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Lincoln Electric (LECO) Q1 Earnings Beat Estimates, Shares Up
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Shares of Lincoln Electric Holdings, Inc. (LECO - Free Report) have appreciated 5% since the company reported record first-quarter 2022 revenues, adjusted operating margin and earnings per share. Adjusted earnings was $2.10 per share that beat the Zacks Consensus Estimate of $1.63, and improved 53% year over year, driven by robust demand, favorable mix and solid operational execution.
Including one-time items, the bottom line came in at an all-time high of $2.13 per share compared with $1.23 in the prior-year quarter.
Total revenues surged 22% year over year to a record $925 million. The improvement in revenues can be attributed to a 22.1% growth in organic sales and a 4.6% benefit from acquisitions. These were partly offset by unfavorable foreign currency exchange of 4.4%. The top line surpassed the Zacks Consensus Estimate of $865 million.
Lincoln Electric Holdings, Inc. Price, Consensus and EPS Surprise
The cost of goods sold rose 18% to $596 million from the prior-year quarter’s levels. The gross profit climbed 30% to $3303 million. The gross margin came in at 35.6% compared with the year-ago quarter’s 33.5%.
Selling, general and administrative expenses increased 14% year over year to $167 million. Adjusted operating profit increased 49% to $1632 million in the quarter. Adjusted operating margin was a record 17.6% in the reported quarter from 14.4% in the year-ago quarter.
Segment Performance
Americas Welding: The segment’s total sales increased to $562 million from $458 million in the year-earlier quarter. Adjusted operating income totaled $111 million compared with $779 million in the prior-year quarter.
International Welding: This segment’s revenues increased 16.2% year over year to $264 million in the reported quarter. The segment reported an adjusted operating profit of $37 million compared with the year-ago quarter’s $19 million.
The Harris Products Group: The segment’s first-quarter total sales amounted to around $136 million, reflecting a year-over-year improvement of 23%. Adjusted operating profit was $19.6 million compared with the prior-year quarter’s $18.7 million.
Financial Update
Lincoln Electric had cash and cash equivalents of around $154 million at the end of the first quarter of 2022 compared with $193 million at the 2021-end. The company generated $435 million in cash flow from operations in the quarter under review compared with $45 million in the prior-year quarter. LECO returned $137.9 million to shareholders via dividends and share repurchases through the quarter.
The company’s debt to invested capital was 50.1% at the end of the first quarter of 2022, compared with 47.1% at the end of 2021.
Guidance
Lincoln Electric now expects organic growth in mid-teens percent for 2022, up from the high-single-digit to low-double-digit percent stated previously. It anticipates incremental margin in mid-20% compared with the previous guidance of low to mid-20%. The increase reflects operational improvements in the company’s automation portfolio and Americas Welding as well as persistent structural savings in Europe. Effective tax rate is expected to be in the low 20% range.
Price Performance
Image Source: Zacks Investment Research
Lincoln Electric’s shares have gained 2.5% in the past year against the industry’s decline of 34%.
Some other top-ranked stocks in the Industrial Products sector are Alcoa (AA - Free Report) , Packaging Corporation of America (PKG - Free Report) and Graphic Packaging Holding Company (GPK - Free Report) . While AA and PKG flaunt a Zacks Rank #1, GEF carries a Zacks Rank #2 (Buy).
Alcoa has a projected earnings growth rate of 107% for the current year. The Zacks Consensus Estimate for 2022 earnings has moved north by 76% in the past 60 days.
Alcoa has a trailing four-quarter earnings surprise of 17.4%, on average. AA’s shares have surged 65% in the past year.
Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 4.2% in the past 60 days.
PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have gained 6% in the past year.
Graphic Packaging has an estimated earnings growth rate of 100% for fiscal 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 6%.
GPK pulled off a trailing four-quarter earnings surprise of 7.2%, on average. The company’s shares have appreciated 17% in a year’s time.
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Lincoln Electric (LECO) Q1 Earnings Beat Estimates, Shares Up
Shares of Lincoln Electric Holdings, Inc. (LECO - Free Report) have appreciated 5% since the company reported record first-quarter 2022 revenues, adjusted operating margin and earnings per share. Adjusted earnings was $2.10 per share that beat the Zacks Consensus Estimate of $1.63, and improved 53% year over year, driven by robust demand, favorable mix and solid operational execution.
Including one-time items, the bottom line came in at an all-time high of $2.13 per share compared with $1.23 in the prior-year quarter.
Total revenues surged 22% year over year to a record $925 million. The improvement in revenues can be attributed to a 22.1% growth in organic sales and a 4.6% benefit from acquisitions. These were partly offset by unfavorable foreign currency exchange of 4.4%. The top line surpassed the Zacks Consensus Estimate of $865 million.
Lincoln Electric Holdings, Inc. Price, Consensus and EPS Surprise
Lincoln Electric Holdings, Inc. price-consensus-eps-surprise-chart | Lincoln Electric Holdings, Inc. Quote
Costs and Margins
The cost of goods sold rose 18% to $596 million from the prior-year quarter’s levels. The gross profit climbed 30% to $3303 million. The gross margin came in at 35.6% compared with the year-ago quarter’s 33.5%.
Selling, general and administrative expenses increased 14% year over year to $167 million. Adjusted operating profit increased 49% to $1632 million in the quarter. Adjusted operating margin was a record 17.6% in the reported quarter from 14.4% in the year-ago quarter.
Segment Performance
Americas Welding: The segment’s total sales increased to $562 million from $458 million in the year-earlier quarter. Adjusted operating income totaled $111 million compared with $779 million in the prior-year quarter.
International Welding: This segment’s revenues increased 16.2% year over year to $264 million in the reported quarter. The segment reported an adjusted operating profit of $37 million compared with the year-ago quarter’s $19 million.
The Harris Products Group: The segment’s first-quarter total sales amounted to around $136 million, reflecting a year-over-year improvement of 23%. Adjusted operating profit was $19.6 million compared with the prior-year quarter’s $18.7 million.
Financial Update
Lincoln Electric had cash and cash equivalents of around $154 million at the end of the first quarter of 2022 compared with $193 million at the 2021-end. The company generated $435 million in cash flow from operations in the quarter under review compared with $45 million in the prior-year quarter. LECO returned $137.9 million to shareholders via dividends and share repurchases through the quarter.
The company’s debt to invested capital was 50.1% at the end of the first quarter of 2022, compared with 47.1% at the end of 2021.
Guidance
Lincoln Electric now expects organic growth in mid-teens percent for 2022, up from the high-single-digit to low-double-digit percent stated previously. It anticipates incremental margin in mid-20% compared with the previous guidance of low to mid-20%. The increase reflects operational improvements in the company’s automation portfolio and Americas Welding as well as persistent structural savings in Europe. Effective tax rate is expected to be in the low 20% range.
Price Performance
Image Source: Zacks Investment Research
Lincoln Electric’s shares have gained 2.5% in the past year against the industry’s decline of 34%.
Zacks Rank & Other Stocks to Consider
Lincoln Electric currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Some other top-ranked stocks in the Industrial Products sector are Alcoa (AA - Free Report) , Packaging Corporation of America (PKG - Free Report) and Graphic Packaging Holding Company (GPK - Free Report) . While AA and PKG flaunt a Zacks Rank #1, GEF carries a Zacks Rank #2 (Buy).
Alcoa has a projected earnings growth rate of 107% for the current year. The Zacks Consensus Estimate for 2022 earnings has moved north by 76% in the past 60 days.
Alcoa has a trailing four-quarter earnings surprise of 17.4%, on average. AA’s shares have surged 65% in the past year.
Packaging Corporation has an expected earnings growth rate of 16.2% for 2022. The Zacks Consensus Estimate for the current year’s earnings has moved up 4.2% in the past 60 days.
PKG has a trailing four-quarter earnings surprise of 19.6%, on average. Packaging Corporation’s shares have gained 6% in the past year.
Graphic Packaging has an estimated earnings growth rate of 100% for fiscal 2022. In the past 60 days, the Zacks Consensus Estimate for current-year earnings has been revised upward by 6%.
GPK pulled off a trailing four-quarter earnings surprise of 7.2%, on average. The company’s shares have appreciated 17% in a year’s time.