Exhibit 99.1
LINCOLN ELECTRIC REPORTS 2004 SECOND-QUARTER
AND FIRST-HALF FINANCIAL RESULTS
- - Net sales up 25%, setting quarterly record
- - Net income rises 67% for the quarter
- - Diluted EPS is 57 cents
CLEVELAND, July 20, 2004 - Lincoln Electric Holdings, Inc.
(Nasdaq: LECO) today reported that net income increased 67% for the 2004 second
quarter to $23.7 million, or 57 cents per diluted share, compared with $14.2
million, or 34 cents per diluted share, in the second quarter of 2003. Net sales
in the quarter totaled $331.8 million, a 25% increase over the same period last
year and set the highest quarterly sales in Lincoln's history.
"Continuing strong demand in all of our markets - domestic and
international - contributed to higher sales, increased production and strong
profitability in the quarter," said John M. Stropki, President and Chief
Executive Officer. "The improving global economy and the rise in worldwide
industrial production are fueling economic growth in our major market segments."
Net sales for Lincoln's U.S. operations increased 28% to
$198.5 million in the quarter, compared with $155.3 million in the 2003 second
quarter. Export sales were $20.3 million, an increase of approximately 17% over
the $17.3 million reported in the 2003 second quarter.
"Higher demand across all industry segments drove sales
increases in North America, which includes the United States and Canada," Mr.
Stropki said. "We continue to experience solid, steady growth in industrial
distribution, retail and rental market channels. Energy projects in Russia, the
Middle East and China contributed to strong export sales increases for our
operations here in the United States and other international operations."
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LINCOLN ELECTRIC REPORTS 2004 SECOND-QUARTER FINANCIAL RESULTS -2-
Net sales for Lincoln's non-U.S. operations were $133.3
million in the quarter, compared with $109.7 million in the second quarter of
2003. In local currencies, non-U.S. net sales increased 18%.
In the 2004 first half, net income increased 59% to $42
million, or $1.02 per diluted share, compared with $26.4 million, or 63 cents
per diluted share, in the first half of 2003. The 2003 first half included
rationalization charges of approximately $1.3 million, net of tax, related to
asset impairments and severance charges. Excluding the rationalization charges,
2003 first-half net income was $27.7 million, or 66 cents per diluted share.
Net sales in the first six months of 2004 increased 24% to
$638.3 million, compared with $514.2 million in the same period last year. The
Company's U.S. operations' net sales in the first half of 2004 increased 25% to
$379.6 million, compared with $302.6 million in the prior year. Export sales
rose 20% to $37.2 million, compared with $31 million in the same period last
year. The Company's non-U.S. operations' net sales were $258.7 million, compared
with $211.6 million in 2003. In local currencies, non-U.S. net sales increased
approximately 15%.
The Company completed its previously announced transactions to
acquire majority interests in three welding businesses in China.
"Lincoln's growth in the Asia-Pacific market, specifically
China, has helped position us as the market leader in this important and
fast-growing market," said Mr. Stropki. "Our new majority position in China
makes Lincoln the only major global arc welding company with a full and
comprehensive offering of welding equipment and consumables to the Chinese
market. Our growth also continues in other markets in the region with sales
driven by market share gains and new product introductions."
The Company paid a quarterly cash dividend of 17 cents per
share on July 15, 2004, to holders of record as of June 30, 2004.
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LINCOLN ELECTRIC REPORTS 2004 SECOND-QUARTER FINANCIAL RESULTS -3-
Lincoln Electric is the world leader in the design,
development and manufacture of arc welding products, robotic arc-welding
systems, plasma and oxyfuel cutting equipment. Headquartered in Cleveland, Ohio,
Lincoln has operations, manufacturing alliances and joint ventures in 18
countries and a worldwide network of distributors and sales offices covering
more than 160 countries. For more information about Lincoln Electric, its
products and services, visit the Company's Web site at www.lincolnelectric.com.
The Company's expectations and beliefs concerning the future
contained in this news release are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. These statements
reflect management's current expectations and involve a number of risks and
uncertainties. Actual results may differ materially from such statements due to
a variety of factors that could adversely affect the Company's operating
results. The factors include, but are not limited to: the effectiveness of
operating initiatives; currency exchange and interest rates; adverse outcome of
pending or potential litigation; possible acquisitions; the strength and
duration of the increase in U.S. demand for the Company's products; and the
possible effects of international terrorism and hostilities on the Company or
its customers, suppliers and the economy in general.
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LINCOLN ELECTRIC HOLDINGS, INC.
FINANCIAL HIGHLIGHTS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months to June 30,
CONSOLIDATED STATEMENT OF OPERATIONS 2004 2003
------- --------
Net Sales $ 331.8 100.0% $ 265.0 100.0%
Cost of Goods Sold 231.5 69.8% 194.9 73.6%
------- ---- -------- ----
Gross Profit 100.3 30.2% 70.1 26.4%
SG&A Expenses 68.9 20.7% 52.0 19.6%
------- ---- -------- ----
Operating Income 31.4 9.5% 18.1 6.8%
Interest Income 0.6 0.2% 0.8 0.3%
Equity Earnings in Affiliates 1.0 0.3% 1.0 0.4%
Other Income 1.2 0.4% 0.2 0.2%
Interest Expense (1.3) (0.4%) (2.0) (0.8%)
------- ---- -------- ----
Income Before Income Taxes 32.9 9.9% 18.1 6.9%
Income Taxes 9.2 2.8% 3.9 1.5%
------- ---- ------- ----
Net Income $ 23.7 7.1% $ 14.2 5.4%
======= ==== ======= ====
Basic Earnings Per Share $0.58 $0.34
======= =======
Diluted Earnings Per Share $0.57 $0.34
======= =======
Weighted Average Shares (Basic) 41.1 41.5
Weighted Average Shares (Diluted) 41.5 41.6
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LINCOLN ELECTRIC HOLDINGS, INC.
FINANCIAL HIGHLIGHTS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Six Months to June 30,
CONSOLIDATED STATEMENT OF OPERATIONS 2004 2003
------- -------
Net Sales $ 638.3 100.0% $ 514.2 100.0%
Cost of Goods Sold 454.1 71.1% 376.7 73.2%
------- ---- ------- ----
Gross Profit 184.2 28.9% 137.5 26.8%
SG&A Expenses 129.4 20.3% 102.5 19.9%
Rationalization Charges -- 0.0% 1.7 0.4%
------ ---- ------- ----
Operating Income 54.8 8.6% 33.3 6.5%
Interest Income 1.2 0.2% 1.4 0.2%
Equity Earnings in Affiliates 1.9 0.3% 1.6 0.3%
Other Income 1.6 0.3% 1.4 0.3%
Interest Expense (3.0) (0.5%) (4.1) (0.8%)
-------- ---- -------- ----
Income Before Income Taxes 56.5 8.9% 33.6 6.5%
Income Taxes 14.5 2.3% 7.2 1.4%
------- ---- ------- ----
Net Income (Loss) $ 42.0 6.6% $ 26.4 5.1%
======= === ======= ====
Basic Earnings Per Share $ 1.03 $ 0.63
Rationalization Charges (1) -- 0.03
-------- -------
Basic Earnings Per Share without
Rationalization Charges (1) $ 1.03 $ 0.66
======== =======
Diluted Earnings Per Share $ 1.02 $ 0.63
Rationalization Charges (1) -- 0.03
-------- -------
Diluted Earnings Per Share without
Rationalization Charges (1) $ 1.02 $ 0.66
======== =======
Weighted Average Shares (Basic) 40.9 41.7
Weighted Average Shares (Diluted) 41.1 41.9
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(1) Basic and diluted earnings (loss) per share without rationalization charges
are presented as management believes this financial measure is important to
investors to evaluate and compare the Company's financial performance from
period to period. Management uses this information in assessing and
evaluating the Company's underlying operating performance.
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LINCOLN ELECTRIC HOLDINGS, INC.
FINANCIAL HIGHLIGHTS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
June 30, December 31,
SELECTED CONSOLIDATED BALANCE SHEET DATA 2004 2003
------------- ----------------
Cash and Cash Equivalents $ 179.8 $ 170.5
Total Current Assets 555.4
650.6
Net Property, Plant and Equipment 282.3
289.3
Total Assets 1,038.3 928.9
Total Current Liabilities 213.1
280.0
Short-Term Debt
1.7 4.3
Long-Term Debt 169.0
162.5
Total Shareholders' Equity 478.5
517.2
Six Months to June 30,
SELECTED CONSOLIDATED CASH FLOW DATA 2004 2003
------------- ----------------
Cash Flow from Operations $ 43.5 $ 45.6
Capital Expenditures (13.8)
(20.3)
Acquisitions
(6.1) -
Issuance (Purchase) of Common Shares for Treasury, net (14.1)
10.1
Increase in Cash and Cash Equivalents
9.3 14.2
Depreciation and Amortization
19.1 18.6
Dividends Paid (13.4)
(13.4)
Cash Dividends Paid Per Share $ 0.33 $ 0.32
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