Lincoln Electric Holdings, Inc.

Second quarter sales increased 12% to $1.220 billion, driven by approximately 8% higher price, 2% higher volume, a 1.5% benefit from the Alloy Steel acquisition, and 40 basis points of favorable FX. Adjusted EPS rose 13% to $2.93, while reported diluted EPS increased 12.5% to $2.88. Gross profit increased about 11%, but gross margin compressed 50 basis points to 36.8%; adjusted operating margin improved 50 basis points to 18.4%. Operating cash flow was a record $254 million, cash conversion was 138% in the quarter and 95% year to date, and management remains on track for 100% cash conversion for the year. For the full year, the company raised net sales growth to a low-double-digit percent rate and organic sales to a high-single-digit to low-double-digit rate, with price/cost expected to be neutral in the second half and mid-20% incremental margins for the balance of the year.

Steve Hedlund framed the quarter as a meaningful inflection, saying the business saw volume growth after 9 quarters of compression, led by the Americas Welding segment. He emphasized broadening demand in the Americas, record backlog, 6 consecutive months of favorable macro data in the region, and improving customer willingness to invest in capital equipment and automation. His tone was constructive and confident, while still noting persistent inflation, weak Europe, and the need to monitor the Middle East.

Gabe Bruno focused on the bridge between price, volume and cost. He said sales rose 12% to $1.220 billion, gross margin was 36.8%, SG&A was $225 million, and adjusted operating margin improved to 18.4%; he also noted a $4.2 million LIFO charge in the quarter and now expects a $10 million LIFO headwind for the full year. On cash and capital deployment, he highlighted a record $254 million in operating cash flow, $31 million of CapEx, $120 million returned to shareholders, and an improved adjusted ROIC of 23%.

Analysts pressed on whether the company had changed its price/cost outlook, and management confirmed it is now targeting neutral price/cost for the back half of the year after ending Q2 at a 10 basis point headwind. Questions also focused on automation mix, the magnitude of the Americas general fabrication rebound, and the Middle East headwind; management said automation demand is broad-based, especially in general industries, and that the Middle East impact is now estimated at $6 million to $7 million per quarter after running better than expected in Q2. Analysts also asked about transportation automation and APAC, and management said automotive quoting is improving for 2027 and beyond, while India, China and parts of Southeast Asia are showing strength.