LECO Lincoln Electric Holdings Inc

- First Quarter sales increase 29% to a record $468.4 million CLEVELAND, April 26 /PRNewswire-FirstCall/ -- Lincoln Electric Holdings, Inc. (NASDAQ:LECO) today reported that 2006 first-quarter net income increased 65% to $36.7 million, or 86 cents per diluted share, on record sales of $468.4 million, an increase of 29%, 19% excluding the acquisition of J.W. Harris. This compares with 2005 same-quarter net income of $22.2 million, or 53 cents per diluted share, on net sales of $362.9 million. Net income for the 2006 and 2005 first quarters include charges of $1.0 million ($1.0 million after-tax, or 2 cents per diluted share) and $1.3 million ($0.8 million after- tax, or 2 cents per diluted share), respectively, related to European rationalization actions. "We had an excellent first quarter," said John M. Stropki, Chairman and Chief Executive Officer. "Our regional strategies continue to progress effectively, resulting in record sales levels across most channels, product segments and markets. Our growth in first quarter sales has been driven by strong volume increases in both consumable and equipment product lines, as well as contributions from the J.W. Harris acquisition. We continue to leverage our sales growth into significant increases in profitability and cash flows." "We are also very pleased with the positive market response from both a customer and investor standpoint to the execution of our key business strategies. We continue to be very focused on product and geographical market expansion, customer service excellence, cost control, working capital management and the integration of new acquisitions." Sales for the Company's North American operations were $320.2 million in the quarter, an increase of 38%, 24% excluding the acquisition of J.W. Harris, versus $231.5 million in the comparable quarter last year. Export sales in the quarter increased 38% to $30.7 million from $22.3 million last year. Sales at Lincoln subsidiaries outside North America increased to $148.2 million in the first quarter, compared with $131.4 million in the year-ago quarter. In local currencies, international subsidiaries' sales increased 17%. Cash flow from operations increased 65% to $29.6 million in the 2006 first quarter, compared with $17.9 million in 2005. During the 2006 quarter the Company paid $8.0 million in dividends. The Board of Directors also declared a quarterly cash dividend of 19 cents, which was paid on April 15, 2006 to holders of record as of March 31, 2006. Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc-welding systems, plasma and oxyfuel cutting equipment and has a leading global position in the brazing and soldering alloys market. Headquartered in Cleveland, Ohio, Lincoln has 33 manufacturing locations, including operations, manufacturing alliances and joint ventures in 18 countries and a worldwide network of distributors and sales offices covering more than 160 countries. For more information about Lincoln Electric, its products and services, visit the Company's Web site at http://www.lincolnelectric.com/. 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. 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: the effectiveness of operating initiatives; currency exchange and interest rates; adverse outcome of pending or potential litigation; possible acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; and the possible effects of international terrorism and hostilities on the Company or its customers, suppliers and the economy in general. A conference call to discuss 2006 first quarter financial results is scheduled for today, Wednesday, April 26, 2006, at 11:00 a.m. ET. An audio webcast of the call is accessible through the Investor page on the Company's Web site at http://www.lincolnelectric.com/. The Annual Meeting of Shareholders of Lincoln Electric Holdings, Inc. will be held at 10:00 a.m. on April 28, 2006 at the Marriott Cleveland East, Warrensville Heights, Ohio. Lincoln Electric Holdings, Inc. Financial Highlights (amounts in thousands, except per share data) (Unaudited) Consolidated Three Months Ended March 31, Statements of Income % of % of 2006 Sales 2005 Sales Net Sales $468,394 100.0% $362,903 100.0% Cost of Goods Sold 338,328 72.2% 264,625 72.9% Gross Profit 130,066 27.8% 98,278 27.1% SG&A Expenses 76,671 16.4% 66,902 18.4% Rationalization Charges 1,049 0.2% 1,250 0.4% Operating Income 52,346 11.2% 30,126 8.3% Interest Income 1,194 0.2% 768 0.2% Equity Earnings in Affiliates 364 0.1% 534 0.2% Other Income 373 0.1% 471 0.1% Interest Expense (2,401) (0.5%) (1,682) (0.5%) Income Before Income Taxes 51,876 11.1% 30,217 8.3% Income Taxes 15,127 3.2% 7,977 2.2% Net Income (1) $36,749 7.9% $22,240 6.1% Basic Earnings Per Share $0.87 $0.53 Diluted Earnings Per Share $0.86 $0.53 Weighted Average Shares (Basic) 42,280 41,676 Weighted Average Shares (Diluted) 42,718 42,088 Lincoln Electric Holdings, Inc. Financial Highlights (amounts in thousands, except per share data) (Unaudited) Consolidated Fav (Unfav) to Prior Year Statements of Income $ % Net Sales $105,491 29.1% Cost of Goods Sold (73,703) (27.9%) Gross Profit 31,788 32.3% SG&A Expenses (9,769) (14.6%) Rationalization Charges 201 16.1% Operating Income 22,220 73.8% Interest Income 426 55.5% Equity Earnings in Affiliates (170) (31.8%) Other Income (98) (20.8%) Interest Expense (719) (42.7%) Income Before Income Taxes 21,659 71.7% Income Taxes (7,150) (89.6%) Net Income (1) $14,509 65.2% Basic Earnings Per Share $0.34 64.2% Diluted Earnings Per Share $0.33 62.3% Weighted Average Shares (Basic) Weighted Average Shares (Diluted) (1) Net income includes charges related to European rationalization actions of $1,049 ($1,049 after-tax) and $1,250 ($848 after-tax) for the three months ended March 31, 2006 and 2005, respectively. Lincoln Electric Holdings, Inc. Financial Highlights (amounts in thousands, except per share data) (Unaudited) Balance Sheet Highlights Selected Consolidated Balance Sheet Data March 31, December 31, 2006 2005 Cash and Cash Equivalents $116,056 $108,007 Total Current Assets 752,681 676,634 Net Property, Plant and Equipment 347,859 340,533 Total Assets 1,246,694 1,161,161 Total Current Liabilities 336,595 293,642 Short-Term Debt 3,837 8,163 Long-Term Debt 155,195 157,853 Total Shareholders' Equity 692,428 652,294 Net Operating Working Capital March 31, December 31, 2006 2005 Trade Accounts Receivable $279,559 $242,093 Inventory 301,742 275,745 Trade Accounts Payable 153,499 121,917 Net Working Capital $427,802 $395,921 Average Operating Working Capital % to Net Sales 30.3% 31.3% Total Debt March 31, December 31, 2006 2005 Short-Term Debt $3,837 $8,163 Long-Term Debt 155,195 157,853 Total Debt 159,032 166,016 Equity 692,428 652,294 Total $851,460 $818,310 Total Debt/Capitalization 18.7% 20.3% Return on Invested Capital 19.0% 17.7% Lincoln Electric Holdings, Inc. Financial Highlights (amounts in thousands, except per share data) (Unaudited) Consolidated Three Months Ended March 31, Statements of Cash Flows 2006 2005 Operating Activities: Net Income $36,749 $22,240 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: Rationalization Charges 1,049 1,250 Depreciation and Amortization 11,447 10,316 Equity Earnings of Affiliates, net 67 (534) Other Non-Cash Items, net 698 2,840 Changes in Operating Assets and Liabilities: Increase in Accounts Receivable (36,277) (21,633) Increase in Inventories (25,097) (17,226) Increase in Accounts Payable 30,924 16,843 Contributions to Pension Plans (7,500) (10,000) Increase in Accrued Pensions 3,761 3,621 Net change in Other Current Assets and Liabilities 15,401 11,700 Net change in Other Long-Term Assets and Liabilities (1,596) (1,504) Net Cash Provided by Operating Activities 29,626 17,913 Investing Activities: Capital Expenditures (17,526) (9,722) Proceeds from Sales of Fixed Assets 124 61 Sales of Marketable Securities, net - 50,500 Net Cash (Used) Provided by Investing Activities (17,402) 40,839 Financing Activities: Net change in Borrowings (5,269) 2,668 Proceeds from Exercise of Stock Options 5,811 1,809 Tax Benefit from the Exercise of Stock Options 2,062 - Purchase of Shares for Treasury - (4,049) Cash Dividends Paid to Shareholders (8,014) (7,496) Net Cash Used by Financing Activities (5,410) (7,068) Effect of Exchange Rate Changes on Cash and Cash Equivalents 1,235 (1,813) Increase in Cash and Cash Equivalents 8,049 49,871 Cash and Cash Equivalents at Beginning of Period 108,007 92,819 Cash and Cash Equivalents at End of Period $116,056 $142,690 Cash Dividends Paid Per Share $0.19 $0.18 DATASOURCE: Lincoln Electric Holdings, Inc. CONTACT: Roy L. Morrow of Lincoln Electric Holdings, Inc., +1-216-383-4893, or Web site: http://www.lincolnelectric.com/

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