Lincoln Electric (LECO) Q2 Earnings Beat, Revenues Rise Y/Y
Lincoln Electric Holdings, Inc. LECO reported record adjusted earnings of $2.44 per share in the second quarter of 2023, beating the Zacks Consensus Estimate of $2.32. The bottom line increased 12% year over year.
Including one-time items, the bottom line was a record $2.36 per share compared with $2.18 in the prior-year quarter.
Total revenues rose 9.4% year over year to a record $1,061 million. However, the top line missed the Zacks Consensus Estimate of $1,099 million. The improvement in revenues can be attributed to 4.5% growth in organic sales and 5.2% benefits from acquisitions. These gains were partly offset by unfavorable foreign currency exchange of 0.2%.
Our model predicted organic sales growth of 7.7% and 5.1% benefits from acquisitions. We expected headwinds from currency exchange to be 0.4%.
Costs and Margins
The cost of goods sold rose 8% to $687 million from the prior-year quarter. The gross profit increased 12% to $373 million. The gross margin was 35.2% compared with the year-ago quarter’s 34.4%.
Selling, general and administrative expenses increased 15.6% year over year to $193 million. Adjusted operating profit increased 9.5% to $184 million in the quarter. The adjusted operating margin was 17.3% in the reported quarter, flat year over year.
Lincoln Electric Holdings, Inc. Price, Consensus and EPS Surprise
Lincoln Electric Holdings, Inc. price-consensus-eps-surprise-chart | Lincoln Electric Holdings, Inc. Quote
Segmental Performance
Americas Welding: The segment’s total sales increased to $708 million from $625 million in the year-earlier quarter. The reported figure lagged our estimated revenues of $740 million. Adjusted operating income totaled $140 million compared with $118 million in the prior-year quarter. We estimated an adjusted operating income of $149 million.
International Welding: This segment’s revenues rose 6.5% year over year to $262 million in the reported quarter. We projected quarterly revenues of $260 million. The segment reported an adjusted operating profit of $34 million compared with the year-ago quarter’s $35 million. The reported figure surpassed our estimate of $33 million.
The Harris Products Group: The segment’s second-quarter total sales amounted to around $133 million, reflecting a year-over-year dip of 5%. The figure came below our projection of $138 million. Adjusted operating profit was $20 million compared with the prior-year quarter’s $18 million. Our prediction for the segment’s adjusted income was $19 million.
Financial Update
Lincoln Electric had cash and cash equivalents of around $220 million at the end of the second quarter of 2023 compared with $152 million at the second-quarter 2022 end. The company generated a record $199 million in cash flow from operations in the quarter under review, up 102% year over year. LECO returned $90 million to shareholders via dividends and share repurchases throughout the quarter.
Price Performance
Lincoln Electric’s shares have gained 44.8% in the past year compared with the industry’s growth of 17.6%.
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Zacks Rank & Other Key Picks
Lincoln Electric currently has a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the Industrial Products sector are Worthington Industries, Inc. WOR, The Manitowoc Company, Inc. MTW and Terex Corporation TEX. WOR and MTW sport a Zacks Rank #1 (Strong Buy) at present, and TEX has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Worthington Industries has an average trailing four-quarter earnings surprise of 14.9%. The Zacks Consensus Estimate for WOR’s fiscal 2023 earnings is pegged at $5.65 per share. The consensus estimate for 2023 earnings has moved north by 22.6% in the past 60 days. Its shares gained 52.2% in the last year.
Manitowoc has an average trailing four-quarter earnings surprise of 256.3%. The Zacks Consensus Estimate for MTW’s 2023 earnings is pegged at $1.12 per share. The consensus estimate for 2023 earnings has moved 7.8% north in the past 60 days. MTW’s shares gained 57.8% in the last year.
The Zacks Consensus Estimate for Terex’s 2023 earnings per share is pegged at $1.61. Estimates were unchanged in the last 60 days. It has a trailing four-quarter average earnings surprise of 27.1%. TEX gained 81.3% in the last year.
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