Lincoln Electric Reports Fourth Quarter and Full Year 2018 Results

Fourth Quarter and Full Year 2018 Highlights
  • Q4 EPS increases 275.0% to $1.35, Adjusted EPS increases 27.7% to $1.29
  • Strong cash flow generation
  • ROIC increases 450 basis points to 20.7%
  • $304 million returned to shareholders in 2018 through dividends and share repurchases
 

CLEVELAND, Feb. 14, 2019 (GLOBE NEWSWIRE) — Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported fourth quarter 2018 net income of $86.8 million, or diluted earnings per share (EPS) of $1.35, which includes special item after-tax income of $3.3 million, or $0.06 EPS.  This compares with prior year net income of $24.2 million, or $0.36 EPS, which included special item after-tax charges of $43.3 million, or $0.65 EPS. Excluding these items, fourth quarter 2018 adjusted net income increased 23.7% to $83.5 million, or $1.29 EPS, as compared with $67.5 million, or $1.01 EPS in the prior year period.  The effective tax rate for the fourth quarter 2018 was 8.1% due to special items and discrete items.  Excluding special items, the adjusted effective tax rate was 14.7%, which compares to 25.8% in the comparable 2017 period.

Fourth quarter 2018 sales decreased 0.4% to $743.8 million with a 1.6% increase in organic sales.  Operating income for the fourth quarter 2018 was $94.9 million, or 12.8% of sales.  This compares with operating income of $76.3 million, or 10.2% of sales, in the comparable 2017 period.  On an adjusted basis, operating income increased 6.6% to $96.7 million and 90 basis points to 13.0% of sales, as compared with $90.7 million, or 12.1% of sales, in the prior year period.

“We achieved good profit improvement and solid cash flow generation in the fourth quarter, as we continued to successfully manage price/cost while investing in growth,” stated Christopher L. Mapes, Chairman, President and Chief Executive Officer.  “We capitalized on strong industrial growth in 2018, yielding record sales and earnings, and I remain confident in the long-term, sustainable value we are creating through our new technologies and solutions.  We are well positioned to drive margin growth and higher returns for our shareholders in 2019 as we continue to execute on our strategic initiatives.”

Twelve Months 2018 Summary

Net income for the twelve months ended December 31, 2018 was $287.1 million, or $4.37 EPS, which includes special item after-tax net charges of $29.6 million or $0.45 EPS.  This compares with $247.5 million, or $3.71 EPS, in the comparable 2017 period.  The prior year included special item after-tax net charges of $5.2 million, or $0.08 EPS.  Excluding these items, adjusted net income for the twelve months ended December 31, 2018 increased 25.3% to $316.6 million, or $4.82 EPS, compared with $252.7 million, or $3.79 EPS, in the comparable 2017 period.  The effective tax rate for the twelve months ended December 31, 2018 was 22.2% due to special items.  Excluding special items, the adjusted effective tax rate was 21.9%, which compares to 28.0% in the comparable 2017 period.

Sales increased 15.4% to $3.0 billion in the twelve months ended December 31, 2018 from a 9.1% benefit from acquisitions and 6.7% higher organic sales.  Operating income for the twelve months ended December 31, 2018 was $375.5 million, or 12.4% of sales.  This compares with operating income of $376.9 million, or 14.4% of sales, in the comparable 2017 period.  On an adjusted basis, 2018 operating income increased 14.7% to $405.3 million, or 13.4% of sales, as compared with $353.5 million, or 13.5% of sales, in the comparable 2017 period.

Webcast Information

A conference call to discuss fourth quarter 2018 financial results will be webcast live today, February 14, 2019, at 10:00 a.m., Eastern Time.  This webcast is accessible at http://ir.lincolnelectric.com.  Listeners should go to the web site prior to the call to register, download and install any necessary audio software.  A replay of the webcast will be available on the Company’s web site.

Investors who are unable to access the webcast may listen to the conference call live by telephone by dialing (877) 344-3899 (domestic) or (315) 625-3087 (international) and use confirmation code 5292068.  Telephone participants are asked to dial in 10 – 15 minutes prior to the start of the conference call.

Financial results for the fourth quarter 2018 can also be obtained at http://ir.lincolnelectric.com.

About Lincoln Electric

Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc welding systems, plasma and oxy-fuel cutting equipment and has a leading global position in the brazing and soldering alloys market.  Headquartered in Cleveland, Ohio, Lincoln has 60 manufacturing locations, including operations and joint ventures in 19 countries and a worldwide network of distributors and sales offices covering more than 160 countries.  For more information about Lincoln Electric and its products and services, visit the Company’s website at http://www.lincolnelectric.com.

Non-GAAP Information

Adjusted operating income, Adjusted EBIT, Adjusted net income, Adjusted effective tax rate, Adjusted diluted earnings per share and Return on invested capital are non-GAAP financial measures.  Management uses non-GAAP measures to assess the Company’s operating performance by excluding certain disclosed special items that management believes are not representative of the Company’s core business.  Management believes that excluding these special items enables them to make better period-over-period comparisons and benchmark the Company’s operational performance against other companies in its industry more meaningfully.  Furthermore, management believes that non-GAAP financial measures provide investors with meaningful information that provides a more complete understanding of Company operating results and enables investors to analyze financial and business trends more thoroughly.  Non-GAAP financial measures should not be viewed in isolation, are not a substitute for GAAP measures and have limitations including, but not limited to, their usefulness as comparative measures as other companies may define their non-GAAP measures differently.

Forward-Looking Statements

The Company’s expectations and beliefs concerning the future contained in this news release are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements reflect management’s current expectations and involve a number of risks and uncertainties.  Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “forecast,” “guidance” or words of similar meaning.  Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company’s operating results.  The factors include, but are not limited to: general economic and market conditions; the effectiveness of operating initiatives; completion of planned divestitures; interest rates; disruptions, uncertainty or volatility in the credit markets that may limit our access to capital; currency exchange rates and devaluations; adverse outcome of pending or potential litigation; actual costs of the Company’s rationalization plans; possible acquisitions, including the Company’s ability to successfully integrate the Air Liquide Welding business acquisition; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; the effects of changes in tax law; tariff rates in the countries where the Company conducts business; and the possible effects of events beyond our control, such as political unrest, acts of terror and natural disasters, on the Company or its customers, suppliers and the economy in general.  For additional discussion, see “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

Contact

Amanda Butler
Vice President, Investor Relations & Communications
Tel: 216.383.2534
Email: Amanda_Butler@lincolnelectric.com

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)

Consolidated Statements of Income

    Three Months Ended December 31,   Fav (Unfav) to
Prior Year
    2018   % of Sales   2017   % of Sales   $   %
Net sales   $ 743,827     100.0 %   $ 747,185     100.0 %   $ (3,358 )   (0.4 %)
Cost of goods sold   493,528     66.3 %   508,933     68.1 %   15,405     3.0 %
Gross profit   250,299     33.7 %   238,252     31.9 %   12,047     5.1 %
Selling, general & administrative expenses   154,437     20.8 %   153,405     20.5 %   (1,032 )   (0.7 %)
Rationalization and asset impairment charges   932     0.1 %   6,590     0.9 %   5,658     85.9 %
Bargain purchase adjustment (gain)           1,935     0.3 %   1,935     100.0 %
Operating income   94,930     12.8 %   76,322     10.2 %   18,608     24.4 %
Interest expense, net   4,343     0.6 %   4,448     0.6 %   105     2.4 %
Other income (expense)   3,868     0.5 %   1,854     0.2 %   2,014     108.6 %
Income before income taxes   94,455     12.7 %   73,728     9.9 %   20,727     28.1 %
Income taxes   7,676     1.0 %   49,543     6.6 %   41,867     84.5 %
Effective tax rate   8.1 %       67.2 %       59.1 %    
Net income including non-controlling interests   86,779     11.7 %   24,185     3.2 %   62,594     258.8 %
Non-controlling interests in subsidiaries’ earnings (loss)   (60 )       4         (64 )   (1,600.0 %)
Net income   $ 86,839     11.7 %   $ 24,181     3.2 %   $ 62,658     259.1 %
                         
Basic earnings per share   $ 1.36         $ 0.37         $ 0.99     267.6 %
Diluted earnings per share   $ 1.35         $ 0.36         $ 0.99     275.0 %
Weighted average shares (basic)   63,808         65,649              
Weighted average shares (diluted)   64,559         66,530              
    Twelve Months Ended December 31,   Fav (Unfav) to
Prior Year
    2018   % of Sales   2017   % of Sales   $   %
Net sales   $ 3,028,674     100.0 %   $ 2,624,431     100.0 %   $ 404,243     15.4 %
Cost of goods sold   2,000,153     66.0 %   1,749,324     66.7 %   (250,829 )   (14.3 %)
Gross profit   1,028,521     34.0 %   875,107     33.3 %   153,414     17.5 %
Selling, general & administrative expenses   627,697     20.7 %   541,225     20.6 %   (86,472 )   (16.0 %)
Rationalization and asset impairment charges   25,285     0.8 %   6,590     0.3 %   (18,695 )   (283.7 %)
Bargain purchase adjustment (gain)           (49,650 )   (1.9 %)   (49,650 )   (100.0 %)
Operating income   375,539     12.4 %   376,942     14.4 %   (1,403 )   (0.4 %)
Interest expense, net   17,565     0.6 %   19,432     0.7 %   1,867     9.6 %
Other income (expense)   10,686     0.4 %   8,726     0.3 %   1,960     22.5 %
Income before income taxes   368,660     12.2 %   366,236     14.0 %   2,424     0.7 %
Income taxes   81,667     2.7 %   118,761     4.5 %   37,094     31.2 %
Effective tax rate   22.2 %       32.4 %       10.2 %    
Net income including non-controlling interests   286,993     9.5 %   247,475     9.4 %   39,518     16.0 %
Non-controlling interests in subsidiaries’ earnings (loss)   (73 )       (28 )       (45 )   (160.7 %)
Net income   $ 287,066     9.5 %   $ 247,503     9.4 %   $ 39,563     16.0 %
                         
Basic earnings per share   $ 4.42         $ 3.76         $ 0.66     17.6 %
Diluted earnings per share   $ 4.37         $ 3.71         $ 0.66     17.8 %
Weighted average shares (basic)   64,886         65,739              
Weighted average shares (diluted)   65,682         66,643              

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands)
(Unaudited)

Balance Sheet Highlights

Selected Consolidated Balance Sheet Data   December 31, 2018   December 31, 2017
Cash and cash equivalents   $ 358,849     $ 326,701  
Marketable securities       179,125  
Total current assets   1,237,799     1,373,608  
Property, plant and equipment, net   478,801     477,031  
Total assets   2,349,825     2,406,547  
Total current liabilities   538,182     528,742  
Short-term debt (1)   111     2,131  
Long-term debt, less current portion   702,549     704,136  
Total equity   887,592     932,453  
         
Operating Working Capital   December 31, 2018   December 31, 2017
Accounts receivable, net   $ 396,885     $ 395,279  
Inventories   361,829     348,667  
Trade accounts payable   268,600     269,763  
Operating working capital   $ 490,114     $ 474,183  
         
Average operating working capital to Net sales (2)   16.5 %   15.9 %
         
Invested Capital   December 31, 2018   December 31, 2017
Short-term debt (1)   $ 111     $ 2,131  
Long-term debt, less current portion   702,549     704,136  
Total debt   702,660     706,267  
Total equity   887,592     932,453  
Invested capital   $ 1,590,252     $ 1,638,720  
         
Total debt / invested capital   44.2 %   43.1 %
  1. Includes current portion of long-term debt.
  2. Average operating working capital to Net sales is defined as operating working capital as of period end divided by annualized rolling three months of Net sales. 

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)

Non-GAAP Financial Measures

    Three Months Ended December 31,   Twelve Months Ended December 31,
    2018   2017   2018   2017
Operating income as reported   $ 94,930     $ 76,322     $ 375,539     $ 376,942  
Special items (pre-tax):                
Rationalization and asset impairment charges (2)   932     6,590     25,285     6,590  
Acquisition transaction and integration costs (3)   833     3,616     4,498     15,002  
Amortization of step up in value of acquired inventories (3)       2,264         4,578  
Bargain purchase adjustment (gain) (3)       1,935         (49,650 )
Adjusted operating income (1)   $ 96,695     $ 90,727     $ 405,322     $ 353,462  
As a percent of total sales   13.0 %   12.1 %   13.4 %   13.5 %
                 
Net income as reported   $ 86,839     $ 24,181     $ 287,066     $ 247,503  
Special items:                
Rationalization and asset impairment charges (2)   932     6,590     25,285     6,590  
Acquisition transaction and integration costs (3)   833     3,616     4,498     15,002  
Pension settlement charges (4)   1,696     2,867     6,686     8,150  
Amortization of step up in value of acquired inventories (3)       2,264         4,578  
Bargain purchase adjustment (gain) (3)       1,935         (49,650 )
Tax effect of Special items (5)   (6,764 )   26,057     (6,896 )   20,536  
Adjusted net income (1)   83,536     67,510     316,639     252,709  
Non-controlling interests in subsidiaries’ earnings (loss)   (60 )   4     (73 )   (28 )
Interest expense, net   4,343     4,448     17,565     19,432  
Income taxes as reported   7,676     49,543     81,667     118,761  
Tax effect of Special items (5)   6,764     (26,057 )   6,896     (20,536 )
Adjusted EBIT (1)   $ 102,259     $ 95,448     $ 422,694     $ 370,338  
                 
Effective tax rate as reported   8.1 %   67.2 %   22.2 %   32.4 %
Net special item tax impact   6.6 %   (41.4 )%   (0.3 )%   (4.4 )%
Adjusted effective tax rate (1)   14.7 %   25.8 %   21.9 %   28.0 %
                 
Diluted earnings per share as reported   $ 1.35     $ 0.36     $ 4.37     $ 3.71  
Special items per share   (0.06 )   0.65     0.45     0.08  
Adjusted diluted earnings per share (1)   $ 1.29     $ 1.01     $ 4.82     $ 3.79  
                 
Weighted average shares (diluted)   64,559     66,530     65,682     66,643  
  1. Adjusted operating income, Adjusted EBIT, Adjusted net income, Adjusted effective tax rate and Adjusted diluted earnings per share are non-GAAP financial measures.  Management uses non-GAAP measures to assess the Company’s operating performance by excluding certain disclosed special items that management believes are not representative of the Company’s core business.  Management believes that excluding these special items enables them to make better period-over-period comparisons and benchmark the Company’s operational performance against other companies in its industry more meaningfully.  Furthermore, management believes that non-GAAP financial measures provide investors with meaningful information that provides a more complete understanding of Company operating results and enables investors to analyze financial and business trends more thoroughly.  Non-GAAP financial measures should not be viewed in isolation, are not a substitute for GAAP measures and have limitations including, but not limited to, their usefulness as comparative measures as other companies may define their non-GAAP measures differently.
  2. Primarily related to severance, asset impairments and gains or losses on the disposal of assets.
  3. Related to the acquisition of Air Liquide Welding.
  4. Related to lump sum pension payments.
  5. Includes the net tax impact of Special items recorded during the respective periods, including a credit of $4,424 and a net charge of $399 related to the U.S. Tax Act in the three and twelve months ended December 31, 2018, respectively, as well as a charge of $28,616 in the three and twelve month period ended December 31, 2017. The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate.  The applicable tax rates reflect the taxable jurisdiction and nature of each Special item.

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)

Non-GAAP Financial Measures

    Twelve Months Ended December 31,
Return on Invested Capital   2018   2017
Net income as reported   $ 287,066     $ 247,503  
Rationalization and asset impairment charges   25,285     6,590  
Pension settlement charges   6,686     8,150  
Acquisition transaction and integration costs   4,498     15,002  
Amortization of step up in value of acquired inventories       4,578  
Bargain purchase adjustment (gain)       (49,650 )
Tax effect of Special items (3)   (6,896 )   20,536  
Adjusted net income (1)   $ 316,639     $ 252,709  
Plus: Interest expense, net of tax of $6,117 and $9,273 in 2018 and 2017, respectively   18,386     14,947  
Less: Interest income, net of tax of $1,732 and $1,833 in 2018 and 2017, respectively   5,206     2,955  
Adjusted net income before tax effected interest   $ 329,819     $ 264,701  
         
Invested Capital   December 31, 2018   December 31, 2017
Short-term debt   111     2,131  
Long-term debt, less current portion   702,549     704,136  
Total debt   702,660     706,267  
Total equity   887,592     932,453  
Invested capital   $ 1,590,252     $ 1,638,720  
         
Return on invested capital (1)(2)   20.7 %   16.2 %
  1. Adjusted net income and Return on invested capital are non-GAAP financial measures.  Management uses non-GAAP measures to assess the Company’s operating performance by excluding certain disclosed special items that management believes are not representative of the Company’s core business.  Management believes that excluding these special items enables them to make better period-over-period comparisons and benchmark the Company’s operational performance against other companies in its industry more meaningfully.  Furthermore, management believes that non-GAAP financial measures provide investors with meaningful information that provides a more complete understanding of Company operating results and enables investors to analyze financial and business trends more thoroughly.  Non-GAAP financial measures should not be viewed in isolation, are not a substitute for GAAP measures and have limitations including, but not limited to, their usefulness as comparative measures as other companies may define their non-GAAP measures differently.
  2. Return on invested capital is defined as rolling 12 months of Adjusted net income before tax-effected interest income and expense divided by invested capital.
  3. Includes the net tax impact of Special items recorded during the respective periods, including the net impact of the U.S. Tax Act of $399 and $28,616 in the twelve months ended December 31, 2018 and 2017, respectively. The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate.  The applicable tax rates reflect the taxable jurisdiction and nature of each Special item.

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)

Condensed Consolidated Statements of Cash Flows

    Three Months Ended December 31,
    2018   2017
OPERATING ACTIVITIES:        
Net income   $ 86,839     $ 24,181  
Non-controlling interests in subsidiaries’ (loss) earnings   (60 )   4  
Net income including non-controlling interests   86,779     24,185  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Rationalization and asset impairment net (gains) charges   (4,570 )   1,441  
Bargain purchase adjustment       1,935  
Net impact of U.S. Tax Act   (4,424 )   28,616  
Depreciation and amortization   18,400     17,658  
Equity earnings in affiliates, net   (1,607 )   (121 )
Pension expense and settlement charges   354     1,701  
Other non-cash items, net   4,497     5,393  
Changes in operating assets and liabilities, net of effects from acquisitions:        
Decrease in accounts receivable   21,431     7,489  
Decrease in inventories   17,629     41,974  
Increase in trade accounts payable   21,159     26,803  
Net change in other current assets and liabilities   (58,649 )   (70,003 )
Net change in other long-term assets and liabilities   (1,624 )   2,420  
NET CASH PROVIDED BY OPERATING ACTIVITIES   99,375     89,491  
INVESTING ACTIVITIES:        
Capital expenditures   (22,500 )   (22,697 )
Acquisition of businesses, net of cash acquired   (108,383 )    
Proceeds from sale of property, plant and equipment   6,170     307  
Purchase of marketable securities       (60,031 )
Proceeds from marketable securities   99,281     60,190  
Other investing activities   (2,000 )    
NET CASH USED BY INVESTING ACTIVITIES   (27,432 )   (22,231 )
FINANCING ACTIVITIES:        
Net change in borrowings   (296 )   109  
Proceeds from exercise of stock options   242     2,294  
Purchase of shares for treasury   (80,173 )   (20,152 )
Cash dividends paid to shareholders   (25,384 )   (23,369 )
Other financing activities       9  
NET CASH USED BY FINANCING ACTIVITIES   (105,611 )   (41,109 )
Effect of exchange rate changes on Cash and cash equivalents   (5,683 )   1,097  
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS   (39,351 )   27,248  
Cash and cash equivalents at beginning of period   398,200     299,453  
Cash and cash equivalents at end of period   $ 358,849     $ 326,701  
Cash dividends paid per share   $ 0.39     $ 0.35  

Lincoln Electric Holdings, Inc.
Financial Highlights
(In thousands, except per share amounts)
(Unaudited)

Condensed Consolidated Statements of Cash Flows

    Twelve Months Ended December 31,
    2018   2017
OPERATING ACTIVITIES:        
Net income   $ 287,066     $ 247,503  
Non-controlling interests in subsidiaries’ loss   (73 )   (28 )
Net income including non-controlling interests   286,993     247,475  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:        
Rationalization and asset impairment net (gains) charges   (5,978 )   1,441  
Bargain purchase gain       (49,650 )
Net impact of U.S. Tax Act   399     28,616  
Depreciation and amortization   72,346     68,115  
Equity earnings in affiliates, net   (3,034 )   (337 )
Pension expense and settlement charges   3,068     2,517  
Other non-cash items, net   9,042     18,158  
Changes in operating assets and liabilities, net of effects from acquisitions:        
Increase in accounts receivable   (4,061 )   (16,811 )
(Increase) decrease in inventories   (23,904 )   19,448  
Increase in trade accounts payable   3,636     17,871  
Net change in other current assets and liabilities   (12,333 )   (8,156 )
Net change in other long-term assets and liabilities   2,978     6,158  
NET CASH PROVIDED BY OPERATING ACTIVITIES   329,152     334,845  
INVESTING ACTIVITIES:        
Capital expenditures   (71,246 )   (61,656 )
Acquisition of businesses, net of cash acquired   (101,792 )   (72,468 )
Proceeds from sale of property, plant and equipment   16,755     2,301  
Purchase of marketable securities   (268,335 )   (205,584 )
Proceeds from marketable securities   447,459     65,380  
Other investing activities   (2,000 )    
NET CASH PROVIDED BY (USED BY) INVESTING ACTIVITIES   20,841     (272,027 )
FINANCING ACTIVITIES:        
Net change in borrowings   (942 )   (496 )
Proceeds from exercise of stock options   4,690     16,627  
Purchase of shares for treasury   (201,650 )   (43,164 )
Cash dividends paid to shareholders   (102,058 )   (92,452 )
Other financing activities   (2,170 )   (15,552 )
NET CASH USED BY FINANCING ACTIVITIES   (302,130 )   (135,037 )
Effect of exchange rate changes on Cash and cash equivalents   (15,715 )   19,741  
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   32,148     (52,478 )
Cash and cash equivalents at beginning of period   326,701     379,179  
Cash and cash equivalents at end of period   $ 358,849     $ 326,701  
Cash dividends paid per share   $ 1.56     $ 1.40  

Lincoln Electric Holdings, Inc.
Segment Highlights
(In thousands)
(Unaudited)

    Americas
Welding
  International
Welding
  The Harris
Products Group
  Corporate /
Eliminations
  Consolidated
Three months ended
  December 31, 2018
                   
Net sales   $ 455,217     $ 219,456     $ 69,154     $     $ 743,827  
Inter-segment sales   29,265     4,907     1,522     (35,694 )    
Total   $ 484,482     $ 224,363     $ 70,676     $ (35,694 )   $ 743,827  
Net income                   $ 86,839  
As a percent of total sales                   11.7 %
EBIT (1)   $ 84,198     $ 11,371     $ 8,506     $ (5,277 )   $ 98,798  
As a percent of total sales   17.4 %   5.1 %   12.0 %       13.3 %
Special items charges (gains) (3)   1,696     932         833     3,461  
Adjusted EBIT (2)   $ 85,894     $ 12,303     $ 8,506     $ (4,444 )   $ 102,259  
As a percent of total sales   17.7 %   5.5 %   12.0 %       13.7 %
Three months ended
  December 31, 2017
                   
Net sales   $ 423,019     $ 256,021     $ 68,145     $     $ 747,185  
Inter-segment sales   22,002     3,646     1,427     (27,075 )    
Total   $ 445,021     $ 259,667     $ 69,572     $ (27,075 )   $ 747,185  
Net income                   $ 24,181  
As a percent of total sales                   3.2 %
EBIT (1)   $ 70,590     $ 4,246     $ 8,951     $ (5,611 )   $ 78,176  
As a percent of total sales   15.9 %   1.6 %   12.9 %       10.5 %
Special items charges (gains) (4)   3,959     7,762         5,551     17,272  
Adjusted EBIT (2)   $ 74,549     $ 12,008     $ 8,951     $ (60 )   $ 95,448  
As a percent of total sales   16.8 %   4.6 %   12.9 %       12.8 %
  1. EBIT is defined as Operating income plus Other income (expense).
  2. The primary profit measure used by management to assess segment performance is Adjusted EBIT.  EBIT for each operating segment is adjusted for special items to derive Adjusted EBIT.
  3. Special items in 2018 reflect pension settlement charges of $1,696 in Americas Welding, rationalization and asset impairment charges of $932 in International Welding and acquisition transaction and integration costs of $833 in Corporate/Eliminations related to the acquisition of Air Liquide Welding.
  4. Special items in 2017 reflect pension settlement charges of $2,867 in Americas Welding, rationalization and asset impairment charges of $6,590 in Americas Welding and International Welding, amortization of step up in value of acquired inventories of $2,264 in International Welding and acquisition transaction and integration costs of $3,616 and an adjustment to the bargain purchase gain of $1,935 in Corporate/Eliminations related to the acquisition of Air Liquide Welding.

Lincoln Electric Holdings, Inc.
Segment Highlights
(In thousands)
(Unaudited)

    Americas
Welding
  International
Welding
  The Harris
Products Group
  Corporate /
Eliminations
  Consolidated
Twelve months ended
  December 31, 2018
                   
Net sales   $ 1,806,514     $ 919,771     $ 302,389     $     $ 3,028,674  
Inter-segment sales   118,936     18,576     6,969     (144,481 )    
Total   $ 1,925,450     $ 938,347     $ 309,358     $ (144,481 )   $ 3,028,674  
Net income                   $ 287,066  
As a percent of total sales                   9.5 %
EBIT (1)   $ 334,058     $ 28,988     $ 36,564     $ (13,385 )   $ 386,225  
As a percent of total sales   17.3 %   3.1 %   11.8 %       12.8 %
Special items charges (gains) (3)   6,686     25,285         4,498     36,469  
Adjusted EBIT (2)   $ 340,744     $ 54,273     $ 36,564     $ (8,887 )   $ 422,694  
As a percent of total sales   17.7 %   5.8 %   11.8 %       14.0 %
Twelve months ended
  December 31, 2017
                   
Net sales   $ 1,609,779     $ 724,024     $ 290,628     $     $ 2,624,431  
Inter-segment sales   97,382     18,860     8,190     (124,432 )    
Total   $ 1,707,161     $ 742,884     $ 298,818     $ (124,432 )   $ 2,624,431  
Net income                   $ 247,503  
As a percent of total sales                   9.4 %
EBIT (1)   $ 282,624     $ 31,645     $ 36,442     $ 34,957     $ 385,668  
As a percent of total sales   16.6 %   4.3 %   12.2 %       14.7 %
Special items charges (gains) (4)   9,242     10,076         (34,648 )   (15,330 )
Adjusted EBIT (2)   $ 291,866     $ 41,721     $ 36,442     $ 309     $ 370,338  
As a percent of total sales   17.1 %   5.6 %   12.2 %       14.1 %
  1. EBIT is defined as Operating income plus Other income (expense).
  2. The primary profit measure used by management to assess segment performance is Adjusted EBIT.  EBIT for each operating segment is adjusted for special items to derive Adjusted EBIT.
  3. Special items in 2018 reflect pension settlement charges of $6,686 in Americas Welding, rationalization and asset impairment charges of $25,285 in International Welding and acquisition transaction and integration costs of $4,498 in Corporate/Eliminations related to the acquisition of Air Liquide Welding.
  4. Special items in 2017 reflect pension settlement charges of $8,150 in Americas Welding, rationalization and asset impairment charges of $6,590 in Americas Welding and International Welding, amortization of step up in value of acquired inventories of $4,578 in International Welding and acquisition transaction and integration costs of $15,002 and a bargain purchase gain of $49,650 in Corporate/Eliminations related to the acquisition of Air Liquide Welding.

Lincoln Electric Holdings, Inc.
Change in Net Sales by Segment
(In thousands)
(Unaudited)

Three Months Ended December 31st Change in Net Sales by Segment
             
        Change in Net Sales due to:    
    Net Sales
2017
  Volume   Acquisitions   Price   Foreign
Exchange
  Net Sales
2018
Operating Segments                        
Americas Welding   $ 423,019     $ (411 )   $ 2,831     $ 35,270     $ (5,492 )   $ 455,217  
International Welding   256,021     (35,198 )       9,626     (10,993 )   219,456  
The Harris Products Group   68,145     3,120         (1,053 )   (1,058 )   69,154  
Consolidated   $ 747,185     $ (32,489 )   $ 2,831     $ 43,843     $ (17,543 )   $ 743,827  
                         
% Change                        
Americas Welding       (0.1 %)   0.7 %   8.3 %   (1.3 %)   7.6 %
International Welding       (13.7 %)       3.8 %   (4.3 %)   (14.3 %)
The Harris Products Group       4.6 %       (1.5 %)   (1.6 %)   1.5 %
Consolidated       (4.3 %)   0.4 %   5.9 %   (2.3 %)   (0.4 %)
                         
Twelve Months Ended December 31st Change in Net Sales by Segment
             
        Change in Net Sales due to:    
    Net Sales
2017
  Volume   Acquisitions   Price   Foreign
Exchange
  Net Sales
2018
Operating Segments                        
Americas Welding   $ 1,609,779     $ 82,258     $ 11,644     $ 111,038     $ (8,205 )   $ 1,806,514  
International Welding   724,024     (66,963 )   227,598     34,777     335     919,771  
The Harris Products Group   $ 290,628     12,497         378     (1,114 )   302,389  
Consolidated   $ 2,624,431     $ 27,792     $ 239,242     $ 146,193     $ (8,984 )   $ 3,028,674  
                         
% Change                        
Americas Welding         5.1 %   0.7 %   6.9 %   (0.5 %)   12.2 %
International Welding       (9.2 %)   31.4 %   4.8 %       27.0 %
The Harris Products Group       4.3 %       0.1 %   (0.4 %)   4.0 %
Consolidated       1.1 %   9.1 %   5.6 %   (0.3 %)   15.4 %