LECO - Earnings call transcript Q2 2021 | Lincoln Electric Holdings, Inc.

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Operator

Greetings and welcome to the Lincoln Electric 2021 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 my pleasure to introduce your host Amanda Butler, Vice President of Investor Relations and Communications. Thank you.

begin. may You

Amanda Butler

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

our Officer; results Chief overview Mapes, on Officer. Lincoln's is Chairman, financial and more the Gabe will Chief and of trends performance me begin Bruno, Joining will detail. quarter Gabe Chris Executive Financial an Chris our the and call President with second cover in and today discussion business our

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

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

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

Chris Mapes

you, Thank Good morning, everyone. Amanda.

three. slide to Turning

Many more business has persevering return impact our marks are we of significant our across business through of done normalized one-year to operate regions tremendous team to anniversary in a quarter second the starting job activity. the this challenge. The and COVID's

on best health However, rising to our under and wellness operate COVID stringent continuing employees' and protocols practice safety. ensure global we cases to are vigilant remain

such sales, diligent like I second benefits challenging customers prior organic we quarter. broad and trended from recovery and as trough. in and productivity quarter, price/cost Welding XX% Consolidated above that on our quarter sales record the four, increased or achieved the reduction operating Americas who thank to quarter Welding employees, pleased management, I'm of approximately partners positively slide a environment. would in well third to the actions. an as to driven to record earnings continue XX% our basis levels for prior increased the Group in excel momentum on Harris in year Sales by Turning our the XXXX we highlights. our expect to sales, inflect report and cost Products International

quarter. supply inventory team of partners to inflationary an Lincoln our during trusted reaffirming leveraged Our levels supplier headwinds maintain and this across elevated addressing in substantially did outstanding and supply the We a portfolio, challenging and constraints availability as job reliable all chain chain product our period.

effectively in inflation material raw which through and year-to-date. pricing We actions productivity, also neutral managed price/cost improved resulted

an dividends. out $XX $X.XX, from million Adjusted to strong. flow and points XX.X% and improved remained XX.X% share on earnings EBIT adjusted increased which to invested repurchases productivity, in resulted returned and share in We will $XX of to operations approximately We million XXX report discretionary cost costs, higher offset disciplined pressures to of inflationary monitor spending management I'm the with in $XX XXX doubling structural the million capital in shareholders, to double-digit XXX% a EBIT performance. cash basis in a we continue as operating move to Higher forward. million Welding basis per approximately savings margin. the near employee margin that adjusted Return business operating record International increase XX.X%. quarter pleased second their margin a achieved our $XXX segment goal our adjusted with to income income quarter, and point to paid

and challenged Organic Looking through XX% strong by above backlogs in improved the XXXX second XXXX quarter, ending consumable demand approximately the revenue in the and construction capital levels. percent transportation geographic and are sales on at with all applications. remained product organic equipment. above Equipment performance more early With and detail we believe stages by trends are expansion. declines markets, we five, sequentially. a automotive we achieved increased of double-digit organic industries, a narrow growing Energy and sales organic industrial trending continue near increased growth, the achieved growth in doubling slide strong regions segments, remained but to main and downstream customers XX% and sales modest begin In year-over-year growth infrastructure. driven of quarter we second XX% and percent our levels. general inflected sales quarter industries an as to families in reinvest of achieved high-teens end Automation reportable in heavy in

Welding to third backlog segments with year-over-year high growth our Slide entering levels. Moving continued We're X. in quarter the expecting

But in focused an may continued supply challenging remain supply with faces of expect deliveries. year, Overall and customer of levels. be Electric and order COVID-related of safety cycle. the the due year well current Our in on We stage positive based on ample in growth a and this to sales Lincoln industrial on Harris comparisons constraints price timing half second us more cautious momentum, impact higher to labor the growth segment which positions levels. we to channel half prior spike chain, the on early yet sentiment retail continues opportunities and in capitalize customers at near-term which servicing disruptions, orders second

to adjusting have organic assumption the high pricing be line compared in now taken, incremental low to the sales teens as we and range percent mid-teens the with top previous trends, demand are we year the range. our full Given percent actions

not pricing As stated include range which before, does this be may warranted. actions, future any

year volume incremental full the range. assuming adjusted a second seasonality to sales quarter standard operating third in also still XX% still lower with income slightly the are flat for margin in We We're generally quarter business performance expecting than high results.

maintain of innovation and the business, growth, We're M&A strategy. automation a our full are looking on manage and series a forward higher industry-leading including are Gabe, pass second in tenets our checkpoint. to cover IoT XXXX As core acquisitions enhanced recent quarter that product financials focused now of the pipeline acquisition, the solution, to call second year we're yesterday's our integrating more of to standard Zeman I'll launch of currently And half we the detail. in launches

Gabe Bruno

you, Chris. Thank

Slide Moving to X.

XX% quarter XX.X% Zeman from benefit exchange acquisition. sales to volumes, and Our the X.X% increased price point a consolidated impact from XX% from benefit second favorable basis higher a and XX a due foreign

charge an expect year. benefits the for offset by higher months, charges neutral margin approximately, cost first material reduction of the $XX in slightly were million XXX half and in from a Our points gross second and the basis actions were and increased Price/cost LIFO and the XX.X%, profit year-to-date. volumes costs million including quarter six raw we equivalent LIFO freight positive charge. was to as $X.X

We price/cost work continue on including we to basis inflation charges. to target neutral year mitigate a LIFO full as

Our we unfavorable XX.X% to compensation and in $XXX or million and $XX all million foreign quarter. represented $X the increased SG&A million increase in exchange. employee of substantially incurred expense, the costs Higher incentive

compensation. the XXX.X% to to higher of expense remain XX.X% income, income XX.X% at of million of the decreased percent basis year, Reported million We increased SG&A incentive XXX sales sales. to approximately this special wage sales. operating as of expect due items. and $XXX.X SG&A due balance a through points $X.X or to higher Operating XXXX level to included

price/cost operating year. increased Excluding increase Adjusted which special management XX.X% or versus items million reduction adjusted prior XX.X% diligent point income XXX basis of a the improved $XXX.X cost from incremental XX.X% income operating to volumes, sales, and generated a benefits margin. benefited

six months. incremental the were XX.X%. For margins

rate due items. our XX.X% of This XX.X% the XX.X% year effective compares with and rate XX.X% in discrete an or earnings Our an adjusted second quarter adjusted effective prior tax basis period. tax or mix was basis on to on a

be full XX% our year the tax low rate mix of extent tax anticipated effective expect XXXX items. of to to the discrete subject earnings range and We in

diluted the year. with earnings XXX.X% increased $X.XX per compared $X.XX share Second to in prior quarter

in the share quarter. a Excluding special diluted XXX.X% to increased per items, record earnings adjusted $X.XX

Slide points reportable in benefit pricing implemented led management all is XX.X% by quarter industries. benefits cost prior drove sales Welding EBIT an reduction EBIT -- including of from general inflation. recovery. Welding but Americas recovery to to price actions. adjusted remains XX.X% and transportation, actions stages Demand a of believe X.X% segments price/cost and segment volumes Americas volumes higher market moving in the growth and our we XX.X% across increased areas X. organic automation. to remained million. Now challenged, product mitigate The cost heavy by from automotive industries End growth early the higher Americas strong Energy in margin basis on XXX to $XX.X increased adjusted led second increased XX.X%

The to International increased of segment's XXX.X% price/cost $XX strong sales initiatives Moving across to increased adjusted operational Slide margin management. benefits on and The primary acquisition Asia segment. EBIT the XX.X% XXX An heavy points Xst X. reflecting increase segment April the to in growth Europe and and expect Organic per transportation, generate quarter. basis in adjusted industry which EBIT improvement The general higher of regional Welding volume Pacific XX.X% will automotive from increased volumes, were we drivers demand sales X% $XX region accelerating the growth on demand. also industrial Zeman the the approximately million benefited million.

of to revenue Zeman recognition. Second quarter sales were the quarter from from -- second due timing lower

the Moving Products Slide XX. on Harris to Group

retail Adjusted million. due increased products. as primarily well Organic XX.X% $XX.X from to as offset commodity markets, EBIT end higher to costs XX.X% consumable XX.X% American benefit to costs. rising higher higher employee Harris' increased and increased in EBIT XXX in by margin copper silver actions which strength by broad as to adjusted quarter pricing HVAC points volumes the such a channel, their recover and XX% were with partially Second volumes basis North XX.X% led sales taken from

conversion operations supply we the XX. constraints. million elevated tax approximately of remains higher intentionally million in by chain Moving impacted which year Working We excess conversion in to in was and capital to flows approximately payments. continue And full was to XX%. XX%. cash recovery the Cash from Slide generated quarter for cash our support $XX expect $XXX mitigate

internal acquisition. Moving execution, the net growth and performance to strong $XX.X in invest million million, a Zeman in given and in for in continued cash quarter. ROIC strength continued expenditures capital XX.X% Xst we to slide invested April We flows, $XX.X the XX,

in repurchases, to We share our million dividend through shareholders also approximately returned program. $XX

Looking in to We repurchase annual continue quarter. opportunistically. $XXX to With million expect million maintained will continue our $XX CapEx program be near-term with ample to we debt million. second in focused liquidity, questions. for over ahead, we would And the we shares Cara? to expectations $XX on growth returning of further are like that, maturities cash the Session With excess Question-and-Answer to XX%, investing call and of I shareholders. in cash turn and conversion no to

Operator

a conducting Bryan first session. be Ladies will from Blair the Oppenheimer. [Operator with Instructions] comes question-and-answer line Your this and of gentlemen, at time, we question

Bryan Blair

Hello everyone, very solid quarter.

Chris Mapes

Good you. thank Hey, morning, Bryan.

Bryan Blair

it we're drives expansion. Chris, you in an emphasize early team's the healthy We're color with that But a a been a having Hoping the really what seem offer you on, while, some more real page we've on industrial since cycle. could industrial that. of has demand had same in little confidence to stage your runway.

Chris Mapes

I would a Bryan. couple things Well, of say,

as just business as the segments. momentum see First see specific the is, the of we some across breadth of that within we the the things well

I been strong would since segment that mining mining we've really a business. So an of while, segment. the be a example think, within the seen It's

maybe would copper positive And in, of cycle. got early the Electric. quarter costs drives activity, in industries. early and can activity and and very a We or be that positive one we're that that for some I coal. input see drives an at two more commodity, they've here And side, in escalation example frankly the see of of whether whether but ore iron a entering from I that's And But those we're replacement we're them. just quite do of or start those at and within business certainly that as demand, like, or I quarters the look believe stages. our argue, feel back in mining Lincoln the You industrial

Bryan Blair

in to on offer or can see but there it more great its to half early detail PythonX a And the of you to structural And I a know SBA impacting automation All any hear incremental had Zeman combination also growth? return makes expected and rates, steel. sense. quarter, and integration little is growth owning the asset, great growth is back order prospects in days be would on automation of

Chris Mapes

turned a Zeman just automation Well, little business. at a think, automation in for that I the think Zeman. I'm I'll bit of the I'll we And it. fit, really the right time. with Gabe I'll you global a right couple growing earlier about projections the segment let at It's working than little acquisition, we talk have we the team strategic give it's is broadly. comments expected. happy a with then, And Electric, At had tell the But, Lincoln about hard you,

So the tell to are And of manufacturing you to excited I've for care steel technology of the for steel they're complement steel cutting, be and to market-leading a assemble provide customers provide about familiar a really interested in them, take now technology a to already Electric really the will can marketplace. for solution Lincoln deal I And great another that activity out process. we individuals able Python the being inside solutions marketplace industry. talked many of couple of robotic that structural very very the there able with which out our can them structural And that for there, industry. pieces for structural

we believe be with the great it's in The know able we'll upon offering world. portion. teams to I around marketplace, be out a there working already going We've U.S. and relationship we're working a here where going be to that our the to the us. customers partners for developed on, expand hard solution So integration them. are with that

automation that strategic comments So, on positive a Gabe, I'll of say fit a a I off the very there. solid great and the very we technology I let people and would start, have give think couple And to then about other broadly. it's

Gabe Bruno

Yes.

Bryan, thanks that. for So

towards opportunities our business. in automation we we're know, year. point middle seeing discussed had excited see growth very about And inflection we about of the the you this an As

see of growth. high-teens very was going we've backlogs did we the half. the the we're into So that It an in acceleration strong in quarter. of quoting to And second second type good good got see activity,

our I'd kind comment, we've the model that the that half margin see years. momentum our over done to also is done within continue business the we'll year. improving. to into We've integrate of profile second So of the things acquisitions

And so we profit profile, business. of the target trajectory this continue we're in on operating very confident growing we're that our reaching managing and as

see the And automation So well we're and necessary automation. very for about the growth, in continued of we a markets to within expand capabilities world. positioned capital start we're excited reinvestment as factories the

Bryan Blair

Okay. Appreciate for color. my taking all questions. the Thanks

Operator

Dobre with next Baird. of Your line question comes from the Mig

Mig Dobre

Good is Mig morning. This Dobre.

Gabe Bruno

Mig. morning, Hey, good

Mig Dobre

a guess, performance wanted guessed. I volume a on couple and of would both what I than questions Hi. bit ask And to one, international. the quite better I here pricing first have

to So two parts my question.

understand higher the First, when gone I'm input looking from a has for pricing model standpoint, price seen cost this is my back as strongest I've goes. I that international far but obviously pricing commodity in

sort how like periods? the quicker looks in the if running now you're business is a progress So your maybe up – you're you're as different now business if there's to international Because And to seems second in levels. of curious volume you're the different then I'm of back your bit something little in inflationary sort something prior International, picking or it the environment And doing than XXXX It volumes. basically than wondering, here. is in on question International to pre-COVID back I'm Americas. levels, seeing like

I'm difference here we if to wondering of. So some need be there's that aware

Chris Mapes

like an making some of that those elements Because one the good tell that we that. the managing out implementation us the of at that getting excited Lincoln not managing business. about at the that start. that And as is that to to very the and doing utilizing needed piece expectations that you particular that part International of we managing that in then and I would have the is maybe the Well, And you talking at of improvements challenges our the part about on are I'm that, requirement market. we sure you others tools place Mig, improvements first us making in at is right get market of And team of some a better that there get in have but in inflationary in we've general, portfolio. improvement I'll tools I across there this those our was key process. good of continued work And the that piece think business, been Electric and of are to was been and teams system

tell I So is portion would you that of a that just frankly process-driven. quite

seeing I teams, the the we're over regain in back last seeing marketplace, thing strong think the couple we're the performance would of broad improvements the the some seeing and is may talking We're this to years and at relationships generate integration be Second I the for tell be European mitigated. been in to we've during you making were the to point. that. us some able of going customers improvements about business that And of in the that especially International from out

But type there then need towards and we're as and some into target that end solid We of this initial excited evaluating So a business in markets show portion really of will very is where exactly that about quarter. seasonality of there the with will with think a in consistency the we of area associated I XXXX. believe we to obviously, we year can that out moving our performance. this that making QX. be international take

Mig Dobre

wondering within you half margin, good And guess I about of Okay. where to on as about. here. margins you seasonality the sustainability thinking the I'm this That's I out helpful, anticipated year, you that especially pointed go I'm back context going quite of Thank the were the with Chris. of as was follow-up. my you. And the talked

Chris Mapes

then And to also get a actually very us may believe chips hear I little of share various in feel And it. seasonality. get the everything also could maintain the actually then which in from improvement see to you, summer XXXX. It's through across we're even of portions and the with are that business. challenges, it's just good we maybe maybe a the in supply and we're be the activity. little they more through to for chain to automotive customers in for business, isn't should that this And the more that they seasonality. expect many structural difficult we about and backlogs segments maybe that the of business try normal an will on identifying into see work difficult expect you But some those in it's extend type wildcard bit just what comment probably we around And there International at might this business. tell as saying, next then, comment, step point I shutdowns one look, opaque, International I be that hear people for the cycle a probably have a and worried a of those is windows. expect we've would handle a Americas exactly across I I may I they more would believe the Look, margins thing double-digit Yes. what world. we year, made improvements moving moving rest to as some

Mig Dobre

Thank Great. you. Very helpful.

Operator

Barger next of from Your the comes Capital question with Steve line Markets. KeyBanc

Steve Barger

Thanks. morning. Good Hey.

Chris Mapes

Steve. morning, Good

Steve Barger

structural are get even about. back margin actions and like last as Looks can over above along revenue XXXX? from the XXXX gets year's to you XXXX $X you billion, nicely gross talked with of they as cost or XX.X% the Do this price the just strong volume and XX% XXXX year of think with probably back

Gabe Bruno

question. that for Thanks Steve. Yes,

business gross that pretty manage and continue but manage back price or to yet whether XXXX not, the that's And One of continue with profile profit confident we'll growth exceed mix also of we obviously going the in the financials, costs. a be in to is we're cost to we'll seen the But, up the level. price price/cost. dynamics neutral to

Chris Mapes

I within what got excites very on to this should getting have assure we the margins, in them. comment Steve, focused to we is the International level will that's average about margin Yes. two I you business, we're the improve the us strategic question, the margins to next initiatives. in over the can That mentioned higher improvement. business how provide I earlier first the that strategy. as the the business, we I we've centered momentum gross certainly be able target on as the although you achieved that automation know up believe those make areas But business strongly And and of as And tell we your company And to will the our drive standard continue identify me several was I expect quarters we've with which Chris. further lift. see Look still we business for yet some

the next business I continued work margin those as areas two of we for catalyst as see So, business several a the through quarters. still improvement for the

Steve Barger

good from comment growth across automation material do I you the see trends, secular product opportunities Are aspects you in look all how right expand now is up itself, the at welding working handling It's the a automation the And business. do how playing to to know hard on that out? bigger as further team keep you just But, drive the or business? there cell the lines.

Chris Mapes

question, processes day that we and cells many solutions at just we're that already great you end the Steve. welding are provide. can that expertise the of we've within of outside a providing believe already the That's made the core the or step I would I that And tell content Yes.

think I about that I broad those think So pandemic is secular accelerate And that tell challenges trends, done with you, when with that when pandemic it. anything have the trend. the one don't But and except we our to the challenges the what about I market they're believe going And doing this of there I going associated associated automation. that's think think will about know that, associated with capital low quickly of labor, within people challenges to do because that's are out especially chain, supply cost with we're in many business. own element I

look it so continue to that higher portfolio. through execute our months business. it will or larger nearly and that So, $X the only automation business over I have larger driving confidence a what we we've XXXX the in I just we had being that the the we're reiterates of in portion us believe billion trying to with as last of And to strategy portfolio for to be at that inside the standard XX manage believe

Steve Barger

Yes.

one I is Are that. line, one percent to total little on to top a quick automation you back think just relative mid-teen-ish it still or of light? the

Gabe Bruno

right, That's run Steve. No. about our yes. That's currently, rate

Steve Barger

Yes. Thanks.

Operator

of Stanley. question Your Dillon from next the comes Cumming with line Morgan

Dillon Cumming

Good automation a pipeline. for Thanks lot morning. the dead a you sound confident question. the Not horse to beat obviously more kind of in Chris But on here. M&A

I language think to the word. from that the in changed deck you slide acquisition fertilize

something Just more your like pipeline you confidence guess in the side do I Welding now, curious of the portfolio the is on the business? legacy versus And if automation that feel so, focused of in imminent? more terms is

Chris Mapes

We are have are both need Well, standard on acquisition welding. that. to the -- component executing areas, to I strategy. in to execute execution we certainly in acquisition capital area. said areas of continuing the the certainly like focused you in Dillon. on automation an there our But obviously, get deploy We've in higher shows Zeman core the to that also business, interest

And reasons our execute requirement. the M&A we is of something one on to pipeline frankly, why that strategy. long-term It's active. very we're it's think our we is that amplifying I know a quite need

long-term I our our those for profile. should execute to on love and opportunities sheet. we're and be investment our that So, strategy. ability We balance confident with identify our utilize able to that

Dillon Cumming

on Thanks the kind growing for the Obviously, the And one already rate. is infrastructure Okay. of color. just end in outlook. of question double-digit kind market maybe

So, that invest you're backlog you do positioning the nicely. any to the customers they're it are by that activity a package kind build actually sense the with of feel side curious or you for of kind year-end that just kind US? infrastructure of Do of improving seems the like conversations of in get But like in of I ahead customers your quoting guess kind like your willing that and business on just and seeing business. is

Chris Mapes

that getting getting we've anybody I'm Look that feel any of a doing I'm there's a front with opportunity. not not associated that type feel build. running any particular got

bill the that frankly quite But another with that I within you that had when I think us the the that to that of activity profile trying for accelerating us I for business business. we've about get demand a have as I their for potential business. business. conversations infrastructure see would can't into our additional to as the think catalyst it opportunity tell or relates be are the people I the ahead by customers that

would chain that is The other that question industries the share it with the associated I to relates other that thing I challenge think having. challenges supply as the are

like. So, our customers be also would as are challenges having these some move to abilities their mitigate of quickly they maybe as supply chain to able

it think So, demand. some infrastructure. elongate activity on may actually out that of But I don't there's any early

Dillon Cumming

the for time. Thanks great. Okay,

Operator

Stifel. from Your of Nathan line with next the question Jones comes

Adam Farley

Adam is for Nathan. Farley This morning. good on Hey,

Chris Mapes

morning Adam. Good

Adam Farley

maybe provide we go you back wages Is then there? on finding the-- could And the don't to increased seeing Can similarly new what some costs. why employees to Now, you're add? on employee about labor you color it talk

Gabe Bruno

But Adam think some track rate with much as pretty we've to I about ranges and for a Adam. just that. asking costs add on just bit of increases employee you're think you're kind $XX -- annually. breaking previously and on expectations color And We're little talked otherwise up comment our million I on run trends. merit

about driver. compensation Our is incentive at $XX months. also the We were for higher a six million key

business. $XX the our currently expect of profile We million in about

comp, That were higher our track XXs. as incentive in into and those based very that our on much last expectations margins -- I incremental cost, just builds running to So, where we're all conversations. employee we considerations comment And on the did otherwise. our mention

Adam Farley

supply the if customers are from Could ability it? Okay, supply impacts on ship that's revenue to you chain realizing supply chain be allowed any higher on chain helpful. you to Maybe time? constraints on the seeing

Chris Mapes

no optimized of there's out point, if move able the question that that was been at backlog we part completely think to I have our to Look, would supply chain marketplace. Yes. this probably

easy as the if chains we my yes. for marketplace. data as of been there's to answer optimized, revenue be that would But mind to to able the in question the So, been more that that those have me in you into The no had products move give amount not supply is point. have quarter a would maybe probably we'd

Adam Farley

for questions. Thanks Okay. the taking

Operator

from Your with next line Seaport. of the comes Instructions] Liptak Walter [Operator question

Walter Liptak

guys. good Hey, morning

Chris Mapes

Walt. morning Good

Walter Liptak

just I wanted a of to ask couple follow-ons.

on you good your guess does construction might bill, I -- have markets anybody mean customers, et into what of is do first infrastructure what you? the looks cetera? infrastructure your there could that it Do been markets, Like, The have for like it you've that the insight there bill happen. any seen studies some really any one guys might about -- for your have

Chris Mapes

No. you great host are Walt. segment. about piece. participants that Remember, with That's question. obviously, talked tell it a internally XX% exposed of revenue We've to that about our market of XX% particular about I'll a and into talked that

it's really be come obviously bill when the an end if could there enough which a moves is around bill dollars be So, we manner to us. real see if about to has the before those see it recognize, here it talking passed and the catalyst as that we that can how would favorable bill we're a exactly the forward. improvements. year, infrastructure general, long impact of marketplace, physical waiting as significant in specifics actually for passed in us, But But and for more the

Walter Liptak

supply and year chains a I've the that the run then the follow- from seasonality. shutdown the you're little referring shutdowns hearing let out And catch just that quarter the summer early US to, I you going not And into questions summer end companies third of what that in Is the about a earlier or the and that Thanks. take as any could just bit wonder your about then all the up to was they're going hoping Great. Europe long something shutdowns? they in heard about a right. winter in and talk couple you're and seasonality? from the on could if or what around Because else they're of customers shutdown. and the All Okay. even

Chris Mapes

chips different bit sounds have with segment, to of all mean some the accelerate right pieces we from individuals longer process. We've summer. trying about quite Walt, exactly to little other shutdowns that the electronics challenges power I in heard that's their some production companies challenge. had potentially I in associated talk the frankly, some more now. the of automotive We've some from the segments. said know and customer, to talking in customer about it segment a

in a work slight within or just demand choppiness. day level to quarter. a frankly in make But So on around it's -- in for broadly of to we'll what the at to if end to quarter I right or may like difficult now. have the not know profiles handle as the and create the get just this through customers that it's that of with decisions business that the momentum the look we shutdown quarter. our see these may very But someone quite we're third the the And the it's going that, stop fourth longer industries. evaluate in shutdowns activity were us moving

Walter Liptak

some Okay. Did that maybe of took you shutdown? see did any in choppiness, -- early you the as customers July,

Chris Mapes

Only wouldn't portfolio. a it's I across the that couple say entire material and

you of as international window. most quarter of Of in occurs an that basis, the July part on the know, latter the course, versus

Walter Liptak

Okay.

Okay, great. Thank you. right. All

Operator

Steve the with line final of And from question Capital our comes KeyBanc Markets. Barger

Steve Barger

steel Chris, market. the for letting the me thanks back in strength obviously increase Hey, pricing in. reflects price the big

back more service will pick imports maybe capacity to is are centers and analyst come expects steel online, up going down. which bring steel restocked, getting Our costs

that lower So, the out play in would you for back do how A, expect you? steel And half?

Chris Mapes

tell going you our quarter the are costs than I higher Steve. Well, slightly I'll Lincoln in looks in steel quarter. to were they that third the Electric second like it at be know

global seeing of starting not on the business elements in the running moving we're the impact those QX. if them execution marketplace, are a to basis So, into

of when would through I've look, to them. but So haven't the not price slightly prices we that to our then for Lincoln and that same again, business that QX with were now, steel right and flow read QX working is how steel to started higher just Obviously, seeing Electric. But support of activity. be to major talking understanding exactly type than about, materialize yet. And able we're your may if some to team see our be start reductions, be we'd customers they things

Steve Barger

cuts And or upcycle that ahead for it's And then obviously, with Harris year metals Thanks. new if averaged mid-teen, to high-teens? the Harris again for and margin cost and Do this precious Understood. volume stepped running years moderate? before five last XX.X%. you the is XXXX, up year. run price think and normal what it can And happens

Chris Mapes

were target. standard inside automation our them would know Yes. we teams which much to is were that average higher talking we Lincoln around you expected get of our that to XX% strategy, Steve, like you tell our targeted we teams Electric in I talking to our that to always

that that So we be There some level. at inside the things continue to believe are mix they're business. able to to operate doing challenges

business higher first Harris window a of see to of portfolio to they would may addressed. need in international strategy. time general as the where maybe expanded fact business. standard that our of expect continue the business target, performance are of at but But has that portions the the that Love their love our to the just You operating average made drive be be

Steve Barger

Got question last it. on I guess, one that. And,

I new of seeing something. took what the home appreciation what's Harris the back maybe -- in But terms because price in back or half? sales step team of are demand think a

Chris Mapes

still the when generally primary because to of the you're side you about and sales the Well is both XX% I market new market that of replacement HVAC. off talking portion that's XX% within probably HVAC know total home the

to quarter HVAC are still business. summer still I and think talking their seeing that as of the many producers earnings that lead the coming hot So solid momentum within that about with second out large they're

HVAC home the to of towards like that the appears components. year. and business as some well yes, its new seasonality So, end be because business still much very But to International the as as that construction exposure momentum business looking we're has there replacement the of in solid

Steve Barger

great. That’s Thanks.

Operator

to Bruno closing remarks. our question-and-answer back call like for to concludes session. I turn Gabe This the would

Gabe Bruno

your our the for We of look for progression I today joining call initiatives on Thank and you in Electric. strategic everyone would the much. us very to thank future. like to continued discussing interest the in forward Lincoln

Operator

conference today's concludes This call.

now disconnect. You may

Lincoln Electric (LECO) 27 Jul 212021 Q2 Earnings call transcript