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Lincoln Electric (LECO) Q2 Earnings & Sales Top Estimates, Up Y/Y

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Lincoln Electric Holdings, Inc. (LECO - Free Report) reported record second-quarter 2021 adjusted earnings of $1.67 per share, which beat the Zacks Consensus Estimate of $1.46. The bottom line also improved 109% year over year. Strong demand across end markets and improved productivity contributed to the company’s bottom-line growth.

Including one-time items, the bottom line came in at $1.60 per share compared with 45 cents in the prior-year quarter.

Total revenues increased 40% year over year to $826 million. Moreover, the top line surpassed the Zacks Consensus Estimate of $786 million. The improvement in revenues was owing to 36% growth in organic sales, favorable impact of 3.3% from foreign exchange and 0.6% benefit from acquisition.

Costs and Margins

Cost of goods sold went up 38% to $552 million from the prior-year quarter. Gross profit rose 45% to $274 million. Gross margin came in at 33% compared with the year-ago quarter’s 32%.

Selling, general and administrative expenses increased 20% year over year to $152 million. Adjusted operating profit increased 98% to $125 million in the quarter. Adjusted operating margin was 15.1% in the reported quarter compared with 10.7% a year ago.

Segment Performance

Americas Welding: The segment’s sales increased to $497 million from $361 million in the year-earlier period. Adjusted operating income totaled $84 million compared with $47 million witnessed in the prior-year quarter.

International Welding: This segment’s revenues increased 43% year over year to $259 million in the reported quarter. The segment reported adjusted operating profit of $30 million compared with the year-ago quarter’s $9.7 million.

The Harris Products Group: The segment’s second-quarter sales amounted to around $119 million, reflecting year-over-year improvement of 45.1%. Adjusted operating profit was $18 million compared with the prior-year quarter’s $12 million.

Financial Update

Lincoln Electric had cash and cash equivalents of around $191 million at the end of the second quarter of 2021 compared with $257 million at the end of the 2020. The company generated cash flow from operations of around $100 million during the reported quarter compared with $104 million in the prior-year quarter.

The company’s debt to invested capital was at 45.9% at the end of the second quarter of 2021 compared with 47.6% as of the end of 2020.

Price Performance

Lincoln Electric’s shares have gained 50.8% over the past year, outperforming the industry’s growth of 21.6%.

Zacks Investment Research
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Zacks Rank and Stocks to Consider

Lincoln Electric currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Industrial Products sector include Greif, Inc (GEF - Free Report) , Lindsay Corporation (LNN - Free Report) and Pentair plc (PNR - Free Report) . All of these stocks sport a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Greif has an anticipated earnings growth rate of 47.2% for fiscal 2021. The company’s shares have gained around 29.3%, year to date.

Lindsay has an estimated earnings growth rate of 1% for the ongoing fiscal year. Year to date, the company’s shares have rallied 29.1%.

Pentair has a projected earnings growth rate of 26% for the current year. The stock has appreciated around 29%, so far this year.