EX-99.1 2 d943131dex991.htm EX-99.1

The Welding Experts ® Vincent K. Petrella Executive Vice President & Chief Financial Officer Stifel 2015 Industrials Conference June 16, 2015 Exhibit 99.1

Forward-Looking Statements: Statements made during this presentation which are not historical facts may be considered forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual events or results to differ materially from those expressed or implied. 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. For further information concerning issues that could materially affect financial performance related to forward-looking statements, please refer to Lincoln Electric’s quarterly earnings releases and periodic filings with the Securities and Exchange Commission, which can be found on www.sec.gov or on www.lincolnelectric.com. Safe Harbor and Regulation G Disclosures Non-GAAP Measures: Our management uses non-GAAP financial measures in assessing and evaluating the Company’s performance, which exclude items we consider unusual or special items. We believe the use of such financial measures and information may be useful to investors. Non-GAAP financial measures should be read in conjunction with the GAAP financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures. Please refer to the attached schedule for a reconciliation of non-GAAP financial measures to the related GAAP financial measures. 2

Pioneer With Market-Leading Technology A global manufacturer and market leader with 120 years of expertise. Distinguished by an unwavering commitment to customers, employees and shareholders. Founded in 1895 $2.8B in revenue in 2014 Market cap of ~$5.1B HQ in Cleveland, Ohio, U.S. 47 manufacturing facilities in 19 countries Distribution to over 160 countries 10,000+ employees worldwide EQUIPMENT EQUIPMENT AUTOMATION AUTOMATION FUME CONTROL FUME CONTROL CUTTING CUTTING ACCESSORIES ACCESSORIES CONSUMABLE CONSUMABLE (filler metals) 3

Investment Highlights Predictable model enables high dividend payout Track record of expanding margins Leader in complete solutions and application expertise Increasing cash returns to shareholders Disciplined capital deployment delivers top quartile returns 1 Refers to Operating profit margin excluding special items 4 13% CAGR 2006 - 2015 15+% Operating Margin 1 #1 Global Provider of Solutions >$485 Million in 2015 Est. (+28% vs. ‘14) 19+% ROIC (share repurchases + dividends)

Diversified Products and Reach Net Sales by Product Area ¹ Net Sales by Segment ¹ 1 FY2014 5 Consumables (filler metals) 62% Equipment 38% North America 60% South America Asia Pacific Harris Products Group Europe 15% 11% 9% 5%

Global Arc Welding, Brazing & Cutting Industry Market Share Estimates ¹ 1 Amounts based on the Company estimates of the total market and include sales of equity affiliates 2 Based on company estimates. $23B Global Arc Welding, Brazing & Cutting Industry ² LECO is one of only three global providers to offer a complete solution Leading Provider Across Diverse End Markets 8% 8% 6% 3% 4% 3% 9% LECO Colfax ITW Big Bridge Kobelco Golden Bridge Bohler Air Liquide Kemppi Hyundai OTC Hypertherm Atlantic Fronius Panasonic Others 6 Heavy Fabrication Ship Building Automotive/ Transport General Industrial Fabrication 31% Power Generation & Process 14% Maintenance & Repair Pipe Mill Offshore Pipeline Structural 14%

Innovation & Expertise Differentiate Our Value-Added Model 1920s Motor generator- based equipment Stick electrodes 1950 - 1970s Transformer-based equipment Wire & stick-based consumables 1990 - 2005 Inverter-based equipment (digital) Proprietary wave form technologies Broader-range of consumables & alloys 2006+ Automated and semi-automated solutions Highly engineered solutions for unique applications Expanded alloys and aluminum Virtual reality training tools Laser welding, cutting and cladding solutions Productivity and quality monitoring tools Digital interfaces for repeatability, speed and ease-of-use 70% smaller and 85% lighter 7

Innovation Drives Growth Adding MIG to existing TIG solution Used in various oil and gas applications Leverages a standard, installed base of Power Wave ® equipment, unique motion control technology & new, simple interface New digital system is 75% faster; meeting the need for speed and ease-of-use R&D Investment Galvanized Steel Solution Orbital Solutions Process Z™ new custom wire & waveform for welding zinc-coated steels Stringent automotive requirements driving demand for zinc-coated steels Delivers up to 85% lower porosity levels and higher productivity vs. alternatives New Patents 1 1 Initial patent filings for new technologies 2 New products defined as solutions launched within the last five years 8 ~33% of 2014 sales from new products 2 (+300 bps YoY) ~44% of 2014 equipment sales from new products 2 $22 $24 $26 $27 $28 $29 $33 $37 $42 $43 67 42 22 41 50 29 52 74 110 61 - 20 40 60 80 100 120 $- $5 $10 $15 $20 $25 $30 $35 $40 $45 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Disciplined M&A is Expanding Growth Opportunities $489 Million Cumulative M&A Investment 2005-2014 Sales growth attributed to acquisitions (%) Expanding the market size potential for future growth ¹ $23 Billion $35 Billion Arc Welding, Brazing & Cutting + Automation + Hardfacing 1 Based on company estimates 9 3.9% average

‘2020 Strategy’ Targets Best-in-Class Financial Performance FY2014 Result 2009 to 2014 Performance 2020 Goal (2009-2020) Sales Growth -1.4% 10.2% CAGR 10% CAGR Adj Op Profit Margin 15.1% Average 11.7% Average 15.0% ROIC 19.1% Average 14.8% Average 15.0% Operating Working Capital Ratio 16.5% 670 bps improvement 15.0% BRICs Channels Salesforce Reach Attractive Sectors Automotive Energy Infrastructure Construction Heavy Fabrication Education Operational Excellence Arc Welding Automation Alloys/ Aluminum Accessories Cutting Services Leverage Core + Adjacencies Working capital initiatives Portfolio optimization Lean/Six Sigma programs 2020 2009 10

Share of World Crude Steel Production: 2014 1 1 World Steel Association. Note: U.S. steel production FY2014: +1.7%, YTD through April 2015: -8.5% 2 Markit Financial Information Services Economic Variables Impacting Our Industry 4% 4% 2% 5% 5% 7% EU-28 11 Crude Steel Production Annual Growth Trend: 2010-4/2015 1 -5% 0% 5% 10% 15% 20% 25% 2010 2011 2012 2013 2014 YTD '15 World China ROW China 50% 10% Japan USA India Russia S. Korea Ukraine ROW 11% 40 42 44 46 48 50 52 54 56 58 60 2010 2011 2012 2013 2014 2015 Global U.S. China Eurozone Manufacturing Purchasing Managers’ Indices: 2010 to April 2015 Report 2

4.2% 15.5% 6.8% -3.9% -29.8% 14.1% 14.8% 1.3% -2.7% -2.0% -0.8% 8.0% 2.9% 3.7% 7.8% -0.5% 0.4% 6.9% 1.7% 0.1% 1.8% 2.9% 7.0% 3.4% 2.0% 3.0% 3.0% 5.3% 5.8% 4.9% 3.2% 1.5% 1.8% 0.9% 1.3% 3.2% 1.9% -2.9% 2.6% -2.0% -0.6% -2.6% -4.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1-2015 FX Acquisition Price Volume Solid Price Performance. Volumes Impacted by Initiatives to Improve Mix and Macro’s Please refer to the appendix for reconciliation of non-GAAP measures. 20.1% 23.1% 15.7% 8.7% -30.2% 19.7% 30.2% 5.9% 0.0% -1.4% Components of Revenue Performance 12 -4.0%

Q2 Trending: Focused on ‘2020 Vision & Strategy’ initiatives to drive long-term margin and earnings growth 13 Value Drivers in Q2: • Richening mix • Automation growth • Diversified end sector exposure with steady-to-modest growth in: • General Fabrication • Automotive • Shipbuilding • Pipe mills • Structural (non-res construction) • Continuous improvement programs and cost reduction initiatives • Capital allocation and share repurchases

Q2 Trending: Near-term trends and challenging YoY comparisons keep us cautious on earnings performance 14 Q2 Challenges: • FX translation – mid single-digit percent decline QTD thru May • Weakening oil/gas – high teens percent decline QTD thru May • Weakening exports – over 25 percent decline QTD thru May • General economic malaise and end sector weakness in: • Energy • Heavy Fabrication (agricultural, mining and construction equipment) • Mining / Maintenance & Repair • Higher interest and pension expense • Challenging year-over-year comparisons • Prior year Q2- and Q3-2014 strengthening volume and EBIT performance in North American and European segments • $0.04 EPS contribution from Venezuela in Q2/2014 • $0.03 EPS contribution from an insurance gain in Q2/2014

Focused on Higher Margin Opportunities 1 Excludes special items. Please refer to the appendix for reconciliation of non-GAAP measures. Operating Profit Margin 1 vs. Net Sales 15

($ in millions) 1 Q1/2013 dividend paid in Q4/2012 Solid Cash Flows are Funding Growth and Accelerated Shareholder Returns 17 Capital Allocation $477 >$550 $43 $45 $47 $52 $73 $49 1 $73 $85-$90 $42 $40 $37 $81 $168 $307 $400 $72 $38 $61 $66 $53 $76 $73 $65-$75 $44 $25 $19 $66 $135 $53 $24 2008 2009 2010 2011 2012 2013 2014 2015e Acquisition Cap Ex Share Repurchase Dividend $346 $342 $221 $167 $108 $201

13.2% CAGR 2006 - 2015 Predictable Model Enables a Growing Dividend Payout Dividend History 18 Celebrating 100 years of dividend payments $0.38 $0.44 $0.50 $0.54 $0.56 $0.62 $0.68 $0.80 $0.92 $1.16 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Disciplined Capital Deployment Delivers Top Quartile Returns 19 Return on Invested Capital 17.7% 19.9% 16.8% 18.8% 4.3% 10.7% 16.9% 18.7% 18.9% 19.1% 20.1% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1-2015

Summary – Positioned for Long Term Value Creation #1 Global Provider Top Quartile ROIC $840M Returned to Shareholders 2011-2014 Top Market Position in Arc Welding • Differentiated by comprehensive equipment and consumables • Renowned Welding Experts ® with industry-leading engineers Innovative R&D and Pragmatic M&A Driving Growth • Focused investments driving higher margins and returns • 33% of sales from new products (excl. Automation) • M&A initiatives contributing 3% to 4% of annual revenue growth Solid Execution Increasing Returns • Operational excellence is optimizing the cost structure • Working capital efficiency supporting cash flow generation • Model driven by ROIC Predictable Model Accelerating Shareholder Returns • Business model resilient through economic cycles • 400 basis point margin expansion in 4 years on ‘2020 Strategy’ • Share repurchases up over 700% over the past 4 years 20 Driving Growth and Richening Mix

Appendix Amanda Butler Director, Investor Relations Amanda_Butler@lincolnelectric.com 216.383.2534

Net Income Solid earnings performance through the cycle ($ in Millions) 2005-2014 CAGR 10.5% Net Income 1 1 Excludes special items. Please refer to the appendix for reconciliation of non-GAAP measures. 21 $125 $171 $203 $231 $73 $130 $231 $266 $313 $306 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015

Please refer to the appendix for reconciliation of non-GAAP measures. (EXCLUDING SPECIAL ITEMS) Diluted Earnings Per Share Progression Beginning of Upturn 22 Beginning of Recession

Period Ended December 31, 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1-2015 Operating income: $149,845 $232,970 $277,632 $295,404 $92,976 $186,430 $296,680 $362,081 $406,985 $373,747 $90,499 Special items: Rationalization charges / (gains) 1,761 3,478 (188) 2,447 29,018 (384) 282 9,354 8,463 30,053 - Loss on sale of land - - - - - - - - 705 - - Impairment charges - - - 16,924 879 - - - - - - Pension settlement loss (gain) - - - - (1,543) - - - - - - Loss on sale of business 1,942 - - - - - - - - - - Gain on sale of Ireland facility - (9,006) - - - - - - - - - Venezuelan charges (gains) - - - - - 3,123 - 1,381 12,198 21,133 - Adjusted operating income: $ 153,548 $ 227,442 $ 277,444 $ 314,775 $ 121,330 $ 189,169 $ 296,962 $ 372,816 $ 428,351 $424.933 $90,499 Net sales $ 1,601,190 $ 1,971,915 $ 2,280,784 $ 2,479,131 $ 1,729,285 $ 2,070,172 $ 2,694,609 $ 2,853,367 $ 2,852,671 $ 2,813,324 $ 657,900 Op income % 9.4% 11.8% 12.2% 11.9% 5.4% 9.0% 11.0% 12.7% 14.3% 13.3% 13.8% Adjusted op income % 9.6% 11.5% 12.2% 12.7% 7.0% 9.1% 11.0% 13.1% 15.0% 15.1% 13.8% Reconciliation of Operating Income and Operating Income Margin to Non-GAAP Adjusted Operating Income and Adjusted Operating Income Margin Non-GAAP Financial Measures 23

Period Ended December 31, 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1-2015 Net income: $122,306 $175,008 $202,736 $212,286 $48,576 $130,244 $217,186 $257,411 $293,780 $254,686 $68,354 Special items: Rationalization charges / (gains) 1,303 3,478 (107) 18,313 23,789 (894) 237 7,442 7,573 30,914 - Loss on sale of land - - - - - - - - 705 - - Pension settlement loss (gain) - - - - (2,144) - - - - - - Loss (gain) on sale of business 1,678 - - - (5,667) - - - - - - Gain on sale of Ireland facility - (7,204) - - - - - - - - - Venezuelan charges (gains) - - - - - 3,560 - 906 12,198 21,133 - Non-controlling interests - - - - 601 1,782 - - (1,068) (805) - Tax audit settlements (9,857) - - - - (4,844) - - - - Tax contingency - - - - - (5,092) - - - - - Tax benefits related to Ohio tax law change (1,807) - - - - - - - - - - Gain from settlement of legal disputes (876) - - - - - - - - - - Adjusted Net Income: $ 112,747 $ 171,282 $ 202,629 $ 230,599 $ 121,330 $ 129,600 $ 212,579 $ 265,759 $ 313,188 $ 305,928 $ 68,354 Reconciliation of Net Income to Non-GAAP Adjusted Net Income Non-GAAP Financial Measures 24

Reconciliation of Diluted Earnings Per Common Share (EPS) to Non-GAAP Diluted Adjusted Net Earnings Per Common Share (Adjusted EPS) 2008 2009 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 Diluted EPS: $0.62 $0.81 $0.80 $0.23 $(0.04) $0.18 $0.15 $0.29 $0.28 $0.38 $0.38 $0.49 Special items: Rationalization charges (gains) - - - 0.02 0.09 0.08 0.07 0.03 0.01 (0.04) - 0.02 Impairment charges - - - 0.19 - - - 0.01 - - - - Pension settlement gain - - - - - (0.02) - - - - - - LEIM disposal of assets (noncontrolling) - - - - - - - - - 0.02 - - Adjust. Tax contingencies (Asia Pac) - - - - - - - - - - - (0.06) Loss from Jin Tai acquisition - - - - - - 0.09 - - - - - Gain on sale of property (Turkey) - - - - - (0.07) - - - - - - Venezuela charges (gains) - - - - - - - - - 0.03 0.01 - Adjusted Diluted EPS: $0.62 $0.81 $0.80 $0.44 $0.05 $0.17 $0.32 $0.32 $0.28 $0.39 $0.39 $0.45 Non-GAAP Financial Measures 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 Diluted EPS: $0.55 $0.68 $0.66 $0.68 $0.76 $0.79 $0.77 $0.74 $0.80 $0.87 $0.80 $1.07 Special items: Rationalization charges (gains) - - - - - 0.01 0.03 0.05 0.01 0.04 0.06 0.02 Tax audit settlements (0.06) - - - - - - - - - - - Venezuela charges (gains) - - - - - 0.01 - - 0.11 - - - Adjusted Diluted EPS: $0.49 $0.68 $0.66 $0.68 $0.76 $0.81 $0.80 $0.79 $0.92 $0.91 $0.86 $1.09 25

Reconciliation of Diluted Earnings Per Common Share (EPS) to Non-GAAP Diluted Adjusted Net Earnings Per Common Share (Adjusted EPS) 2014 2015 2010 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2014 2014 2014 2014 2015 2009 2009 2009 2010 2010 2010 2010 Diluted EPS: $0.69 $0.96 $0.57 $0.96 $0.89 $0.18 $0.15 $0.29 $0.28 $0.38 $0.38 $0.49 Special items: Rationalization charges (gains) - 0.01 0.37 - - 0.08 0.07 0.03 0.01 (0.04) - 0.02 Venezuela charges (gains) 0.22 0.04 - - - - - - - 0.03 0.01 - Adjusted Diluted EPS: $0.91 $1.01 $0.94 $0.96 $0.89 $0.17 $0.32 $0.32 $0.28 $0.39 $0.39 $0.45 Non-GAAP Financial Measures 26