Lincoln Electric (LECO) Q4 Earnings & Revenues Top Estimates
Lincoln Electric Holdings, Inc. LECO reported fourth-quarter 2023 adjusted earnings of $2.45 per share, beating the Zacks Consensus Estimate of $2.19. This marked a 26.3% year-over-year increase, driven by robust demand, effective cost management and operational enhancements. On Feb 15, the company's shares rose 8% in response to the stronger-than-anticipated results.
Including one-time items, the bottom line was $2.70 per share compared with $1.87 in the year-ago quarter.
Total revenues rose 13.7% year over year to a record $1.06 billion. The top line surpassed the Zacks Consensus Estimate of $1.03 billion. The improvement in revenues can be attributed to 2.6% growth in organic sales and a 9.8% benefit from acquisitions. Foreign currency exchange had a favorable impact of 1.3%.
Lincoln Electric Holdings, Inc. Price, Consensus and EPS Surprise
Lincoln Electric Holdings, Inc. price-consensus-eps-surprise-chart | Lincoln Electric Holdings, Inc. Quote
Costs and Margins
The cost of goods sold rose 10.4% year over year to $688 million. The gross profit increased 20.5% to $371 million. The gross margin was 35.1% compared with the year-ago quarter’s 33.1%, delivering a 200-basis point expansion.
Selling, general and administrative expenses increased 15.1% year over year to $189 million. Adjusted operating profit increased 24% year over year to $182 million in the quarter. LECO delivered a record adjusted operating margin of 17.2% for the quarter. The company had reported an operating margin of 15.8% in the year-ago quarter.
Segment Performances
Americas Welding: The segment’s total sales increased 14.4% to $690 million from $603 million in the year-earlier quarter. Adjusted operating income totaled $129.5 million compared with $114 million in the year-ago quarter.
International Welding: This segment’s revenues rose 22% year over year to $304 million in the reported quarter. The segment reported an adjusted operating profit of $43 million compared with the year-ago quarter’s $23 million.
The Harris Products Group: The segment’s fourth-quarter total sales amounted to around $114 million, reflecting a year-over-year dip of 2%. Adjusted operating profit was $15 million compared with the year-ago quarter’s $12 million.
Cash Flow & Balance Sheet
Lincoln Electric had cash and cash equivalents of around $394 million at the end of 2023 compared with $197 million at 2022 end. The company generated a record $668 million in cash flow from operations in 2023, up 74% year over year. LECO returned $347 million to shareholders via dividends and share repurchases through the quarter.
The company’s debt to invested capital was 45.8% at the end of 2023 compared with 53.8% at the end of 2022.
2023 Results
The company reported adjusted earnings of $9.41 per share in 2023, up 13.8% from $8.27 reported in 2022. The bottom-line figure also surpassed the Zacks Consensus Estimate of earnings of $9.16 per share and marked a record performance for the company. This reflects the strong demand in its markets and the effective execution of the Higher Standard strategy. Including one-time items, earnings were $9.37 per share for the year compared with $8.04 in 2022.
Total revenues rose 11% year over year to a record $4.19 billion. The top line beat the Zacks Consensus Estimate of $4.16 billion. The company witnessed 4% growth in organic sales. Acquisitions contributed 7.4% to sales improvement while foreign exchange added 0.1%.
Price Performance
Lincoln Electric’s shares have gained 43.3% in the past year compared with the industry’s 16.1% growth.
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Zacks Rank & Stocks to Consider
Lincoln Electric currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Cadre Holdings, Inc. CDRE, AZZ Inc. AZZ and Applied Industrial Technologies AIT. CDRE and AZZ currently sport a Zacks Rank # 1 (Strong Buy), while AIT carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Cadre Holdings’ 2024 earnings is pegged at $1.11 per share. The consensus estimate for 2024 earnings has moved 1% north in the past 60 days and suggests year-over-year growth of 16.7%. The company has a trailing four-quarter average earnings surprise of 33%. CDRE shares have gained 52.5% in the past year.
The consensus estimate for AZZ’s fiscal 2024 earnings is pegged at $4.19 per share. The consensus estimate for 2024 earnings has moved 2% north in the past 60 days. The company has a trailing four-quarter average earnings surprise of 37.6%. AZZ shares have rallied 82% in the past year.
Applied Industrial has an average trailing four-quarter earnings surprise of 13.9%. The Zacks Consensus Estimate for AIT’s 2024 earnings is pinned at $9.43 per share, which indicates year-over-year growth of 7.8%. Estimates have been unchanged in the past 60 days. The company’s shares have gained 31.8% in a year.
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