LINCOLN ELECTRIC HOLDINGS INC

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File Number: 0-1402

LINCOLN ELECTRIC HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Ohio		34-1860551
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

22801 St. Clair Avenue, Cleveland, Ohio		44117
(Address of principal executive offices)		(Zip Code)

(216) 481-8100

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of exchange on which registered
Common Shares, without par value	LECO	The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ⌧ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ⌧ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “small reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ⌧

The number of shares outstanding of the registrant’s common shares as of March 31, 2025 was 55,826,284.

Table of Contents

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)		3
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)		4
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)		5
CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)		6
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)		7
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS		8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		20
Item 3. Quantitative and Qualitative Disclosures About Market Risk		28
Item 4. Controls and Procedures		28

PART II. OTHER INFORMATION		28
Item 1. Legal Proceedings		28
Item 1A. Risk Factors		29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		29
Item 4. Mine Safety Disclosures		29
Item 5. Other Information		30
Item 6. Exhibits		35
Signatures		31

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

LINCOLN ELECTRIC HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF INCOME

(UNAUDITED)

(In thousands, except per share amounts)


	Three Months Ended March 31,
	2025		2024
Net sales (Note 2)	$	1,004,388	$	981,197
Cost of goods sold		638,940		612,798
Gross profit		365,448		368,399
Selling, general & administrative expenses		196,665		198,747
Rationalization and asset impairment net charges (Note 6)		3,865		4,605
Operating income		164,918		165,047
Interest expense, net		12,127		8,779
Other income		444		2,262
Income before income taxes		153,235		158,530
Income taxes (Note 11)		34,748		35,115
Net income	$	118,487	$	123,415

Basic earnings per share (Note 3)	$	2.11	$	2.17
Diluted earnings per share (Note 3)	$	2.10	$	2.14
Cash dividends declared per share	$	0.75	$	0.71

See notes to these consolidated financial statements.

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LINCOLN ELECTRIC HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

(In thousands)


	Three Months Ended March 31,
	2025		2024
Net income	$	118,487	$	123,415
Other comprehensive income (loss), net of tax:
Unrealized gain on derivatives designated and qualifying as cash flow hedges		829		3,715
Defined benefit pension plan activity		(1,285)		73
Currency translation adjustment		29,679		(13,395)
Other comprehensive income (loss):		29,223		(9,607)
Comprehensive income	$	147,710	$	113,808

See notes to these consolidated financial statements.

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LINCOLN ELECTRIC HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)


	March 31, 2025		December 31, 2024
	(UNAUDITED)		(NOTE 1)
ASSETS
Current Assets
Cash and cash equivalents	$	394,705	$	377,262
Accounts receivable (less allowance for doubtful accounts of $15,112 in 2025; $12,674 in 2024)		522,721		481,979
Inventories (Note 8)		574,329		544,037
Other current assets		237,872		242,003
Total Current Assets		1,729,627		1,645,281
Property, plant and equipment (less accumulated depreciation of $884,856 in 2025; $865,634 in 2024)		636,158		619,181
Goodwill		813,698		804,927
Other assets		445,591		450,753
TOTAL ASSETS	$	3,625,074	$	3,520,142
LIABILITIES AND EQUITY
Current Liabilities
Short-term debt (Note 10)	$	109,620	$	110,524
Trade accounts payable		365,267		296,590
Accrued employee compensation and benefits		113,767		104,374
Other current liabilities		381,200		367,314
Total Current Liabilities		969,854		878,802
Long-term debt, less current portion (Note 10)		1,150,473		1,150,551
Other liabilities		164,577		163,356
Total Liabilities		2,284,904		2,192,709
Shareholders' Equity
Common shares, without par value - at stated capital amount; authorized 240,000,000 shares; issued 98,581,434 shares in 2025 and 2024; outstanding 55,826,284 shares in 2025 and 56,211,219 in 2024		9,858		9,858
Additional paid-in capital		581,250		566,740
Retained earnings		4,067,213		3,993,016
Accumulated other comprehensive loss		(270,912)		(300,135)
Treasury shares, at cost - 42,755,150 shares in 2025 and 42,370,215 shares in 2024		(3,047,239)		(2,942,046)
Total Equity		1,340,170		1,327,433
TOTAL LIABILITIES AND TOTAL EQUITY	$	3,625,074	$	3,520,142

See notes to these consolidated financial statements.

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LINCOLN ELECTRIC HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(UNAUDITED)

(In thousands, except per share amounts)


								Accumulated
	Common			Additional				Other
	Shares	Common		Paid-In		Retained		Comprehensive		Treasury
	Outstanding	Shares		Capital		Earnings		Income (Loss)		Shares		Total
Balance at December 31, 2024	56,211	$	9,858	$	566,740	$	3,993,016	$	(300,135)	$	(2,942,046)	$	1,327,433
Net income							118,487						118,487
Defined benefit pension plan activity, net of tax									(1,285)				(1,285)
Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax									829				829
Currency translation adjustment, net of tax									29,679				29,679
Cash dividends declared - $0.75 per share							(42,073)						(42,073)
Stock-based compensation activity	157				13,105						1,501		14,606
Purchase of shares for treasury	(542)										(106,694)		(106,694)
Other					1,405		(2,217)						(812)
Balance at March 31, 2025	55,826	$	9,858	$	581,250	$	4,067,213	$	(270,912)	$	(3,047,239)	$	1,340,170


								Accumulated
	Common			Additional				Other
	Shares	Common		Paid-In		Retained		Comprehensive		Treasury
	Outstanding	Shares		Capital		Earnings		Income (Loss)		Shares		Total
Balance at December 31, 2023	56,977	$	9,858	$	523,357	$	3,688,038	$	(229,847)	$	(2,682,554)	$	1,308,852
Net income							123,415						123,415
Unrecognized amounts from defined benefit pension plans, net of tax									73				73
Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax									3,715				3,715
Currency translation adjustment, net of tax									(13,395)				(13,395)
Cash dividends declared – $0.71 per share							(41,273)						(41,273)
Stock-based compensation activity	397				34,981						3,647		38,628
Purchase of shares for treasury	(466)										(110,405)		(110,405)
Other					2,101		(3,883)						(1,782)
Balance at March 31, 2024	56,908	$	9,858	$	560,439	$	3,766,297	$	(239,454)	$	(2,789,312)	$	1,307,828

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LINCOLN ELECTRIC HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(In thousands)


	Three Months Ended March 31,
	2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	118,487	$	123,415
Adjustments to reconcile Net income to Net cash provided by operating activities:
Rationalization and asset impairment net charges		—		64
Depreciation and amortization		23,784		21,586
Deferred income taxes		(5,838)		(7,348)
Stock-based compensation		8,352		14,190
Other, net		282		5,104
Changes in operating assets and liabilities, net of effects from acquisitions:
Increase in accounts receivable		(34,108)		(9,603)
Increase in inventories		(20,167)		(9,416)
Decrease in other current assets		2,057		3,331
Increase in trade accounts payable		64,884		3,957
Increase (decrease) in other current liabilities		21,206		(8,121)
Net change in other assets and liabilities		6,754		(3,865)
NET CASH PROVIDED BY OPERATING ACTIVITIES		185,693		133,294
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(26,949)		(26,256)
Proceeds from sale of property, plant and equipment		4,646		316
NET CASH USED BY INVESTING ACTIVITIES		(22,303)		(25,940)
CASH FLOWS FROM FINANCING ACTIVITIES
(Payments on) proceeds from short-term borrowings		(904)		2,016
Payments on long-term borrowings		(169)		(169)
Proceeds from exercise of stock options		6,254		24,438
Purchase of shares for treasury		(106,694)		(110,405)
Cash dividends paid to shareholders		(42,975)		(41,280)
NET CASH USED BY FINANCING ACTIVITIES		(144,488)		(125,400)
Effect of exchange rate changes on Cash and cash equivalents		(1,459)		(763)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		17,443		(18,809)

Cash and cash equivalents at beginning of period		377,262		393,787
CASH AND CASH EQUIVALENTS AT END OF PERIOD	$	394,705	$	374,978

See notes to these consolidated financial statements.

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LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Dollars in thousands, except per share amounts

NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of Lincoln Electric Holdings, Inc. and its wholly-owned and majority-owned subsidiaries for which it has a controlling interest (the “Company”) after elimination of all inter-company accounts, transactions and profits.

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. However, in the opinion of management, these unaudited consolidated financial statements contain all the adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position, results of operations and cash flows for the interim periods. Operating results for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025.

The accompanying Condensed Consolidated Balance Sheet at December 31, 2024 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

Certain reclassifications have been made to the prior period amounts to conform to the current period presentation, none of which are material.

New Accounting Pronouncements:

This section provides a description of new accounting pronouncements (“Accounting Standards Updates” or “ASUs”) issued by the Financial Accounting Standards Board (“FASB”) that are applicable to the Company.

The following ASUs were adopted as of January 1, 2025:

Standard		Description
ASU No. 2023-09, Income Taxes (Topic 740), issued December 2023.		Requires disclosure of specific categories in rate reconciliation and additional information for reconciling items that meet a quantitative threshold, additional information about income taxes paid, and disclosure of disaggregated income tax information. The Company will adopt the required disclosures for the 2025 annual period.

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LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

The Company is currently evaluating the impact on its financial statements of the following ASUs:


Standard		Description
ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures, issued November 2024		Requires enhanced disclosures of specified information about certain costs and expenses. The amendments are effective for annual periods beginning January 1, 2027, and interim periods beginning January 1, 2028. Early adoption is permitted.
ASU No. 2023-06, Disclosure Improvements, issued October 2023		Requires amending certain disclosure and presentation requirements for a variety of topics within the ASC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or S-K becomes effective, or June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited.

NOTE 2 — REVENUE RECOGNITION

The following table presents the Company’s Net sales disaggregated by product line:


	Three Months Ended March 31,
	2025		2024
Consumables	$	520,603	$	527,738
Equipment		483,785		453,459
Net sales	$	1,004,388	$	981,197

Consumable sales consist of welding, brazing and soldering filler metals. Equipment sales consist of arc welding equipment, welding accessories, wire feeding systems, fume control equipment, plasma and oxy-fuel cutting systems, specialty gas regulators, and education solutions; as well as a comprehensive portfolio of automated solutions for joining, cutting, material handling, module assembly, and end of line testing. Consumable and Equipment products are sold within each of the Company’s operating segments.

Within the Equipment product line, there are certain customer contracts related to automation products that may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines the standalone selling price based on the prices charged to customers or using expected cost plus margin. Approximately 10% of the Company’s Net sales are recognized over time.

At March 31, 2025, the Company recorded $44,822 related to advance customer payments and $59,324 related to billings in excess of revenue recognized. These contract liabilities are included in Other current liabilities in the Condensed Consolidated Balance Sheets. At December 31, 2024, the balances related to advance customer payments and billings in excess of revenue recognized were $63,473 and $57,960, respectively. Substantially all of the Company’s contract liabilities are recognized within twelve months based on contract duration. The Company records an asset for contracts where it has recognized revenue, but has not yet invoiced the customer for goods or services. At March 31, 2025 and December 31, 2024, the Company recorded $87,263 and $81,781, respectively, related to these contract assets which are included in Other current assets in the Condensed Consolidated Balance Sheets. Contract asset amounts are expected to be billed within the next twelve months.

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LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

NOTE 3 — EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share:


	Three Months Ended March 31,
	2025		2024
Numerator:
Net income	$	118,487	$	123,415
Denominator (shares in 000's):
Basic weighted average shares outstanding		56,058		56,865
Effect of dilutive securities - Stock options and awards		469		776
Diluted weighted average shares outstanding		56,527		57,641
Basic earnings per share	$	2.11	$	2.17
Diluted earnings per share	$	2.10	$	2.14

For the three months ended March 31, 2025 and 2024, common shares subject to equity-based awards of 21,704 and 25,147, respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive.

NOTE 4 — ACQUISITIONS

On April 1, 2025, the Company acquired an approximate 35% ownership interest of Alloy Steel Australia (Int) Pty Ltd. (“Alloy Steel”), a privately held manufacturer of maintenance and repair solutions, for a purchase price of approximately $43,000. Alloy Steel supplies proprietary technology, engineering services and digital monitoring to the mining sector.

The acquired companies discussed below are accounted for as business combinations and are included in the consolidated financial statements as of the date of acquisition. The acquired companies are not material individually, or in the aggregate, to the actual or pro forma Consolidated Statements of Income or Consolidated Statements of Cash Flows; as such, pro forma information related to these acquisitions has not been presented.

On July 30, 2024, the Company acquired 100% ownership of Vanair Manufacturing, LLC (“Vanair”), a privately held, Michigan City, Indiana-based, manufacturer for a total purchase price of $109,993, net of cash acquired and certain debt-like items. Vanair offers a comprehensive portfolio of mobile power solutions, including vehicle-mounted compressors, generators, welders, hydraulics, chargers/boosters and electrified power equipment.

On June 3, 2024, the Company acquired 100% ownership of Inrotech A/S (“Inrotech”), a privately held automation system integration and technology firm headquartered in Odense, Denmark. The purchase price was $42,352, net of cash acquired. Inrotech specializes in automated welding systems that are differentiated by proprietary adaptive intelligence software and computer vision which guides and optimizes the welding process without the need for programming or the use of computer aided design files. The state-of-the-art vision-based technology is used in the shipbuilding, energy, and heavy industry sectors, where welding accessibility can be challenging for traditional automated systems, but precision and quality are mission critical.

On April 1, 2024, the Company acquired 100% ownership of Superior Controls, LLC (“RedViking”), a privately held automation system integrator based in Plymouth, Michigan. The purchase price was $108,844, net of cash acquired. RedViking specializes in the development and integration of state-of-the-art autonomous guided vehicles and mobile robots, custom assembly and dynamic test systems, and proprietary manufacturing execution system software.

During the three months ended March 31, 2025 and 2024, the Company recognized acquisition costs of $802 and $1,762, respectively, which are included in Selling, general & administrative expenses on the Consolidated Statements of Income and are expensed as incurred.

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LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

NOTE 5 — SEGMENT INFORMATION

The Company’s primary business is the design, development and manufacture of arc welding products, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment. The Company also has a leading global position in brazing and soldering alloys.

The Company’s products include arc welding, brazing and soldering filler metals (consumables), arc welding equipment, plasma and oxyfuel cutting systems, wire feeding systems, fume control equipment, welding accessories, specialty gas regulators, and education solutions; as well as a comprehensive portfolio of automated solutions for joining, cutting, material handling, module assembly, and end of line testing.

The Company has aligned its organizational and leadership structure into three operating segments to support growth strategies and enhance the utilization of the Company’s worldwide resources and global sourcing initiatives. The operating segments consist of Americas Welding, International Welding and The Harris Products Group. The Americas Welding segment includes welding operations in North and South America. The International Welding segment includes welding operations in Europe, Africa, Asia and Australia. The Harris Products Group includes the Company’s global cutting, soldering and brazing businesses, specialty gas equipment, as well as its retail business in the United States.

Segment performance is measured and resources are allocated based on a number of factors, the primary measure being the adjusted earnings before interest and income taxes ("Adjusted EBIT") profit measure. EBIT is defined as Operating income plus Other income. Segment EBIT is adjusted for special items as determined by management such as the impact of rationalization activities, certain asset impairment charges and gains or losses on disposals of assets.

The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM uses segment Adjusted EBIT to allocate resources for each segment predominantly in establishing the Company’s long-term strategy and in developing the annual budget. The CODM considers actual performance using Adjusted EBIT when making decisions about allocating capital and resources to the segments.

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LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

The following table presents Adjusted EBIT by segment:


					The Harris
	Americas		International		Products		Corporate /
	Welding		Welding		Group		Eliminations		Consolidated
Three Months Ended March 31, 2025
Net sales	$	653,107	$	219,061	$	132,220	$	—	$	1,004,388
Inter-segment sales		30,372		6,832		3,984		(41,188)		—
Total		683,479		225,893		136,204		(41,188)		1,004,388
Cost of goods sold		417,700		163,442		97,974		(40,176)		638,940
Gross profit		265,779		62,451		38,230		(1,012)		365,448
Other segment expenses⁽³⁾		143,716		40,851		14,079		1,440		200,086
EBIT		122,063		21,600		24,151		(2,452)		165,362
Special items charge ⁽¹⁾		2,135		1,412		178		802		4,527
Adjusted EBIT	$	124,198	$	23,012	$	24,329	$	(1,650)	$	169,889
Special items charge ⁽¹⁾										(4,527)
Interest income										2,255
Interest expense										(14,382)
Income before income taxes									$	153,235

Total assets	$	2,445,066	$	1,093,775	$	388,804	$	(302,571)	$	3,625,074
Capital expenditures		21,766		3,608		1,575		—		26,949
Depreciation and amortization		16,114		5,378		2,663		(371)		23,784

Three Months Ended March 31, 2024
Net sales	$	624,099	$	235,761	$	121,337	$	—	$	981,197
Inter-segment sales		29,978		8,408		3,093		(41,479)		—
Total		654,077		244,169		124,430		(41,479)		981,197
Cost of goods sold		388,605		175,047		90,730		(41,584)		612,798
Gross profit		265,472		69,122		33,700		105		368,399
Other segment expenses⁽³⁾		129,372		44,415		15,358		11,945		201,090
EBIT	$	136,100	$	24,707	$	18,342	$	(11,840)	$	167,309
Special items charge ⁽²⁾		—		3,069		1,536		1,762		6,367
Adjusted EBIT	$	136,100	$	27,776	$	19,878	$	(10,078)	$	173,676
Special items charge ⁽²⁾										(6,367)
Interest income										3,221
Interest expense										(12,000)
Income before income taxes									$	158,530

Total assets	$	2,354,812	$	987,321	$	353,485	$	(315,901)	$	3,379,717
Capital expenditures		21,853		3,423		980		—		26,256
Depreciation and amortization		14,086		5,313		2,426		(239)		21,586

(1)

In the three months ended March 31, 2025, special items primarily include Rationalization and asset impairment net charges of $2,135, $1,552 and $178 in Americas Welding, International Welding and The Harris Products Group, respectively, as discussed in Note 6 and Acquisition transaction costs of $802 in Corporate/Eliminations.

(2)

In the three months ended March 31, 2024, special items include Rationalization and asset impairment net charges of $3,069 and $1,536 in International Welding and The Harris Products Group, respectively, as discussed in Note 6 and Acquisition transaction costs of $1,762 in Corporate/Eliminations.

(3)

Other segment expenses primarily include:

Selling, general & administrative expenses – including bonus and research and development expenses.

Rationalization and asset impairment net charges – refer to Note 6 for further discussion.

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LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

NOTE 6 — RATIONALIZATION AND ASSET IMPAIRMENTS

The Company has rationalization plans within International Welding, Americas Welding and The Harris Products Group. The plans impacted headcount and included the consolidation of manufacturing facilities to better align with the cost structure, economic conditions and operating needs of the business. As a result of these plans, in the three months ended March 31, 2025, the Company recorded Rationalization and asset impairment net charges of $2,135 in Americas Welding, $1,552 in International Welding and $178 in The Harris Products Group. In the three months ended March 31, 2024, the Company recorded Rationalization and asset impairment net charges of $3,069 in International Welding and $1,536 in The Harris Products Group.

At March 31, 2025 and December 31, 2024, rationalization liabilities of $7,598 and $14,146, respectively, were recognized in Other current liabilities in the Company’s Condensed Consolidated Balance Sheet. The Company does not anticipate significant additional charges related to the completion of these plans.

The Company believes the rationalization actions will positively impact future results of operations and will not have a material effect on liquidity and sources and uses of capital. The Company continues to evaluate its cost structure and additional rationalization actions may result in charges in future periods.

The following table summarizes the activity related to rationalization liabilities for the three months ended March 31, 2025:


	Americas		International		The Harris Products
	Welding		Welding		Group		Consolidated
Balance at December 31, 2024	$	5,628	$	7,562	$	956	$	14,146
Payments and other adjustments		(6,693)		(2,974)		(746)		(10,413)
Charged to expense		2,135		1,552		178		3,865
Balance at March 31, 2025	$	1,070	$	6,140	$	388	$	7,598

NOTE 7 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI")

The following tables set forth the total changes in AOCI by component, net of taxes:


	Three Months Ended March 31, 2025
	Unrealized gain
	(loss) on derivatives
	designated and		Defined benefit		Currency
	qualifying as cash		pension plan		translation
	flow hedges		activity		adjustment		Total
Balance at December 31, 2024	$	17,255	$	(1,048)	$	(316,342)	$	(300,135)
Other comprehensive income before reclassification		1,148		—		29,679		30,827
Amounts reclassified from AOCI		(319)		(1,285)		—		(1,604)
Net current-period other comprehensive income (loss)		829		(1,285)		29,679		29,223
Balance at March 31, 2025	$	18,084	$	(2,333)	$	(286,663)	$	(270,912)

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LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts


	Three Months Ended March 31, 2024
	Unrealized gain
	(loss) on derivatives
	designated and		Defined benefit		Currency
	qualifying as cash		pension plan		translation
	flow hedges		activity		adjustment		Total
Balance at December 31, 2023	$	16,536	$	(1,996)	$	(244,387)	$	(229,847)
Other comprehensive income (loss) before reclassification		4,528		—		(13,395)		(8,867)
Amounts reclassified from AOCI		(813)		73		—		(740)
Net current-period other comprehensive income (loss)		3,715		73		(13,395)		(9,607)
Balance at March 31, 2024	$	20,251	$	(1,923)	$	(257,782)	$	(239,454)

NOTE 8 — INVENTORIES

Inventories in the Condensed Consolidated Balance Sheets are comprised of the following components:



	March 31, 2025		December 31, 2024
Raw materials	$	162,629	$	153,596
Work-in-process		120,963		123,406
Finished goods		290,737		267,035
Total	$	574,329	$	544,037

At both March 31, 2025 and December 31, 2024, approximately 35% of total inventories were valued using the last-in, first-out ("LIFO") method. The excess of current cost over LIFO cost was $122,394 and $120,633 at March 31, 2025 and December 31, 2024, respectively.

NOTE 9 — LEASES

The table below summarizes the right-of-use assets and lease liabilities in the Company’s Condensed Consolidated Balance sheets:


Operating Leases	Balance Sheet Classification	March 31, 2025		December 31, 2024
Right-of-use assets	Other assets	$	51,324	$	54,276

Current liabilities	Other current liabilities	$	12,833	$	13,110
Noncurrent liabilities	Other liabilities		39,445		42,124
Total lease liabilities		$	52,278	$	55,234

Total lease expense, which is included in Cost of goods sold and Selling, general & administrative expenses in the Company’s Consolidated Statements of Income, was $5,890 and $6,161 in the three months ended March 31, 2025 and 2024, respectively. Cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2025 and 2024, was $2,552 and $4,049, respectively, are included in Net cash provided by operating activities in the Company’s Consolidated Statements of Cash Flows. Right-of-use assets obtained in exchange for operating lease liabilities during the three months ended March 31, 2025 and 2024 were $254 and $3,546, respectively.

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LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

The total future minimum lease payments for noncancelable operating leases were as follows:


	March 31, 2025
2025	$	12,241
2026		12,499
2027		9,909
2028		8,125
2029		5,411
After 2029		11,576
Total lease payments	$	59,761
Less: Imputed interest		7,483
Operating lease liabilities	$	52,278

As of March 31, 2025 the weighted average remaining lease term is 6.3 years and the weighted average discount rate used to determine the operating lease liability is 3.7%.

NOTE 10 — DEBT

At March 31, 2025 and December 31, 2024, debt consisted of the following:



			March 31, 2025		December 31, 2024
Long-term debt	Interest Rate
Senior Unsecured Notes
2015 Notes - Series A due August 20, 2025	3.15	%	$	100,000	$	100,000
2015 Notes - Series B due August 20, 2030	3.35	%		100,000		100,000
2015 Notes - Series C due April 1, 2035	3.61	%		50,000		50,000
2015 Notes - Series D due April 1, 2045	4.02	%		100,000		100,000
2016 Notes - Series A due October 20, 2028	2.75	%		100,000		100,000
2016 Notes - Series B due October 20, 2033	3.03	%		100,000		100,000
2016 Notes - Series C due October 20, 2037	3.27	%		100,000		100,000
2016 Notes - Series D due October 20, 2041	3.52	%		50,000		50,000
2024 Notes - Series A due August 22, 2029	5.55	%		75,000		75,000
2024 Notes - Series B due August 22, 2031	5.62	%		75,000		75,000
2024 Notes - Series C due June 20, 2034	5.74	%		400,000		400,000
Other borrowings due through 2030	Variable⁽¹⁾			9		10
				1,250,009		1,250,010
Plus interest rate swap adjustment				3,186		3,355
Less current portion				100,004		100,004
Less debt issuance costs				2,718		2,810
Long-term debt, less current portion				1,150,473		1,150,551
Short-term debt
Amounts due to banks	Variable⁽²⁾			9,616		10,520
Current portion long-term debt				100,004		100,004
Total short-term debt				109,620		110,524
Total debt			$	1,260,093	$	1,261,075

(1)

Interest rate was 7.97% at both March 31, 2025 and December 31, 2024.

(2)

Weighted average interest rate of other borrowings related to liquidity needs in a hyperinflationary country was 44.8% and 47.8% as of March 31, 2025 and December 31, 2024, respectively.

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LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

Senior Unsecured Notes

As of March 31, 2025, the Company’s total weighted average effective interest rate and remaining weighted average tenure of the senior unsecured notes is 4.08%, including the impact from terminated swap agreements, and 8.7 years, respectively. The senior unsecured notes contain certain affirmative and negative covenants. As of March 31, 2025, the Company was in compliance with all of its debt covenants relating to the senior unsecured notes.

Revolving Credit Agreements

On June 20, 2024, the Company entered into a $1 billion revolving credit facility, which may be increased, subject to certain conditions including the consent of its lenders, by an additional amount up to $300,000. The revolving credit facility matures on June 20, 2029. The revolving credit facility will initially bear interest on outstanding borrowings at a per annum rate equal to secured overnight finance rate (“SOFR”) plus 1.10% and could fluctuate based on the Company’s total net leverage ratio at a spread ranging from SOFR plus 1.10% to SOFR plus 1.60%. The financial covenants consist of a maximum net leverage ratio of 3.5x EBITDA and a minimum interest coverage ratio of 2.5x EBITDA. The revolving credit facility contains customary representations and warranties, as well as customary affirmative, negative and financial covenants for credit facilities of this type (subject to negotiated baskets and exceptions), including limitations on the Company and its subsidiaries with respect to liens, investments, distributions, mergers and acquisitions, dispositions of assets and transactions with affiliates. As of March 31, 2025, the Company was in compliance with all of its covenants and had no outstanding borrowings under the revolving credit facility.

The Company has other lines of credit and debt agreements totaling $31,457. As of March 31, 2025, the Company was in compliance with all of its covenants and had outstanding debt under short-term lines of credit of $4,391.

Fair Value of Debt

At March 31, 2025 and December 31, 2024, the fair value of long-term debt, including the current portion, was approximately $1,200,149 and $1,184,313, respectively. The approximate fair value of the Company’s long-term debt, including current maturities, was based on a valuation model using Level 2 observable inputs using available market information and methodologies requiring judgment. The carrying value of this debt at such dates was $1,250,477 and $1,250,555, respectively. Since judgment is required in interpreting market information, the fair value of the debt is not necessarily the amount which could be realized in a current market exchange.

NOTE 11 — INCOME TAXES

The Company recognized $34,748 of tax expense on pretax income of $153,235, resulting in an effective income tax rate of 22.7% for the three months ended March 31, 2025. The effective income tax rate was 22.2% for the three months ended March 31, 2024.

The effective tax rate was higher for the three months ended March 31, 2025, as compared with the same period in 2024, primarily due to mix of earnings and discrete tax items.

NOTE 12 — DERIVATIVES

The Company uses derivative instruments to manage exposures to currency exchange rates, interest rates and commodity prices arising in the normal course of business. Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable. Hedge ineffectiveness was immaterial in the three months ended March 31, 2025 and 2024.

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LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. None of the concentrations of risk with any individual counterparty was considered significant at March 31, 2025. The Company does not expect any counterparties to fail to meet their obligations.

Cash Flow Hedges

Certain foreign currency forward contracts are qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of these short-term contracts was $88,276 and $96,444 at March 31, 2025 and December 31, 2024, respectively.

The Company had interest rate forward starting swap agreements that were qualified and designated as cash flow hedges that were terminated during 2024. Upon termination of the contracts in 2024, the company had a gain of $25,852 recorded in AOCI that will be amortized to Interest expense, net over the life of the associated debt.

Net Investment Hedges

The Company has foreign currency forward contracts that qualify and are designated as net investment hedges. The dollar equivalent gross notional amount of these contracts was $354,894 and $319,450 at March 31, 2025 and December 31, 2024, respectively.

Derivatives Not Designated as Hedging Instruments

The Company has certain foreign exchange forward contracts that are not designated as hedges. These derivatives are held as economic hedges of certain balance sheet exposures. The dollar equivalent gross notional amount of these contracts was $380,684 and $421,754 at March 31, 2025 and December 31, 2024, respectively.

Fair values of derivative instruments in the Company’s Condensed Consolidated Balance Sheets consisted of the following:


	March 31, 2025								December 31, 2024
	Other		Other						Other		Other
	Current		Current		Other		Other		Current		Current		Other		Other
Derivatives by hedge designation	Assets		Liabilities		Assets		Liabilities		Assets		Liabilities		Assets		Liabilities
Designated as hedging instruments:
Foreign exchange contracts	$	1,131	$	822	$	—	$	—	$	1,663	$	2,972	$	—	$	—
Net investment contracts		—		8,479		—		—		10,276		—		—		—
Not designated as hedging instruments:
Foreign exchange contracts		893		1,330		—		—		1,560		4,251		—		—
Total derivatives	$	2,024	$	10,631	$	—	$	—	$	13,499	$	7,223	$	—	$	—

The effects of undesignated derivative instruments on the Company’s Consolidated Statements of Income consisted of the following:


		Three Months Ended March 31,
Derivatives by hedge designation	Classification of gain (loss)	2025		2024
Not designated as hedges:
Foreign exchange contracts	Selling, general & administrative expenses	$	8,333	$	(1,615)

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LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

The effects of designated hedges on AOCI consisted of the following:



Total gain (loss) recognized in AOCI, net of tax	March 31, 2025		December 31, 2024
Foreign exchange contracts	$	394	$	(812)
Forward starting swap agreements		17,690		18,067
Net investment contracts		13,583		20,403

The Company expects a gain of $394 related to existing contracts to be reclassified from AOCI, net of tax, to earnings over the next 12 months as the hedged transactions are realized.

The effects of designated hedges on the Company’s Consolidated Statements of Income consisted of the following:


		Three Months Ended March 31,
	(Loss) gain recognized in the
Derivative type	Consolidated Statements of Income:	2025		2024
Foreign exchange contracts	Sales	$	(713)	$	839
	Cost of goods sold		361		232
Commodity contracts	Cost of goods sold		—		2
Forward starting swap agreements	Interest expense, net		689		—

NOTE 13 - FAIR VALUE

The following table provides a summary of assets and liabilities as of March 31, 2025, measured at fair value on a recurring basis:


			Quoted Prices in
			Active Markets for
			Identical Assets or		Significant Other		Significant
	Balance as of		Liabilities		Observable Inputs		Unobservable
Description	March 31, 2025		(Level 1)		(Level 2)		Inputs (Level 3)
Assets:
Foreign exchange contracts	$	2,024	$	—	$	2,024	$	—
Pension surplus		23,691		23,691		—		—
Total assets	$	25,715	$	23,691	$	2,024	$	—
Liabilities:
Foreign exchange contracts	$	2,152	$	—	$	2,152	$	—
Net investment contracts		8,479		—		8,479		—
Deferred compensation		53,356		—		53,356		—
Total liabilities	$	63,987	$	—	$	63,987	$	—

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LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

The following table provides a summary of assets and liabilities as of December 31, 2024, measured at fair value on a recurring basis:


			Quoted Prices in
			Active Markets for
			Identical Assets or		Significant Other		Significant
	Balance as of		Liabilities		Observable Inputs		Unobservable
Description	December 31, 2024		(Level 1)		(Level 2)		Inputs (Level 3)
Assets:
Foreign exchange contracts	$	3,223	$	—	$	3,223	$	—
Net investment contracts		10,276		—		10,276		—
Pension Surplus		27,059		27,059		—		—
Total assets	$	40,558	$	27,059	$	13,499	$	—
Liabilities:
Foreign exchange contracts	$	7,223	$	—	$	7,223	$	—
Deferred compensation		55,425		—		55,425		—
Total liabilities	$	62,648	$	—	$	62,648	$	—

The fair value of the Company’s pension surplus assets are based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy. The pension surplus assets are invested in money market and short-term duration bond funds at March 31, 2025.

The Company’s derivative contracts are valued at fair value using the market approach. The Company measures the fair value of foreign exchange contracts and net investment contracts using Level 2 inputs based on observable spot and forward rates in active markets.

The deferred compensation liability is the Company’s obligation under its executive deferred compensation plan. The Company measures the fair value of the liability using the market values of the participants’ underlying investment fund elections.

The fair value of Cash and cash equivalents, Accounts receivable, Short-term debt excluding the current portion of Long-term debt and Trade accounts payable approximated book value due to the short-term nature of these instruments at both March 31, 2025 and December 31, 2024.

The Company has various financial instruments, including cash and cash equivalents, short and long-term debt and forward contracts. While these financial instruments are subject to concentrations of credit risk, the Company has minimized this risk by entering into arrangements with a number of major banks and financial institutions and investing in several high-quality instruments. The Company does not expect any counterparties to fail to meet their obligations.

NOTE 14 – SUPPLIER FINANCING PROGRAM

The Company’s suppliers, at the supplier’s sole discretion, are able to factor receivables due from the Company to a financial institution on terms directly negotiated with the financial institution without affecting the Company’s balance sheet classification of the corresponding payable. The Company pays the financial institution the stated amount of the confirmed invoices from its designated suppliers on the original maturity dates of the invoices. At March 31, 2025 and December 31, 2024, Trade accounts payable included $33,938 and $29,164, respectively, payable to suppliers that have elected to participate in the supplier financing program.

(1)

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except per share amounts)

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with the Company’s unaudited consolidated financial statements and other financial information included elsewhere in this Quarterly Report on Form 10-Q.

General

The Company is the world’s largest designer and manufacturer of arc welding and cutting products, manufacturing a broad line of arc welding equipment, consumable welding products and other welding and cutting products. Welding products include arc welding power sources, computer numerical control and plasma cutters, wire feeding systems, robotic welding packages, integrated automation systems, fume extraction equipment, consumable electrodes, fluxes, welding accessories and specialty welding consumables and fabrication. The Company’s product offering also includes oxy-fuel cutting systems and regulators and torches used in oxy-fuel welding, cutting and brazing. In addition, the Company has a leading global position in the brazing and soldering alloys market.

The Company’s products are sold globally. In the Americas, products are sold principally through industrial distributors, retailers and also directly to users of welding products. Outside of the Americas, the Company has an international sales organization comprised of Company employees and agents who sell products from the Company’s various manufacturing sites to distributors and product users.

The Company’s business units are aligned into three operating segments. The operating segments consist of Americas Welding, International Welding and The Harris Products Group. The Americas Welding segment includes welding operations in North and South America. The International Welding segment includes welding operations in Europe, Africa, Asia and Australia. The Harris Products Group includes the Company’s global oxy-fuel cutting, soldering and brazing businesses as well as its retail business in the United States.

In 2025, the U.S. government announced a series of tariffs on imported goods into the U.S., which prompted retaliatory actions from some of its trading partners. The Company has taken actions to address the impact of these initial trade policies and while the Company cannot predict the ultimate impact on its business, the Company will continue to monitor evolving trade negotiations to determine if additional measures are warranted.

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Results of Operations

The following table shows the Company’s results of operations:


	Three Months Ended March 31,
												Favorable (Unfavorable)
	2025						2024					2025 vs. 2024
	Amount			% of Sales			Amount			% of Sales		$			%
Net sales	$	1,004,388					$	981,197				$	23,191		2.4	%
Cost of goods sold		638,940						612,798					(26,142)		(4.3)	%
Gross profit		365,448			36.4	%		368,399		37.5	%		(2,951)		(0.8)	%
Selling, general & administrative expenses		196,665			19.6	%		198,747		20.3	%		2,082		1.0	%
Rationalization and asset impairment net charges		3,865			0.4	%		4,605		0.5	%		740		16.1	%
Operating income		164,918			16.4	%		165,047		16.8	%		(129)		(0.1)	%
Interest expense, net		12,127						8,779					(3,348)		(38.1)	%
Other income		444						2,262					(1,818)		(80.4)	%
Income before income taxes		153,235			15.3	%		158,530		16.2	%		(5,295)		(3.3)	%
Income taxes		34,748						35,115					367		1.0	%
Effective tax rate		22.7	%					22.2	%				(0.5)	%
Net income	$	118,487			11.8	%	$	123,415		12.6	%	$	(4,928)		(4.0)	%
Diluted earnings per share	$	2.10					$	2.14				$	(0.04)		(1.9)	%

Net Sales:

The following table summarizes the impact of volume, acquisitions, price and foreign currency exchange rates on Net sales on a consolidated basis:


Three Months Ended March 31,			Change in Net Sales due to:
	Net Sales											Foreign			Net Sales
	2024		Volume			Price			Acquisitions			Exchange			2025
Lincoln Electric Holdings, Inc.	$	981,197	$	(37,601)		$	25,731		$	48,142		$	(13,081)		$	1,004,388
% Change
Lincoln Electric Holdings, Inc.				(3.8)	%		2.6	%		4.9	%		(1.3)	%		2.4	%

Net sales increased for the three months ended March 31, 2025 primarily due to a benefit from acquisitions, partially offset by a decrease in organic sales due to softer demand and an unfavorable foreign exchange impact.

Gross Profit:

Gross profit as a percentage of sales decreased 1.1% for the three months ended March 31, 2025 as compared to the same 2024 period, driven by unfavorable impact from acquisitions and operational inefficiencies. The three months ended March 31, 2025 includes a last-in, first-out (“LIFO”) charge of $1,761, as compared with a benefit of $531 in the comparable 2024 period.

Selling, General & Administrative ("SG&A") Expenses:

SG&A expenses decreased in the three months ended March 31, 2025 as compared to the same 2024 period, primarily due to reductions in employee costs partially offset by acquisitions.

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Operating Income:

Operating income as a percentage of sales was 16.4% for the three months ended March 31, 2025 as compared to 16.8% in the prior year period. Excluding special items, Operating income as a percentage of sales was 16.9% for the three months ended March 31, 2025 as compared to 17.5% in the prior year period. Refer to explanations above for additional details. Also refer to Non-GAAP Financial Measures for a reconciliation of Adjusted operating income.

Income Taxes:

The effective tax rate was higher for the three months ended March 31, 2025 as compared to the same period in 2024, primarily due to mix of earnings and discrete tax items.

Segment Results

The following table presents components of sales by segment:


Three Months Ended March 31,			Change in Net Sales due to:
	Net Sales											Foreign			Net Sales
	2024		Volume ⁽¹⁾			Price ⁽²⁾			Acquisitions ⁽³⁾			Exchange			2025
Operating Segments
Americas Welding	$	624,099	$	(24,740)		$	13,369		$	47,327		$	(6,948)		$	653,107
International Welding		235,761		(13,648)			828			815			(4,695)			219,061
The Harris Products Group		121,337		787			11,534			—			(1,438)			132,220

% Change
Americas Welding				(4.0)	%		2.1	%		7.6	%		(1.1)	%		4.6	%
International Welding				(5.8)	%		0.4	%		0.3	%		(2.0)	%		(7.1)	%
The Harris Products Group				0.6	%		9.5	%		—			(1.2)	%		9.0	%

(1)

Decrease for the three months ended March 31, 2025 for Americas Welding and International Welding due to softer demand.

(2)

Increase for all the segments due to price actions taken in response to higher input costs.

(3)

Increase for Americas Welding and International Welding due to the acquisitions discussed in Note 4 to the consolidated financial statements.

Segment performance is measured and resources are allocated based on a number of factors, the primary measure being the Adjusted EBIT profit measure. EBIT is defined as Operating income plus Other (expense) income. EBIT is adjusted for special items as determined by management such as the impact of rationalization activities, certain asset impairment charges and gains or losses on disposals of assets.

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The following table presents Adjusted EBIT by segment:


							Favorable (Unfavorable)
	Three Months Ended March 31,						2025 vs. 2024
	2025			2024			$		%
Americas Welding:
Net sales	$	653,107		$	624,099		$	29,008	4.6	%
Inter-segment sales		30,372			29,978			394	1.3	%
Total Sales	$	683,479		$	654,077			29,402	4.5	%
Adjusted EBIT ⁽⁴⁾	$	124,198		$	136,100			(11,902)	(8.7)	%
As a percent of total sales ⁽¹⁾		18.2	%		20.8	%			(2.6)	%
International Welding:
Net sales	$	219,061		$	235,761			(16,700)	(7.1)	%
Inter-segment sales		6,832			8,408			(1,576)	(18.7)	%
Total Sales	$	225,893		$	244,169			(18,276)	(7.5)	%
Adjusted EBIT ⁽⁵⁾	$	23,012		$	27,776			(4,764)	(17.2)	%
As a percent of total sales ⁽²⁾		10.2	%		11.4	%			(1.2)	%
The Harris Products Group:
Net sales	$	132,220		$	121,337			10,883	9.0	%
Inter-segment sales		3,984			3,093			891	28.8	%
Total Sales	$	136,204		$	124,430			11,774	9.5	%
Adjusted EBIT ⁽⁶⁾	$	24,329		$	19,878			4,451	22.4	%
As a percent of total sales⁽³⁾		17.9	%		16.0	%			1.9	%
Corporate / Eliminations:
Inter-segment sales	$	(41,188)		$	(41,479)			291	0.7	%
Adjusted EBIT ⁽⁷⁾		(1,650)			(10,078)			8,428	83.6	%
Consolidated:
Net sales	$	1,004,388		$	981,197			23,191	2.4	%
Net income	$	118,487		$	123,415			(4,928)	(4.0)	%
As a percent of total sales		11.8	%		12.6	%			(0.8)	%
Adjusted EBIT ⁽⁸⁾	$	169,889		$	173,676			(3,787)	(2.2)	%
As a percent of sales		16.9	%		17.7	%			(0.8)	%

(1)

Decrease for the three months ended March 31, 2025 as compared to March 31, 2024 primarily driven by the unfavorable impact of lower volumes and the impact of acquisitions.

(2)

Decrease for the three months ended March 31, 2025 as compared to March 31, 2024 primarily driven by the unfavorable impact of lower volumes.

(3)

Increase for the three months ended March 31, 2025 as compared to March 31, 2024 primarily reflects effective cost management and operational improvements.

(4)

The three months ended March 31, 2025 exclude Rationalization and asset impairment net charges of $2,135 as discussed in Note 6.

(5)

The three months ended March 31, 2025 exclude Rationalization and asset impairment net charges of $1,552 as discussed in Note 6. The three months ended March 31, 2024 exclude Rationalization and asset impairment net charges of $3,069 as discussed in Note 6.

(6)

The three months ended March 31, 2025 exclude Rationalization and asset impairment net charges of $178 as discussed in Note 6. The three months ended March 31, 2024 exclude Rationalization and asset impairment net charges of $1,536 as discussed in Note 6.

(7)

The three months ended March 31, 2025 exclude acquisition transaction costs of $802 as discussed in Note 4. The three months ended March 31, 2024 exclude acquisition transaction costs of $1,762.

(8)

See non-GAAP Financial Measures for a reconciliation of Net income as reported and Adjusted EBIT.

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Non-GAAP Financial Measures

The Company reviews Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate, Adjusted diluted earnings per share (“EPS”), Adjusted return on invested capital (“Adjusted ROIC”), Adjusted net operating profit after taxes, Cash conversion and Organic sales, all non-GAAP financial measures, in assessing and evaluating the Company’s underlying operating performance. These non-GAAP financial measures exclude the impact of special items on the Company’s reported financial results. Non-GAAP financial measures should be read in conjunction with the generally accepted accounting principles in the United States ("GAAP") financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures.

The following table presents the reconciliations of Operating income as reported to Adjusted operating income, Net income as reported to Adjusted net income and Adjusted EBIT, Effective tax rate as reported to Adjusted effective tax rate and Diluted earnings per share as reported to Adjusted diluted earnings per share:


	Three Months Ended March 31,
	2025			2024
Operating income as reported	$	164,918		$	165,047
Special items (pre-tax):
Rationalization and asset impairment charges ⁽¹⁾		3,865			4,605
Acquisition transaction costs ⁽²⁾		802			1,762
Amortization of step up in value of acquired inventories ⁽³⁾		(140)			—
Adjusted operating income	$	169,445		$	171,414
As a percentage of net sales		16.9	%		17.5	%

Net income as reported	$	118,487		$	123,415
Special items:
Rationalization and asset impairment charges ⁽¹⁾		3,865			4,605
Acquisition transaction costs ⁽²⁾		802			1,762
Amortization of step up in value of acquired inventories ⁽³⁾		(140)			—
Tax effect of Special items ⁽⁴⁾		(1,158)			(1,126)
Adjusted net income		121,856			128,656
Interest expense, net		12,127			8,779
Income taxes as reported		34,748			35,115
Tax effect of Special items⁽⁴⁾		1,158			1,126
Adjusted EBIT	$	169,889		$	173,676
Effective tax rate as reported		22.7	%		22.2	%
Net special item tax impact		0.1	%		(0.2)	%
Adjusted effective tax rate		22.8	%		22.0	%
Diluted earnings per share as reported	$	2.10		$	2.14
Special items per share		0.06			0.09
Adjusted diluted earnings per share	$	2.16		$	2.23

(1)

Primarily related to restructuring activities as discussed in Note 6 to the consolidated financial statements.

(2)

Transaction costs related to acquisitions which are included in Selling, general & administrative expenses.

(3)

Costs related to acquisitions which are included in Cost of goods sold.

(4)

Includes the net tax impact of Special Items recorded during the respective periods. 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.

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Liquidity and Capital Resources

Overview

The Company’s primary sources of liquidity are operating cash flows and revolving credit facilities. As of March 31, 2025, the Company had $394,705 of cash and cash equivalents on hand and $4,391 of outstanding borrowings under its $1,031,457 revolving credit facilities.

The Company’s capital allocation priorities include internal investment to support existing operations and organic growth, investment in acquisitions to grow the business and then returning capital to shareholders through dividends and share repurchases.

The Company’s cash flow from operations can be cyclical. In assessing liquidity, the Company reviews working capital measurements to define areas for improvement. Management anticipates the Company will be able to satisfy cash requirements for its ongoing businesses for the foreseeable future primarily with cash generated by operations, existing cash balances, borrowings under its existing credit facilities and raising debt in capital markets.

The Company continues to expand globally and periodically consider acquisitions that would involve significant investments. The Company can fund its global expansion plans with operational cash flow, but a significant acquisition may require access to capital markets, in particular, the long-term debt market, as well as the syndicated bank loan market. The Company’s financing strategy is to fund itself at the lowest after-tax cost of funding. Where possible, the Company utilizes operational cash flows and raises capital in the most efficient market, usually the United States, and then lends funds to the specific subsidiary needing or requiring funding. If additional acquisitions providing appropriate financial benefits become available, additional expenditures may be made.

Cash Flow

The following table reflects changes in key cash flow measures:


	Three Months Ended March 31,
	2025		2024		$ Change
Cash provided by operating activities⁽¹⁾	$	185,693	$	133,294	$	52,399
Cash used by investing activities		(22,303)		(25,940)		3,637
Capital expenditures		(26,949)		(26,256)		(693)
Cash used by financing activities⁽²⁾		(144,488)		(125,400)		(19,088)
(Payments on) proceeds from short-term borrowings		(904)		2,016		(2,920)
Purchase of shares for treasury		(106,694)		(110,405)		3,711
Cash dividends paid to shareholders		(42,975)		(41,280)		(1,695)
Increase (decrease) in Cash and cash equivalents		17,443		(18,809)		36,252

(1)

Cash provided by operating activities increased for the three months ended March 31, 2025, compared with the three months ended March 31, 2024 primarily due to improved working capital.

(2)

Cash used by financing activities increased for the three months ended March 31, 2025, compared with the three months ended March 31, 2024 primarily due to a decrease in proceeds from exercise of stock options.

As of March 31, 2025, the Company had cash of $394,705, of which $298,917 was held by international subsidiaries.

In April 2025, the Company paid a cash dividend of $0.75 per share, or $41,870, to shareholders of record on March 31, 2025.

The Company currently anticipates capital expenditures of $100,000 to $120,000 in 2025. Anticipated capital expenditures include investments to increase capacity, improve operational effectiveness and for general maintenance.

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Management critically evaluates all proposed capital expenditures and expects each project to increase efficiency, reduce costs, support sales growth or improve the overall safety and environmental conditions of the Company’s facilities.

Revolving Credit Agreements

On June 20, 2024, the Company entered into a $1 billion revolving credit facility. The revolving credit facility matures on June 20, 2029. As of March 31, 2025, the Company had $1 billion of availability under the revolving credit facility. Additionally, the Company has other lines of credit with total availability of $27,066 as of March 31, 2025. Refer to Note 10 for further information on our revolving credit agreements.

Working Capital Ratios


	March 31, 2025		December 31, 2024		March 31, 2024
Average operating working capital to Net sales ⁽¹⁾	17.8	%	16.9	%	18.8	%
Days sales in Inventories	115.7		106.0		120.5
Days sales in Accounts receivable	50.5		46.9		53.6
Average days in Trade accounts payable	58.6		45.8		54.9

(1)

Average operating working capital to net sales is defined as the sum of Accounts receivable, Inventories and contract assets less Trade accounts payable and contract liabilities as of period end divided by annualized rolling three months of Net sales.

Stock Repurchase Program

On February 12, 2020, the Company’s Board authorized a share repurchase program for up to 10 million shares of the Company’s common stock. As of March 31, 2025, there were 6.2 million shares available under the authorization. The Company is not obligated to make any repurchases.

Rationalization and Asset Impairments

Refer to Note 6 to the consolidated financial statements for a discussion of the Company’s rationalization plans. The Company believes the rationalization actions will positively impact future results of operations and will not have a material effect on liquidity and sources and uses of capital.

Acquisitions

Refer to Note 4 to the consolidated financial statements for a discussion of the Company’s recent acquisitions.

Return on Invested Capital

The Company reviews ROIC in assessing and evaluating the Company’s underlying operating performance. As discussed in the Non-GAAP Financial Measures section above, Adjusted ROIC is a non-GAAP financial measure that the Company believes is a meaningful metric to investors in evaluating the Company’s financial performance. The calculation may be different than the method used by other companies to calculate ROIC. Adjusted ROIC is defined as rolling 12 months of Adjusted net income excluding tax-effected interest income and expense divided by invested capital. Invested capital is defined as total debt, which includes Short-term debt and Long-term debt, less current portions, plus Total equity.

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The following table presents the reconciliations of ROIC and Adjusted ROIC to net income:


	Twelve Months Ended March 31,
	2025			2024
Net income as reported	$	461,180		$	546,733
Plus: Interest expense (after-tax)		41,450			36,519
Less: Interest income (after-tax)		6,868			6,793
Net operating profit after taxes	$	495,762		$	576,459
Special items:
Rationalization and asset impairment net charges		55,120			(7,586)
Acquisition transaction costs		6,085			1,762
Pension settlement charges		3,792			845
Amortization of step up in value of acquired inventories		4,883			8,397
Loss on asset disposal		4,950			—
Tax effect of Special items ⁽¹⁾		(11,545)			2,228
Adjusted net operating profit after taxes	$	559,047		$	582,105

Invested Capital	March 31, 2025			March 31, 2024
Short-term debt	$	109,620		$	4,720
Long-term debt, less current portion		1,150,473			1,102,677
Total debt		1,260,093			1,107,397
Total equity		1,340,170			1,307,828
Invested capital	$	2,600,263		$	2,415,225

Return on invested capital as reported		19.1	%		23.9	%
Adjusted return on invested capital		21.5	%		24.1	%

(1)

Includes the net tax impact of Special items recorded during the respective periods. 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.

New Accounting Pronouncements

Refer to Note 1 to the consolidated financial statements for a discussion of new accounting pronouncements.

Forward-looking Statements

The Company’s expectations and beliefs concerning the future contained in this report 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, financial 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 acquisitions; 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, including but not limited to, the ongoing conflicts between Russia and Ukraine and in the Middle East, political unrest, acts of terror, natural disasters and pandemics on the Company or its customers, suppliers and the economy in general. For additional discussion, see “Item 1A. Risk Factors” presented herein, as well as in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the Company’s exposure to market risk since December 31, 2024. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of March 31, 2025.

Changes in Internal Control Over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2025 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is subject, from time to time, to a variety of civil and administrative proceedings arising out of its normal operations, including, without limitation, product liability claims, regulatory claims and health, safety and environmental claims. Among such proceedings are the cases described below.

As of March 31, 2025, the Company was a co-defendant in cases alleging asbestos induced illness involving claims by approximately 1,261 plaintiffs, which is a net decrease of 39 claims from those previously reported. In each instance, the Company is one of a large number of defendants. The asbestos claimants seek compensatory and punitive damages, in most cases for unspecified sums. Since January 1, 1995, the Company has been a co-defendant in asbestos cases that have been resolved as follows: 57,122 of those claims were dismissed, 23 were tried to defense verdicts, 7 were tried to plaintiff verdicts (which were reversed or resolved after appeal), 1 was resolved by agreement for an immaterial amount and 1,020 were decided in favor of the Company following summary judgment motions.

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ITEM 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and the Risk Factor described below, which could materially affect the Company’s business, financial condition or future results.

General economic, financial and market conditions may adversely affect our financial condition, results of operations and access to capital markets.

Our operating results are sensitive to changes in general economic conditions. Recessionary economic cycles, global supply chain disruptions, higher logistics costs, higher interest rates, inflation, higher raw materials costs, higher labor costs, trade barriers in the world markets, financial turmoil related to sovereign debt and changes in tax laws or trade laws or other economic factors and other challenges affecting the countries and industries in which we do business, including, but not limited to, the ongoing conflicts between Russia and Ukraine and in the Middle East, could adversely affect demand for our products. An adverse change in demand could impact our results of operations, collection of accounts receivable and our expected cash flow generation from current and acquired businesses, which may adversely affect our financial condition, results of operations and access to capital markets.

In 2025, the U.S. government announced a series of tariffs on imported goods into the U.S., which prompted retaliatory actions from some of its trading partners. We have taken actions to address the impact of these initial trade policies and will continue to monitor evolving trade negotiations to determine if additional measures are warranted. While we cannot predict the ultimate impact on our business and potential additional U.S. tariffs and retaliatory actions by other countries remain unknown, the impacts could adversely affect our financial condition, results of operations and access to capital markets.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer purchases of its common shares during the first quarter of 2025 were as follows:


					Total Number of
					Shares	Maximum Number
					Repurchased	of Shares that May
	Total Number of				as Part of Publicly	Yet be Purchased
	Shares		Average Price		Announced Plans or	Under the Plans or
Period	Repurchased		Paid Per Share		Programs	Programs ⁽²⁾
January 1 - 31, 2025	130,719	⁽¹⁾		$ 191.92	130,245	6,551,864
February 1 - 28, 2025	130,991	⁽¹⁾		203.47	117,227	6,434,637
March 1 - 31, 2025	280,582	⁽¹⁾		195.86	264,212	6,170,425
Total	542,292			$ 196.75	511,684

(1)

The above share repurchases include the surrender of the Company’s common shares in connection with the vesting of restricted awards.

(2)

On February 12, 2020, the Company’s Board of Directors authorized a new share repurchase program for up to an additional 10 million shares of the Company’s common stock. Total shares purchased through the share repurchase programs were 3.8 million shares at a total cost of $685.0 million for a weighted average cost of $178.86 per share through March 31, 2025.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 5. OTHER INFORMATION

During the quarter ended March 31, 2025, none of the Company’s directors or officers adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408(a) of Regulation S-K.

ITEM 6. EXHIBITS

(a)

Exhibits




10.1*	Form of Stock Option Agreement for Executive Officers (filed herewith).
10.2*	Form of Restricted Stock Unit Agreement for Executive Officers (filed herewith).
10.3*	Form of Performance Share Award Agreement for Executive Officers (filed herewith).
31.1	Certification of the Chair, President and Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
31.2	Certification of the Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
32.1	Certification of the Chair, President and Chief Executive Officer (Principal Executive Officer) and Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

101.INS	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
104	Cover page Interactive Data File (formatted as Inline XBRL and contained in the Exhibit 101 attachments)
	Inline XBRL Taxonomy Extension Label Linkbase Document

* Reflects management contract or other compensatory arrangement required to be filed as an exhibit pursuant to Item 15(b) of this report

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		LINCOLN ELECTRIC HOLDINGS, INC.

		/s/ Gabriel Bruno
		Gabriel Bruno
		Executive Vice President, Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)
		April 30, 2025