What changed in this filing

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Item 1. Financial Statements

2024-10-31 compared with 2024-07-31 · 137 added, 116 removed, 474 unchanged (35% of the section changed)

3 unchanged sentences

(In thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Net sales (Note 2)

4 unchanged sentences

Interest expense, net

Other income (expense)

Other (expense) income

Income before income taxes

7 unchanged sentences

(In thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Other comprehensive (loss) income, net of tax:

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive income (loss), net of tax:

Unrealized (loss) gain on derivatives designated and qualifying as cash flow hedges

1 unchanged sentence

Currency translation adjustment

Other comprehensive (loss) income:

Other comprehensive income (loss):

Comprehensive income

3 unchanged sentences

(In thousands)

June 30, 2024

September 30, 2024

December 31, 2023

35 unchanged sentences

( 2,682,554 )

Unrecognized amounts from defined benefit pension plans, net of tax

Defined benefit pension plan activity, net of tax

Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax

5 unchanged sentences

( 2,789,312 )

Unrecognized amounts from defined benefit pension plans, net of tax

Defined benefit pension plan activity, net of tax

Unrealized (loss) on derivatives designated and qualifying as cash flow hedges, net of tax

5 unchanged sentences

( 2,839,641 )

Defined benefit pension plan activity, net of tax

Unrealized (loss) on derivatives designated and qualifying as cash flow hedges, net of tax

Currency translation adjustment, net of tax

Cash dividends declared – $ 0.71 per share

Stock-based compensation activity

Purchase of shares for treasury

Balance at September 30, 2024

( 2,889,873 )

LINCOLN ELECTRIC HOLDINGS, INC.

5 unchanged sentences

( 2,488,776 )

Unrecognized amounts from defined benefit pension plans, net of tax

Defined benefit pension plan activity, net of tax

Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax

5 unchanged sentences

( 2,519,299 )

Unrecognized amounts from defined benefit pension plans, net of tax

Defined benefit pension plan activity, net of tax

Unrealized loss on derivatives designated and qualifying as cash flow hedges, net of tax

5 unchanged sentences

( 2,570,678 )

Defined benefit pension plan activity, net of tax

Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax

Currency translation adjustment

Cash dividends declared – $ 0.64 per share

Stock-based compensation activity

Purchase of shares for treasury

Balance at September 30, 2023

( 2,615,748 )

LINCOLN ELECTRIC HOLDINGS, INC.

1 unchanged sentence

(In thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Stock-based compensation

Pension settlement net charges

Changes in operating assets and liabilities, net of effects from acquisitions:

Increase in accounts receivable

Decrease in accounts receivable

(Increase) decrease in inventories

Increase in other current assets

Increase in trade accounts payable

(Decrease) increase in other current liabilities

Decrease in trade accounts payable

Increase in other current liabilities

Net change in other assets and liabilities

7 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES

Payments on short-term borrowings

Proceeds from (payments on) short-term borrowings

Proceeds from long-term borrowings

5 unchanged sentences

Effect of exchange rate changes on Cash and cash equivalents

(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

INCREASE IN CASH AND CASH EQUIVALENTS

Cash and cash equivalents at beginning of period

11 unchanged sentences

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.

Operating results for the nine months ended September 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.

3 unchanged sentences

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:

30 unchanged sentences

The following table presents the Company’s Net sales disaggregated by product line:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Consumable sales consist of welding, brazing and soldering filler metals.

9 unchanged sentences

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.

Approximately 10 % of the Company’s Net sales are recognized over time.

At September 30, 2024, the Company recorded $ 33,940 related to advance customer payments and $ 78,331 related to billings in excess of revenue recognized.

These contract liabilities are included in Other current liabilities in the Condensed Consolidated Balance Sheets.

2 unchanged sentences

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.

At September 30, 2024 and December 31, 2023, the Company recorded $ 57,481 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.

1 unchanged sentence

The following table sets forth the computation of basic and diluted earnings per share:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Denominator (shares in 000's):

4 unchanged sentences

Diluted earnings per share

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.

For the three months ended September 30, 2024 and 2023, common shares subject to equity-based awards of 43,250 and 19,368 , respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive.

For the nine months ended September 30, 2024 and 2023, common shares subject to equity-based awards of 38,665 and 67,549 , 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 July 30, 2024, the Company acquired 100 % ownership of Vanair Manufacturing, LLC (“Vanair”), a privately held, Michigan City, Indiana-based, manufacturer for a total purchase price of $ 109,993 , net of cash acquired and certain debt-like items.

In 2023, Vanair generated sales of approximately $ 100,000 (unaudited).

Vanair offers a comprehensive portfolio of mobile power solutions, including vehicle-mounted compressors, generators, welders, hydraulics, chargers/boosters, and electrified power equipment.

LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

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.

2 unchanged sentences

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.

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.

8 unchanged sentences

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.

During the three and nine months ended September 30, 2024, the Company recognized acquisition costs of $ 610 and $ 4,551 , 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.

8 unchanged sentences

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 defined as Operating income plus Other (expense) income.

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.

4 unchanged sentences

International

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Inter-segment sales

Adjusted EBIT

Special items charge (gain) (1)

Special items charge (1)

Interest income

1 unchanged sentence

Income before income taxes

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Inter-segment sales

4 unchanged sentences

Income before income taxes

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Inter-segment sales

4 unchanged sentences

Income before income taxes

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Inter-segment sales

4 unchanged sentences

Income before income taxes

(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.

(1) In the three months ended September 30, 2024, special items primarily include Rationalization and asset impairment net charges of $ 16,282 in Americas Welding, $ 2,676 in International Welding and $ 1,269 in Harris Products Group.

In addition, there was an amortization of step up in value of acquired inventories of $ 3,109 and $ 250 in Americas Welding and International Welding, respectively, a pension settlement charge of $ 3,966 in Americas Welding and acquisition transaction costs of $ 610 in Corporate/Eliminations.

(2) In the three months ended September 30, 2023, special items include amortization of step up in value of acquired inventories of $ 3,648 in Americas Welding and $ 1,204 in International Welding and Rationalization and asset impairment net charges of $ 408 in Americas Welding and $ 6,666 in International Welding.

LINCOLN ELECTRIC HOLDINGS, INC.

1 unchanged sentence

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.

(3) In the nine months ended September 30, 2024, special items primarily include Rationalization and asset impairment net charges of $ 16,521 in Americas Welding, $ 32,030 in International Welding, including the impact of the Company’s disposition of its Russian entity, and $ 2,666 in The Harris Products.

In addition, there was a loss on asset disposal of $ 4,950 recorded to Other (expense) income in International Welding, an amortization of step up in value of acquired inventories of $ 3,224 and $ 250 in Americas Welding and International Welding, respectively, a pension settlement charge of $ 3,966 in Americas Welding, and acquisition transaction costs of $ 4,551 in Corporate/Eliminations.

(4) In the nine months ended September 30, 2023, special items include amortization of step up in value of acquired inventories of $ 9,390 in Americas Welding and $ 2,862 in International Welding, Rationalization and asset impairment net charges of $ 408 in Americas Welding and $ 10,210 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.

During 2024, the Company initiated rationalization plans within International Welding, Americas Welding and The Harris Products Group.

During 2023, the Company also initiated rationalization plans within International Welding.

The plans in both years impacted headcount and included the consolidation of manufacturing facilities to better align with the cost structure, economic conditions and operating needs.

As a result of these plans, in the nine months ended September 30, 2024, the Company recorded Rationalization and asset impairment net charges of $ 32,030 in International Welding, of which $ 22,566 is associated with the disposal of the Company’s Russian entity.

The Company also incurred Rationalization and asset impairment net charges of $ 16,521 in Americas Welding and $ 2,666 in The Harris Products Group in the same period.

In the comparable 2023 period, the Company recorded Rationalization and asset impairment net charges of $ 10,210 in International Welding and $ 408 in Americas Welding.

At September 30, 2024 and December 31, 2023, liabilities of $ 19,046 and $ 15,086 , respectively, were recognized in Other current liabilities in the Company’s Condensed Consolidated Balance Sheet.

The Company anticipates approximately $ 6,000 of additional charges in the fourth quarter of 2024 related to the completion of these plans.

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:

The following table summarizes the activity related to rationalization liabilities for the nine months ended September 30, 2024:

International

3 unchanged sentences

Charged to expense

Balance at June 30, 2024

Balance at September 30, 2024

LINCOLN ELECTRIC HOLDINGS, INC.

3 unchanged sentences

The following tables set forth the total changes in AOCI by component, net of taxes:

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Unrealized gain

3 unchanged sentences

qualifying as cash

Balance at March 31, 2024

Other comprehensive (loss) before reclassification

Balance at June 30, 2024

Other comprehensive (loss) income before reclassification

Amounts reclassified from AOCI

Net current-period other comprehensive (loss) income

Balance at June 30, 2024

Three Months Ended June 30, 2023

Balance at September 30, 2024

Three Months Ended September 30, 2023

Unrealized gain

3 unchanged sentences

qualifying as cash

Balance at March 31, 2023

Other comprehensive (loss) income before reclassification

Amounts reclassified from AOCI

Net current-period other comprehensive (loss) income

Balance at June 30, 2023

Six Months Ended June 30, 2024

Other comprehensive income (loss) before reclassification

Amounts reclassified from AOCI

Net current-period other comprehensive income (loss)

Balance at September 30, 2023

Nine Months Ended September 30, 2024

Unrealized gain

6 unchanged sentences

Amounts reclassified from AOCI

Net current-period other comprehensive income (loss)

Balance at June 30, 2024

Net current-period other comprehensive (loss) income

Balance at September 30, 2024

LINCOLN ELECTRIC HOLDINGS, INC.

1 unchanged sentence

Dollars in thousands, except per share amounts

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Unrealized gain

7 unchanged sentences

Net current-period other comprehensive income (loss)

Balance at June 30, 2023

Balance at September 30, 2023

NOTE 8 — INVENTORIES

Inventories in the Condensed Consolidated Balance Sheets are comprised of the following components:

June 30, 2024

September 30, 2024

December 31, 2023

2 unchanged sentences

Finished goods

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.

At September 30, 2024 and December 31, 2023, approximately 33 % 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 $ 125,975 and $ 129,946 at September 30, 2024 and December 31, 2023, respectively.

NOTE 9 — LEASES

2 unchanged sentences

Balance Sheet Classification

June 30, 2024

September 30, 2024

December 31, 2023

5 unchanged sentences

Total lease liabilities

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.

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 $ 5,657 and $ 18,390 in the three and nine months ended September 30, 2024 and $ 5,322 and $ 11,173 in the three and nine months ended September 30, 2023, respectively.

Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended September 30, 2024, respectively, were $ 3,771 and $ 11,918 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 nine months ended September 30, 2023, respectively, were $ 3,494 and $ 9,716 and are included in Net cash provided by operating activities in the Company’s Consolidated Statements of Cash Flows.

Right-of-use assets obtained

LINCOLN ELECTRIC HOLDINGS, INC.

1 unchanged sentence

Dollars in thousands, except per share amounts

in exchange for operating lease liabilities were $ 5,426 and $ 16,043 during the three and nine months ended September 30, 2024 and $ 1,077 and $ 6,410 during the three and nine months ended September 30, 2023, respectively.

The total future minimum lease payments for noncancelable operating leases were as follows:

June 30, 2024

September 30, 2024

Total lease payments

1 unchanged sentence

Operating lease liabilities

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 %.

As of September 30, 2024 the weighted average remaining lease term is 6.5 years and the weighted average discount rate used to determine the operating lease liability is 3.7 %.

N OTE 10 — DEBT

5 unchanged sentences

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.

As of September 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 $ 39,993 .

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 .

As of September 30, 2024, the Company was in compliance with all of its covenants and had outstanding debt under short-term lines of credit of $ 11,993 .

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.

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 two series of the 2024 Notes each in the aggregate principal amount of $ 75,000 on August 22, 2024.

LINCOLN ELECTRIC HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

Dollars in thousands, except per share amounts

The maturity and interest rates of the 2024 Notes are as follows:

4 unchanged sentences

June 20, 2034

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.

3 unchanged sentences

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.

As of September 30, 2024, the Company was in compliance with all of its debt covenants relating to the senior unsecured notes.

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).

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 (expense) income.

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.

At September 30, 2024 and December 31, 2023, the fair value of long-term debt, including the current portion, was approximately $ 1,235,998 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 $ 1,250,620 and $ 1,102,771 , respectively.

1 unchanged sentence

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.

The Company recognized $ 101,217 of tax expense on pretax income of $ 427,096 , resulting in an effective income tax rate of 23.7 % for the nine months ended September 30, 2024.

The effective income tax rate was 20.7 % for the nine months ended September 30, 2023.

The effective tax rate was higher for the nine months ended September 30, 2024, as compared with the same period in 2023, primarily due to mix of earnings and discrete tax items.

As of September 30, 2024, the Company had $ 13,971 of unrecognized tax benefits.

If recognized, approximately $ 11,453 would be reflected as a component of income tax expense.

6 unchanged sentences

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.

LINCOLN ELECTRIC HOLDINGS, INC.

1 unchanged sentence

Dollars in thousands, except per share amounts

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.

It is reasonably possible there could be a reduction of $ 2,550 in previously unrecognized tax benefits by the end of the third quarter 2025.

NOTE 12 — DERIVATIVES

1 unchanged sentence

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.

Hedge ineffectiveness was immaterial in the three and nine months ended September 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.

None of the concentrations of risk with any individual counterparty was considered significant at September 30, 2024.

The Company does not expect any counterparties to fail to meet their obligations.

1 unchanged sentence

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.

The dollar equivalent gross notional amount of these short-term contracts was $ 94,030 at September 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 during the second quarter of 2024.

At December 31, 2023, the dollar equivalent gross notional amount of the contracts was $ 100,000 .

1 unchanged sentence

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.

The notional amount of these contracts were 25,000 pounds and 200,000 pounds at September 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).

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 (expense) income.

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.

The dollar equivalent gross notional amount of these contracts was $ 334,947 and $ 119,607 at September 30, 2024 and December 31, 2023, respectively.

Derivatives Not Designated as Hedging Instruments

1 unchanged sentence

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.

The dollar equivalent gross notional amount of these contracts was $ 384,414 and $ 492,600 at September 30, 2024 and December 31, 2023, respectively.

LINCOLN ELECTRIC HOLDINGS, INC.

2 unchanged sentences

Fair values of derivative instruments in the Company’s Condensed Consolidated Balance Sheets follow:

June 30, 2024

September 30, 2024

December 31, 2023

10 unchanged sentences

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,

Three Months Ended September 30,

Nine Months Ended September 30,

Derivatives by hedge designation

6 unchanged sentences

Total gain (loss) recognized in AOCI, net of tax

June 30, 2024

September 30, 2024

December 31, 2023

5 unchanged sentences

The Company expects a loss of $ 2,004 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

Three Months Ended September 30,

Nine Months Ended September 30,

Gain (loss) recognized in the

Derivative type

10 unchanged sentences

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:

The following table provides a summary of assets and liabilities as of September 30, 2024, measured at fair value on a recurring basis:

Quoted Prices in

4 unchanged sentences

Observable Inputs

June 30, 2024

September 30, 2024

Inputs (Level 3)

Foreign exchange contracts

Net investment contracts

Commodity contracts

1 unchanged sentence

Foreign exchange contracts

Net investment contracts

Deferred compensation

19 unchanged sentences

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 pension surplus assets are invested in money market and short-term duration bond funds at September 30, 2024.

The Company’s derivative contracts are valued at fair value using the market approach.

5 unchanged sentences

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 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 September 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.

7 unchanged sentences

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.

At September 30, 2024 and December 31, 2023, Trade accounts payable included $ 32,760 and $ 29,111 , respectively, payable to suppliers that have elected to participate in the supplier financing program.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements