LECO - Earnings call transcript Q3 2018 | Lincoln Electric Holdings, Inc.

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Operator

Greetings and welcome to the Lincoln Electric 2018 Third 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. Thank you.

begin. may You

Amanda H. Butler

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

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

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

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

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

Christopher L. Mapes

of and One a acquisition Liquide doing rigorous Amanda. executing we job in teams a report Welding, the an the quarter inflation successfully that achieved initiatives of on Good solid driving pleased metrics. number in you, our and morning, growth, third innovation, program to following capitalizing integration Air are Thank Europe. mitigating progress across excellent year We're everyone. key

are am and team, yielding I'm strategy and us, everything confident work programs still proud of industry our our for success leadership. results I we long-term While our that have and of the ahead right we've accomplished

million, Looking at our by the third mid-teens strong quarter, Americas $XXX organic in sales percent XX.X% segment. Welding driven primarily to increased growth

to Our mitigate measures and mix, inflationary were drive pressures pricing effective. improvements initiatives through richen operational

which the Our strong efforts, income. increased and synergies to increased dollar-for-dollar allowed yielded Both income in our rising the adjusted in continued gross capital versus benefits incremental the drive operating growth, costs exceed operating profit of recovery volume improvement XX Americas' expand reform. EPS us at strong performance, and margin adjusted The XX.X%, along global approximately margins Americas operating increased Adjusted organic initiatives, adjusted points of basis prior to on team profit combined ratios. our $X.XX working to We to in tax acquisition year XX.X% XX%. with dollars margin by XX.X% and quarter. income and

Our in flows the XXX% initiatives XXX-basis yielded solid execution and cash team's improvement from point income. conversion Overall, a XX.X%. in ROIC cash operations improvement XX% to a of net generated

in Welding quarter -- well automotive, major the Slide segment. region continued fabrication double-digit of percent our end-market In organic strong X, general increase market as in across energy. and this remain International region, we the demand of all in a to Moving the as categories to heavy on Asia-Pacific sales capitalized Americas, Americas industries, in industrial

but the systems volumes Looking Automation equipment and a labor and demand rate do enhanced growth. increase in broader sector digit at suggesting organic driving investment with faced organic mining after strong Harris to year-over-year the integrated several their Group year strong commercial and In challenging on mid-single and automotive of oil fabrication improved combined general and a prior across product growth Products presence systems, region. markets, trends industry tight consumables in double-digit an quarters for a basis, strong continued sectors, consolidated percentage demand. market. our demand equally Asia-Pacific, sales in in heavy which was and portfolio a comparisons at gas capital with production well percent outpaced solid in

capitalizing did in our broadening markets, integration report demand are Liquide end facility primarily completed volume as Welding the the in decline underway, manufacturing and six we and With integration double-digit we rapidly While our a segment, from executing along of across closures back our Air system on planned. distribution International platform, European we several active consolidations acquisition. are office Welding commercial our centers now with IT

remain our teams their are and meeting time that working are to customers priority our Our needs. we during hard this ensure

effective great to And in achieve is excellent November, curve It Atlanta can It our in of push me the Expo the strategy which the demonstrates operate synergies side solutions on stakeholders. showcased forward confidence this program targeted superior by operational to our continue now, confident track will early of right the be is integration are execution are we for the success activities We to I'll with the call FABTECH XXXX our pass and our at that the and we of cycle. value program will industry-leading that mid-XXXX the on Vince. gives how a through many that along the growth our and well through organization generate XXXX. to

Vincent K. Petrella

Chris. you, Thank

Moving to Slide X.

Air one higher volume benefit from from sales exchange. XX Our X.X% growth X.X% basis from partially results unfavorable was Welding increased This price, of XX.X% of on and offset month quarter the performance Liquide a a impact by acquisition. foreign consolidated X.X% points third

inflation reflects contributing mix, tariffs. quarter to gross Americas The gross measures million basis integration U.S. in estimated quarter to Price-cost We raw initiatives. pricing benefits our the compares impact $X.X trending quarter, increased in points charge This point prior and the LIFO a improved of margin. in the profit this gross XX.X% of a basis XXX trade and as and headwind the XX-basis third to second and margin material reflecting Our points year. XX incurred increased XX.X% XX.X% volume year. with the of compared profit increase in

of sales, of as Reported or Air results gain XX.X% the increased Welding expense expenses. compensation costs included SG&A bargain Our due Liquide the related acquisition. higher purchase to our or acquisition-related year $XXX.X $XXX.X to XX.X% income and benefit prior declined XX.X% primarily to to operating of million XX.X% million sales

items, the in of income point sales, an to versus prior improvements results in million of quarter Americas, volume reflected special mix, XX.X% XX-basis initiatives. XX.X% year. increased increase operating benefits operational the $XXX.X or favorable and Excluding expansion the the pricing management Margin

prior tax XX.X% year. Our compared rate third was quarter with in XX.X% effective the as

unfavorable third compared prior Excluding Tax year. U.S. XX.X% our the XX.X% tax items in tax impact the was year tax reflects and the rate the rate prior special with items, lower in period. of The quarter as discrete Act

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

year Third earnings year, diluted the bargain effective earnings XX.X% share with prior period. compared including which rate. $X.XX in of On XX.X% $X.XX share prior quarter diluted purchase from $X.XX in basis, $X.XX the lower organic per mix prior the tax share special per income item per with $X.XX an adjusted gain and year declined per to to benefited in compared share sales, the higher the increased favorable on

for points adjusted digit we XX.X% geographical the pricing of mid-to-high Demand markets, quarter consumables organic in and to applied to EBIT volumes and Most the to Now, recover organic Both single EBIT on and on projects $XX.X rose the benefits actions prices. X. quarter rebound million. sales partially increased by prior as in third customers dollars sales. modestly to tariffs. Welding energy slower in higher growth higher improved segments XX.X% systems reflected demand in increases end on Americas equipment remained to automotive. performance segment's general XX in percent the ongoing strong adjusted and oil experienced margin heavy and moving the The energy, XX.X% Automation Slide strong industry including started solutions Pricing basis increased were quarter. rate. the offset high surcharge see

our taking Asia-Pacific shape business helped mitigate stemming prior for and X. the Adjusted $XX.X of Moving Europe Welding benefits integration to success. margin long-term on actions The Slide adjusted impact and EBIT the points profitable pricing versus the volumes pricing million XX to X%. management year in from the segment's growth, are in International we by growth of slightly lower increased declined to Asia-Pacific. basis EBIT The initiatives to actions

to Products Group. Harris The Moving

basis Third quarter adjusted to EBIT XX.X% EBIT XX the million. points versus prior declined year. declined X.X% margin to $X.X

While volumes margin against relatively compressed commodity challenging steady held prior comparisons, prices year performance. lower

a Moving to Slide and XX.X% XX.X% capital X. ratio to the of prior Cash on conversion year compared improvement point third end. operating a the cash quarter flow XXX% $XXX working operations increased net period XXX-basis Average to achieved income. we was sales, from million, in

XX. Slide to Moving

full-year estimate range million the in million. million invest in We continue $XX.X third capital be now expenditures. $XX quarter to business of in with spending We capital the in to $XX to the

higher also rate payout to acceleration first million. shares. approximately the shareholders dividend and XXXX, million $XX the XX% million in of we repurchases an nine returned repurchased In in to We $XX months $XXX approximately of share our with quarter, an

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

which of the the a In ongoing payout generation confidence dividend long-term reflects capabilities addition, increase approved our in company. board cash our in rate, our strong XX% flow

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

Operator

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

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

Jason A. Rodgers

morning. Good

Christopher L. Mapes

Jason. Good morning,

Vincent K. Petrella

morning, Good Jason.

Jason A. Rodgers

was talk activities, if improving how integration much there? there decline little weakness you deteriorating about due of if you're I wondered could the to market seeing a conditions Wonder versus bit. or and International volumes

Christopher L. Mapes

in shared expectation I were of as Welding forward benefits looking that we over last of of we aggressively course since we to returns with integration on XXXX. to that Liquide we the think drive the improvements August, we've were by move had to acquisition as the business Jason, driving an those the the make integration the – Well, model going business Air that types with for

like difficult that, look, we've we're also facilities of that activities office of at think that, individuals number I down and integration, shaping probably three we portion we've challenges months months. large as of There's probably in operations index are facilities the the has and other logistics middle closed, as back quite industrial our my an it's integration – I'm the that where saw quarter. we're see in I the remarks, third in from over the question the looking frankly, data that slightly some two while very that portion of shared the last no shared business business. production a a or Germany trended that

absolutely very softness very difficult it's in and Lincoln it where to Electric outlined execute and the signs in guidance, would our areas the improvements drive forward market moving and the of business there me activities. have on Europe Air that that that through But, I'm seeing into are be that market be be driving our strategy moved we some is model, excited we and are absolutely the for clear we're as where in of business the down the able quarter. other to Liquide good bring let some expected we integration ability versus we'll to performance that We about to Business, other how is much confident us that that that core really we when XXXX.

Jason A. Rodgers

to cost fourth quarter? raw the even see good for Should ahead we material with of the it larger pricing. see, expectations a was the you benefit? And What's got increases

Vincent K. Petrella

to fourth the that range third with the expect type results the environment the business, into we say price-cost same of quarter. of trended some would or we quarter, in for in ought to the similar positive I see what

Jason A. Rodgers

as for contribute it could Air for if next Liquide, squeeze Are the what in still the And Thanks. as fourth any quarter? to did early one $X.XX year? contribution you and far more I expecting EPS thoughts in,

Vincent K. Petrella

the activity only that put The per acquisition would was Air at the an that in one that fully quarter. contributed business. one was business. Yes, $X.XX estimate I were we But, if of being bulk Jason. Liquide business It month, of the month share by is Lincoln integrated into it make of to

Jason A. Rodgers

Thanks. Okay.

Christopher L. Mapes

welcome. You're

Operator

you. Thank

Our O'Dea Research. question comes Vertical next from with Joe

Joseph John O'Dea

morning. good Hi,

Christopher L. Mapes

morning. Good

Joseph John O'Dea

point? into each so think quarters, sets just additional four this pricing, in you're do ability next the at you as And fourth in price of there what action. you think that Are had given I you And the just taking taken for to actions where On you've how to some past price do that up taking do price feel year? you've move year, we up continue far, the quarter? next stand

Vincent K. Petrella

take cases increases significant there There what prices actions. the the will and Joe. what actions three so starting pricing taken quarters year, to this I having commodity see the costs won't of quarter Yes, in and the based from has here we've of will on we be think first environment moderate. to My quarter We price year. pricing in is been what see from see But seen on terms fourth in quarter. view of inflationary into spot input fourth broad this far that we the some in moderate the

Joseph John O'Dea

costs, moves seen, know the that effect we any P&L cost sort effect pressure is moving do third inflationary continued lag given point? additional you at commodity this of reflected or inflation Just so, lag the in we've of of prices? in the that you forward, fully the quarter And don't have in – barring

Christopher L. Mapes

that. associated we've look seen price Yes, P&L. inflation commodity with think lag don't I in the I any see that

impacting make, would productivity business expect rest be expect try of around able wages and would that that we'd that utilizing types into different to But, ability around My certainly broad see to have actions manage to still things or be inflation. rest not XXXX moving driving eliminate we'd And comment our some of areas or move world. that have other I business. that that other the the be comment XXXX, as XXXX places we and may think we the probably may would to that's to other not that certainly into system inflationary will through world moving we is be the business the the pressures as in around the that, our minimize, that that we're through through be we'll we if around we recognize Lincoln I XXXX. various and is of able

Joseph John O'Dea

far volume, when some on forward, is look of about one Americas comp And just and trends and the XQ integration and back, X, seeing but thinking demand what's activities, the moving setup kind the stuff? going you're continued moving on Europe we and this continued of of kind tougher quarter, in then volume volume. on on seeing both at of the a last volume improvement activity How stepping there so of sort things of in just you're side and International integration forward some

Christopher L. Mapes

Right.

more Air are, markets far addressed our those perspective of as if an So, International is bit and as from on are where a in expect little integration same, concerned, activities International we the year-over-year deterioration based I a with Liquide greater Chris not earlier. underlying where as

we The Oil growth, still pick the positive a come to us. on to up based exit a started from So, comparisons albeit we volume see roll Americas as I more XXXX to continue continue moderating will markets International rate we'll Americas the against. on declines third the difficult will in we and up our XXXX. is gas double-digit expectations The perspective, expect quarter we business. up continue has as see against the My fourth at into to end will comparisons strength. that come and into for that through momentum show and

growth So, and expansion reason the the that our have for into continue Americas and in fourth quarter XXXX. we into will do this optimism

Joseph John O'Dea

much. very Thanks

Operator

you. Thank

Our question Stifel. comes Nathan Jones next from with

Nathan Hardie Jones

Good morning, everyone.

Christopher L. Mapes

Good Morning.

Vincent K. Petrella

Good morning

Nathan Hardie Jones

you've impact on just the little you us from Maybe a if picture pretty the more Welding. separate combined could effect no-margin International I a other around disruption know that International the margin, effect volume to follow-up exited here. of give lines can the versus color But, I it's in little market product volume possibly two? those out tough bit lower versus

Vincent K. Petrella

is legacy out able somewhere business. low-to-mid is mentioned portion market Air I into to underlying European lines, declines a at Nathan, in in would our think of to substantial personal would It integrating demand. our performance and to But, softening we've the view the reshaping manufacturing his I Lincoln and of my be that business believe these some I as are comments, challenging, distribution we parse locations, in Liquide in channels core say, business, the marketplace. type Chris of single-digit the seen the the that related put that

is as need But, that in of activities the of first half the contribution what through International the lower-margin into fourth and stabilize majority some integration quarter to of the exiting the next businesses market. So, we're and is work we the year. seeing from

Nathan Hardie Jones

comps on that, volume And that. a good you you've job done you've to understand think International, to those maybe and that accelerating explaining a declines that and seen of Maybe the fourth in lap volumes as people following and double-digit little I you talked we hit the about of getting and bit worse in as When start to even diminish quarter. see integration peak do nears completion? and that the decline,

Vincent K. Petrella

Right.

time, change that this business you're noting I year-over-year seeing Air for first purchased Nathan line. worth that through Liquide So, think volume the we that it's at the point, in a

So, effective X being seen the you reported business the only acquisition in column. of when we last August sales have acquired the would year,

So, of we have as kind shape any you wouldn't seen volume compression that business.

Liquide again matter column. the quarter shows is year, acquisition you it this and that up first because for a the So, in see acquisition for activities flow volumes that pricing through integration Air that

think So, the comparisons. time I business it's caused to the of acceleration for by note the is first that year-over-year also reporting of being important the part that

that see barring to And normalized then exogenous next macro will business the effects our where pattern, that that I to second more the in to we question, of the this year integrated. year-over-year of year, be focused. is on on we're growth the volumes largely believe stabilize quarter. half a a yes, business been see recovery fourth other still we'll your to not that kind basis Now, of expect a in any continue next going the in start second has compression internally of to that I start first will period I part half believe

talking think integrated half, year we'll half start an of business. first about next stabilize; to So, I second

Nathan Hardie Jones

is that reasonable Liquide Air down and organic cause broad the be a single-digits an else then it perspective, reported volumes the would there basis will strokes, equal. half? All up So, to or to second then XH in like be in that from on something flat assume XXXX, volume maybe

Vincent K. Petrella

because think it year, I think can we against the comparing of we we're restructured that not it'll double-digits but a flat business, And second had in barring would will expect Again have and year. yet. macro. the of probably be that I still significantly to the half then business been be stable certainly the the I next of half expect this mid-single-digits, GDP backdrop upon second kind prices... again it my depending of In oil a expectations down or environment, for that's

Nathan Hardie Jones

– course, of Thanks course. course Of helpful. very That's of Vince. much,

Vincent K. Petrella

You're welcome, Nathan.

Operator

Thank you.

next Our comes question with Dobre Baird. from Mig

Mircea Dobre

expectations has different bit in – maybe doing that remember obviously a the Good to It's of volumes. to certain coming has wondering in Mig declines things have than or little quarter, to I I Vince, half, were that of this Yes. last what either XXXX. for to to expectations morning. discussion bit this months volume you're may going I we've were are or this changed Those three I'm I'm your stick seen a with mean on do with ALW if thinking with International accelerated XQ somewhat the ago? if Dobre. and And what do similar if sort back out environment, you

Vincent K. Petrella

No.

with to Nathan, I think of it's response it's I think a little my bit both. consistent

integration our as more bit business well. our – think has probably legacy and accelerated see a as as we softened has far in Europe and I in little environment the the activities

and far tell concerned. businesses our integration facilities six I So, result these is a thought the what would decline the expectations be with Air and closure volume Liquide as year-over-year of have as the of would you in I tracking that integration would in would line it's organic against

Mircea Dobre

Okay.

additional where if expect in the is are are And quite the charge costs quick then, either thinking question LIFO, what right on That's don't million half, $X.X for the quarter? I'm a should year benefits? you charges Then Okay. how now, what in also What we the a remember they next stay here? the quarter. helpful. fourth I material front it LIFO year, was in or but impact full wondering

Vincent K. Petrella

Yes.

finish are million what the the took $X of that I think slowing quarters So the to which $X.X of million period, compared to first our charges LIFO the as half through taken we to year. off in of fourth we've continue -- up that those about moderate My rate quarter. expectations charges three as will the means are we

is next what are charges the year far concerned, take does where that year As Mig, XXXX. then dependent in wholly upon we the end next and we and as solely year inflation

that level in our an have and isn't certain at there they at the charges. year if exit we next point estimate be a don't year, costs change this time. made So, But, can then no

on dependent fully December on it's we where and move we XXXX upon from finish So, XX, where XXXX in there.

are a hopefully inflationary material flat So, perspective. for a from expectations environment see my raw XXXX, that we'll

Mircea Dobre

obviously auto, if quarter various at off? all a leaving Got it. out of you're looking maybe that pricing at is about heavy to On alone, you're called things looking energy, one you versus part industry, these pricing in end pretty I'm markets sector last general of Which growth. trending? starting still businesses one are basis a these how when accelerating played may. on And level we're the talking good end X, Slide fab, volume the as here, wondering sort and in I driving performances financials organic the

Vincent K. Petrella

market two basis. transportation organically Well, increases automotive end biggest year-over-year and even price, increases two were biggest our and heavy our largest on and a segments year-over-year taking out both our actually has fabrication

Americas I that little perspective, well. encouraging as in a International in a was a only year-over-year has very softer perspective, and our taking from improvements that's So, automotive had core out in but but business in space, seen business, spotty automation reporting the direct marketplace, very know we've from strong this not Lincoln which

Christopher L. Mapes

solutions it's success I against drive unique just for and been of our in into space. that able of feel because being automotive now that trend We've quarters some several strongly to

I seen increases in even, a prices a in basis. on some a energy As a then trending global globally. look Vince mentioned I like the we're segment micro they're to we've And more in improvement those like that's earlier, perspective, of direct broad mean correlation seeing cars things certainly rail crude believe favorably.

see think host shared, broad the in at So still as Lincoln I we strength driving here the are segments we've a that Electric. of business

Mircea Dobre

Thank Much you. appreciated.

Vincent K. Petrella

welcome. You're

Operator

you. Thank

comes with Liptak Our Walter Global. next question from Seaport

Walter Scott Liptak

morning, Good Thanks. guys.

Christopher L. Mapes

morning, Good Walt.

Vincent K. Petrella

Good Walt. morning,

Walter Scott Liptak

a of your Chris I By follow to about looks comments XXXX, run year this want so the on would about sort the ask $XX like be profit as rate profitability. million what running something your to is Air this run a a on is restructuring range, It including it for little bit the expectation stepped what that, done, is up your is for Liquide after done, Welding. But, integration rate? like operating you? normal in International the profit

Christopher L. Mapes

a for for been the Asia business Southeast certainly about that's in into of business. talking we've business, improvements talking business we've is our improvements integration we're seen the of International Welding make business. piece there Certainly some placed the step we targets operating for in the to the a International. expectation that working path on in have in China also inside profit we that need of profitability our our well certainly out profitability Europe as drive that area first in big business, business We've the Air us us When about in how that improvement. We've profile our the business improving and for double-digit been and as of to European improvement, a improvements Liquide the

well, view in opportunity have we technical years, Harris improvements to Air to over as where see in the that to to steady step integration beginning in is but see International host that that also several driving Liquide a That profitability at Shanghai marketplace. I like the try Air Liquide, Asia of you technical bring integration and the we've new improvement business made Welding we've we've in So center launched -- that, last then in of change continuous the are market. the other big I Southeast improvements I'll we're the got centers some that area, tell we view globally a initiatives business move with We've we and and much that piece of improvements is launched the this China forward. certainly that, the

that to that's certainly initiative. but large have, wouldn't I a is Liquide only want imply Air the So, that initiative we

Walter Scott Liptak

good Okay. point. Understood. Yes, a

about though, to talking Just be double-digit clear International margins overall? XXXX operating you're by for

Vincent K. Petrella

Yes.

Christopher L. Mapes

XX%. Yes.

Vincent K. Petrella

Yes.

Walter Scott Liptak

Okay. That's double-digits. All right.

as Lincoln And delineate get just for Okay. what percentage direct refresher, of gas oil a business a and and indirect? now to and revenue is your energy

Vincent K. Petrella

direct low-double digits On now. a basis, it's

Walter Scott Liptak

presumably And indirect that? quantify you then Okay. too, there's some to have been able

Vincent K. Petrella

Yes. digits. Well, probably be oil would and low-double would energy then XX%-ish be total and gas

Walter Scott Liptak

Okay. it and you are pickup – pipeline, so, ones upstream, the Got I pickup seeing just it. which to which in? And land the you in? offshore, delineate in are shipbuilding, guess seeing yes, one

Vincent K. Petrella

probably to up, We that impact result, in really all actually, upstream and in a Walt, oil saw both but had gas, see quarter strong mid it's strong categories a quarter. Americas very midstream performance, biggest downstream. double-digit of had in improvement the the gratifying three and From contribution perspective, particularly the in discrete this

had So, nice third had quarters us the the nice was over soft pickup for that quarter has it we're across upstream. board. But, a we the and in just – place been upstream in of we seeing a the handful past

Walter Scott Liptak

Okay. or upstream land based? Is offshore your is it

Vincent K. Petrella

a We've compression It's some now for seen all. time It's in both. offshore.

first time pick I up saw For that remember the can least at few Americas, we a slightly. quarters the in in and offshore

Walter Scott Liptak

share Can the how you left is allocation it? us slide, on much stepped And have much and approval you up. do repurchase on Okay. capital board Great. your how remind then

Vincent K. Petrella

two years have probably At ample. rate, our we of a years have run still left kind three or We that on share we this have buyback activity.

Walter Scott Liptak

Okay. All right. you. Thank

Vincent K. Petrella

You're welcome.

Operator

Matthew with next Trusz comes Thank G.research. question you. And from our

Matthew Trusz

taking you questions. for Thank morning. Good the

Christopher L. Mapes

Yes. Good morning.

Vincent K. Petrella

Good morning.

Matthew Trusz

about talking other the States, United Americas, things than the In how are doing America South mostly?

Christopher L. Mapes

and American Argentina with challenges I particular to seeing we some it. that Brazil. has South very markets mean, of and you tell familiar areas in associated in I the all of of from sector inflationary Well, associated across improvements with challenges Electric. seeing the we're pressures an improvement improvements associated some Brazil. with tell – coming you We're those some the product everyone's those challenges those in of see with are will had the in mining market Lincoln we the seeing beginning some we're our I'll lines that that for then saw some – portions

So, that at some of Peru Brazil certainly there that and Argentina improvement, in the stability. started again has has pressures big is believe are is you we mining that work space for still look Chile. a us, a when and inflationary some business which to portion smaller but through welding the We'll show got

Matthew Trusz

follow-up more out the To on are on stage you. are pretty there? as started? about well your in, then just getting little that they we detail of penetrated rollout Thank as you technologies Okay. ending And or a that automotive with far the you you think are the customers provide you're discussion, or could when rolling

Christopher L. Mapes

into automotive technology that that is improve been extensively the years and some these the embedded Tier Tier over drive those into benefits fact, the software and the or into taking X been not got of the launched machine bring to new of But, within have we've applications that three and fully two this that a look, those OEM capabilities, in globally. last for improve some have of technologies X. years for the very time. focused Most either No, we've capabilities other We've really the do we performance penetrated. technologies or solutions European market space at and to we've involve various bringing we Look, application that that of some productivity certainly on broad Matter the business. thin mature I Tier many to trying we're down time believe space solutions seen our machine gauge, us process into to to marketplace have automotive got to customers. space galvanized we've space try some X those technologies the our we with

So, we're in and still the solutions about other to drive able to those upon excited being continue global to automotive. improve position solutions

Matthew Trusz

Chris. Great. Thank you,

Operator

you. Thank

comes Blair next Bryan Oppenheimer. Our question with from

Bryan F. Blair

my you. for question. Thank morning. Thanks Good taking

Christopher L. Mapes

morning. Good

Vincent K. Petrella

Bryan. morning, Good

Bryan F. Blair

to What your exposure wanted what's to there on touch Just current more. bit automation run and the revenue rate a automotive? is annual

Vincent K. Petrella

XX% is automotive XX%, run still million and now. is It roughly $XXX exposure of the rate roughly to right

Bryan F. Blair

Okay.

market? end that to weighted slightly still So

Vincent K. Petrella

Yes.

Bryan F. Blair

strong pretty in the heavy quarter this had automotive. consistence now you've offsetting general And of slowdown industry, some growth in Okay. industry,

automation confident you you look are revenue? XXXX, As growth in continued to in

Christopher L. Mapes

Yes, to underlying associated with need are for let's especially a productivity, are that part the second towards the able that of looking which driving those continually away very so. as talking drive from to much chain supply segments finding viewing individuals requirement look, might the the is and, with step a and strategy be welder the skilled dynamics be Look, onshoring challenge about automation. as their automation

companies the And strongly our So, as there strength continue long-term capital automation believe moving the their general quarter, investments they for and I automation segments still of to we're operations. the profile as industries demand we're those will fourth industries is as believe heavy seeing into that within solid. certainly, in be I place

term. bit mid is especially this a show that choppy, about it in business automation that we growth out we're talking little always But, when So, building you're large confident feel high-single-digit we'll to longer projects. as continue

Bryan F. Blair

Very good. again. Thanks All right.

Vincent K. Petrella

welcome. You are

Operator

Barger Steve from comes question final our And with Capital. you. KeyBanc Thank

Steve Barger

segmenting process follow up has on is thinking get the on to Hey, into oriented or thanks. to market? big you a handle you and market in go opportunity Just opportunities, about a force high that going Do to think you, how the of question. customers. more that LECO, return targeting I'm sales high automation good conversion terms or just there

Christopher L. Mapes

question. a Yes, yes. very Steve, good that's

Vincent K. Petrella

question. Good

Christopher L. Mapes

I I both. tell would want you, And

along automation bring But important have, solution going solutions from be automation may as them each be to Sequencer, more process look, talk maturity we that we customers make to for welding want their about might but to the that be Steve, be into of rate an But, to might level, capability many think adoption to an the then to us that it's in might So, that segments. we see we provide we as automation into using move first that want applications drive their industry not pieces them sales automation, where when base. using and customers those because going quite automation bring and competencies for that and journey. question, but great current improve those of solution complex automation capabilities we're the segment are to believe we their customers also upon are status. enhanced where the to that's those who partner other and and we then sure systems, only certainly type relates look developing at or viewed on an and of look, I they multi-arm customer be more welding group our step we that it more it's that's automation want to frankly, our Weld we further cells other And IoT provide and type those or a seek process well trying to technologies latest one a improvement, very entry to it into solutions that internally, of they're out products

Steve Barger

Yes. think customer regions? Do process the response way an sales optimize to is efficient data you from that collecting in really across organization

Christopher L. Mapes

enhance investment implementing tool from employees that a around basis customers, our it's improvement to be challenges. I Look, the made that fully important you in here we is are one years critical. on perspective we've And that talking confidence it's I us with at. of facilities last of global a better those those can of communications. leaders tool have them It's need that one sure those the couple and continuous over about salesforce.com manufacturing a collaboration and in always upon make world data large certainly the and to -- a think things to provides challenges managers that our those But, people of as see that

past. we So, we have had quickly the in opportunities more visibility than those much what to

Steve Barger

it. very I Great. much. it. Got Well, Thanks appreciate

Vincent K. Petrella

Steve. you, Thank

Operator

Vincent our remarks. turn gentlemen, to session. this back Petrella for question-and-answer Ladies call like would concludes and not I the closing to

Vincent K. Petrella

to interest joining Thank in of call year everyone and and end next you, year, today Sharink, for our on continued XXXX. the discussing thanks the your in Look us the at progress to forward for Electric. Lincoln

Operator

This participating in Ladies thank today's for the conference. and gentlemen, program. does conclude you

and have disconnect a wonderful day. all may You

Lincoln Electric (LECO) 25 Oct 182018 Q3 Earnings call transcript