Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2022 shares | |
Cover page. | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Transition Report | false |
Document Period End Date | Sep. 30, 2022 |
Entity File Number | 0-1402 |
Entity Registrant Name | LINCOLN ELECTRIC HOLDINGS, INC. |
Entity Incorporation, State or Country Code | OH |
Entity Tax Identification Number | 34-1860551 |
Entity Address, Address Line One | 22801 St. Clair Avenue |
Entity Address, City or Town | Cleveland |
Entity Address, State or Province | OH |
Entity Address, Postal Zip Code | 44117 |
City Area Code | 216 |
Local Phone Number | 481-8100 |
Title of 12(b) Security | Common Shares, without par value |
Trading Symbol | LECO |
Security Exchange Name | NASDAQ |
Entity Central Index Key | 0000059527 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Entity Interactive Data Current | Yes |
Entity Current Reporting Status | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Common Stock, Shares Outstanding | 57,738,400 |
Document Fiscal Year Focus | 2022 |
Document Fiscal Period Focus | Q3 |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONSOLIDATED STATEMENTS OF INCOME | ||||
Net sales (Note 2) | $ 935,240 | $ 806,454 | $ 2,830,277 | $ 2,389,929 |
Cost of goods sold | 625,722 | 538,282 | 1,857,501 | 1,593,981 |
Gross profit | 309,518 | 268,172 | 972,776 | 795,948 |
Selling, general & administrative expenses | 159,045 | 149,118 | 492,523 | 446,351 |
Rationalization and asset impairment charges (Note 6) | 8,364 | 3,484 | 9,405 | 8,277 |
Operating income | 142,109 | 115,570 | 470,848 | 341,320 |
Interest expense, net | 8,210 | 5,714 | 20,867 | 16,736 |
Other income (expense) (Note 14) | 3,588 | (71,441) | 7,088 | (71,155) |
Income before income taxes | 137,487 | 38,415 | 457,069 | 253,429 |
Income taxes (Note 15) | 28,262 | 6,658 | 93,991 | 51,259 |
Net income including non-controlling interests | 109,225 | 31,757 | 363,078 | 202,170 |
Non-controlling interests in subsidiaries' income (loss) | 0 | 0 | 0 | 131 |
Net income | $ 109,225 | $ 31,757 | $ 363,078 | $ 202,039 |
Basic earnings per share (Note 3) | $ 1.89 | $ 0.54 | $ 6.24 | $ 3.40 |
Diluted earnings per share (Note 3) | 1.87 | 0.53 | 6.17 | 3.36 |
Cash dividends declared per share | $ 0.56 | $ 0.51 | $ 1.68 | $ 1.53 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Net income including non-controlling interests | $ 109,225 | $ 31,757 | $ 363,078 | $ 202,170 |
Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges, net of tax of $3,234 and $8,079 in the three and nine months ended September 30, 2022; $707 and $1,493 in the three and nine months ended September 30, 2021 | 7,777 | 2,876 | 22,082 | 5,412 |
Defined benefit pension plan activity, net of tax of $47 and $506 in the three and nine months ended September 30, 2022; $18,759 and $19,005 in the three and nine months ended September 30, 2021 | 85 | 55,558 | 148 | 58,916 |
Currency translation adjustment | (52,129) | (19,120) | (94,193) | (28,284) |
Other comprehensive income (loss): | (44,267) | 39,314 | (71,963) | 36,044 |
Comprehensive income | 64,958 | 71,071 | 291,115 | 238,214 |
Comprehensive income (loss) attributable to non-controlling interests | (13) | (58) | 102 | (196) |
Comprehensive income attributable to shareholders | $ 64,971 | $ 71,129 | $ 291,013 | $ 238,410 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) | ||||
Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges, tax | $ 3,234 | $ 707 | $ 8,079 | $ 1,493 |
Unrecognized amounts from defined benefit pension plans, tax | $ 47 | $ 18,759 | $ 506 | $ 19,005 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 141,307 | $ 192,958 |
Accounts receivable (less allowance for doubtful accounts of $10,009 in 2022; $11,105 in 2021) | 463,106 | 429,074 |
Inventories (Note 9) | 632,376 | 539,919 |
Other current assets | 158,609 | 127,642 |
Total Current Assets | 1,395,398 | 1,289,593 |
Property, plant and equipment (less accumulated depreciation of $863,983 in 2022; $868,036 in 2021) | 489,961 | 511,744 |
Goodwill | 424,505 | 430,162 |
Other assets | 342,101 | 360,808 |
TOTAL ASSETS | 2,651,965 | 2,592,307 |
Current Liabilities | ||
Short-term debt (Note 12) | 68,375 | 52,730 |
Trade accounts payable | 329,890 | 330,230 |
Accrued employee compensation and benefits | 183,638 | 108,562 |
Other current liabilities | 238,425 | 264,383 |
Total Current Liabilities | 820,328 | 755,905 |
Long-term debt, less current portion (Note 12) | 711,250 | 717,089 |
Other liabilities | 196,159 | 255,404 |
Total Liabilities | 1,727,737 | 1,728,398 |
Shareholders' Equity | ||
Common Shares | 9,858 | 9,858 |
Additional paid-in capital | 471,172 | 451,268 |
Retained earnings | 3,237,200 | 2,970,303 |
Accumulated other comprehensive loss | (329,451) | (257,386) |
Treasury Shares | (2,464,460) | (2,309,941) |
Total Shareholders' Equity | 924,319 | 864,102 |
Non-controlling interests | (91) | (193) |
Total Equity | 924,228 | 863,909 |
TOTAL LIABILITIES AND TOTAL EQUITY | $ 2,651,965 | $ 2,592,307 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 10,009 | $ 11,105 |
Accumulated depreciation | $ 863,983 | $ 868,036 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Treasury Shares | Noncontrolling Interests | Total |
Beginning Balance at Dec. 31, 2020 | $ 9,858 | $ 409,958 | $ 2,821,359 | $ (302,190) | $ (2,149,714) | $ 979 | $ 790,250 |
Beginning Balance (in shares) at Dec. 31, 2020 | 59,641,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 74,177 | (44) | 74,133 | ||||
Unrecognized amounts from defined benefit pension plans, net of tax | 5,060 | 5,060 | |||||
Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges, net of tax | 7,290 | 7,290 | |||||
Currency translation adjustment | (22,584) | (159) | (22,743) | ||||
Cash dividends declared | (30,572) | (30,572) | |||||
Stock-based compensation activity | 7,680 | 1,502 | 9,182 | ||||
Stock-based compensation activity (in shares) | 134,000 | ||||||
Purchase of shares for treasury | (28,459) | (28,459) | |||||
Purchase of shares for treasury (in shares) | (237,000) | ||||||
Other | 891 | (741) | (883) | (733) | |||
Ending Balance at Mar. 31, 2021 | $ 9,858 | 418,529 | 2,864,223 | (312,424) | (2,176,671) | (107) | 803,408 |
Ending Balance (in shares) at Mar. 31, 2021 | 59,538,000 | ||||||
Beginning Balance at Dec. 31, 2020 | $ 9,858 | 409,958 | 2,821,359 | (302,190) | (2,149,714) | 979 | 790,250 |
Beginning Balance (in shares) at Dec. 31, 2020 | 59,641,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 202,170 | ||||||
Unrecognized amounts from defined benefit pension plans, net of tax | 58,916 | ||||||
Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges, net of tax | 5,412 | ||||||
Currency translation adjustment | (28,284) | ||||||
Ending Balance at Sep. 30, 2021 | $ 9,858 | 434,786 | 2,930,361 | (265,819) | (2,251,193) | (100) | 857,893 |
Ending Balance (in shares) at Sep. 30, 2021 | 59,048,000 | ||||||
Beginning Balance at Mar. 31, 2021 | $ 9,858 | 418,529 | 2,864,223 | (312,424) | (2,176,671) | (107) | 803,408 |
Beginning Balance (in shares) at Mar. 31, 2021 | 59,538,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 96,105 | 175 | 96,280 | ||||
Unrecognized amounts from defined benefit pension plans, net of tax | (1,702) | (1,702) | |||||
Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges, net of tax | (4,754) | (4,754) | |||||
Currency translation adjustment | 13,689 | (110) | 13,579 | ||||
Cash dividends declared | (30,552) | (30,552) | |||||
Stock-based compensation activity | 8,638 | 503 | 9,141 | ||||
Stock-based compensation activity (in shares) | 46,000 | ||||||
Purchase of shares for treasury | (25,229) | (25,229) | |||||
Purchase of shares for treasury (in shares) | (197,000) | ||||||
Other | 409 | (957) | (548) | ||||
Ending Balance at Jun. 30, 2021 | $ 9,858 | 427,576 | 2,928,819 | (305,191) | (2,201,397) | (42) | 859,623 |
Ending Balance (in shares) at Jun. 30, 2021 | 59,387,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 31,757 | 31,757 | |||||
Unrecognized amounts from defined benefit pension plans, net of tax | 55,558 | 55,558 | |||||
Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges, net of tax | 2,876 | 2,876 | |||||
Currency translation adjustment | (19,062) | (58) | (19,120) | ||||
Cash dividends declared | (30,379) | (30,379) | |||||
Stock-based compensation activity | 7,449 | 364 | 7,813 | ||||
Stock-based compensation activity (in shares) | 34,000 | ||||||
Purchase of shares for treasury | (50,160) | (50,160) | |||||
Purchase of shares for treasury (in shares) | (373,000) | ||||||
Other | (239) | 164 | (75) | ||||
Ending Balance at Sep. 30, 2021 | $ 9,858 | 434,786 | 2,930,361 | (265,819) | (2,251,193) | (100) | 857,893 |
Ending Balance (in shares) at Sep. 30, 2021 | 59,048,000 | ||||||
Beginning Balance at Dec. 31, 2021 | $ 9,858 | 451,268 | 2,970,303 | (257,386) | (2,309,941) | (193) | 863,909 |
Beginning Balance (in shares) at Dec. 31, 2021 | 58,787,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 126,030 | 1 | 126,031 | ||||
Unrecognized amounts from defined benefit pension plans, net of tax | 107 | 107 | |||||
Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges, net of tax | 5,355 | 5,355 | |||||
Currency translation adjustment | (7,583) | 134 | (7,449) | ||||
Cash dividends declared | (32,505) | (32,505) | |||||
Stock-based compensation activity | 10,834 | 1,349 | 12,183 | ||||
Stock-based compensation activity (in shares) | 116,000 | ||||||
Purchase of shares for treasury | (104,579) | (104,579) | |||||
Purchase of shares for treasury (in shares) | (805,000) | ||||||
Other | 115 | (107) | 8 | ||||
Ending Balance at Mar. 31, 2022 | $ 9,858 | 462,217 | 3,063,721 | (259,507) | (2,413,171) | (58) | 863,060 |
Ending Balance (in shares) at Mar. 31, 2022 | 58,098,000 | ||||||
Beginning Balance at Dec. 31, 2021 | $ 9,858 | 451,268 | 2,970,303 | (257,386) | (2,309,941) | (193) | 863,909 |
Beginning Balance (in shares) at Dec. 31, 2021 | 58,787,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 363,078 | ||||||
Unrecognized amounts from defined benefit pension plans, net of tax | 148 | ||||||
Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges, net of tax | 22,082 | ||||||
Currency translation adjustment | $ (94,193) | ||||||
Purchase of shares for treasury (in shares) | (1,200,000) | ||||||
Ending Balance at Sep. 30, 2022 | $ 9,858 | 471,172 | 3,237,200 | (329,451) | (2,464,460) | (91) | $ 924,228 |
Ending Balance (in shares) at Sep. 30, 2022 | 57,738,000 | ||||||
Beginning Balance at Mar. 31, 2022 | $ 9,858 | 462,217 | 3,063,721 | (259,507) | (2,413,171) | (58) | 863,060 |
Beginning Balance (in shares) at Mar. 31, 2022 | 58,098,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 127,823 | (1) | 127,822 | ||||
Unrecognized amounts from defined benefit pension plans, net of tax | (44) | (44) | |||||
Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges, net of tax | 8,950 | 8,950 | |||||
Currency translation adjustment | (34,596) | (19) | (34,615) | ||||
Cash dividends declared | (32,698) | (32,698) | |||||
Stock-based compensation activity | 5,428 | 146 | 5,574 | ||||
Stock-based compensation activity (in shares) | 15,000 | ||||||
Purchase of shares for treasury | (25,119) | (25,119) | |||||
Purchase of shares for treasury (in shares) | (191,000) | ||||||
Other | (2,021) | 2,074 | 53 | ||||
Ending Balance at Jun. 30, 2022 | $ 9,858 | 465,624 | 3,160,920 | (285,197) | (2,438,144) | (78) | 912,983 |
Ending Balance (in shares) at Jun. 30, 2022 | 57,922,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 109,225 | 109,225 | |||||
Unrecognized amounts from defined benefit pension plans, net of tax | 85 | 85 | |||||
Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges, net of tax | 7,777 | 7,777 | |||||
Currency translation adjustment | (52,116) | (13) | (52,129) | ||||
Cash dividends declared | (32,580) | (32,580) | |||||
Stock-based compensation activity | 5,158 | 202 | 5,360 | ||||
Stock-based compensation activity (in shares) | 14,000 | ||||||
Purchase of shares for treasury | (26,518) | $ (26,518) | |||||
Purchase of shares for treasury (in shares) | (198,000) | (200,000) | |||||
Other | 390 | (365) | $ 25 | ||||
Ending Balance at Sep. 30, 2022 | $ 9,858 | $ 471,172 | $ 3,237,200 | $ (329,451) | $ (2,464,460) | $ (91) | $ 924,228 |
Ending Balance (in shares) at Sep. 30, 2022 | 57,738,000 |
CONSOLIDATED STATEMENTS OF EQ_2
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONSOLIDATED STATEMENTS OF EQUITY | ||||||||
Cash dividends declared per share (in dollars per share) | $ 0.56 | $ 0.56 | $ 0.56 | $ 0.51 | $ 0.51 | $ 0.51 | $ 1.68 | $ 1.53 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 363,078 | $ 202,039 |
Non-controlling interests in subsidiaries' income (loss) | 0 | 131 |
Net income including non-controlling interests | 363,078 | 202,170 |
Adjustments to reconcile Net income including non-controlling interests to Net cash provided by operating activities: | ||
Rationalization and asset impairment net charges (gains) (Note 6) | 7,776 | (1,162) |
Depreciation and amortization | 59,009 | 60,558 |
Equity earnings (loss) in affiliates, net | 254 | (399) |
Deferred income taxes | (34,403) | (28,428) |
Stock-based compensation | 20,949 | 18,215 |
Pension settlement charges | 0 | 80,098 |
Other, net | 15,867 | (754) |
Changes in operating assets and liabilities, net of effects from acquisitions: | ||
Increase in accounts receivable | (64,569) | (71,212) |
Increase in inventories | (135,578) | (128,856) |
Increase in other current assets | (34,368) | (10,610) |
Increase in trade accounts payable | 19,572 | 54,981 |
Increase in other current liabilities | 66,838 | 89,569 |
Net change in other assets and liabilities | (12,841) | (9,045) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 271,584 | 255,125 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (52,301) | (46,440) |
Acquisition of businesses, net of cash acquired | (22,294) | (158,605) |
Proceeds from sale of property, plant and equipment | 2,338 | 3,847 |
Other investing activities | 0 | 6,500 |
NET CASH USED BY INVESTING ACTIVITIES | (72,257) | (194,698) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Net change in borrowings | 14,999 | 32,295 |
Proceeds from exercise of stock options | 2,168 | 7,921 |
Purchase of shares for treasury (Note 8) | (156,216) | (103,848) |
Cash dividends paid to shareholders | (98,377) | (91,717) |
Other financing activities | 0 | (763) |
NET CASH USED BY FINANCING ACTIVITIES | (237,426) | (156,112) |
Effect of exchange rate changes on Cash and cash equivalents | (13,552) | (1,035) |
DECREASE IN CASH AND CASH EQUIVALENTS | (51,651) | (96,720) |
Cash and cash equivalents at beginning of period | 192,958 | 257,279 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 141,307 | $ 160,559 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Lincoln Electric Holdings, Inc. and its wholly-owned and majority-owned subsidiaries for which it has a controlling interest (the “Company”) after elimination of all inter-company accounts, transactions and profits. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. However, in the opinion of management, these unaudited consolidated financial statements contain all the adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position, results of operations and cash flows for the interim periods. Operating results for the nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022. The accompanying Consolidated Balance Sheet at December 31, 2021 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. In March 2022, i n response to Russia’s invasion of Ukraine, the Company announced it was ceasing operations in Russia and implementing plans to support its Russian employees. Although the Company’s Net sales and Total assets in Russia are less than of consolidated Total assets as of December 31, 2021, the Russia-Ukraine conflict and sanctions imposed globally may result in economic and supply chain disruptions, the ultimate financial impact of which cannot be reasonably estimated at this time. The Company continues to monitor the Russia-Ukraine conflict and its potential impacts. Turkey – Highly Inflationary Economy An economy is considered highly inflationary under GAAP if the cumulative inflation rate for a three-year period meets or exceeds 100 percent. The Turkish economy exceeded the three-year cumulative inflation rate of percent during the second quarter of 2022. As a result, the financial statements of the Company’s Turkish operation are reported under highly inflationary accounting rules as of April 1, 2022. Under highly inflationary accounting, the financial statements of the Company’s Turkish operation have been remeasured into the Company’s reporting currency (U.S. dollar). Beginning April 1, 2022, the exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in current earnings, rather than “Accumulated other comprehensive loss” on the balance sheet. As of September 30, 2022, this impact was not significant to the Company’s results. Management has evaluated and disclosed all material events occurring subsequent to the date of the financial statements up to October 27, 2022, the filing date of this Quarterly Report on Form 10-Q. New Accounting Pronouncements: This section provides a description of new accounting pronouncements (“Accounting Standard Update” or “ASU”) issued by the Financial Accounting Standards Board (“FASB”) that are applicable to the Company. The Company is currently evaluating the impact on its financial statements of the following ASU: Standard Description ASU No. 2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50) Requires disclosure about a company’s supplier finance program, including key terms, amount outstanding, assets pledged as applicable, presentation on the balance sheet and a period-over-period balance roll forward. Except for the roll forward requirement, the ASU is effective for interim and annual periods beginning January 1, 2023 and should be applied retrospectively. The roll forward requirement is effective January 1, 2024 and should be applied prospectively. Early adoption of the roll forward requirement is permitted. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 9 Months Ended |
Sep. 30, 2022 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | NOTE 2 — REVENUE RECOGNITION The following table presents the Company’s Net sales disaggregated by product line: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Consumables $ 547,596 $ 465,829 $ 1,655,613 $ 1,375,567 Equipment 387,644 340,625 1,174,664 1,014,362 Net sales $ 935,240 $ 806,454 $ 2,830,277 $ 2,389,929 Consumable sales consist of electrodes, fluxes, specialty welding consumables and brazing and soldering alloys. Equipment sales consist of arc welding power sources, welding accessories, fabrication, plasma cutters, wire feeding systems, automated joining, assembly and cutting systems, fume extraction equipment, CNC plasma and oxy-fuel cutting systems and regulators and torches used in oxy-fuel welding, cutting and brazing. Consumable and Equipment products are sold within each of the Company’s operating segments. Within the Equipment product line, there are certain customer contracts related to automation products that may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines the standalone selling price based on the prices charged to customers or using expected cost plus margin. Less than 10% of the Company’s Net sales are recognized over time. At September 30, 2022, the Company recorded $42,552 related to advance customer payments and $31,772 related to billings in excess of revenue recognized. These contract liabilities are included in Other current liabilities in the Condensed Consolidated Balance Sheets. At December 31, 2021, the balances related to advance customer payments and billings in excess of revenue recognized were $72,047 and $40,450, respectively. Substantially all of the Company’s contract liabilities are recognized within twelve months based on contract duration. The Company records an asset for contracts where it has recognized revenue, but has not yet invoiced the customer for goods or services. At September 30, 2022 and December 31, 2021, the Company recorded $37,488 and $25,300, respectively, related to these contract assets which are included in Other current assets in the Condensed Consolidated Balance Sheets. Contract asset amounts are expected to be billed within the next twelve months. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2022 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 3 — EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Numerator: Net income $ 109,225 $ 31,757 $ 363,078 $ 202,039 Denominator (shares in 000's): Basic weighted average shares outstanding 57,823 59,289 58,148 59,465 Effect of dilutive securities - Stock options and awards 703 766 667 703 Diluted weighted average shares outstanding 58,526 60,055 58,815 60,168 Basic earnings per share $ 1.89 $ 0.54 $ 6.24 $ 3.40 Diluted earnings per share $ 1.87 $ 0.53 $ 6.17 $ 3.36 For the three months ended September 30, 2022 and 2021, common shares subject to equity-based awards of 52,495 and 2,126, respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive. For the nine months ended September 30, 2022 and 2021, common shares subject to equity-based awards of 120,106 and 150,254, respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive. |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2022 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 4 — ACQUISITIONS On March 1, 2022, the Company acquired 100% ownership of Kestra Universal Soldas, Industria e Comercio, Imporacao e Exportacao Ltda. (“Kestra”), a privately held manufacturer headquartered in Atibaia, Sao Paulo State, Brazil. The net purchase price was $22,294 , net of cash acquired and accounted for as a business combination. In 2021, Kestra generated sales of approximately $15,000 . Beginning March 1, 2022, the Company’s Consolidated Statements of Income include the results of Kestra, including Net sales of $11,906 through September 30, 2022 and the impact on net income for the three and nine months ended September 30, 2022 was not material. Kestra manufactures and provides specialty welding consumables, wear plates and maintenance and repair services for alloy and wear-resistant products commonly used in mining, steel, agricultural and industrial mill applications. The acquisition broadens the Company’s specialty alloys portfolio and services. On July 28, 2021, the Company acquired 100% ownership of Overstreet-Hughes Company, Inc. and Shoals Tubular, Inc. (“FTP”). The net purchase price was $71,716 , net of cash acquired and accounted for as a business combination. The Company recognized $ in acquisition transaction costs in 2021 which were expensed as incurred and are included in “Selling, general, and administrative expenses” in the Consolidated Statements of Income. In 2020, FTP generated sales of approximately $50,000 . Beginning July 28, 2021, the Company’s Consolidated Statements of Income include the results of FTP, including Net sales of $24,953 through December 31, 2021 and the impact on net income for the year ended December 31, 2021 was not material. FTP manufactures copper and aluminum headers, distributor assemblies and manifolds in the United States and Mexico for the heating, ventilation, and air conditioning sector (“HVAC”). The acquisition further differentiated The Harris Products Group’s competitive position serving HVAC original equipment manufacturers with a comprehensive portfolio of solutions for the fabrication of HVAC coils and accelerates growth in this market. On April 1, 2021, the Company acquired 100% ownership of Zeman Bauelemente Produktionsgesellschaft m.b.H. (“Zeman"), a division of the Zeman Group. The net purchase price was $84,390, net of cash acquired and accounted for as a business combination. The Company recognized $1,577 in acquisition transaction costs in 2021 which were expensed as incurred and are included in “Selling, general, and administrative expenses” in the Consolidated Statements of Income. In 2020, Zeman generated sales of approximately $40,000. Beginning April 1, 2021, the Company’s Consolidated Statements of Income include the results of Zeman, including Net sales of $24,473 through December 31, 2021 and the impact on net income for the year ended December 31, 2021 was not material. Zeman, based in Vienna, Austria, is a leading designer and manufacturer of robotic assembly and arc welding systems that automate the tacking and welding of steel beams. The acquired companies discussed above are not material individually, or in the aggregate, to the actual or pro forma Consolidated Statements of Income or Consolidated Statements of Cash Flows; as such, pro forma information related to these acquisitions have not been presented. The preliminary purchase price allocations are expected to be finalized within the allowable measurement period. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2022 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | NOTE 5 — SEGMENT INFORMATION The Company’s business units are aligned into three operating segments. The operating segments consist of Americas Welding, International Welding and The Harris Products Group. The Americas Welding segment includes welding operations in North and South America. The International Welding segment includes welding operations in Europe, Africa, Asia and Australia. The Harris Products Group includes the Company’s global oxy-fuel cutting, soldering and brazing businesses as well as its retail business in the United States. Segment performance is measured and resources are allocated based on a number of factors, the primary measure being the adjusted earnings before interest and income taxes (“Adjusted EBIT”) profit measure. EBIT is defined as Operating income plus Other income (expense). EBIT is adjusted for special items as determined by management such as the impact of rationalization activities, certain asset impairment charges and gains or losses on disposals of assets. The following table presents Adjusted EBIT by segment: The Harris Americas International Products Corporate / Welding Welding Group Eliminations Consolidated Three Months Ended September 30, 2022 Net sales $ 585,628 $ 216,497 $ 133,115 $ — $ 935,240 Inter-segment sales 35,353 9,994 2,642 (47,989) — Total $ 620,981 $ 226,491 $ 135,757 $ (47,989) $ 935,240 Adjusted EBIT $ 118,804 $ 25,225 $ 14,432 $ (1,685) $ 156,776 Special items charge (gain) (1) (353) 8,364 — 3,068 11,079 EBIT $ 119,157 $ 16,861 $ 14,432 $ (4,753) $ 145,697 Interest income 376 Interest expense (8,586) Income before income taxes $ 137,487 Three Months Ended September 30, 2021 Net sales $ 461,508 $ 227,165 $ 117,781 $ — $ 806,454 Inter-segment sales 37,480 7,078 1,945 (46,503) — Total $ 498,988 $ 234,243 $ 119,726 $ (46,503) $ 806,454 Adjusted EBIT $ 84,557 $ 29,032 $ 15,980 $ (4,704) $ 124,865 Special items charge (gain) (3) 73,574 6,615 547 — 80,736 EBIT $ 10,983 $ 22,417 $ 15,433 $ (4,704) $ 44,129 Interest income 333 Interest expense (6,047) Income before income taxes $ 38,415 Nine Months Ended September 30, 2022 Net sales $ 1,715,342 $ 711,167 $ 403,768 $ — $ 2,830,277 Inter-segment sales 92,540 25,749 8,570 (126,859) — Total $ 1,807,882 $ 736,916 $ 412,338 $ (126,859) $ 2,830,277 Adjusted EBIT $ 348,439 $ 97,321 $ 51,952 $ (10,470) $ 487,242 Special items charge (gain) (2) (3,627) 9,865 — 3,068 9,306 EBIT $ 352,066 $ 87,456 $ 51,952 $ (13,538) $ 477,936 Interest income 980 Interest expense (21,847) Income before income taxes $ 457,069 Nine Months Ended September 30, 2021 Net sales $ 1,344,218 $ 702,596 $ 343,115 $ — $ 2,389,929 Inter-segment sales 109,993 18,260 6,376 (134,629) — Total $ 1,454,211 $ 720,856 $ 349,491 $ (134,629) $ 2,389,929 Adjusted EBIT $ 245,308 $ 77,845 $ 52,889 $ (10,048) $ 365,994 Special items charge (gain) (3) 79,664 13,695 547 1,923 95,829 EBIT $ 165,644 $ 64,150 $ 52,342 $ (11,971) $ 270,165 Interest income 1,185 Interest expense (17,921) Income before income taxes $ 253,429 (1) In the three months ended September 30, 2022, special items exclude an adjustment to the amortization of the step up in value of acquired inventories of $353 in Americas Welding, Rationalization and asset impairment charges of $8,364 in International Welding as discussed in Note 6 and acquisition transaction costs of $3,068 in Corporate/Eliminations related to the contemplated acquisition discussed in Note 18. (2) In the nine months ended September 30, 2022, special items exclude a favorable adjustment related to the termination of a pension plan of $3,735 , the amortization of the step up in value of acquired inventories of $1,106 and Rationalization and asset impairment net gains of $998 in Americas Welding, Rationalization and asset impairment charges of $10,403 in International Welding as discussed in Note 6 and acquisition costs transaction costs of $3,086 in Corporate/Eliminations related to the contemplated acquisition discussed in Note 18. (3) In the three and nine months ended September 30, 2021, special items reflect Rationalization and asset impairment charges of $3,484 and $8,277 , respectively, primarily in International Welding, amortization of the step up in value of acquired inventories of $3,690 and $5,531 , respectively , related to the acquisitions of Zeman in International Welding and FTP in The Harris Products Group, pension settlement charges of $73,562 and $79,652 , respectively, in Americas Welding and $446 in International Welding in the nine months ended September 30, 2021. Also in the nine months ended September 30, 2021, special items reflect acquisition transaction costs of $1,923 in Corporate/Eliminations related to acquisitions as discussed in Note 4. |
RATIONALIZATION AND ASSET IMPAI
RATIONALIZATION AND ASSET IMPAIRMENTS | 9 Months Ended |
Sep. 30, 2022 | |
RATIONALIZATION AND ASSET IMPAIRMENTS | |
RATIONALIZATION AND ASSET IMPAIRMENTS | NOTE 6 — RATIONALIZATION AND ASSET IMPAIRMENTS The Company recorded Rationalization and asset impairment net charges of $9,405 and $8,277 in the nine months ended September 30, 2022 and 2021, respectively. The charges are primarily related to employee severance, non-cash asset impairments and gains or losses on the disposal of assets. During 2021, the Company initiated rationalization plans within the International Welding segment. The plans include headcount restructuring and the consolidation of manufacturing operations to better align the Company’s cost structure with economic conditions and operating needs. At September 30, 2022, liabilities of The Company believes the rationalization actions will positively impact future results of operations and will not have a material effect on liquidity and sources and uses of capital. The Company continues to evaluate its cost structure and additional rationalization actions may result in charges in future periods. The following table summarizes the activity related to rationalization liabilities for the nine months ended September 30, 2022: International Welding Consolidated Balance at December 31, 2021 $ 2,990 $ 2,990 Payments and other adjustments (3,522) (3,522) Charged to expense 1,629 1,629 Balance at September 30, 2022 $ 1,097 $ 1,097 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI") | 9 Months Ended |
Sep. 30, 2022 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI") | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI") | NOTE 7 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI") The following tables set forth the total changes in accumulated other comprehensive income (loss) ("AOCI") by component, net of taxes: Three Months Ended September 30, 2022 Unrealized gain (loss) on derivatives designated and Defined benefit Currency qualifying as cash pension plan translation flow hedges activity adjustment Total Balance at June 30, 2022 $ 22,399 $ (13,168) $ (294,428) $ (285,197) Other comprehensive income (loss) before reclassification 8,142 — (52,116) 3 (43,974) Amounts reclassified from AOCI (365) 1 85 2 — (280) Net current-period other comprehensive income (loss) 7,777 85 (52,116) (44,254) Balance at September 30, 2022 $ 30,176 $ (13,083) $ (346,544) $ (329,451) Three Months Ended September 30, 2021 Unrealized gain (loss) on derivatives designated and Defined benefit Currency qualifying as cash pension plan translation flow hedges activity adjustment Total Balance at June 30, 2021 $ 5,023 $ (98,412) $ (211,802) $ (305,191) Other comprehensive income (loss) before reclassification 3,162 (235) (19,062) 3 (16,135) Amounts reclassified from AOCI (286) 1 55,793 2 — 55,507 Net current-period other comprehensive income (loss) 2,876 55,558 (19,062) 39,372 Balance at September 30, 2021 $ 7,899 $ (42,854) $ (230,864) $ (265,819) (1) During the three months ended September 30, 2022, the AOCI reclassification is a component of Net sales of $155 (net of tax of $74 ) and Cost of goods sold of $(210) (net of tax of $(44) ); during the three months ended September 30, 2021, the reclassification is a component of Net sales of $304 (net of tax of $135 ) and Cost of goods sold of $18 (net of tax of $26 ). See Note 16 to the consolidated financial statements for additional details. (2) This AOCI component is included in the computation of net periodic pension costs (net of tax of $30 and $18,677 ) during the three months ended September 30, 2022 and 2021, respectively. See Note 13 to the consolidated financial statements for additional details. (3) The Other comprehensive income (loss) before reclassifications excludes $(13) and $(58) attributable to Non-controlling interests in the three months ended September 30, 2022 and 2021, respectively. Nine Months Ended September 30, 2022 Unrealized gain (loss) on derivatives designated and Defined benefit Currency qualifying as cash pension plan translation flow hedges activity adjustment Total Balance at December 31, 2021 $ 8,094 $ (13,231) $ (252,249) $ (257,386) Other comprehensive income (loss) before reclassification 23,430 — (94,295) 3 (70,865) Amounts reclassified from AOCI (1,348) 1 148 2 — (1,200) Net current-period other comprehensive income (loss) 22,082 148 (94,295) (72,065) Balance at September 30, 2022 $ 30,176 $ (13,083) $ (346,544) $ (329,451) Nine Months Ended September 30, 2021 Unrealized gain (loss) on derivatives designated and Defined benefit Currency qualifying as cash pension plan translation flow hedges activity adjustment Total Balance at December 31, 2020 $ 2,487 $ (101,770) $ (202,907) $ (302,190) Other comprehensive income (loss) before reclassification 6,275 (2,220) (27,957) 3 (23,902) Amounts reclassified from AOCI (863) 1 61,136 2 — 60,273 Net current-period other comprehensive income (loss) 5,412 58,916 (27,957) 36,371 Balance at September 30, 2021 $ 7,899 $ (42,854) $ (230,864) $ (265,819) (1) During the nine months ended September 30, 2022, the AOCI reclassification is a component of Net sales of $409 (net of tax of $181 ) and Cost of goods sold of $(939) (net of tax of $(223) ); during the nine months ended September 30, 2021, the reclassification is a component of Net sales of $1,611 (net of tax of $692 ) and Cost of goods sold of $748 (net of tax of $270 ). See Note 16 to the consolidated financial statements for additional details. (2) This AOCI component is included in the computation of net periodic pension costs (net of tax of $209 and $21,578 ) during the nine months ended September 30, 2022 and 2021, respectively. See Note 13 to the consolidated financial statements for additional details. (3) The Other comprehensive income (loss) before reclassifications excludes $102 and $ (327) attributable to Non-controlling interests in the nine months ended September 30, 2022 and 2021, respectively. |
COMMON STOCK REPURCHASE PROGRAM
COMMON STOCK REPURCHASE PROGRAM | 9 Months Ended |
Sep. 30, 2022 | |
COMMON STOCK REPURCHASE PROGRAM | |
COMMON STOCK REPURCHASE PROGRAM | NOTE 8 — COMMON STOCK REPURCHASE PROGRAM From time to time at management’s discretion, the Company is authorized to repurchase its common shares in the open market, depending on market conditions, stock price and other factors. During the three months ended September 30, 2022, the Company purchased a total of 0.2 million shares at an average cost per share of $133.74. During the nine months ended September 30, 2022, the Company purchased a total of 1.2 million shares at an average cost per share of $130.90. As of September 30, 2022, 9.1 million common shares remained available for repurchase. The repurchased common shares remain in treasury and have not been retired. |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2022 | |
INVENTORIES | |
INVENTORIES | NOTE 9 — INVENTORIES Inventories in the Condensed Consolidated Balance Sheets are comprised of the following components: September 30, 2022 December 31, 2021 Raw materials $ 190,369 $ 143,394 Work-in-process 106,212 97,834 Finished goods 335,795 298,691 Total $ 632,376 $ 539,919 At September 30, 2022 and December 31, 2021, approximately 40% and 36%, respectively, of total inventories were valued using the last-in, first-out ("LIFO") method. The excess of current cost over LIFO cost was $134,597 and $114,176 at September 30, 2022 and December 31, 2021, respectively. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2022 | |
LEASES | |
LEASES | NOTE 10 — LEASES The table below summarizes the right-of-use assets and lease liabilities in the Company’s Condensed Consolidated Balance sheets: Operating Leases Balance Sheet Classification September 30, 2022 December 31, 2021 Right-of-use assets Other assets $ 45,222 $ 47,966 Current liabilities Other current liabilities $ 9,963 $ 10,218 Noncurrent liabilities Other liabilities 36,636 38,960 Total lease liabilities $ 46,599 $ 49,178 Total lease expense, which is included in Cost of goods sold and Selling, general & administrative expenses in the Company’s Consolidated Statements of Income, was $5,109 and $15,415 in the three and nine months ended September 30, 2022, respectively, and $5,619 and $16,279 in the three and nine months ended September 30, 2021, respectively. Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended September 30, 2022 were $2,930 and $9,101, respectively, and are included in Net cash provided by operating activities in the Company’s Consolidated Statements of Cash Flows. Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended September 30, 2021 were $5,896 and $12,548, respectively, and are included in Net cash provided by operating activities in the Company’s Consolidated Statements of Cash Flows. Right-of-use assets obtained in exchange for operating lease liabilities were $4,739 and $8,217 during the three and nine months ended September 30, 2022, respectively, and $3,218 and $12,912 for the three and nine months ended September 30, 2021, respectively. The total future minimum lease payments for noncancelable operating leases were as follows: September 30, 2022 2022 $ 2,868 2023 10,794 2024 9,313 2025 6,307 2026 5,124 After 2026 17,915 Total lease payments $ 52,321 Less: Imputed interest 5,722 Operating lease liabilities $ 46,599 As of September 30, 2022, the weighted average remaining lease term is 7.9 years and the weighted average discount rate used to determine the operating lease liability is 3.0%. |
PRODUCT WARRANTY COSTS
PRODUCT WARRANTY COSTS | 9 Months Ended |
Sep. 30, 2022 | |
PRODUCT WARRANTY COSTS | |
PRODUCT WARRANTY COSTS | NOTE 11 — PRODUCT WARRANTY COSTS The changes in the carrying amount of product warranty accruals are as follows: Nine Months Ended September 30, 2022 2021 Balance at beginning of year $ 20,466 $ 21,760 Accruals for warranties 9,790 8,446 Settlements (10,346) (8,809) Foreign currency translation and other adjustments (723) (306) Balance at end of period $ 19,187 $ 21,091 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2022 | |
DEBT | |
DEBT | NOTE 12 — DEBT Revolving Credit Agreements On April 23, 2021, the Company amended and restated the agreement governing its line of credit by entering into the Second Amended and Restated Credit Agreement (“Credit Agreement”). The Credit Agreement has a line of credit totaling . The interest rate on borrowings is based on LIBOR plus a spread based on the Company’s net leverage ratio. The Credit Agreement contains customary representations and warranties, as well as customary affirmative, negative and financial covenants for credit facilities of this type (subject to negotiated baskets and exceptions), including limitations on the Company and its subsidiaries with respect to liens, investments, distributions, mergers and acquisitions, dispositions of assets and transactions with affiliates. The Company has other lines of credit and debt agreements totaling $104,293. As of September 30, 2022, the Company was in compliance with all of its covenants and had $20,338 outstanding at September 30, 2022. Senior Unsecured Notes On April 1, 2015 and October 20, 2016, the Company entered into separate Note Purchase Agreements pursuant to which it issued senior unsecured notes (the "Notes") through a private placement. The 2015 have an aggregate principal amount of $350,000, comprised of four different series ranging from $50,000 to $100,000, with maturity dates ranging from August 20, 2025 through April 1, 2045, and interest rates ranging from 2.75% to 4.02%. Interest on the Notes is paid semi-annually. The Company’s total weighted average effective interest rate and remaining weighted average tenure of the Notes is 3.3% and 11.6 years, respectively. The proceeds of the Notes were used for general corporate purposes. The Notes contain certain affirmative and negative covenants. As of September 30, 2022, the Company was in compliance with all of its debt covenants relating to the Notes. Shelf Agreements On November 27, 2018, the Company entered into seven uncommitted master note facilities (the "Shelf Agreements") that allow borrowings up to $700,000 in the aggregate. The Shelf Agreements have a term of 5 years and the average life of borrowings cannot exceed 15 years. The Company is required to comply with covenants similar to those contained in the Notes. As of September 30, 2022, the Company was in compliance with all of its covenants and had no outstanding borrowings under the Shelf Agreements. Fair Value of Debt At September 30, 2022 and December 31, 2021, the fair value of long-term debt, including the current portion, was approximately $597,972 and $776,655, respectively, which was determined using available market information and methodologies requiring judgment. The carrying value of this debt at such dates was $722,287 and $717,855, respectively. Since judgment is required in interpreting market information, the fair value of the debt is not necessarily the amount which could be realized in a current market exchange. |
RETIREMENT AND POSTRETIREMENT B
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS | 9 Months Ended |
Sep. 30, 2022 | |
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS | |
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS | NOTE 13 — RETIREMENT AND POSTRETIREMENT BENEFIT PLANS The components of total pension cost were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 U.S. pension Non-U.S. U.S. pension Non-U.S. U.S. pension Non-U.S. U.S. pension Non-U.S. plans pension plans plans pension plans plans pension plans plans pension plans Service cost $ 50 $ 254 $ 49 $ 395 $ 149 $ 827 $ 146 $ 1,190 Interest cost 66 607 2,622 924 197 1,947 8,675 1,932 Expected return on plan assets — (759) (3,888) (1,487) — (2,637) (12,595) (2,996) Amortization of prior service cost — — — 1 — (1) — 12 Amortization of net loss 44 71 616 291 133 225 1,867 737 Settlement charges (gains) (1) — — 73,562 — (3,735) — 79,652 446 Defined benefit plans 160 173 72,961 124 (3,256) 361 77,745 1,321 Multi-employer plans — 74 — 138 — 289 — 640 Defined contribution plans 7,850 679 6,572 898 20,180 2,284 17,606 2,296 Total pension cost $ 8,010 $ 926 $ 79,533 $ 1,160 $ 16,924 $ 2,934 $ 95,351 $ 4,257 (1) Gains in the nine months ended September 30, 2022 related to the final settlement associated with the termination of a pension plan. Charges in the three and nine months ended September 30, 2021 primarily resulting from lump sum pension payments also related to the termination of a pension plan. The defined benefit plan components of Total pension cost, other than service cost, are included in Other income (expense) in the Company’s Consolidated Statements of Income. |
OTHER INCOME (EXPENSE)
OTHER INCOME (EXPENSE) | 9 Months Ended |
Sep. 30, 2022 | |
OTHER INCOME (EXPENSE) | |
OTHER INCOME (EXPENSE) | NOTE 14 — OTHER INCOME (EXPENSE) The components of Other income (expense) were as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Equity earnings (loss) in affiliates $ (434) $ 108 $ (254) $ 399 Other components of net periodic pension (cost) income (1) (29) (72,641) 3,871 (77,730) Other income (expense) 4,051 1,092 3,471 6,176 Total Other income (expense) $ 3,588 $ (71,441) $ 7,088 $ (71,155) (1) Other components of net periodic pension (cost) income includes pension settlements and curtailments as discussed in Note 13 to the consolidated financial statements. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2022 | |
INCOME TAXES | |
INCOME TAXES | NOTE 15 — INCOME TAXES The Company recognized $93,991 of tax expense on pretax income of $457,069, resulting in an effective income tax rate of 20.6% for the nine months ended September 30, 2022. The effective income tax rate was 20.2% for the nine months ended September 30, 2021. The effective tax rate was higher for the nine months ended September 30, 2022, as compared with the same period in 2021, primarily due to the geographic mix of earnings and the impact of favorable discrete tax adjustments in 2021. As of September 30, 2022, the Company had $18,375 of unrecognized tax benefits. If recognized, approximately $15,195 would be reflected as a component of income tax expense. The Company files income tax returns in the U.S. and various state, local and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before 2017. The Company is currently subject to U.S., various state and non-U.S. income tax audits. Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including progress of tax audits and closing of statutes of limitations. Based on information currently available, management believes that additional audit activity could be completed and/or statutes of limitations may close relating to existing unrecognized tax benefits. It is reasonably possible there could be a reduction of $3,655 in previously unrecognized tax benefits by the end of the third quarter 2023. |
DERIVATIVES
DERIVATIVES | 9 Months Ended |
Sep. 30, 2022 | |
DERIVATIVES | |
DERIVATIVES | NOTE 16 — DERIVATIVES The Company uses derivative instruments to manage exposures to currency exchange rates, interest rates and commodity prices arising in the normal course of business. Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable. Hedge ineffectiveness was immaterial in the nine months ended September 30, 2022 and 2021. The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. None of the concentrations of risk with any individual counterparty was considered significant at September 30, 2022. The Company does not expect any counterparties to fail to meet their obligations. Cash Flow Hedges The Company has certain foreign currency forward contracts that are qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of these short-term contracts was $54,600 at September 30, 2022 and $72,630 at December 31, 2021. The Company has interest rate forward starting swap agreements that are qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of the long-term contracts was $100,000 at September 30, 2022 and December 31, 2021 and have a termination date of August 2025. The Company has commodity contracts with a notional amount of 1,475,000 pounds and 975,000 pounds at September 30, 2022 and December 31, 2021, respectively, which are qualified and designated as cash flow hedges. Net Investment Hedges The Company has cross currency swap agreements that are qualified and designated as net investment hedges. The dollar equivalent gross notional amount of these contracts is $25,000 as of September 30, 2022 and December 31, 2021, respectively. The Company has foreign currency forward contracts that qualify and are designated as net investment hedges. The dollar equivalent gross notional amount of these short-term contracts was $81,398 at September 30, 2022 and $94,479 at December 31, 2021. Derivatives Not Designated as Hedging Instruments The Company has certain foreign exchange forward contracts that are not designated as hedges. These derivatives are held as economic hedges of certain balance sheet exposures. The dollar equivalent gross notional amount of these contracts was $260,594 and $301,685 at September 30, 2022 and December 31, 2021, respectively. Fair values of derivative instruments in the Company’s Condensed Consolidated Balance Sheets follow: September 30, 2022 December 31, 2021 Other Other Other Other Current Current Other Other Current Current Other Other Derivatives by hedge designation Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities Designated as hedging instruments: Foreign exchange contracts $ 2,039 $ 508 $ — $ — $ 772 $ 535 $ — $ — Forward starting swap agreements — — 19,479 — — — 6,990 — Net investment contracts 13,394 — 2,718 — 2,095 — — 608 Commodity contracts — 547 — — 311 — — — Not designated as hedging instruments: Foreign exchange contracts 1,684 3,394 — — 4,656 3,445 — — Total derivatives $ 17,117 $ 4,449 $ 22,197 $ — $ 7,834 $ 3,980 $ 6,990 $ 608 The effects of undesignated derivative instruments on the Company’s Consolidated Statements of Income consisted of the following: Three Months Ended September 30, Nine Months Ended September 30, Derivatives by hedge designation Classification of gain (loss) 2022 2021 2022 2021 Not designated as hedges: Foreign exchange contracts Selling, general $ (3,374) $ (878) $ (2,836) $ 5,000 Commodity Contracts Cost of goods sold (319) — (40) — The effects of designated hedges on AOCI and the Company’s Consolidated Statements of Income consisted of the following: Total gain (loss) recognized in AOCI, net of tax September 30, 2022 December 31, 2021 Foreign exchange contracts $ 1,325 $ 284 Forward starting swap agreements 14,133 5,232 Net investment contracts 15,000 2,339 Commodity Contracts (282) 239 The Company expects a gain of $1,043 related to existing contracts to be reclassified from AOCI, net of tax, to earnings over the next 12 months as the hedged transactions are realized. Three Months Ended September 30, Nine Months Ended September 30, Gain (loss) recognized in the Derivative type Consolidated Statements of Income: 2022 2021 2022 2021 Foreign exchange contracts Sales $ 229 $ 439 $ 590 $ 2,303 Cost of goods sold 573 (44) 1,202 (1,018) Commodity contracts Cost of goods sold (319) — (40) — |
FAIR VALUE
FAIR VALUE | 9 Months Ended |
Sep. 30, 2022 | |
FAIR VALUE. | |
FAIR VALUE | NOTE 17 - FAIR VALUE The following table provides a summary of assets and liabilities as of September 30, 2022, measured at fair value on a recurring basis: Quoted Prices in Active Markets for Identical Assets or Significant Other Significant Balance as of Liabilities Observable Inputs Unobservable Description September 30, 2022 (Level 1) (Level 2) Inputs (Level 3) Assets: Foreign exchange contracts $ 3,723 $ — $ 3,723 $ — Net investment contracts 16,112 — 16,112 — Forward starting swap agreements 19,479 — 19,479 — Pension surplus 62,750 62,750 — — Total assets $ 102,064 $ 62,750 $ 39,314 $ — Liabilities: Foreign exchange contracts $ 3,902 $ — $ 3,902 $ — Commodity contracts 547 — 547 — Deferred compensation 38,189 — 38,189 — Total liabilities $ 42,638 $ — $ 42,638 $ — The following table provides a summary of assets and liabilities as of December 31, 2021, measured at fair value on a recurring basis: Quoted Prices in Active Markets for Identical Assets or Significant Other Significant Balance as of Liabilities Observable Inputs Unobservable Description December 31, 2021 (Level 1) (Level 2) Inputs (Level 3) Assets: Foreign exchange contracts $ 5,428 $ — $ 5,428 $ — Net investment contracts 2,095 — 2,095 — Commodity contracts 311 — 311 — Forward starting swap agreements 6,990 — 6,990 — Total assets $ 14,824 $ — $ 14,824 $ — Liabilities: Foreign exchange contracts $ 3,980 $ — $ 3,980 $ — Net investment contracts 608 — 608 — Deferred compensation 41,612 — 41,612 — Total liabilities $ 46,200 $ — $ 46,200 $ — The Company’s derivative contracts are valued at fair value using the market approach. The Company measures the fair value of foreign exchange contracts, swap agreements and net investment contracts using Level 2 inputs based on observable spot and forward rates in active markets. The deferred compensation liability is the Company’s obligation under its executive deferred compensation plan. The Company measures the fair value of the liability using the market values of the participants’ underlying investment fund elections. The fair value of Cash and cash equivalents, Accounts receivable, Short-term debt excluding the current portion of long-term debt and Trade accounts payable approximated book value due to the short-term nature of these instruments at both September 30, 2022 and December 31, 2021. The fair value of the Company’s pension surplus assets are based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy. The pension surplus assets are invested in money market and short-term duration bond funds at September 30, 2022. The Company has various financial instruments, including cash and cash equivalents, short and long-term debt and forward contracts. While these financial instruments are subject to concentrations of credit risk, the Company has minimized this risk by entering into arrangements with a number of major banks and financial institutions and investing in several high-quality instruments. The Company does not expect any counterparties to fail to meet their obligations. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2022 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 18 – SUBSEQUENT EVENTS On October 14, 2022, the Company entered into a definitive agreement to acquire Fori Automation, Inc. (the “contemplated acquisition”). Upon completion of the contemplated acquisition, the acquired business will extend the Company’s market presence within the automotive sector, better position it to capitalize on accelerating investments in automotive electric vehicle platforms, offer cross-selling growth opportunities to industrial customers and expand the Company’s international automation footprint. The definitive agreement provides for a cash purchase price of $427,000, subject to a customary working capital adjustment. The Company intends to fund the transaction with cash on hand and arranged credit. The contemplated acquisition is subject to regulatory approval and other customary closing conditions and is expected to close in the fourth quarter of 2022. For the three and nine months ended September 30, 2022, the Company has incurred $3,068, respectively, of acquisition transaction costs related to the contemplated acquisition. These costs were expensed as incurred and are included in “Selling, general, and administrative expenses” in the Consolidated Statements of Income. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of Lincoln Electric Holdings, Inc. and its wholly-owned and majority-owned subsidiaries for which it has a controlling interest (the “Company”) after elimination of all inter-company accounts, transactions and profits. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. However, in the opinion of management, these unaudited consolidated financial statements contain all the adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position, results of operations and cash flows for the interim periods. Operating results for the nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the year ending December 31, 2022. The accompanying Consolidated Balance Sheet at December 31, 2021 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. In March 2022, i n response to Russia’s invasion of Ukraine, the Company announced it was ceasing operations in Russia and implementing plans to support its Russian employees. Although the Company’s Net sales and Total assets in Russia are less than of consolidated Total assets as of December 31, 2021, the Russia-Ukraine conflict and sanctions imposed globally may result in economic and supply chain disruptions, the ultimate financial impact of which cannot be reasonably estimated at this time. The Company continues to monitor the Russia-Ukraine conflict and its potential impacts. |
Highly Inflationary Economy | Turkey – Highly Inflationary Economy An economy is considered highly inflationary under GAAP if the cumulative inflation rate for a three-year period meets or exceeds 100 percent. The Turkish economy exceeded the three-year cumulative inflation rate of percent during the second quarter of 2022. As a result, the financial statements of the Company’s Turkish operation are reported under highly inflationary accounting rules as of April 1, 2022. Under highly inflationary accounting, the financial statements of the Company’s Turkish operation have been remeasured into the Company’s reporting currency (U.S. dollar). Beginning April 1, 2022, the exchange gains and losses from the remeasurement of monetary assets and liabilities are reflected in current earnings, rather than “Accumulated other comprehensive loss” on the balance sheet. As of September 30, 2022, this impact was not significant to the Company’s results. Management has evaluated and disclosed all material events occurring subsequent to the date of the financial statements up to October 27, 2022, the filing date of this Quarterly Report on Form 10-Q. |
New Accounting Pronouncements | New Accounting Pronouncements: This section provides a description of new accounting pronouncements (“Accounting Standard Update” or “ASU”) issued by the Financial Accounting Standards Board (“FASB”) that are applicable to the Company. The Company is currently evaluating the impact on its financial statements of the following ASU: Standard Description ASU No. 2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50) Requires disclosure about a company’s supplier finance program, including key terms, amount outstanding, assets pledged as applicable, presentation on the balance sheet and a period-over-period balance roll forward. Except for the roll forward requirement, the ASU is effective for interim and annual periods beginning January 1, 2023 and should be applied retrospectively. The roll forward requirement is effective January 1, 2024 and should be applied prospectively. Early adoption of the roll forward requirement is permitted. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
REVENUE RECOGNITION | |
Disaggregation of revenue by product line | Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Consumables $ 547,596 $ 465,829 $ 1,655,613 $ 1,375,567 Equipment 387,644 340,625 1,174,664 1,014,362 Net sales $ 935,240 $ 806,454 $ 2,830,277 $ 2,389,929 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
EARNINGS PER SHARE | |
Computation of basic and diluted earnings per share | Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Numerator: Net income $ 109,225 $ 31,757 $ 363,078 $ 202,039 Denominator (shares in 000's): Basic weighted average shares outstanding 57,823 59,289 58,148 59,465 Effect of dilutive securities - Stock options and awards 703 766 667 703 Diluted weighted average shares outstanding 58,526 60,055 58,815 60,168 Basic earnings per share $ 1.89 $ 0.54 $ 6.24 $ 3.40 Diluted earnings per share $ 1.87 $ 0.53 $ 6.17 $ 3.36 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
SEGMENT INFORMATION | |
Schedule of financial information for the reportable segments | The Harris Americas International Products Corporate / Welding Welding Group Eliminations Consolidated Three Months Ended September 30, 2022 Net sales $ 585,628 $ 216,497 $ 133,115 $ — $ 935,240 Inter-segment sales 35,353 9,994 2,642 (47,989) — Total $ 620,981 $ 226,491 $ 135,757 $ (47,989) $ 935,240 Adjusted EBIT $ 118,804 $ 25,225 $ 14,432 $ (1,685) $ 156,776 Special items charge (gain) (1) (353) 8,364 — 3,068 11,079 EBIT $ 119,157 $ 16,861 $ 14,432 $ (4,753) $ 145,697 Interest income 376 Interest expense (8,586) Income before income taxes $ 137,487 Three Months Ended September 30, 2021 Net sales $ 461,508 $ 227,165 $ 117,781 $ — $ 806,454 Inter-segment sales 37,480 7,078 1,945 (46,503) — Total $ 498,988 $ 234,243 $ 119,726 $ (46,503) $ 806,454 Adjusted EBIT $ 84,557 $ 29,032 $ 15,980 $ (4,704) $ 124,865 Special items charge (gain) (3) 73,574 6,615 547 — 80,736 EBIT $ 10,983 $ 22,417 $ 15,433 $ (4,704) $ 44,129 Interest income 333 Interest expense (6,047) Income before income taxes $ 38,415 Nine Months Ended September 30, 2022 Net sales $ 1,715,342 $ 711,167 $ 403,768 $ — $ 2,830,277 Inter-segment sales 92,540 25,749 8,570 (126,859) — Total $ 1,807,882 $ 736,916 $ 412,338 $ (126,859) $ 2,830,277 Adjusted EBIT $ 348,439 $ 97,321 $ 51,952 $ (10,470) $ 487,242 Special items charge (gain) (2) (3,627) 9,865 — 3,068 9,306 EBIT $ 352,066 $ 87,456 $ 51,952 $ (13,538) $ 477,936 Interest income 980 Interest expense (21,847) Income before income taxes $ 457,069 Nine Months Ended September 30, 2021 Net sales $ 1,344,218 $ 702,596 $ 343,115 $ — $ 2,389,929 Inter-segment sales 109,993 18,260 6,376 (134,629) — Total $ 1,454,211 $ 720,856 $ 349,491 $ (134,629) $ 2,389,929 Adjusted EBIT $ 245,308 $ 77,845 $ 52,889 $ (10,048) $ 365,994 Special items charge (gain) (3) 79,664 13,695 547 1,923 95,829 EBIT $ 165,644 $ 64,150 $ 52,342 $ (11,971) $ 270,165 Interest income 1,185 Interest expense (17,921) Income before income taxes $ 253,429 (1) In the three months ended September 30, 2022, special items exclude an adjustment to the amortization of the step up in value of acquired inventories of $353 in Americas Welding, Rationalization and asset impairment charges of $8,364 in International Welding as discussed in Note 6 and acquisition transaction costs of $3,068 in Corporate/Eliminations related to the contemplated acquisition discussed in Note 18. (2) In the nine months ended September 30, 2022, special items exclude a favorable adjustment related to the termination of a pension plan of $3,735 , the amortization of the step up in value of acquired inventories of $1,106 and Rationalization and asset impairment net gains of $998 in Americas Welding, Rationalization and asset impairment charges of $10,403 in International Welding as discussed in Note 6 and acquisition costs transaction costs of $3,086 in Corporate/Eliminations related to the contemplated acquisition discussed in Note 18. (3) In the three and nine months ended September 30, 2021, special items reflect Rationalization and asset impairment charges of $3,484 and $8,277 , respectively, primarily in International Welding, amortization of the step up in value of acquired inventories of $3,690 and $5,531 , respectively , related to the acquisitions of Zeman in International Welding and FTP in The Harris Products Group, pension settlement charges of $73,562 and $79,652 , respectively, in Americas Welding and $446 in International Welding in the nine months ended September 30, 2021. Also in the nine months ended September 30, 2021, special items reflect acquisition transaction costs of $1,923 in Corporate/Eliminations related to acquisitions as discussed in Note 4. |
RATIONALIZATION AND ASSET IMP_2
RATIONALIZATION AND ASSET IMPAIRMENTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
RATIONALIZATION AND ASSET IMPAIRMENTS | |
Summary of the activity related to the rationalization liabilities by segment | International Welding Consolidated Balance at December 31, 2021 $ 2,990 $ 2,990 Payments and other adjustments (3,522) (3,522) Charged to expense 1,629 1,629 Balance at September 30, 2022 $ 1,097 $ 1,097 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI") (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI") | |
Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block] | Three Months Ended September 30, 2022 Unrealized gain (loss) on derivatives designated and Defined benefit Currency qualifying as cash pension plan translation flow hedges activity adjustment Total Balance at June 30, 2022 $ 22,399 $ (13,168) $ (294,428) $ (285,197) Other comprehensive income (loss) before reclassification 8,142 — (52,116) 3 (43,974) Amounts reclassified from AOCI (365) 1 85 2 — (280) Net current-period other comprehensive income (loss) 7,777 85 (52,116) (44,254) Balance at September 30, 2022 $ 30,176 $ (13,083) $ (346,544) $ (329,451) Three Months Ended September 30, 2021 Unrealized gain (loss) on derivatives designated and Defined benefit Currency qualifying as cash pension plan translation flow hedges activity adjustment Total Balance at June 30, 2021 $ 5,023 $ (98,412) $ (211,802) $ (305,191) Other comprehensive income (loss) before reclassification 3,162 (235) (19,062) 3 (16,135) Amounts reclassified from AOCI (286) 1 55,793 2 — 55,507 Net current-period other comprehensive income (loss) 2,876 55,558 (19,062) 39,372 Balance at September 30, 2021 $ 7,899 $ (42,854) $ (230,864) $ (265,819) (1) During the three months ended September 30, 2022, the AOCI reclassification is a component of Net sales of $155 (net of tax of $74 ) and Cost of goods sold of $(210) (net of tax of $(44) ); during the three months ended September 30, 2021, the reclassification is a component of Net sales of $304 (net of tax of $135 ) and Cost of goods sold of $18 (net of tax of $26 ). See Note 16 to the consolidated financial statements for additional details. (2) This AOCI component is included in the computation of net periodic pension costs (net of tax of $30 and $18,677 ) during the three months ended September 30, 2022 and 2021, respectively. See Note 13 to the consolidated financial statements for additional details. (3) The Other comprehensive income (loss) before reclassifications excludes $(13) and $(58) attributable to Non-controlling interests in the three months ended September 30, 2022 and 2021, respectively. Nine Months Ended September 30, 2022 Unrealized gain (loss) on derivatives designated and Defined benefit Currency qualifying as cash pension plan translation flow hedges activity adjustment Total Balance at December 31, 2021 $ 8,094 $ (13,231) $ (252,249) $ (257,386) Other comprehensive income (loss) before reclassification 23,430 — (94,295) 3 (70,865) Amounts reclassified from AOCI (1,348) 1 148 2 — (1,200) Net current-period other comprehensive income (loss) 22,082 148 (94,295) (72,065) Balance at September 30, 2022 $ 30,176 $ (13,083) $ (346,544) $ (329,451) Nine Months Ended September 30, 2021 Unrealized gain (loss) on derivatives designated and Defined benefit Currency qualifying as cash pension plan translation flow hedges activity adjustment Total Balance at December 31, 2020 $ 2,487 $ (101,770) $ (202,907) $ (302,190) Other comprehensive income (loss) before reclassification 6,275 (2,220) (27,957) 3 (23,902) Amounts reclassified from AOCI (863) 1 61,136 2 — 60,273 Net current-period other comprehensive income (loss) 5,412 58,916 (27,957) 36,371 Balance at September 30, 2021 $ 7,899 $ (42,854) $ (230,864) $ (265,819) (1) During the nine months ended September 30, 2022, the AOCI reclassification is a component of Net sales of $409 (net of tax of $181 ) and Cost of goods sold of $(939) (net of tax of $(223) ); during the nine months ended September 30, 2021, the reclassification is a component of Net sales of $1,611 (net of tax of $692 ) and Cost of goods sold of $748 (net of tax of $270 ). See Note 16 to the consolidated financial statements for additional details. (2) This AOCI component is included in the computation of net periodic pension costs (net of tax of $209 and $21,578 ) during the nine months ended September 30, 2022 and 2021, respectively. See Note 13 to the consolidated financial statements for additional details. (3) The Other comprehensive income (loss) before reclassifications excludes $102 and $ (327) attributable to Non-controlling interests in the nine months ended September 30, 2022 and 2021, respectively. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
INVENTORIES | |
Schedule of Inventory, Current [Table Text Block] | September 30, 2022 December 31, 2021 Raw materials $ 190,369 $ 143,394 Work-in-process 106,212 97,834 Finished goods 335,795 298,691 Total $ 632,376 $ 539,919 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
LEASES | |
Schedule Of Leases In Balance Sheet [Table Text Block] | Operating Leases Balance Sheet Classification September 30, 2022 December 31, 2021 Right-of-use assets Other assets $ 45,222 $ 47,966 Current liabilities Other current liabilities $ 9,963 $ 10,218 Noncurrent liabilities Other liabilities 36,636 38,960 Total lease liabilities $ 46,599 $ 49,178 |
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | September 30, 2022 2022 $ 2,868 2023 10,794 2024 9,313 2025 6,307 2026 5,124 After 2026 17,915 Total lease payments $ 52,321 Less: Imputed interest 5,722 Operating lease liabilities $ 46,599 |
PRODUCT WARRANTY COSTS (Tables)
PRODUCT WARRANTY COSTS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
PRODUCT WARRANTY COSTS | |
Schedule of the changes in the carrying amount of product warranty accruals | Nine Months Ended September 30, 2022 2021 Balance at beginning of year $ 20,466 $ 21,760 Accruals for warranties 9,790 8,446 Settlements (10,346) (8,809) Foreign currency translation and other adjustments (723) (306) Balance at end of period $ 19,187 $ 21,091 |
RETIREMENT AND POSTRETIREMENT_2
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS | |
Components of Pension Cost for Defined Benefit Plans | Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 U.S. pension Non-U.S. U.S. pension Non-U.S. U.S. pension Non-U.S. U.S. pension Non-U.S. plans pension plans plans pension plans plans pension plans plans pension plans Service cost $ 50 $ 254 $ 49 $ 395 $ 149 $ 827 $ 146 $ 1,190 Interest cost 66 607 2,622 924 197 1,947 8,675 1,932 Expected return on plan assets — (759) (3,888) (1,487) — (2,637) (12,595) (2,996) Amortization of prior service cost — — — 1 — (1) — 12 Amortization of net loss 44 71 616 291 133 225 1,867 737 Settlement charges (gains) (1) — — 73,562 — (3,735) — 79,652 446 Defined benefit plans 160 173 72,961 124 (3,256) 361 77,745 1,321 Multi-employer plans — 74 — 138 — 289 — 640 Defined contribution plans 7,850 679 6,572 898 20,180 2,284 17,606 2,296 Total pension cost $ 8,010 $ 926 $ 79,533 $ 1,160 $ 16,924 $ 2,934 $ 95,351 $ 4,257 (1) Gains in the nine months ended September 30, 2022 related to the final settlement associated with the termination of a pension plan. Charges in the three and nine months ended September 30, 2021 primarily resulting from lump sum pension payments also related to the termination of a pension plan. |
OTHER INCOME (EXPENSE) (Tables)
OTHER INCOME (EXPENSE) (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
OTHER INCOME (EXPENSE) | |
Schedule of Other Nonoperating Income (Expense) | Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Equity earnings (loss) in affiliates $ (434) $ 108 $ (254) $ 399 Other components of net periodic pension (cost) income (1) (29) (72,641) 3,871 (77,730) Other income (expense) 4,051 1,092 3,471 6,176 Total Other income (expense) $ 3,588 $ (71,441) $ 7,088 $ (71,155) (1) Other components of net periodic pension (cost) income includes pension settlements and curtailments as discussed in Note 13 to the consolidated financial statements. |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
DERIVATIVES | |
Schedule of fair values of derivative instruments on the Company's Consolidated Balance Sheets | September 30, 2022 December 31, 2021 Other Other Other Other Current Current Other Other Current Current Other Other Derivatives by hedge designation Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities Designated as hedging instruments: Foreign exchange contracts $ 2,039 $ 508 $ — $ — $ 772 $ 535 $ — $ — Forward starting swap agreements — — 19,479 — — — 6,990 — Net investment contracts 13,394 — 2,718 — 2,095 — — 608 Commodity contracts — 547 — — 311 — — — Not designated as hedging instruments: Foreign exchange contracts 1,684 3,394 — — 4,656 3,445 — — Total derivatives $ 17,117 $ 4,449 $ 22,197 $ — $ 7,834 $ 3,980 $ 6,990 $ 608 |
Schedule of effects of undesignated derivative instruments on the Company's Consolidated Statements of Income | Three Months Ended September 30, Nine Months Ended September 30, Derivatives by hedge designation Classification of gain (loss) 2022 2021 2022 2021 Not designated as hedges: Foreign exchange contracts Selling, general $ (3,374) $ (878) $ (2,836) $ 5,000 Commodity Contracts Cost of goods sold (319) — (40) — |
Schedule of effects of designated cash flow hedges on AOCI and the entity's Consolidated Statements of Income | Total gain (loss) recognized in AOCI, net of tax September 30, 2022 December 31, 2021 Foreign exchange contracts $ 1,325 $ 284 Forward starting swap agreements 14,133 5,232 Net investment contracts 15,000 2,339 Commodity Contracts (282) 239 Three Months Ended September 30, Nine Months Ended September 30, Gain (loss) recognized in the Derivative type Consolidated Statements of Income: 2022 2021 2022 2021 Foreign exchange contracts Sales $ 229 $ 439 $ 590 $ 2,303 Cost of goods sold 573 (44) 1,202 (1,018) Commodity contracts Cost of goods sold (319) — (40) — |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
FAIR VALUE. | |
Summary of assets and liabilities measured at fair value on a recurring basis | Quoted Prices in Active Markets for Identical Assets or Significant Other Significant Balance as of Liabilities Observable Inputs Unobservable Description September 30, 2022 (Level 1) (Level 2) Inputs (Level 3) Assets: Foreign exchange contracts $ 3,723 $ — $ 3,723 $ — Net investment contracts 16,112 — 16,112 — Forward starting swap agreements 19,479 — 19,479 — Pension surplus 62,750 62,750 — — Total assets $ 102,064 $ 62,750 $ 39,314 $ — Liabilities: Foreign exchange contracts $ 3,902 $ — $ 3,902 $ — Commodity contracts 547 — 547 — Deferred compensation 38,189 — 38,189 — Total liabilities $ 42,638 $ — $ 42,638 $ — Quoted Prices in Active Markets for Identical Assets or Significant Other Significant Balance as of Liabilities Observable Inputs Unobservable Description December 31, 2021 (Level 1) (Level 2) Inputs (Level 3) Assets: Foreign exchange contracts $ 5,428 $ — $ 5,428 $ — Net investment contracts 2,095 — 2,095 — Commodity contracts 311 — 311 — Forward starting swap agreements 6,990 — 6,990 — Total assets $ 14,824 $ — $ 14,824 $ — Liabilities: Foreign exchange contracts $ 3,980 $ — $ 3,980 $ — Net investment contracts 608 — 608 — Deferred compensation 41,612 — 41,612 — Total liabilities $ 46,200 $ — $ 46,200 $ — |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended | 12 Months Ended |
Jun. 30, 2022 | Dec. 31, 2021 | |
TURKEY | Minimum | ||
Highly inflationary economy | ||
Cumulative inflation rate over the preceding three-year period | 100% | |
Net Sales | Customer concentration risk | RUSSIAN FEDERATION | Maximum | ||
Risks | ||
Concentration Risk, Percentage | 1% | |
Total Assets | Geographic Concentration Risk | RUSSIAN FEDERATION | Maximum | ||
Risks | ||
Concentration Risk, Percentage | 1% |
REVENUE RECOGNITION - Narrative
REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Percentage Net Sales Over Time | 10% | |
Unbilled Contracts Receivable | $ 37,488 | $ 25,300 |
Advance Customer Payments | ||
Contract with customer liability | 42,552 | 72,047 |
Billings in Excess of Revenue Recognized | ||
Contract with customer liability | $ 31,772 | $ 40,450 |
REVENUE RECOGNITION (Disaggrega
REVENUE RECOGNITION (Disaggregation of Revenue) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Net sales (Note 2) | $ 935,240 | $ 806,454 | $ 2,830,277 | $ 2,389,929 |
Welding Consumables | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales (Note 2) | 547,596 | 465,829 | 1,655,613 | 1,375,567 |
Welding Equipment | ||||
Disaggregation of Revenue [Line Items] | ||||
Net sales (Note 2) | $ 387,644 | $ 340,625 | $ 1,174,664 | $ 1,014,362 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||
Net income | $ 109,225 | $ 31,757 | $ 363,078 | $ 202,039 |
Denominator (shares in 000's): | ||||
Basic weighted average shares outstanding (in shares) | 57,823,000 | 59,289,000 | 58,148,000 | 59,465,000 |
Effect of dilutive securities - Stock options and awards (in shares) | 703,000 | 766,000 | 667,000 | 703,000 |
Diluted weighted average shares outstanding (in shares) | 58,526,000 | 60,055,000 | 58,815,000 | 60,168,000 |
Basic earnings per share (in dollars per share) | $ 1.89 | $ 0.54 | $ 6.24 | $ 3.40 |
Diluted earnings per share (in dollars per share) | $ 1.87 | $ 0.53 | $ 6.17 | $ 3.36 |
Anti-dilutive shares excluded from the computation of diluted earnings per share | 52,495 | 2,126 | 120,106 | 150,254 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended | 7 Months Ended | 9 Months Ended | 12 Months Ended | |||||||
Mar. 01, 2022 | Jul. 28, 2021 | Apr. 01, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | |
Acquisitions | ||||||||||||
Net purchase price, net of cash acquired | $ 22,294 | $ 158,605 | ||||||||||
Annual sales at the date of acquisition | $ 935,240 | $ 806,454 | $ 2,830,277 | $ 2,389,929 | ||||||||
Kestra | ||||||||||||
Acquisitions | ||||||||||||
Net purchase price, net of cash acquired | $ 22,294 | |||||||||||
Ownership purchased (as a percent) | 100% | |||||||||||
Acquisitions' net sales | $ 11,906 | |||||||||||
Annual sales at the date of acquisition | $ 15,000 | |||||||||||
FTP | ||||||||||||
Acquisitions | ||||||||||||
Net purchase price, net of cash acquired | $ 71,716 | |||||||||||
Ownership purchased (as a percent) | 100% | |||||||||||
Acquisitions' net sales | $ 24,953 | |||||||||||
Annual sales at the date of acquisition | $ 50,000 | |||||||||||
FTP | Selling, general & administrative expenses | ||||||||||||
Acquisitions | ||||||||||||
Acquisition Costs | 346 | |||||||||||
Zeman | ||||||||||||
Acquisitions | ||||||||||||
Net purchase price, net of cash acquired | $ 84,390 | |||||||||||
Ownership purchased (as a percent) | 100% | |||||||||||
Acquisitions' net sales | $ 24,473 | |||||||||||
Annual sales at the date of acquisition | $ 40,000 | |||||||||||
Zeman | Selling, general & administrative expenses | ||||||||||||
Acquisitions | ||||||||||||
Acquisition Costs | $ 1,577 |
SEGMENT INFORMATION (Financial
SEGMENT INFORMATION (Financial Information of Reportable Segments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Financial information for the reportable segments | ||||
Net sales (Note 2) | $ 935,240 | $ 806,454 | $ 2,830,277 | $ 2,389,929 |
Revenue from Related Parties | 0 | 0 | 0 | 0 |
Segment, including Inter-segment, sales | 935,240 | 806,454 | 2,830,277 | 2,389,929 |
Adjusted EBIT | 156,776 | 124,865 | 487,242 | 365,994 |
Special items charge (Gain) | 11,079 | 80,736 | 9,306 | 95,829 |
EBIT | 145,697 | 44,129 | 477,936 | 270,165 |
Interest income | 376 | 333 | 980 | 1,185 |
Interest expense | (8,586) | (6,047) | (21,847) | (17,921) |
Income before income taxes | 137,487 | 38,415 | 457,069 | 253,429 |
Rationalization and asset impairment net gains | (7,776) | 1,162 | ||
Rationalization and asset impairment charges (gains) | 8,364 | 3,484 | 9,405 | 8,277 |
Corporate/Eliminations | ||||
Financial information for the reportable segments | ||||
Net sales (Note 2) | 0 | 0 | 0 | 0 |
Revenue from Related Parties | (47,989) | (46,503) | (126,859) | (134,629) |
Segment, including Inter-segment, sales | (47,989) | (46,503) | (126,859) | (134,629) |
Adjusted EBIT | (1,685) | (4,704) | (10,470) | (10,048) |
Special items charge (Gain) | 3,068 | 0 | 3,068 | 1,923 |
EBIT | (4,753) | (4,704) | (13,538) | (11,971) |
Acquisition Costs | 3,068 | 3,086 | 1,923 | |
Americas Welding | ||||
Financial information for the reportable segments | ||||
Rationalization and asset impairment net gains | 998 | |||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Gain (Loss) Due to Curtailment | 3,735 | |||
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Gain (Loss) Due to Settlement and Curtailment | 73,562 | 79,652 | ||
Business Combination, Inventory Step Up | (353) | 1,106 | ||
Americas Welding | Operating Segments | ||||
Financial information for the reportable segments | ||||
Net sales (Note 2) | 585,628 | 461,508 | 1,715,342 | 1,344,218 |
Revenue from Related Parties | 35,353 | 37,480 | 92,540 | 109,993 |
Segment, including Inter-segment, sales | 620,981 | 498,988 | 1,807,882 | 1,454,211 |
Adjusted EBIT | 118,804 | 84,557 | 348,439 | 245,308 |
Special items charge (Gain) | (353) | 73,574 | (3,627) | 79,664 |
EBIT | 119,157 | 10,983 | 352,066 | 165,644 |
International Welding | ||||
Financial information for the reportable segments | ||||
Rationalization and asset impairment charges (gains) | 8,364 | 3,484 | 10,403 | 8,277 |
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Gain (Loss) Due to Settlement and Curtailment | 446 | |||
International Welding | Operating Segments | ||||
Financial information for the reportable segments | ||||
Net sales (Note 2) | 216,497 | 227,165 | 711,167 | 702,596 |
Revenue from Related Parties | 9,994 | 7,078 | 25,749 | 18,260 |
Segment, including Inter-segment, sales | 226,491 | 234,243 | 736,916 | 720,856 |
Adjusted EBIT | 25,225 | 29,032 | 97,321 | 77,845 |
Special items charge (Gain) | 8,364 | 6,615 | 9,865 | 13,695 |
EBIT | 16,861 | 22,417 | 87,456 | 64,150 |
The Harris Products Group | Operating Segments | ||||
Financial information for the reportable segments | ||||
Net sales (Note 2) | 133,115 | 117,781 | 403,768 | 343,115 |
Revenue from Related Parties | 2,642 | 1,945 | 8,570 | 6,376 |
Segment, including Inter-segment, sales | 135,757 | 119,726 | 412,338 | 349,491 |
Adjusted EBIT | 14,432 | 15,980 | 51,952 | 52,889 |
Special items charge (Gain) | 0 | 547 | 0 | 547 |
EBIT | $ 14,432 | 15,433 | $ 51,952 | 52,342 |
International Welding and Harris Products Group [Member] | ||||
Financial information for the reportable segments | ||||
Business Combination, Inventory Step Up | $ 3,690 | $ 5,531 |
SEGMENT INFORMATION - Narrative
SEGMENT INFORMATION - Narrative (Details) | 9 Months Ended |
Sep. 30, 2022 segment | |
Financial information for the reportable segments | |
Number of operating segments (segments) | 3 |
RATIONALIZATION AND ASSET IMP_3
RATIONALIZATION AND ASSET IMPAIRMENTS (Summary of Activity Related to Rationalization Liabilities by Segment) (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Activity related to the rationalization liabilities by segment | |
Balance at the beginning of the period | $ 2,990 |
Payments and other adjustments | (3,522) |
Charged to expense | 1,629 |
Balance at the end of the period | 1,097 |
International Welding | |
Activity related to the rationalization liabilities by segment | |
Balance at the beginning of the period | 2,990 |
Payments and other adjustments | (3,522) |
Charged to expense | 1,629 |
Balance at the end of the period | $ 1,097 |
RATIONALIZATION AND ASSET IMP_4
RATIONALIZATION AND ASSET IMPAIRMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Restructuring Cost and Reserve [Line Items] | |||||
Rationalization and asset impairment charges (gains) | $ 8,364 | $ 3,484 | $ 9,405 | $ 8,277 | |
Restructuring liability | 1,097 | 1,097 | $ 2,990 | ||
International Welding | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Rationalization and asset impairment charges (gains) | 8,364 | $ 3,484 | 10,403 | $ 8,277 | |
Restructuring liability | 1,097 | 1,097 | $ 2,990 | ||
Restructure Plans 2021 and 2022 | International Welding | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring liability | $ 1,097 | $ 1,097 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI") (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Accumulated other comprehensive (loss) income | |||||
Beginning Balance | $ 912,983 | $ 859,623 | $ 863,909 | $ 790,250 | $ 790,250 |
Ending Balance | 924,228 | 857,893 | 924,228 | 857,893 | 863,909 |
Net sales (Note 2) | 935,240 | 806,454 | 2,830,277 | 2,389,929 | |
Income taxes | 28,262 | 6,658 | 93,991 | 51,259 | |
Cost of goods sold | 625,722 | 538,282 | 1,857,501 | 1,593,981 | |
Accumulated Other Comprehensive Income (Loss) | |||||
Accumulated other comprehensive (loss) income | |||||
Beginning Balance | (285,197) | (305,191) | (257,386) | (302,190) | (302,190) |
Other comprehensive income (loss) before reclassification | (43,974) | (16,135) | (70,865) | (23,902) | |
Amounts reclassified from AOCI | (280) | 55,507 | (1,200) | 60,273 | |
Net current-period other comprehensive income (loss) | (44,254) | 39,372 | (72,065) | 36,371 | |
Ending Balance | (329,451) | (265,819) | (329,451) | (265,819) | (257,386) |
Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges | |||||
Accumulated other comprehensive (loss) income | |||||
Beginning Balance | 22,399 | 5,023 | 8,094 | 2,487 | 2,487 |
Other comprehensive income (loss) before reclassification | 8,142 | 3,162 | 23,430 | 6,275 | |
Amounts reclassified from AOCI | (365) | (286) | (1,348) | (863) | |
Net current-period other comprehensive income (loss) | 7,777 | 2,876 | 22,082 | 5,412 | |
Ending Balance | 30,176 | 7,899 | 30,176 | 7,899 | 8,094 |
Defined benefit plan activity | |||||
Accumulated other comprehensive (loss) income | |||||
Beginning Balance | (13,168) | (98,412) | (13,231) | (101,770) | (101,770) |
Other comprehensive income (loss) before reclassification | 0 | (235) | 0 | (2,220) | |
Amounts reclassified from AOCI | 85 | 55,793 | 148 | 61,136 | |
Net current-period other comprehensive income (loss) | 85 | 55,558 | 148 | 58,916 | |
Ending Balance | (13,083) | (42,854) | (13,083) | (42,854) | (13,231) |
Currency translation adjustment | |||||
Accumulated other comprehensive (loss) income | |||||
Beginning Balance | (294,428) | (211,802) | (252,249) | (202,907) | (202,907) |
Other comprehensive income (loss) before reclassification | (52,116) | (19,062) | (94,295) | (27,957) | |
Amounts reclassified from AOCI | 0 | 0 | 0 | 0 | |
Net current-period other comprehensive income (loss) | (52,116) | (19,062) | (94,295) | (27,957) | |
Ending Balance | (346,544) | (230,864) | (346,544) | (230,864) | $ (252,249) |
Reclassification out of Accumulated Other Comprehensive Income | Defined benefit plan activity | |||||
Accumulated other comprehensive (loss) income | |||||
Income taxes | 30 | 18,677 | 209 | 21,578 | |
Reclassification out of Accumulated Other Comprehensive Income | Currency translation adjustment | |||||
Accumulated other comprehensive (loss) income | |||||
Other Comprehensive (Income) Loss, Net of Tax, Portion Attributable to Noncontrolling Interest | (13) | (58) | 102 | (327) | |
Reclassification out of Accumulated Other Comprehensive Income | Sales | Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges | |||||
Accumulated other comprehensive (loss) income | |||||
Net sales (Note 2) | 155 | 304 | 409 | 1,611 | |
Income taxes | 74 | 135 | 181 | 692 | |
Reclassification out of Accumulated Other Comprehensive Income | Cost of goods sold | Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges | |||||
Accumulated other comprehensive (loss) income | |||||
Income taxes | (44) | 26 | (223) | 270 | |
Cost of goods sold | $ (210) | $ 18 | $ (939) | $ 748 |
COMMON STOCK REPURCHASE PROGR_2
COMMON STOCK REPURCHASE PROGRAM (Details) shares in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | Sep. 30, 2022 $ / shares shares | |
COMMON STOCK REPURCHASE PROGRAM | ||
Shares purchased in the open market under share repurchase program (in shares) | 0.2 | 1.2 |
Average cost per share of shares purchased in the open market under share repurchase program (in dollars per share) | $ / shares | $ 133.74 | $ 130.90 |
Remaining shares available for repurchase under the stock repurchase program (in shares) | 9.1 | 9.1 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
INVENTORIES | ||
Raw materials | $ 190,369 | $ 143,394 |
Work-in-process | 106,212 | 97,834 |
Finished goods | 335,795 | 298,691 |
Total | $ 632,376 | $ 539,919 |
Percentage of total inventories valued using the LIFO method (as a percent) | 40% | 36% |
Excess of current cost over LIFO cost | $ 134,597 | $ 114,176 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
LEASES | ||||
Operating Lease, Weighted Average Remaining Lease Term | 7 years 10 months 24 days | 7 years 10 months 24 days | ||
Lease, Cost | $ 5,109 | $ 5,619 | $ 15,415 | $ 16,279 |
Operating Lease, Payments | 2,930 | 5,896 | 9,101 | 12,548 |
Right-of-Use Asset Obtained in Exchange for Operating Lease Liability | $ 4,739 | $ 3,218 | $ 8,217 | $ 12,912 |
Operating Lease, Weighted Average Discount Rate, Percent | 3% | 3% |
LEASES Schedule of Leases in Ba
LEASES Schedule of Leases in Balance Sheets (Detail) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
LEASES | ||
Right-of-Use Asset | $ 45,222 | $ 47,966 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets, Noncurrent | Other Assets, Noncurrent |
Current liabilities | $ 9,963 | $ 10,218 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current | Other Liabilities, Current |
Noncurrent liabilities | $ 36,636 | $ 38,960 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent |
Total lease liabilities | $ 46,599 | $ 49,178 |
LEASES Maturities of Lease Liab
LEASES Maturities of Lease Liabilities, Operating Leases (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
LEASES | ||
2022 | $ 2,868 | |
2023 | 10,794 | |
2024 | 9,313 | |
2025 | 6,307 | |
2026 | 5,124 | |
After 2026 | 17,915 | |
Total lease payments | 52,321 | |
Less: Imputed interest | (5,722) | |
Operating lease liabilities | $ 46,599 | $ 49,178 |
PRODUCT WARRANTY COSTS (Details
PRODUCT WARRANTY COSTS (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Changes in the carrying amount of product warranty accruals | ||
Balance at beginning of year | $ 20,466 | $ 21,760 |
Accruals for warranties | 9,790 | 8,446 |
Settlements | (10,346) | (8,809) |
Foreign currency translation and other adjustments | (723) | (306) |
Balance at end of period | $ 19,187 | $ 21,091 |
DEBT (Revolving Credit Agreemen
DEBT (Revolving Credit Agreement) (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Apr. 23, 2021 | Sep. 30, 2022 | |
Revolving credit agreement | ||
Debt Instrument [Line Items] | ||
Borrowing capacity under the line of credit | $ 500,000 | |
Credit facility covenant compliance | As of September 30, 2022, the Company was in compliance with all of its covenants | |
Debt Instrument, Term | 5 years | |
Additional increase in borrowing capacity of the line of credit available at the entity's option | $ 150,000 | |
Line of Credit, Current | $ 37,000 | |
Other Lines of Credit and Debt Agreements | ||
Debt Instrument [Line Items] | ||
Borrowing capacity under the line of credit | 104,293 | |
Line of Credit, Current | $ 20,338 |
DEBT (Long-Term Debt) (Details)
DEBT (Long-Term Debt) (Details) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2022 | Dec. 31, 2021 | Oct. 20, 2016 | Apr. 01, 2015 | |
Debt Instrument [Line Items] | ||||
Fair value of long-term debt | $ 597,972 | $ 776,655 | ||
Carrying value of long-term debt | $ 722,287 | $ 717,855 | ||
Senior Notes 2016 | ||||
Debt Instrument [Line Items] | ||||
Face amount of loan | $ 350,000 | |||
Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Debt, Weighted Average Interest Rate | 3.30% | |||
Debt Instrument, Covenant Compliance | As of September 30, 2022, the Company was in compliance with all of its debt covenants | |||
Weighted Average | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Term | 11 years 7 months 6 days | |||
Senior Notes 2015 | ||||
Debt Instrument [Line Items] | ||||
Face amount of loan | $ 350,000 | |||
Minimum | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Face amount of loan | $ 50,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 2.75% | |||
Maximum | Senior Notes | ||||
Debt Instrument [Line Items] | ||||
Face amount of loan | $ 100,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 4.02% |
DEBT (Shelf facility) (Details)
DEBT (Shelf facility) (Details) - Private Placement $ in Thousands | 9 Months Ended | |
Nov. 27, 2018 USD ($) loan | Sep. 30, 2022 USD ($) | |
Debt Instrument [Line Items] | ||
Number of uncommitted master note facilities | loan | 7 | |
Debt Instrument, Unused Borrowing Capacity, Amount | $ 700,000 | |
Debt Instrument, Term | 5 years | |
Debt Instrument, Covenant Compliance | As of September 30, 2022, the Company was in compliance with all of its covenants | |
Line of Credit, Current | $ 0 | |
Maximum | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Term | 15 years |
RETIREMENT AND POSTRETIREMENT_3
RETIREMENT AND POSTRETIREMENT BENEFIT PLANS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
United States | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Service cost | $ 50 | $ 49 | $ 149 | $ 146 |
Interest cost | 66 | 2,622 | 197 | 8,675 |
Expected return on plan assets | 0 | (3,888) | 0 | (12,595) |
Amortization of prior service cost | 0 | 0 | 0 | 0 |
Amortization of net loss | 44 | 616 | 133 | 1,867 |
Settlement charges (gains) (1) | 0 | 73,562 | (3,735) | 79,652 |
Defined benefit plans | 160 | 72,961 | (3,256) | 77,745 |
Multi-employer plans | 0 | 0 | 0 | 0 |
Defined contribution plans | 7,850 | 6,572 | 20,180 | 17,606 |
Total pension cost | 8,010 | 79,533 | 16,924 | 95,351 |
Other foreign plan | ||||
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | ||||
Service cost | 254 | 395 | 827 | 1,190 |
Interest cost | 607 | 924 | 1,947 | 1,932 |
Expected return on plan assets | (759) | (1,487) | (2,637) | (2,996) |
Amortization of prior service cost | 0 | 1 | (1) | 12 |
Amortization of net loss | 71 | 291 | 225 | 737 |
Settlement charges (gains) (1) | 0 | 0 | 0 | 446 |
Defined benefit plans | 173 | 124 | 361 | 1,321 |
Multi-employer plans | 74 | 138 | 289 | 640 |
Defined contribution plans | 679 | 898 | 2,284 | 2,296 |
Total pension cost | $ 926 | $ 1,160 | $ 2,934 | $ 4,257 |
OTHER INCOME (EXPENSE) (Details
OTHER INCOME (EXPENSE) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
OTHER INCOME (EXPENSE) | ||||
Equity earnings (loss) in affiliates | $ (434) | $ 108 | $ (254) | $ 399 |
Other components of net periodic pension (cost) income | (29) | (72,641) | 3,871 | (77,730) |
Other income (expense) | 4,051 | 1,092 | 3,471 | 6,176 |
Total Other income (expense) | $ 3,588 | $ (71,441) | $ 7,088 | $ (71,155) |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
INCOME TAXES | ||||
Income taxes | $ 28,262 | $ 6,658 | $ 93,991 | $ 51,259 |
Pre-tax income | 137,487 | $ 38,415 | $ 457,069 | $ 253,429 |
Effective tax rate | 20.60% | 20.20% | ||
Unrecognized tax benefits | 18,375 | $ 18,375 | ||
Unrecognized tax benefits that, if recognized, would be reflected as a component of income tax expense | 15,195 | 15,195 | ||
Reasonably possible further reduction in prior years' unrecognized tax benefits during the next twelve months | $ 3,655 | $ 3,655 |
DERIVATIVES (Fair Value of Deri
DERIVATIVES (Fair Value of Derivative Instruments) (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Other Current Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | $ 17,117 | $ 7,834 |
Other Current Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 4,449 | 3,980 |
Other Noncurrent Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 22,197 | 6,990 |
Other Noncurrent Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 608 |
Designated as Hedging Instruments | Foreign exchange contracts | Other Current Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 2,039 | 772 |
Designated as Hedging Instruments | Foreign exchange contracts | Other Current Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 508 | 535 |
Designated as Hedging Instruments | Foreign exchange contracts | Other Noncurrent Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 0 | 0 |
Designated as Hedging Instruments | Foreign exchange contracts | Other Noncurrent Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 0 |
Designated as Hedging Instruments | Forward Contracts | Other Current Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 0 | 0 |
Designated as Hedging Instruments | Forward Contracts | Other Current Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 0 |
Designated as Hedging Instruments | Forward Contracts | Other Noncurrent Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 19,479 | 6,990 |
Designated as Hedging Instruments | Forward Contracts | Other Noncurrent Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 0 |
Designated as Hedging Instruments | Net Investment Hedging | Other Current Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 13,394 | 2,095 |
Designated as Hedging Instruments | Net Investment Hedging | Other Current Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 0 |
Designated as Hedging Instruments | Net Investment Hedging | Other Noncurrent Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 2,718 | 0 |
Designated as Hedging Instruments | Net Investment Hedging | Other Noncurrent Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 608 |
Designated as Hedging Instruments | Commodity contracts | Other Current Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 0 | 311 |
Designated as Hedging Instruments | Commodity contracts | Other Current Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 547 | 0 |
Designated as Hedging Instruments | Commodity contracts | Other Noncurrent Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 0 | 0 |
Designated as Hedging Instruments | Commodity contracts | Other Noncurrent Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 0 |
Not designated as hedging instruments | Foreign exchange contracts | Other Current Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 1,684 | 4,656 |
Not designated as hedging instruments | Foreign exchange contracts | Other Current Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 3,394 | 3,445 |
Not designated as hedging instruments | Foreign exchange contracts | Other Noncurrent Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 0 | 0 |
Not designated as hedging instruments | Foreign exchange contracts | Other Noncurrent Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | $ 0 | $ 0 |
DERIVATIVES (Derivatives Income
DERIVATIVES (Derivatives Income Statement Impact) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Foreign exchange contracts | Selling, general & administrative expenses | ||||
Effects of undesignated derivative instruments on the entity's Consolidated Statements of Income | ||||
Gains (losses) recognized in income | $ (3,374) | $ (878) | $ (2,836) | $ 5,000 |
Commodity contracts | Cost of goods sold | ||||
Effects of undesignated derivative instruments on the entity's Consolidated Statements of Income | ||||
Gains (losses) recognized in income | $ (319) | $ (40) |
DERIVATIVES (AOCI Impact) (Deta
DERIVATIVES (AOCI Impact) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Foreign exchange contracts | |||||
Fair values of derivative instruments | |||||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | $ 1,325 | $ 284 | |||
Forward Contracts | |||||
Fair values of derivative instruments | |||||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | 14,133 | 5,232 | |||
Net Investment Hedging | |||||
Fair values of derivative instruments | |||||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | 15,000 | 2,339 | |||
Commodity contracts | |||||
Fair values of derivative instruments | |||||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | (282) | $ 239 | |||
Sales | Foreign exchange contracts | |||||
Fair values of derivative instruments | |||||
Gain (loss) reclassified from AOCI to earnings | $ 229 | $ 439 | 590 | $ 2,303 | |
Cost of goods sold | Foreign exchange contracts | |||||
Fair values of derivative instruments | |||||
Gain (loss) reclassified from AOCI to earnings | 573 | $ (44) | 1,202 | $ (1,018) | |
Cost of goods sold | Commodity contracts | |||||
Fair values of derivative instruments | |||||
Gain (loss) reclassified from AOCI to earnings | $ (319) | $ (40) |
DERIVATIVES - Narrative (Detail
DERIVATIVES - Narrative (Details) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 USD ($) lb | Dec. 31, 2021 USD ($) lb | |
Derivative [Line Items] | ||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | $ 1,043 | |
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimate of Time to Transfer | 12 months | |
Not designated as hedging instruments | Foreign exchange contracts | ||
Derivative [Line Items] | ||
Derivative Asset, Notional Amount | $ 260,594 | $ 301,685 |
Cash flow hedges | Designated as Hedging Instruments | Foreign exchange contracts | ||
Derivative [Line Items] | ||
Derivative Asset, Notional Amount | $ 54,600 | $ 72,630 |
Cash flow hedges | Designated as Hedging Instruments | Commodity contracts | ||
Derivative [Line Items] | ||
Notional amount (in pounds) | lb | 1,475,000 | 975,000 |
Cash flow hedges | Designated as Hedging Instruments | Forward Contracts | ||
Derivative [Line Items] | ||
Derivative Asset, Notional Amount | $ 100,000 | $ 100,000 |
Net Investment Hedging | Designated as Hedging Instruments | Foreign exchange contracts | ||
Derivative [Line Items] | ||
Derivative Asset, Notional Amount | 81,398 | 94,479 |
Net Investment Hedging | Designated as Hedging Instruments | Net Investment Hedging | ||
Derivative [Line Items] | ||
Derivative Asset, Notional Amount | $ 25,000 | $ 25,000 |
FAIR VALUE (Summary of Fair Val
FAIR VALUE (Summary of Fair Value Assets and Liabilities) (Details) - Recurring basis - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Assets: | ||
Total assets | $ 102,064 | $ 14,824 |
Liabilities: | ||
Deferred compensation | 38,189 | 41,612 |
Total liabilities | 42,638 | 46,200 |
Foreign exchange contracts | ||
Assets: | ||
Assets | 3,723 | 5,428 |
Liabilities: | ||
Liabilities | 3,902 | 3,980 |
Forward Contracts | ||
Assets: | ||
Assets | 19,479 | 6,990 |
Commodity contracts | ||
Assets: | ||
Assets | 311 | |
Liabilities: | ||
Liabilities | 547 | |
Net Investment Hedging | ||
Assets: | ||
Assets | 16,112 | 2,095 |
Liabilities: | ||
Liabilities | 608 | |
Pension Surplus | ||
Assets: | ||
Assets | 62,750 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Assets: | ||
Total assets | 62,750 | 0 |
Liabilities: | ||
Deferred compensation | 0 | 0 |
Total liabilities | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Foreign exchange contracts | ||
Assets: | ||
Assets | 0 | 0 |
Liabilities: | ||
Liabilities | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Forward Contracts | ||
Assets: | ||
Assets | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Commodity contracts | ||
Assets: | ||
Assets | 0 | |
Liabilities: | ||
Liabilities | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Net Investment Hedging | ||
Assets: | ||
Assets | 0 | 0 |
Liabilities: | ||
Liabilities | 0 | |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Pension Surplus | ||
Assets: | ||
Assets | 62,750 | |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Total assets | 39,314 | 14,824 |
Liabilities: | ||
Deferred compensation | 38,189 | 41,612 |
Total liabilities | 42,638 | 46,200 |
Significant Other Observable Inputs (Level 2) | Foreign exchange contracts | ||
Assets: | ||
Assets | 3,723 | 5,428 |
Liabilities: | ||
Liabilities | 3,902 | 3,980 |
Significant Other Observable Inputs (Level 2) | Forward Contracts | ||
Assets: | ||
Assets | 19,479 | 6,990 |
Significant Other Observable Inputs (Level 2) | Commodity contracts | ||
Assets: | ||
Assets | 311 | |
Liabilities: | ||
Liabilities | 547 | |
Significant Other Observable Inputs (Level 2) | Net Investment Hedging | ||
Assets: | ||
Assets | 16,112 | 2,095 |
Liabilities: | ||
Liabilities | 608 | |
Significant Unobservable Inputs (Level 3) | ||
Assets: | ||
Total assets | 0 | 0 |
Liabilities: | ||
Deferred compensation | 0 | 0 |
Total liabilities | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Foreign exchange contracts | ||
Assets: | ||
Assets | 0 | 0 |
Liabilities: | ||
Liabilities | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Forward Contracts | ||
Assets: | ||
Assets | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Commodity contracts | ||
Assets: | ||
Assets | 0 | |
Liabilities: | ||
Liabilities | 0 | |
Significant Unobservable Inputs (Level 3) | Net Investment Hedging | ||
Assets: | ||
Assets | 0 | 0 |
Liabilities: | ||
Liabilities | $ 0 | |
Significant Unobservable Inputs (Level 3) | Pension Surplus | ||
Assets: | ||
Assets | $ 0 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Fori - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Dec. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | |
Subsequent events | |||
Acquisition Costs | $ 3,068 | $ 3,068 | |
Subsequent Events | Forecast | |||
Subsequent events | |||
Cash purchase price | $ 427,000 |