Lincoln on Acquisition Spree

Lincoln Electric Holdings Inc. (LECO - Analyst Report) recently announced the acquisition of the welding operations of Maryland based Techalloy Company Inc. and of its parent company, Central Wire Industries Ltd. The company is a producer of nickel alloy and stainless steel welding consumables, which are positioned well globally in the high growth energy and infrastructure business segments. These segments are expected to continue to grow as well as expand and improve Lincoln’s relationship with its customers.

According to Lincoln, the acquisition of Techalloy expands the product portfolio of high alloy consumables required to service customers across the globe. The terms of the deal were not disclosed. Techalloy employs 55 people and generates annual revenue of approximately $70 million.

In another deal, Lincoln acquired all of the assets of Nevada based, Applied Robotics, Inc., a leading manufacturer of CNC cutting tables and accessories in North America. The company is known by its brand name Torchmate in the welding industry. Torchmate offers a wide variety of CNC plasma and oxyfuel cutting tables and systems to small and medium- sized fabricators.

According to Lincoln, metal cutting is closely related to arc welding, the addition of which will not only complement its existing business line but also add to the company’s ability to provide better solutions for its global customers.

Lincoln Electric is pursuing a multi-year strategy to become more cost competitive by building manufacturing facilities in Eastern Europe and Asia. Prior to this, the company entered the Russian market with the acquisition of Mezhgosmetiz-Mtsensk OAO and OOO Severstal-metiz. In addition to the above acquisitions, the company also partnered with IPG Photonics Corporation to explore global opportunities in the high-power laser welding and cutting market.

Lincoln Electric recently reported its fiscal second quarter results of an adjusted EPS of  68 cents, up from 38 cents in the year-earlier quarter and ahead of the Zacks Consensus Estimate of 55 cents. Total revenue, as reported by the company, increased 35.6% year over year to $699.3 million. The company’s continued focus on new products accounted for an increase in sales and market share gains. We currently have a Zacks #1 Rank (short-tem Strong Buy rating) on the stock.

Cleveland, Ohio-based Lincoln Electric designs, develops and manufactures arc welding products, robotic arc-welding systems, plasma and oxyfuel cutting equipment and commands a leading position in the brazing and soldering alloys market. Lincoln Electric competes with Illinois Tool Works Inc. (ITW - Analyst Report), Charter International Plc and ESAB Group Holdings Ltd.

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