Exhibit 99.1
Contact: Roy L. Morrow (216) 383-4893
Roy_Morrow@lincolnelectric.com
LINCOLN ELECTRIC REPORTS
2004 FOURTH-QUARTER AND FULL-YEAR FINANCIAL RESULTS
- Sales increase 30% in the Fourth Quarter
- 2004 sales increase 28% to a record $1.33 billion
- Diluted Earnings Per Share (EPS) up 9% in the quarter and 48% for
year, including non-recurring items
- Diluted Earnings Per Share (EPS) up 44% in the quarter and 54% for
year, excluding non-recurring items
CLEVELAND, Ohio, U.S.A., February 17, 2005 -- Lincoln Electric
Holdings, Inc. (Nasdaq: LECO) reported 2004 fourth quarter net income of $15.6
million or diluted earnings per share of 37 cents, including non-recurring items
of $4.9 million, net of tax, compared with 2003 fourth quarter net income of
$14.1 million, or diluted earnings per share of 34 cents. The 2004 quarter
includes non-recurring items associated with European rationalization actions of
$2.1 million, net of tax, and retirement charges associated with the Company's
former CEO of $2.8 million, net of tax. Excluding the non-recurring items, net
income was $20.5 million, or diluted earnings per share of 49 cents.
Sales in the quarter were $351.0 million, an increase of 30% over
$269.4 million in 2003, reflecting strong volume increases, the impact of price
increases and the favorable impact of foreign currency exchange rates of $9.1
million. In addition, the acquisitions of two welding products businesses in
China contributed $9.5 million to sales in the quarter.
The Company's U.S. sales in the quarter were $193.3 million, an
increase of 23% over $157.6 million in the year-ago quarter. Export sales grew
24% to $19.7 million, compared with $16.0 million in the 2003 same quarter.
Non-U.S. sales were $157.7 million in the quarter, compared with $111.8
million in the quarter last year, an increase of 41%. In local currencies, sales
were up 33%.
"Our Company achieved strong earnings on record sales for the quarter
and year," said John M. Stropki, Chairman and Chief Executive Officer. "We had
significant sales gains in all regions and market channels. Our overall
profitability improvement was a result of significant volume increases.
Significant increases in raw material costs were generally offset by price
increases across all product offerings. We are very encouraged by our 2004
performance and look forward to continuing our strategy of profitable global
expansion."
-more-
LINCOLN ELECTRIC REPORTS 2004 FOURTH-QUARTER AND FULL-YEAR FINANCIAL RESULTS -2-
The Company reported full year net income of $80.6 million or diluted
earnings per share of $1.94, including non-recurring items, an increase of 48%
over 2003 net income of $54.5 million or $1.31 diluted earnings per share.
Excluding non-recurring items, net income for the year was $85.5 million or
diluted earnings per share of $2.06, compared with 2003 net income of $55.8
million or diluted earnings per share of $1.34. Net income in 2003 included
rationalization charges of $1.3 million, net of tax.
Sales for the 2004 year were a record $1.33 billion, a 28% increase
over 2003 sales of $1.04 billion reflecting strong volume, price increases and
the favorable impact of foreign currency exchange rates of $32.0 million. In
addition, the acquisitions of the two welding products businesses in China
contributed $24.1 million to sales for the year.
The Company's U.S. sales for the year were $771.2 million, an increase
of 26% over $614.5 million in 2003. Export sales grew 24% to $77.0 million,
compared with $62.1 million in the prior year.
Non-U.S. sales were $562.4 million for the year, compared with $426.0
million last year, an increase of 32%. In local currencies, sales were up 25%.
Fourth quarter gross profit margins declined to 24.3% of sales compared
with 27.1% of sales in the prior year period. The decrease reflects the timing
of product price increases and the impact of significantly higher raw
material costs and the related LIFO accounting impact on inventories.
Capital expenditures increased to $56.4 million from $34.8 million in
2003 primarily for projects at the Company's Cleveland operations, additional
investments in China, and the start-up of a new facility in Torreon, Mexico.
The Company's return on average shareholders' equity increased to 15.8%
in 2004 from 12.5% in 2003.
A total of $27.5 million in dividends was paid through December 31,
2004. The Board of Directors also declared a cash dividend increase to 18 cents
per share for holders of record December 31, 2004, which was paid January 15,
2005.
-more-
LINCOLN ELECTRIC REPORTS 2004 FOURTH-QUARTER AND FULL-YEAR 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; market risks
and price fluctuations related to the purchase of commodities and energy; and
the possible effects of international terrorism and hostilities on the Company
or its customers, suppliers and the economy in general.
#2005-300#
LINCOLN ELECTRIC HOLDINGS, INC.
FINANCIAL HIGHLIGHTS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Three Months Ended December 31, Fav (Unfav) to Prior Year
CONSOLIDATED ------------------------------------------ -------------------------
STATEMENTS OF INCOME 2004 % of Sales 2003 % of Sales $ %
------- ------- -------- ------------
Net Sales $ 351.0 100.0% $ 269.4 100.0% $ 81.6 30.3%
Cost of Goods Sold 265.6 75.7% 196.3 72.9% (69.3) (35.3%)
------- ------- -------
Gross Profit 85.4 24.3% 73.1 27.1% 12.3 16.8%
SG&A Expenses 65.8 18.7% 56.3 20.9% (9.5) (16.9%)
Rationalization Charges 2.4 0.7% - 0.0% (2.4) (100.0%)
------- ------- -------
Operating Income 17.2 4.9% 16.8 6.2% 0.4 2.4%
Interest Income 1.1 0.3% 1.2 0.5% (0.1) (8.3%)
Equity Earnings in Affiliates 0.9 0.3% 0.4 0.1% 0.5 125.0%
Other Income 1.3 0.4% 1.1 0.4% 0.2 18.2%
Interest Expense (1.7) (0.5%) (1.9) (0.7%) 0.2 10.5%
------- ------- -------
Income Before Income Taxes 18.8 5.4% 17.6 6.5% 1.2 6.8%
Income Taxes 3.2 0.9% 3.5 1.3% 0.3 8.6%
------- ------- -------
Net Income $ 15.6 4.5% $ 14.1 5.2% $ 1.5 10.6%
======= ======= =======
Basic Earnings Per Share $ 0.38 $ 0.34 $ 0.04 11.8%
Non-recurring items(1) 0.12 - 0.12 (100.0%)
------- ------- -------
Basic Earnings Per Share excluding non-recurring items(2) $ 0.50 $ 0.34 $ 0.16 47.1%
======= ======= =======
Diluted Earnings Per Share $ 0.37 $ 0.34 $ 0.03 8.8%
Non-recurring items(1) 0.12 - 0.12 (100.0%)
------- ------- -------
Diluted Earnings Per Share excluding non-recurring items(2) $ 0.49 $ 0.34 $ 0.15 44.1%
======= ======= =======
Weighted Average Shares (Basic) 41.5 40.8
Weighted Average Shares (Diluted) 41.9 41.1
(1) Non-recurring items include European rationalization charges of $2,440
pre-tax, or $2,061 after tax and $4,525 pre-tax, or $2,828, after tax relating
to retirement costs for the former CEO.
(2) Basic and diluted earnings per share excluding non-recurring items are
presented as management believes this financial measure is important to
investors to evaluate and compare the Company's financial performance from
period to period. Management uses this information in assessing and evaluating
the Company's underlying operating performance.
LINCOLN ELECTRIC HOLDINGS, INC.
FINANCIAL HIGHLIGHTS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Twelve Months Ended December 31, Fav (Unfav) to Prior Year
CONSOLIDATED -------------------------------------------- -------------------------
STATEMENTS OF INCOME 2004 % of Sales 2003 % of Sales $ %
----------- ---------- ------------ -------
Net Sales $1,333.6 100.0% $ 1,040.5 100.0% $ 293.1 28.2%
Cost of Goods Sold 971.3 72.8% 759.9 73.0% (211.4) (27.8%)
----------- ----------- -----------
Gross Profit 362.3 27.2% 280.6 27.0% 81.7 29.1%
SG&A Expenses 256.6 19.2% 210.7 20.2% (45.9) (21.8%)
Rationalization Charges 2.4 0.2% 1.7 0.2% (0.7) (41.2%)
----------- ----------- -----------
Operating Income 103.3 7.8% 68.2 6.6% 35.1 51.5%
Interest Income 3.1 0.2% 3.2 0.3% (0.1) (3.1%)
Equity Earnings in Affiliates 4.0 0.3% 2.9 0.3% 1.1 37.9%
Other Income 3.5 0.3% 3.0 0.2% 0.5 16.7%
Interest Expense (6.1) (0.5%) (8.1) (0.8%) 2.0 24.2%
----------- ----------- -----------
Income Before Income Taxes 107.8 8.1% 69.2 6.6% 38.6 55.8%
Income Taxes 27.2 2.1% 14.7 1.4% (12.5) (85.0%)
----------- ----------- -----------
Net Income $ 80.6 6.0% $ 54.5 5.2% $ 26.1 47.9%
=========== =========== ===========
Basic Earnings Per Share $ 1.96 $ 1.32 $ 0.64 48.5%
Non-recurring items(1) 0.12 0.03 0.09 300.0%
----------- ----------- -----------
Basic Earnings Per Share excluding non-recurring items(2) $ 2.08 $ 1.35 $ 0.73 54.1%
=========== =========== ===========
Diluted Earnings Per Share $ 1.94 $ 1.31 $ 0.63 48.1%
Non-recurring items(1) 0.12 0.03 0.09 300.0%
----------- ----------- -----------
Diluted Earnings Per Share excluding non-recurring items(2) $ 2.06 $ 1.34 $ 0.72 53.7%
=========== =========== ===========
Weighted Average Shares (Basic) 41.2 41.4
Weighted Average Shares (Diluted) 41.4 41.5
(1) 2003 non-recurring items include rationalization charges of $1,743 pre-tax,
or $1,367, after tax. 2004 non-recurring items include European rationalization
charges of $2,440 pre-tax, or $2,061 after tax and $4,525 pre-tax, or $2,828,
after tax relating to retirement costs for the former CEO.
(2) Basic and diluted earnings per share excluding non-recurring items are
presented as management believes this financial measure is important to
investors to evaluate and compare the Company's financial performance from
period to period. Management uses this information in assessing and evaluating
the Company's underlying operating performance.
LINCOLN ELECTRIC HOLDINGS, INC.
FINANCIAL HIGHLIGHTS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
BALANCE SHEET HIGHLIGHTS
SELECTED CONSOLIDATED
BALANCE SHEET DATA
December 31, December 31,
2004 2003
--------------- --------------
Cash and Cash Equivalents $ 143.3 $ 170.5
Total Current Assets 637.6 555.4
Net Property, Plant and Equipment 316.1 282.3
Total Assets 1,059.2 928.9
Total Current Liabilities 263.0 213.1
Short-Term Debt 3.4 4.3
Long-Term Debt 163.9 169.0
Total Shareholders' Equity 577.3 478.5
NET WORKING CAPITAL
December 31, December 31,
2004 2003
--------------- --------------
Trade Accounts Receivable $ 219.5 $ 167.6
Inventory 236.3 173.7
Trade Accounts Payable 111.2 77.3
--------------- --------------
Net Working Capital $ 344.6 $ 264.0
=============== ==============
Average Operating Working Capital
% to Net Sales 32.6% 32.4%
=============== ==============
TOTAL DEBT
December 31, December 31,
2004 2003
--------------- --------------
Short-term debt $ 3.4 $ 4.3
Long-term debt 163.9 169.0
--------------- --------------
Total Debt 167.3 173.3
Equity 577.3 478.5
--------------- --------------
Total $ 744.6 $ 651.8
=============== ==============
Total Debt/Capitalization 22.5% 26.6%
Return on Average Shareholders' Equity 15.8% 12.5%
LINCOLN ELECTRIC HOLDINGS, INC.
FINANCIAL HIGHLIGHTS
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
(UNAUDITED)
Twelve Months Ended December 31,
CONSOLIDATED -------------------------------------
STATEMENTS OF CASH FLOWS 2004 2003
------------------ -----------------
Operating Activities:
Net Income $ 80.6 $ 54.5
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Rationalization Charges 2.4 1.7
Depreciation and Amortization 40.2 37.7
Equity Earnings of Affiliates and Other Non-Cash Items, net 10.2 10.3
Changes in Operating Assets and Liabilities, net of the effects from acquisitions:
(Increase) decrease in Accounts Receivable (35.3) 1.1
(Increase) decrease in Inventories (47.8) 11.1
Increase in Accounts Payable 3.9 7.2
Contributions to Pension Plans (33.1) (43.3)
Net change in Other Current Assets and Liabilities 20.6 (10.6)
Net change in Other Long-Term Assets and Liabilities 9.6 26.0
------------------ -----------------
Net Cash Provided by Operating Activities 51.3 95.7
------------------ -----------------
Investing Activities:
Capital Expenditures (56.4) (34.8)
Proceeds from Sales of Fixed Assets 3.6 2.7
Acquisitions of Businesses, net of cash acquired (11.8) (3.7)
Other - 0.2
------------------ -----------------
Net Cash (Used) by Investing Activities (64.6) (35.6)
------------------ -----------------
Financing Activities:
Net change in Borrowings (7.6) (18.0)
Proceeds from Termination of Interest Rate Swaps - 10.6
Proceeds from the Exercise of Stock Options 22.6 6.7
Purchase of Shares for Treasury (4.4) (41.9)
Cash Dividends Paid (27.5) (26.7)
------------------ -----------------
Net Cash (Used) by Financing Activities (16.9) (69.3)
------------------ -----------------
Effect of Exchange Rate Changes on Cash and Cash Equivalents 3.0 3.6
(Decrease) in Cash and Cash Equivalents (27.2) (5.6)
Cash and Cash Equivalents at Beginning of Period 170.5 176.1
------------------ -----------------
Cash and Cash Equivalents at End of Period $143.3 $170.5
================== =================
Cash Dividends Paid Per Share $ 0.67 $ 0.64