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What changed in LINCOLN ELECTRIC HOLDINGS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of LINCOLN ELECTRIC HOLDINGS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+166 added−185 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-27)

Top changes in LINCOLN ELECTRIC HOLDINGS INC's 2024 10-K

166 paragraphs added · 185 removed · 136 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeRisk Factors" for further discussion regarding risks associated with customers, general economic conditions and demand. Competition Conditions in the arc welding and cutting industry are highly competitive. The Company believes it is the world’s largest manufacturer of consumables and equipment with relatively few major broad-line competitors worldwide, but numerous smaller competitors in specific geographic markets.
Biggest changeThe Company believes it is the world’s largest manufacturer of consumables and equipment with relatively few major broad-line competitors worldwide, but numerous smaller competitors in specific geographic markets. The Company continues to pursue strategies to heighten its competitiveness in domestic and international markets, which includes positioning low cost manufacturing facilities in most geographical markets.
The Company has, through wholly-owned subsidiaries, manufacturing facilities located in the United States, Australia, Austria, Brazil, Canada, China, Colombia, France, Germany, India, Italy, Mexico, Poland, Portugal, Romania, Russia, South Korea, Spain, Turkey and the United Kingdom. The Company’s business units are aligned into three operating segments. The operating segments consist of Americas Welding, International Welding and The Harris Products Group.
The Company has, through wholly-owned subsidiaries, manufacturing facilities located in the United States, Australia, Austria, Brazil, Canada, China, Colombia, Denmark, France, Germany, India, Italy, Mexico, Poland, Portugal, Romania, South Korea, Spain, Turkey and the United Kingdom. The Company’s business units are aligned into three operating segments. The operating segments consist of Americas Welding, International Welding and The Harris Products Group.
The number of persons employed by the Company worldwide at December 31, 2023 was approximately 12,000. ​ Employee Engagement ​ The Company strongly believes that employee engagement drives better business results and that a highly engaged workforce can increase innovation, productivity and bottom-line performance while reducing costs.
The number of persons employed by the Company worldwide at December 31, 2024 was approximately 12,000. ​ Employee Engagement ​ The Company strongly believes that employee engagement drives better business results and that a highly engaged workforce can increase innovation, productivity and bottom-line performance while reducing costs.
The Company engages employees through individual, small group and town hall meetings, its Advisory Board, global intranet, employee surveys, resource groups, health and safety communications and initiatives, training and development, employee wellness programs, and an ethics hotline, among other vehicles.
The Company engages employees through individual, small group and town hall meetings, global intranet, employee surveys, resource groups, health and safety communications and initiatives, training and development, employee wellness programs, and an ethics hotline, among other vehicles.
This evaluation includes the Company’s CEO, as well as segment business and functional leaders who focus on high potential and diverse talent, as well as planning succession within the Company’s most critical roles. ​ The Company believes that the practices outlined above result in sustained increases in shareholder value and reflect its compensation philosophy of aligning long-term pay and performance. ​ Health and Safety ​ Health and safety is a priority for the Company, and its vision is an accident-free workplace with zero safety incidents.
This evaluation is utilized by the Company’s CEO, as well as segment business and functional executives, to identify high potential and diverse talent for further development to establish strong succession plans for the Company’s most critical roles. ​ The Company believes that the practices outlined above result in sustained increases in shareholder value and reflect its compensation philosophy of aligning long-term pay and performance. ​ Health and Safety ​ Health and safety is a priority for the Company, and its vision is an accident-free workplace with zero safety incidents.
The Company reviews and updates its human resources processes and benchmarks roles and compensation externally on a regular basis to help prevent bias and promote a diverse and inclusive workplace. ​ Compensation ​ The Company’s compensation program is designed to attract and retain exceptional employees and to maintain a strong pay for performance culture.
The Company focuses on recruiting and developing diverse talent and reviews and updates its human resources processes and benchmarks roles and compensation externally on a regular basis to help prevent bias and promote an engaged, industry-leading workplace. 3 Table of Contents ​ Compensation ​ The Company’s compensation program is designed to attract and retain exceptional employees and to maintain a strong pay for performance culture.
The Company ensures compliance as well as the continuous improvement of the environmental performance of its products and operations through its global Environmental, Health, Safety and Quality (“EHS&Q”) systems.
In addition, the Company is ISO 9001 certified at 47 facilities worldwide. The Company ensures compliance as well as the continuous improvement of the environmental performance of its products and operations through its global Environmental, Health, Safety and Quality (“EHS&Q”) systems.
The Company is one of only a few worldwide broad-line manufacturers of welding, cutting and brazing products. The Company is the world leader in the design, development and manufacture of arc welding products, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment. The Company also has a leading global position in brazing and soldering alloys.
The Company is the world leader in the design, development and manufacture of arc welding solutions, automated joining, assembly and cutting systems, plasma and oxyfuel cutting equipment, and has a leading global position in brazing and soldering alloys.
The Company believes its performance against these factors has contributed to the Company’s position as the leader in the industry. Most of the Company’s products may be classified as standard commercial articles and are manufactured for stock.
Competition in the arc welding and cutting industry is based on brand preference, product quality, price, performance, warranty, delivery, service and technical support. The Company believes its performance against these factors has contributed to the Company’s position as the leader in the industry. Most of the Company’s products may be classified as standard commercial articles and are manufactured for stock.
Patents and Trademarks The Company holds many valuable patents, primarily in arc welding, and actively protects its innovations as research and development has progressed in both the United States and major international jurisdictions.
Patents and Trademarks The Company holds many valuable patents, primarily in arc welding, and actively protects its innovations as research and development has progressed in both the United States and major international jurisdictions. The Company believes its trademarks are an important asset and aggressively pursues brand management. Environmental Regulations The Company’s facilities are subject to environmental regulations.
The Company’s programs include formal leadership, management and professional development programs, tuition reimbursement for external accredited programs, mentoring, self-guided online courses, instructor-led programs and special project and rotational assignments that can lead to extensive global exposure. ​ Diversity and Inclusion ​ The Company has a longstanding commitment to equal opportunity in all aspects of employment—including employee compensation, job placement and promotion regardless of gender, race or other personal characteristics.
The Company’s programs include formal leadership, management and professional development programs, tuition reimbursement for external accredited programs, comprehensive employee safety and compliance training, early career and internship programs, mentoring, self-guided online courses, instructor-led programs and special project and rotational assignments that can lead to extensive global exposure. ​ Global Diversity and Culture ​ The Company has a globally diverse workforce with many cultures, subcultures, religions, lifestyles, and languages.
The Company’s culture is underpinned by its core values, including the guiding principles championed by James F. and John C. Lincoln when they founded Lincoln Electric over 125 years ago – The Golden Rule: Treat Others How You Would Like to Be Treated.
Lincoln when they founded Lincoln Electric 130 years ago – The Golden Rule: Treat Others How You Would Like to Be Treated.
The Company believes its trademarks are an important asset and aggressively pursues brand management. 2 Table of Contents ​ Environmental Regulations The Company’s facilities are subject to environmental regulations. To date, compliance with these environmental regulations has not had a material adverse effect on the Company’s earnings.
To date, compliance with these environmental regulations has not had a material adverse effect on the Company’s earnings. The Company is ISO 14001 certified at 2 Table of Contents ​ most significant manufacturing facilities in North America and Europe and is progressing towards certification at its remaining facilities worldwide.
Overall demand for arc welding and cutting products is largely determined by economic cycles and the level of capital spending in manufacturing and other industrial sectors. The Company experiences some variability in reported period-to-period results as historical demand for the Company’s products is mildly seasonal with generally higher demand in the second and third quarters. See "Item 1A.
Overall demand for arc welding and cutting products is largely determined by economic cycles and the level of capital spending in manufacturing and other industrial sectors. See "Item 1A. Risk Factors" for further discussion regarding risks associated with customers, general economic conditions and demand. Competition Conditions in the arc welding and cutting industry are highly competitive.
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The Company continues to pursue strategies to heighten its competitiveness in domestic and international markets, which includes positioning low cost manufacturing facilities in most geographical markets. Competition in the arc welding and cutting industry is based on brand preference, product quality, price, performance, warranty, delivery, service and technical support.
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The Company has a longstanding commitment to equal opportunity in all aspects of employment—including employee compensation, job placement and promotion regardless of gender, race or other personal characteristics. The Company’s culture is underpinned by its core values, including the guiding principle championed by James F. and John C.
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The Company is ISO 14001 certified at most significant manufacturing facilities in North America and Europe and is progressing towards certification at its remaining facilities worldwide. In addition, the Company is ISO 9001 certified at 46 facilities worldwide.
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The Company has implemented several measures that focus on accountability for making progress in diversity. 3 Table of Contents ​ The CEO and other senior leaders have diversity and inclusion objectives as part of their annual performance goals. The Company focuses on diverse talent sourcing strategies and partners with external organizations that develop and supply diverse talent.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeHowever, cybersecurity threats or cybersecurity incidents involving our systems or those of our third party service providers could interrupt our ability to manage and operate the business, impact data, and adversely affect our results of operations and financial condition.
Biggest changeHowever, cybersecurity threats, cybersecurity incidents or disruptions involving our systems or those of our third-party business partners, or any failure by us or our third-party business partners to effectively address, enforce or maintain our information systems could interrupt our ability to manage and operate the business, impact data, and adversely affect our business strategy, results of operations and financial condition, including major disruptions to business operations, loss of intellectual property, release of confidential information, alteration or corruption of data or systems, costs related to remediation and recovery, and litigation including individual claims or consumer class actions, commercial litigation, 7 Table of Contents ​ administrative, and civil or criminal investigations or actions, regulatory intervention and sanctions or fines, investigation and remediation costs and possible prolonged negative publicity.
Claims of intellectual property infringement also might require us to redesign affected products, enter into costly settlements or license agreements, pay costly damage awards or face a temporary or permanent injunction prohibiting us from manufacturing, marketing or selling certain of our products. The competitive pressures we face could harm our revenue, results of operations and prospects.
Claims of intellectual property infringement might also require us to redesign affected products, enter into costly settlements or license agreements, pay costly damage awards or face a temporary or permanent injunction prohibiting us from manufacturing, marketing or selling certain of our products. The competitive pressures we face could harm our revenue, results of operations and prospects.
We have previously initiated, and may in the future initiate significant rationalization activities to align our business with market conditions and improve our overall competitiveness, including with respect to the integration of acquired businesses. Such rationalization activities could fail to deliver the desired competitive cost structure and could result in disruptions in customer service.
We have previously initiated, and may initiate in the future, significant rationalization activities to align our business with market conditions and improve our overall competitiveness, including with respect to the integration of acquired businesses. Such rationalization activities could fail to deliver the desired competitive cost structure and could result in disruptions in customer service.
These risks could have a material impact on our business, financial condition, operating results and cash flows. Our Enterprise Risk Management ("ERM") process seeks to identify and address significant risks. Our ERM process is a company-wide initiative that is designed with the intent of prioritizing risks and allocating appropriate resources to address such risks.
These risks could have a material impact on our business, financial condition, operating results and cash flows. Our Enterprise Risk Management (“ERM”) process seeks to identify and address significant risks. Our ERM process is a company-wide initiative that is designed with the intent of prioritizing risks and allocating appropriate resources to address such risks.
There are a number of risks in doing business internationally, which may impede our ability to achieve our strategic objectives relating to our foreign operations, including: ● Political and economic uncertainty and social turmoil; ● Corporate governance and management challenges in consideration of the numerous U.S. and foreign laws and regulations, including regulations relating to import-export control, technology transfer restrictions, repatriation of earnings and funds, exchange controls, labor regulations, nationalization, tariffs, data protection and privacy requirements, anti-boycott provisions and anti-bribery laws (such as the Foreign Corrupt Practices Act and the Organization for Economic Cooperation and Development Convention); ● International terrorism and hostilities; ● Changes in the global regulatory environment, including revised or newly created laws, regulations or standards relating to the Company, our products or the markets in which we operate; and ● Significant fluctuations in relative currency values; in particular, an increase in the value of the U.S. dollar against foreign currencies could have an adverse effect on our profitability and financial condition, as well as the imposition of exchange controls, currency devaluations and hyperinflation.
There are a number of risks in doing business internationally, which may impede our ability to achieve our strategic objectives relating to our foreign operations, including: ● Political and economic uncertainty and social turmoil; ● Corporate governance and management challenges in consideration of the numerous U.S. and foreign laws and regulations, including regulations relating to import-export control, technology transfer restrictions, repatriation of earnings and funds, exchange controls, labor regulations, nationalization, tariffs, data protection and privacy requirements, anti-boycott provisions and anti-bribery laws (such as the Foreign Corrupt Practices Act and the Organization for Economic Co-operation and Development Convention); ● International terrorism and hostilities; ● Changes in the global regulatory environment, including revised or newly created laws, regulations or standards relating to the Company, our products or the markets in which we operate; and ● Significant fluctuations in relative currency values; in particular, an increase in the value of the U.S. dollar against foreign currencies could have an adverse effect on our profitability and financial condition, as well as the imposition of exchange controls, currency devaluations and hyperinflation.
Our Board of Directors provides oversight of the ERM process and systematically reviews identified critical risks. The Audit Committee also reviews major financial risk exposures and the steps management has taken to monitor and control them.
Our Board of Directors (“Board”) provides oversight of the ERM process and systematically reviews identified critical risks. The Audit Committee also reviews major financial risk exposures and the steps management has taken to monitor and control them.
ITEM 1A. RISK FACTORS From time to time, information we provide, statements by our employees or information included in our filings with the SEC may contain forward-looking statements that are not historical facts. Those statements are "forward-looking" within the meaning of the Private Securities Litigation Reform Act of 1995.
ITEM 1A. RISK FACTORS From time to time, information we provide, statements by our employees or information included in our filings with the SEC may contain forward-looking statements that are not historical facts. Those statements are “forward-looking” within the meaning of the Private Securities Litigation Reform Act of 1995.
Risks Related to Manufacturing and Operations Economic and supply disruptions associated with events beyond our control, such as war, acts of terror, political unrest, pandemic, labor disputes, natural disasters could adversely affect our supply chain and distribution channels or result in loss of sales and customers.
Risks Related to Manufacturing and Operations Economic and supply disruptions associated with events beyond our control, such as war, acts of terror, political unrest, pandemics, labor disputes and natural disasters could adversely affect our supply chain and distribution channels or result in loss of sales and customers.
There can be no assurance that changes in tax laws or regulations, both within the United States and the various foreign jurisdictions in which we operate, such as the proposed 15% global minimum tax under the Organisation for Economic Co-operation and Development (the “OECD”) Pillar Two, Global Anti-Base Erosion Rules (The “Pillar Two Rules”), will not materially and adversely affect our effective tax rate, tax payments, financial condition and results of operations.
There can be no assurance that changes in tax laws or regulations, both within the United States and the various foreign jurisdictions in which we operate, such as the 15% global minimum tax under The Organization for Economic Co-operation and Development (the “OECD”) Pillar Two, Global Anti-Base Erosion Rules (the “Pillar Two Rules”), will not materially and adversely affect our effective tax rate, tax payments, financial condition and results of operations.
In the normal course of business, we are exposed to market risks related to the availability of and price fluctuations in the purchase of energy and commodities used in the manufacture of our products (primarily steel, brass, copper, silver, aluminum alloys, electronic components, electricity and natural gas).
In the normal course of business, we are exposed to market risks related to the availability of and price fluctuations in the purchase of energy and commodities used in the manufacturing of our products (primarily steel, brass, copper, silver, aluminum alloys, electronic components, electricity and natural gas).
If environmental laws or regulations are either changed or adopted and impose significant operational restrictions and compliance requirements upon us or our products, they could negatively impact our business, capital expenditures, results of operations, financial condition and competitive position.
If environmental laws or regulations are either changed or adopted and impose significant operational restrictions and compliance requirements upon us or our products, it could negatively impact our business, capital expenditures, results of operations, financial condition and competitive position.
For example, while steel manufacturers traditionally have not been significant competitors in the domestic arc welding industry, some foreign integrated steel producers manufacture selected consumable arc welding products and robotic arm manufacturers compete in the automated welding and cutting space. In addition, in certain markets of the world, distributors manufacture and sell arc welding products.
For example, while steel manufacturers traditionally have not been significant competitors in the domestic arc welding industry, some 9 Table of Contents ​ foreign integrated steel producers manufacture selected consumable arc welding products and robotic arm manufacturers compete in the automated welding and cutting space. In addition, in certain markets of the world, distributors manufacture and sell arc welding products.
We may incur substantial costs, including 11 Table of Contents ​ cleanup costs, fines and civil or criminal sanctions, liabilities resulting from third-party property damage or personal injury claims, or our products could be prohibited from entering certain jurisdictions, if we were to violate or become liable under environmental laws, if our products become non-compliant with environmental laws or if we were to undertake environmental protection actions voluntarily.
We may incur substantial costs, including cleanup costs, fines and civil or criminal sanctions, liabilities resulting from third-party property damage or personal injury claims, or our products could be prohibited from entering certain jurisdictions, if we were to violate or become liable under environmental laws, if our products become non-compliant with environmental laws or if we were to undertake environmental protection actions voluntarily.
The amount of income taxes paid is subject to ongoing audits by the United States federal, state and local tax authorities and by foreign tax authorities. If these audits result in assessments different from amounts reserved, future financial results may include unfavorable adjustments which could have a material adverse effect on our results of operations.
The amount of income taxes paid is subject to ongoing audits by the U.S. federal, state and local tax authorities and by foreign tax authorities. If these audits result in assessments different from amounts reserved, future financial results may include unfavorable adjustments which could have a material adverse effect on our results of operations.
If economic, business and industry conditions deteriorate, capital spending in those sectors may be substantially decreased, which could reduce demand for our products and have an adverse effect on our revenues and results of operations.
If economic, business and industry conditions 6 Table of Contents ​ deteriorate, capital spending in those sectors may be substantially decreased, which could reduce demand for our products and have an adverse effect on our revenues and results of operations.
Overall demand for arc welding and cutting products is largely determined by the level of capital spending in manufacturing and other industrial sectors, and the welding industry has historically 6 Table of Contents ​ experienced contraction during periods of slowing industrial activity.
Overall demand for arc welding and cutting products is largely determined by the level of capital spending in manufacturing and other industrial sectors, and the welding industry has historically experienced contraction during periods of slowing industrial activity.
Our current operational cash flow is sufficient to fund our acquisition plans, but a significant acquisition could require access to the capital markets. Additionally, from time to time we may identify assets for strategic divestitures that would increase capital resources available for other activities and create organizational and operational efficiencies.
Our current operational cash flow is sufficient to fund our acquisition plans, but a significant acquisition could require access to the capital markets. 8 Table of Contents ​ Additionally, from time to time, we may identify assets for strategic divestitures that would increase capital resources available for other activities and create organizational and operational efficiencies.
Increases in the cost of raw materials and components may adversely affect our profitability if we are unable to pass along to our customers these cost increases in the form of price increases or otherwise reduce our cost of goods sold.
Increases in the cost of raw materials and components may adversely affect our profitability if we are unable to pass these cost increases along to our customers or reduce our cost of goods sold.
Since January 1, 1995, we have been a co-defendant in asbestos cases that have been resolved as follows: 56,986 of those claims were dismissed, 23 were tried to defense verdicts, 7 were tried to plaintiff verdicts (which were reversed or resolved after appeal), 1 was resolved by agreement for an immaterial amount and 1,015 were decided in favor of the Company following summary judgment motions.
Since January 1, 1995, we have been a co-defendant in asbestos cases that have been resolved as follows: 57,080 of those claims were dismissed, 23 were tried to defense verdicts, 7 were tried to plaintiff verdicts (which were reversed or resolved after appeal), 1 was resolved by agreement for an immaterial amount and 1,018 were decided in favor of the Company following summary judgment motions.
We may be exposed to certain regulatory and financial risks related to climate change. A number of governments and agencies in the U.S. and in foreign jurisdictions have proposed and may continue to introduce regulatory changes to address climate change, including regulations related to greenhouse gas emissions.
We may be exposed to certain regulatory and financial risks related to climate change. A number of governments and agencies in the United States and in foreign jurisdictions have proposed and may continue to introduce regulatory changes to address climate change, including regulations related to greenhouse gas emissions.
The risk factors and uncertainties described below, together with information incorporated by reference or otherwise included elsewhere in this Annual Report on Form 10- K, should be carefully considered. Although the risks are organized by headings, and each risk is discussed separately, many are interrelated.
The risk factors and uncertainties described below, together with information incorporated by reference or otherwise included elsewhere in this report, should be carefully considered. Although the risks are organized by headings, and each risk is discussed separately, many are interrelated.
In certain cases, we design automated welding systems for use in a customer’s production facilities (including automotive production facilities), which could expose us to financial losses or professional liability.
In certain 10 Table of Contents ​ cases, we design automated welding systems for use in a customer’s production facilities (including automotive production facilities), which could expose us to financial losses or professional liability.
We cannot be assured that new products or product improvements, once developed, will meet with customer acceptance and contribute positively to our operating results, or that we will be able to continue our 8 Table of Contents ​ product development efforts at a pace to sustain future growth.
We cannot be assured that new products or product improvements, once developed, will be met with customer acceptance and contribute positively to our operating results, or that we will be able to continue our product development efforts at a pace to sustain future growth.
Laws and regulations addressing personal information, including with respect to the European Union’s General Data Protection Regulation ("GDPR"), and the interpretation and enforcement of these and similar laws and regulations, are continuously evolving and there is significant uncertainty with respect to how compliance with these laws and regulations may develop and the costs and complexity of future compliance.
Laws and regulations addressing personal information, including with respect to the European Union’s General Data Protection Regulation ("GDPR"), U.S. state privacy laws such as the California Consumer Privacy Act, and the interpretation and enforcement of these and similar laws and regulations, are continuously evolving and there is significant uncertainty with respect to how compliance with these laws and regulations may develop and the costs and complexity of future compliance.
Recessionary economic cycles, global supply chain disruptions, higher logistics costs, higher interest rates, inflation, higher raw materials costs, higher labor costs, trade barriers in the world markets, financial turmoil related to sovereign debt and changes in tax laws or trade laws or other economic factors affecting the countries and industries in which we do business could adversely affect demand for our products.
Recessionary economic cycles, global supply chain disruptions, higher logistics costs, higher interest rates, inflation, higher raw materials costs, higher labor costs, trade barriers in the world markets, financial turmoil related to sovereign debt and changes in tax laws or trade laws or other economic factors and other challenges affecting the countries and industries in which we do business, including, but not limited to, the ongoing conflicts between Russia and Ukraine and in the Middle East, could adversely affect demand for our products.
Any failure, or perceived failure, to comply with data protection or privacy-related legal obligations may result in governmental enforcement actions, litigation, or negative publicity, and could have an adverse effect on our operations and financial condition. ​ Our global operations are subject to increasingly complex environmental regulatory requirements.
Any failure, or perceived failure, to comply with data protection or privacy-related legal obligations may result in governmental enforcement actions, regulatory intervention and sanctions or fines, investigating costs, consumer 11 Table of Contents ​ class actions or commercial litigation, or negative publicity, and could have an adverse effect on our operations and financial condition. ​ Our global operations are subject to increasingly complex environmental regulatory requirements.
For more information regarding rationalization plans, refer to the rationalization and asset impairment related disclosure under Note 7 to the Company’s consolidated financial statements. ​ 9 Table of Contents ​ Risks Related to Legal, Compliance and Regulatory Matters ​ We are a co-defendant in litigation alleging asbestos induced illness.
For more information regarding rationalization plans, refer to the rationalization and asset impairment related disclosure under Note 7 to the Company’s consolidated financial statements. Risks Related to Legal, Compliance and Regulatory Matters ​ We are a co-defendant in litigation alleging asbestos induced illness. Liabilities relating to such litigation could reduce our profitability and impair our financial condition.
Our facilities and operations, and the facilities and operations of our suppliers and customers, could be disrupted by events beyond our control, such as war, political unrest, pandemics, labor disputes and natural disasters, including events caused by climate change. Any such disruption could cause delays in the production and distribution of our products and the loss of sales and customers.
Our facilities and operations, and the facilities and operations of our suppliers and customers, could be disrupted by events beyond our control, such as war, acts of terror, political unrest, pandemics, labor disputes and natural disasters, including events caused by climate change.
Like many companies, our information systems and those of third parties who provide products or services to us may be subject to cybersecurity threats and cybersecurity incidents. To date, no such cybersecurity incidents have had a material impact on our business or operations.
Like many companies, our information systems and those of third parties who provide products or services to us may be subject to cybersecurity threats and cybersecurity incidents.
Forward-looking statements generally can be identified by the use of words such as "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "forecast," "guidance" or words of similar meaning. Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company’s operating results.
Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “forecast,” “guidance” or words of similar meaning. Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company’s operating results.
Insurance proceeds may not adequately compensate the Company for the losses. Availability of and volatility in energy costs or raw material prices may adversely affect our performance.
Any such disruption could cause delays in the production and distribution of our products and the loss of sales and customers. Insurance proceeds may not adequately compensate the Company for the losses. Availability of and volatility in energy costs or raw material prices may adversely affect our business.
Our business exposes us to potential product liability risks that are inherent in the design, manufacture, sale and application of our products and the products of third-party suppliers that we utilize or resell.
We may incur material losses and costs as a result of product liability claims that may be brought against us or failure to meet contractual performance commitments. Our business exposes us to potential product liability risks that are inherent in the design, manufacture, sale and application of our products and the products of third-party suppliers that we utilize or resell.
Our sales and results of operations, as well as our plans to expand in some foreign countries, could be adversely affected by this practice. We may incur additional restructuring charges as we continue to contemplate rationalization actions in an effort to optimize our cost structure and may not achieve the anticipated savings and benefits of these actions.
We may incur additional restructuring charges as we continue to contemplate rationalization actions in an effort to optimize our cost structure, and, as a result, we may not achieve the anticipated savings and benefits of these actions.
The Company continues to monitor the Russia-Ukraine conflict and its potential impacts. ​ We conduct our sales and distribution operations on a worldwide basis and maintain manufacturing facilities in a number of foreign countries, which subjects us to risks associated with doing business outside the United States.
Any further changes in the United States or international trade policy could have an adverse impact on our business. ​ We conduct our sales and distribution operations on a worldwide basis and maintain manufacturing facilities in a number of foreign countries, which subjects us to risks associated with doing business outside the United States.
The Company continues to invest in cybersecurity, including measures intended to maintain and enhance cybersecurity resilience, and the Company’s cybersecurity risks are regularly monitored by the Audit Committee of our Board of Directors.
The Company continues to invest in cybersecurity, including measures intended to maintain and enhance cybersecurity resilience, and the Company’s cybersecurity risks are regularly monitored by the Audit Committee of our Board. Nevertheless, due to the nature of cybersecurity threats, there can be no assurance that our preventive efforts can fully mitigate the risks of all cybersecurity threats and cybersecurity incidents.
Additional risks and uncertainties of which we are currently unaware or that we currently believe to be immaterial may also adversely affect our business.
Additional risks and uncertainties of which we are currently unaware or that we currently believe to be immaterial may also adversely affect our business. 5 Table of Contents ​ Risks Related to Economic Conditions General economic, financial and market conditions may adversely affect our financial condition, results of operations and access to capital markets.
Domestic and international tax liabilities are subject to the allocation of income among various tax jurisdictions. Our effective tax rate could be adversely affected by changes in the mix among earnings in countries with differing statutory tax rates, changes in the valuation allowances of deferred tax assets or changes in tax laws.
Our effective tax rate could be adversely affected by changes in the mix among earnings in countries with differing statutory tax rates, changes in the valuation allowances of deferred tax assets or changes in tax laws. In addition, there is uncertainty in changes to the U.S. tax rate due to the new U.S. presidential administration.
In addition, our backlog consists of the expected revenue from projects for which we have an executed contract or commitment with a customer.
In addition, our backlog consists of the expected revenue from projects for which we have an executed contract or commitment with a customer. Project cancellations, scope adjustments, deferrals or changes in cost estimates may reduce the dollar amount of revenue and profits that we actually earn.
Competition for these individuals is intense and compensation rates are increasing due to lower labor availability. Under these conditions, we may not succeed in identifying, attracting or retaining qualified personnel. With our strategy to expand internationally into developing markets, we may incur additional risks as some developing economies lack a sufficiently trained labor pool.
With our strategy to expand internationally into developing markets, we may incur additional risks as some developing economies lack a sufficiently trained labor pool.
Liabilities relating to such litigation could reduce our profitability and impair our financial condition. As of December 31, 2023, we were a co-defendant in cases alleging asbestos induced illness involving claims by approximately 1,387 plaintiffs. In each instance, we are one of a large number of defendants.
As of December 31, 2024, we were a co-defendant in cases alleging asbestos induced illness involving claims by approximately 1,300 plaintiffs. In each instance, we are one of a large number of defendants. The asbestos claimants allege that exposure to asbestos contained in welding consumables caused the plaintiffs to develop adverse pulmonary diseases, including mesothelioma and other lung cancers.
Any of these events could have an adverse effect on our results of operations and financial condition. 7 Table of Contents ​ Risks Related to Human Capital Our operations depend on maintaining a skilled workforce, and any interruption in our workforce could negatively impact our results of operations and financial condition.
Risks Related to Human Capital Our operations depend on maintaining a skilled workforce, and any interruption in our workforce could negatively impact our results of operations and financial condition. Our success depends in part on the efforts and abilities of our management team and key employees. Their skills, experience and industry knowledge significantly benefit our operations and performance.
Project cancellations, scope adjustments, deferrals or changes in cost estimates may reduce the dollar amount of revenue and profits that we actually earn. 10 Table of Contents ​ Changes in tax rates or exposure to additional income tax liabilities could affect profitability. Our business is subject to income taxes in the United States and various foreign jurisdictions.
Changes in tax rates or exposure to additional income tax liabilities could have a material adverse effect on our results of operations. Our business is subject to income taxes in the United States and various foreign jurisdictions. Domestic and international tax liabilities are subject to the allocation of income among various tax jurisdictions.
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Readers should not interpret the disclosure of any risk factor to imply that the risk has not yet already materialized. 5 Table of Contents ​ Risks Related to Economic Conditions General economic, financial and market conditions may adversely affect our financial condition, results of operations and access to capital markets.
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We cannot predict what further action may be taken with respect to tariffs or trade relations between the United States and other governments.
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In March 2022, in response to Russia’s invasion of Ukraine, the Company announced it had ceased operations in Russia and implemented plans to support its Russian employees.
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Cybersecurity incidents and similar attacks vary in their form and can include the deployment of harmful malware or ransomware, denial-of-service attacks, and other attacks, which may affect business continuity and threaten the availability, confidentiality and integrity of our systems and information.
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Although the Company’s Net sales and Total assets in Russia were less than 1% of consolidated Net sales and Total assets for the year ended December 31, 2023 and 2022, the Russia-Ukraine conflict and sanctions imposed globally may result in economic and supply chain disruptions, the ultimate financial impact of which cannot be reasonably estimated at this time.
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Cybersecurity incidents can also include employee or personnel failures, fraud, phishing or other social engineering attempts or other methods to cause confidential information, payments, account access or access credentials, or other data to be transmitted to an unintended recipient.
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Nevertheless, due to the nature of cybersecurity threats, there can be no assurance that our preventive efforts can fully mitigate the risks of all cybersecurity threats and cybersecurity incidents, and a significant cybersecurity incident could result in financial loss, unfavorable publicity, damage to our reputation, loss of data, including our trade secrets and other competitive information, allegations by our customers and business partners that we have not performed our contractual obligations, litigation by affected parties, governmental investigations, and related monetary damages, injunctive requirements, and fines or other sanctions.
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Cybersecurity threat actors also may attempt to exploit vulnerabilities in software that is commonly used by companies in cloud-based services and bundled software. To date, no such cybersecurity incidents have had a material impact on our business or operations.
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Our success depends in part on the efforts and abilities of our management team and key employees. Their skills, experience and industry knowledge significantly benefit our operations and performance. Our future success will also depend on our ability to identify, attract and retain highly qualified managerial and technical (including research and development) personnel.
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Any of these events could have an adverse effect on our business strategy, results of operations and financial condition. ​ We may be incorporating artificial intelligence technologies into our products, services and processes. These technologies may present business, compliance and reputational risks.
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The asbestos claimants allege that exposure to asbestos contained in welding consumables caused the plaintiffs to develop adverse pulmonary diseases, including mesothelioma and other lung cancers.
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The introduction of artificial intelligence ("AI") and machine-learning technologies, particularly generative AI, into internal processes, third-party services and/or new and existing offerings may result in new or expanded risks and liabilities, including due to enhanced governmental or regulatory scrutiny, litigation, compliance issues, ethical concerns, confidentiality or security risks, as well as other factors that could adversely affect our business, reputation and financial results.
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Asbestos use in welding consumables in the U.S. ceased in 1981. We may incur material losses and costs as a result of product liability claims that may be brought against us or failure to meet contractual performance commitments.
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In addition, our personnel could, unbeknownst to us, improperly utilize AI and machine learning-technology while carrying out their responsibilities. The use of AI in third-party services and the development of our products and services could also cause loss of intellectual property, as well as subject us to risks related to intellectual property infringement or misappropriation, data privacy and cybersecurity.
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The use of artificial intelligence can lead to unintended consequences, including generating content that appears correct but is factually inaccurate, misleading or otherwise flawed, or that results in unintended biases and discriminatory outcomes, which could harm our reputation and business and expose us to risks related to inaccuracies or errors in the output of such technologies.
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Our future success will also depend on our ability to identify, attract and retain highly qualified managerial and technical (including research and development) personnel. Competition for these individuals is intense and compensation rates are increasing due to lower labor availability. Under these conditions, we may not succeed in identifying, attracting or retaining qualified personnel.
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Our sales and results of operations, as well as our plans to expand in some foreign countries, could be adversely affected by this increased competition.
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Asbestos use in welding consumables in the United States ceased in 1981.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeITEM 1C. CYBERSECURITY ​ Risk Management and Strategy Our cybersecurity risk management process is integrated into our Enterprise Risk Management “ERM” process as described in Item 1A. Risk Factors. Cybersecurity has been identified as a critical risk.
Biggest changeITEM 1C. CYBERSECURITY ​ Risk Management and Strategy Our cybersecurity risk management process is integrated into our ERM process as described in Item 1A. Risk Factors. Cybersecurity has been identified as a critical risk. To identify, assess, and manage material cybersecurity risks, we regularly evaluate and take steps to enhance our cybersecurity protocols to protect against or mitigate cyber threats.
However, if as a result of any future incidents or our systems are significantly damaged, cease to function properly or are subject to a significant cybersecurity incident, we may suffer an interruption in our ability to manage and operate the business, and our results of operations and financial condition could be adversely affected.
However, if as a result of any future incidents our systems are significantly damaged, cease to function properly or are subject to a significant cybersecurity incident, we may suffer an interruption in our ability to manage and operate the business, and our results of operations and financial condition could be adversely affected.
We maintain processes to oversee and identify cybersecurity risks associated with our use of third-party service providers such as vigilant contract and vendor due diligence review, as well as annual review of the service providers’ independent audit report where applicable.
We maintain processes to oversee and identify cybersecurity risks associated with our use of third-party service providers such as contract and vendor due diligence review, as well as annual review of the service providers’ independent audit report where applicable.
The Company maintains an insurance policy with respect to cybersecurity and has 12 Table of Contents ​ undergone several simulation, preparedness and response exercises. See “Risks Related to Manufacturing and Operations” in Item 1A.
The Company maintains an insurance policy with respect to cybersecurity and has undergone several simulation, preparedness and response exercises. See “Risks Related to Manufacturing and Operations” in Item 1A.
The Audit Committee regularly monitors the Company’s cybersecurity risks and receives updates from the Chief Information Officer (“CIO”) at each meeting. In addition, the Audit Committee regularly reviews the overall effectiveness of the information technology security environment. The CIO reports to the full Board about cybersecurity on an annual basis. Lisa Dietrich is our CIO. Ms.
The Audit Committee regularly monitors the Company’s cybersecurity risks and receives updates from the Chief Information Officer (“CIO”) at each meeting. In addition, the Audit Committee regularly reviews the overall effectiveness of the information technology security environment as part of quarterly updates provided by the CIO. The CIO reports to the full Board about cybersecurity on an annual basis.
Like many companies, our systems and those of our third party providers who provide us with services and products may be subject to cybersecurity threats and cybersecurity incidents. To date, no such cybersecurity incidents have had a material impact on our business or operations.
Like many companies, our systems and those of our third party providers who provide us with services and products may be subject to cybersecurity threats and cybersecurity incidents. To date, no such cybersecurity incidents have had or are reasonably likely to have a material impact on our Company, including its business strategy, results of operations or financial condition.
Dietrich chairs the IT Governance Committee, which includes the executive management team. The purpose of this committee is to inform and make strategic decisions on IT related matters, including the prevention, detection, mitigation and remediation of cybersecurity incidents. In addition, Ms. Dietrich regularly reviews key cybersecurity risk metrics and reporting designed to measure the effectiveness of related processes and procedures.
The purpose of this committee is to inform and make strategic decisions on IT-related matters, including the prevention, detection, mitigation and remediation of cybersecurity incidents. In addition, the CIO regularly reviews key cybersecurity risk metrics and reporting designed to measure the effectiveness of related processes and procedures as part of quarterly updates to the Audit Committee.
Dietrich has 25 years of experience in the Information Technology (“IT”) and cybersecurity industry. In her role as CIO, Ms. Dietrich is responsible for assessing and managing material risks from cybersecurity threats, including monitoring the prevention, detection, mitigation and remediation of cybersecurity incidents. On at least a quarterly basis, Ms.
Our CIO has over 25 years of experience in the Information Technology (“IT”) and cybersecurity industry. The CIO is responsible for assessing and managing material risks from cybersecurity threats, including monitoring the prevention, detection, mitigation and remediation of cybersecurity incidents. On at least a quarterly basis, the CIO chairs the IT Governance Committee, which includes the executive management team.
Ms. Dietrich utilizes this information in her reporting to the Board and Audit Committee of the Board.
The CIO utilizes this information in her reporting to the Board and Audit Committee of the Board. ​ 13 Table of Contents ​
To identify, assess, and manage material cybersecurity risks, we regularly evaluate and take steps to enhance our cybersecurity protocols to protect against or mitigate cyber threats. We conduct third-party and internal assessments of our environments, including system penetration testing, test our recovery and response processes, and we consider industry standards when developing our information security program.
We conduct third-party and internal assessments of our environments, including system penetration testing, test our recovery and response processes, and we consider industry standards when developing our information security program.
The Company has an information security training program, which calls for training all computer-based employees twice per year, through various employee training modules relative to information security matters and phishing simulation events with employees to raise cybersecurity awareness.
The Company has an information security training program, which calls for training all computer-based employees through various employee training modules relative to information security matters and phishing simulation events with employees to raise cybersecurity awareness. From time to time, we engage third-party assessors, consultants, auditors and others to assist us with evaluating, enhancing, implementing and monitoring our cybersecurity risk-management programs.
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From time to time, we engage third-party assessors, consultants, auditors and others to assist us with evaluating, enhancing, implementing and monitoring our cybersecurity risk-management programs.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeRefer to Note 17 to the consolidated financial statements for information regarding the Company’s lease commitments. ​ 15 Table of Contents ​
Biggest changeIn May 2024, the Company disposed of its Russian entity and completed its exit from the Russian market. In addition, the Company maintains operating leases for some manufacturing facilities, distribution centers and sales offices throughout the world. Refer to Note 17 to the consolidated financial statements for information regarding the Company’s lease commitments. ​ 15 Table of Contents ​
Total Cleveland area property consists of 244 acres, of which present manufacturing facilities comprise an area of approximately 3,017,090 square feet. 14 Table of Contents ​ The Company has 71 manufacturing and automation system integration facilities, including operations and joint ventures across 21 countries, the significant locations (grouped by operating segment) of which are as follows: ​ ​ ​ ​ Americas Welding: ​ United States ​ Cleveland, Columbus, Coldwater, Fort Loramie, and Orrville, Ohio; Reno, Nevada; Ladson, South Carolina; Chattanooga, Tennessee; Detroit, Michigan; Fort Collins, Colorado; Bettendorf, Iowa; Churubusco, Indiana.
Total Cleveland area property consists of 244 acres, of which present manufacturing facilities comprise an area of approximately 3,017,090 square feet. 14 Table of Contents ​ The Company has 71 manufacturing and automation system integration facilities, including operations and joint ventures across 20 countries, the significant locations (grouped by operating segment) of which are as follows: ​ ​ ​ ​ Americas Welding: ​ United States ​ Cleveland, Columbus, Coldwater, Fort Loramie, and Orrville, Ohio; Reno, Nevada; Ladson, South Carolina; Chattanooga, Tennessee; Detroit, and Plymouth, Michigan; Fort Collins, Colorado; Bettendorf, Iowa; Michigan City, Indiana.
Italy ​ Corsalone. Poland ​ Bielawa; Dzierzoniow. Romania ​ Buzau. Russia ​ Mtsensk. South Korea ​ Siheung-si. Spain ​ Valencia; Zaragoza. Turkey ​ Istanbul. United Kingdom ​ Sheffield, England; Port Talbot, Wales. The Harris Products Group: ​ ​ United States ​ Mason, Ohio; Gainesville, Georgia; Winston Salem, North Carolina; Gordonsville, Carthage, Tennessee; Florence, Alabama. Brazil ​ Maua. Italy ​ Verona.
Poland ​ Bielawa; Dzierzoniow. Romania ​ Buzau. South Korea ​ Siheung-si. Spain ​ Valencia; Zaragoza. Turkey ​ Istanbul. United Kingdom ​ Sheffield, England; Port Talbot, Wales. The Harris Products Group: ​ ​ United States ​ Mason, Ohio; Gainesville, Georgia; Winston Salem, North Carolina; Gordonsville, and Carthage, Tennessee. Brazil ​ Maua. Italy ​ Verona. Mexico ​ Guadalupe. Poland ​ Dzierzoniow.
Brazil ​ Atibaia; Guarulhos; Sao Paulo; Caxias do Sul. Canada ​ Toronto; Mississauga; Hamilton; Montreal; Vankleek Hill. Colombia ​ Bogota. Chile ​ Santiago. Mexico ​ Mexico City; Torreon; Saltillo. International Welding: ​ ​ Australia ​ Newcastle; Gladstone. Austria ​ Scheifling. China ​ Tangshan; Shanghai; Beijing. France ​ Grand-Quevilly; Partheny. Germany ​ Essen; Eisenberg; Frankfurt; Merzig. India ​ Chennai; Pune.
Brazil ​ Atibaia; Guarulhos; Caxias do Sul. Canada ​ Toronto; Mississauga; Hamilton; Montreal. Colombia ​ Bogota. ​ Mexico ​ Mexico City; Torreon; Saltillo. International Welding: ​ ​ Australia ​ Newcastle; Gladstone. Austria ​ Scheifling. China ​ Tangshan; Shanghai; Beijing. ​ ​ Denmark ​ Odense. France ​ Partheny. Germany ​ Essen; Eisenberg; Frankfurt; Saarbrücken. India ​ Chennai; Pune. Italy ​ Corsalone.
Mexico ​ Guadalupe. Poland ​ Dzierzoniow. Portugal ​ Albergaria-a-Velha. ​ All properties relating to the Company’s Cleveland, Ohio headquarters and manufacturing facilities are owned by the Company. Most of the Company’s foreign subsidiaries own manufacturing facilities in the country where they are located.
Portugal ​ Albergaria-a-Velha. ​ All properties relating to the Company’s Cleveland, Ohio headquarters and manufacturing facilities are owned by the Company. Most of the Company’s foreign subsidiaries own manufacturing facilities in the country where they are located. The Company believes that its existing properties are in good condition and are suitable for the conduct of its business.
Removed
The Company believes that its existing properties are in good condition and are suitable for the conduct of its business. In March 2022, in response to Russia’s invasion of Ukraine, the Company ceased operations in Russia. In addition, the Company maintains operating leases for some manufacturing facilities, distribution centers and sales offices throughout the world.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSince January 1, 1995, the Company has been a co-defendant in other similar cases that have been resolved as follows: 56,986 of those claims were dismissed, 23 were tried to defense verdicts, 7 were tried to plaintiff verdicts (which were reversed or resolved after appeal), 1 was resolved by agreement for an immaterial amount and 1,015 were decided in favor of the Company following summary judgment motions. ​
Biggest changeSince January 1, 1995, the Company has been a co-defendant in asbestos cases that have been resolved as follows: 57,080 of those claims were dismissed, 23 were tried to defense verdicts, 7 were tried to plaintiff verdicts (which were reversed or resolved after appeal), 1 was resolved by agreement for an immaterial amount and 1,018 were decided in favor of the Company following summary judgment motions. ​
As of December 31, 2023, the Company was a co-defendant in cases alleging asbestos induced illness involving claims by approximately 1,387 plaintiffs, which is a net decrease of 22 claims from those previously reported. In each instance, the Company is one of a large number of defendants.
As of December 31, 2024, the Company was a co-defendant in cases alleging asbestos induced illness involving claims by approximately 1,300 plaintiffs, which is a net decrease of 41 claims from those previously reported. In each instance, the Company is one of a large number of defendants.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeIssuer purchases of equity securities for the fourth quarter 2023 were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares ​ Maximum Number ​ ​ ​ ​ ​ ​ ​ Purchased ​ of Shares that May ​ ​ Total Number of ​ ​ ​ ​ as Part of Publicly ​ Yet be Purchased ​ ​ Shares ​ Average Price ​ Announced Plans or ​ Under the Plans Period ​ Purchased ​ Paid Per Share ​ Programs ​ or Programs (2) October 1 - 31, 2023 100,749 (1) ​ $ 179.12 98,253 8,107,766 November 1 - 30, 2023 132,659 (1) ​ 188.51 132,617 7,975,149 December 1 - 31, 2023 120,132 (1) ​ 209.13 116,629 7,858,520 Total 353,540 ​ 192.84 347,499 ​ (1) The above share repurchases include the surrender of the Company’s common shares in connection with the vesting of restricted awards.
Biggest changeIssuer purchases of equity securities for the fourth quarter 2024 were: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of Shares ​ Maximum Number ​ ​ ​ ​ ​ ​ ​ Purchased ​ of Shares that May ​ ​ Total Number of ​ ​ ​ ​ as Part of Publicly ​ Yet be Purchased ​ ​ Shares ​ Average Price ​ Announced Plans or ​ Under the Plans Period ​ Purchased ​ Paid Per Share ​ Programs ​ or Programs (2) October 1 - 31, 2024 96,952 (1) ​ $ 193.69 94,974 6,835,014 November 1 - 30, 2024 77,126 (1) ​ 209.68 76,266 6,758,748 December 1 - 31, 2024 79,534 (1) ​ 203.63 76,639 6,682,109 Total 253,612 ​ 192.84 247,879 ​ (1) The above share repurchases include the surrender of the Company’s common shares in connection with the vesting of restricted awards.
(2) On February 12, 2020, the Company’s Board of Directors authorized a share repurchase program for up to 10 million shares of the Company’s common stock.
(2) On February 12, 2020, the Company’s Board authorized a share repurchase program for up to 10 million shares of the Company’s common stock.
This graph assumes that $100 was invested on December 31, 2018 in each of the Company’s common shares, the S&P 500 and the S&P 400.
This graph assumes that $100 was invested on December 31, 2019 in each of the Company’s common shares, the S&P 500 and the S&P 400.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common shares are traded on The NASDAQ Global Select Market under the symbol "LECO." The number of record holders of common shares at December 31, 2023 was 2,214.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The Company’s common shares are traded on The NASDAQ Global Select Market under the symbol "LECO." The number of record holders of common shares at January 31, 2025 was 2,189.
Total shares purchased through the share repurchase program were 2.1 million shares at a total cost of $334.9 million for a weighted average cost of $156.37 per share through December 31, 2023. 16 Table of Contents ​ The following line graph compares the yearly percentage change in the cumulative total shareholder return on the Company’s common stock against the cumulative total return of the S&P Composite 500 Stock Index ("S&P 500") and the S&P 400 MidCap Index ("S&P 400") for the five-year calendar period commencing January 1, 2019 and ending December 31, 2023.
Total shares purchased through the share repurchase program were 3.3 million shares at a total cost of $584.5 million for a weighted average cost of $176.18 per share through December 31, 2024. 16 Table of Contents ​ The following line graph compares the yearly percentage change in the cumulative total shareholder return on the Company’s common stock against the cumulative total return of the S&P Composite 500 Stock Index ("S&P 500") and the S&P 400 MidCap Index ("S&P 400") for the five-year calendar period commencing January 1, 2020 and ending December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 21, 2023. 19 Table of Contents ​ Results of Operations The following table shows the Company’s results of operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Favorable (Unfavorable) ​ 2023 ​ 2022 ​ 2023 vs. 2022 ​ ​ Amount % of Sales Amount % of Sales $ % Net sales $ 4,191,636 ​ ​ ​ ​ $ 3,761,211 ​ ​ $ 430,425 11.4 % Cost of goods sold 2,726,191 ​ ​ ​ 2,480,451 ​ ​ (245,740) (9.9) % Gross profit 1,465,445 ​ 35.0 % 1,280,760 34.1 % 184,685 14.4 % Selling, general & administrative expenses 758,910 ​ 18.1 % 656,636 17.5 % (102,274) (15.6) % Rationalization and asset impairment charges (11,314) ​ (0.3) % 11,788 0.3 % 23,102 196.0 % Operating income 717,849 ​ 17.1 % 612,336 16.3 % 105,513 17.2 % Interest expense, net 44,371 ​ ​ ​ 29,500 ​ ​ (14,871) (50.4) % Other income 13,388 ​ ​ ​ 9,991 ​ ​ 3,397 34.0 % Income before income taxes 686,866 ​ 16.4 % 592,827 15.8 % 94,039 15.9 % Income taxes 141,618 ​ ​ ​ 120,603 ​ ​ (21,015) (17.4) % Effective tax rate 20.6 % ​ ​ 20.3 % ​ ​ (0.3) % ​ ​ Net income $ 545,248 ​ 13.0 % $ 472,224 12.6 % $ 73,024 15.5 % Diluted earnings per share $ 9.37 ​ ​ ​ ​ $ 8.04 ​ $ 1.33 16.5 % ​ Net Sales: T he following table summarizes the impacts of volume, acquisitions, price and foreign currency exchange rates on Net sales for the twelve months ended December 31, 2023 on a consolidated basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in Net Sales due to: ​ ​ ​ ​ Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ Net Sales ​ ​ 2022 Volume Acquisitions Price Exchange 2023 Lincoln Electric Holdings, Inc. ​ $ 3,761,211 ​ $ 85,686 ​ $ 276,571 ​ $ 64,146 $ 4,022 ​ $ 4,191,636 ​ % Change ​ ​ ​ ​ ​ ​ ​ ​ ​ Lincoln Electric Holdings, Inc. ​ ​ ​ ​ 2.3 % 7.4 % 1.7 % ​ 0.1 % ​ 11.4 % ​ Net sales increased primarily due to the benefit of acquisitions, higher demand levels and increased product pricing as a result of higher input costs.
Biggest changeResults of Operations The following table shows the Company’s results of operations: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Favorable (Unfavorable) ​ 2024 ​ 2023 ​ 2024 vs. 2023 ​ ​ Amount % of Sales Amount % of Sales $ % Net sales $ 4,008,670 ​ ​ ​ ​ $ 4,191,636 ​ ​ $ (182,966) (4.4) % Cost of goods sold 2,535,758 ​ ​ ​ 2,726,191 ​ ​ 190,433 7.0 % Gross profit 1,472,912 ​ 36.7 % 1,465,445 35.0 % 7,467 0.5 % Selling, general & administrative expenses 780,590 ​ 19.5 % 758,910 18.1 % (21,680) (2.9) % Rationalization and asset impairment net charges 55,860 ​ 1.4 % (11,314) (0.3) % (67,174) (593.7) % Operating income 636,462 ​ 15.9 % 717,849 17.1 % (81,387) (11.3) % Interest expense, net 42,786 ​ ​ ​ 44,371 ​ ​ 1,585 3.6 % Other income 473 ​ ​ ​ 13,388 ​ ​ (12,915) (96.5) % Income before income taxes 594,149 ​ 14.8 % 686,866 16.4 % (92,717) (13.5) % Income taxes 128,041 ​ ​ ​ 141,618 ​ ​ 13,577 9.6 % Effective tax rate 21.6 % ​ ​ 20.6 % ​ ​ (1.0) % ​ ​ Net income $ 466,108 ​ 11.6 % $ 545,248 13.0 % $ (79,140) (14.5) % Diluted earnings per share $ 8.15 ​ ​ ​ ​ $ 9.37 ​ $ (1.22) (13.0) % ​ 19 Table of Contents ​ Net Sales: T he following table summarizes the impacts of volume, acquisitions, price and foreign currency exchange rates on Net sales for the twelve months ended December 31, 2024 on a consolidated basis: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in Net Sales due to: ​ ​ ​ ​ Net Sales ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ Net Sales ​ ​ 2023 Volume Acquisitions Price Exchange 2024 Lincoln Electric Holdings, Inc. ​ $ 4,191,636 ​ $ (301,161) ​ $ 102,757 ​ $ 30,398 $ (14,960) ​ $ 4,008,670 ​ % Change ​ ​ ​ ​ ​ ​ ​ ​ ​ Lincoln Electric Holdings, Inc. ​ ​ ​ ​ (7.2) % 2.5 % 0.7 % ​ (0.4) % ​ (4.4) % ​ Net sales decreased primarily due to softer demand across all segments.
To date, compliance with these environmental regulations has not had a material adverse effect on the Company’s earnings. The Company is ISO 14001 certified at most significant manufacturing facilities in North America and Europe and is progressing towards certification at its remaining facilities worldwide. In addition, the Company is ISO 9001 certified at 46 facilities worldwide.
To date, compliance with these environmental regulations has not had a material adverse effect on the Company’s earnings. The Company is ISO 14001 certified at most significant manufacturing facilities in North America and Europe and is progressing towards certification at its remaining facilities worldwide. In addition, the Company is ISO 9001 certified at 47 facilities worldwide.
The Company has, through wholly-owned subsidiaries, manufacturing facilities located in the United States, Australia, Austria, Brazil, Canada, China, Colombia, France, Germany, India, Italy, Mexico, Poland, Portugal, Romania, Russia, South Korea, Spain, Turkey and the United Kingdom.
The Company has, through wholly-owned subsidiaries, manufacturing facilities located in the United States, Australia, Austria, Brazil, Canada, China, Colombia, Denmark, France, Germany, India, Italy, Mexico, Poland, Portugal, Romania, South Korea, Spain, Turkey and the United Kingdom.
These measures are reviewed at monthly, quarterly and annual intervals and are compared with historical periods, as well as objectives established by the Board of Directors of the Company. ​ The discussion that follows includes a comparison of our results of operations, liquidity and capital resources for fiscal years ended December 31, 2023 and 2022.
These measures are reviewed at monthly, quarterly and annual intervals and are compared with historical periods, as well as objectives established by the Board of the Company. ​ The discussion that follows includes a comparison of our results of operations, liquidity and capital resources for fiscal years ended December 31, 2024 and 2023.
In assessing the realizability of deferred tax assets, the Company assesses whether it is more-likely-than-not that a portion or all of the deferred tax assets will not be realized. The Company considers the scheduled reversal of deferred tax 30 Table of Contents ​ liabilities, tax planning strategies and projected future taxable income in making this assessment.
In assessing the realizability of deferred tax assets, the Company assesses whether it is more-likely-than-not that a portion or all of the deferred tax assets will not be realized. The Company considers the scheduled reversal of deferred tax liabilities, tax planning strategies and projected future taxable income in making this assessment.
The Company’s products support our customers' sustainable operations through enhanced worker safety, reduced emissions, improved energy efficiency, reduced waste and regulatory compliance. 18 Table of Contents ​ Key Indicators Key economic measures relevant to the Company include industrial production trends, steel consumption, purchasing manager indices, capacity utilization within durable goods manufacturers and consumer confidence indicators.
The Company’s products support our customers' sustainable operations through enhanced worker safety, reduced emissions, improved energy efficiency, reduced waste and regulatory compliance. Key Indicators Key economic measures relevant to the Company include industrial production trends, steel consumption, purchasing manager indices, capacity utilization within durable goods manufacturers and consumer confidence indicators.
The Company is the world leader in the design, development and manufacture of arc welding products, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment. The Company also has a leading global position in brazing and soldering alloys.
The Company is the world leader in the design, development and manufacture of arc welding products, automated joining, 17 Table of Contents ​ assembly and cutting systems, plasma and oxy-fuel cutting equipment. The Company also has a leading global position in brazing and soldering alloys.
Key industries which provide a relative indication of demand drivers to the Company include steel, farm machinery and equipment, construction and transportation, fabricated metals, electrical equipment, ship and boat building, defense, truck manufacturing, energy and railroad equipment.
Key 18 Table of Contents ​ industries which provide a relative indication of demand drivers to the Company include steel, farm machinery and equipment, construction and transportation, fabricated metals, electrical equipment, ship and boat building, defense, truck manufacturing, energy and railroad equipment.
For a comparison of the Company’s results of operations, liquidity and capital resources for the fiscal years ended December 31, 2022 and 2021, see “Item 7.
For a comparison of the Company’s results of operations, liquidity and capital resources for the fiscal years ended December 31, 2023 and 2022, see “Item 7.
Fixed manufacturing overhead costs are allocated to inventory based on normal production capacity and abnormal manufacturing costs are recognized as period costs. Cost for a substantial portion of U.S. inventories is determined on a LIFO basis. LIFO was used for 37% and 38% of total inventories at December 31, 2023 and 2022, respectively.
Fixed manufacturing overhead costs are allocated to inventory based on normal production capacity and abnormal manufacturing costs are recognized as period costs. Cost for a substantial portion of U.S. inventories is determined on a LIFO basis. LIFO was used for 35% and 37% of total inventories at December 31, 2024 and 2023, respectively.
From time to time, management evaluates and discloses to investors the following non-GAAP measures: Free cash flow ("FCF"), defined as Net cash provided by operating activities less Capital expenditures (the Company considers FCF to be a liquidity measure that provides useful information to management and investors about how the amount of cash generated by our business, after the purchase of property and equipment, can be used for debt service, acquisitions, paying dividends and repurchasing our common shares); Cash conversion, defined as FCF divided by Adjusted net income; Organic sales, defined as sales excluding the effects of foreign currency and acquisitions.
From time to time, management evaluates and discloses to investors the following non-GAAP measures: Free cash flow ("FCF"), defined as Net cash provided by operating activities less Capital expenditures (the Company considers FCF to be a liquidity measure that provides useful information to management and investors about how the amount of cash generated by our business, after the purchase of property and equipment, can be used for debt service, acquisitions, paying dividends and repurchasing our common shares); Cash conversion, defined as FCF divided by Adjusted net income; Organic sales, reflects changes in volumes and prices, and excludes the effects of foreign currency and acquisitions.
General The Company is the world’s largest designer and manufacturer of arc welding and cutting products, manufacturing a broad line of arc welding equipment, consumable welding products and other welding and cutting products. 17 Table of Contents ​ The Company is one of only a few worldwide broad-line manufacturers of welding, cutting and brazing products.
General The Company is the world’s largest designer and manufacturer of arc welding and cutting products, manufacturing a broad line of arc welding equipment, consumable welding products and other welding and cutting products. The Company is one of only a few worldwide broad-line manufacturers of welding, cutting and brazing products.
Management anticipates the Company will be able to satisfy cash requirements for its ongoing businesses for the foreseeable future primarily with cash generated by operations, existing cash balances, borrowings under its existing credit facilities and raising debt in capital markets. 24 Table of Contents ​ The Company continues to expand globally and periodically consider acquisitions that would involve significant investments.
Management anticipates we will be able to satisfy cash requirements for its ongoing businesses for the foreseeable future primarily with cash generated by operations, existing cash balances, borrowings under its existing credit facilities and raising debt in capital markets. The Company continues to expand globally and periodically consider acquisitions that would involve significant investments.
The cumulative impact of revisions to total estimated costs is reflected in the period of the change, including anticipated losses. Less than 10% of the Company’s Net sales are recognized over time.
The cumulative impact of revisions to total estimated costs is reflected in the period of the change, including anticipated losses. Approximately 10% of the Company’s Net sales are recognized over time.
Actual year-end inventory levels and costs may differ from interim LIFO inventory valuations. The excess of current cost over LIFO cost was $129,946 at December 31, 2023 and $133,909 at December 31, 2022. The Company reviews the net realizable value of inventory on an on-going basis with consideration given to deterioration, obsolescence and other factors.
Actual year-end inventory levels and costs may differ from interim LIFO inventory valuations. The excess of current cost over LIFO cost was $120,633 and $129,946 at December 31, 2024 and 2023, respectively. The Company reviews the net realizable value of inventory on an on-going basis with consideration given to deterioration, obsolescence and other factors.
EBIT is adjusted for special items as determined by management such as the impact of rationalization activities, certain asset impairment charges and gains or losses on disposals of assets.
EBIT is defined as Operating income plus Other income. EBIT is adjusted for special items as determined by management such as the impact of rationalization activities, certain asset impairment charges and gains or losses on disposals of assets.
At December 31, 2023, the Company had approximately $172,734 of gross deferred tax assets related to deductible temporary differences and tax loss and credit carry-forwards, which may reduce taxable income in future years.
At December 31, 2024, the Company had approximately $207,739 of gross deferred tax assets related to deductible temporary differences and tax loss and credit carry-forwards, which may reduce taxable income in future years.
Rationalization and Asset Impairments Refer to Note 7 to the consolidated financial statements for a discussion of the Company’s rationalization plans. The Company believes the rationalization actions will positively impact future results of operations and will not have a material effect on liquidity and sources and uses of capital.
The Company believes the rationalization actions will positively impact future results of operations and will not have a material effect on liquidity and sources and uses of capital. Acquisitions Refer to Note 4 to the consolidated financial statements for a discussion of the Company’s recent acquisitions.
At December 31, 2023, a valuation allowance of $36,876 was recorded against certain deferred tax assets based on this assessment. The Company believes it is more-likely-than-not that the tax benefit of the remaining net deferred tax assets will be realized.
At December 31, 2024, a valuation allowance of $35,284 was recorded against certain deferred tax assets based on this assessment. The 29 Table of Contents ​ Company believes it is more-likely-than-not that the tax benefit of the remaining net deferred tax assets will be realized.
(2) Costs related to acquisitions and included in Selling, general & administrative expenses.
(2) Transaction costs related to acquisitions which are included in Selling, general & administrative expenses.
The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate. The applicable tax rate reflects the taxable jurisdiction and nature of each Special item.
(6) Includes the net tax impact of Special items recorded during the respective periods. The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate. The applicable tax rates reflect the taxable jurisdiction and nature of each Special item.
Management critically evaluates all proposed capital expenditures and expects each project to increase efficiency, reduce costs, promote business growth or improve the overall safety and environmental conditions of the Company’s facilities.
Anticipated capital expenditures include investments to increase capacity, improve operational effectiveness and for general maintenance. Management critically evaluates all proposed capital expenditures and expects each project to increase efficiency, reduce costs, support sales growth or improve the overall safety and environmental conditions of the Company’s facilities.
Invested capital is defined as total debt, which includes Amounts due banks, Current portion of long-term debt and Long-term debt, less current portions, plus Total equity. ​ 27 Table of Contents ​ The following table presents the reconciliation of ROIC and Adjusted ROIC to net income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on Invested Capital 2023 2022 Net income as reported ​ $ 545,248 ​ $ 472,224 ​ Plus: Interest expense (after-tax) ​ 38,050 ​ 23,276 ​ Less: Interest income (after-tax) ​ 5,033 ​ 1,202 ​ Net operating profit after taxes ​ $ 578,265 ​ $ 494,298 ​ Special items: ​ ​ ​ ​ ​ ​ ​ Rationalization and asset impairment charges ​ ​ (11,314) ​ ​ 11,788 ​ Acquisition transaction costs ​ ​ — ​ ​ 6,003 ​ Pension settlement net charges ​ ​ 845 ​ ​ (4,273) ​ Amortization of step up in value of acquired inventories ​ ​ 12,252 ​ ​ 1,106 ​ Gain on asset disposal ​ ​ (1,646) ​ ​ — ​ Tax effect of Special items (1) ​ ​ 2,537 ​ ​ (1,192) ​ Adjusted net operating profit after taxes ​ $ 580,939 ​ $ 507,730 ​ ​ ​ ​ ​ ​ ​ ​ ​ Invested Capital ​ ​ ​ ​ ​ ​ ​ Short-term debt ​ $ 2,439 ​ $ 93,483 ​ Long-term debt, less current portion ​ ​ 1,102,771 ​ ​ 1,110,396 ​ Total debt ​ ​ 1,105,210 ​ ​ 1,203,879 ​ Total equity ​ ​ 1,308,852 ​ ​ 1,034,041 ​ Invested capital ​ $ 2,414,062 ​ $ 2,237,920 ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on invested capital as reported ​ ​ 24.0 % ​ 22.1 % Adjusted return on invested capital ​ 24.1 % 22.7 % ​ (1) Includes the net tax impact of Special items recorded during the respective periods.
Invested capital is defined as total debt, which includes Amounts due banks, Current portion of long-term debt and Long-term debt, less current portions, plus Total equity. ​ 27 Table of Contents ​ The following table presents the reconciliation of ROIC and Adjusted ROIC to net income: ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on Invested Capital 2024 2023 Net income as reported ​ $ 466,108 ​ $ 545,248 ​ Plus: Interest expense (after-tax) ​ 39,665 ​ 38,050 ​ Less: Interest income (after-tax) ​ 7,593 ​ 5,033 ​ Net operating profit after taxes ​ $ 498,180 ​ $ 578,265 ​ Special items: ​ ​ ​ ​ ​ ​ ​ Rationalization and asset impairment net charges ​ ​ 55,860 ​ ​ (11,314) ​ Acquisition transaction costs ​ ​ 7,042 ​ ​ — ​ Pension settlement net charges ​ ​ 3,792 ​ ​ 845 ​ Amortization of step up in value of acquired inventories ​ ​ 5,026 ​ ​ 12,252 ​ Loss (gain) on asset disposal ​ ​ 4,950 ​ ​ (1,646) ​ Tax effect of Special items (1) ​ ​ (11,513) ​ ​ 2,537 ​ Adjusted net operating profit after taxes ​ $ 563,337 ​ $ 580,939 ​ ​ ​ ​ ​ ​ ​ ​ ​ Invested Capital ​ ​ ​ ​ ​ ​ ​ Short-term debt ​ $ 110,524 ​ $ 2,439 ​ Long-term debt, less current portion ​ ​ 1,150,551 ​ ​ 1,102,771 ​ Total debt ​ ​ 1,261,075 ​ ​ 1,105,210 ​ Total equity ​ ​ 1,327,433 ​ ​ 1,308,852 ​ Invested capital ​ $ 2,588,508 ​ $ 2,414,062 ​ ​ ​ ​ ​ ​ ​ ​ ​ Return on invested capital as reported ​ ​ 19.2 % ​ 24.0 % Adjusted return on invested capital ​ 21.8 % 24.1 % ​ (1) Includes the net tax impact of Special items recorded during the respective periods.
Increase for International Welding due to higher equipment volumes. Decrease for the Harris Products Group due to weakness in end markets. (2) Increase for Americas Welding and International Welding due to the acquisitions discussed in Note 4 to the consolidated financial statements.
(2) Increase for Americas Welding and International Welding due to the acquisitions discussed in Note 4 to the consolidated financial statements.
(3) Increase for all segments reflects increased product pricing to offset higher input costs. 21 Table of Contents ​ Adjusted Earnings Before Interest and Income Taxes (“Adjusted EBIT”): Segment performance is measured and resources are allocated based on a number of factors, the primary measure being the Adjusted EBIT profit measure. EBIT is defined as Operating income plus Other income.
(3) Increase for The Harris Products Group due to price actions taken in response to higher commodity costs. 21 Table of Contents ​ Adjusted Earnings Before Interest and Income Taxes (“Adjusted EBIT”): Segment performance is measured and resources are allocated based on a number of factors, the primary measure being the Adjusted EBIT profit measure.
(2) Increase for 2023 as compared to 2022 primarily driven by higher volumes and effective cost management. (3) Increase for 2023 compared to 2022 primarily reflects effective cost management and operational improvements .
(2) Decrease for 2024 as compared to 2023 primarily driven by unfavorable impact of lower volumes, partially offset by cost reduction actions. (3) Increase for 2024 compared to 2023 primarily reflects effective cost management and operational improvements.
The costs associated with these claims are predominantly defense costs, which are recognized in the periods incurred. Insurance reimbursements mitigate these costs and, where reimbursements are probable, they are recognized in the applicable period.
The costs associated with these claims are predominantly defense costs which are recognized in the periods incurred.
If an unfavorable outcome is determined to be reasonably possible but not probable, or if the amount of loss cannot be reasonably estimated, disclosure would be provided for material claims or litigation.
The Company accrues its best estimate of the probable costs after a review of the facts with management and counsel and taking into account past experience. If an unfavorable outcome is determined to be reasonably possible but not probable, or if the amount of loss cannot be reasonably estimated, disclosure would be provided for material claims or litigation.
If the carrying amount exceeds the fair value, an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit. 31 Table of Contents ​ Fair values are determined using established business valuation techniques and models developed by the Company, estimates of market participant assumptions of future cash flows, future growth rates and discount rates to value estimated cash flows.
Fair values are determined using established business valuation techniques and models developed by the Company, estimates of market participant assumptions of future cash flows, future growth rates and discount rates to value 30 Table of Contents ​ estimated cash flows.
These estimates and assumptions are reviewed periodically by management and compared to historical trends to determine the accuracy of estimates and assumptions 29 Table of Contents ​ used. If warranted, these estimates and assumptions may be changed as current trends are assessed and updated. Historically, the Company’s estimates have been determined to be reasonable.
If warranted, these estimates and assumptions may be changed as current trends are assessed and updated. Historically, the Company’s estimates have been determined to be reasonable. No material changes to the Company’s 28 Table of Contents ​ accounting policies were made during 2024.
(3) Costs related to acquisitions and included in Cost of goods sold. 23 Table of Contents ​ The following table presents the reconciliations of Net income as reported to Adjusted net income and Adjusted EBIT, Effective tax rate as reported to Adjusted effective tax rate and Diluted earnings per share as reported to Adjusted diluted earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Net income as reported ​ $ 545,248 $ 472,224 ​ Special items: ​ ​ ​ Rationalization and asset impairment charges (1) ​ (11,314) 11,788 ​ Acquisition transaction costs (2) ​ — 6,003 ​ Pension settlement net charges (3) ​ 845 (4,273) ​ Amortization of step up in value of acquired inventories (4) ​ 12,252 1,106 ​ Gain on asset disposal (5) ​ (1,646) — ​ Tax effect of Special items (6) ​ 2,537 (1,192) ​ Adjusted net income ​ $ 547,922 $ 485,656 ​ Interest expense, net ​ 44,371 29,500 ​ Income taxes as reported ​ 141,618 120,603 ​ Tax effect of Special items (6) ​ (2,537) 1,192 ​ Adjusted EBIT ​ $ 731,374 $ 636,951 ​ Effective tax rate as reported ​ 20.6 % 20.3 % Net special item tax impact ​ (0.4) % (0.2) % Adjusted effective tax rate ​ 20.2 % 20.1 % Diluted earnings per share as reported ​ $ 9.37 $ 8.04 ​ Special items per share ​ 0.04 0.23 ​ Adjusted diluted earnings per share ​ $ 9.41 $ 8.27 ​ ​ (1) 2023 reflects a gain on the sale of a property of $36,187, offset by rationalization and asset impairment charges of $24,873 within International Welding. 2022 charges are primarily related to employee severance, gains or losses on the disposal of assets and other related costs and non-cash asset impairment charges.
(3) Costs related to acquisitions which are included in Cost of goods sold. 23 Table of Contents ​ The following table presents the reconciliations of Net income as reported to Adjusted net income and Adjusted EBIT, Effective tax rate as reported to Adjusted effective tax rate and Diluted earnings per share as reported to Adjusted diluted earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Net income as reported ​ $ 466,108 $ 545,248 ​ Special items: ​ ​ ​ Rationalization and asset impairment net charges (1) ​ 55,860 (11,314) ​ Acquisition transaction costs (2) ​ 7,042 — ​ Pension settlement net charges (3) ​ 3,792 845 ​ Amortization of step up in value of acquired inventories (4) ​ 5,026 12,252 ​ Loss (gain) on asset disposal (5) ​ 4,950 (1,646) ​ Tax effect of Special items (6) ​ (11,513) 2,537 ​ Adjusted net income ​ $ 531,265 $ 547,922 ​ Interest expense, net ​ 42,786 44,371 ​ Income taxes as reported ​ 128,041 141,618 ​ Tax effect of Special items (6) ​ 11,513 (2,537) ​ Adjusted EBIT ​ $ 713,605 $ 731,374 ​ Effective tax rate as reported ​ 21.6 % 20.6 % Net special item tax impact ​ (0.8) % (0.4) % Adjusted effective tax rate ​ 20.8 % 20.2 % Diluted earnings per share as reported ​ $ 8.15 $ 9.37 ​ Special items per share ​ 1.14 0.04 ​ Adjusted diluted earnings per share ​ $ 9.29 $ 9.41 ​ ​ (1) Items in 2024 primarily relate to rationalization plans initiated in the third quarter of 2024 in all three segments, as well as previously initiated plans and the disposition of the Company’s Russian entity in International Welding .
New Accounting Pronouncements Refer to Note 1 to the consolidated financial statements for a discussion of new accounting pronouncements. Critical Accounting Policies and Estimates The Company’s consolidated financial statements are based on the selection and application of significant accounting policies, which require management to make estimates and assumptions.
Critical Accounting Policies and Estimates The Company’s consolidated financial statements are based on the selection and application of significant accounting policies, which require management to make estimates and assumptions. These estimates and assumptions are reviewed periodically by management and compared to historical trends to determine the accuracy of estimates and assumptions used.
The applicable tax rates reflect the taxable jurisdiction and nature of each Special item. Liquidity and Capital Resources The Company’s cash flow from operations can be cyclical. Operational cash flow is a key driver of liquidity. In assessing liquidity, the Company reviews working capital measurements to define areas for improvement.
The Company’s cash flow from operations can be cyclical. In assessing liquidity, the Company reviews working capital measurements to define areas for improvement.
The Company paid $148,010 and $130,724 in cash dividends to its shareholders in the twelve months ended December 31, 2023 and 2022, respectively.
The Company paid $162,143 and $148,010 in cash dividends to its shareholders during 2024 and 2023, respectively.
In January 2024, the Company paid a cash dividend of $0.71 per share, or $40,453, to shareholders of record on December 31, 2023, which reflects a 11% increase in the Company’s dividend payout rate. ​ 25 Table of Contents ​ Working Capital Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 Average operating working capital to Net sales (1) (2) 17.1 % 20.9 % Days sales in Inventories (3) 104.6 132.5 ​ Days sales in Accounts receivable 50.0 57.0 ​ Average days in Trade accounts payable 47.6 57.0 ​ ​ (1) Average operating working capital to Net sales is defined as the sum of Accounts receivable, Inventories and contract assets less Trade accounts payable and contract liabilities as of period end divided by annualized rolling three months of Net sales.
Working Capital Ratios ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 2023 Average operating working capital to Net sales (1) 16.9 % 17.1 % Days sales in Inventories 106.0 104.6 ​ Days sales in Accounts receivable 46.9 50.0 ​ Average days in Trade accounts payable 45.8 47.6 ​ ​ (1) Average operating working capital to Net sales is defined as the sum of Accounts receivable, Inventories and contract assets less Trade accounts payable and contract liabilities as of period end divided by annualized rolling three months of Net sales.
With respect to costs other than defense costs (i.e., for liability and/or settlement or other resolution), reserves are recorded when it is probable that the contingencies will have an unfavorable outcome. The Company accrues its best estimate of the probable costs after a review of the facts with management and counsel and taking into account past experience.
Insurance reimbursements mitigate these costs and, where reimbursements are probable, they are recognized in the applicable period. With respect to costs other than defense costs (i.e., for liability and/or settlement or other resolution), reserves are recorded when it is probable that the contingencies will have an unfavorable outcome.
The following table presents a reconciliation of Operating income as reported to Adjusted operating income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2023 2022 Operating income as reported ​ $ 717,849 ​ $ 612,336 ​ Special items (pre-tax): ​ ​ ​ Rationalization and asset impairment charges (1) ​ (11,314) ​ 11,788 ​ Acquisition transaction costs (2) ​ — ​ 6,003 ​ Amortization of step up in value of acquired inventories (3) ​ 12,252 ​ 1,106 ​ Adjusted operating income ​ $ 718,787 ​ $ 631,233 ​ ​ (1) 2023 reflects a gain on the sale of a property of $36,187, offset by rationalization and asset impairment charges of $24,873 within International Welding. 2022 charges are primarily related to employee severance, gains or losses on the disposal of assets and other related costs and non-cash asset impairment charges.
The following table presents a reconciliation of Operating income as reported to Adjusted operating income: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ 2024 2023 Operating income as reported ​ $ 636,462 ​ $ 717,849 ​ Special items (pre-tax): ​ ​ ​ Rationalization and asset impairment net charges (1) ​ 55,860 ​ (11,314) ​ Acquisition transaction costs (2) ​ 7,042 ​ — ​ Amortization of step up in value of acquired inventories (3) ​ 5,026 ​ 12,252 ​ Adjusted operating income ​ $ 704,390 ​ $ 718,787 ​ As a percent of total sales ​ ​ 17.6% ​ ​ 17.1% ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) 2024 charges primarily relate to rationalization plans initiated in the third quarter of 2024 in all three segments, as well as previously initiated plans and the disposition of the Company’s Russian entity in International Welding . 2023 net gains primarily relates to the gain on sale of a property, partially offset by charges within International Welding.
(5) 2023 excludes pension settlement charges of $845, a gain on asset disposal of $1,646, the amortization of step up in value of acquired inventories of $2,862 and Rationalization and asset impairment net gains of $11,782 as discussed in Note 7 to the consolidated financial statements . 2022 excludes Rationalization and asset impairment charges of $11,681 related to impairment charges as discussed in Note 7 to the consolidated financial statements.
(4) 2024 excludes Rationalization and asset impairment net charges of $18,840, the amortization of step up in value of acquired inventories of $4,776 and pension settlement charges of $4,205 . 2023 excludes Rationalization and asset impairment net charges of $468 and the amortization of step up in value of acquired inventories of $9,390 . 22 Table of Contents ​ (5) 2024 excludes Rationalization and asset impairment net charges of $32,960 primarily due to restructuring activities, including the impact of the Company’s disposition of its Russian entity as discussed in Note 7, a loss on asset disposal of $4,950, the amortization of the step up in value of acquired inventories of $250 and pension settlement gain of $413 . 2023 excludes pension settlement charges of $845, a gain on asset disposal of $1,646, the amortization of step up in value of acquired inventories of $2,862 and Rationalization and asset impairment net gains of $11,782.
(8) See non-GAAP Financial Measures for a reconciliation of Net income as reported and Adjusted EBIT.
(6) 2024 excludes Rationalization and asset impairment net charges of $3,955 as discussed in Note 7. (7) 2024 excludes acquisition transaction costs of $7,042 as discussed in Note 4. (8) See non-GAAP Financial Measures for a reconciliation of Net income as reported and Adjusted EBIT.
The following table reflects changes in key cash flow measures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2023 2022 $ Change Cash provided by operating activities (1) ​ $ 667,542 ​ $ 383,386 ​ $ 284,156 Cash used by investing activities (2) ​ (74,729) ​ (504,691) ​ 429,962 Capital expenditures ​ (90,987) ​ (71,883) ​ (19,104) Acquisition of businesses, net of cash acquired ​ (32,685) ​ (436,298) ​ 403,613 Proceeds from the sale of property, plant and equipment ​ ​ 49,494 ​ ​ 3,331 ​ ​ 46,163 Cash (used by) provided by financing activities (3) ​ (412,392) ​ 133,725 ​ (546,117) (Payments on) proceeds from short-term borrowings ​ (79,873) ​ 34,351 ​ (114,224) (Payments on) proceeds from long-term borrowings ​ ​ (8,109) ​ ​ 405,444 ​ ​ (413,553) Purchase of shares for treasury ​ (198,765) ​ (181,293) ​ (17,472) Cash dividends paid to shareholders ​ (148,010) ​ (130,724) ​ (17,286) Increase in Cash and cash equivalents (4) ​ 196,637 ​ 4,192 ​ 192,445 ​ (1) Cash provided by operating activities increased for the twelve months ended December 31, 2023 compared with the twelve months ended December 31, 2022 primarily due to increased earnings and improved working capital.
Cash Flow ​ The following table reflects changes in key cash flow measures: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, $ Change ​ ​ 2024 2023 2024 vs. 2023 Cash provided by operating activities (1) ​ $ 598,977 ​ $ 667,542 ​ $ (68,565) Cash used by investing activities (2) ​ (361,231) ​ (74,729) ​ (286,502) Capital expenditures ​ (116,603) ​ (90,987) ​ (25,616) Acquisition of businesses, net of cash acquired ​ (252,746) ​ (32,685) ​ (220,061) Proceeds from sale of property, plant and equipment ​ ​ 7,798 ​ ​ 49,494 ​ ​ (41,696) Cash used by financing activities (3) ​ (244,640) ​ ​ (412,392) ​ 167,752 Proceeds from (payments on) short-term borrowings ​ 8,449 ​ (79,873) ​ 88,322 Proceeds from long-term borrowings ​ ​ 550,000 ​ ​ — ​ ​ 550,000 Payments on long-term borrowings ​ ​ (400,677) ​ ​ (8,109) ​ ​ (392,568) Purchase of shares for treasury ​ (263,751) ​ (198,765) ​ (64,986) Cash dividends paid to shareholders ​ (162,143) ​ (148,010) ​ (14,133) (Decrease) increase in Cash and cash equivalents ​ (16,525) ​ 196,637 ​ (213,162) ​ (1) Cash provided by operating activities decreased in 2024 as compared to 2023 primarily due to decreased earnings and working capital.
Legal and Tax Contingencies The Company, like other manufacturers, is subject from time to time to a variety of civil and administrative proceedings arising in the ordinary course of business. Such claims and litigation include, without limitation, product liability claims, administrative claims, regulatory claims and health, safety and environmental claims, some of which relate to cases alleging asbestos induced illnesses.
Such claims and litigation include, without limitation, product liability claims, administrative claims, regulatory claims and health, safety and environmental claims, some of which relate to cases alleging asbestos induced illnesses. The costs associated with these claims are predominantly defense costs, which are recognized in the periods incurred.
The following table presents Adjusted EBIT by segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Favorable (Unfavorable) ​ ​ ​ Year Ended December 31, ​ 2023 vs. 2022 ​ ​ 2023 2022 $ % Americas Welding: ​ ​ ​ ​ ​ Net sales ​ $ 2,655,546 ​ $ 2,288,934 ​ $ 366,612 ​ 16.0 % ​ Inter-segment sales ​ 127,536 ​ 122,019 ​ 5,517 ​ 4.5 % ​ Total Sales ​ $ 2,783,082 ​ $ 2,410,953 ​ $ 372,129 ​ 15.4 % ​ Adjusted EBIT (4) ​ $ 538,269 ​ $ 462,819 ​ $ 75,450 ​ 16.3 % ​ As a percent of total sales (1) ​ 19.3 % 19.2 % ​ ​ ​ 0.1 % ​ International Welding: ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 1,040,006 ​ $ 954,281 ​ $ 85,725 ​ 9.0 % ​ Inter-segment sales ​ 31,498 ​ 31,503 ​ ​ (5) ​ — ​ ​ Total Sales ​ $ 1,071,504 ​ $ 985,784 ​ $ 85,720 ​ 8.7 % ​ Adjusted EBIT (5) ​ $ 136,497 ​ $ 120,157 ​ $ 16,340 ​ 13.6 % ​ As a percent of total sales (2) ​ 12.7 % 12.2 % ​ ​ ​ 0.5 % ​ The Harris Products Group: ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 496,084 ​ $ 517,996 ​ $ (21,912) ​ (4.2) % ​ Inter-segment sales ​ 10,641 ​ 11,040 ​ ​ (399) ​ (3.6) % ​ Total Sales ​ $ 506,725 ​ $ 529,036 ​ $ (22,311) ​ (4.2) % ​ Adjusted EBIT (6) ​ $ 74,144 ​ $ 64,008 ​ $ 10,136 ​ 15.8 % ​ As a percent of total sales (3) ​ 14.6 % 12.1 % ​ ​ ​ 2.5 % ​ Corporate / Eliminations: ​ ​ ​ ​ ​ ​ ​ ​ Inter-segment sales ​ $ (169,675) ​ $ (164,562) ​ $ (5,113) ​ (3.1) % ​ Adjusted EBIT (7) ​ (17,536) ​ (10,033) ​ ​ (7,503) ​ (74.8) % ​ Consolidated: ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 4,191,636 ​ $ 3,761,211 ​ $ 430,425 ​ 11.4 % ​ Net income ​ $ 545,248 ​ $ 472,224 ​ $ 73,024 ​ 15.5 % ​ As a percent of total sales ​ 13.0 % 12.6 % ​ ​ ​ 0.4 % ​ Adjusted EBIT (8) ​ $ 731,374 ​ $ 636,951 ​ $ 94,423 ​ 14.8 % ​ As a percent of sales ​ 17.4 % 16.9 % ​ ​ 0.5 % ​ ​ (1) Increase for 2023 as compared to 2022 primarily driven by higher volumes and effective cost management, partially offset by the impact of acquisitions.
The following table presents Adjusted EBIT by segment: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Favorable ​ ​ ​ ​ ​ ​ ​ ​ (Unfavorable) ​ ​ December 31, ​ 2024 vs. 2023 ​ 2024 ​ 2023 ​ $ ​ % ​ Americas Welding: ​ ​ ​ ​ ​ ​ Net sales ​ $ 2,564,847 ​ $ 2,655,546 ​ $ (90,699) ​ (3.4) % Inter-segment sales ​ ​ 135,758 ​ 127,536 ​ 8,222 ​ 6.4 % Total Sales ​ $ 2,700,605 ​ $ 2,783,082 ​ $ (82,477) ​ (3.0) % Adjusted EBIT (4) ​ $ 530,188 ​ $ 538,269 ​ $ (8,081) ​ (1.5) % As a percent of total sales (1) ​ ​ 19.6 % 19.3 % ​ ​ 0.3 % International Welding: ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 933,722 ​ $ 1,040,006 ​ $ (106,284) ​ (10.2) % Inter-segment sales ​ ​ 35,861 ​ 31,498 ​ 4,363 ​ 13.9 % Total Sales ​ $ 969,583 ​ $ 1,071,504 ​ $ (101,921) ​ (9.5) % Adjusted EBIT (5) ​ $ 106,117 ​ $ 136,497 ​ $ (30,380) ​ (22.3) % As a percent of total sales (2) ​ ​ 10.9 % 12.7 % ​ ​ (1.8) % The Harris Products Group: ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 510,101 ​ $ 496,084 ​ $ 14,017 ​ 2.8 % Inter-segment sales ​ ​ 12,321 ​ 10,641 ​ 1,680 ​ 15.8 % Total Sales ​ $ 522,422 ​ $ 506,725 ​ $ 15,697 ​ 3.1 % Adjusted EBIT (6) ​ $ 88,328 ​ $ 74,144 ​ $ 14,184 ​ 19.1 % As a percent of total sales (3) ​ ​ 16.9 % 14.6 % ​ ​ 2.3 % Corporate / Eliminations: ​ ​ ​ ​ ​ ​ ​ ​ Inter-segment sales ​ $ (183,940) ​ $ (169,675) ​ $ (14,265) ​ 8.4 % Adjusted EBIT (7) ​ ​ (11,028) ​ (17,536) ​ 6,508 ​ (37.1) % Consolidated: ​ ​ ​ ​ ​ ​ ​ ​ Net sales ​ $ 4,008,670 ​ $ 4,191,636 ​ $ (182,966) ​ (4.4) % Net income ​ $ 466,108 ​ $ 545,248 ​ $ (79,140) ​ (14.5) % As a percent of total sales ​ ​ 11.6 % 13.0 % ​ ​ (1.4) % Adjusted EBIT (8) ​ $ 713,605 ​ $ 731,374 ​ $ (17,769) ​ (2.4) % As a percent of sales ​ ​ 17.8 % 17.4 % ​ ​ 0.4 % ​ (1) Increase for 2024 as compared to 2023 primarily driven by effective cost management, cost reduction actions, partially offset by the unfavorable impact of lower volumes.
Gross Profit: Gross profit increased for the year ended December 31, 2023 primarily due to pricing actions taken to offset higher inputs costs and favorable segment mix, which offset the impact of acquisitions. Selling, General & Administrative ("SG&A") Expenses: SG&A expenses increased in 2023 as compared to 2022 primarily due to acquisitions and higher employee-related costs .
Gross Profit: Gross profit as a percentage of sales increased 1.7% as compared to 2023 driven by the benefit of effective cost management, cost reduction actions and operational efficiencies. Selling, General & Administrative ("SG&A") Expenses: SG&A expenses increased in 2024 as compared to 2023 primarily due to SG&A associated with acquisitions, partially offset by lower employee-related costs .
No material changes to the Company’s accounting policies were made during 2023. The Company believes the following accounting policies are some of the more critical judgment areas affecting its financial condition and results of operations.
The Company believes the following accounting policies are some of the more critical judgment areas affecting its financial condition and results of operations. Legal and Tax Contingencies The Company, like other manufacturers, is subject from time to time to a variety of civil and administrative proceedings arising in the ordinary course of business.
(2) Costs related to acquisitions, as discussed in Note 4 to the consolidated financial statements, and are included in Selling, general & administrative. (3) 2023 charges related to pension settlement charges. 2022 net gains primarily related to the final settlement associated with the termination of a pension plan, as discussed in Note 11 to the consolidated financial statements.
(3) Pension settlement net charges are primarily due to the final settlement associated with the termination of pension plans and are included in Other income. Refer to Note 11 for further discussion. ​ (4) Costs related to acquisitions which are included in Cost of goods sold. (5) Loss (gain) on asset disposal included in Other income.
(2) Cash used by investing activities decreased for the twelve months ended December 31, 2023 compared with the twelve months ended December 31, 2022 primarily due to less acquisition activity in 2023. The Company currently anticipates capital expenditures of $90,000 to $110,000 in 2024. Anticipated capital expenditures include investments to increase capacity and improve operational effectiveness.
(2) Cash used by investing activities increased in 2024 as compared to 2023 primarily for capital expenditures and the acquisition of businesses in 2024.
Rationalization and asset impairment charges: In 2023, the Company recorded a gain of $11,314 primarily related to the sale of a property offset by rationalization and asset impairment charges within International Welding. 20 Table of Contents ​ Segment Results Net Sales: The table below summarizes the impacts of volume, acquisitions, price and foreign currency exchange rates on Net sales for the twelve months ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in Net Sales due to: ​ ​ Net Sales ​ ​ ​ ​ ​ ​ Foreign Net Sales ​ 2022 ​ Volume (1) Acquisitions (2) Price (3) ​ Exchange ​ 2023 ​ Operating Segments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas Welding $ 2,288,934 ​ $ 109,860 ​ $ 222,493 ​ $ 37,125 $ (2,866) ​ $ 2,655,546 ​ International Welding ​ 954,281 ​ 12,519 ​ 54,078 ​ 14,691 ​ 4,437 ​ 1,040,006 ​ The Harris Products Group ​ 517,996 ​ (36,693) ​ — ​ 12,330 ​ 2,451 ​ 496,084 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change ​ ​ ​ ​ ​ ​ ​ Americas Welding ​ ​ ​ ​ 4.8 % 9.7 % ​ 1.6 % ​ (0.1) % ​ 16.0 % International Welding ​ ​ ​ ​ 1.3 % 5.7 % ​ 1.5 % ​ 0.5 % ​ 9.0 % The Harris Products Group ​ ​ ​ ​ (7.1) % — ​ ​ 2.4 % ​ 0.5 % ​ (4.2) % ​ (1) Increase for Americas Welding due to higher volumes in all product groups.
Income taxes: The effective tax rate was higher in 2024 as compared to 2023 primarily due to the mix of earnings and discrete tax items. 20 Table of Contents ​ Segment Results Net Sales: The table below summarizes the impacts of volume, acquisitions, price and foreign currency exchange rates on Net sales for the twelve months ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in Net Sales due to: ​ ​ Net Sales ​ ​ ​ ​ ​ ​ Foreign Net Sales ​ 2023 ​ Volume (1) Acquisitions (2) Price (3) ​ Exchange ​ 2024 ​ Operating Segments ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Americas Welding $ 2,655,546 ​ $ (192,454) ​ $ 101,097 ​ $ 10,770 $ (10,112) ​ $ 2,564,847 ​ International Welding ​ 1,040,006 ​ (96,658) ​ 1,660 ​ (8,413) ​ (2,873) ​ 933,722 ​ The Harris Products Group ​ 496,084 ​ (12,049) ​ — ​ 28,041 ​ (1,975) ​ 510,101 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % Change ​ ​ ​ ​ ​ ​ ​ Americas Welding ​ ​ ​ ​ (7.2) % 3.8 % ​ 0.4 % ​ (0.4) % ​ (3.4) % International Welding ​ ​ ​ ​ (9.3) % 0.2 % ​ (0.8) % ​ (0.3) % ​ (10.2) % The Harris Products Group ​ ​ ​ ​ (2.4) % — ​ ​ 5.7 % ​ (0.4) % ​ 2.8 % ​ (1) Decrease in all segments due to softer demand across broad industrial markets.
Acquisitions Refer to Note 4 to the consolidated financial statements for a discussion of the Company’s recent acquisitions.
Letters of credit are subject to limits based on amounts outstanding under the Company’s revolving credit facility. Rationalization and Asset Impairments Refer to Note 7 to the consolidated financial statements for a discussion of the Company’s rationalization plans.
(4) Costs related to acquisitions and included in Cost of goods sold. (5) Gain on asset disposal and included in Other income. (6) Includes the net tax impact of Special items recorded during the respective periods. The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate.
The tax effect of Special items impacting pre-tax income was calculated as the pre-tax amount multiplied by the applicable tax rate. The applicable tax rate reflects the taxable jurisdiction and nature of each Special item. Product Liability Costs Product liability costs incurred can be volatile and are largely related to trial activity.
Removed
(4) 2023 excludes the amortization of step up in value of acquired inventories of $9,390 and Rationalization and asset impairment net charges of $468 . 22 Table of Contents ​ 2022 excludes a favorable adjustment related to the termination of a pension plan of $3,735, the amortization of step up in value of acquired inventories of $1,106 and Rationalization and asset impairment gains of $431 related to severance and gains or losses on the disposal of assets as discussed in Note 7 to the consolidated financial statements .
Added
Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on February 27, 2024.
Removed
(6) 2022 excludes the amortization of step up in value of acquired inventories of $820 related to an acquisition and non-cash pension settlement charges of $2,965 as discussed in Note 11 to the consolidated financial statements. (7) 2022 excludes acquisition transaction and integration costs of $6,003 as discussed in Note 4 to the consolidated financial statements.
Added
Rationalization and Asset Impairment Net Charges: Net charges in 2024 of $55,860 primarily relate to rationalization plans initiated in the third quarter of 2024 in all three segments, as well as previously initiated plans and the disposition of the Company’s Russian entity in International Welding .
Removed
(3) Cash used by financing activities increased in the twelve months ended December 31, 2023 compared with the twelve months ended December 31, 2022 primarily due to increased payments on short- and long-term borrowings as compared with the prior year.
Added
Net gains in 2023 primarily reflect a gain on the sale of a property of $36,187, partially offset by Rationalization and asset impairment charges of $24,873 primarily within International Welding. Refer to Note 7 to the consolidated financial statements for further information on the Company’s rationalization plans.
Removed
(4) Cash and cash equivalents increased 99.7%, or $196,637, to $393,787 during the twelve months ended December 31, 2023, from $197,150 as of December 31, 2022. The increase was predominantly due to higher cash provided by operating activities in 2023.
Added
Operating Income: Operating income as a percentage of sales was 15.9% in 2024 as compared to 17.1% in 2023. Excluding special items, Operating income as a percentage of sales was 17.6% in 2024 as compared to 17.1% in the prior year. Refer to explanations above for additional details.
Removed
(2) In 2022, Average operating working capital excluding Fori would have been 18.6% as a percent of Net Sales. (3) In order to minimize supply chain disruptions in serving customers due to the impacts of the COVID-19 pandemic, the Company increased inventories relative to expected Net sales resulting in higher Days sales in Inventories in 2022.
Added
Also refer to Non-GAAP Financial Measures for a reconciliation of Adjusted operating income. Other Income: Other income for 2024 primarily relates to the gain on termination of interest rate swaps and other miscellaneous income, partially offset by pension settlement charges and a loss on asset disposal.
Removed
Debt At December 31, 2023 and 2022, the total amount of debt outstanding was $1,105,210 and $1,203,879, respectively, while the fair value of long-term debt, including the current portion, was approximately $1,013,795 and $1,009,020, respectively, which was determined using available market information and methodologies requiring judgment. The carrying value of this debt at such dates was $1,102,771 and $1,121,435, respectively.
Added
Items in 2023 reflects a gain on the sale of a property, partially offset by Rationalization and asset impairment charges within International Welding. (2) Transaction costs related to acquisitions which are included in Selling, general and administrative expenses. Refer to Note 4 for further discussion.
Removed
Since judgment is required in interpreting market information, the fair value of the debt is not necessarily the amount which could be realized in a current market exchange.
Added
Liquidity and Capital Resources Overview The Company’s primary sources of liquidity are operating cash flows and revolving credit facilities.
Removed
Senior Unsecured Notes On April 1, 2015 and October 20, 2016, the Company entered into separate Note Purchase Agreements pursuant to which it issued senior unsecured notes (the "Notes") through a private placement. The Notes each have an aggregate principal amount of $350,000. Interest on the Notes are payable semi-annually.
Added
As of December 31, 2024, the Company had $377,262 of cash and cash equivalents on hand and $10,520 of outstanding borrowings under its $1,045,608 revolving credit facilities . 24 Table of Contents ​ The Company’s capital allocation priorities include internal investment to support existing operations and organic growth, investment in acquisitions to grow the business and then returning capital to shareholders through dividends and share repurchases.
Removed
The proceeds of the Notes were used for general corporate purposes. The Notes contain certain affirmative and negative covenants. As of December 31, 2023, the Company was in compliance with all of its debt covenants relating to the Notes.
Added
(3) Cash used by financing activities decreased in 2024 as compared to 2023 primarily due to the proceeds from the 2024 Notes issuances, partially offset by the repayment of the Term Loan as described in Note 9 . As of December 31, 2024, the Company had cash of $249,895 held by international subsidiaries.
Removed
The Company’s total weighted average effective interest rate and remaining weighted average term, inclusive of the 2015 Notes and 2016 Notes, is 3.3% and 10.4 years, respectively. Term Loan On November 29, 2022, the Company entered into a term loan in the aggregate principal amount of $400,000 (the “Term Loan”), which was borrowed in full.
Added
In January 2025, the Company paid a cash dividend of $0.75 per share, or $42,158, to shareholders of record on December 31, 2024, which reflects a 5.6% increase in the Company’s dividend payout rate. 25 Table of Contents ​ The Company currently anticipates capital expenditures of $100,000 to $120,000 in 2025.
Removed
The Term Loan matures on November 29, 2025. The Term Loan bears an interest at a rate based on Term SOFR, plus a margin ranging from 0.75% to 1.75% based on the Company’s consolidated net 26 Table of Contents ​ leverage ratio.
Added
Revolving Credit Agreements and Other Lines of Credit On June 20, 2024, the Company terminated its existing $500,000 revolving credit facility and entered into a $1 billion revolving credit facility. The revolving credit facility matures on June 20, 2029. As of December 31, 2024, the Company had $1 billion of availability under the revolving credit facility.
Removed
The proceeds of the Term Loan were used to pay a portion of the purchase price in connection with the acquisition of Fori.
Added
Additionally, the Company has other lines of credit with total availability of $35,088 as of December 31, 2024. Refer to Note 9 for further information on our revolving credit agreements and other lines of credit.
Removed
The agreement governing the Term Loan (the “Term Loan Credit Agreement”) contains representations and warranties, as well as customary affirmative, negative and financial covenants for credit facilities of this type, including limitations on the Company and its subsidiaries with respect to liens, investments, distributions, mergers and acquisitions, dispositions of assets and transactions with affiliates.
Added
Stock Repurchase Program On February 12, 2020, the Company’s Board authorized a share repurchase program for up to 10 million shares of the Company’s common stock. As of December 31, 2024, there were 6.7 million shares available under the authorization. The Company is not obligated to make any repurchases.
Removed
The Term Loan Credit Agreement requires the Company to maintain a minimum consolidated fixed charges coverage ratio and maximum consolidated net leverage ratio. As of December 31, 2023, the Company was in compliance with all of its covenants.
Added
Contractual Obligations Debt As of December 31, 2024, the total amount of debt outstanding was $1,261,075, which includes $110,524 in short-term debt. Refer to Note 9 for further information on our debt and interest. Lease Obligations As of December 31, 2024, the Company’s total future minimum lease payments were $61,942, which includes $14,896 in short-term lease obligations.
Removed
Revolving Credit Agreements On April 23, 2021, the Company amended and restated the agreement governing its line of credit by entering into the Second Amended and Restated Credit Agreement (“Credit Agreement”).
Added
Refer to Note 17 for further information on our lease obligations. Purchase Commitments Purchase commitments include contractual obligations for raw materials and services. As of December 31, 2024, the Company had total purchase commitments of $91,028, which includes $89,792 in current liabilities.
Removed
The Credit Agreement has a line of credit totaling $500,000, has a term of 5 years with a maturity date of April 23, 2026 and may be increased, subject to certain conditions including the consent of its lenders, by an additional amount up to $150,000.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

8 edited+0 added−6 removed2 unchanged
Biggest changeForeign Currency Exchange Risk The Company enters into forward foreign exchange contracts principally to hedge the currency fluctuations in transactions denominated in foreign currencies, thereby limiting the Company’s risk that would otherwise result from changes in exchange rates. At December 31, 2023, the Company hedged certain third-party and intercompany purchases and sales.
Biggest changeThe derivative, borrowing and investment arrangements in effect at December 31, 2024 were compared to the hypothetical foreign exchange rates in the sensitivity analysis to determine the effect on the Company’s current period consolidated financial statements. 31 Table of Contents ​ Foreign Currency Exchange Risk The Company enters into forward foreign exchange contracts principally to hedge the currency fluctuations in transactions denominated in foreign currencies, thereby limiting the Company’s risk that would otherwise result from changes in exchange rates.
The fair value of the Company’s cash and cash equivalents at December 31, 2023 approximated cost due to the short-term duration. These financial instruments are subject to concentrations of credit risk. The Company has minimized this risk by entering into investments with a number of major banks and financial institutions and investing in high-quality instruments.
The fair value of the Company’s cash and cash equivalents at December 31, 2024 approximated cost due to the short-term duration. These financial instruments are subject to concentrations of credit risk. The Company has minimized this risk by entering into investments with a number of major banks and financial institutions and investing in high-quality instruments.
A hypothetical 10% change in the year-end exchange rates would have resulted in an increase or decrease to Income before income taxes of $25,267 related to these positions.
A hypothetical 10% change in the year-end exchange rates would have resulted in an increase or decrease to Income before income taxes of $17,271 related to these positions.
The Company enters into forward foreign exchange contracts to hedge transaction exposures or significant cross-border intercompany loans by either purchasing or selling specified amounts of foreign currency at a specified date. The gross notional dollar amount of these foreign exchange contracts at December 31, 2023 was $492,600.
The Company enters into forward foreign exchange contracts to hedge transaction exposures or significant cross-border intercompany loans by either purchasing or selling specified amounts of foreign currency at a specified date. The gross notional dollar amount of these foreign exchange contracts at December 31, 2024 was $421,754.
The Company does not expect any counter-parties to fail to meet their obligations. ​ 33 Table of Contents ​
The Company does not expect any counter-parties to fail to meet their obligations. ​
The Company also has a foreign currency forward contract hedge designated as a net investment hedge with a notional dollar amount of $119,607 at December 31, 2023. At December 31, 2023, a hypothetical 10% strengthening or weakening in the U.S. dollar would have changed Accumulated other comprehensive income (loss) by $11,658.
The Company also has a foreign currency forward contract hedge designated as a net investment hedge with a notional dollar amount of $319,450 at December 31, 2024. At December 31, 2024, any loss (or gain) resulting from the hypothetical 10% strengthening or weakening in the U.S. dollar would have changed Accumulated other comprehensive income (loss) by $32,617.
The gross notional dollar amount of these foreign exchange contracts at December 31, 2023 was $84,148. At December 31, 2023, a hypothetical 10% strengthening or weakening in the U.S. dollar would have changed Accumulated other comprehensive income (loss) by $1,744.
At December 31, 2024, the Company hedged certain third-party and intercompany purchases and sales. The gross notional dollar amount of these foreign exchange contracts at December 31, 2024 was $96,444. At December 31, 2024, a hypothetical 10% strengthening or weakening in the U.S. dollar would have changed Accumulated other comprehensive income (loss) by $785.
Included below is a sensitivity analysis based upon a hypothetical 10% weakening or strengthening in the U.S. dollar compared to foreign currency exchange rates at December 31, 2023, a 10% change in pricing of commodity contracts 32 Table of Contents ​ and a 100 basis point increase in effective and variable interest rates at December 31, 2023.
Included below is a sensitivity analysis based upon a hypothetical 10% weakening or strengthening in the U.S. dollar compared to foreign currency exchange rates at December 31, 2024.
Removed
The derivative, borrowing and investment arrangements in effect at December 31, 2023 were compared to the hypothetical foreign exchange or interest rates in the sensitivity analysis to determine the effect on the Company’s current period consolidated financial statements.
Removed
Commodity Price Risk From time to time, the Company uses various hedging arrangements to manage exposures related to price risk from commodity purchases. These hedging arrangements have the effect of fixing for specified periods the prices the Company will pay for the volume to which the hedge relates.
Removed
The notional amount of these contracts was 200,000 pounds at December 31, 2023. At December 31, 2023, a hypothetical 10% change in the price would have resulted in an increase or decrease to the value of the contracts by $74.
Removed
Interest Rate Risk In anticipation of future debt issuance associated with the Notes referenced in Note 9 to the consolidated financial statements, the Company has interest rate forward starting swap agreements to hedge the variability of future changes in interest rates. The gross notional dollar value of these contracts was $100,000 at December 31, 2023.
Removed
At December 31, 2023, a hypothetical 100 basis point increase to effective interest rates would have changed Accumulated other comprehensive income (loss) by $6,054. At December 31, 2023, a hypothetical 100 basis point increase to variable interest rates would have changed Interest expense by approximately $2,500.
Removed
In March 2023, the Company entered into interest rate swap agreements, which were qualified and designated as cash flow hedges, with an aggregate notional amount of $150,000. At December 31, 2023, a hypothetical 100 basis point increase to effective interest rates would have changed Accumulated other comprehensive income (loss) by $2,599.

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