Lincoln Electric (LECO) Q4 2011 earnings summary

Executive summary

• FY 2011 net sales rose 30.2% to $2,694,609 thousand; operating income increased to $296,680 thousand and net income to $217,186 thousand.

• Higher volume across all segments, pricing and acquisitions drove growth as global industrial demand improved; gross margin edged up to 27.3%.

• Q4 net sales were $694,513 thousand and net income was $57,733 thousand; diluted EPS was $0.68.

Financial highlights

• Net sales increased from $2,070,172 thousand in 2010; operating income rose from $186,430 thousand and net income from $130,244 thousand.

• Gross profit reached $736,737 thousand, up 30.7%; SG&A rose 16.4% to $439,775 thousand, including higher bonuses and selling, administrative and R&D costs.

• Reported diluted EPS was $2.56 vs. $1.53; Adjusted diluted EPS was $2.51 vs. $1.52, and Adjusted net income was $212,579 thousand vs. $129,600 thousand.

• FY 2011 included a $4,844 thousand tax-audit settlement benefit and $237 thousand after-tax rationalization and impairment charges.

Outlook and guidance

• 2012 capital expenditures are expected to be $65,000 thousand for maintenance, operational effectiveness, safety and environmental improvements, and international expansion.

• 2012 voluntary U.S. pension contributions are expected to be $30,000 thousand; defined-benefit pension expense is projected to increase $7,000–$9,000 thousand due to actuarial losses.

• The $80,000 thousand senior note due in March 2012 is expected to be repaid with operating cash, existing cash or credit-facility borrowings.

• A replacement for the $150,000 thousand revolving credit facility, expiring in November 2012, is expected; replacement and terms are not assured.