Lincoln Electric Reports 2004 Second-Quarter and First-Half Financial Results
July 20 2004 - 9:59AM
PR Newswire (US)
Lincoln Electric Reports 2004 Second-Quarter and First-Half
Financial Results - Net sales up 25%, setting quarterly record -
Net income rises 67% for the quarter - Diluted EPS is 57 cents
CLEVELAND, July 20 /PRNewswire-FirstCall/ -- Lincoln Electric
Holdings, Inc. (NASDAQ:LECO) today reported that net income
increased 67% for the 2004 second quarter to $23.7 million, or 57
cents per diluted share, compared with $14.2 million, or 34 cents
per diluted share, in the second quarter of 2003. Net sales in the
quarter totaled $331.8 million, a 25% increase over the same period
last year and set the highest quarterly sales in Lincoln's history.
"Continuing strong demand in all of our markets -- domestic and
international -- contributed to higher sales, increased production
and strong profitability in the quarter," said John M. Stropki,
President and Chief Executive Officer. "The improving global
economy and the rise in worldwide industrial production are fueling
economic growth in our major market segments." Net sales for
Lincoln's U.S. operations increased 28% to $198.5 million in the
quarter, compared with $155.3 million in the 2003 second quarter.
Export sales were $20.3 million, an increase of approximately 17%
over the $17.3 million reported in the 2003 second quarter. "Higher
demand across all industry segments drove sales increases in North
America, which includes the United States and Canada," Mr. Stropki
said. "We continue to experience solid, steady growth in industrial
distribution, retail and rental market channels. Energy projects in
Russia, the Middle East and China contributed to strong export
sales increases for our operations here in the United States and
other international operations." Net sales for Lincoln's non-U.S.
operations were $133.3 million in the quarter, compared with $109.7
million in the second quarter of 2003. In local currencies,
non-U.S. net sales increased 18%. In the 2004 first half, net
income increased 59% to $42 million, or $1.02 per diluted share,
compared with $26.4 million, or 63 cents per diluted share, in the
first half of 2003. The 2003 first half included rationalization
charges of approximately $1.3 million, net of tax, related to asset
impairments and severance charges. Excluding the rationalization
charges, 2003 first-half net income was $27.7 million, or 66 cents
per diluted share. Net sales in the first six months of 2004
increased 24% to $638.3 million, compared with $514.2 million in
the same period last year. The Company's U.S. operations' net sales
in the first half of 2004 increased 25% to $379.6 million, compared
with $302.6 million in the prior year. Export sales rose 20% to
$37.2 million, compared with $31 million in the same period last
year. The Company's non-U.S. operations' net sales were $258.7
million, compared with $211.6 million in 2003. In local currencies,
non-U.S. net sales increased approximately 15%. The Company
completed its previously announced transactions to acquire majority
interests in three welding businesses in China. "Lincoln's growth
in the Asia-Pacific market, specifically China, has helped position
us as the market leader in this important and fast-growing market,"
said Mr. Stropki. "Our new majority position in China will make
Lincoln the only major global arc welding company with a full and
comprehensive offering of welding equipment and consumables to the
Chinese market. Our growth also continues in other markets in the
region with sales driven by market share gains and new product
introductions." The Company paid a quarterly cash dividend of 17
cents per share on July 15, 2004, to holders of record as of June
30, 2004. 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.
Headquartered in Cleveland, Ohio, Lincoln has 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; the strength and
duration of the increase in U.S. demand for the Company's products;
and the possible effects of international terrorism and hostilities
on the Company or its customers, suppliers and the economy in
general. Lincoln Electric Holdings, Inc. Financial Highlights
(amounts in millions, except per share data) (Unaudited)
Consolidated Three Months to June 30, Statement of Operations 2004
2003 Net Sales $331.8 100.0% $265.0 100.0% Cost of Goods Sold 231.5
69.8% 194.9 73.6% Gross Profit 100.3 30.2% 70.1 26.4% SG&A
Expenses 68.9 20.7% 52.0 19.6% Operating Income 31.4 9.5% 18.1 6.8%
Interest Income 0.6 0.2% 0.8 0.3% Equity Earnings in Affiliates 1.0
0.3% 1.0 0.4% Other Income 1.2 0.4% 0.2 0.2% Interest Expense (1.3)
(0.4%) (2.0) (0.8%) Income Before Income Taxes 32.9 9.9% 18.1 6.9%
Income Taxes 9.2 2.8% 3.9 1.5% Net Income $23.7 7.1% $14.2 5.4%
Basic Earnings Per Share $0.58 $0.34 Diluted Earnings Per Share
$0.57 $0.34 Weighted Average Shares (Basic) 41.1 41.5 Weighted
Average Shares (Diluted) 41.5 41.6 Lincoln Electric Holdings, Inc.
Financial Highlights (amounts in millions, except per share data)
(Unaudited) Consolidated Six Months to June 30, Statement of
Operations 2004 2003 Net Sales $638.3 100.0% $514.2 100.0% Cost of
Goods Sold 454.1 71.1% 376.7 73.2% Gross Profit 184.2 28.9% 137.5
26.8% SG&A Expenses 129.4 20.3% 102.5 19.9% Rationalization
Charges - 0.0% 1.7 0.4% Operating Income 54.8 8.6% 33.3 6.5%
Interest Income 1.2 0.2% 1.4 0.2% Equity Earnings in Affiliates 1.9
0.3% 1.6 0.3% Other Income 1.6 0.3% 1.4 0.3% Interest Expense (3.0)
(0.5%) (4.1) (0.8%) Income Before Income Taxes 56.5 8.9% 33.6 6.5%
Income Taxes 14.5 2.3% 7.2 1.4% Net Income $42.0 6.6% $26.4 5.1%
Basic Earnings Per Share $1.03 $0.63 Rationalization Charges (1) -
0.03 Basic Earnings Per Share without Rationalization Charges (1)
$1.03 $0.66 Diluted Earnings Per Share $1.02 $0.63 Rationalization
Charges (1) - 0.03 Diluted Earnings Per Share without
Rationalization Charges (1) $1.02 $0.66 Weighted Average Shares
(Basic) 40.9 41.7 Weighted Average Shares (Diluted) 41.1 41.9 (1)
Basic and diluted earnings per share without rationalization
charges are presented as management believes this financial measure
is 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 (amounts in millions, except per share data) (Unaudited)
Selected Consolidated June 30, December 31, Balance Sheet Data 2004
2003 Cash and Cash Equivalents $179.8 $170.5 Total Current Assets
650.6 555.4 Net Property, Plant and Equipment 289.3 282.3 Total
Assets 1,038.3 928.9 Total Current Liabilities 280.0 213.1
Short-Term Debt 1.7 4.3 Long-Term Debt 162.5 169.0 Total
Shareholders' Equity 517.2 478.5 Selected Consolidated Cash Flow
Six Months to June 30, Data 2004 2003 Cash Flow from Operations
$43.5 $45.6 Capital Expenditures (20.3) (13.8) Acquisitions (6.1) -
Issuance (Purchase) of Common Shares for Treasury, net 10.1 (14.1)
Increase in Cash and Cash Equivalents 9.3 14.2 Depreciation and
Amortization 19.1 18.6 Dividends Paid (13.4) (13.4) Cash Dividends
Paid Per Share $0.33 $0.32 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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