LECO - Earnings call transcript Q2 2018 | Lincoln Electric Holdings, Inc.

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Operator

Greetings, and welcome to Lincoln Electric's 2018 Second Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode and this call is being recorded. It is now my pleasure to introduce your host, Amanda Butler, Vice President of Investor Relations and Communications. Ma’am, you may begin.

Amanda Butler

Thank you, Krystal, and good morning everyone. XXXX conference Electric's Lincoln to second call. quarter Welcome the earlier you attachment lincolnelectric.com can released as this our our in and results financial on well section. as an We the find Investor site today release slide presentation, Electric Relations Lincoln Web call's at to as

of is with the Chris detail. quarter Chief Chairman, Financial performance second Vince Mapes, Petrella. President an well and will Joining me quarter Chris as our on Chief begin as discussion the will overview call today Vince the and Lincoln's Executive Officer results, Officer, cover more in

Following are questions. prepared to take our your remarks, we happy

we Before our filings uncertainties due that number of are of forward-looking, discussion, be and and certain that actual discussion results provided and the in risks results risks and factors. on our to Form statements a A release materially note of expectations made start may some may this our may SEC our XX-Q. during our in call differ press XX-K affect please from

measures earnings again discuss Relations site in measures to U.S. non-GAAP of to A In call comparable Mapes. GAAP. is addition, which lincolnelectric.com. in at conform not Investor with our of over that Chris the tables our measure turn financial And do is the reconciliation the most GAAP in found the I'll release, available to Web we section financial that, Chris?

Chris Mapes

Good Thank you, Amanda. morning, everyone.

strong We momentum production the metrics mitigating our and on during second team’s and quarter organization’s sequential on our integrating our advanced achieved our second growth, rates the focus trends our European mix, capitalizing our of cycle. this strong. quarter inflation order demonstrate and results across and generated industrial Our rapidly remained execution portfolio strategy. organic in portion XXXX The as business improvement sales richening good key year-over-year

and supply led price sales to operating legacy team quarter. Air chain operating on increased Adjusted, our dollar inflation the and headwinds, have mix organic initiatives, XX.X% improved trade productivity acquisition. management, Liquide year-over-year XX% or Diligent Welding $XXX operational successfully XX% and to growth X.X% million offset been Our benefit The mix. improved of managing XX.X% adjusted increased points XX a by in million our to a from inflationary basis tariffs. In basis our income which favorable margin is XX.X% on compounded $XXX sales. by volumes and business,

that right we all benefit lag latest actions a full And result, a strategy with on the the actions, in this portion have continue As surcharges of offset expanded of cycle. our impacted inflationary of will through to the business products. we recognizing have successfully are confident pressures. our the pricing we navigate Despite to we

XX.X% working Moving quarter. sequential improving and did year-over-year in to to adjusted points improvement improved team $X.XX; in the adjusted basis ALW share in to quarter The earnings earnings, of the $X.XX flows efficiency capital ROIC capital XX%. EPS performance. XXX per and contributed working job excellent an the acquisition increased cash with

industrial on X, continue Slide to Moving capitalize growing we to markets.

low generated achieved growth our and areas America, exports mid-teens to of where U.S. that of Asia-Pacific. notable reportable segments North growth; strength in All organic percent in

end solutions our of to region. Automation Additionally, prior continued integration compress Europe half second growth levels due for to organic trends generated organic year prior percent sales year high across year. and continued remained the order strong growth and digit exceed and consumables single equipment comparison. activities systems. achieved Products against the the We the Harris challenging Group choppy to performance mid-single-digit market in

intuitive larger MIGXXX features for and that light enhanced teams market, the for performance R&D continued new and Our solutions system commercial ease-of-use. applications features and to launch including display the more several the have new into industrial POWER

improved alloys, applications. which have weldability incorporating our on new capabilities, portfolio launched Red These also automation examples solutions, extensive that along allowed are stainless steel to core our delivers in with largest and new fabrication, proprietary broadly the at strong percent semiautomatic treatment us capitalize demand markets, the Organic industries and Max these We markets. a three end of strength areas. quarter surface our improving digit general increased expect and heavy a automotive, double trends end pace in ongoing sales in across in we most

Air achieved the the and the successful X, into anniversary to we enterprise accomplishment a business pleased our am more by the and Moving Welding have acquisition. Slide the are Liquide extremely to approaching shape of I And pacing efficient in region. the teams

our commercial improve our impact platform These one ensure we from SAP drive ERP consolidate manufacturing processes always tools across A efficiencies our and opportunity, continue ability trends region. We‘ve also reduce to is This attractive and confident standardizing commercial made I North of procurement working employees, excellence. applications. towards instance energy with the downstream presents facilities synergies. to to and for the complexity distribution we especially into deployed market. We’ve in challenging being functions and operational While to in several benefiting and the are demand decision consumables in standardized long-term to in a brand and introduce and Oerlikon the American at started better incremental to strong strategy. Europe system our growth progress, centers Europe. are am very back-office a given align achieve streamlining efforts positioning also in

While these ahead points. income there basis work XXX efforts us, operating initial Welding’s have improved Air by profile of more several is margin Liquide

very time synergy organization’s am in cycle. the benefits as the program expect I improve contributions to mature. this part of We fully positioning pleased by over

initiatives all and stakeholders. pass the drive I focused will now, We to value And our are call actively to Vince. addressing on challenges, for staying near-term superior long-term investments inflationary executing while

Vince Petrella

Chris. Thank you,

X: X.X% second XX Air favorable profit XX second cost quarter higher the foreign sales XX% first impact exchange; basis price; Welding. on XX% declined volume basis price and to benefit from Slide gross to on consolidated our due gross X.X% XX.X% XXXX. growth; Our points The of Liquide to increased margins Moving modestly basis XX by acquisition; quarter in the of Welding XX to basis addition Air margin points the narrowed quarter points points compared to Liquide from

a items The and and profit by in margin quarter the point gross trade the mix. special prior LIFO acquisition versus Excluding the tariffs. higher estimated material XX on $X.X our impact increase impacted Americas Welding favorable unfavorably charge LIFO was segment. million XX%, in was inflation the Margin higher charge volumes performance year basis reflects U.S. raw of and

addition million Liquide to Our SG&A or Air sales to of $XXX.X and expense due acquisition Welding the related increased expenses. of XX.X% XX%

of wage SG&A income increased was compensation, salary incentive acquisition the Reported XX.X% European items, increase expense Excluding income XX% increased approximately integration due special related professional to costs to operating to or to primarily and million higher fees million. activities and acquisition, transaction asset and results and The $XX.X from our charges special $XX.X and items sales. impairments and integration $XXX.X rationalization Operating costs. XX% include million of service the

XX.X% special income increased $XXX XX.X% sales. these operating items, or adjusted Excluding of to million

Excluding items, of the adjusted to mix, XX.X% sales; initiatives improve have leverage, management acquisition and operational margin special and help would performance. volume operating pricing income been

Our second at quarter year-over-year effective tax rate held XX%. steady

tax Excluding rate special items, our second was XX.X%. quarter

discrete in to the and tax timing range, We extent earnings stock tax expect of items, mix subject future the our XX% exercises. mid the including option of effective to and be rate XXXX

on diluted earnings $X.XX rate. and XX% XX.X% diluted year. earnings to with prior share organic $X.XX share tax in lower increased higher per $X.XX adjusted to per compared effective On the increased sales Second basis, quarter an

higher at Now, moving to remains Demand segment's well in $XX.X EBITDA geographical second in markets consumables, up Americas dollars basis strong sales. across equipment segments the the on end margin most the pace; markets quarter double X, the automation quarter systems all and rose a with organic to digit XX.X% three quarter. to solutions segment end adjusted The on points Welding top performed EBIT Slide XX.X% XX.X% adjusted XX million. increased

Slide addition pricing $XX.X due welding increased integration Moving Adjusted segment reflecting of adjusted The and management X. prior solid activities. with Asia-Pacific. at in XX.X% Welding EBIT EBIT the of margin to growth our steady the Air X.X%, execution international to performed million year to Liquide

EBIT our adjusted Organic commercial X.X% X% This was the and acquisition, margin increased basis initiatives. year. reflects versus sales increase higher X.X%, benefits volumes. the in decline XXX improvement of the Excluding X.X% prior price point with

by European volumes were and expected, As activities sales. impacted acquisition lower integration

second against at as all offset demand increased Harris EBIT XX.X% by channels, volumes costs X.X% solid unfavorable the to group, price challenging across prior steady to quarter and mix. be comparisons. leverage year moving Now, margin sales held from continued and products Volume

was the improvement XX.X%, working Moving XX Slide year on in capital point to XX, Average period. cash from increased second operations X% million basis quarter $XX the working operating capital prior to compared efficiency. flows to improved

average Welding, ratio Excluding working points the basis operating XX.X%. Air to XXX approximately improved capital Liquide

the This dividend with first payout returned approximately share Moving million $XX $XX to $XX $XX of our the pacing XX% share rate repurchases. of annual in approximately of Slide In $XX.X to shares. we we an XXXX, and exceeds million million. buyback million rate higher to repurchased quarter million shareholders half XX, repurchase maintenance in

continue and will cash buybacks opportunistically through of price based pursue We cash generation, share expected uses on XXXX. to performance

capital in in We also million business expenditures. with $XX.X invested the

estimate of $XX $XX year be range We million. million continue full the to to spending capital to in

cash maintain XXXX, through program to over in to up and the would I please our to expect open and repurchases. call We dividend the for balanced a prioritizing Krystal, share like questions. shareholders that, strategy growth turn With investments capital returning allocation line.

Operator

session [Operator time, this Instructions]. and a Ladies we at conducting gentlemen, you. Thank be question-and-answer will

Review. Lakes question Our from from Great Rodgers comes first Jason

open. line is Your

Jason Rodgers

far positive margin volumes Just turn wondering pruning lower when are to along that you we segment? sales in internationally, how might the in expect and

Chris Mapes

Lincoln process, said would to Air As the multiyear we event and us. we for the a had the think integration in the bring we about that move Electric, forward process opportunity Liquide be business Welding when

very continue need of process. my happy, Really activity, is that of But and potentially the at as stated segments through or because the it's would rest need with manner; provide XXXX. determine comments, the potentially we of reason those margin enhance going into expect the and can some we just could portions the see in pruning early easy cost-effective out more products; that least those the behind am a I to to in So whether I ‘XX that as be pacing particular to whether of as evaluate to for value those we profile. we made to more products not customers

part the through of you latter see So And as through I ’XX. process, exhaustive the continue a of detailed potentially expect. would us expect first ‘XX we’re to into again, half and that would going

Jason Rodgers

looking the And just the on out comment there? the make was year-over-year What activity seeing you’re could bidding maybe any the automation you at growth in quarter? And area.

Chris Mapes

Jason, we grew digit year-over-year at a pace. high single

mix nice profit the improvement margin operating contribution. improved in in We Our automation. saw

quarter year. We levels and second order of continue to automation in backlogs in strong see this the

Operator

you. Thank

question Research next from Partners. comes Our from Joe Vertical O’Dea

open. is line Your

Joe O’Dea

applied? are surcharges questions you I price if looking a where surcharges guess seeing And couple Could actions? to increases about sales we’re First, the those follow related there? surcharge just of talk of some you’re suit the What at you portion competitors the mentioned. in

Vince Petrella

the So aluminum the tariffs Joe, to of impact U.S. the primarily surcharges and Those these exclusively from related the are prevalent. impact. where surcharges side to having where greatest consumable steel tariffs are are the business, business is greatest also the related

of and So business is of than the bit consumables little be that. U.S. less XX% our then business total XX% of would book roughly

when our So think business it's total affecting surcharges. the about about tariffs XX%, XX% of we

Joe O’Dea

in is And in would in actual rough magnitude of falling related increases? what's that implemented of consumables price that just on through be the terms order to of price terms terms of surcharges increases

Vince Petrella

the the in surcharge. would be single-digits tariff the consumable portfolio It’s high in

high but little its I'd Some that say single-digits. at little higher lower, averages, than a some

Joe O’Dea

flow in My market realization of through the understanding that With in have these way done pricing respect terms of commodity change, such prices price to of as surcharges, understanding And a change? the mechanism what actions customer is to is just through previously. will been and previous it the there flow good. this you've versus actions raw also the is implemented this

Vince Petrella

they were of that of the of directly tariffs. extent is in -- Well, still uncertainty tariffs the those There regarding coming market. fair thought that length of with the to were duration, associated the behind surcharges are amount surcharges the the

pricing cost appropriate that than increases tariffs mechanism it's as thought in a a the So our traditional was treating marketplace. surcharge more inflationary the

Joe O’Dea

organic bit pivot demand like and demand down better the there. the the sidelines a things saw just certainty, guess the on quarter growth. bit but seeing what to potentially I And slow picture little of of on any a with think front. It what on in could particular you’re to that the haven't what strong sensitivity little July, what tone terms waiting for we lot in side we seeing U.S., bigger seeing I of of to in on sounds But you What customers moving very a seen just be June, in staying we maybe forward? you’re in from another just the then front, see

Vince Petrella

yet, July basis in a on but is Americas continual sales segment and strong performance. completed our not daily see we order largest

seen haven't in this more marketplace. the see And we point demand trends as So negative at positive that than see we we time. U.S., the back far American North in do off as

Operator

you. And next Thank Deutsche from comes Saree from our question Boroditsky Bank.

open. Your line is

Saree Boroditsky

the just as some you’re -- buying causing seeing I surcharge if to pricing to as and maybe any want up follow what far customers on Could increases patterns these anticipated price are you customers buy ahead? and commentary.

Chris Mapes

our confident be the manage to have pressures costs that frankly, in that able base, to input and we’ve XX Lincoln inflationary to business to with surcharges costs placing impact by that do associated are with impact and are costs able months just the six to with am there’re And over the mentioned, customer we’ve forward going our mitigate we marketplace. through here have hit or been the difficult not As we raw to Electric. real offset we’ll moved Vince but historically. out these tariff conversations material as quite those very other the I very last recover business as

tariffs. to patterns. seen is whether larger of sidelines, we’ve inflation impact several we on the So need and and we’ll I’ve economic seen to as this months not impacts to -- longer-term manage cycle a just continue or over of it in through trying next to shorter this and any determine the the relative order manage change any changes portion the not just customers

Saree Boroditsky

And North And lower you’re about what Could gas across demand of oil remainder talked portions you then America about the the in any market. on sight, in and I XXXX? of growth thinking think you’re color in and this markets? how seeing provide you competitively strong But highlighted morning energy year energies. demand the the into the maybe additional

Chris Mapes

year-over-year our was in basis. primarily was So upstream international. on really flattish business energy offshore, overall, The in softness

with So midstream our business extent our of associated are we second is still far a But to that there relatively segment offshore as year downstream. and as we’ve start of are important compressing, spots bright that business other the growth. and overall, hopeful within soft continues book lesser half we and have energy to but overall might to concerned, stabilization of seen some see be

Operator

comes Baird. question next from our And from you. Thank Mig Dobre

Your line is open.

Mig Dobre

essentially just clarify customers buy the saying cost question previous that ahead not of seen to something of yet? on Are you that you Just any here. have that’s that you’ve anticipate your not seen thus increases and that,

Chris Mapes

made when marketplace, increases the always individuals that some of or have forward. out some I we Well, in provided channel the pulling of that be partners price comment. Traditionally, your there's might

recent As seen, not inflation material business. it the to and it’s to the been relates that tariffs a we’ve impact the

I But I say don't it's that believe that that occurs. I not when some broad So I want to portfolio, not the about material. there's think would materiality within imply been

Vince Petrella

by the from amounts second Mig, and quarter our year. the a perspective, increased in just equipment sales consumable of similar macro And

Mig Dobre

Then about any there shipping how day. I talked I having that? comment impact you can remember that, out this wonder if year quarter you one less on if from played was last

Chris Mapes

We did have the day year more shipping compared prior this one to year.

Mig Dobre

extra expect the in as something you well third year-over-year an similar day? having shipping Do quarter

Chris Mapes

view tends all for one to upon full have a right depending quarter the lay one don't but it We or now. I weeks the that could potentially year. how I balance don’t front but of me, the out, third in less of have out have more

Mig Dobre

clarified Depending and that, if on other small the or growth, don't in pricing an back should reported expect third fourth growth you pricing timing pricing I Americas surcharges. what in acceleration was. of on to quarter in as just surcharges we the remember one, And one this the Welding quarter?

Chris Mapes

to year in surcharge so Yes, Americas’ in that of third see we the increase quarters and put as of Mig, an the in we fourth compared middle finished second July, pricing quarter. the we the where should

Mig Dobre

on think margin the year-over-year expect you on do at I that year-over-year half on Should tougher bit on incremental? anything know all a comps How about the margins getting And Harris, pieces as expand here? to we moving are back we basis. a lastly look a basis,

Chris Mapes

to us to going even and the they their fourth segment. occur that the the pricing perhaps likely in the price quarter cost we're quarter take half as inflationary third see costs. second that behind same And management think in quarter, in welding the increases improve at in Harris, I the in the to the environment second will Americas of The led cost we the equalize it’s year that attempt certainly performance. way lag with business, against covering needs Harris our to and improvement and

in expect second the So half of more I of year. the same the

Operator

Company. our from and Gabelli question from Trusz Matthew And comes next

Your line is open.

Matthew Trusz

growth are you integration then provide related environment the elaborate your just would looking the you what and soft out, what Can reasons the on have to core called you you what if been European demand is outlook Europe ex out that, activities? could if forward? And

Chris Mapes

activities When we not is time. very, difficult were to projection European a of be growth so the be a started to as period that much or It's proxy good through. to around integration process, for just for been very I trying guide activity what the markets and the that we we There have a down signaled going would provide we’re uncomfortable without the would the going integration. very

we’re the seen of We world that we’ve a areas that we around Vince with we there other generating not the than I that growing Europe. a lesser business at have the are the just slower markets other to think But of world. markets in of that than in trying globally. see components recognize would for participate as -- pace there is certainly much at pace determine that that of saying in amount many that around we’re some other the we’re some that there energy the many than integration, growth confident that see we’re the markets the participating the that certainly of been, but we activity confident European what is growing because in growth in pace, of Europe a some that of slower uncomfortable participating mentioned, other

Matthew Trusz

how Are On quarter? you markets back compare you macro half? current your confidence or the of focused for on a level any compared how you’re global the basis, specific overall last business and felt geographies that to would outlook there

Chris Mapes

I that look a very continue to segments. progression say continued nice wouldn’t model that, of outlook look to our see the We’ve just would seen I No, demand segment industry there is. favorable say growth positive we across very with continues trends very globally.

that very within with progression. the our the of was happy One portfolio the quarter of entities things broad I around which the was second showed in world, number positive the

world the So very We’ve I move as any geographic don't around of rest that strong one improvements, are and the think we’re targeting. ’XX. broad that through we in expecting seen area continue solid in to

Operator

And our you. next Jones from from Nathan Stifel. question Thank comes

Your line is open.

Nathan Jones

me noise think mean there? XX% that here? guys numbers mix performing increases continue of the have you the out the the the being is that color been noise, higher I you I give for shows business that of are underlying ex we all the than business of that ex way here, with Is could any function all the reaching high quarter maybe that level if out and XX% the or XX% XX% this look all that can impacts the to and that’s into you Is to gave for targeting. I if -- enough rid get ex quarter, business about fundamentally can of here the to think talking price you Vince, out the acquisition the incrementals

Vince Petrella

the acquisition, the that XX.X%. calculated would say incremental up something core I in way teens, our come the with the So I high have business ex in XX%,

where think out incremental, the periods of that, chosen and XX% a is calculate price we Lincoln many financial consistent I So performance. way not to compared that’s prevalent cost in to that the were number Having sequentially good our the last in take that has impact is the that historical quarter. to said

quarter the I high I XX%, think digits. we’re we’re maybe in that before think single

So our combined of management, productivity progression while through business our and drive to cost restructuring performance the we’re improve integrating business and excellence type with still and businesses. generally and in operational this price environment, our of the the and European our pleased volume improve

the still XX% continuing incremental like Lincoln we margin methodology XX% in line moving the is the two from your progression. We Electric look believe that an improvement So of performance to what on previous that is at XX% expectations with we the at I appreciate incrementals forward. show be And to should quarters.

Nathan Jones

the steel the price same I included, with thing get think there. I

increases, guys put more through price quarter. the did You surcharges second in

price want. So which I steel am don’t assuming behaves itself, we

expect higher then would see You and we fourth in quarter further third into progression quarters as there. the incrementals to is get that

your beginning is expectation reasonable So quarter? it year half be that you‘re would second to XX range of that the say to XX the in in the in that third

Vince Petrella

we’re having trends progression. certainly right Well, and the

that we of our second half that second are we’re something tick should over the continue costs. we our year, my that north here and to XX%. the the see to going of price year half And aggressively manage XX% in are of expectations expectations So will

Nathan Jones

international business. have just the on one more I

leading been weaker decelerating. that have comps volume pruning a the of the Is the of guys about portfolio Those of reflection rationalization pretty underlying You volume product to more market amount have you clear fundamentals? doing increasing levels. been or lower you're

Vince Petrella

seen the and over year heretofore last what refer no this as, last of of doubt the half maximum hit this And activities hitting integration the during in course of year. the intensity first from manufacturing second our activities quarter. the quarter would there's that and quarter of escalated pace integration and are rationalizations has first level the the their, to I peak and Certainly, pacing number a second the year. have The

to that at what that activity try is currently. demand a Europe. So activity think that very high is to we Chris from intensified. do trends clear mentioned, level But underlying know tease out it's our And pretty I in is challenging the certainly, that as

Operator

Liptak comes question from Seaport Global. And next our Walter from

line Your open. is

Walter Liptak

million Follow ALW. think of operational one gotten thinking that the we still on that these getting in related to the last $XX in year? about $XX of much say How we’re then would as Obviously, was you and synergies. it into early year innings where far to? to the one will so look million cadence and And be next to where get do we've

Vince Petrella

Well, about I way there. quarter the of the I through there we’re activities hit think we're expectations of the my out, based the I'll $XX come roughly million. way year savings that of to-date well about rationalizations. $XX we’re think fourth by synergies. has mark of we’ll what through hit a procurement when think Most bit the I million reiterate the about a again, manufacturing and quarter But a delivered confident, our on that And and within to Chris that laid expectations the we’ve that little

Walter Liptak

things us? up Are any should are that coming Or or that of and costs behind of? aware big are thinking I’m we projects, be those consolidations, employment of, there some

Vince Petrella

Those facilities. Well, our then rationalization second the of will followed million. charge to will biggest we roughly be by manufacturing that took to-date of attributable XXXX, in the combination was the be benefits $XX.X the quarter it charges now

benefits will third are and of that will the expectations of to settle you taking million fourth the accrue those the begin $XX.X the quarter second in charges and my year, year. So see the of quarter in to this dust

Operator

Liam from Riley comes FBR. from question B. next our And Burke you. Thank

line is Your open.

Liam Burke

a strong and new seem seen your on on response the you automation both introductions? have market you or product traditional side. to terms product pipeline, a new in Chris, to innovative of the competitive What to have

Chris Mapes

it’s do see I few innovative equipment some Well, capabilities. don't you similar is to launched then at our the look types they competitors the think of if business. not we’ve unique over I side that's portfolio, nor trying the to And last products surprising that, develop it think surprising And very especially to of can years. starting determine on

moved and Europe. as that the it's as had what's company So strategy going that’s been we have some customer be that I think than I Probably the innovation drive recognized very to And larger within forward broader market why we’re to that continue and with that’s we space. excited we U.S. to the viewed base probably us that estimated driving been as the last the believe is the behind a technologies that’s supply product product want and slightly for the that very and when element our acquisition. here month sister And we’ve new the launched its am Electric Welding exciting other equipment invest during strategy. launched But portfolio we’ve I within in had critical in can us Air the for innovation Liquide and and catalyst found we Lincoln to we globally. commercialize take we about

our European our shared in a and way last and also Board innovation we’ll week team working executive execute that had to So to Board of very was our team. certainly and exciting on had drive to be just some innovation with bring that it the our meeting We for marketplace.

Liam Burke

the in happy the And there, with board much across you’re pretty staying of terms automation just growth globally. rates

your You was digits. all progress? markets, up the double with terms rates mentioned growth you’re in in But of that pleased North America

Chris Mapes

growth quarter, our very confident global that automation the that we’ll high continue long think I invest to single-digit in automation. business term am to behind I It progress. strategy continues that for

strong very of of moving I we And portion to believe us stay and in ’XX, automation for is the certainly, We’re a the the through in going ‘XX cycle. good rest strategy, very confident it have to positioning our profile. a activity portfolio automation's Electric’s XXXX as we’re product relates in longer-term Lincoln particular within around Again, that of now. right strategic lot

Operator

Research. Thank Hayes from you. And our next comes from Northcoast Tom question

is open. line Your

Tom Hayes

asked, commentary pipeline. you the questions M&A in Chris then been quick maybe One, you market. my some have maybe in if guess Thanks. China color ones. on what Most on seeing the just provide seeing are what but I of you're guys two some And could

Chris Mapes

China, So very saw in and business we favorable trends. QX, our well. in China Asia-Pac performed In look specifically

region right We continue find in we approach our I to be you on back perspective, strategy opportunities Asia-Pac. I way for in have of there how their team the pipeline that And evaluate trying very innovative we’ll in the forward but approach the I’d positive be several would positive China, nothing solutions to disciplined us to opportunities the drive here. the to towards been in to valuation. to can would The continues to our quarter of allocate expect, in we’re lots first quarters; repositioning accretive could that business impacts going looking or and and program; a for we over strategy there at our deploy going continue see progress; be it; to our that. as evaluate our that say but are of M&A to came working businesses capital acquisition, we lots are the the strategic base that review continue and pipeline. the to for us there which hard to is will But mindful business strategies than through opportunities it more But we M&A more on but robust, stay if lots think disciplined like capital last

Operator

from Thank Seth Weber RBC. our you. comes And from next question

is open. line Your

Seth Weber

us the could Thanks. just you percent go where digit market versus discussion growth think over auto I Can next it the give years? growth diversifying market? couple -- wanted end where of where to end go is double could with about for there. be second. single you the the end over just market you or talk from next mix maybe back the on And your the high today color to Can some success digit away the margin a automation you automotive

Chris Mapes

a three, expand And years, an that seen And for industry Well, capital our of strategy to into we’ve our improved than heavy industries industries general in over there have their centric they more more facility. few in in acquisition acquisitions no we’ve has continue five manufacturing industry that over as those then automation than quarters. mix. back the last the seen in automotive those four, and the is were question couple come were bringing expanded, last

last in acquisitions trend years. improvements the and mix favorable a certainly over portfolio had we the from those we the the industries that the in So brought into few underlying driven

that recognize would segments. to parameters of particular that. we any too automation, want mix have we that have concentration to much relates We we around it one have within As term don't long in don't any the sets those

be that. the we mix opportunities would to like had have trend to portfolio. continue a to that and study But continue to to So able us we evaluate and for expand will automation upon find within that favorable global

Seth Weber

this slower a Or then it there And just on Liquide summer? was added being with clarification, your Is just Air a quarter, seasonality there? $X.XX guess I is that last the in relatively issue $X.XX something going quarter. the business

Vince Petrella

a between as two performance it No Seth, I the quarters. relatively stable view

to around could to the $X.XX. You $X.XX $X.XX and down up the $X.XX

So relatively from earnings dollar a perspective, they consistent. are

Operator

Thank Capital you. from question And KeyBanc Steve Markets. our comes Barger next from

Your open. is line

Steve Barger

quarter. to relative basis that plan? And tell in narrowed exiting get costs the or points price your to was XX said do you you Vince, Can zero positive how us you the to year?

Vince Petrella

substantial difficult math the increase the year, going get I or the behind of pricing tariffs. zero and very the another to of with think, to simply positive because be it’s associated to during course

So in we’re regard. our performance with this pleased

We at positive have expectations a that on inflationary would manufacturing the on realm dollar you the inflation is top line. seeing basis through businesses. tell we’re number across largely reaching increases the our I of based not the a just passed within

Steve Barger

with exit But year to XX% would to somebody XX% range? back response expect that your to that, you else, previous that the even you at

Vince Petrella

Right.

we’ll and costs percent integration the we our year exit Company initiatives some productivity, driven of from the lot of would, basis of price I and as Americas expecting improvements. think, narrowing expectations, see continued mix volume a into activity by and So the finally, our points range. better from XX think over to incremental us the the a XX improve tip outside results There’s I other couple of think the other some perspective. segments I then we’re And plus

Steve Barger

you in the you Can quarter specifically if for was us tell the have price the cost spread what Americas that?

Vince Petrella

actually out don’t for it No, I Americas the broken have separately.

Steve Barger

continuing more and but we Going that first sorry to or the $XXX given to over expect I pruning be if back and in should growth half growth exercises. million the market show likely run Would is a to quarterly revenue you outcome? this international thinking rate Europe missed am in have I conditions this,

Vince Petrella

Could question? the you rephrase

Steve Barger

grow that? international in in over $X you half just $XXX segment Do on second half? million a up basis, Does first put you the think, the

Chris Mapes

manner in were I’ve It it call. pruning to of so Air comment got in we back of Welding as we the certainly moving QX lot process, that be a anniversary, got and moving have on integration will so full month many we so then we And being of probably for necessarily parts. would -- I that then thought one can't we’ve that a initial Liquide the say parts, be the we’ll you we’ve business starting as wouldn't July. But basis. year were

Vince Petrella

that another at go so I am at the to just would negative ex third say far year-over-year, quarter expecting the least acquisition number. I you if international volume, in look

Operator

And queue Baird. our Dobre question in Mig you. comes from last from Thank

Your line is open.

Mig Dobre

expense from How a a drags bit when we’re Can give is little freight? on that you part you about structure much thinking of maybe What us color as whole? experiencing that your of business? are the

Chris Mapes

XX increase that the distribution of the headwind We quarter quarter. into total first year quarter, from point so the in estimate second about the basis costs our accelerating was

Mig Dobre

exposure, And through or your rails, presume I trucking is trucking? Vince, it or mostly

Vince Petrella

Well, all our the we of freight proportion Trucking is of transportation. forms costs. probably use greater

Mig Dobre

actual for challenges availability terms Are a of this primarily freight, any you you, in issue? of seeing cost or

Vince Petrella

time, it’s of perspective anecdotal getting the wouldn't a customers products because not cost their our issue, think from that availability on wide say I hear But you story. issues. I an enterprise freight primarily are

Mig Dobre

this this than you forward? And income this thinking we How higher what line, about a we’ve seen bit other expected going then the are couple quarters. number over of be lastly past little

Vince Petrella

a it can have it unpredictable It’s about think variability lot, can in other income period-to-period because vary some not as from and whole way. volatility it. in an -- Don't

Mig Dobre

So we a something zero forward like in model? going that should thinking be or

Vince Petrella

take would in I that years have Well, and the always assumption. as item. use line last zero. couple We it an don’t I an about know that just something look at average of and at

Operator

am to would like phone not Vince I for to showing I lines. no our further from any questions remarks. closing And you. Petrella Thank over turn the back conference

Vince Petrella

did have that a billing Krystal. the Thanks shipping number of question in to earlier our came or answer I days. about follow-up

the in the not in We the day that up day third second quarter and the year will fourth of is half quarter. but one pick

and our operational much. for your the continued of future. the We And Our XXXX interest third and the for to discussing Thank call in be to they in much everyone strategic very forward quarter up thanking Electric. XXXX. programs execution with will joining in that, billing by in equal days look wrap I'd us as very like were Lincoln you progression today our

Operator

and program have in gentlemen, the for thank today's a you This Ladies may all day. conference. participating does and you Everyone, conclude wonderful disconnect.

Lincoln Electric (LECO) 23 Jul 182018 Q2 Earnings call transcript