GlobeNewswire Inc | Jul 27, 2020 07:30AM EDT

July 27, 2020

Second Quarter 2020 Highlights

-- Net sales decline 24.0% on lower organic sales -- Operating income margin of 6.7%; Adjusted operating income margin of 10.7% -- EPS of $0.45; Adjusted EPS of $0.80 -- Solid balance sheet profile and strong cash flow generation with 189% cash conversion -- Cost reduction actions now estimated to provide $55 to $65 million of benefits in 2020

CLEVELAND, July 27, 2020 (GLOBE NEWSWIRE) -- Lincoln Electric Holdings,Inc. (the Company) (Nasdaq: LECO) today reported second quarter 2020 net income of $27.0 million, or diluted earnings per share (EPS) of $0.45, which includes special item after-tax net charges of $21.0 million, or $0.35 EPS. This compares with prior year period net income of $85.5 million, or $1.36 EPS, which included special item after-tax net benefits of $4.6 million, or $0.08 EPS. Excluding these items, second quarter 2020 adjusted net income was $48.0 million, or $0.80 EPS. This compares with $80.9 million, or $1.28 EPS in the prior year period. The effective tax rate was 19.8% in the second quarter 2020 as compared with 17.4% in the prior year period. Excluding special items, the adjusted effective tax rate was 20.3%, or 22.0% in the comparable 2019 period.

Second quarter 2020 sales decreased 24.0% to $590.7 million from a 24.8% decrease in organic sales and 1.1% unfavorable foreign exchange, partially offset by a 2.0% benefit from acquisitions. Operating income for the second quarter 2020 was $39.8 million, or 6.7% of sales, including $23.2 million in rationalization and asset impairment charges, which are primarily non-cash charges. This compares with operating income of $105.2 million, or 13.5% of sales, in the prior year period. Excluding special items, adjusted operating income was $63.0 million, or 10.7% of sales, as compared with $105.9 million, or 13.6% of sales, in the prior year period.

As we navigate through the pandemic, I am proud of how effectively we are managing employee safety while serving our customers, stated Christopher L. Mapes, Chairman, President and Chief Executive Officer. We continued to generate strong cash flows and increased liquidity, while achieving solid second quarter profitability through aggressive cost management." Mapes commented, As the pace of recovery remains uncertain, we have expanded our cost action initiatives and now expect to generate $55 to $65 million in realized cost savings in 2020. We remain confident in our disciplined management of the business, strong cash flow generation, returns, and balance sheet profile.

Six Months 2020 Summary

Net income for the six months ended June 30, 2020 was $82.6 million, or $1.37 EPS. This compares with $156.9 million, or $2.47 EPS, in the comparable 2019 period. Reported EPS includes special item after-tax charges of $26.3 million or $0.44 EPS, as compared with special item after-tax net benefits of $1.1 million, or $0.01 EPS in the prior year period. Excluding these items, adjusted net income for the six months ended June 30, 2020decreased 30.1% to $108.9 million, or $1.81 EPS, compared with $155.9 million, or $2.46 EPS, in the comparable 2019 period. The effective tax rate was 24.7% for the six months ended June 30, 2020 as compared with 20.1% in the prior year period. Excluding special items, the adjusted effective tax rate was 24.1%, which compares to 22.4% in the comparable 2019 period.

Sales decreased 15.8% to $1.3 billion in the six months ended June 30, 2020 from a 17.3% decrease in organic sales, 1.2% unfavorable foreign exchange, partially offset by a 2.6% benefit from acquisitions. Operating income for the six months ended June 30, 2020 was $120.8 million, or 9.3% of sales. This compares with operating income of $199.7 million, or 13.0% of sales, in the comparable 2019 period. Excluding special items, adjusted operating income was $151.4 million, or 11.7% of sales, as compared with $204.7 million, or 13.3% of sales, in the comparable 2019 period.

Webcast Information

A conference call to discuss second quarter 2020 financial results will be webcast live today, July 27, 2020, at 10:00a.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 9627497. Telephone participants are asked to dial in 10 - 15 minutes prior to the start of the conference call.

Financial results for the second 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 59 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 Companys 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 Companys 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 managements 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 Companys 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 ofpending or potential litigation; actual costs of the Companys rationalization plans; possible acquisitions, including the Companys 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. New and changing government actions to address the COVID- 19 pandemic continue to occur on a regular basis. As a result, the countries in which the Companys products are manufactured and distributed are in varying stages of restrictions. Certain jurisdictions have had to re-establish restrictions due to a resurgence in COVID-19 cases. Additionally, although many of the Companys customers have begun to re-open or increase operating levels, such customers may be forced to close or limit operations as any new COVID-19 outbreaks occur. Even as government restrictions are lifted and economies gradually reopen, the shape of the economic recovery is uncertain and may continue to negatively impact the Company's results of operations, cash flows and financial position in subsequent quarters. Given this current 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 Companys Annual Report on Form10-K for the year ended December 31, 2019 and on Form 10-Q for the quarter ended March 31, 2020.

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

Three Months Ended June 30, Fav (Unfav) to Prior Year 2020 %ofSales 2019 %ofSales $ %Net sales $ 590,727 100.0 % $ 777,008 100.0 % $ (186,281 ) (24.0 %)Cost of goods sold 401,349 67.9 % 507,127 65.3 % 105,778 20.9 %Gross profit 189,378 32.1 % 269,881 34.7 % (80,503 ) (29.8 %)Selling, general& administrative 126,376 21.4 % 163,388 21.0 % 37,012 22.7 %expensesRationalizationandassetimpairment 23,238 3.9 % 1,307 0.2 % (21,931 ) (1,678.0 %)chargesOperating income 39,764 6.7 % 105,186 13.5 % (65,422 ) (62.2 %)Interest expense, net 5,881 1.0 % 5,898 0.8 % 17 0.3 %Other income (expense) (203 ) ? 4,196 0.5 % (4,399 ) (104.8 %)Income before income taxes 33,680 5.7 % 103,484 13.3 % (69,804 ) (67.5 %)Income taxes 6,667 1.1 % 18,040 2.3 % 11,373 63.0 %Effective tax rate 19.8 % 17.4 % (2.4 %) Net income including non-controlling 27,013 4.6 % 85,444 11.0 % (58,431 ) (68.4 %)interestsNon-controlling interests in 17 ? (8 ) ? 25 312.5 %subsidiaries? income (loss)Net income $ 26,996 4.6 % $ 85,452 11.0 % $ (58,456 ) (68.4 %) Basic earnings per share $ 0.45 $ 1.37 $ (0.92 ) (67.2 %)Diluted earnings per share $ 0.45 $ 1.36 $ (0.91 ) (66.9 %)Weighted average shares (basic) 59,354 62,305 Weighted average shares (diluted) 59,831 62,970 Six Months Ended June 30, Fav (Unfav) to Prior Year 2020 % of Sales 2019 % of Sales $ %Net sales $ 1,292,718 100.0 % $ 1,536,182 100.0 % $ (243,464 ) (15.8 %)Cost of goods sold 866,018 67.0 % 1,007,880 65.6 % 141,862 14.1 %Gross profit 426,700 33.0 % 528,302 34.4 % (101,602 ) (19.2 %)Selling, general& administrative 276,103 21.4 % 323,796 21.1 % 47,693 14.7 %expensesRationalizationandassetimpairment 29,759 2.3 % 4,842 0.3 % (24,917 ) (514.6 %)chargesOperating income 120,838 9.3 % 199,664 13.0 % (78,826 ) (39.5 %)Interest expense, net 11,339 0.9 % 11,221 0.7 % (118 ) (1.1 %)Other income (expense) 106 ? 7,959 0.5 % (7,853 ) (98.7 %)Income before income taxes 109,605 8.5 % 196,402 12.8 % (86,797 ) (44.2 %)Income taxes 27,037 2.1 % 39,492 2.6 % 12,455 31.5 %Effective tax rate 24.7 % 20.1 % (4.6 %) Net income including non-controlling 82,568 6.4 % 156,910 10.2 % (74,342 ) (47.4 %)interestsNon-controlling interests in 10 ? (22 ) ? 32 145.5 %subsidiaries? income (loss)Net income $ 82,558 6.4 % $ 156,932 10.2 % $ (74,374 ) (47.4 %) Basic earnings per share $ 1.38 $ 2.50 $ (1.12 ) (44.8 %)Diluted earnings per share $ 1.37 $ 2.47 $ (1.10 ) (44.5 %)Weighted average shares (basic) 59,769 62,733 Weighted average shares (diluted) 60,300 63,419

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

Balance Sheet Highlights

SelectedConsolidatedBalanceSheetData June30, 2020 December 31, 2019Cash and cash equivalents $ 143,055 $ 199,563 Total current assets 1,007,779 1,075,581 Property, plant and equipment, net 502,249 529,344 Total assets 2,199,039 2,371,213 Total current liabilities 568,571 563,135 Short-term debt ^(1) 49,597 34,969 Long-term debt, less current portion 715,817 712,302 Total equity 660,111 819,077 Operating Working Capital June30, 2020 December 31, 2019Accounts receivable, net $ 339,102 $ 374,649 Inventories 417,525 393,748 Trade accounts payable 226,799 273,002 Operating working capital $ 529,828 $ 495,395 Average operating working capital to Net 22.4 % 16.8 %sales ^(2) Invested Capital June30, 2020 December 31, 2019Short-term debt ^(1) $ 49,597 $ 34,969 Long-term debt, less current portion 715,817 712,302 Total debt 765,414 747,271 Total equity 660,111 819,077 Invested capital $ 1,425,525 $ 1,566,348 Total debt / invested capital 53.7 % 47.7 %

-- Includes current portion of long-term debt. -- 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 June Six Months Ended June 30, 30, 2020 2019 2020 2019Operating income as $ 39,764 $ 105,186 $ 120,838 $ 199,664 reportedSpecial items (pre-tax):Rationalization andasset impairment 23,238 1,307 29,759 4,842 charges^(2)Acquisition transactionand integration costs^ ? 1,014 ? 1,804 (3)Amortization of step upin value of acquired ? 1,399 806 1,399 inventories ^(4)Gains on asset ? (3,045 ) ? (3,045 )disposals ^(5)Adjusted operating $ 63,002 $ 105,861 $ 151,403 $ 204,664 income ^(1)As a percent of total 10.7 % 13.6 % 11.7 % 13.3 %sales Net income as reported $ 26,996 $ 85,452 $ 82,558 $ 156,932 Special items: Rationalization andasset impairment 23,238 1,307 29,759 4,842 charges^(2)Acquisition transactionand integration costs^ ? 1,014 ? 1,804 (3)Pension settlement 3,334 ? 3,334 ? charges ^(6)Amortization of step upin value of acquired ? 1,399 806 1,399 inventories ^(4)Gains on asset ? (3,554 ) ? (3,554 )disposals ^(5)Tax effect of Special (5,576 ) (4,751 ) (7,552 ) (5,564 )items ^(7)Adjusted net income ^ 47,992 80,867 108,905 155,859 (1)Non-controllinginterests in 17 (8 ) 10 (22 )subsidiaries? lossInterest expense, net 5,881 5,898 11,339 11,221 Income taxes as 6,667 18,040 27,037 39,492 reportedTax effect of Special 5,576 4,751 7,552 5,564 items ^(7)Adjusted EBIT ^(1) $ 66,133 $ 109,548 $ 154,843 $ 212,114 Effective tax rate as 19.8 % 17.4 % 24.7 % 20.1 %reportedNet special item tax 0.5 % 4.6 % (0.6 %) 2.3 %impactAdjusted effective tax 20.3 % 22.0 % 24.1 % 22.4 %rate ^(1) Diluted earnings per $ 0.45 $ 1.36 $ 1.37 $ 2.47 share as reportedSpecial items per share 0.35 (0.08 ) 0.44 (0.01 )Adjusted diluted $ 0.80 $ 1.28 $ 1.81 $ 2.46 earnings per share ^(1) Weighted average shares 59,831 62,970 60,300 63,419 (diluted)

-- 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. -- Primarily related to severance, asset impairments of long-lived assets and gains or losses on the disposal of assets. -- Related to the acquisition of Air Liquide Welding and are included in Selling, general & administrative expenses. -- Related to an acquisition and are included in Cost of goods sold. -- Primarily included in Cost of goods sold. -- Related to lump sum pension payments and are included in Other income (expense). -- 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 three and six months ended June 30, 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 June 30,Return on Invested Capital 2020 2019Net income as reported $ 218,735 $ 314,310 Rationalization and asset impairment charges 40,105 8,410 Acquisition transaction and integration costs ? 3,607 Pension settlement charges 3,334 5,928 Amortization of step up in value of acquired 2,415 1,399 inventoriesGains on asset disposals ? (3,554 )Gain on change in control (7,601 ) ? Tax effect of Special items ^(2) (9,374 ) (11,295 )Adjusted net income ^(1) $ 247,614 $ 318,805 Plus: Interest expense, net of tax of $6,439 19,348 18,569 and $6,178 in 2020 and 2019, respectivelyLess: Interest income, net of tax of $563 and 1,691 3,912 $1,302 in 2020 and 2019, respectivelyAdjusted net income before tax-effected $ 265,271 $ 333,462 interest Invested Capital June30, 2020 June30, 2019Short-term debt $ 49,597 $ 30,110 Long-term debt, less current portion 715,817 710,458 Total debt 765,414 740,568 Total equity 660,111 846,058 Invested capital $ 1,425,525 $ 1,586,626 Return on invested capital ^(1) 18.6 % 21.0 % Twelve Months Ended June 30,Total Debt / EBITDA 2020 2019Net income as reported $ 218,735 $ 314,310 Income taxes 62,955 72,377 Interest expense, net 23,533 19,533 Depreciation and amortization 83,313 75,275 EBITDA ^(1) $ 388,536 $ 481,495 June30, 2020 June30, 2019Total debt $ 765,414 $ 740,568 Total debt / EBITDA 1.97 1.54

-- Adjusted net income, Return on invested capital and EBITDA are non-GAAP financial measures. Refer to Non-GAAP Information section. -- 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 June 30, 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 June 30, 2020 2019OPERATING ACTIVITIES: Net income $ 26,996 $ 85,452 Non-controlling interests in subsidiaries? income 17 (8 )(loss)Net income including non-controlling interests 27,013 85,444 Adjustments to reconcile Net income includingnon-controlling interests to Net cash provided by operating activities:Rationalization and asset impairment net charges 22,141 (355 )(gains)Depreciation and amortization 20,050 20,351 Equity earnings in affiliates, net (81 ) (769 )Other non-cash items, net (1,106 ) 1,325 Changes in operating assets and liabilities, net of effects from acquisitions:Decrease in accounts receivable 49,364 5,629 Increase in inventories (12,977 ) (13,129 )Decrease in trade accounts payable (23,439 ) (362 )Net change in other current assets and liabilities 20,717 28,595 Net change in other long-term assets and 2,359 (622 )liabilitiesNET CASH PROVIDED BY OPERATING ACTIVITIES 104,041 126,107 INVESTING ACTIVITIES: Capital expenditures (13,183 ) (20,262 )Acquisition of businesses, net of cash acquired ? (107,843 )Proceeds from sale of property, plant and equipment 118 8,410 NET CASH USED BY INVESTING ACTIVITIES (13,065 ) (119,695 ) FINANCING ACTIVITIES: Net change in borrowings (82,682 ) 29,980 Proceeds from exercise of stock options 955 323 Purchase of shares for treasury (3,213 ) (85,330 )Cash dividends paid to shareholders (29,139 ) (29,541 )NET CASH USED BY FINANCING ACTIVITIES (114,079 ) (84,568 ) Effect of exchange rate changes on Cash and cash 2,783 883 equivalentsDECREASE IN CASH AND CASH EQUIVALENTS (20,320 ) (77,273 )Cash and cash equivalents at beginning of period 163,375 267,134 Cash and cash equivalents at end of period $ 143,055 $ 189,861 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

Six Months Ended June 30, 2020 2019OPERATING ACTIVITIES: Net income $ 82,558 $ 156,932 Non-controlling interests in subsidiaries? income 10 (22 )(loss)Net income including non-controlling interests 82,568 156,910 Adjustments to reconcile Net income includingnon-controlling interests to Net cash provided by operating activities:Rationalization and asset impairment net charges 21,905 1,069 Depreciation and amortization 41,078 39,252 Equity earnings in affiliates, net (243 ) (1,217 )Other non-cash items, net (5,288 ) 5,719 Changes in operating assets and liabilities, net of effects from acquisitions:Decrease (increase) in accounts receivable 23,666 (21,271 )Increase in inventories (30,378 ) (27,767 )Decrease in trade accounts payable (40,115 ) (15,469 )Net change in other current assets and liabilities 32,410 13,947 Net change in other long-term assets and 410 812 liabilitiesNET CASH PROVIDED BY OPERATING ACTIVITIES 126,013 151,985 INVESTING ACTIVITIES: Capital expenditures (25,011 ) (36,513 )Acquisition of businesses, net of cash acquired ? (107,843 )Proceeds from sale of property, plant and equipment 6,218 8,712 Other investing activities ? 2,000 NET CASH USED BY INVESTING ACTIVITIES (18,793 ) (133,644 ) FINANCING ACTIVITIES: Net change in borrowings 15,095 29,977 Proceeds from exercise of stock options 2,002 960 Purchase of shares for treasury (112,975 ) (160,914 )Cash dividends paid to shareholders (59,814 ) (60,101 )NET CASH USED BY FINANCING ACTIVITIES (155,692 ) (190,078 ) Effect of exchange rate changes on Cash and cash (8,036 ) 2,749 equivalentsDECREASE IN CASH AND CASH EQUIVALENTS (56,508 ) (168,988 )Cash and cash equivalents at beginning of period 199,563 358,849 Cash and cash equivalents at end of period $ 143,055 $ 189,861 Cash dividends paid per share $ 0.98 $ 0.94

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

Americas International TheHarris Corporate/ Welding Welding Products Eliminations Consolidated GroupThree monthsended June 30, 2020Net sales $ 333,229 $ 177,167 $ 80,331 $ ? $ 590,727 Inter-segment 27,493 4,286 1,753 (33,532 ) ? salesTotal $ 360,722 $ 181,453 $ 82,084 $ (33,532 ) $ 590,727 Net income $ 26,996 As a percentof total 4.6 %sales EBIT^ (1) $ 20,695 $ 9,117 $ 11,713 $ (1,964 ) $ 39,561 As a percentof total 5.7 % 5.0 % 14.3 % 6.7 %salesSpecial itemscharges 26,007 565 ? ? 26,572 (gains) ^(3)Adjusted EBIT $ 46,702 $ 9,682 $ 11,713 $ (1,964 ) $ 66,133 ^(2)As a percentof total 12.9 % 5.3 % 14.3 % 11.2 %sales Three monthsended June 30, 2019Net sales $ 476,607 $ 212,306 $ 88,095 $ ? $ 777,008 Inter-segment 34,811 4,188 2,113 (41,112 ) ? salesTotal $ 511,418 $ 216,494 $ 90,208 $ (41,112 ) $ 777,008 Net income $ 85,452 As a percentof total 11.0 %sales EBIT ^(1) $ 83,072 $ 17,805 $ 13,488 $ (4,983 ) $ 109,382 As a percentof total 16.2 % 8.2 % 15.0 % 14.1 %salesSpecial itemscharges 1,779 (2,627 ) ? 1,014 166 (gains) ^(4)Adjusted EBIT $ 84,851 $ 15,178 $ 13,488 $ (3,969 ) $ 109,548 ^(2)As a percentof total 16.6 % 7.0 % 15.0 % 14.1 %sales

-- EBIT is defined as Operating income plus Other income (expense). -- 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. -- Special items in 2020 reflect Rationalization and asset impairment charges of $22,673 and $565 in Americas Welding and International Welding, respectively, and pension settlement charges of $3,334 in Americas Welding, -- Special items in 2019 reflect Rationalization and asset impairment charges of $380 in Americas Welding and $927 in International Welding, amortization of step up in value of acquired inventories of $1,399 in Americas Welding, gains on disposals of assets of $3,554 in International Welding and acquisition transaction and integration costs of $1,014 in Corporate/Eliminations related to the acquisition of Air Liquide Welding.

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

Americas International TheHarris Corporate/ Welding Welding Products Eliminations Consolidated GroupSix monthsended June 30, 2020Net sales $ 751,764 $ 375,090 $ 165,864 $ ? $ 1,292,718 Inter-segment 52,276 8,769 3,478 (64,523 ) ? salesTotal $ 804,040 $ 383,859 $ 169,342 $ (64,523 ) $ 1,292,718 Net income $ 82,558 As a percentof total 6.4 %sales EBIT ^(1) $ 90,207 $ 9,595 $ 24,205 $ (3,063 ) $ 120,944 As a percentof total 11.2 % 2.5 % 14.3 % 9.4 %salesSpecial itemscharges 27,197 6,702 ? ? 33,899 (gains) ^(3)Adjusted EBIT $ 117,404 $ 16,297 $ 24,205 $ (3,063 ) $ 154,843 ^(2)As a percentof total 14.6 % 4.2 % 14.3 % 12.0 %sales Six monthsended June 30, 2019Net sales $ 934,326 $ 430,392 $ 171,464 $ ? $ 1,536,182 Inter-segment 64,199 8,397 3,980 (76,576 ) ? salesTotal $ 998,525 $ 438,789 $ 175,444 $ (76,576 ) $ 1,536,182 Net income $ 156,932 As a percentof total 10.2 %sales EBIT ^(1) $ 163,488 $ 28,943 $ 24,007 $ (8,815 ) $ 207,623 As a percentof total 16.4 % 6.6 % 13.7 % 13.5 %salesSpecial itemscharges 3,115 (428 ) ? 1,804 4,491 (gains) ^(4)Adjusted EBIT $ 166,603 $ 28,515 $ 24,007 $ (7,011 ) $ 212,114 ^(2)As a percentof total 16.7 % 6.5 % 13.7 % 13.8 %sales

-- EBIT is defined as Operating income plus Other income (expense). -- 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. -- Special items in 2020 reflect Rationalization and asset impairment charges of $23,863 and $5,896 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 $3,334 in Americas Welding, -- Special items in 2019 reflect Rationalization and asset impairment charges of $1,716 in Americas Welding and $3,126 in International Welding, amortization of step up in value of acquired inventories of $1,399 in Americas Welding, gains on disposals of assets of $3,554 in International Welding 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 June 30th Change in Net Sales by Segment Change in Net Sales due to: NetSales Volume Acquisitions Price Foreign NetSales 2019 Exchange 2020Operating SegmentsAmericas $ 476,607 $ (139,035 ) $ ? $ (1,405 ) $ (2,938 ) $ 333,229 WeldingInternational 212,306 (44,452 ) 15,219 (1,280 ) (4,626 ) 177,167 WeldingThe HarrisProducts 88,095 (6,891 ) ? 278 (1,151 ) 80,331 GroupConsolidated $ 777,008 $ (190,378 ) $ 15,219 $ (2,407 ) $ (8,715 ) $ 590,727 % Change Americas (29.2 %) ? (0.3 %) (0.6 %) (30.1 %)WeldingInternational (20.9 %) 7.2 % (0.6 %) (2.2 %) (16.6 %)WeldingThe HarrisProducts (7.8 %) ? 0.3 % (1.3 %) (8.8 %)GroupConsolidated (24.5 %) 2.0 % (0.3 %) (1.1 %) (24.0 %) Six Months Ended June 30th Change in Net Sales by Segment Change in Net Sales due to: NetSales Volume Acquisitions Price Foreign NetSales 2019 Exchange 2020Operating SegmentsAmericas $ 934,326 $ (176,727 ) $ 6,190 $ (6,797 ) $ (5,228 ) $ 751,764 WeldingInternational 430,392 (74,959 ) 33,521 (2,971 ) (10,893 ) 375,090 WeldingThe HarrisProducts 171,464 (4,091 ) ? 601 (2,110 ) 165,864 GroupConsolidated $ 1,536,182 $ (255,777 ) $ 39,711 $ (9,167 ) $ (18,231 ) $ 1,292,718 % Change Americas (18.9 %) 0.7 % (0.7 %) (0.6 %) (19.5 %)WeldingInternational (17.4 %) 7.8 % (0.7 %) (2.5 %) (12.8 %)WeldingThe HarrisProducts (2.4 %) ? 0.4 % (1.2 %) (3.3 %)GroupConsolidated (16.7 %) 2.6 % (0.6 %) (1.2 %) (15.8 %)

Contact

Amanda ButlerVice President, Investor Relations & CommunicationsTel: 216.383.2534Email: Amanda_Butler@lincolnelectric.com