Lincoln Electrical Stories Fourth Quarter and Full Yr 2020 Outcomes Nasdaq:LECO

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Lincoln Electric Reports Fourth Quarter and Full Year 2020 Results Nasdaq:LECO

Fourth Quarter 2020 Highlights

  • Net sales decline 5.8% to $693.8 million on 5.6% lower organic sales
     
  • Operating income margin of 12.0%; Adjusted operating income margin of 13.4%
     
  • EPS increases 4.9% to $1.08; Adjusted EPS increases 7.8% to $1.24
     
  • Record fourth quarter cash flows from operations of $135.8 million with 152% cash conversion

CLEVELAND, Feb. 12, 2021 (GLOBE NEWSWIRE) — Lincoln Electric Holdings, Inc. (the “Company”) (Nasdaq: LECO) today reported fourth quarter 2020 net income of $65.1 million, or diluted earnings per share (EPS) of $1.08, which includes special item after-tax charges of $9.9 million, or $0.16 EPS. This compares with prior year period net income of $63.7 million, or $1.03 EPS, which included special item after-tax charges of $7.3 million, or $0.12 EPS. Excluding these items, fourth quarter 2020 Adjusted net income was $75.0 million, or $1.24 Adjusted EPS. This compares with Adjusted net income of $71.0 million, or $1.15 Adjusted EPS in the prior year period.

Fourth quarter 2020 sales decreased 5.8% to $693.8 million from a 5.6% decrease in organic sales and 0.2% unfavorable foreign exchange. Operating income for the fourth quarter 2020 was $83.4 million, or 12.0% of sales, including $9.5 million in rationalization charges. This compares with operating income of $82.7 million, or 11.2% of sales, in the prior year period. Excluding special items, Adjusted operating income was $92.9 million, or 13.4% of sales, as compared with $91.6 million, or 12.4% of sales, in the prior year period.

“I am proud of our organization’s outstanding teamwork during this challenging year as we have been focused on safely serving our customers with improving demand through the fourth quarter,” stated Christopher L. Mapes, Chairman, President and Chief Executive Officer. “Strong execution of our strategic initiatives and cost reduction actions generated record cash flows, strong cash conversion performance and earnings growth in the quarter while also delivering record safety and environmental performance.” Mapes continued, “Looking ahead, we are well-positioned to capitalize on growth and increase profitability and returns as we focus on achieving our long-term Higher Standard 2025 Strategy goals and superior long-term value for our stakeholders.”

Twelve Months 2020 Summary

Net income for the twelve months ended December 31, 2020 was $206.1 million, or $3.42 EPS, which includes special item after-tax charges of $43.8 million, or $0.73 EPS. This compares with prior year period net income of $293.1 million, or $4.68 EPS, which included special item after-tax net charges of $1.5 million, or $0.02 EPS. Excluding these items, Adjusted net income for the twelve months ended December 31, 2020 was $249.9 million, or $4.15 Adjusted EPS, compared with Adjusted net income of $294.6 million, or $4.70 Adjusted EPS, in the comparable 2019 period.

Sales decreased 11.6% to $2.7 billion in the twelve months ended December 31, 2020 from a 12.2% decrease in organic sales and 0.7% unfavorable foreign exchange, partially offset by a 1.3% benefit from acquisitions. Operating income for the twelve months ended December 31, 2020 was $282.1 million, or 10.6% of sales. This compares with operating income of $370.9 million, or 12.4% of sales, in the comparable 2019 period. Excluding special items, Adjusted operating income was $328.3 million, or 12.4% of sales, as compared with $387.9 million, or 12.9% of sales, in the comparable 2019 period.

Webcast Information

A conference call to discuss fourth quarter 2020 financial results will be webcast live today, February 12, 2021, at 10:00 a.m., Eastern Time.  This webcast is accessible at https://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.

If investors would like to ask questions, please dial (877) 344-3899 (domestic) or (315) 625-3087 (international) and use confirmation code 7190715. Telephone participants are asked to dial in 10 – 15 minutes prior to the start of the conference call.

Financial results for the fourth quarter 2020 can also be obtained at https://ir.lincolnelectric.com.

About Lincoln Electric

Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment and has a leading global position in brazing and soldering alloys.  Headquartered in Cleveland, Ohio, Lincoln has 55 manufacturing locations in 18 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 https://www.lincolnelectric.com.

Non-GAAP Information

Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate, Adjusted diluted earnings per share, Organic sales, Cash conversion, Return on invested capital and Earnings before interest, taxes, depreciation and amortization (“EBITDA”) 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, 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, such as political unrest, acts of terror, natural disasters and pandemics, including the current coronavirus disease (“COVID-19”) outbreak, on the Company or its customers, suppliers and the economy in general.  The Company has experienced the negative impacts of COVID-19 on its markets and operations; however, the ultimate duration and severity on the Company’s business remains unknown. Although the Company’s customers have re-opened and increased operating levels, such customers may be forced to close or limit operations should a resurgence of COVID-19 cases occur. Given this continued level of economic and operational uncertainty over the impacts of COVID-19, the ultimate financial impact cannot be reasonably estimated at this time. For additional discussion, see “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.

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

Consolidated Statements of Income

                                 
                                Fav (Unfav) to
    Three Months Ended December 31,    Prior Year
    2020     % of Sales      2019      % of Sales   $   %
Net sales   $ 693,794       100.0 % $ 736,307   100.0 % $ (42,513 )   (5.8 )%
Cost of goods sold          464,540       67.0 %        495,373   67.3 %   30,833     6.2 %
Gross profit     229,254       33.0 %   240,934   32.7 %   (11,680 )   (4.8 )%
Selling, general & administrative expenses     136,362       19.7 %   149,381   20.3 %   13,019     8.7 %
Rationalization and asset impairment charges     9,452       1.4 %   8,851   1.2 %   (601 )   (6.8 )%
Operating income     83,440       12.0 %   82,702   11.2 %   738     0.9 %
Interest expense, net     5,082       0.7 %   5,794   0.8 %   712     12.3 %
Other income (expense)     2,774       0.4 %   3,386   0.5 %   (612 )   (18.1 )%
Income before income taxes     81,132       11.7 %   80,294   10.9 %   838     1.0 %
Income taxes     16,062       2.3 %   16,578   2.3 %   516     3.1 %
Effective tax rate     19.8 %           20.6 %        0.8 %     
Net income including non-controlling interests     65,070       9.4 %   63,716   8.7 %   1,354     2.1 %
Non-controlling interests in subsidiaries’ income (loss)     (8 )               (8 )   (100.0 )%
Net income   $ 65,078       9.4 % $ 63,716   8.7 % $ 1,362     2.1 %
                                 
Basic earnings per share   $ 1.09           $ 1.04       $ 0.05     4.8 %
Diluted earnings per share   $ 1.08           $ 1.03       $ 0.05     4.9 %
Weighted average shares (basic)     59,567             60,996                 
Weighted average shares (diluted)     60,301             61,710                
                               
                              Fav (Unfav) to
    Twelve Months Ended December 31,   Prior Year
       2020   % of Sales      2019     % of Sales      $   %
Net sales   $ 2,655,400   100.0 $ 3,003,272     100.0 $ (347,872 )   (11.6 )% 
Cost of goods sold     1,784,059   67.2   1,995,685     66.5   211,626     10.6
Gross profit     871,341   32.8   1,007,587     33.5   (136,246 )   (13.5 )% 
Selling, general & administrative expenses     543,802   20.5   621,489     20.7   77,687     12.5
Rationalization and asset impairment charges     45,468   1.7   15,188     0.5   (30,280 )   (199.4 )% 
Operating income     282,071   10.6   370,910     12.4   (88,839 )   (24.0 )% 
Interest expense, net     21,973   0.8   23,415     0.8   1,442     6.2
Other income (expense)     3,942   0.1   20,998     0.7   (17,056 )   (81.2 )% 
Income before income taxes     264,040   9.9   368,493     12.3   (104,453 )   (28.3 )% 
Income taxes     57,896   2.2   75,410     2.5   17,514     23.2
Effective tax rate     21.9 %       20.5 %          (1.5 )%     
Net income including non-controlling interests     206,144   7.8   293,083     9.8   (86,939 )   (29.7 )% 
Non-controlling interests in subsidiaries’ income (loss)     29       (26 )       55     211.5
Net income   $ 206,115   7.8 $ 293,109     9.8 $ (86,994 )   (29.7 )% 
                               
Basic earnings per share   $ 3.46       $ 4.73         $ (1.27 )   (26.8 )% 
Diluted earnings per share   $ 3.42       $ 4.68         $ (1.26 )   (26.9 )% 
Weighted average shares (basic)     59,633         61,960                   
Weighted average shares (diluted)     60,248         62,658                   

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

Balance Sheet Highlights

               
Selected Consolidated Balance Sheet Data      December 31, 2020      December 31, 2019  
Cash and cash equivalents   $ 257,279   $ 199,563  
Total current assets     1,112,343     1,075,581  
Property, plant and equipment, net     522,092     529,344  
Total assets     2,314,453     2,371,213  
Total current liabilities     549,449     563,135  
Short-term debt (1)     2,734     34,969  
Long-term debt, less current portion     715,456     712,302  
Total equity     790,250     819,077  
               
Operating Working Capital   December 31, 2020   December 31, 2019  
Accounts receivable, net   $ 373,487   $ 374,649  
Inventories     381,258     393,748  
Trade accounts payable     256,530     273,002  
Operating working capital   $ 498,215   $ 495,395  
               
Average operating working capital to Net sales (2)     18.0 %     16.8 %
               
Invested Capital   December 31, 2020   December 31, 2019  
Short-term debt (1)   $ 2,734   $ 34,969  
Long-term debt, less current portion     715,456     712,302  
Total debt     718,190     747,271  
Total equity     790,250     819,077  
Invested capital   $ 1,508,440   $ 1,566,348  
               
Total debt / invested capital     47.6 %     47.7 %
(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,
    2020   2019     2020   2019
Operating income as reported   $ 83,440     $ 82,702       $ 282,071     $ 370,910  
Special items (pre-tax):                              
Rationalization and asset impairment charges (2)     9,452       8,851         45,468       15,188  
Acquisition transaction and integration costs (3)                         1,804  
Amortization of step up in value of acquired inventories (4)                   806       3,008  
Gains on asset disposals (5)                         (3,045 )
Adjusted operating income (1)   $ 92,892     $ 91,553       $ 328,345     $ 387,865  
As a percent of total sales     13.4 %     12.4 %       12.4 %     12.9 %
                           
Net income as reported   $ 65,078     $ 63,716       $ 206,115     $ 293,109  
Special items:                              
Rationalization and asset impairment charges (2)     9,452       8,851         45,468       15,188  
Acquisition transaction and integration costs (3)                         1,804  
Pension settlement charges (6)     1,597               8,119        
Amortization of step up in value of acquired inventories (4)                   806       3,008  
Gains on asset disposals (5)                         (3,554 )
Gain on change in control (7)                         (7,601 )
Tax effect of Special items (8)     (1,131 )     (1,567 )       (10,594 )     (7,386 )
Adjusted net income (1)     74,996       71,000         249,914       294,568  
Non-controlling interests in subsidiaries’ income (loss)     (8 )             29       (26 )
Interest expense, net     5,082       5,794         21,973       23,415  
Income taxes as reported     16,062       16,578         57,896       75,410  
Tax effect of Special items (8)     1,131       1,567         10,594       7,386  
Adjusted EBIT (1)   $ 97,263     $ 94,939       $ 340,406     $ 400,753  
                           
Effective tax rate as reported     19.8 %     20.6 %       21.9 %     20.5 %
Net special item tax impact     (1.1 )%     (0.2 )%       (0.4 )%     1.4 %
Adjusted effective tax rate (1)     18.7 %     20.4 %       21.5 %     21.9 %
                           
Diluted earnings per share as reported   $ 1.08     $ 1.03       $ 3.42     $ 4.68  
Special items per share     0.16       0.12         0.73       0.02  
Adjusted diluted earnings per share (1)   $ 1.24     $ 1.15       $ 4.15     $ 4.70  
                           
Weighted average shares (diluted)     60,301       61,710         60,248       62,658  
(1) Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate and Adjusted diluted earnings per share are non-GAAP financial measures. Refer to Non-GAAP Information section.
(2) Primarily related to severance, asset impairments of long-lived assets and gains or losses on the disposal of assets.
(3) Related to the acquisition of Air Liquide Welding and are included in Selling, general & administrative expenses.
(4) Related to an acquisition and are included in Cost of goods sold.
(5) Primarily included in Cost of goods sold.
(6) Related to lump sum pension payments and are included in Other income (expense).
(7) Related to the acquisition of Askaynak and is included in Other income (expense).
(8) Includes the net tax impact of Special items recorded during the respective periods, including tax benefits of $4,852 for the settlement of a tax item as well as tax deductions associated with an investment in a subsidiary in the twelve months ended December 31, 2019.
  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      2020      2019  
Net income as reported   $ 206,115     $ 293,109    
Rationalization and asset impairment charges     45,468       15,188    
Acquisition transaction and integration costs           1,804    
Pension settlement charges     8,119          
Amortization of step up in value of acquired inventories     806       3,008    
Gains on asset disposals           (3,554 )  
Gain on change in control           (7,601 )  
Tax effect of Special items (2)     (10,594 )     (7,386 )  
Adjusted net income (1)   $ 249,914     $ 294,568    
Plus: Interest expense, net of tax of $6,026 and $6,477 in 2020 and 2019, respectively     17,933       19,465    
Less: Interest income, net of tax of $500 and $631 in 2020 and 2019, respectively     1,486       1,896    
Adjusted net income before tax-effected interest   $ 266,361     $ 312,137    
               
Invested Capital   December 31, 2020   December 31, 2019  
Short-term debt   $ 2,734     $ 34,969    
Long-term debt, less current portion     715,456       712,302    
Total debt     718,190       747,271    
Total equity     790,250       819,077    
Invested capital   $ 1,508,440     $ 1,566,348    
               
Return on invested capital (1)     17.7 %     19.9 %  
                   
    Twelve Months Ended December 31,   
Total Debt / EBITDA   2020   2019  
Net income as reported   $ 206,115     $
293,109    
Income taxes     57,896       75,410    
Interest expense, net     21,973       23,415    
Depreciation and amortization     80,492       81,487    
EBITDA (1)   $ 366,476     $ 473,421    
                   
    December 31, 2020   December 31, 2019    
Total debt   $
718,190     $
747,271    
                   
Total debt / EBITDA     1.96       1.58    
                   
(1) Adjusted net income, Return on invested capital and EBITDA are non-GAAP financial measures. Refer to Non-GAAP Information section.
(2) Includes the net tax impact of Special items recorded during the respective periods, including tax benefits of $4,852 for the settlement of a tax item as well as tax deductions associated with an investment in a subsidiary in the twelve months ended December 31, 2019.
  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, 
    2020   2019
OPERATING ACTIVITIES:              
Net income   $ 65,078     $ 63,716  
Non-controlling interests in subsidiaries’ income (loss)     (8 )      
Net income including non-controlling interests     65,070       63,716  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:              
Rationalization and asset impairment charges (gains)     (92 )     2,431  
Depreciation and amortization     19,926       21,087  
Equity earnings in affiliates, net     (85 )     (161 )
Other non-cash items, net     5,214       12,203  
Changes in operating assets and liabilities, net of effects from acquisitions:              
Decrease in accounts receivable     10,433       26,291  
Decrease in inventories     26,181       24,453  
Increase in trade accounts payable     24,414       25,863  
Net change in other current assets and liabilities     (9,621 )     (51,294 )
Net change in other long-term assets and liabilities     (5,639 )     (2,070 )
NET CASH PROVIDED BY OPERATING ACTIVITIES     135,801       122,519  
             
INVESTING ACTIVITIES:              
Capital expenditures     (22,085 )     (16,064 )
Acquisition of businesses, net of cash acquired           2,018  
Proceeds from sale of property, plant and equipment     710       18  
Other investing activities     2,321        
NET CASH USED BY INVESTING ACTIVITIES     (19,054 )     (14,028 )
             
FINANCING ACTIVITIES:              
Net change in borrowings     1,375       21,889  
Proceeds from exercise of stock options     9,231       8,137  
Purchase of shares for treasury     (257 )     (70,751 )
Cash dividends paid to shareholders     (29,173 )     (28,758 )
NET CASH USED BY FINANCING ACTIVITIES     (18,824 )     (69,483 )
             
Effect of exchange rate changes on Cash and cash equivalents     6,877       3,943  
INCREASE IN CASH AND CASH EQUIVALENTS     104,800       42,951  
Cash and cash equivalents at beginning of period     152,479       156,612  
Cash and cash equivalents at end of period   $ 257,279     $ 199,563  
             
Cash dividends paid per share   $ 0.49     $ 0.47  

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

Condensed Consolidated Statements of Cash Flows

             
       Year Ended December 31, 
    2020   2019
OPERATING ACTIVITIES:              
Net income   $ 206,115     $ 293,109  
Non-controlling interests in subsidiaries’ income (loss)     29       (26 )
Net income including non-controlling interests     206,144       293,083  
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities:              
Rationalization and asset impairment net charges     21,835       3,500  
Depreciation and amortization     80,492       81,487  
Equity earnings in affiliates, net     (408 )     (1,427 )
Gain on change in control           (7,601 )
Other non-cash items, net     2,444       21,488  
Changes in operating assets and liabilities, net of effects from acquisitions:              
Decrease in accounts receivable     3,582       50,394  
Decrease (increase) in inventories     22,751       (12,023 )
Decrease in trade accounts payable     (17,919 )     (8,339 )
Net change in other current assets and liabilities     37,021       (16,954 )
Net change in other long-term assets and liabilities     (4,580 )     (423 )
NET CASH PROVIDED BY OPERATING ACTIVITIES     351,362       403,185  
             
INVESTING ACTIVITIES:              
Capital expenditures     (59,201 )     (69,615 )
Acquisition of businesses, net of cash acquired           (134,717 )
Proceeds from sale of property, plant and equipment     7,667       9,509  
Other investing activities     2,321       2,000  
NET CASH USED BY INVESTING ACTIVITIES     (49,213 )     (192,823 )
             
FINANCING ACTIVITIES:              
Net change in borrowings     (31,760 )     24,322  
Proceeds from exercise of stock options     17,192       14,347  
Purchase of shares for treasury     (113,455 )     (292,693 )
Cash dividends paid to shareholders     (118,118 )     (117,920 )
NET CASH USED BY FINANCING ACTIVITIES     (246,141 )     (371,944 )
             
Effect of exchange rate changes on Cash and cash equivalents     1,708       2,296  
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     57,716       (159,286 )
Cash and cash equivalents at beginning of period     199,563       358,849  
Cash and cash equivalents at end of period   $ 257,279     $ 199,563  
             
Cash dividends paid per share   $ 1.96     $ 1.88  

Lincoln Electric Holdings, Inc.
Segment Highlights (1)
(In thousands)
(Unaudited)

                                 
       Americas      International       The Harris      Corporate /           
    Welding   Welding   Products Group   Eliminations   Consolidated  
Three months ended December 31, 2020                                     
Net sales   $ 386,571   $ 214,782   $ 92,441   $     $ 693,794  
Inter-segment sales     27,734     4,827     1,658     (34,219 )      
Total   $ 414,305   $ 219,609   $ 94,099   $ (34,219 )   $ 693,794  
                                 
Net income                              $ 65,078  
As a percent of total sales                                9.4 %  
                                 
EBIT (1)   $ 68,456   $ 4,949   $ 13,362   $ (553 )   $ 86,214  
As a percent of total sales     16.5 %     2.3 %     14.2 %           12.4 %  
Special items charges (gains) (3)     748     10,301               11,049  
Adjusted EBIT (2)   $ 69,204   $ 15,250   $ 13,362   $ (553 )   $ 97,263  
As a percent of total sales     16.7 %     6.9 %     14.2 %           14.0 %  
                                 
Three months ended December 31, 2019                                     
Net sales   $ 437,899   $ 218,606   $ 79,802   $     $ 736,307  
Inter-segment sales     28,042     4,853     1,650     (34,545 )      
Total   $ 465,941   $ 223,459   $ 81,452   $ (34,545 )   $ 736,307  
                                 
Net income                              $ 63,716  
As a percent of total sales                                8.7 %  
                                 
EBIT (1)   $ 75,006   $ 4,501   $ 8,886   $ (2,305 )   $ 86,088  
As a percent of total sales     16.1 %     2.0 %     10.9 %           11.7 %  
Special items charges (gains) (4)         7,081     1,770           8,851  
Adjusted EBIT (2)   $ 75,006   $ 11,582   $ 10,656   $ (2,305 )   $ 94,939  
As a percent of total sales     16.1 %     5.2 %     13.1 %           12.9 %  
(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 2020 reflect Rationalization and asset impairment gains of $849 and charges of $10,301 in Americas Welding and International Welding, respectively and pension settlement charges of $1,597 in Americas Welding.
(4) Special items in 2019 reflect Rationalization and asset impairment charges of $7,081 in International Welding and $1,770 in The Harris Products Group.

Lincoln Electric Holdings, Inc.
Segment Highlights (1)
(In thousands)
(Unaudited)

       Americas      International      The Harris      Corporate /           
    Welding   Welding   Products Group   Eliminations   Consolidated  
Year ended December 31, 2020                                     
Net sales   $ 1,509,870   $ 786,809   $ 358,721   $     $ 2,655,400  
Inter-segment sales     109,378     18,494     7,034     (134,906 )      
Total   $ 1,619,248   $ 805,303   $ 365,755   $ (134,906 )   $ 2,655,400  
                                 
Net income                              $ 206,115  
As a percent of total sales                                7.8 %  
                                 
EBIT (1)   $ 210,739   $ 25,575   $ 55,154   $ (5,455 )   $ 286,013  
As a percent of total sales     13.0 %     3.2 %     15.1 %           10.8 %  
Special items charges (gains) (3)     34,989     19,404               54,393  
Adjusted EBIT (2)   $ 245,728   $ 44,979   $ 55,154   $ (5,455 )   $ 340,406  
As a percent of total sales     15.2 %     5.6 %     15.1 %           12.8 %
                                 
Year ended December 31, 2019                                     
Net sales   $ 1,815,746   $ 854,376   $ 333,150   $     $ 3,003,272  
Inter-segment sales     123,342     17,691     7,487     (148,520 )      
Total   $ 1,939,088   $ 872,067   $ 340,637   $ (148,520 )   $ 3,003,272  
                                 
Net income                              $ 293,109  
As a percent of total sales                                9.8 %  
                                 
EBIT (1)   $ 312,604   $ 48,125   $ 43,931   $ (12,752 )   $ 391,908  
As a percent of total sales     16.1 %     5.5 %     12.9 %           13.0 %
Special items charges (gains) (4)     3,115     2,156     1,770     1,804       8,845  
Adjusted EBIT (2)   $ 315,719   $ 50,281   $ 45,701   $ (10,948 )   $ 400,753  
As a percent of total sales     16.3 %     5.8 %     13.4 %           13.3 %
(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 2020 reflect Rationalization and asset impairment net charges of $26,870 and $18,598 in Americas Welding and International Welding, respectively, amortization of step up in value of acquired inventories of $806 in International Welding related to an acquisition, and pension settlement charges of $8,119 in Americas Welding.
(4) Special items in 2019 reflect Rationalization and asset impairment charges of $1,716 in Americas Welding, $11,702 in International Welding and $1,770 in The Harris Products Group, amortization of step up in value of acquired inventories of $1,399 in Americas Welding and $1,609 in International Welding, gains on disposals of assets of $3,554 in International Welding, a gain on change in control of $7,601 related to the acquisition of Askaynak and acquisition transaction and integration costs of $1,804 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                     Foreign   Net Sales
  2019   Volume   Acquisitions   Price   Exchange   2020
Operating Segments                                        
Americas Welding $ 437,899   $ (54,412 )   $   $ 5,164   $ (2,080 )   $ 386,571  
International Welding   218,606     (7,341 )         1,101     2,416       214,782  
The Harris Products Group   79,802     5,872           8,498     (1,731 )     92,441  
Consolidated $ 736,307   $ (55,881 )   $   $ 14,763   $ (1,395 )   $ 693,794  
                                   
% Change                                        
Americas Welding         (12.4 )%         1.2 %   (0.5 )%     (11.7 )%
International Welding         (3.4 )%         0.5 %   1.1 %     (1.7 )%
The Harris Products Group         7.4 %         10.6 %   (2.2 )%     15.8 %
Consolidated         (7.6 )%         2.0 %   (0.2 )%     (5.8 )%

Twelve Months Ended December 31st Change in Net Sales by Segment

                                       
                Change in Net Sales due to:              
    Net Sales                     Foreign   Net Sales  
    2019   Volume   Acquisitions   Price   Exchange   2020  
Operating Segments                                            
Americas Welding   $ 1,815,746   $ (300,167 )   $ 6,190   $ (2,315 )   $ (9,584 )   $ 1,509,870    
International Welding     854,376     (93,264 )     33,521     (1,800 )     (6,024 )     786,809    
The Harris Products Group     333,150     12,242           18,571       (5,242 )     358,721    
Consolidated   $ 3,003,272   $ (381,189 )   $ 39,711   $ 14,456     $ (20,850 )   $ 2,655,400    
                                       
% Change                                            
Americas Welding           (16.5 )%     0.3 %   (0.1 )%     (0.5 )%     (16.8 )%  
International Welding           (10.9 )%     3.9 %   (0.2 )%     (0.7 )%     (7.9 )%  
The Harris Products Group           3.7 %         5.6 %     (1.6 )%     7.7  
Consolidated           (12.7 )%     1.3 %   0.5 %     (0.7 )%     (11.6 )%