LINCOLN ELECTRIC HOLDINGS INC 10-Q

ITEM 1. FINANCIAL STATEMENTS LINCOLN ELECTRIC HOLDINGS, INC. CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2024 2023 Net sales (Note 2) $ 981,197 $ 1,039,343 Cost of goods sold ​ 612,798 ​ 683,986 Gross profit ​ 368,399 ​ 355,357 Selling, general & administrative expenses ​ 198,747 ​ 190,116 Rationalization and asset impairment charges (Note 6) ​ 4,605 ​ 877 Operating income ​ 165,047 ​ 164,364 Interest expense, net ​ 8,779 ​ 13,201 Other income ​ 2,262 ​ 4,181 Income before income taxes ​ 158,530 ​ 155,344 Income taxes (Note 11) ​ 35,115 ​ 33,413 Net income ​ $ 123,415 ​ $ 121,931 ​ ​ ​ ​ ​ ​ ​ Basic earnings per share (Note 3) ​ $ 2.17 ​ $ 2.12 Diluted earnings per share (Note 3) ​ $ 2.14 ​ $ 2.09 Cash dividends declared per share ​ $ 0.71 ​ $ 0.64 ​ See notes to these consolidated financial statements. ​ 3 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2024 2023 Net income $ 123,415 $ 121,931 Other comprehensive (loss) income, net of tax: ​ ​ Unrealized gain on derivatives designated and qualifying as cash flow hedges ​ ​ 3,715 ​ ​ 9,131 Defined benefit pension plan activity ​ ​ 73 ​ ​ 560 Currency translation adjustment ​ ( 13,395 ) ​ 14,818 Other comprehensive (loss) income: ​ ( 9,607 ) ​ 24,509 Comprehensive income ​ $ 113,808 ​ $ 146,440 ​ See notes to these consolidated financial statements. ​ ​ 4 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 ​ December 31, 2023 ​ ​ (UNAUDITED) ​ (NOTE 1) ASSETS ​ ​ Current Assets ​ ​ Cash and cash equivalents ​ $ 374,978 ​ $ 393,787 Accounts receivable (less allowance for doubtful accounts of $ 11,237 in 2024; $ 11,464 in 2023) ​ 544,514 ​ 538,830 Inventories (Note 8) ​ 567,279 ​ 562,864 Other current assets ​ 192,979 ​ 197,630 Total Current Assets ​ 1,679,750 ​ 1,693,111 Property, plant and equipment (less accumulated depreciation of $ 885,421 in 2024; $ 876,990 in 2023) ​ ​ 582,178 ​ ​ 575,316 Goodwill ​ 689,868 ​ 694,452 Other assets ​ 427,921 ​ 414,418 TOTAL ASSETS ​ $ 3,379,717 ​ $ 3,377,297 LIABILITIES AND EQUITY ​ ​ ​ Current Liabilities ​ ​ ​ Short-term debt (Note 10) ​ $ 4,720 ​ $ 2,435 Trade accounts payable ​ 327,798 ​ 325,435 Accrued employee compensation and benefits ​ 114,770 ​ 112,373 Other current liabilities ​ 301,585 ​ 314,367 Total Current Liabilities ​ 748,873 ​ 754,610 Long-term debt, less current portion (Note 10) ​ 1,102,677 ​ 1,102,771 Other liabilities ​ 220,339 ​ 211,064 Total Liabilities ​ 2,071,889 ​ 2,068,445 Shareholders' Equity ​ ​ ​ Common Shares ​ 9,858 ​ 9,858 Additional paid-in capital ​ 560,439 ​ 523,357 Retained earnings ​ 3,766,297 ​ 3,688,038 Accumulated other comprehensive loss ​ ( 239,454 ) ​ ( 229,847 ) Treasury Shares ​ ( 2,789,312 ) ​ ( 2,682,554 ) Total Equity ​ 1,307,828 ​ 1,308,852 TOTAL LIABILITIES AND TOTAL EQUITY ​ $ 3,379,717 ​ $ 3,377,297 ​ See notes to these consolidated financial statements. ​ ​ ​ 5 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED) (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ Common ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ Common ​ Paid-In ​ Retained ​ Comprehensive ​ Treasury ​ ​ ​ ​ Outstanding Shares Capital Earnings Income (Loss) Shares Total Balance at December 31, 2023 56,977 ​ $ 9,858 ​ $ 523,357 ​ $ 3,688,038 ​ $ ( 229,847 ) ​ $ ( 2,682,554 ) ​ $ 1,308,852 Net income ​ ​ ​ ​ ​ ​ ​ ​ ​ 123,415 ​ ​ ​ ​ ​ ​ ​ 123,415 Unrecognized amounts from defined benefit pension plans, net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 73 ​ ​ ​ ​ 73 Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,715 ​ ​ ​ ​ 3,715 Currency translation adjustment, net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 13,395 ) ​ ​ ​ ​ ( 13,395 ) Cash dividends declared - $ 0.71 per share ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 41,273 ) ​ ​ ​ ​ ​ ​ ​ ( 41,273 ) Stock-based compensation activity 397 ​ ​ ​ ​ ​ 34,981 ​ ​ ​ ​ ​ ​ ​ ​ 3,647 ​ 38,628 Purchase of shares for treasury ( 466 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 110,405 ) ​ ( 110,405 ) Other ​ ​ ​ ​ ​ ​ 2,101 ​ ​ ( 3,883 ) ​ ​ ​ ​ ​ ​ ​ ( 1,782 ) Balance at March 31, 2024 56,908 ​ $ 9,858 ​ $ 560,439 ​ $ 3,766,297 ​ $ ( 239,454 ) ​ $ ( 2,789,312 ) ​ $ 1,307,828 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ Common ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ Shares ​ Common ​ Paid-In ​ Retained ​ Comprehensive ​ Treasury ​ ​ ​ ​ Outstanding Shares Capital Earnings Income (Loss) Shares Total Balance at December 31, 2022 57,624 ​ $ 9,858 ​ $ 481,857 ​ $ 3,306,500 ​ $ ( 275,398 ) ​ $ ( 2,488,776 ) ​ $ 1,034,041 Net income ​ ​ ​ ​ ​ ​ ​ ​ ​ 121,931 ​ ​ ​ ​ ​ ​ ​ 121,931 Unrecognized amounts from defined benefit pension plans, net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 560 ​ ​ ​ ​ 560 Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 9,131 ​ ​ ​ ​ 9,131 Currency translation adjustment, net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 14,818 ​ ​ ​ ​ 14,818 Cash dividends declared – $ 0.64 per share ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 36,971 ) ​ ​ ​ ​ ​ ​ ​ ( 36,971 ) Stock-based compensation activity 143 ​ ​ ​ ​ ​ 12,475 ​ ​ ​ ​ ​ ​ ​ ​ 1,635 ​ 14,110 Purchase of shares for treasury ( 194 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 32,158 ) ​ ( 32,158 ) Other ​ ​ ​ ​ ​ ​ 3,691 ​ ​ ( 3,917 ) ​ ​ ​ ​ ​ ​ ​ ( 226 ) Balance at March 31, 2023 57,573 ​ $ 9,858 ​ $ 498,023 ​ $ 3,387,543 ​ $ ( 250,889 ) ​ $ ( 2,519,299 ) ​ $ 1,125,236 ​ ​ 6 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES ​ ​ ​ Net income ​ $ 123,415 ​ $ 121,931 Adjustments to reconcile Net income to Net cash provided by operating activities: ​ ​ ​ Rationalization and asset impairment net charges ​ 64 ​ — Depreciation and amortization ​ 21,586 ​ 21,295 Deferred income taxes ​ ( 7,348 ) ​ ( 7,019 ) Stock-based compensation ​ 14,190 ​ 11,634 Other, net ​ 5,104 ​ ( 2,117 ) Changes in operating assets and liabilities, net of effects from acquisitions: ​ ​ ​ Increase in accounts receivable ​ ( 9,603 ) ​ ( 27,664 ) (Increase) decrease in inventories ​ ( 9,416 ) ​ 5,881 Decrease (increase) in other current assets ​ 3,331 ​ ( 16,587 ) Increase in trade accounts payable ​ 3,957 ​ 6,841 (Decrease) increase in other current liabilities ​ ( 8,121 ) ​ 10,505 Net change in other assets and liabilities ​ ( 3,865 ) ​ ( 769 ) NET CASH PROVIDED BY OPERATING ACTIVITIES ​ 133,294 ​ 123,931 CASH FLOWS FROM INVESTING ACTIVITIES ​ ​ ​ Capital expenditures ​ ( 26,256 ) ​ ( 18,787 ) Proceeds from sale of property, plant and equipment ​ 316 ​ 3,314 Other investing activities ​ — ​ ( 576 ) NET CASH USED BY INVESTING ACTIVITIES ​ ( 25,940 ) ​ ( 16,049 ) CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ ​ Proceeds from (payments on) short-term borrowings ​ ​ 2,016 ​ ​ ( 43,940 ) Payments on long-term borrowings ​ ( 169 ) ​ ( 111 ) Proceeds from exercise of stock options ​ 24,438 ​ 2,476 Purchase of shares for treasury ​ ( 110,405 ) ​ ( 32,158 ) Cash dividends paid to shareholders ​ ( 41,280 ) ​ ( 37,583 ) NET CASH USED BY FINANCING ACTIVITIES ​ ( 125,400 ) ​ ( 111,316 ) Effect of exchange rate changes on Cash and cash equivalents ​ ( 763 ) ​ 5,087 (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ​ ( 18,809 ) ​ 1,653 ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents at beginning of period ​ 393,787 ​ 197,150 CASH AND CASH EQUIVALENTS AT END OF PERIOD ​ $ 374,978 ​ $ 198,803 ​ See notes to these consolidated financial statements. ​ ​ 7 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS Dollars in thousands, except per share amounts NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of Lincoln Electric Holdings, Inc. and its wholly-owned and majority-owned subsidiaries for which it has a controlling interest (the “Company”) after elimination of all inter-company accounts, transactions and profits. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. However, in the opinion of management, these unaudited consolidated financial statements contain all the adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position, results of operations and cash flows for the interim periods. Operating results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the year ending December 31, 2024. The accompanying Condensed Consolidated Balance Sheet at December 31, 2023 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Certain reclassifications have been made to the prior period amounts to conform to the current period presentation, none of which are material. New Accounting Pronouncements: This section provides a description of new accounting pronouncements (“Accounting Standards Updates” or “ASUs”) issued by the Financial Accounting Standards Board (“FASB”) that are applicable to the Company. ​ 8 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts The following ASUs were adopted as of January 1, 2024: Standard Description ASU No. 2023-01, Leases-Common Control Arrangements (Topic 842), issued March 2023 Requires a lessee in a common-control arrangement to amortize leasehold improvements that it owns over the improvements’ useful life, regardless of the lease term. The requirements of the ASU are effective January 1, 2024 and the adoption did not have an impact on the Company’s consolidated financial statements. ASU No. 2023-07, Segment Reporting (Topic 280), issued November 2023 Requires enhanced disclosures about significant segment expenses, including significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”), the title and position of the CODM, an amount for other segment items by reportable segment, and disclosures about segment profit or loss and assets on an annual and interim basis. The amendments are effective for annual periods beginning January 1, 2024, and interim periods beginning January 1, 2025. Early adoption is permitted. The Company will adopt the required disclosures for the annual period. ASU No. 2022-04, Liabilities-Supplier Finance Programs (Subtopic 405-50), issued September 2022. Requires disclosure about a company’s supplier finance programs, including a period-over-period balance roll forward. This requirement of the ASU is effective for annual periods beginning January 1, 2024 and should be applied prospectively. The Company will adopt the required disclosures for the annual period. ​ The Company is currently evaluating the impact on its financial statements of the following ASUs: ​ Standard Description ASU No. 2023-06, Disclosure Improvement s , issued October 2023 Requires amending certain disclosure and presentation requirements for a variety of topics within the ASC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or S-K becomes effective, or June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited. ASU No. 2023-09, Income Taxes (Topic 740), issued December 2023. Requires disclosure of specific categories in rate reconciliation and additional information for reconciling items that meet a quantitative threshold, additional information about income taxes paid, and disclosure of disaggregated income tax information. The amendments are effective January 1, 2025 and early adoption is permitted. ASU No. 2024-01, Compensation – Stock Compensation (Topic 718), issued March 2024 ​ ​ Requires determining whether a profits interest award should be accounted for as a share-based payment arrangement or other compensation in accordance with Topic 718. The amendments are effective for annual periods beginning January 1, 2025, and interim periods within those annual periods. Early adoption is permitted. ​ ​ ​ ​ NOTE 2 — REVENUE RECOGNITION The following table presents the Company’s Net sales disaggregated by product line: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2024 2023 Consumables ​ $ 527,738 ​ $ 569,684 Equipment ​ 453,459 ​ 469,659 Net sales ​ $ 981,197 ​ $ 1,039,343 ​ Consumable sales consist of welding, brazing and soldering filler metals. Equipment sales consist of arc welding, welding accessories, arc welding equipment, wire feeding systems, fume control equipment, plasma and oxy-fuel cutting systems, specialty gas regulators, and education solutions; as well as a comprehensive portfolio of automated solutions 9 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts for joining, cutting, material handling, module assembly, and end of line testing. Consumable and Equipment products are sold within each of the Company’s operating segments. Within the Equipment product line, there are certain customer contracts related to automation products that may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines the standalone selling price based on the prices charged to customers or using expected cost plus margin. Less than 10 % of the Company’s Net sales are recognized over time. At March 31, 2024, the Company recorded $ 37,609 related to advance customer payments and $ 55,401 related to billings in excess of revenue recognized. These contract liabilities are included in Other current liabilities in the Condensed Consolidated Balance Sheets. At December 31, 2023, the balances related to advance customer payments and billings in excess of revenue recognized were $ 40,063 and $ 52,422 , respectively. Substantially all of the Company’s contract liabilities are recognized within twelve months based on contract duration. The Company records an asset for contracts where it has recognized revenue, but has not yet invoiced the customer for goods or services. At March 31, 2024 and December 31, 2023, the Company recorded $ 45,147 and $ 41,816 , respectively, related to these contract assets which are included in Other current assets in the Condensed Consolidated Balance Sheets. Contract asset amounts are expected to be billed within the next twelve months. NOTE 3 — EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2024 2023 Numerator: ​ ​ Net income ​ $ 123,415 ​ $ 121,931 Denominator (shares in 000's): ​ ​ ​ ​ Basic weighted average shares outstanding ​ 56,865 ​ 57,596 Effect of dilutive securities - Stock options and awards ​ 776 ​ 821 Diluted weighted average shares outstanding ​ 57,641 ​ 58,417 Basic earnings per share ​ $ 2.17 ​ $ 2.12 Diluted earnings per share ​ $ 2.14 ​ $ 2.09 ​ For the three months ended March 31, 2024 and 2023, common shares subject to equity-based awards of 25,147 and 29,112 , respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive. NOTE 4 — ACQUISITIONS On April 1, 2024, the Company acquired 100 % ownership of Superior Controls, LLC (“RedViking”), a privately held automation system integrator based in Plymouth, Michigan. The net purchase price was $ 115,000 , net of cash acquired, and it was accounted for as a business combination. In 2023, RedViking generated sales of approximately $ 70,000 (unaudited). RedViking specializes in the development and integration of state-of-the-art autonomous guided vehicles and mobile robots, custom assembly and dynamic test systems, and proprietary manufacturing execution system software. The acquisition broadened the Company’s portfolio of automation solutions and extends the Company’s ability to serve customers in the growing aerospace and defense industries. ​ On May 3, 2023, the Company acquired 100 % ownership of Powermig Automação e Soldagem Ltda. (“Powermig”), a privately held automation engineering firm headquartered in Caxias do Sul, Rio Grande do Sul, in Brazil. The net 10 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts purchase price was $ 29,572 , net of cash acquired, and it was accounted for as a business combination. Beginning May 3, 2023, the Company’s Consolidated Statement of Income includes the results of Powermig, which were not material for the three months ended March 31, 2024. Powermig specializes in designing and engineering industrial welding automation solutions for the heavy industry and transportation sectors. The acquisition broadened the Company’s automation portfolio and capabilities. ​ In 2024, the Company recognized $ 1,762 in acquisition costs, which were expensed as incurred. ​ The acquired companies discussed above are not material individually, or in the aggregate, to the actual or pro forma Consolidated Statements of Income or Consolidated Statements of Cash Flows; as such, pro forma information related to these acquisitions have not been presented. ​ NOTE 5 — SEGMENT INFORMATION The Company’s business units are aligned into three operating segments. The operating segments consist of Americas Welding, International Welding and The Harris Products Group. The Americas Welding segment includes welding operations in North and South America. The International Welding segment includes welding operations in Europe, Africa, Asia and Australia. The Harris Products Group includes the Company’s global oxy-fuel cutting, soldering and brazing businesses as well as its retail business in the United States. Segment performance is measured and resources are allocated based on a number of factors, the primary measure being the adjusted earnings before interest and income taxes (“Adjusted EBIT”) profit measure. EBIT is defined as Operating income plus Other income (expense). EBIT is adjusted for special items as determined by management such as the impact of rationalization activities, certain asset impairment charges and gains or losses on disposals of assets. The following table presents Adjusted EBIT by segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Harris ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ International ​ Products ​ Corporate / ​ ​ ​ ​ Welding Welding Group Eliminations Consolidated Three Months Ended March 31, 2024 ​ ​ ​ ​ ​ Net sales ​ $ 624,099 ​ $ 235,761 ​ $ 121,337 ​ $ — ​ $ 981,197 Inter-segment sales ​ 29,978 ​ ​ 8,408 ​ ​ 3,093 ​ ​ ( 41,479 ) ​ ​ — Total ​ $ 654,077 ​ $ 244,169 ​ $ 124,430 ​ $ ( 41,479 ) ​ $ 981,197 Adjusted EBIT ​ $ 136,100 ​ $ 27,776 ​ $ 19,878 ​ $ ( 10,078 ) ​ $ 173,676 Special items charge (1) ​ — ​ ​ 3,069 ​ ​ 1,536 ​ ​ 1,762 ​ ​ 6,367 EBIT ​ $ 136,100 ​ $ 24,707 ​ $ 18,342 ​ $ ( 11,840 ) ​ $ 167,309 Interest income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 3,221 Interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 12,000 ) Income before income taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 158,530 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2023 ​ ​ ​ ​ ​ Net sales ​ $ 658,645 ​ $ 252,416 ​ $ 128,282 ​ $ — ​ $ 1,039,343 Inter-segment sales ​ 32,318 ​ 6,753 ​ 2,897 ​ ( 41,968 ) ​ ​ — Total ​ $ 690,963 ​ $ 259,169 ​ $ 131,179 ​ $ ( 41,968 ) ​ $ 1,039,343 Adjusted EBIT ​ $ 132,453 ​ $ 29,598 ​ $ 18,983 ​ $ ( 9,402 ) ​ $ 171,632 Special items charge (2) ​ 2,785 ​ 302 ​ — ​ — ​ ​ 3,087 EBIT ​ $ 129,668 ​ $ 29,296 ​ $ 18,983 ​ $ ( 9,402 ) ​ $ 168,545 Interest income ​ ​ ​ ​ ​ ​ ​ 854 Interest expense ​ ​ ​ ​ ​ ​ ​ ( 14,055 ) Income before income taxes ​ ​ ​ ​ ​ ​ ​ $ 155,344 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 11 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts (1) In the three months ended March 31, 2024, special items include Rationalization and asset impairment charges of $ 3,069 and $ 1,536 in International Welding and The Harris Products Group, respectively, as discussed in Note 6 and Acquisition transaction costs of $ 1,762 in Corporate/Eliminations. (2) In the three months ended March 31, 2023, special items include amortization of step up in value of acquired inventories of $ 2,785 and $ 1,071 in Americas and International Welding, respectively, Rationalization and asset impairment net charges of $ 877 in International Welding and a gain on disposal of $ 1,646 in International Welding. ​ NOTE 6 — RATIONALIZATION AND ASSET IMPAIRMENTS The Company has rationalization plans within International Welding and The Harris Products Group segments. The plans include headcount restructuring and the consolidation of manufacturing operations to better align the Company’s cost structure with economic conditions and operating needs. At March 31, 2024, liabilities of $ 9,801 and $ 386 for International Welding and The Harris Products Group, respectively, were recognized in Other current liabilities in the Company’s Condensed Consolidated Balance Sheet. The Company does not anticipate significant additional charges related to the completion of these plans. The Company recorded Rationalization and asset impairment net charges of $ 3,069 and $ 1,536 in International Welding and The Harris Products Group in the three months ended March 31, 2024, respectively. The Company recorded Rationalization and asset impairment net charges of $ 877 in International Welding in the three months ended March 31, 2023. The charges are primarily related to restructuring activities. The Company believes the rationalization actions will positively impact future results of operations and will not have a material effect on liquidity and sources and uses of capital. The Company continues to evaluate its cost structure and additional rationalization actions may result in charges in future periods. The following table summarizes the activity related to rationalization liabilities for the three months ended March 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ International The Harris Products ​ ​ ​ Welding Group Consolidated Balance at December 31, 2023 ​ $ 15,086 ​ $ — ​ $ 15,086 Payments and other adjustments ​ ( 8,290 ) ​ ( 1,150 ) ​ ( 9,440 ) Charged to expense ​ 3,005 ​ 1,536 ​ 4,541 Balance at March 31, 2024 ​ $ 9,801 ​ $ 386 ​ $ 10,187 ​ ​ ​ ​ 12 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts NOTE 7 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI") The following tables set forth the total changes in AOCI by component, net of taxes: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2024 ​ ​ Unrealized gain ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (loss) on derivatives ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ designated and ​ Defined benefit ​ Currency ​ ​ ​ ​ ​ qualifying as cash ​ pension plan ​ translation ​ ​ ​ ​ ​ flow hedges ​ activity ​ adjustment ​ Total Balance at December 31, 2023 ​ $ 16,536 ​ $ ( 1,996 ) ​ $ ( 244,387 ) ​ $ ( 229,847 ) Other comprehensive income (loss) before reclassification ​ 4,528 ​ ​ — ​ ​ ( 13,395 ) ​ ​ ( 8,867 ) Amounts reclassified from AOCI ​ ( 813 ) ​ ​ 73 ​ ​ — ​ ​ ( 740 ) Net current-period other comprehensive income (loss) ​ 3,715 ​ 73 ​ ( 13,395 ) ​ ( 9,607 ) Balance at March 31, 2024 ​ $ 20,251 ​ $ ( 1,923 ) ​ $ ( 257,782 ) ​ $ ( 239,454 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, 2023 ​ ​ Unrealized gain ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (loss) on derivatives ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ designated and ​ Defined benefit ​ Currency ​ ​ ​ ​ ​ qualifying as cash ​ pension plan ​ translation ​ ​ ​ ​ ​ flow hedges ​ activity ​ adjustment ​ Total Balance at December 31, 2022 ​ $ 13,909 ​ $ ( 1,781 ) ​ $ ( 287,526 ) ​ $ ( 275,398 ) Other comprehensive income before reclassification ​ 10,134 ​ — ​ 14,818 ​ 24,952 Amounts reclassified from AOCI ​ ( 1,003 ) ​ 560 ​ — ​ ( 443 ) Net current-period other comprehensive income ​ 9,131 ​ 560 ​ 14,818 ​ 24,509 Balance at March 31, 2023 ​ $ 23,040 ​ $ ( 1,221 ) ​ $ ( 272,708 ) ​ $ ( 250,889 ) ​ ​ ​ ​ 13 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts ​ ​ NOTE 8 — INVENTORIES Inventories in the Condensed Consolidated Balance Sheets are comprised of the following components: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 December 31, 2023 Raw materials ​ $ 141,217 ​ $ 160,809 Work-in-process ​ 137,803 ​ 125,756 Finished goods ​ 288,259 ​ 276,299 Total ​ $ 567,279 ​ $ 562,864 ​ At March 31, 2024 and December 31, 2023, approximately 36 % and 37 %, respectively, of total inventories were valued using the last-in, first-out ("LIFO") method. The excess of current cost over LIFO cost was $ 129,415 and $ 129,946 at March 31, 2024 and December 31, 2023, respectively. NOTE 9 — LEASES The table below summarizes the right-of-use assets and lease liabilities in the Company’s Condensed Consolidated Balance sheets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Leases Balance Sheet Classification March 31, 2024 December 31, 2023 Right-of-use assets Other assets ​ $ 52,615 ​ $ 53,284 ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities Other current liabilities ​ $ 13,191 ​ $ 13,104 Noncurrent liabilities Other liabilities ​ 40,747 ​ 41,576 Total lease liabilities ​ $ 53,938 ​ $ 54,680 ​ Total lease expense, which is included in Cost of goods sold and Selling, general & administrative expenses in the Company’s Consolidated Statements of Income, was $ 6,161 and $ 5,851 in the three months ended March 31, 2024 and 2023, respectively. Cash paid for amounts included in the measurement of lease liabilities for the three months ended March 31, 2024 and 2023, respectively, were $ 4,049 and $ 3,145 and are included in Net cash provided by operating activities in the Company’s Consolidated Statements of Cash Flows. Right-of-use assets obtained in exchange for operating lease liabilities were $ 3,546 and $ 3,896 during the three months ended March 31, 2024 and 2023, respectively. The total future minimum lease payments for noncancelable operating leases were as follows: ​ ​ ​ ​ ​ ​ March 31, 2024 2024 ​ $ 11,281 2025 ​ 12,540 2026 ​ 9,807 2027 ​ 7,148 2028 ​ 5,191 After 2028 ​ 14,394 Total lease payments ​ $ 60,361 Less: Imputed interest ​ 6,423 Operating lease liabilities ​ $ 53,938 ​ As of March 31, 2024, the weighted average remaining lease term is 6.8 years and the weighted average discount rate used to determine the operating lease liability is 3.6 %. 14 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts ​ ​ NOTE 10 — DEBT Revolving Credit Agreements On April 23, 2021, the Company amended and restated the agreement governing its line of credit by entering into the Second Amended and Restated Credit Agreement (“Credit Agreement”). The Credit Agreement has a line of credit totaling $ 500,000 , has a term of 5 years with a maturity date of April 23, 2026 and may be increased, subject to certain conditions including the consent of its lenders, by an additional amount up to $ 150,000 . On March 8, 2023, the Credit Agreement was amended to replace the LIBOR rate to a term secured overnight finance rate (“SOFR”); as such, the interest rate on borrowings is based on SOFR plus a spread of 0.85 % to 1.85 % based on (1) the Company’s net leverage ratio and (2) a credit spread adjustment. The Credit Agreement contains customary representations and warranties, as well as customary affirmative, negative and financial covenants for credit facilities of this type (subject to negotiated baskets and exceptions), including limitations on the Company and its subsidiaries with respect to liens, investments, distributions, mergers and acquisitions, dispositions of assets and transactions with affiliates. As of March 31, 2024, the Company was in compliance with all of its covenants and had no outstanding borrowings under the Credit Agreement. The Company has other lines of credit and debt agreements totaling $ 90,945 . As of March 31, 2024, the Company was in compliance with all of its covenants and had outstanding debt under short-term lines of credit of $ 4,720 . Senior Unsecured Notes On April 1, 2015 and October 20, 2016, the Company entered into separate Note Purchase Agreements pursuant to which it issued senior unsecured notes (the "Notes") through a private placement. The 2015 Notes and 2016 Notes each have an aggregate principal amount of $ 350,000 , comprised of four different series ranging from $ 50,000 to $ 100,000 , with maturity dates ranging from August 20, 2025 through April 1, 2045, and interest rates ranging from 2.75 % to 4.02 %. Interest on the Notes is paid semi-annually. The Company’s total weighted average effective interest rate and remaining weighted average tenure of the Notes is 3.3 % and 10.1 years, respectively. The proceeds of the Notes were used for general corporate purposes. The Notes contain certain affirmative and negative covenants. As of March 31, 2024, the Company was in compliance with all of its debt covenants relating to the Notes. Term Loan On November 29, 2022, the Company entered into a term loan in the aggregate principal amount of $ 400,000 (the “Term Loan”), which was borrowed in full. The Term Loan matures on November 29, 2025. The Term Loan bears an interest at a rate based on SOFR, plus a margin ranging from 0.75 % to 1.75 % based on the Company’s consolidated net leverage ratio. As of March 31, 2024, the Company was in compliance with all of its covenants. In March 2023, the Company entered into interest rate swap agreements to effectively convert the interest rate on $ 150,000 of the Term Loan from a variable rate to a fixed rate. Fair Value of Debt At March 31, 2024 and December 31, 2023, the fair value of long-term debt, including the current portion, was approximately $ 981,481 and $ 1,013,795 , respectively, which was determined using available market information and methodologies requiring judgment. The carrying value of this debt at such dates was $ 1,102,677 and $ 1,102,771 , respectively. Since judgment is required in interpreting market information, the fair value of the debt is not necessarily the amount which could be realized in a current market exchange. 15 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts NOTE 11 — INCOME TAXES The Company recognized $ 35,115 of tax expense on pretax income of $ 158,530 , resulting in an effective income tax rate of 22.2 % for the three months ended March 31, 2024. The effective income tax rate was 21.5 % for the three months ended March 31, 2023. The effective tax rate was higher for the three months ended March 31, 2024, as compared with the same period in 2023, primarily due to mix of earnings and discrete tax items. As of March 31, 2024, the Company had $ 12,855 of unrecognized tax benefits. If recognized, approximately $ 10,304 would be reflected as a component of income tax expense. The Company files income tax returns in the U.S. and various state, local and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local or non-U.S. income tax examinations by tax authorities for years before 2019. The Company is currently subject to U.S., various state and non-U.S. income tax audits. Unrecognized tax benefits are reviewed on an ongoing basis and are adjusted for changing facts and circumstances, including progress of tax audits and closing of statutes of limitations. Based on information currently available, management believes that additional audit activity could be completed and/or statutes of limitations may close relating to existing unrecognized tax benefits. It is reasonably possible there could be a reduction of $ 1,864 in previously unrecognized tax benefits by the end of the first quarter 2025. NOTE 12 — DERIVATIVES The Company uses derivative instruments to manage exposures to currency exchange rates, interest rates and commodity prices arising in the normal course of business. Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable. Hedge ineffectiveness was immaterial in the three months ended March 31, 2024 and 2023. The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. None of the concentrations of risk with any individual counterparty was considered significant at March 31, 2024. The Company does not expect any counterparties to fail to meet their obligations. Cash Flow Hedges Certain foreign currency forward contracts are qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of these short-term contracts was $ 98,808 at March 31, 2024 and $ 84,148 at December 31, 2023. The Company has interest rate forward starting swap agreements that are qualified and designated as cash flow hedges. In the first quarter 2024, the Company entered into short-term contracts with the dollar equivalent gross notional amount of $ 100,000 at March 31, 2024 and have a termination date of June 2024. The dollar equivalent gross notional amount of the long-term contracts was $ 100,000 at March 31, 2024 and December 31, 2023 and have a termination date of August 2025. The Company has commodity contracts that are qualified and designated as cash flow hedges. The Notional amount of these contracts were 150,000 pounds and 200,000 pounds at March 31, 2024 and December 31, 2023, respectively. 16 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts In March 2023, the Company entered into interest rate swap agreements, which were qualified and designated as cash flow hedges, with an aggregate notional amount of $ 150,000 . The interest rate swaps will effectively convert the interest rate on $ 150,000 of the Term Loan discussed in Note 10 from a variable rate based on one-month SOFR to a fixed rate. Net Investment Hedges The Company has foreign currency forward contracts that qualify and are designated as net investment hedges. The dollar equivalent gross notional amount of these contracts was $ 117,578 at March 31, 2024 and $ 119,607 at December 31, 2023. Derivatives Not Designated as Hedging Instruments The Company has certain foreign exchange forward contracts that are not designated as hedges. These derivatives are held as economic hedges of certain balance sheet exposures. The dollar equivalent gross notional amount of these contracts was $ 416,200 and $ 492,600 at March 31, 2024 and December 31, 2023, respectively. Fair values of derivative instruments in the Company’s Condensed Consolidated Balance Sheets follow: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2024 ​ December 31, 2023 ​ Other ​ Other ​ ​ ​ ​ ​ ​ ​ Other ​ Other ​ ​ ​ ​ ​ ​ ​ Current ​ Current ​ Other ​ Other ​ Current ​ Current ​ Other ​ Other Derivatives by hedge designation Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities Designated as hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ Foreign exchange contracts $ 2,391 ​ $ 238 ​ $ — ​ $ — ​ $ 1,548 ​ $ 687 ​ $ — ​ $ — Interest rate swap agreements — ​ — ​ ​ 2,649 ​ ​ — ​ — ​ — ​ 1,460 ​ — Forward starting swap agreements ​ — ​ ​ — ​ ​ 23,005 ​ ​ 40 ​ ​ — ​ ​ — ​ ​ 20,377 ​ ​ — Net investment contracts ​ 1,261 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,351 ​ ​ — ​ ​ — Commodity contracts ​ 52 ​ ​ — ​ ​ — ​ ​ — ​ ​ 45 ​ ​ — ​ ​ — ​ ​ — Not designated as hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign exchange contracts 1,617 ​ ​ 998 ​ ​ — ​ ​ — ​ 4,063 ​ 623 ​ — ​ — Total derivatives $ 5,321 ​ $ 1,236 ​ $ 25,654 ​ $ 40 ​ $ 5,656 ​ $ 4,661 ​ $ 21,837 ​ $ — ​ The effects of undesignated derivative instruments on the Company’s Consolidated Statements of Income consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, Derivatives by hedge designation Classification of (loss) gain 2024 2023 Not designated as hedges: ​ ​ ​ ​ Foreign exchange contracts ​ Selling, general & administrative expenses ​ $ ( 1,615 ) ​ $ 6,690 ​ The effects of designated hedges on AOCI and the Company’s Consolidated Statements of Income consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total gain recognized in AOCI, net of tax March 31, 2024 December 31, 2023 Foreign exchange contracts ​ $ 1,628 ​ $ 721 ​ Interest rate swap agreements ​ ​ 2,198 ​ ​ 1,085 ​ Forward starting swap agreements ​ ​ 16,386 ​ ​ 14,696 ​ Net investment contracts ​ ​ 9,089 ​ 7,136 ​ Commodity contracts ​ 39 ​ 34 ​ ​ 17 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts The Company expects a gain of $ 1,667 related to existing contracts to be reclassified from AOCI, net of tax, to earnings over the next 12 months as the hedged transactions are realized. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ Gain recognized in the ​ ​ ​ ​ ​ ​ Derivative type Consolidated Statements of Income: 2024 2023 Foreign exchange contracts Sales ​ $ 839 ​ $ 1,206 ​ Cost of goods sold ​ 232 ​ 3 Commodity contracts ​ Cost of goods sold ​ ​ 2 ​ ​ 179 ​ ​ NOTE 13 - FAIR VALUE The following table provides a summary of assets and liabilities as of March 31, 2024, measured at fair value on a recurring basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted Prices in ​ ​ ​ ​ ​ ​ ​ ​ ​ Active Markets for ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Identical Assets or ​ Significant Other ​ Significant ​ ​ Balance as of ​ Liabilities ​ Observable Inputs ​ Unobservable Description March 31, 2024 (Level 1) (Level 2) Inputs (Level 3) Assets: ​ ​ ​ ​ Foreign exchange contracts ​ $ 4,008 ​ $ — ​ $ 4,008 ​ $ — Net investment contracts ​ ​ 1,261 ​ ​ — ​ ​ 1,261 ​ ​ — Commodity contracts ​ ​ 52 ​ ​ — ​ ​ 52 ​ ​ — Interest rate swap agreements ​ ​ 2,649 ​ ​ — ​ ​ 2,649 ​ ​ — Forward starting swap agreements ​ 23,005 ​ — ​ 23,005 ​ — Pension surplus ​ ​ 38,323 ​ ​ 38,323 ​ ​ — ​ ​ — Total assets ​ $ 69,298 ​ $ 38,323 ​ $ 30,975 ​ $ — Liabilities: ​ ​ ​ ​ Foreign exchange contracts ​ $ 1,236 ​ $ — ​ $ 1,236 ​ $ — Forward starting swap agreements ​ ​ 40 ​ ​ — ​ ​ 40 ​ ​ — Deferred compensation ​ 54,126 ​ — ​ 54,126 ​ — Total liabilities ​ $ 55,402 ​ $ — ​ $ 55,402 ​ $ — ​ 18 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts The following table provides a summary of assets and liabilities as of December 31, 2023, measured at fair value on a recurring basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted Prices in ​ ​ ​ ​ ​ ​ ​ ​ ​ Active Markets for ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Identical Assets or ​ Significant Other ​ Significant ​ ​ Balance as of ​ Liabilities ​ Observable Inputs ​ Unobservable Description December 31, 2023 (Level 1) (Level 2) Inputs (Level 3) Assets: ​ ​ ​ ​ Foreign exchange contracts ​ $ 5,611 ​ $ — ​ $ 5,611 ​ $ — Interest rate swap agreements ​ ​ 1,460 ​ ​ — ​ ​ 1,460 ​ ​ — Commodity contracts ​ ​ 45 ​ ​ — ​ ​ 45 ​ ​ — Forward starting swap agreements ​ ​ 20,377 ​ ​ — ​ ​ 20,377 ​ ​ — Pension Surplus ​ 41,849 ​ 41,849 ​ — ​ — Total assets ​ $ 69,342 ​ $ 41,849 ​ $ 27,493 ​ $ — Liabilities: ​ ​ ​ ​ Foreign exchange contracts ​ $ 1,310 ​ $ — ​ $ 1,310 ​ $ — Net investment contracts ​ 3,351 ​ — ​ 3,351 ​ — Deferred compensation ​ 53,628 ​ — ​ 53,628 ​ — Total liabilities ​ $ 58,289 ​ $ — ​ $ 58,289 ​ $ — ​ The fair value of the Company’s pension surplus assets are based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy. The pension surplus assets are invested in money market and short-term duration bond funds at March 31, 2024. The Company’s derivative contracts are valued at fair value using the market approach. The Company measures the fair value of foreign exchange contracts, forward starting swap agreements, net investment contracts and interest rate swap agreements using Level 2 inputs based on observable spot and forward rates in active markets. The deferred compensation liability is the Company’s obligation under its executive deferred compensation plan. The Company measures the fair value of the liability using the market values of the participants’ underlying investment fund elections. The fair value of Cash and cash equivalents, Marketable securities, Accounts receivable, Short-term debt excluding the current portion of long-term debt and Trade accounts payable approximated book value due to the short-term nature of these instruments at both March 31, 2024 and December 31, 2023. The Company has various financial instruments, including cash and cash equivalents, short and long-term debt and forward contracts. While these financial instruments are subject to concentrations of credit risk, the Company has minimized this risk by entering into arrangements with a number of major banks and financial institutions and investing in several high-quality instruments. The Company does not expect any counterparties to fail to meet their obligations. ​ ​ 19 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts NOTE 14 – SUPPLIER FINANCING PROGRAM The Company’s suppliers, at the supplier’s sole discretion, are able to factor receivables due from the Company to a financial institution on terms directly negotiated with the financial institution without affecting the Company’s balance sheet classification of the corresponding payable. The Company pays the financial institution the stated amount of the confirmed invoices from its designated suppliers on the original maturity dates of the invoices. Invoices with suppliers have terms between 120 and 180 days . The Company does not provide secured legal assets or other forms of guarantees under the arrangement and has no involvement in establishing the terms or conditions of the arrangement between its suppliers and the financial institution. The amounts due to the financial institution for suppliers that participate in the supplier financing program are included in Trade accounts payable on the Company’s Condensed Consolidated Balance Sheets, and the associated payments are included in operating activities in the Consolidated Statements of Cash Flows. At March 31, 2024 and December 31, 2023, Trade accounts payable included $ 35,936 and $ 29,111 , respectively, payable to suppliers that have elected to participate in the supplier financing program. 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