Lincoln Electric (LECO) investor relations material

Strategic outlook and growth plans

• Key themes for 2030 strategy will be announced in early 2026, with foundational growth drivers centered on innovation, technology, automation, and acquisitions.

• Targeting high single-digit to low double-digit growth, with acquisitions contributing 300–400 basis points.

• Operating margins have exceeded 17% for three years, with expectations for continued 200 basis point expansion per cycle.

• Capital allocation prioritizes internal growth, new products, and capacity, with balanced focus on automation and core welding.

• No pullback on internal investment or acquisitions due to macro uncertainty or interest rates; focus remains on long-term value creation.

Market dynamics and end-market performance

• Americas show steady volumes, especially in consumables, with resilience despite price increases.

• Heavy industries remain pressured, with growth not expected until 2026; general industries and automotive show steadiness, while energy is positive.

• Automation business is flat, with quoting activity high but order conversion delayed due to economic uncertainty.

• International margins have more than doubled since 2015, with optimism in Middle East and Southeast Asia, while Europe remains challenging.

• Retail partnerships, such as with Tractor Supply, have driven growth in Harris, but normalized demand is expected to be lower.

Pricing, cost management, and tariffs

• Maintains a price-cost neutral strategy, responding quickly to cost changes, including tariffs.

• LIFO accounting accelerates cost impact, requiring immediate pricing actions; $10 million LIFO charge recognized in first half.

• Five price increases implemented in the first half, with disciplined communication to channel partners and OEMs.

• Cost initiatives include diversifying suppliers, especially for steel, and targeting $10–15 million in permanent cost savings in the second half.

• Ongoing efforts to secure U.S. steel suppliers, with progress expected in the next 6–12 months.