Lincoln Electric (LECO) Q1 2026 earnings summary

Executive summary

• Achieved record net sales of $1.121 billion in Q1 2026, up 11.7% year-over-year, driven by strong pricing, acquisitions, and favorable foreign exchange, despite lower volumes and operating complexity from geopolitics and trade negotiations.

• Adjusted EPS reached a record $2.50, up 16% from the prior year, with reported EPS at $2.47.

• Launched the RISE strategy, including a new elite customer program and process innovation in welding consumables.

• Maintained a solid balance sheet and continued disciplined capital allocation, returning $101 million to shareholders via dividends and share repurchases.

• Net income rose 15.1% to $136.4 million.

Financial highlights

• Q1 sales rose 11.7% to $1.121 billion, driven by 10% higher price, 2% FX benefit, and 1.6% from acquisition, offset by 2.6% lower volumes.

• Gross profit increased 9.2% to $399.1 million; gross margin declined 80 bps to 35.6% due to lower volumes and product mix.

• Adjusted operating income up 11.5% to $189 million; adjusted operating margin steady at 16.9%.

• Cash flow from operations was $102 million, down 45% year-over-year due to higher working capital and inventory build.

• Free cash flow for the quarter was $63 million, with cash conversion at 46%.

Outlook and guidance

• Raised net sales growth outlook to high single digits, mainly price-driven, with low single-digit volume growth expected.

• New price actions in welding segments effective May; expect price cost neutrality by Q3.

• Capital expenditures for 2026 expected at $110–130 million, focused on capacity and operational effectiveness.

• Cash conversion targeted at 100% for the year, with inventory normalization in H2.

• Interest expense forecasted at $50–55 million; tax rate low-to-mid 20%.