Lincoln Electric (LECO) Q4 2023 earnings summary

Executive summary

• FY2023 record net sales of $4,191.6M, adjusted operating margin of 17.1%, adjusted EPS of $9.41, and adjusted ROIC of 24.1%.

• Q4 net sales reached $1,058.5M, up 13.7%; organic sales grew 2.6%, and adjusted EPS was $2.45.

Financial highlights

• FY net sales rose 11.4%, including 4.0% organic growth, 7.4% from acquisitions, and 0.1% from favorable FX.

• FY adjusted operating income margin increased 30 bps to 17.1%; adjusted EPS rose 14% to $9.41.

• Q4 adjusted operating income was $182.1M, up 24.0%, with a 17.2% margin; adjusted net income was $142.0M, up 25.4%.

• Q4 GAAP operating income was $204.0M, or 19.3% of sales; GAAP net income was $156.6M, or $2.70 diluted EPS.

• FY GAAP net income was $545.2M, or $9.37 diluted EPS; adjusted net income was $548.0M, up 12.8%.

Outlook and guidance

• FY2024 assumptions: low- to mid-single-digit organic sales growth, neutral price / cost, and low- to mid-20% incremental operating income margin.

• FY2024 assumptions include $45M–$50M interest expense, a low- to mid-20% tax rate, $90M–$110M capex, and 100%+ cash conversion.

• Velion DC Fast Charger and large-scale 3D printing / Additive are opportunities outside guidance assumptions; priorities include customer focus, innovative products, and operational excellence.