Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2023 shares | |
Cover page. | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Transition Report | false |
Document Period End Date | Mar. 31, 2023 |
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 Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Common Stock, Shares Outstanding | 57,572,859 |
Entity Central Index Key | 0000059527 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Year Focus | 2023 |
Document Fiscal Period Focus | Q1 |
Amendment Flag | false |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF INCOME | ||
Net sales (Note 2) | $ 1,039,343 | $ 925,448 |
Cost of goods sold | 683,986 | 595,671 |
Gross profit | 355,357 | 329,777 |
Selling, general & administrative expenses | 190,116 | 166,686 |
Rationalization and asset impairment charges (Note 6) | 877 | 1,885 |
Operating income | 164,364 | 161,206 |
Interest expense, net | 13,201 | 6,198 |
Other income (Note 11) | 4,209 | 4,634 |
Income before income taxes | 155,372 | 159,642 |
Income taxes (Note 12) | 33,413 | 33,611 |
Net income including non-controlling interests | 121,959 | 126,031 |
Non-controlling interests in subsidiaries' income | 28 | 1 |
Net income | $ 121,931 | $ 126,030 |
Basic earnings per share (Note 3) | $ 2.12 | $ 2.15 |
Diluted earnings per share (Note 3) | 2.09 | 2.13 |
Cash dividends declared per share | $ 0.64 | $ 0.56 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income including non-controlling interests | $ 121,959 | $ 126,031 |
Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax of $1,043 and $2,051 in the three months ended March 31, 2023 and 2022 | 9,131 | 5,355 |
Defined benefit pension plan activity, net of tax | 560 | 107 |
Currency translation adjustment | 14,772 | (7,449) |
Other comprehensive income (loss): | 24,463 | (1,987) |
Comprehensive income | 146,422 | 124,044 |
Comprehensive income attributable to non-controlling interests | 28 | 135 |
Comprehensive income attributable to shareholders | $ 146,394 | $ 123,909 |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Unrealized gain on derivatives designated and qualifying as cash flow hedges, tax | $ 1,043 | $ 2,051 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current Assets | ||
Cash and cash equivalents | $ 198,803 | $ 197,150 |
Accounts receivable (less allowance for doubtful accounts of $12,902 in 2023; $12,556 in 2022) | 573,467 | 541,529 |
Inventories (Note 8) | 664,599 | 665,451 |
Other current assets | 173,622 | 153,660 |
Total Current Assets | 1,610,491 | 1,557,790 |
Property, plant and equipment (less accumulated depreciation of $911,957 in 2023; $890,543 in 2022) | 553,409 | 544,871 |
Goodwill | 679,385 | 665,257 |
Other assets | 409,916 | 412,628 |
TOTAL ASSETS | 3,253,201 | 3,180,546 |
Current Liabilities | ||
Short-term debt (Note 10) | 49,340 | 93,483 |
Trade accounts payable | 361,236 | 352,079 |
Accrued employee compensation and benefits | 109,525 | 109,369 |
Other current liabilities | 315,838 | 297,966 |
Total Current Liabilities | 835,939 | 852,897 |
Long-term debt, less current portion (Note 10) | 1,110,626 | 1,110,396 |
Other liabilities | 181,400 | 183,212 |
Total Liabilities | 2,127,965 | 2,146,505 |
Shareholders' Equity | ||
Common Shares | 9,858 | 9,858 |
Additional paid-in capital | 498,023 | 481,857 |
Retained earnings | 3,387,543 | 3,306,500 |
Accumulated other comprehensive loss | (250,836) | (275,299) |
Treasury Shares | (2,519,299) | (2,488,776) |
Total Shareholders' Equity | 1,125,289 | 1,034,140 |
Non-controlling interests | (53) | (99) |
Total Equity | 1,125,236 | 1,034,041 |
TOTAL LIABILITIES AND TOTAL EQUITY | $ 3,253,201 | $ 3,180,546 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Accounts receivable, allowance for doubtful accounts (in dollars) | $ 12,902 | $ 12,556 |
Accumulated depreciation | $ 911,957 | $ 890,543 |
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, 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 | ||||
Defined benefit pension plan activity, net of tax | 107 | 107 | |||||
Unrealized gain 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, 2022 | $ 9,858 | 481,857 | 3,306,500 | (275,299) | (2,488,776) | (99) | 1,034,041 |
Beginning Balance (in shares) at Dec. 31, 2022 | 57,624,000 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 121,931 | 28 | 121,959 | ||||
Defined benefit pension plan activity, net of tax | 560 | 560 | |||||
Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax | 9,131 | 9,131 | |||||
Currency translation adjustment | 14,772 | 14,772 | |||||
Cash dividends declared | (36,971) | (36,971) | |||||
Stock-based compensation activity | 12,475 | 1,635 | 14,110 | ||||
Stock-based compensation activity (in shares) | 143,000 | ||||||
Purchase of shares for treasury | (32,158) | (32,158) | |||||
Purchase of shares for treasury (in shares) | (194,000) | ||||||
Other | 3,691 | (3,917) | 18 | (208) | |||
Ending Balance at Mar. 31, 2023 | $ 9,858 | $ 498,023 | $ 3,387,543 | $ (250,836) | $ (2,519,299) | $ (53) | $ 1,125,236 |
Ending Balance (in shares) at Mar. 31, 2023 | 57,573,000 |
CONSOLIDATED STATEMENTS OF EQ_2
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONSOLIDATED STATEMENTS OF EQUITY | ||
Cash dividends declared per share (in dollars per share) | $ 0.64 | $ 0.56 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 121,931 | $ 126,030 |
Non-controlling interests in subsidiaries' income | 28 | 1 |
Net income including non-controlling interests | 121,959 | 126,031 |
Adjustments to reconcile Net income to Net cash provided by operating activities: | ||
Rationalization and asset impairment net charges (Note 6) | 0 | 1,188 |
Depreciation and amortization | 21,295 | 19,891 |
Equity earnings in affiliates, net | (188) | (113) |
Deferred income taxes | (7,019) | (18,207) |
Stock-based compensation | 11,634 | 11,148 |
Other, net | (1,957) | (162) |
Changes in operating assets and liabilities, net of effects from acquisitions: | ||
Increase in accounts receivable | (27,664) | (86,120) |
Decrease (increase) in inventories | 5,881 | (55,407) |
Increase in other current assets | (16,587) | (25,152) |
Increase in trade accounts payable | 6,841 | 39,284 |
Increase in other current liabilities | 10,505 | 32,116 |
Net change in other assets and liabilities | (769) | (1,407) |
NET CASH PROVIDED BY OPERATING ACTIVITIES | 123,931 | 43,090 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (18,787) | (18,672) |
Acquisition of businesses, net of cash acquired | 0 | (22,013) |
Proceeds from sale of property, plant and equipment | 3,314 | 569 |
Purchase of marketable securities | (576) | 0 |
NET CASH USED BY INVESTING ACTIVITIES | (16,049) | (40,116) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
(Payments on) proceeds from short-term borrowings | (43,940) | 98,408 |
Payments on long-term borrowings | (111) | (2,100) |
Proceeds from exercise of stock options | 2,476 | 1,035 |
Purchase of shares for treasury | (32,158) | (104,579) |
Cash dividends paid to shareholders | (37,583) | (33,361) |
NET CASH USED BY FINANCING ACTIVITIES | (111,316) | (40,597) |
Effect of exchange rate changes on Cash and cash equivalents | 5,087 | (962) |
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 1,653 | (38,585) |
Cash and cash equivalents at beginning of period | 197,150 | 192,958 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | $ 198,803 | $ 154,373 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
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 three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023. The accompanying Consolidated Balance Sheet at December 31, 2022 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, 2022. Turkey – Highly Inflationary Economy Effective April 1, 2022, the financial statements of the Company’s Turkish operation are reported under highly inflationary accounting rules. As a result, the financial statements of the Company’s Turkish operation have been remeasured into the Company’s reporting currency (U.S. dollar) and 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 March 31, 2023, 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 April 27, 2023, the filing date of this Quarterly Report on Form 10-Q. New Accounting Pronouncements: This section provides a description of new accounting pronouncements (“Accounting Standards Update” or “ASU”) issued by the Financial Accounting Standards Board (“FASB”) that are applicable to the Company. The following ASUs were adopted as of January 1, 2023: 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, and presentation on the balance sheet. Refer to Note 15 for the impacts on the Company’s consolidated financial statements. ASU No. 2021-08, Business Combinations (Subtopic 805) Requires the acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The adoption did not have a material impact on the Company’s consolidated financial statements. 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 a period-over-period balance roll forward. This requirement of the ASU is effective January 1, 2024 and should be applied prospectively. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Mar. 31, 2023 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | NOTE 2 — REVENUE RECOGNITION The following table presents the Company’s Net sales disaggregated by product line: Three Months Ended March 31, 2023 2022 Consumables $ 569,684 $ 539,162 Equipment 469,659 386,286 Net sales $ 1,039,343 $ 925,448 Consumable sales consist of welding, brazing and soldering filler metals. Equipment sales consist of arc welding, welding accessories, arc welding equipment, wire feeding systems, fume control equipment, plasma and oxy-fuel cutting systems, specialty gas regulators, and education solutions; as well as a comprehensive portfolio of automated solutions for joining, cutting, material handling, module assembly, and end of line testing. 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 March 31, 2023, the Company recorded $72,363 related to advance customer payments and $34,144 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, 2022, the balances related to advance customer payments and billings in excess of revenue recognized were $78,756 and $34,771, 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 March 31, 2023 and December 31, 2022, the Company recorded $43,130 and $35,252, 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 | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023 2022 Numerator: Net income $ 121,931 $ 126,030 Denominator (shares in 000's): Basic weighted average shares outstanding 57,596 58,606 Effect of dilutive securities - Stock options and awards 821 666 Diluted weighted average shares outstanding 58,417 59,272 Basic earnings per share $ 2.12 $ 2.15 Diluted earnings per share $ 2.09 $ 2.13 For the three months ended March 31, 2023 and 2022, common shares subject to equity-based awards of 29,112 and 69,614, respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive. |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended |
Mar. 31, 2023 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 4 — ACQUISITIONS On December 1, 2022, the Company acquired 100% ownership of for an agreed upon purchase price of $427,000 , which was adjusted for certain debt like obligations, for total purchase price consideration of $468,683 , or $416,353 net of cash acquired, before final and customary adjustments. In 2022, the Company recognized $5,196 in acquisition costs related to Fori and were expensed as incurred. The acquisition of Fori has been accounted for as a business combination which requires the assets and liabilities assumed be recognized at their respective fair values as of the acquisition date. The process of estimating the fair values of certain tangible assets, identifiable intangible assets and assumed liabilities requires the use of judgment in determining the appropriate assumptions and estimates. The table below summarizes the preliminary estimated fair Assets acquired and liabilities assumed Preliminary Purchase Price Allocation Cash and cash equivalents $ 52,330 Accounts receivable 64,439 Inventory 62,584 Property, plant and equipment (1) 36,863 Intangible assets (2) 69,928 Accounts payable 17,996 Net other assets and liabilities (3) 200,535 Total purchase price consideration $ 468,683 (1) Property, plant and equipment acquired includes a number of manufacturing and distribution sites, including the related facilities, land and leased sites, and machinery and equipment for use in manufacturing operations. (2) Intangible asset balances of $22,000 and $18,778, respectively, were assigned to trade names and customer relationships (15 year weighted year weighted average life). (3) Consists primarily of goodwill of $245,749. Goodwill is calculated as the excess of the consideration transferred over the net assets recognized and represents the anticipated synergies of acquiring Fori. A portion of the goodwill is deductible for tax purposes. 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 2022, the Company recognized $365 in acquisition costs related to Kestra and were expensed as incurred. In 2021, Kestra generated sales of approximately $15,000 (unaudited). Beginning March 1, 2022, the Company’s Consolidated Statements of Income include the results of Kestra, including Net sales of $17,602 through December 31, 2022 and the impact on net income for the year ended December 31, 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. 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. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023 Net sales $ 658,645 $ 252,416 $ 128,282 $ — $ 1,039,343 Inter-segment sales 32,318 6,753 2,897 (41,968) — Total $ 690,963 $ 259,169 $ 131,179 $ (41,968) $ 1,039,343 Adjusted EBIT $ 132,453 $ 29,598 $ 18,983 $ (9,374) $ 171,660 Special items charge (gain) (1) 2,785 302 — — 3,087 EBIT $ 129,668 $ 29,296 $ 18,983 $ (9,374) $ 168,573 Interest income 854 Interest expense (14,055) Income before income taxes $ 155,372 Three Months Ended March 31, 2022 Net sales $ 534,055 $ 258,041 $ 133,352 $ — $ 925,448 Inter-segment sales 28,156 6,228 3,062 (37,446) — Total $ 562,211 $ 264,269 $ 136,414 $ (37,446) $ 925,448 Adjusted EBIT $ 111,568 $ 37,087 $ 19,598 $ (4,801) $ 163,452 Special items charge (gain) (2) (3,735) 1,347 — — (2,388) EBIT $ 115,303 $ 35,740 $ 19,598 $ (4,801) $ 165,840 Interest income 376 Interest expense (6,574) Income before income taxes $ 159,642 (1) In the three months ended March 31, 2023, special items include amortization of step up in value of acquired inventories of $2,785 and $1,071 in Americas and International Welding, respectively, Rationalization and asset impairment net charges of $877 in International Welding and a gain on disposal of $1,646 in International Welding. (2) In the three months ended March 31, 2022, special items reflect Rationalization charges of $1,885 in International Welding and the final settl ement related to the termination of a pension plan of $3,735 in Americas Welding. |
RATIONALIZATION AND ASSET IMPAI
RATIONALIZATION AND ASSET IMPAIRMENTS | 3 Months Ended |
Mar. 31, 2023 | |
RATIONALIZATION AND ASSET IMPAIRMENTS | |
RATIONALIZATION AND ASSET IMPAIRMENTS | NOTE 6 — RATIONALIZATION AND ASSET IMPAIRMENTS The Company has 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 March 31, 2023, liabilities of The Company recorded Rationalization and asset impairment net charges of $877 and charges of $1,885 in the three months ended March 31, 2023 and 2022, respectively. The charges are primarily related to restructuring activities. 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 three months ended March 31, 2023: Consolidated Balance at December 31, 2022 $ 2,207 Payments and other adjustments (1,478) Charged to expense 877 Balance at March 31, 2023 $ 1,606 |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI") | 3 Months Ended |
Mar. 31, 2023 | |
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 AOCI by component, net of taxes: Three Months Ended March 31, 2023 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, 2022 $ 13,909 $ (1,781) $ (287,427) $ (275,299) Other comprehensive income before reclassification 10,134 — 14,772 2 24,906 Amounts reclassified from AOCI (1,003) 1 560 — (443) Net current-period other comprehensive income 9,131 560 14,772 24,463 Balance at March 31, 2023 $ 23,040 $ (1,221) $ (272,655) 3 $ (250,836) Three Months Ended March 31, 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 5,849 — (7,583) 2 (1,734) Amounts reclassified from AOCI (494) 1 107 — (387) Net current-period other comprehensive income (loss) 5,355 107 (7,583) (2,121) Balance at March 31, 2022 $ 13,449 $ (13,124) $ (259,832) $ (259,507) (1) During the three months ended March 31, 2023, the AOCI reclassification is a component of Net sales of $864 (net of tax of $342 ) and Cost of goods sold of $(139) (net of tax of $(43) ); during the three months ended March 31, 2022, the reclassification is a component of Net sales of $132 (net of tax of $48 ) and Cost of goods sold of $(362) (net of tax of $(93) ). See Note 13 to the consolidated financial statements for additional details. (2) The Other comprehensive income (loss) before reclassifications excludes $0 and $134 attributable to Non-controlling interests in the three months ended March 31, 2023 and 2022, respectively. (3) Includes a gain of $8,599 from derivatives as net investment hedges. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Mar. 31, 2023 | |
INVENTORIES | |
INVENTORIES | NOTE 8 — INVENTORIES Inventories in the Condensed Consolidated Balance Sheets are comprised of the following components: March 31, 2023 December 31, 2022 Raw materials $ 179,287 $ 181,076 Work-in-process 163,128 164,778 Finished goods 322,184 319,597 Total $ 664,599 $ 665,451 At March 31, 2023 and December 31, 2022, approximately 37% and 38%, respectively, of total inventories were valued using the last-in, first-out ("LIFO") method. The excess of current cost over LIFO cost was $136,101 and $133,909 at March 31, 2023 and December 31, 2022, respectively. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2023 | |
LEASES | |
LEASES | NOTE 9 — 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 March 31, 2023 December 31, 2022 Right-of-use assets Other assets $ 46,549 $ 44,810 Current liabilities Other current liabilities $ 11,167 $ 10,378 Noncurrent liabilities Other liabilities 36,615 35,945 Total lease liabilities $ 47,782 $ 46,323 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 $5,851 and $5,198 in the three months ended March 31, 2023 and 2022, respectively. Cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2023 and 2022, respectively, were $3,145 and $3,187 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 $3,896 and $2,737 during the three months ended March 31, 2023 and 2022, respectively. The total future minimum lease payments for noncancelable operating leases were as follows: March 31, 2023 2023 $ 9,178 2024 10,910 2025 7,656 2026 6,287 2027 4,747 After 2027 14,510 Total lease payments $ 53,288 Less: Imputed interest 5,506 Operating lease liabilities $ 47,782 As of March 31, 2023, the weighted average remaining lease term is 7.6 years and the weighted average discount rate used to determine the operating lease liability is 3.0%. |
DEBT
DEBT | 3 Months Ended |
Mar. 31, 2023 | |
DEBT | |
DEBT | NOTE 10 — 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 . On March 8, 2023, the Credit Agreement was amended to replace the LIBOR rate to a term secured overnight finance rate (“SOFR”); as such, the interest rate on borrowings is based on SOFR plus a spread of based on (1) the Company’s net leverage ratio and (2) a credit spread adjustment. 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 $98,692. As of March 31, 2023, the Company was in compliance with all of its covenants and had $13,408 outstanding. 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 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 March 31, 2023, the Company was in compliance with all of its covenants and had no outstanding borrowings under the Shelf Agreements. Term Loan On November 29, 2022, the Company entered into a term loan in the aggregate principal amount of $400,000 (the “Term Loan”), which was borrowed in full. The Term Loan matures on November 29, 2025. The Term Loan bears an interest at a rate based on SOFR, plus a margin ranging from 0.75% to 1.75% based on the Company’s consolidated net leverage ratio. The proceeds of the Term Loan were used to pay a portion of the purchase price in connection with the acquisition of Fori. As of March 31, 2023, the Company was in compliance with all of its covenants. In March 2023, the Company entered into interest rate swap agreements to effectively convert the interest rate on $150,000 of the Term Loan from a variable rate to a fixed rate. Fair Value of Debt At March 31, 2023 and December 31, 2022, the fair value of long-term debt, including the current portion, was approximately $1,033,063 and $1,009,020, respectively, which was determined using available market information and methodologies requiring judgment. The carrying value of this debt at such dates was $1,121,558 and $1,121,435, 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. |
OTHER INCOME (EXPENSE)
OTHER INCOME (EXPENSE) | 3 Months Ended |
Mar. 31, 2023 | |
OTHER INCOME (EXPENSE) | |
OTHER INCOME (EXPENSE) | NOTE 11 — OTHER INCOME (EXPENSE) The components of Other income (expense) were as follows: Three Months Ended March 31, 2023 2022 Equity earnings in affiliates $ 188 $ 113 Other components of net periodic pension (cost) income (1) (333) 3,848 Other income (expense) (2) 4,354 673 Total Other income (expense) $ 4,209 $ 4,634 (1) In 2022, Other components of net periodic pension (cost) income includes pension settlements and curtailments . (2) In 2023, Other income (expense) includes a gain on asset disposal of $1,646 . |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE 12 — INCOME TAXES The Company recognized $33,413 of tax expense on pretax income of $155,372, resulting in an effective income tax rate of 21.5% for the three months ended March 31, 2023. The effective income tax rate was 21.1% for the three months ended March 31, 2022. The effective tax rate was slightly higher for the three months ended March 31, 2023, as compared with the same period in 2022, primarily due to the geographic mix of earnings and discrete tax items. As of March 31, 2023, the Company had $16,226 of unrecognized tax benefits. If recognized, approximately $13,217 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 2018. 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 $1,287 in previously unrecognized tax benefits by the end of the first quarter 2024. |
DERIVATIVES
DERIVATIVES | 3 Months Ended |
Mar. 31, 2023 | |
DERIVATIVES | |
DERIVATIVES | NOTE 13 — 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 three months ended March 31, 2023 and 2022. 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 March 31, 2023. The Company does not expect any counterparties to fail to meet their obligations. Cash Flow Hedges Certain foreign currency forward contracts are qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of these short-term contracts was $65,779 at March 31, 2023 and $66,296 at December 31, 2022. 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 March 31, 2023 and December 31, 2022 and have a termination date of August 2025. The Company has commodity contracts with a notional amount of 300,000 pounds and 875,000 pounds at March 31, 2023 and December 31, 2022, respectively, which are qualified and designated as cash flow hedges. In March 2023, the Company entered into interest rate swap agreements, which were qualified and designated as cash flow hedges, with an aggregate notional amount of $150,000. The interest rate swaps will effectively convert the interest rate on $150,000 of the Term Loan discussed in Note 10 from a variable rate based on one-month SOFR to a fixed rate. Net Investment Hedges 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 $90,105 at March 31, 2023 and $88,843 at December 31, 2022. 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 $323,519 and $380,443 at March 31, 2023 and December 31, 2022, respectively. Fair values of derivative instruments in the Company’s Condensed Consolidated Balance Sheets follow: March 31, 2023 December 31, 2022 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 $ 3,678 $ 618 $ — $ — $ 1,467 $ 738 $ — $ — Interest rate swap agreements — — 877 — — — — — Forward starting swap agreements — — 17,651 — — — 19,291 — Net investment contracts — 2,947 — — — 2,229 — — Commodity contracts 155 — — — 181 33 — — Not designated as hedging instruments: Foreign exchange contracts 5,378 536 — — 2,348 790 — — Total derivatives $ 9,211 $ 4,101 $ 18,528 $ — $ 3,996 $ 3,790 $ 19,291 $ — The effects of undesignated derivative instruments on the Company’s Consolidated Statements of Income consisted of the following: Three Months Ended March 31, Derivatives by hedge designation Classification of gain (loss) 2023 2022 Not designated as hedges: Foreign exchange contracts Selling, general $ 6,690 $ 1,897 The effects of designated hedges on AOCI and the Company’s Consolidated Statements of Income consisted of the following: Total gain recognized in AOCI, net of tax March 31, 2023 December 31, 2022 Foreign exchange contracts $ 1,769 $ 627 Interest rate swap agreements 656 — Forward starting swap agreements 11,950 13,191 Net investment contracts 8,599 9,440 Commodity Contracts 66 91 The Company expects a gain of $1,835 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 March 31, Gain (loss) recognized in the Derivative type Consolidated Statements of Income: 2023 2022 Foreign exchange contracts Sales $ 1,206 $ 180 Cost of goods sold 3 (455) Commodity contracts Cost of goods sold 179 — |
FAIR VALUE
FAIR VALUE | 3 Months Ended |
Mar. 31, 2023 | |
FAIR VALUE | |
FAIR VALUE | NOTE 14 - FAIR VALUE The following table provides a summary of assets and liabilities as of March 31, 2023, 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 March 31, 2023 (Level 1) (Level 2) Inputs (Level 3) Assets: Foreign exchange contracts $ 9,056 $ — $ 9,056 $ — Commodity contracts 155 — 155 — Interest rate swap agreements 877 — 877 — Forward starting swap agreements 17,651 — 17,651 — Pension surplus 54,085 54,085 — — Total assets $ 81,824 $ 54,085 $ 27,739 $ — Liabilities: Foreign exchange contracts $ 1,154 $ — $ 1,154 $ — Net investment contracts 2,947 — 2,947 — Deferred compensation 38,547 — 38,547 — Total liabilities $ 42,648 $ — $ 42,648 $ — The following table provides a summary of assets and liabilities as of December 31, 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 December 31, 2022 (Level 1) (Level 2) Inputs (Level 3) Assets: Foreign exchange contracts $ 3,815 $ — $ 3,815 $ — Commodity contracts 181 — 181 — Forward starting swap agreements 19,291 — 19,291 — Pension Surplus 56,418 56,418 — — Total assets $ 79,705 $ 56,418 $ 23,287 $ — Liabilities: Foreign exchange contracts $ 1,528 $ — $ 1,528 $ — Net investment contracts 2,229 — 2,229 — Commodity contracts 33 — 33 — Deferred compensation 39,090 — 39,090 — Total liabilities $ 42,880 $ — $ 42,880 $ — 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, net investment contracts and interest rate swap agreements 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 March 31, 2023 and December 31, 2022. 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 March 31, 2023. 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. |
SUPPLIER FINANCING PROGRAM
SUPPLIER FINANCING PROGRAM | 3 Months Ended |
Mar. 31, 2023 | |
SUPPLIER FINANCING PROGRAM | |
SUPPLIER FINANCING PROGRAM | NOTE 15 – SUPPLIER FINANCING PROGRAM The Company’s suppliers, at the supplier’s sole discretion, are able to factor receivables due from the Company to a financial institution on terms directly negotiated with the financial institution without affecting the Company’s balance sheet classification of the corresponding payable. The Company pays the financial institution the stated amount of the confirmed invoices from its designated suppliers on the original maturity dates of the invoices. Invoices with suppliers have terms between 120 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
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 three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023. The accompanying Consolidated Balance Sheet at December 31, 2022 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, 2022. |
Highly Inflationary Economy | Turkey – Highly Inflationary Economy Effective April 1, 2022, the financial statements of the Company’s Turkish operation are reported under highly inflationary accounting rules. As a result, the financial statements of the Company’s Turkish operation have been remeasured into the Company’s reporting currency (U.S. dollar) and 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 March 31, 2023, 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 April 27, 2023, 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 Standards Update” or “ASU”) issued by the Financial Accounting Standards Board (“FASB”) that are applicable to the Company. The following ASUs were adopted as of January 1, 2023: 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, and presentation on the balance sheet. Refer to Note 15 for the impacts on the Company’s consolidated financial statements. ASU No. 2021-08, Business Combinations (Subtopic 805) Requires the acquirer in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The adoption did not have a material impact on the Company’s consolidated financial statements. 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 a period-over-period balance roll forward. This requirement of the ASU is effective January 1, 2024 and should be applied prospectively. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
REVENUE RECOGNITION | |
Schedule of disaggregation of revenue by product line | Three Months Ended March 31, 2023 2022 Consumables $ 569,684 $ 539,162 Equipment 469,659 386,286 Net sales $ 1,039,343 $ 925,448 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
EARNINGS PER SHARE | |
Schedule of computation of basic and diluted earnings per share | Three Months Ended March 31, 2023 2022 Numerator: Net income $ 121,931 $ 126,030 Denominator (shares in 000's): Basic weighted average shares outstanding 57,596 58,606 Effect of dilutive securities - Stock options and awards 821 666 Diluted weighted average shares outstanding 58,417 59,272 Basic earnings per share $ 2.12 $ 2.15 Diluted earnings per share $ 2.09 $ 2.13 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
ACQUISITIONS | |
Schedule of assets acquired and liabilities assumed | Assets acquired and liabilities assumed Preliminary Purchase Price Allocation Cash and cash equivalents $ 52,330 Accounts receivable 64,439 Inventory 62,584 Property, plant and equipment (1) 36,863 Intangible assets (2) 69,928 Accounts payable 17,996 Net other assets and liabilities (3) 200,535 Total purchase price consideration $ 468,683 (1) Property, plant and equipment acquired includes a number of manufacturing and distribution sites, including the related facilities, land and leased sites, and machinery and equipment for use in manufacturing operations. (2) Intangible asset balances of $22,000 and $18,778, respectively, were assigned to trade names and customer relationships (15 year weighted year weighted average life). (3) Consists primarily of goodwill of $245,749. |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
SEGMENT INFORMATION | |
Schedule of financial information for the reportable segments | The Harris Americas International Products Corporate / Welding Welding Group Eliminations Consolidated Three Months Ended March 31, 2023 Net sales $ 658,645 $ 252,416 $ 128,282 $ — $ 1,039,343 Inter-segment sales 32,318 6,753 2,897 (41,968) — Total $ 690,963 $ 259,169 $ 131,179 $ (41,968) $ 1,039,343 Adjusted EBIT $ 132,453 $ 29,598 $ 18,983 $ (9,374) $ 171,660 Special items charge (gain) (1) 2,785 302 — — 3,087 EBIT $ 129,668 $ 29,296 $ 18,983 $ (9,374) $ 168,573 Interest income 854 Interest expense (14,055) Income before income taxes $ 155,372 Three Months Ended March 31, 2022 Net sales $ 534,055 $ 258,041 $ 133,352 $ — $ 925,448 Inter-segment sales 28,156 6,228 3,062 (37,446) — Total $ 562,211 $ 264,269 $ 136,414 $ (37,446) $ 925,448 Adjusted EBIT $ 111,568 $ 37,087 $ 19,598 $ (4,801) $ 163,452 Special items charge (gain) (2) (3,735) 1,347 — — (2,388) EBIT $ 115,303 $ 35,740 $ 19,598 $ (4,801) $ 165,840 Interest income 376 Interest expense (6,574) Income before income taxes $ 159,642 (1) In the three months ended March 31, 2023, special items include amortization of step up in value of acquired inventories of $2,785 and $1,071 in Americas and International Welding, respectively, Rationalization and asset impairment net charges of $877 in International Welding and a gain on disposal of $1,646 in International Welding. (2) In the three months ended March 31, 2022, special items reflect Rationalization charges of $1,885 in International Welding and the final settl ement related to the termination of a pension plan of $3,735 in Americas Welding. |
RATIONALIZATION AND ASSET IMP_2
RATIONALIZATION AND ASSET IMPAIRMENTS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
RATIONALIZATION AND ASSET IMPAIRMENTS | |
Summary of the activity related to the rationalization liabilities by segment | Consolidated Balance at December 31, 2022 $ 2,207 Payments and other adjustments (1,478) Charged to expense 877 Balance at March 31, 2023 $ 1,606 |
ACCUMULATED OTHER COMPREHENSI_2
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI") (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI") | |
Schedule of changes in accumulated other comprehensive income (loss) | Three Months Ended March 31, 2023 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, 2022 $ 13,909 $ (1,781) $ (287,427) $ (275,299) Other comprehensive income before reclassification 10,134 — 14,772 2 24,906 Amounts reclassified from AOCI (1,003) 1 560 — (443) Net current-period other comprehensive income 9,131 560 14,772 24,463 Balance at March 31, 2023 $ 23,040 $ (1,221) $ (272,655) 3 $ (250,836) Three Months Ended March 31, 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 5,849 — (7,583) 2 (1,734) Amounts reclassified from AOCI (494) 1 107 — (387) Net current-period other comprehensive income (loss) 5,355 107 (7,583) (2,121) Balance at March 31, 2022 $ 13,449 $ (13,124) $ (259,832) $ (259,507) (1) During the three months ended March 31, 2023, the AOCI reclassification is a component of Net sales of $864 (net of tax of $342 ) and Cost of goods sold of $(139) (net of tax of $(43) ); during the three months ended March 31, 2022, the reclassification is a component of Net sales of $132 (net of tax of $48 ) and Cost of goods sold of $(362) (net of tax of $(93) ). See Note 13 to the consolidated financial statements for additional details. (2) The Other comprehensive income (loss) before reclassifications excludes $0 and $134 attributable to Non-controlling interests in the three months ended March 31, 2023 and 2022, respectively. (3) Includes a gain of $8,599 from derivatives as net investment hedges. |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
INVENTORIES | |
Schedule of inventory | March 31, 2023 December 31, 2022 Raw materials $ 179,287 $ 181,076 Work-in-process 163,128 164,778 Finished goods 322,184 319,597 Total $ 664,599 $ 665,451 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
LEASES | |
Schedule of leases In balance sheet | Operating Leases Balance Sheet Classification March 31, 2023 December 31, 2022 Right-of-use assets Other assets $ 46,549 $ 44,810 Current liabilities Other current liabilities $ 11,167 $ 10,378 Noncurrent liabilities Other liabilities 36,615 35,945 Total lease liabilities $ 47,782 $ 46,323 |
Schedule of future minimum lease payments | March 31, 2023 2023 $ 9,178 2024 10,910 2025 7,656 2026 6,287 2027 4,747 After 2027 14,510 Total lease payments $ 53,288 Less: Imputed interest 5,506 Operating lease liabilities $ 47,782 |
OTHER INCOME (EXPENSE) (Tables)
OTHER INCOME (EXPENSE) (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
OTHER INCOME (EXPENSE) | |
Schedule of Other Nonoperating Income (Expense) | Three Months Ended March 31, 2023 2022 Equity earnings in affiliates $ 188 $ 113 Other components of net periodic pension (cost) income (1) (333) 3,848 Other income (expense) (2) 4,354 673 Total Other income (expense) $ 4,209 $ 4,634 (1) In 2022, Other components of net periodic pension (cost) income includes pension settlements and curtailments . (2) In 2023, Other income (expense) includes a gain on asset disposal of $1,646 . |
DERIVATIVES (Tables)
DERIVATIVES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
DERIVATIVES | |
Schedule of fair values of derivative instruments on the Company's Consolidated Balance Sheets | March 31, 2023 December 31, 2022 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 $ 3,678 $ 618 $ — $ — $ 1,467 $ 738 $ — $ — Interest rate swap agreements — — 877 — — — — — Forward starting swap agreements — — 17,651 — — — 19,291 — Net investment contracts — 2,947 — — — 2,229 — — Commodity contracts 155 — — — 181 33 — — Not designated as hedging instruments: Foreign exchange contracts 5,378 536 — — 2,348 790 — — Total derivatives $ 9,211 $ 4,101 $ 18,528 $ — $ 3,996 $ 3,790 $ 19,291 $ — |
Schedule of effects of undesignated derivative instruments on the Company's Consolidated Statements of Income | Three Months Ended March 31, Derivatives by hedge designation Classification of gain (loss) 2023 2022 Not designated as hedges: Foreign exchange contracts Selling, general $ 6,690 $ 1,897 |
Schedule of effects of designated cash flow hedges on AOCI and the entity's Consolidated Statements of Income | Total gain recognized in AOCI, net of tax March 31, 2023 December 31, 2022 Foreign exchange contracts $ 1,769 $ 627 Interest rate swap agreements 656 — Forward starting swap agreements 11,950 13,191 Net investment contracts 8,599 9,440 Commodity Contracts 66 91 Three Months Ended March 31, Gain (loss) recognized in the Derivative type Consolidated Statements of Income: 2023 2022 Foreign exchange contracts Sales $ 1,206 $ 180 Cost of goods sold 3 (455) Commodity contracts Cost of goods sold 179 — |
FAIR VALUE (Tables)
FAIR VALUE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023 (Level 1) (Level 2) Inputs (Level 3) Assets: Foreign exchange contracts $ 9,056 $ — $ 9,056 $ — Commodity contracts 155 — 155 — Interest rate swap agreements 877 — 877 — Forward starting swap agreements 17,651 — 17,651 — Pension surplus 54,085 54,085 — — Total assets $ 81,824 $ 54,085 $ 27,739 $ — Liabilities: Foreign exchange contracts $ 1,154 $ — $ 1,154 $ — Net investment contracts 2,947 — 2,947 — Deferred compensation 38,547 — 38,547 — Total liabilities $ 42,648 $ — $ 42,648 $ — Quoted Prices in Active Markets for Identical Assets or Significant Other Significant Balance as of Liabilities Observable Inputs Unobservable Description December 31, 2022 (Level 1) (Level 2) Inputs (Level 3) Assets: Foreign exchange contracts $ 3,815 $ — $ 3,815 $ — Commodity contracts 181 — 181 — Forward starting swap agreements 19,291 — 19,291 — Pension Surplus 56,418 56,418 — — Total assets $ 79,705 $ 56,418 $ 23,287 $ — Liabilities: Foreign exchange contracts $ 1,528 $ — $ 1,528 $ — Net investment contracts 2,229 — 2,229 — Commodity contracts 33 — 33 — Deferred compensation 39,090 — 39,090 — Total liabilities $ 42,880 $ — $ 42,880 $ — |
REVENUE RECOGNITION - Narrative
REVENUE RECOGNITION - Narrative (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Percentage Net Sales Over Time | 10% | |
Unbilled Contracts Receivable | $ 43,130 | $ 35,252 |
Advance Customer Payments | ||
Contract with customer liability | 72,363 | 78,756 |
Billings in Excess of Revenue Recognized | ||
Contract with customer liability | $ 34,144 | $ 34,771 |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Net sales (Note 2) | $ 1,039,343 | $ 925,448 |
Consumables | ||
Disaggregation of Revenue [Line Items] | ||
Net sales (Note 2) | 569,684 | 539,162 |
Equipment | ||
Disaggregation of Revenue [Line Items] | ||
Net sales (Note 2) | $ 469,659 | $ 386,286 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator: | ||
Net income | $ 121,931 | $ 126,030 |
Denominator (shares in 000's): | ||
Basic weighted average shares outstanding (in shares) | 57,596,000 | 58,606,000 |
Effect of dilutive securities - Stock options and awards (in shares) | 821,000 | 666,000 |
Diluted weighted average shares outstanding (in shares) | 58,417,000 | 59,272,000 |
Basic earnings per share (in dollars per share) | $ 2.12 | $ 2.15 |
Diluted earnings per share (in dollars per share) | $ 2.09 | $ 2.13 |
Anti-dilutive shares excluded from the computation of diluted earnings per share | 29,112 | 69,614 |
ACQUISITIONS - Narrative (Detai
ACQUISITIONS - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 10 Months Ended | 12 Months Ended | ||||
Dec. 01, 2022 | Mar. 01, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Acquisitions | |||||||
Net purchase price, net of cash acquired | $ 0 | $ 22,013 | |||||
Annual sales at the date of acquisition | 1,039,343 | $ 925,448 | |||||
Fori | |||||||
Acquisitions | |||||||
Cash purchase price | $ 427,000 | ||||||
Purchase price | 468,683 | ||||||
Net purchase price, net of cash acquired | 416,353 | ||||||
Cash acquired | $ 52,330 | ||||||
Ownership purchased (as a percent) | 100% | ||||||
Acquisition Costs | $ 5,196 | ||||||
Acquisitions' net sales | $ 49,215 | ||||||
Annual sales at the date of acquisition | 200,000 | ||||||
Kestra | |||||||
Acquisitions | |||||||
Net purchase price, net of cash acquired | $ 22,294 | ||||||
Ownership purchased (as a percent) | 100% | ||||||
Acquisition Costs | $ 365 | ||||||
Acquisitions' net sales | $ 17,602 | ||||||
Annual sales at the date of acquisition | $ 15,000 |
ACQUISITIONS - Assets Acquired
ACQUISITIONS - Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Dec. 01, 2022 | Mar. 31, 2023 | Dec. 31, 2022 |
Assets Acquired and Liabilities Assumed | |||
Goodwill | $ 679,385 | $ 665,257 | |
Fori | |||
Assets Acquired and Liabilities Assumed | |||
Cash and cash equivalents | $ 52,330 | ||
Accounts receivable | 64,439 | ||
Inventory | 62,584 | ||
Property, plant and equipment | 36,863 | ||
Intangible assets | 69,928 | ||
Accounts payable | 17,996 | ||
Net other assets and liabilities | 200,535 | ||
Total purchase price consideration | 468,683 | ||
Goodwill | 245,749 | ||
Tradenames | Fori | |||
Assets Acquired and Liabilities Assumed | |||
Finite-lived Intangible Assets Acquired | $ 22,000 | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | ||
Customer relationships | Fori | |||
Assets Acquired and Liabilities Assumed | |||
Finite-lived Intangible Assets Acquired | $ 18,778 | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years | ||
Technology know-how | Fori | |||
Assets Acquired and Liabilities Assumed | |||
Finite-lived Intangible Assets Acquired | $ 24,900 | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 10 years | ||
Restrictive covenants | Fori | |||
Assets Acquired and Liabilities Assumed | |||
Finite-lived Intangible Assets Acquired | $ 4,250 | ||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 4 years |
SEGMENT INFORMATION (Financial
SEGMENT INFORMATION (Financial Information of Reportable Segments) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Financial information for the reportable segments | ||
Net sales (Note 2) | $ 1,039,343 | $ 925,448 |
Inter-segment sales | 0 | 0 |
Total | 1,039,343 | 925,448 |
Adjusted EBIT | 171,660 | 163,452 |
Special items charge (gain) | 3,087 | (2,388) |
EBIT | 168,573 | 165,840 |
Interest income | 854 | 376 |
Interest expense | (14,055) | (6,574) |
Income before income taxes | 155,372 | 159,642 |
Rationalization and asset impairment charges (gains) | 877 | 1,885 |
Gain (Loss) on Disposition of Assets | 1,646 | |
Rationalization and asset impairment net gains | 0 | (1,188) |
Corporate/Eliminations | ||
Financial information for the reportable segments | ||
Net sales (Note 2) | 0 | 0 |
Inter-segment sales | (41,968) | (37,446) |
Total | (41,968) | (37,446) |
Adjusted EBIT | (9,374) | (4,801) |
Special items charge (gain) | 0 | 0 |
EBIT | (9,374) | (4,801) |
Americas Welding | ||
Financial information for the reportable segments | ||
Defined benefit plan, net periodic benefit cost (credit), gain (loss) due to curtailment | 3,735 | |
Americas Welding | Operating Segments | ||
Financial information for the reportable segments | ||
Net sales (Note 2) | 658,645 | 534,055 |
Inter-segment sales | 32,318 | 28,156 |
Total | 690,963 | 562,211 |
Adjusted EBIT | 132,453 | 111,568 |
Special items charge (gain) | 2,785 | (3,735) |
EBIT | 129,668 | 115,303 |
International Welding | ||
Financial information for the reportable segments | ||
Rationalization and asset impairment charges (gains) | 877 | 1,885 |
Business combination, inventory step up | 1,071 | |
Gain (Loss) on Disposition of Assets | 1,646 | |
International Welding | Operating Segments | ||
Financial information for the reportable segments | ||
Net sales (Note 2) | 252,416 | 258,041 |
Inter-segment sales | 6,753 | 6,228 |
Total | 259,169 | 264,269 |
Adjusted EBIT | 29,598 | 37,087 |
Special items charge (gain) | 302 | 1,347 |
EBIT | 29,296 | 35,740 |
The Harris Products Group | Operating Segments | ||
Financial information for the reportable segments | ||
Net sales (Note 2) | 128,282 | 133,352 |
Inter-segment sales | 2,897 | 3,062 |
Total | 131,179 | 136,414 |
Adjusted EBIT | 18,983 | 19,598 |
Special items charge (gain) | 0 | 0 |
EBIT | 18,983 | $ 19,598 |
Americas Welding and International Welding | ||
Financial information for the reportable segments | ||
Business combination, inventory step up | $ 2,785 |
SEGMENT INFORMATION - Narrative
SEGMENT INFORMATION - Narrative (Details) | 3 Months Ended |
Mar. 31, 2023 segment | |
SEGMENT INFORMATION | |
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 | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Activity related to the rationalization liabilities by segment | |
Balance at the beginning of the period | $ 2,207 |
Payments and other adjustments | (1,478) |
Charged to expense | 877 |
Balance at the end of the period | $ 1,606 |
RATIONALIZATION AND ASSET IMP_4
RATIONALIZATION AND ASSET IMPAIRMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Restructuring Cost and Reserve [Line Items] | |||
Rationalization and asset impairment charges (gains) | $ 877 | $ 1,885 | |
Restructuring liability | 1,606 | $ 2,207 | |
International Welding | |||
Restructuring Cost and Reserve [Line Items] | |||
Rationalization and asset impairment charges (gains) | 877 | $ 1,885 | |
Restructure Plans 2021 and 2022 | International Welding | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring liability | $ 1,606 |
ACCUMULATED OTHER COMPREHENSI_3
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI") (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Accumulated other comprehensive (loss) income | |||
Beginning Balance | $ 1,034,041 | $ 863,909 | $ 863,909 |
Ending Balance | 1,125,236 | 863,060 | 1,034,041 |
Net sales (Note 2) | 1,039,343 | 925,448 | |
Income taxes | 33,413 | 33,611 | |
Cost of goods sold | 683,986 | 595,671 | |
Derivative designated as net investment hedges | 8,599 | ||
Accumulated Other Comprehensive Income (Loss) | |||
Accumulated other comprehensive (loss) income | |||
Beginning Balance | (275,299) | (257,386) | (257,386) |
Other comprehensive income (loss) before reclassification | 24,906 | (1,734) | |
Amounts reclassified from AOCI | (443) | (387) | |
Net current-period other comprehensive income (loss) | 24,463 | (2,121) | |
Ending Balance | (250,836) | (259,507) | (275,299) |
Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges | |||
Accumulated other comprehensive (loss) income | |||
Beginning Balance | 13,909 | 8,094 | 8,094 |
Other comprehensive income (loss) before reclassification | 10,134 | 5,849 | |
Amounts reclassified from AOCI | (1,003) | (494) | |
Net current-period other comprehensive income (loss) | 9,131 | 5,355 | |
Ending Balance | 23,040 | 13,449 | 13,909 |
Defined benefit pension plan activity | |||
Accumulated other comprehensive (loss) income | |||
Beginning Balance | (1,781) | (13,231) | (13,231) |
Other comprehensive income (loss) before reclassification | 0 | 0 | |
Amounts reclassified from AOCI | 560 | 107 | |
Net current-period other comprehensive income (loss) | 560 | 107 | |
Ending Balance | (1,221) | (13,124) | (1,781) |
Currency translation adjustment | |||
Accumulated other comprehensive (loss) income | |||
Beginning Balance | (287,427) | (252,249) | (252,249) |
Other comprehensive income (loss) before reclassification | 14,772 | (7,583) | |
Amounts reclassified from AOCI | 0 | 0 | |
Net current-period other comprehensive income (loss) | 14,772 | (7,583) | |
Ending Balance | (272,655) | (259,832) | $ (287,427) |
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 | 0 | 134 | |
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) | 864 | 132 | |
Income taxes | 342 | 48 | |
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 | (43) | (93) | |
Cost of goods sold | $ (139) | $ (362) |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
INVENTORIES | ||
Raw materials | $ 179,287 | $ 181,076 |
Work-in-process | 163,128 | 164,778 |
Finished goods | 322,184 | 319,597 |
Total | $ 664,599 | $ 665,451 |
Percentage of total inventories valued using the LIFO method (as a percent) | 37% | 38% |
Excess of current cost over LIFO cost | $ 136,101 | $ 133,909 |
LEASES (Details)
LEASES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
LEASES | ||
Operating lease, weighted average remaining lease term | 7 years 7 months 6 days | |
Lease, cost | $ 5,851 | $ 5,198 |
Operating lease, payments | 3,145 | 3,187 |
Right-of-use asset obtained in exchange for operating lease liability | $ 3,896 | $ 2,737 |
Operating lease, weighted average discount rate, percent | 3% |
LEASES - Schedule of Leases in
LEASES - Schedule of Leases in Balance Sheets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
LEASES | ||
Right-of-use assets | $ 46,549 | $ 44,810 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Other Assets, Noncurrent | Other Assets, Noncurrent |
Current liabilities | $ 11,167 | $ 10,378 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other Liabilities, Current | Other Liabilities, Current |
Noncurrent liabilities | $ 36,615 | $ 35,945 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent |
Total lease liabilities | $ 47,782 | $ 46,323 |
LEASES - Maturities of Lease Li
LEASES - Maturities of Lease Liabilities, Operating Leases (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
LEASES | ||
2023 | $ 9,178 | |
2024 | 10,910 | |
2025 | 7,656 | |
2026 | 6,287 | |
2027 | 4,747 | |
After 2027 | 14,510 | |
Total lease payments | 53,288 | |
Less: Imputed interest | (5,506) | |
Operating lease liabilities | $ 47,782 | $ 46,323 |
DEBT (Revolving Credit Agreemen
DEBT (Revolving Credit Agreement) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 08, 2023 | Apr. 23, 2021 | Mar. 31, 2023 | |
Revolving credit agreement | |||
Debt Instrument [Line Items] | |||
Borrowing capacity under the line of credit | $ 500,000 | ||
Credit facility covenant compliance | As of March 31, 2023, 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 | $ 25,000 | ||
Revolving credit agreement | SOFR | Minimum | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 0.85% | ||
Revolving credit agreement | SOFR | Maximum | |||
Debt Instrument [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.85% | ||
Other Lines of Credit and Debt Agreements | |||
Debt Instrument [Line Items] | |||
Borrowing capacity under the line of credit | 98,692 | ||
Line of Credit, Current | $ 13,408 |
DEBT (Long-Term Debt) (Details)
DEBT (Long-Term Debt) (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 | Dec. 31, 2022 | Oct. 20, 2016 | Apr. 01, 2015 | |
Debt Instrument [Line Items] | ||||
Fair value of long-term debt | $ 1,033,063 | $ 1,009,020 | ||
Carrying value of long-term debt | $ 1,121,558 | $ 1,121,435 | ||
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 March 31, 2023, the Company was in compliance with all of its debt covenants | |||
Weighted Average | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, term | 11 years 1 month 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 | 3 Months Ended | |
Nov. 27, 2018 USD ($) loan | Mar. 31, 2023 USD ($) | |
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 March 31, 2023, 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 |
DEBT (Term Loan) (Details)
DEBT (Term Loan) (Details) - Term Loan - USD ($) $ in Thousands | Nov. 29, 2022 | Mar. 31, 2023 |
Debt Instrument [Line Items] | ||
Face amount of loan | $ 400,000 | |
Debt associated with interest rate swap | $ 150,000 | |
Maximum | SOFR | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | |
Minimum | SOFR | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Basis Spread on Variable Rate | 0.75% |
OTHER INCOME (EXPENSE) (Details
OTHER INCOME (EXPENSE) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
OTHER INCOME (EXPENSE) | ||
Equity earnings in affiliates | $ 188 | $ 113 |
Other components of net periodic pension (cost) income | (333) | 3,848 |
Other income (expense) | 4,354 | 673 |
Total Other income (expense) | 4,209 | $ 4,634 |
Gain (Loss) on Disposition of Assets | $ 1,646 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
INCOME TAXES | ||
Income taxes | $ 33,413 | $ 33,611 |
Pre-tax income | $ 155,372 | $ 159,642 |
Effective tax rate | 21.50% | 21.10% |
Unrecognized tax benefits | $ 16,226 | |
Unrecognized tax benefits that, if recognized, would be reflected as a component of income tax expense | 13,217 | |
Reasonably possible further reduction in prior years' unrecognized tax benefits during the next twelve months | $ 1,287 |
DERIVATIVES (Fair Value of Deri
DERIVATIVES (Fair Value of Derivative Instruments) (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Other Current Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | $ 9,211 | $ 3,996 |
Other Current Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 4,101 | 3,790 |
Other Noncurrent Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 18,528 | 19,291 |
Other Noncurrent Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 0 |
Designated as Hedging Instruments | Foreign exchange contracts | Other Current Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 3,678 | 1,467 |
Designated as Hedging Instruments | Foreign exchange contracts | Other Current Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 618 | 738 |
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 | Interest Rate Swap | Other Current Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 0 | 0 |
Designated as Hedging Instruments | Interest Rate Swap | Other Current Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 0 |
Designated as Hedging Instruments | Interest Rate Swap | Other Noncurrent Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 877 | 0 |
Designated as Hedging Instruments | Interest Rate Swap | Other Noncurrent Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 0 |
Designated as Hedging Instruments | Forward starting swap agreements | Other Current Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 0 | 0 |
Designated as Hedging Instruments | Forward starting swap agreements | Other Current Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 0 |
Designated as Hedging Instruments | Forward starting swap agreements | Other Noncurrent Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 17,651 | 19,291 |
Designated as Hedging Instruments | Forward starting swap agreements | Other Noncurrent Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 0 |
Designated as Hedging Instruments | Net investment contracts | Other Current Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 0 | 0 |
Designated as Hedging Instruments | Net investment contracts | Other Current Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 2,947 | 2,229 |
Designated as Hedging Instruments | Net investment contracts | Other Noncurrent Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 0 | 0 |
Designated as Hedging Instruments | Net investment contracts | Other Noncurrent Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 0 |
Designated as Hedging Instruments | Commodity contracts | Other Current Assets | ||
Fair values of derivative instruments | ||
Fair value of derivative assets | 155 | 181 |
Designated as Hedging Instruments | Commodity contracts | Other Current Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 0 | 33 |
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 | 5,378 | 2,348 |
Not designated as hedging instruments | Foreign exchange contracts | Other Current Liabilities | ||
Fair values of derivative instruments | ||
Fair value of derivative liabilities | 536 | 790 |
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 | |
Mar. 31, 2023 | Mar. 31, 2022 | |
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 | $ 6,690 | $ 1,897 |
DERIVATIVES (AOCI Impact) (Deta
DERIVATIVES (AOCI Impact) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Foreign exchange contracts | |||
Fair values of derivative instruments | |||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | $ 1,769 | $ 627 | |
Interest Rate Swap | |||
Fair values of derivative instruments | |||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | 656 | 0 | |
Forward starting swap agreements | |||
Fair values of derivative instruments | |||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | 11,950 | 13,191 | |
Net investment contracts | |||
Fair values of derivative instruments | |||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | 8,599 | 9,440 | |
Commodity contracts | |||
Fair values of derivative instruments | |||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), before Reclassification and Tax | 66 | $ 91 | |
Sales | Foreign exchange contracts | |||
Fair values of derivative instruments | |||
Gain (loss) reclassified from AOCI to earnings | 1,206 | $ 180 | |
Cost of goods sold | Foreign exchange contracts | |||
Fair values of derivative instruments | |||
Gain (loss) reclassified from AOCI to earnings | 3 | (455) | |
Cost of goods sold | Commodity contracts | |||
Fair values of derivative instruments | |||
Gain (loss) reclassified from AOCI to earnings | $ 179 | $ 0 |
DERIVATIVES - Narrative (Detail
DERIVATIVES - Narrative (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 USD ($) lb | Dec. 31, 2022 USD ($) lb | |
Derivative [Line Items] | ||
Derivative Instruments, Gain (Loss) Recognized in Other Comprehensive Income (Loss), Effective Portion, Net | $ 1,835 | |
Derivative Instruments, Gain (Loss) Reclassification from Accumulated OCI to Income, Estimate of Time to Transfer | 12 months | |
Term Loan | ||
Derivative [Line Items] | ||
Debt associated with interest rate swap | $ 150,000 | |
Interest Rate Swap | ||
Derivative [Line Items] | ||
Notional amount of derivative instruments | 150,000 | |
Not designated as hedging instruments | Foreign exchange contracts | ||
Derivative [Line Items] | ||
Derivative Asset, Notional Amount | 323,519 | $ 380,443 |
Cash flow hedges | Designated as Hedging Instruments | Foreign exchange contracts | ||
Derivative [Line Items] | ||
Derivative Asset, Notional Amount | $ 65,779 | $ 66,296 |
Cash flow hedges | Designated as Hedging Instruments | Commodity contracts | ||
Derivative [Line Items] | ||
Notional amount (in pounds) | lb | 300,000 | 875,000 |
Cash flow hedges | Designated as Hedging Instruments | Forward Contracts | ||
Derivative [Line Items] | ||
Derivative Asset, Notional Amount | $ 100,000 | $ 100,000 |
Net investment hedges | Designated as Hedging Instruments | Foreign exchange contracts | ||
Derivative [Line Items] | ||
Derivative Asset, Notional Amount | $ 90,105 | $ 88,843 |
FAIR VALUE (Summary of Fair Val
FAIR VALUE (Summary of Fair Value Assets and Liabilities) (Details) - Recurring basis - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Assets: | ||
Total assets | $ 81,824 | $ 79,705 |
Liabilities: | ||
Deferred compensation | 38,547 | 39,090 |
Total liabilities | 42,648 | 42,880 |
Foreign exchange contracts | ||
Assets: | ||
Assets | 9,056 | 3,815 |
Liabilities: | ||
Liabilities | 1,154 | 1,528 |
Net investment contracts | ||
Liabilities: | ||
Liabilities | 2,947 | 2,229 |
Interest Rate Swap | ||
Assets: | ||
Assets | 877 | |
Commodity contracts | ||
Assets: | ||
Assets | 155 | 181 |
Liabilities: | ||
Liabilities | 33 | |
Forward starting swap agreements | ||
Assets: | ||
Assets | 17,651 | 19,291 |
Pension surplus | ||
Assets: | ||
Assets | 54,085 | 56,418 |
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | ||
Assets: | ||
Total assets | 54,085 | 56,418 |
Liabilities: | ||
Deferred compensation | 0 | 0 |
Total liabilities | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Foreign exchange contracts | ||
Assets: | ||
Assets | 0 | 0 |
Liabilities: | ||
Liabilities | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Net investment contracts | ||
Liabilities: | ||
Liabilities | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Interest Rate Swap | ||
Assets: | ||
Assets | 0 | |
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Commodity contracts | ||
Assets: | ||
Assets | 0 | 0 |
Liabilities: | ||
Liabilities | 0 | |
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Forward starting swap agreements | ||
Assets: | ||
Assets | 0 | 0 |
Quoted Prices in Active Markets for Identical Assets or Liabilities (Level 1) | Pension surplus | ||
Assets: | ||
Assets | 54,085 | 56,418 |
Significant Other Observable Inputs (Level 2) | ||
Assets: | ||
Total assets | 27,739 | 23,287 |
Liabilities: | ||
Deferred compensation | 38,547 | 39,090 |
Total liabilities | 42,648 | 42,880 |
Significant Other Observable Inputs (Level 2) | Foreign exchange contracts | ||
Assets: | ||
Assets | 9,056 | 3,815 |
Liabilities: | ||
Liabilities | 1,154 | 1,528 |
Significant Other Observable Inputs (Level 2) | Net investment contracts | ||
Liabilities: | ||
Liabilities | 2,947 | 2,229 |
Significant Other Observable Inputs (Level 2) | Interest Rate Swap | ||
Assets: | ||
Assets | 877 | |
Significant Other Observable Inputs (Level 2) | Commodity contracts | ||
Assets: | ||
Assets | 155 | 181 |
Liabilities: | ||
Liabilities | 33 | |
Significant Other Observable Inputs (Level 2) | Forward starting swap agreements | ||
Assets: | ||
Assets | 17,651 | 19,291 |
Significant Other Observable Inputs (Level 2) | Pension surplus | ||
Assets: | ||
Assets | 0 | 0 |
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) | Net investment contracts | ||
Liabilities: | ||
Liabilities | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Interest Rate Swap | ||
Assets: | ||
Assets | 0 | |
Significant Unobservable Inputs (Level 3) | Commodity contracts | ||
Assets: | ||
Assets | 0 | 0 |
Liabilities: | ||
Liabilities | 0 | |
Significant Unobservable Inputs (Level 3) | Forward starting swap agreements | ||
Assets: | ||
Assets | 0 | 0 |
Significant Unobservable Inputs (Level 3) | Pension surplus | ||
Assets: | ||
Assets | $ 0 | $ 0 |
SUPPLIER FINANCING PROGRAM (Det
SUPPLIER FINANCING PROGRAM (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Supplier financing program | ||
Supplier financing program obligations included in accounts payable | $ 27,535 | $ 33,475 |
Minimum | ||
Supplier financing program | ||
Supplier terms | 120 days | |
Maximum | ||
Supplier financing program | ||
Supplier terms | 180 days |