LECO Lincoln Electric Holdings Inc

CLEVELAND, April 23 /PRNewswire-FirstCall/ -- - First quarter sales increased 13.0% to $620.2 million - First quarter operating income increased 14.9% to $78.5 million - First quarter net income increased 11.4% to $53.5 million - First quarter diluted earnings per share increased 11.7% to $1.24 - First quarter net cash provided by operating activities increased 59.5% to $67.5 million Lincoln Electric Holdings, Inc. (the "Company") (NASDAQ:LECO) today reported record 2008 first quarter operating income, increasing 14.9% to $78.5 million from $68.3 million in 2007, on a sales increase of 13.0%. Net income for the first quarter increased 11.4% to $53.5 million, or $1.24 per diluted share from $48.0 million, or $1.11 per diluted share in 2007. The 2008 first quarter effective tax rate was 32.3% compared with 30.4% in 2007. Sales for the first quarter increased 13.0% to $620.2 million from $549.0 million in the comparable period of 2007. Sales for the Company's North American operations were $371.1 million in the quarter versus $345.7 million in the comparable quarter last year, an increase of 7.3%. U.S. export sales in the quarter increased 29.5% to $61.6 million from $47.5 million in 2007. "We had an excellent start to 2008, with strong sales, profitability and cash flow," said John M. Stropki, Chairman and Chief Executive Officer. "Despite a very volatile economic environment, and rising commodity costs, we were able to continue to leverage the strengths of our strong global market position. We remain focused on executing our long-term strategy despite softening in the industrial economic outlook by continuing to capitalize on key infrastructure development opportunities, and expanding our value-driven welding product and service offering." Sales at Lincoln subsidiaries outside North America increased to $249.1 million in the first quarter, compared with $203.3 million in the year ago quarter. In local currencies, international subsidiaries' sales increased 9.3%. Net cash provided by operating activities increased 59.5% to $67.5 million in the first quarter compared with $42.3 million for the comparable period in 2007. During the first quarter 2008, the Company paid $10.7 million in dividends. The Company's Board of Directors declared a quarterly cash dividend of $0.25, which was paid on April 15, 2008 to holders of record as of March 31, 2008. The Company announced on April 7, 2008, the acquisition of Electro-Arco, S.A. ("Electro-Arco"), a privately held manufacturer of welding consumables headquartered near Lisbon, Portugal. Founded over 70 years ago, Electro-Arco has been continuously owned and operated by the Rodrigues family. Electro-Arco has forged a leading position in the Portuguese welding market and has grown to be a significant exporter to markets throughout Europe. Electro-Arco has sales of approximately $40 million and 165 employees. "This acquisition significantly expands our European consumables manufacturing capacity and widens our commercial presence in Western Europe," said Mr. Stropki. 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 38 manufacturing locations, including operations, manufacturing alliances and joint ventures in 20 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 website 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. For additional discussion, see "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K. A conference call to discuss first quarter 2008 results is scheduled for today, Wednesday, April 23, 2008 at 10:00 a.m. Eastern Time. An audio webcast of the call is accessible through the investor tab on the Company's website at http://www.lincolnelectric.com/ . The 2008 Annual Meeting of Shareholders of Lincoln Electric Holdings, Inc. will be held at 11:30 a.m. Eastern Time on Friday, April 25, 2008 at the Marriott Cleveland East, 26300 Harvard Road, Warrensville Heights, Ohio. Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share data) (Unaudited) Consolidated Statements of Income Three Months Ended March 31, Fav (Unfav) to Prior Year 2008 % of Sales 2007 % of Sales $ % Net sales $ 620,227 100.0% $ 549,043 100.0% $ 71,184 13.0% Cost of goods sold 442,776 71.4% 390,827 71.2% (51,949) (13.3%) Gross profit 177,451 28.6% 158,216 28.8% 19,235 12.2% Selling, general & administrative expenses 98,961 16.0% 89,520 16.3% (9,441) (10.5%) Rationalization charges - NA 396 0.1% 396 NA Operating income 78,490 12.7% 68,300 12.4% 10,190 14.9% Interest income 2,434 0.4% 1,450 0.3% 984 67.9% Equity earnings in affiliates 549 0.1% 1,478 0.3% (929) (62.9%) Other income 499 0.1% 464 0.1% 35 7.5% Interest expense (2,981) (0.5%) (2,727) (0.5%) (254) (9.3%) Income before income taxes 78,991 12.7% 68,965 12.6% 10,026 14.5% Income taxes 25,514 4.1% 20,965 3.8% (4,549) (21.7%) Effective tax rate 32.3% 30.4% (1.9%) Net income (1) $ 53,477 8.6% $ 48,000 8.7% $ 5,477 11.4% Reconciliation of Net Income as Reported to Adjusted Net Income Excluding Non-Recurring Items: Three Months Ended Change March 31, 2008 2007 $ % Net income as reported (1) $ 53,477 $ 48,000 $ 5,477 11.4% Non-recurring items: European rationalization charges (after-tax) - 396 (396) NA Adjusted net income excluding non-recurring items (2) $ 53,477 $ 48,396 $ 5,081 10.5% Basic earnings per share $ 1.25 $ 1.12 $ 0.13 11.6% Non-recurring items (1) - 0.01 (0.01) NA Basic earnings per share excluding non-recurring items (2) $ 1.25 $ 1.13 $ 0.12 10.6% Diluted earnings per share $ 1.24 $ 1.11 $ 0.13 11.7% Non-recurring items (1) - 0.01 (0.01) NA Diluted earnings per share excluding non-recurring items (2) $ 1.24 $ 1.12 $ 0.12 10.7% Weighted average shares (basic) 42,675 42,843 Weighted average shares (diluted) 43,090 43,349 (1) Net income includes a charge of $396 ($396 after-tax) in 2007 related to European rationalization actions. (2) Adjusted net income excluding non-recurring items and basic and diluted earnings per share excluding non-recurring items, non-GAAP financial measures, are presented as management believes these financial measures are important to investors to evaluate and compare the Company's financial performance from period to period. Management uses this information in assessing and evaluating the Company's underlying operating performance. Lincoln Electric Holdings, Inc. Financial Highlights (In thousands) (Unaudited) Balance Sheet Highlights Selected Consolidated Balance Sheet Data March 31, December 31, 2008 2007 Cash and cash equivalents $ 237,853 $ 217,382 Total current assets 1,082,642 969,648 Property, plant and equipment, net 443,036 429,944 Total assets 1,795,651 1,645,296 Total current liabilities 417,281 311,921 Short-term debt 42,570 12,486 Long-term debt 90,704 117,329 Total shareholders' equity 1,142,526 1,087,220 Net Operating Working Capital March 31, December 31, 2008 2007 Trade accounts receivable $ 390,656 $ 344,058 Inventory 381,800 343,849 Trade accounts payable 193,078 152,301 Net operating working capital $579,378 $535,606 Net operating working capital % to net sales 24.6% 23.5% Invested Capital March 31, December 31, 2008 2007 Short-term debt $ 42,570 $ 12,486 Long-term debt 90,704 117,329 Total debt 133,274 129,815 Equity 1,142,526 1,087,220 Total $1,275,800 $1,217,035 Total debt/capitalization 10.4% 10.7% Return on invested capital 20.2% 20.5% Lincoln Electric Holdings, Inc. Financial Highlights (In thousands, except per share data) (Unaudited) CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, 2008 2007 OPERATING ACTIVITIES: Net income $ 53,477 $ 48,000 Adjustments to reconcile net income to net cash provided by operating activities: Rationalization charges - 396 Depreciation and amortization 13,907 12,511 Equity losses (earnings) of affiliates, net 4 (1,134) Other non-cash items, net 3,816 (2,677) Changes in operating assets and liabilities net of effects from acquisitions: Increase in accounts receivable (37,174) (35,734) Increase in inventories (26,970) (18,116) Increase in accounts payable 31,172 15,281 Net change in other current assets and liabilities 31,765 29,021 Net change in other long-term assets and liabilities (2,474) (5,205) NET CASH PROVIDED BY OPERATING ACTIVITIES 67,523 42,343 INVESTING ACTIVITIES: Capital expenditures (12,812) (15,724) Acquisition of businesses, net of cash acquired (8,675) (4,362) Proceeds from sale of property, plant and equipment 272 73 NET CASH USED BY INVESTING ACTIVITIES (21,215) (20,013) FINANCING ACTIVITIES: Net change in borrowings (1,095) (41,720) Proceeds from exercise of stock options 1,591 2,426 Tax benefit from the exercise of stock options 819 496 Purchase of shares for treasury (18,033) - Cash dividends paid to shareholders (10,720) (9,403) NET CASH USED BY FINANCING ACTIVITIES (27,438) (48,201) Effect of exchange rate changes on cash and cash equivalents 1,601 195 INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 20,471 (25,676) Cash and cash equivalents at beginning of the period 217,382 120,212 Cash and cash equivalents at end of period $ 237,853 $ 94,536 Cash dividends paid per share $ 0.25 $ 0.22 DATASOURCE: Lincoln Electric Co. CONTACT: Roy L. Morrow, +1-216-383-4893, , or Investors Contact: Joseph P. Kelley, +1-216-383-8346, , both of Lincoln Electric Co. Web site: http://www.lincolnelectric.com/

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