What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-04-30 compared with 2025-10-30 · 65 added, 155 removed, 177 unchanged (55% of the section changed)

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This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with the Company’s unaudited consolidated financial statements and other financial information included elsewhere in this Quarterly Report on Form 10-Q.

The Company is the world’s largest designer and manufacturer of arc welding and cutting products, manufacturing a broad line of arc welding equipment, consumable welding products and other welding and cutting products.

Welding products include arc welding power sources, computer numerical control and plasma cutters, wire feeding systems, robotic welding packages, integrated automation systems, fume extraction equipment, consumable electrodes, fluxes, welding accessories and specialty welding consumables and fabrication.

The Company’s product offering also includes oxy-fuel cutting systems and regulators and torches used in oxy-fuel welding, cutting and brazing.

In addition, the Company has a leading global position in the brazing and soldering alloys market.

The Company’s products are sold globally.

In the Americas, products are sold principally through industrial distributors, retailers and also directly to users of welding products.

Outside of the Americas, the Company has an international sales organization comprised of Company employees and agents who sell products from the Company’s various manufacturing sites to distributors and product users.

The Company is a high-performance industrial machinery and technology leader who helps customers manufacture and maintain vital equipment and infrastructure.

The Company’s innovative solutions enable higher quality and productivity across a variety of processes including welding, cutting, brazing, machining, process automation, and field repair.

The Company’s products include arc welding equipment, filler metals (welding, brazing and soldering consumables), cutting systems (laser, plasma and oxyfuel), wire feeding systems, fume control equipment, welding accessories, specialty gas regulators, mobile power equipment, wear solutions, software, and education solutions;

as well as a comprehensive portfolio of automated solutions and system integration services for joining, cutting, material handling, module assembly, and end of line testing.

Services include additive manufacturing, precision fabrication, wear services, upfitting, and training.

Solutions range in technology and features from basic units used for personal, maintenance and light manufacturing use to highly sophisticated robotic solutions for complex fabrication and production activities.

The Company’s business units are aligned into three operating segments.

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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.

In 2025, the U.S.

government announced a series of tariffs on imported goods into the U.S., which prompted retaliatory actions from some of its trading partners.

The Company has taken actions to address the impact of these trade policies and while the Company cannot predict the ultimate impact on its business, the Company will continue to monitor evolving trade negotiations to determine if additional measures are warranted.

The Harris Products Group includes the Company’s global cutting, soldering and brazing businesses, specialty gas equipment, as well as the retail business which is primarily in the United States.

Results of Operations

The following table shows the Company’s results of operations:

Three Months Ended September 30,

Favorable (Unfavorable)

Cost of goods sold

Selling, general & administrative expenses

Rationalization and asset impairment net charges

Operating income

Interest expense, net

Other income (expense)

Income before income taxes

Effective tax rate

Diluted earnings per share

Nine Months Ended September 30,

Three Months Ended March 31,

Favorable (Unfavorable)

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Interest expense, net

Other income (expense)

Income before income taxes

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The following table summarizes the impact of volume, acquisitions, price and foreign currency exchange rates on Net sales on a consolidated basis:

Three Months Ended September 30,

Change in Net Sales due to:

Lincoln Electric Holdings, Inc.

Nine Months Ended September 30,

Three Months Ended March 31,

Change in Net Sales due to:

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Lincoln Electric Holdings, Inc.

Net sales increased for the three and nine months ended September 30, 2025 due to an increase in organic sales and a benefit from acquisitions.

The increase in organic sales for both the three and nine months ended September 30, 2025 is driven by an increase in pricing primarily due to higher input costs, partially offset by lower volumes.

Net sales increased for the three months ended March 31, 2026 due to an increase in organic sales and a benefit from acquisitions and foreign exchange.

The increase in organic sales for the three months ended March 31, 2026 is driven by an increase in pricing primarily due to higher input costs, partially offset by lower volumes.

Gross Profit:

Gross profit as a percentage of sales increased 0.9% for the three months ended September 30, 2025 as compared to the same 2024 period, driven by effective cost management and favorable mix.

Gross profit as a percentage of sales decreased 0.2% for the nine months ended September 30, 2025 as compared to the same 2024 period, driven by lower volumes partially offset by effective cost management.

The three and nine months ended September 30, 2025 includes last-in, first-out (“LIFO”) charges of $4,804 and $15,088, respectively, which are primarily due to rising input costs.

This compares with a benefit of $1,196 and $3,971 in the comparable 2024 periods.

Gross profit as a percentage of sales decreased 0.8% for the three months ended March 31, 2026 as compared to the same 2025 period, driven by an unfavorable impacts from volumes and product mix.

The three months ended March 31, 2026 and 2025 includes last-in, first-out (“LIFO”) charges of $838 and $1,761, respectively, which was primarily due to rising input costs.

Selling, General & Administrative Expenses:

Selling, general and administrative expenses increased in the three and nine months ended September 30, 2025 as compared to the same 2024 periods, primarily due to increases in employee costs and acquisitions, partially offset by effective cost management.

Selling, general & administrative expenses increased in the three months ended March 31, 2026 as compared to the same 2025 period, primarily due to increases in discretionary spend, employee costs and the unfavorable impact of foreign currency translation.

Selling, general & administrative expenses as a percentage of sales decreased primarily due to higher organic sales.

Operating Income:

Operating income as a percentage of sales was 16.6% for the three months ended September 30, 2025 as compared to 14.8% in the prior year period.

Excluding special items, Operating income as a percentage of sales was 17.4% for the three months ended September 30, 2025 as compared to 17.3% in the prior year period.

Operating income as a percentage of sales was 16.9% for the nine months ended September 30, 2025 as compared to 15.4% in the prior year period.

Excluding special items, Operating income as a percentage of sales, was 17.4% for both comparable periods.

Operating income as a percentage of sales was 16.6% for the three months ended March 31, 2026 as compared to 16.4% in the prior year period.

Excluding special items, Operating income as a percentage of sales was 16.9% for both the three months ended March 31, 2026 and 2025.

Refer to explanations above for additional details.

Also refer to Non-GAAP Financial Measures for a reconciliation of Adjusted operating income.

Rationalization and Asset Impairment Net Charges:

Charges in 2025 and 2024 relate to rationalization plans within all three reportable segments .

Charges in 2024 include the impact of the Company’s disposition of its Russian entity.

Refer to Note 6 to the consolidated financial statements for further information on the Company’s rationalization plans.

Income Taxes:

The effective tax rate was higher for the three months ended September 30, 2025 as compared to the same 2024 period, primarily driven by the impact of the One Big Beautiful Bill Act (“OBBBA”), as discussed in Note 11, partially offset by the mix of earnings and timing of discrete tax items.

The effective tax rate was lower for the three months ended March 31, 2026 as compared to the same 2025 period, primarily due to the mix of earnings and timing of discrete tax items.

Segment Results

The following table presents components of sales by segment:

Three Months Ended September 30,

Change in Net Sales due to:

Acquisitions (3)

Operating Segments

Americas Welding

International Welding

The Harris Products Group

Americas Welding

International Welding

The Harris Products Group

Nine Months Ended September 30,

The following table presents components of Net sales by segment:

Three Months Ended March 31,

Change in Net Sales due to:

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The Harris Products Group

(1) Decrease for the three and nine months ended September 30, 2025 for Americas Welding and International Welding due to weakened industrial demand trends.

Increase for the three and nine months ended September 30, 2025 for The Harris Products Group due to the expanded market presence.

(2) Increase due to price actions taken in response to higher input costs.

(3) Increase for Americas Welding and International Welding due to the acquisitions discussed in Note 4 to the consolidated financial statements.

(4) Increase for the three months ended September 30, 2025 for International Welding relates to the weaker U.S.

(1) Decrease for the three months ended March 31, 2026 in International Welding is primarily related to lower project volumes within the Automation product line and the Middle East conflict.

(2) Increase in Americas Welding and The Harris Products Group due to price actions taken in response to higher input costs.

(3) Increase in International Welding due to the acquisition discussed in Note 4 to the consolidated financial statements.

(4) Increase for the three months ended March 31, 2026 for all three segments relates to the weaker U.S.

Segment performance is measured and resources are allocated based on a number of factors, the primary measure being the Adjusted EBIT profit measure.

Adjusted EBIT is defined as Operating income plus Other income (expense), 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.

Adjusted EBIT is defined as Operating income plus Other income, adjusted for special items as determined by management such as the impact of rationalization activities, certain asset impairment charges and gains or losses on disposals of assets.

The following table presents Adjusted EBIT by segment:

Favorable (Unfavorable)

Three Months Ended September 30,

Americas Welding:

Inter-segment sales

Adjusted EBIT (1) (4)

As a percent of total sales (1)

International Welding:

Inter-segment sales

Adjusted EBIT (2) (5)

As a percent of total sales (2)

The Harris Products Group:

Inter-segment sales

Adjusted EBIT (3) (6)

As a percent of total sales (3)

Corporate / Eliminations:

Inter-segment sales

Adjusted EBIT (7)

Consolidated:

As a percent of total sales

Adjusted EBIT (8)

As a percent of sales

(1) Adjusted EBIT increased for the three months ended September 30, 2025 as compared to September 30, 2024 primarily driven by favorable net impact of organic sales, partially offset by unfavorable impact of product mix;

Adjusted EBIT as a percent of sales decreased for the same period due to unfavorable product mix.

(2) Adjusted EBIT and Adjusted EBIT as a percent of sales increased for the three months ended September 30, 2025 as compared to September 30, 2024 primarily as a result of the benefit of acquisitions, partially offset by the unfavorable impact of lower volumes.

(3) Adjusted EBIT and Adjusted EBIT as a percent of sales increased for the three months ended September 30, 2025 as compared to September 30, 2024 primarily as a result of the favorable impact of organic sales, partially offset by unfavorable impact of higher input costs.

(4) The three months ended September 30, 2025 exclude Rationalization and asset impairment net charges of $4,150 as discussed in Note 6.

The three months ended September 30, 2024 exclude Rationalization and asset impairment net charges of $16,282 primarily due to restructuring activities, the amortization of the step up in value of acquired inventories of $3,109 and pension settlement charges of $3,966.

(5) The three months ended September 30, 2025 exclude Rationalization and asset impairment net charges of $1,365 as discussed in Note 6 and the amortization of the step up in value of acquired inventories of $1,397.

The three months ended September 30, 2024 exclude Rationalization and asset impairment net charges of $2,676 primarily due to restructuring activities and the amortization of the step up in value of acquired inventories of $250.

(6) The three months ended September 30, 2025 exclude Rationalization and asset impairment net charges of $316 as discussed in Note 6.

The three months ended September 30, 2024 exclude Rationalization and asset impairment net charges of $1,269 primarily due to restructuring activities.

(7) The three months ended September 30, 2025 exclude acquisition transaction costs of $452 as discussed in Note 4.

The three months ended September 30, 2024 exclude acquisition transaction costs of $610.

(8) See non-GAAP Financial Measures for a reconciliation of Net income as reported and Adjusted EBIT.

Favorable (Unfavorable)

Nine Months Ended September 30,

(Unfavorable)

Americas Welding:

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As a percent of sales

(1) Adjusted EBIT and Adjusted EBIT as a percent of sales decreased for the nine months ended September 30, 2025 as compared to September 30, 2024 primarily driven by the unfavorable impact of lower volumes, product mix and acquisitions.

(2) Adjusted EBIT and Adjusted EBIT as a percent of sales increased for the nine months ended September 30, 2025 as compared to September 30, 2024 primarily as a result of t he benefit of acquisitions , effective cost management and a favorable prior year comparison due to operational inefficiencies in 2024 which were not repeated in the current year .

(3) Adjusted EBIT and Adjusted EBIT as a percent of sales increased for the nine months ended September 30, 2025 as compared to September 30, 2024 primarily as a result of higher organic sales, effective cost management and operational improvements.

(4) The nine months ended September 30, 2025 exclude Rationalization and asset impairment net charges of $7,190 as discussed in Note 6.

The nine months ended September 30, 2024 exclude Rationalization and asset impairment net charges of $16,521 primarily due to restructuring activities, the amortization of the step up in value of acquired inventories of $3,224 and pension settlement charges of $3,966.

(5) The nine months ended September 30, 2025 exclude Rationalization and asset impairment net charges of $4,468 as discussed in Note 6 and the amortization of the step up in value of acquired inventories of $1,257 .

The nine months ended September 30, 2024 exclude Rationalization and asset impairment net charges of $32,030 primarily due to restructuring activities, including the impact of the Company’s disposition of its Russian entity, a loss on asset disposal of $4,950 and the amortization of the step up in value of acquired inventories of $250.

(6) The nine months ended September 30, 2025 exclude Rationalization and asset impairment net charges of $580 as discussed in Note 6.

The nine months ended September 30, 2024 exclude Rationalization and asset impairment net charges of $2,666 primarily due to restructuring activities.

(7) The nine months ended September 30, 2025 exclude acquisition transaction costs of $1,683 as discussed in Note 4.

The nine months ended September 30, 2024 exclude acquisition transaction costs of $4,551.

(1) Adjusted EBIT increased for the three months ended March 31, 2026 as compared to March 31, 2025 driven by the favorable net impact of organic sales, partially offset by unfavorable impact of product mix;

Adjusted EBIT as a percent of sales decreased for the same period due to the timing of pricing actions, higher employee costs and an increase in allocated corporate costs related to strategic initiatives.

(2) Adjusted EBIT and Adjusted EBIT as a percent of sales decreased for the three months ended March 31, 2026 as compared to March 31, 2025 primarily driven by the unfavorable impact of lower volumes and an increase in allocated corporate costs related to strategic initiatives, partially offset by the benefit of acquisitions.

(3) Adjusted EBIT and Adjusted EBIT as a percent of sales increased for the three months ended March 31, 2026 as compared to March 31, 2025 primarily driven by operating leverage from higher organic sales.

(4) The three months ended March 31, 2026 and 2025 exclude Rationalization and asset impairment net charges of $573 and $2,135, respectively, as discussed in Note 6 to the consolidated financial statements.

(5) The three months ended March 31, 2026 and 2025 exclude Rationalization and asset impairment net charges of $1,772 and $1,552, respectively, as discussed in Note 6 to the consolidated financial statements.

(6) The three months ended March 31, 2026 and 2025 exclude Rationalization and asset impairment net gains of $182 and net charges of $178, respectively, as discussed in Note 6 to the consolidated financial statements.

(7) The three months ended March 31, 2026 and 2025 exclude transaction costs of $653 and $802, respectively, as discussed in Note 4 to the consolidated financial statements.

(8) See non-GAAP Financial Measures for a reconciliation of Net income as reported and Adjusted EBIT.

Non-GAAP Financial Measures

The Company reviews Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate, Adjusted diluted earnings per share, Adjusted return on invested capital (“Adjusted ROIC”), Adjusted net operating profit after taxes, Cash conversion and Organic sales, all non-GAAP financial measures, in assessing and evaluating the Company’s underlying operating performance.

The Company reviews Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate, Adjusted diluted earnings per share, Adjusted return on invested capital (“Adjusted ROIC”), Adjusted net operating profit after taxes, Free cash flow, Cash conversion and Organic sales, all non-GAAP financial measures, in assessing and evaluating the Company’s underlying operating performance.

These non-GAAP financial measures exclude the impact of special items on the Company’s reported financial results.

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The following table presents the reconciliations of Operating income as reported to Adjusted operating income, Net income as reported to Adjusted net income and Adjusted EBIT, Effective tax rate as reported to Adjusted effective tax rate and Diluted earnings per share as reported to Adjusted diluted earnings per share:

Three Months Ended September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

Operating income as reported

Special items (pre-tax):

Rationalization and asset impairment charges (2)

Acquisition transaction costs (3)

Rationalization and asset impairment net charges (1)

Transaction costs (2)

Amortization of step up in value of acquired inventories (3)

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Special items:

Rationalization and asset impairment charges (2)

Acquisition transaction costs (3)

Pension settlement charges (4)

Rationalization and asset impairment net charges (1)

Transaction costs (2)

Amortization of step up in value of acquired inventories (3)

Loss on asset disposal (6)

Tax effect of Special items (4)

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Adjusted diluted earnings per share

(1) Adjusted operating income, adjusted net income, adjusted EBIT, adjusted effective tax rate and adjusted diluted EPS are non-GAAP financial measures.

Refer to Non-GAAP Information section.

(2) 2025 and 2024 net charges p rimarily relate to rationalization plans within all three segments .

Charges in 2024 include the impact of the Company’s disposition of its Russian entity.

(3) Transaction costs related to acquisitions which are included in Selling, general & administrative expenses .

(4) Pension settlement charges primarily due to the final settlement associated with the termination of a pension plan and are included in Other income (expense).

(5) Costs related to acquisitions which are included in Cost of goods sold.

(6) Loss on asset disposal included in Other income (expense).

(1) Primarily related to restructuring activities as discussed in Note 6 to the consolidated financial statements.

(2) Transaction costs primarily relate to acquisitions and are included in Selling, general & administrative expenses .

(3) Costs relate to acquisitions and are included in Cost of goods sold.

(4) Includes the net tax impact of Special items recorded during the respective periods.

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The applicable tax rates reflect the taxable jurisdiction and nature of each Special item.

(8) During the third quarter of 2025, the Company recognized tax expense of approximately $8,800, reflecting the cumulative impact of the OBBBA provisions.

Refer to Note 11 for further detail.

Liquidity and Capital Resources

The Company’s primary sources of liquidity are operating cash flows and revolving credit facilities.

As of September 30, 2025, the Company had $292,997 of cash and cash equivalents on hand and $88,199 of outstanding borrowings under its $1,031,386 revolving credit facilities .

As of March 31, 2026, the Company had $298,903 of cash and cash equivalents on hand and $163,502 of outstanding borrowings under its $1,024,982 revolving credit facilities .

The Company’s capital allocation priorities include internal investment to support existing operations and organic growth, investment in acquisitions to grow the business and then returning capital to shareholders through dividends and share repurchases.

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The following table reflects changes in key cash flow measures:

Nine Months Ended September 30,

Three Months Ended March 31,

Cash provided by operating activities (1)

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Capital expenditures

Acquisition of businesses, net of cash acquired

Cash used by financing activities

Proceeds from short-term borrowings

Proceeds from long-term borrowings

Payments on long-term borrowings

Proceeds from (payments on) short-term borrowings, net

Purchase of shares for treasury

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(Decrease) increase in Cash and cash equivalents

(1) Cash provided by operating activities increased for the nine months ended September 30, 2025, compared with the nine months ended September 30, 2024 primarily due to the net impacts of the OBBBA and improved working capital.

(2) Cash used by financing activities increased for the nine months ended September 30, 2025, compared with the nine months ended September 30, 2024 primarily due to the increase in purchases of shares for treasury and proceeds from long-term borrowings in the prior year.

As of September 30, 2025, the Company had cash of $292,997, of which $272,870 was held by international subsidiaries.

In October 2025, the Company paid a cash dividend of $0.75 per share, or $41,270, to shareholders of record on September 30, 2025.

(1) Cash provided by operating activities decreased for the three months ended March 31, 2026, compared with the three months ended March 31, 2025 primarily due to unfavorable working capital.

As of March 31, 2026, the Company had cash of $298,903, of which $281,612 was held by international subsidiaries.

In April 2026, the Company paid a cash dividend of $0.79 per share, or $43,282, to shareholders of record on March 31, 2026.

The Company currently anticipates capital expenditures of $110,000 to $130,000 in 2026.

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The revolving credit facility matures on June 20, 2029.

As of September 30, 2025, the Company had $915,000 of availability under the revolving credit facility.

Additionally, the Company has other lines of credit with total availability of $28,187 as of September 30, 2025.

Refer to Note 10 for further information on our revolving lines of credit.

Additionally, the Company has other lines of credit with total availability of $24,982.

As of March 31, 2026, the Company had total availability of $861,480 under its revolving credit facilities.

Refer to Note 10 to the consolidated financial statements for further information on our revolving lines of credit.

Working Capital Ratios

September 30, 2025

March 31, 2026

December 31, 2025

September 30, 2024

March 31, 2025

Average operating working capital to Net sales (1) (2)

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(1) Average operating working capital to net sales is defined as the sum of Accounts receivable, Inventories and contract assets less Trade accounts payable and contract liabilities as of period end divided by annualized rolling three months of Net sales.

(2) Due to the strategic increase of inventory to serve customers, the Company had higher inventories relative to expected Net sales resulting in higher Days sales in Inventories and Average operating working capital to Net sales.

Stock Repurchase Program

On February 12, 2020, the Company’s Board authorized a share repurchase program for up to 10 million shares of the Company’s common stock.

As of September 30, 2025, there were 5.3 million shares available under the authorization.

As of March 31, 2026, there were 4.9 million shares available under the authorization.

The Company is not obligated to make any repurchases.

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The following table presents the reconciliations of ROIC and Adjusted ROIC to net income:

Twelve Months Ended September 30,

Twelve Months Ended March 31,

Net income as reported

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Rationalization and asset impairment net charges

Acquisition transaction costs

Pension settlement net (gains) charges

Transaction costs

Pension settlement net charges

Amortization of step up in value of acquired inventories

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Invested Capital

September 30, 2025

September 30, 2024

March 31, 2026

March 31, 2025

Short-term debt

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Adjusted return on invested capital

(1) Includes the net tax impact of Special items recorded during the respective periods, including the cumulative impact of the OBBBA provisions.

(1) I ncludes the net tax impact of Special items recorded during the respective periods.

The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate.

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global regulatory complexity;

the effects of changes in tax law, including any changes from the new legislation implemented in the OBBBA;

the effects of changes in tax law;

tariff rates in the countries where the Company conducts business;

and the possible effects of events beyond

our control, including but not limited to, the ongoing geopolitical conflicts, political unrest, acts of terror, natural disasters and pandemics on the Company or its customers, suppliers and the economy in general.

and the possible effects of events beyond our control, including but not limited to, the ongoing geopolitical conflicts, political unrest, acts of terror, natural disasters and pandemics on the Company or its customers, suppliers and the economy in

For additional discussion, see “Item 1A.

Risk Factors” presented herein, as well as in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.

Risk Factors” presented herein, as well as in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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 2. Management’s Discussion and Analysis