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 June 30, ​ Six Months Ended June 30, ​ 2024 2023 2024 2023 Net sales (Note 2) $ 1,021,683 $ 1,060,565 $ 2,002,880 $ 2,099,908 Cost of goods sold ​ 637,870 ​ 687,137 ​ 1,250,668 ​ 1,371,123 Gross profit ​ 383,813 ​ 373,428 ​ 752,212 ​ 728,785 Selling, general & administrative expenses ​ 208,485 ​ 192,748 ​ 407,232 ​ 382,864 Rationalization and asset impairment charges (Note 6) ​ 26,490 ​ 2,667 ​ 31,095 ​ 3,544 Operating income ​ 148,838 ​ 178,013 ​ 313,885 ​ 342,377 Interest expense, net ​ 10,661 ​ 11,699 ​ 19,440 ​ 24,899 Other income (expense) ​ ( 1,553 ) ​ 6,746 ​ 709 ​ 10,926 Income before income taxes ​ 136,624 ​ 173,060 ​ 295,154 ​ 328,404 Income taxes (Note 11) ​ 34,916 ​ 35,729 ​ 70,031 ​ 69,142 Net income ​ $ 101,708 ​ $ 137,331 ​ $ 225,123 ​ $ 259,262 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic earnings per share (Note 3) ​ $ 1.79 ​ $ 2.39 ​ $ 3.96 ​ $ 4.51 Diluted earnings per share (Note 3) ​ $ 1.77 ​ $ 2.36 ​ $ 3.91 ​ $ 4.44 Cash dividends declared per share ​ $ 0.71 ​ $ 0.64 ​ $ 1.42 ​ $ 1.28 ​ 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 June 30, ​ Six Months Ended June 30, ​ 2024 2023 2024 2023 Net income $ 101,708 $ 137,331 $ 225,123 $ 259,262 Other comprehensive (loss) income, net of tax: ​ ​ ​ ​ Unrealized (loss) gain on derivatives designated and qualifying as cash flow hedges ​ ( 2,761 ) ​ ( 4,888 ) ​ ​ 954 ​ ​ 4,243 Defined benefit pension plan activity ​ 6 ​ ( 1,366 ) ​ ​ 79 ​ ​ ( 806 ) Currency translation adjustment ​ ( 7,696 ) ​ 20,957 ​ ( 21,091 ) ​ 35,775 Other comprehensive (loss) income: ​ ( 10,451 ) ​ 14,703 ​ ( 20,058 ) ​ 39,212 Comprehensive income ​ $ 91,257 ​ $ 152,034 ​ $ 205,065 ​ $ 298,474 ​ See notes to these consolidated financial statements. ​ ​ 4 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2024 ​ December 31, 2023 ​ ​ (UNAUDITED) ​ (NOTE 1) ASSETS ​ ​ Current Assets ​ ​ Cash and cash equivalents ​ $ 272,672 ​ $ 393,787 Accounts receivable (less allowance for doubtful accounts of $ 10,735 in 2024; $ 11,464 in 2023) ​ 549,237 ​ 538,830 Inventories (Note 8) ​ 582,730 ​ 562,864 Other current assets ​ 208,467 ​ 197,630 Total Current Assets ​ 1,613,106 ​ 1,693,111 Property, plant and equipment (less accumulated depreciation of $ 879,241 in 2024; $ 876,990 in 2023) ​ ​ 583,832 ​ ​ 575,316 Goodwill ​ 791,991 ​ 694,452 Other assets ​ 426,320 ​ 414,418 TOTAL ASSETS ​ $ 3,415,249 ​ $ 3,377,297 LIABILITIES AND EQUITY ​ ​ ​ Current Liabilities ​ ​ ​ Short-term debt (Note 10) ​ $ 6,254 ​ $ 2,435 Trade accounts payable ​ 351,445 ​ 325,435 Accrued employee compensation and benefits ​ 159,265 ​ 112,373 Other current liabilities ​ 266,603 ​ 314,367 Total Current Liabilities ​ 783,567 ​ 754,610 Long-term debt, less current portion (Note 10) ​ 1,098,430 ​ 1,102,771 Other liabilities ​ 220,346 ​ 211,064 Total Liabilities ​ 2,102,343 ​ 2,068,445 Shareholders' Equity ​ ​ ​ Common Shares ​ 9,858 ​ 9,858 Additional paid-in capital ​ 559,327 ​ 523,357 Retained earnings ​ 3,833,267 ​ 3,688,038 Accumulated other comprehensive loss ​ ( 249,905 ) ​ ( 229,847 ) Treasury Shares ​ ( 2,839,641 ) ​ ( 2,682,554 ) Total Equity ​ 1,312,906 ​ 1,308,852 TOTAL LIABILITIES AND TOTAL EQUITY ​ $ 3,415,249 ​ $ 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 Net income ​ ​ ​ ​ ​ ​ ​ ​ ​ 101,708 ​ ​ ​ ​ ​ ​ ​ 101,708 Unrecognized amounts from defined benefit pension plans, net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 6 ​ ​ ​ ​ 6 Unrealized (loss) on derivatives designated and qualifying as cash flow hedges, net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 2,761 ) ​ ​ ​ ​ ( 2,761 ) Currency translation adjustment, net of tax ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 7,696 ) ​ ​ ​ ​ ( 7,696 ) Cash dividends declared – $ 0.71 per share ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 40,236 ) ​ ​ ​ ​ ​ ​ ​ ( 40,236 ) Stock-based compensation activity 9 ​ ​ ​ ​ ​ 4,646 ​ ​ ​ ​ ​ ​ ​ ​ 86 ​ 4,732 Purchase of shares for treasury ( 242 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 50,415 ) ​ ( 50,415 ) Other ​ ​ ​ ​ ​ ​ ( 5,758 ) ​ ​ 5,498 ​ ​ ​ ​ ​ ​ ​ ( 260 ) Balance at June 30, 2024 56,675 ​ $ 9,858 ​ $ 559,327 ​ $ 3,833,267 ​ $ ( 249,905 ) ​ $ ( 2,839,641 ) ​ $ 1,312,906 ​ ​ 6 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, 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 Net income ​ ​ ​ ​ ​ 137,331 ​ ​ ​ ​ ​ 137,331 Unrecognized amounts from defined benefit pension plans, net of tax ​ ​ ​ ​ ​ ​ ​ ( 1,366 ) ​ ​ ​ ( 1,366 ) Unrealized loss on derivatives designated and qualifying as cash flow hedges, net of tax ​ ​ ​ ​ ​ ​ ​ ( 4,888 ) ​ ​ ​ ( 4,888 ) Currency translation adjustment, net of tax ​ ​ ​ ​ ​ ​ ​ 20,957 ​ ​ ​ 20,957 Cash dividends declared – $ 0.64 per share ​ ​ ​ ​ ​ ( 36,917 ) ​ ​ ​ ​ ​ ( 36,917 ) Stock-based compensation activity 152 ​ ​ 12,818 ​ ​ ​ ​ ​ 1,697 ​ 14,515 Purchase of shares for treasury ( 312 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 53,076 ) ​ ( 53,076 ) Other ​ ​ ​ 4,462 ​ ( 4,830 ) ​ ​ ​ ​ ​ ( 368 ) Balance at June 30, 2023 57,413 ​ $ 9,858 ​ $ 515,303 ​ $ 3,483,127 ​ $ ( 236,186 ) ​ $ ( 2,570,678 ) ​ $ 1,201,424 ​ ​ 7 Table of Contents ​ ​ LINCOLN ELECTRIC HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES ​ ​ ​ Net income ​ $ 225,123 ​ $ 259,262 Adjustments to reconcile Net income to Net cash provided by operating activities: ​ ​ ​ Rationalization and asset impairment net charges ​ 23,751 ​ 1,134 Depreciation and amortization ​ 42,451 ​ 43,212 Deferred income taxes ​ ( 3,864 ) ​ 3,774 Stock-based compensation ​ 18,379 ​ 16,615 Other, net ​ 2,020 ​ 997 Changes in operating assets and liabilities, net of effects from acquisitions: ​ ​ ​ Increase in accounts receivable ​ ( 14,484 ) ​ ( 18,890 ) (Increase) decrease in inventories ​ ( 27,626 ) ​ 6,267 Increase in other current assets ​ ( 5,153 ) ​ ( 13,275 ) Increase in trade accounts payable ​ 28,956 ​ 1,566 (Decrease) increase in other current liabilities ​ ( 5,092 ) ​ 28,749 Net change in other assets and liabilities ​ 19,520 ​ ( 6,635 ) NET CASH PROVIDED BY OPERATING ACTIVITIES ​ 303,981 ​ 322,776 CASH FLOWS FROM INVESTING ACTIVITIES ​ ​ ​ Capital expenditures ​ ( 49,395 ) ​ ( 40,552 ) Acquisition of businesses, net of cash acquired ​ ( 152,654 ) ​ ( 32,657 ) Proceeds from sale of property, plant and equipment ​ 1,303 ​ 3,892 Purchase of marketable securities ​ — ​ ( 7,029 ) NET CASH USED BY INVESTING ACTIVITIES ​ ( 200,746 ) ​ ( 76,346 ) CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ ​ Payments on short-term borrowings ​ ​ ( 578 ) ​ ​ ( 72,224 ) Proceeds from long-term borrowings ​ 400,000 ​ — Payments on long-term borrowings ​ ( 400,339 ) ​ ( 6,978 ) Proceeds from exercise of stock options ​ 24,981 ​ 12,010 Purchase of shares for treasury ​ ( 160,820 ) ​ ( 85,234 ) Cash dividends paid to shareholders ​ ( 81,696 ) ​ ( 74,472 ) NET CASH USED BY FINANCING ACTIVITIES ​ ( 218,452 ) ​ ( 226,898 ) Effect of exchange rate changes on Cash and cash equivalents ​ ( 5,898 ) ​ 3,801 (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ​ ( 121,115 ) ​ 23,333 ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents at beginning of period ​ 393,787 ​ 197,150 CASH AND CASH EQUIVALENTS AT END OF PERIOD ​ $ 272,672 ​ $ 220,483 ​ See notes to these consolidated financial statements. ​ ​ 8 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 six months ended June 30, 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. In March 2022, in response to Russia’s invasion of Ukraine, the Company announced it was ceasing operations in Russia and implementing plans to support its Russian employees. In May 2024, the Company disposed of its Russian entity and completed its exit from the Russian market. As a result, $ 22,566 of cumulative translation adjustment previously recognized within Other comprehensive income (loss) was recorded to Rationalization and asset impairment charges on the Consolidated Statements of Income in the three and six months ended June 30, 2024. 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. ​ 9 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 June 30, ​ Six Months Ended June 30, ​ 2024 2023 2024 2023 Consumables ​ $ 546,421 ​ $ 577,910 ​ $ 1,074,159 ​ $ 1,147,594 Equipment ​ 475,262 ​ 482,655 ​ 928,721 ​ 952,314 Net sales ​ $ 1,021,683 ​ $ 1,060,565 ​ $ 2,002,880 ​ $ 2,099,908 ​ 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 10 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 June 30, 2024, the Company recorded $ 21,454 related to advance customer payments and $ 72,642 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 June 30, 2024 and December 31, 2023, the Company recorded $ 51,071 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 June 30, ​ Six Months Ended June 30, ​ 2024 2023 2024 2023 Numerator: ​ ​ ​ ​ ​ Net income ​ $ 101,708 ​ $ 137,331 ​ $ 225,123 ​ $ 259,262 Denominator (shares in 000's): ​ ​ ​ ​ ​ ​ ​ ​ Basic weighted average shares outstanding ​ 56,816 ​ 57,479 ​ 56,841 ​ 57,537 Effect of dilutive securities - Stock options and awards ​ 550 ​ 824 ​ 664 ​ 816 Diluted weighted average shares outstanding ​ 57,366 ​ 58,303 ​ 57,505 ​ 58,353 Basic earnings per share ​ $ 1.79 ​ $ 2.39 ​ $ 3.96 ​ $ 4.51 Diluted earnings per share ​ $ 1.77 ​ $ 2.36 ​ $ 3.91 ​ $ 4.44 ​ For the three months ended June 30, 2024 and 2023, common shares subject to equity-based awards of 25,472 and 76 , respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive. For the six months ended June 30, 2024 and 2023, common shares subject to equity-based awards of 18,008 and 115 , 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 June 3, 2024, the Company acquired 100 % ownership of Inrotech A/S (“Inrotech”), a privately held automation system integration and technology firm headquartered in Odense, Denmark. The purchase price was $ 42,968 , net of cash acquired. Inrotech specializes in automated welding systems that are differentiated by proprietary adaptive intelligence software and computer vision which guides and optimizes the welding process without the need for programming or the use of computer aided design files. The state-of-the-art vision-based technology is used in the shipbuilding, energy, and heavy industry sectors, where welding accessibility can be challenging for traditional automated systems, but precision and quality are mission critical. 11 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts 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 purchase price was $ 109,686 , net of cash acquired. 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 purchase price was $ 29,572 , net of cash acquired. 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. ​ During the three and six months ended June 30, 2024, the Company recognized acquisition costs of $ 2,182 and $ 3,944 , respectively, which are included in Selling, general & administrative expenses on the Consolidated Statements of Income and are expensed as incurred. ​ The acquired companies are accounted for as business combinations and are included in the consolidated financial statements as of the date of acquisition. 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 has 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. 12 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts The following table presents Adjusted EBIT by segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Harris ​ ​ ​ ​ ​ ​ ​ ​ Americas ​ International ​ Products ​ Corporate / ​ ​ ​ ​ Welding Welding Group Eliminations Consolidated Three Months Ended June 30, 2024 ​ ​ ​ ​ ​ Net sales ​ $ 648,936 ​ $ 238,758 ​ $ 133,989 ​ $ — ​ $ 1,021,683 Inter-segment sales ​ 37,800 ​ ​ 8,849 ​ ​ 3,272 ​ ​ ( 49,921 ) ​ ​ — Total ​ $ 686,736 ​ $ 247,607 ​ $ 137,261 ​ $ ( 49,921 ) ​ $ 1,021,683 Adjusted EBIT ​ $ 136,651 ​ $ 25,709 ​ $ 24,923 ​ $ ( 6,264 ) ​ $ 181,019 Special items charge (gain) (1) ​ 354 ​ ​ 31,234 ​ ​ ( 140 ) ​ ​ 2,286 ​ ​ 33,734 EBIT ​ $ 136,297 ​ $ ( 5,525 ) ​ $ 25,063 ​ $ ( 8,550 ) ​ $ 147,285 Interest income ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 1,972 Interest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ( 12,633 ) Income before income taxes ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 136,624 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2023 ​ ​ ​ ​ ​ Net sales ​ $ 676,966 ​ $ 253,403 ​ $ 130,196 ​ $ — ​ $ 1,060,565 Inter-segment sales ​ 30,850 ​ 8,292 ​ 2,867 ​ ( 42,009 ) ​ ​ — Total ​ $ 707,816 ​ $ 261,695 ​ $ 133,063 ​ $ ( 42,009 ) ​ $ 1,060,565 Adjusted EBIT ​ $ 139,870 ​ $ 33,774 ​ $ 19,510 ​ $ ( 2,183 ) ​ $ 190,971 Special items charge (2) ​ 2,957 ​ 3,255 ​ — ​ — ​ ​ 6,212 EBIT ​ $ 136,913 ​ $ 30,519 ​ $ 19,510 ​ $ ( 2,183 ) ​ $ 184,759 Interest income ​ ​ ​ ​ ​ ​ ​ 814 Interest expense ​ ​ ​ ​ ​ ​ ​ ( 12,513 ) Income before income taxes ​ ​ ​ ​ ​ ​ ​ $ 173,060 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 1,273,035 ​ $ 474,519 ​ $ 255,326 ​ $ — ​ $ 2,002,880 Inter-segment sales ​ 67,778 ​ 17,257 ​ 6,365 ​ ( 91,400 ) ​ ​ — Total ​ $ 1,340,813 ​ $ 491,776 ​ $ 261,691 ​ $ ( 91,400 ) ​ $ 2,002,880 Adjusted EBIT ​ $ 272,750 ​ $ 53,486 ​ $ 44,802 ​ $ ( 16,343 ) ​ $ 354,695 Special items charge (3) ​ 354 ​ 34,304 ​ 1,396 ​ 4,047 ​ ​ 40,101 EBIT ​ $ 272,396 ​ $ 19,182 ​ $ 43,406 ​ $ ( 20,390 ) ​ $ 314,594 Interest income ​ ​ ​ ​ ​ ​ ​ 5,193 Interest expense ​ ​ ​ ​ ​ ​ ​ ( 24,633 ) Income before income taxes ​ ​ ​ ​ ​ ​ ​ $ 295,154 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 1,335,611 ​ $ 505,819 ​ $ 258,478 ​ $ — ​ $ 2,099,908 Inter-segment sales ​ 63,168 ​ 15,045 ​ 5,764 ​ ( 83,977 ) ​ ​ — Total ​ $ 1,398,779 ​ $ 520,864 ​ $ 264,242 ​ $ ( 83,977 ) ​ $ 2,099,908 Adjusted EBIT ​ $ 272,324 ​ $ 63,371 ​ $ 38,493 ​ $ ( 11,586 ) ​ $ 362,602 Special items charge (4) ​ 5,742 ​ 3,557 ​ — ​ — ​ ​ 9,299 EBIT ​ $ 266,582 ​ $ 59,814 ​ $ 38,493 ​ $ ( 11,586 ) ​ $ 353,303 Interest income ​ ​ ​ ​ ​ ​ ​ 1,668 Interest expense ​ ​ ​ ​ ​ ​ ​ ( 26,567 ) Income before income taxes ​ ​ ​ ​ ​ ​ ​ $ 328,404 ​ (1) In the three months ended June 30, 2024, special items include Rationalization and asset impairment net charges of $ 26,284 in International Welding, primarily due to the impact of the Company’s disposition of its Russian entity, as discussed in Note 6, a loss on asset disposal of $ 4,950 recorded to Other income (expense) in International Welding and acquisition transaction costs of $ 2,182 in Corporate/Eliminations. (2) In the three months ended June 30, 2023, special items include amortization of step up in value of acquired inventories of $ 2,957 in Americas Welding and $ 588 in International Welding and Rationalization and asset impairment net charges of $ 2,667 in International Welding. 13 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts (3) In the six months ended June 30, 2024, special items include Rationalization and asset impairment net charges of $ 29,354 in International Welding, primarily due to the impact of the Company’s disposition of its Russian entity, and $ 1,396 in The Harris Products Group, as discussed in Note 6, a loss on asset disposal of $ 4,950 recorded to Other income (expense) in International Welding and acquisition transaction costs of $ 3,944 in Corporate/Eliminations. (4) In the six months ended June 30, 2023, special items include amortization of step up in value of acquired inventories of $ 5,742 in Americas Welding and $ 1,659 in International Welding, Rationalization and asset impairment net charges of $ 3,544 in International Welding and a gain on asset 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 June 30, 2024, liabilities of $ 7,897 and $ 351 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 $ 29,354 in International Welding in the six months ended June 30, 2024, of which $ 22,566 is associated with the disposal of the Company’s Russian entity. In addition, the Company incurred Rationalization and asset impairment net charges of $ 1,396 in The Harris Products Group in the six months ended June 30, 2024. 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 six months ended June 30, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ International The Harris Products ​ ​ ​ Welding Group Consolidated Balance at December 31, 2023 ​ $ 15,086 ​ $ — ​ $ 15,086 Payments and other adjustments ​ ( 13,137 ) ​ ( 1,045 ) ​ ( 14,182 ) Charged to expense ​ 5,948 ​ 1,396 ​ 7,344 Balance at June 30, 2024 ​ $ 7,897 ​ $ 351 ​ $ 8,248 ​ ​ 14 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 June 30, 2024 ​ ​ Unrealized gain ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (loss) on derivatives ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ designated and ​ Defined benefit ​ Currency ​ ​ ​ ​ ​ qualifying as cash ​ pension plan ​ translation ​ ​ ​ ​ ​ flow hedges ​ activity ​ adjustment ​ Total Balance at March 31, 2024 ​ $ 20,251 ​ $ ( 1,923 ) ​ $ ( 257,782 ) ​ $ ( 239,454 ) Other comprehensive (loss) before reclassification ​ ( 2,175 ) ​ ​ — ​ ​ ( 7,696 ) ​ ​ ( 9,871 ) Amounts reclassified from AOCI ​ ( 586 ) ​ ​ 6 ​ ​ — ​ ​ ( 580 ) Net current-period other comprehensive (loss) income ​ ( 2,761 ) ​ 6 ​ ( 7,696 ) ​ ( 10,451 ) Balance at June 30, 2024 ​ $ 17,490 ​ $ ( 1,917 ) ​ $ ( 265,478 ) ​ $ ( 249,905 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, 2023 ​ ​ Unrealized gain ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (loss) on derivatives ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ designated and ​ Defined benefit ​ Currency ​ ​ ​ ​ ​ qualifying as cash ​ pension plan ​ translation ​ ​ ​ ​ ​ flow hedges ​ activity ​ adjustment ​ Total Balance at March 31, 2023 ​ $ 23,040 ​ $ ( 1,221 ) ​ $ ( 272,708 ) ​ $ ( 250,889 ) Other comprehensive (loss) income before reclassification ​ ( 3,459 ) ​ — ​ 20,957 ​ 17,498 Amounts reclassified from AOCI ​ ( 1,429 ) ​ ( 1,366 ) ​ — ​ ( 2,795 ) Net current-period other comprehensive (loss) income ​ ( 4,888 ) ​ ( 1,366 ) ​ 20,957 ​ 14,703 Balance at June 30, 2023 ​ $ 18,152 ​ $ ( 2,587 ) ​ $ ( 251,751 ) ​ $ ( 236,186 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 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 ​ 2,353 ​ ​ — ​ ​ ( 21,091 ) ​ ​ ( 18,738 ) Amounts reclassified from AOCI ​ ( 1,399 ) ​ ​ 79 ​ ​ — ​ ​ ( 1,320 ) Net current-period other comprehensive income (loss) ​ 954 ​ 79 ​ ( 21,091 ) ​ ( 20,058 ) Balance at June 30, 2024 ​ $ 17,490 ​ $ ( 1,917 ) ​ $ ( 265,478 ) ​ $ ( 249,905 ) 15 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, 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 ​ 6,675 ​ — ​ 35,775 ​ 42,450 Amounts reclassified from AOCI ​ ( 2,432 ) ​ ( 806 ) ​ — ​ ( 3,238 ) Net current-period other comprehensive income (loss) ​ 4,243 ​ ( 806 ) ​ 35,775 ​ 39,212 Balance at June 30, 2023 ​ $ 18,152 ​ $ ( 2,587 ) ​ $ ( 251,751 ) ​ $ ( 236,186 ) ​ ​ NOTE 8 — INVENTORIES Inventories in the Condensed Consolidated Balance Sheets are comprised of the following components: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2024 December 31, 2023 Raw materials ​ $ 143,479 ​ $ 160,809 Work-in-process ​ 150,469 ​ 125,756 Finished goods ​ 288,782 ​ 276,299 Total ​ $ 582,730 ​ $ 562,864 ​ At June 30, 2024 and December 31, 2023, approximately 35 % 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 $ 127,171 and $ 129,946 at June 30, 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 June 30, 2024 December 31, 2023 Right-of-use assets Other assets ​ $ 54,329 ​ $ 53,284 ​ ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities Other current liabilities ​ $ 13,188 ​ $ 13,104 Noncurrent liabilities Other liabilities ​ 42,505 ​ 41,576 Total lease liabilities ​ $ 55,693 ​ $ 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 $ 6,572 and $ 12,733 in the three and six months ended June 30, 2024 and $ 5,322 and $ 11,173 in the three and six months ended June 30, 2023, respectively. Cash paid for amounts included in the measurement of lease liabilities for the three and six months ended June 30, 2024, respectively, were $ 4,098 and $ 8,147 and are included in Net cash provided by operating activities in the Company’s Consolidated Statements of Cash Flows. Cash paid for amounts included in the measurement of lease liabilities for the three and six months ended June 30, 2023, respectively, were $ 3,077 and $ 6,222 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 $ 7,071 and $ 10,617 during the three and six months ended June 30, 2024 and $ 1,438 and $ 5,334 during the three and six months ended June 30, 2023, respectively. 16 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts The total future minimum lease payments for noncancelable operating leases were as follows: ​ ​ ​ ​ ​ ​ June 30, 2024 2024 ​ $ 9,518 2025 ​ 14,273 2026 ​ 11,522 2027 ​ 8,923 2028 ​ 6,923 After 2028 ​ 13,196 Total lease payments ​ $ 64,355 Less: Imputed interest ​ 8,662 Operating lease liabilities ​ $ 55,693 ​ As of June 30, 2024 the weighted average remaining lease term is 6.6 years and the weighted average discount rate used to determine the operating lease liability is 3.7 %. ​ ​ N OTE 10 — DEBT Revolving Credit Agreements On June 20, 2024, the Company terminated its existing $ 500,000 revolving credit facility and entered into a new $ 1 billion revolving credit facility, which may be increased, subject to certain conditions including the consent of its lenders, by an additional amount up to $ 300,000 . The new revolving credit facility matures on June 20, 2029. The new revolving credit facility will initially bear interest on outstanding borrowings at a per annum rate equal to secured overnight finance rate (“SOFR”) plus 1.10 % and could fluctuate based on the Company’s total net leverage ratio at a spread ranging from SOFR plus 1.10 % to SOFR plus 1.60 %. The financial covenants consist of a maximum net leverage ratio of 3.5 x EBITDA and a minimum interest coverage ratio of 2.5 x EBITDA. The new revolving credit facility 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 June 30, 2024, the Company was in compliance with all of its covenants and had no outstanding borrowings under the new revolving credit facility. The Company has other lines of credit and debt agreements totaling $ 37,412 . As of June 30, 2024, the Company was in compliance with all of its covenants and had outstanding debt under short-term lines of credit of $ 6,254 . Senior Unsecured Notes On June 20, 2024, the Company entered into a Note Purchase Agreement (the “NPA”) pursuant to which it agreed to issue new senior unsecured notes (“2024 Notes”) in an aggregate principal amount of $ 550,000 , at par. Pursuant to the NPA, the Company issued one series of the 2024 Notes in the aggregate principal amount of $ 400,000 on June 20, 2024, and will issue two series of the 2024 Notes each in the aggregate principal amount of $ 75,000 on August 22, 2024. The maturity and interest rates of the 2024 Notes are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 Notes ​ Amount ​ Maturity Date ​ Interest Rate Series A ​ $ 75,000 ​ August 22, 2029 ​ 5.55 % Series B ​ ​ 75,000 ​ August 22, 2031 ​ 5.62 % Series C ​ 400,000 ​ June 20, 2034 ​ 5.74 % ​ 17 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts 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 senior unsecured notes is 4.08 %, including the impact from terminated swap agreements as discussed in Note 12, and 9.5 years, respectively. The senior unsecured notes contain certain affirmative and negative covenants. As of June 30, 2024, the Company was in compliance with all of its debt covenants relating to the senior unsecured 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. On June 20, 2024, the Company used the net proceeds from the issuance of the initial series of 2024 Notes to repay the Term Loan in full. In June 2024, the Company terminated the interest rate swaps that were associated with the Term Loan and realized a gain of $ 2,428 , which is recorded in Other income (expense). Fair Value of Debt At June 30, 2024 and December 31, 2023, the fair value of long-term debt, including the current portion, was approximately $ 1,017,606 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 $ 1,098,434 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. NOTE 11 — INCOME TAXES The Company recognized $ 70,031 of tax expense on pretax income of $ 295,154 , resulting in an effective income tax rate of 23.7 % for the six months ended June 30, 2024. The effective income tax rate was 21.1 % for the six months ended June 30, 2023. The effective tax rate was higher for the six months ended June 30, 2024, as compared with the same period in 2023, primarily due to mix of earnings and discrete tax items. As of June 30, 2024, the Company had $ 13,410 of unrecognized tax benefits. If recognized, approximately $ 10,841 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 $ 1,855 in previously unrecognized tax benefits by the end of the second quarter 2025. 18 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts 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 and six months ended June 30, 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 June 30, 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 $ 92,413 at June 30, 2024 and $ 84,148 at December 31, 2023. The Company had interest rate forward starting swap agreements that were qualified and designated as cash flow hedges that were terminated as of June 30, 2024. At December 31, 2023, the dollar equivalent gross notional amount of the contracts was $ 100,000 . Upon termination of the contracts in the second quarter of 2024, the Company had a gain of $ 25,852 recorded in AOCI that will be amortized to Interest expense, net over the life of the associated debt. The Company has commodity contracts that are qualified and designated as cash flow hedges. The Notional amount of these contracts were 100,000 pounds and 200,000 pounds at June 30, 2024 and December 31, 2023, respectively. 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 . In June 2024, the Company terminated the interest rate swaps that were associated with the Term Loan and realized a gain of $ 2,428 , which is recorded in Other income (expense). 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 $ 116,645 and $ 119,607 at June 30, 2024 and December 31, 2023, respectively. 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 $ 385,255 and $ 492,600 at June 30, 2024 and December 31, 2023, respectively. 19 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts Fair values of derivative instruments in the Company’s Condensed Consolidated Balance Sheets follow: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 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 $ 418 ​ $ 1,735 ​ $ — ​ $ — ​ $ 1,548 ​ $ 687 ​ $ — ​ $ — Interest rate swap agreements — ​ — ​ ​ — ​ ​ — ​ — ​ — ​ 1,460 ​ — Forward starting swap agreements ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 20,377 ​ ​ — Net investment contracts ​ 2,022 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,351 ​ ​ — ​ ​ — Commodity contracts ​ 73 ​ ​ — ​ ​ — ​ ​ — ​ ​ 45 ​ ​ — ​ ​ — ​ ​ — Not designated as hedging instruments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign exchange contracts 661 ​ ​ 884 ​ ​ — ​ ​ — ​ 4,063 ​ 623 ​ — ​ — Total derivatives $ 3,174 ​ $ 2,619 ​ $ — ​ $ — ​ $ 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 June 30, Six Months Ended June 30, Derivatives by hedge designation Classification of (loss) gain 2024 2023 2024 2023 Not designated as hedges: ​ ​ ​ ​ ​ ​ ​ Foreign exchange contracts ​ Selling, general & administrative expenses ​ $ ( 5,155 ) ​ $ 5,080 ​ $ ( 6,771 ) ​ $ 11,770 ​ The effects of designated hedges on AOCI and the Company’s Consolidated Statements of Income consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total gain (loss) recognized in AOCI, net of tax June 30, 2024 December 31, 2023 Foreign exchange contracts ​ $ ( 921 ) ​ $ 721 ​ Interest rate swap agreements ​ ​ — ​ ​ 1,085 ​ Forward starting swap agreements ​ ​ 18,376 ​ ​ 14,696 ​ Net investment contracts ​ ​ 9,672 ​ 7,136 ​ Commodity contracts ​ 35 ​ 34 ​ ​ The Company expects a loss of $ 886 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 June 30, Six Months Ended June 30, ​ ​ Gain recognized in the ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative type Consolidated Statements of Income: 2024 2023 2024 2023 Foreign exchange contracts Sales ​ $ 447 ​ $ 1,884 ​ $ 1,286 ​ $ 3,090 ​ Cost of goods sold ​ 251 ​ 27 ​ 484 ​ 28 Commodity contracts ​ Cost of goods sold ​ ​ 65 ​ ​ 16 ​ ​ 66 ​ ​ 196 Forward starting swap agreements ​ Interest expense, net ​ ​ 66 ​ ​ — ​ ​ 66 ​ ​ — ​ ​ 20 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts NOTE 13 - FAIR VALUE The following table provides a summary of assets and liabilities as of June 30, 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 June 30, 2024 (Level 1) (Level 2) Inputs (Level 3) Assets: ​ ​ ​ ​ Foreign exchange contracts ​ $ 1,079 ​ $ — ​ $ 1,079 ​ $ — Net investment contracts ​ ​ 2,022 ​ ​ — ​ ​ 2,022 ​ ​ — Commodity contracts ​ ​ 73 ​ ​ — ​ ​ 73 ​ ​ — Pension surplus ​ ​ 35,544 ​ ​ 35,544 ​ ​ — ​ ​ — Total assets ​ $ 38,718 ​ $ 35,544 ​ $ 3,174 ​ $ — Liabilities: ​ ​ ​ ​ Foreign exchange contracts ​ $ 2,619 ​ $ — ​ $ 2,619 ​ $ — Deferred compensation ​ 54,472 ​ — ​ 54,472 ​ — Total liabilities ​ $ 57,091 ​ $ — ​ $ 57,091 ​ $ — ​ 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 June 30, 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. 21 Table of Contents LINCOLN ELECTRIC HOLDINGS, INC. NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued) Dollars in thousands, except per share amounts 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 June 30, 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. 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 June 30, 2024 and December 31, 2023, Trade accounts payable included $ 36,081 and $ 29,111 , respectively, payable to suppliers that have elected to participate in the supplier financing program. NOTE 15 – SUBSEQUENT EVENTS On July 30, 2024, the Company acquired 100 % ownership of Vanair Manufacturing, LLC (“Vanair”), a privately held, Michigan City, Indiana-based, manufacturer for an agreed upon purchase price of $ 116,000 . In 2023, Vanair generated sales of approximately $ 100,000 (unaudited). Vanair offers the industry’s most comprehensive portfolio of mobile power solutions, including vehicle-mounted compressors, generators, welders, hydraulics, chargers/boosters, and electrified power equipment. ​ (1) ​ ​ ​ 22 Table of Contents