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    LECO
    Earnings call· Mar 2026(Q1 FY26)

    LINCOLN ELECTRIC HOLDINGS Q1 FY26 earnings call LECO

    Apr 30, 2026 Source

    Executive summary

    Lincoln Electric Q1 FY26 — Record Sales and Adjusted EPS Amidst Geopolitical Headwinds

    Lincoln Electric delivered strong Q1 FY26 results with record sales and adjusted EPS, driven by robust Americas demand in general fabrication and energy. The company navigated geopolitical complexities and inflationary pressures by implementing new pricing actions to restore price/cost neutrality. Strategic investments in automation and customer service initiatives underpin long-term growth, while temporary inventory builds impacted cash flow.

    Highlights

    5

    • Achieved record quarterly sales of $1.121 billion, an increase of approximately 12% year-over-year.

    • Delivered record adjusted diluted EPS of $2.50, representing a 16% increase year-over-year.

    • General fabrication end market showed high 30% growth, driven by accelerated factory activity and data center/HVAC projects in the Americas.

    • Harris Products Group adjusted EBIT increased approximately 68% to $41 million, with its margin improving 330 basis points to 21.2%.

    • Americas Welding segment volume declines narrowed to 40 basis points, with orders accelerating through the quarter.

    Concerns

    5

    • Gross profit margin declined 80 basis points to 35.6%, impacted by lower volumes, timing of price/cost recovery, and a $1 million LIFO charge.

    • Price/cost was unfavorable by 90 basis points in the quarter, as higher prices did not fully offset inflation.

    • International Welding segment volumes decreased 10%, primarily due to automation project timing and the Middle East conflict.

    • Estimated an approximate $8 million sales impact from the Middle East conflict in Q1, with an expected $8 million to $10 million impact per quarter while it persists.

    • Cash flows from operations were seasonally lower and further affected by a temporary increase in inventory levels.

    Guidance & targets

    11
    CategoryTargetConfidence
    Net sales growth
    high single-digit percent range
    high materiality
    High
    Organic sales mix
    3.75% price at a mid-single digit percent rate and 1 quarter volume
    medium materiality
    Medium
    Middle East conflict sales impact
    $8 million to $10 million per quarter
    medium materiality
    Medium
    M&A benefit (Alloy Steel acquisition)
    70 basis point M&A benefit
    low materiality
    High
    Operating income margin improvement
    maintaining our other full year assumptions
    high materiality
    High
    Americas Welding segment EBIT margin
    mid-18 to mid-19% EBIT margin range
    medium materiality
    High
    International Welding segment margin
    11% range
    medium materiality
    Medium
    Harris segment margin
    19% to 20% margin range
    medium materiality
    High
    SG&A run rate
    $250 million per quarter
    low materiality
    High
    Corporate expense
    $1 million to $2 million per quarter
    low materiality
    High
    Price cost posture
    neutral
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Americas Welding
    Sales growth driven by higher price and favorable foreign exchange translation, partially offset by narrowing volume declines. Adjusted EBIT margin declined 100 basis points primarily due to timing of price/cost recovery and higher corporate expense allocation.
    Price: nearly 8% higherForeign exchange translation: 1% favorableVolume declines: narrowed to 40 basis points
    		—increased approximately 8%—17.2%
    International Welding
    Sales increase primarily from favorable foreign exchange translation and strong sales from the Alloy Steel acquisition, partially offset by 10% lower volumes due to automation project timing and the Middle East conflict. Adjusted EBIT margin declined 50 basis points due to lower volumes and higher corporate expense allocation.
    Foreign exchange translation: favorableAlloy Steel acquisition: strong salesVolumes: 10% lower
    		—increased approximately 4%—9.7%
    Harris Products Group
    Sales growth led by 41% higher price, effectively mitigating record high metal costs. Segment achieved neutral price/cost target. Adjusted EBIT increased approximately 68% to $41 million, with margin improving 330 basis points, reflecting SG&A leverage from higher sales and favorable mix.
    Price: 41% higherPrice/cost: neutralVolumes: compression narrowed
    		—increased 42%—21.2%

    Operational metrics

    21
    Net sales growth
    12%
    Q1 FY26

    Consolidated net sales increase.

    Gross profit
    $399 millionincreased approximately 9%
    Q1 FY26

    Reflecting higher sales.

    Gross profit margin
    35.6%declined 80 basis points
    Q1 FY26

    Impacted by various factors including a LIFO charge.

    Price/cost impact
    unfavorable 90 basis points
    Q1 FY26

    Higher price did not fully offset inflation in the quarter.

    SG&A expense
    $211 millionincreased by 7% or $14 million
    Q1 FY26

    Increase driven by several factors including higher employee costs.

    SG&A as percent of sales
    18.8%improved 80 basis points
    Q1 FY26

    Improvement on higher sales levels.

    Adjusted operating income
    $189 millionincreased 11.5%
    Q1 FY26

    Excluding special items.

    Adjusted operating income margin
    16.9%held steady year-over-year
    Q1 FY26

    Steady margin performance reflected favorable SG&A leverage, offsetting lower volumes and unfavorable price/cost.

    Adjusted diluted EPS
    $2.50increased 16%
    Q1 FY26

    Includes benefits from foreign exchange translation and share repurchases.

    Return on invested capital (ROIC)
    21.5%
    Q1 FY26

    Maintained at top quartile levels.

    Cash flows from operations
    $102 millionlower
    Q1 FY26

    Lower due to higher uses of working capital, specifically a temporary increase in inventory levels.

    Average operating working capital to sales ratio
    18.6%80 basis point increase
    Q1 FY26

    Increase due to higher inventory levels.

    Capital expenditures
    $39 million
    Q1 FY26

    Investment in long-term growth.

    Cash returned to shareholders
    $101 million
    Q1 FY26

    Part of balanced capital allocation strategy.

    General fabrication growth rate
    high 30%
    Q1 FY26

    Most notable growth among end markets.

    Energy growth rate
    high teens percent
    Q1 FY26

    Offset by international performance, resulting in steady overall energy segment.

    Automation sales
    $210 millionversus $215 million in prior year
    Q1 FY26

    Compression from international markets due to challenging prior year comparison.

    Manufacturing PMI data
    expanding
    3 consecutive months

    Aligns with improving sales and order momentum in the Americas region.

    Middle East conflict sales impact
    $8 million
    Q1 FY26

    Estimated impact as several customers suspended activity.

    Americas Welding price actions benefit
    150 basis points per quarter
    run rate

    Expected full quarter benefit from new pricing actions to mitigate rising raw material and logistics costs.

    Employee cost increase (seasonal merit)
    $6 million per quarter
    year-over-year basis

    Impact on SG&A run rate.

    Industry KPIs

    4
    MetricValueDetails
    Capacity expansiontriples
    Data center prime power demandhigh teens percent growth rate%
    Incremental margin operating leverage17%%
    Order backlog order intake by segmentstrong

    Orderbook & backlog

    2
    Automation order rates and backlog levelsstrongApril

    continued acceleration

    in the Americas

    Equipment order rates and backlog levelsstrongApril

    continued acceleration

    in the Americas

    Product announcements

    2
    ProductTypeDetails
    Automated Manufacturing Linelaunch
    Center-led Process Innovation Functionlaunch

    Deals & partnerships

    1
    Alloy SteelAcquisition contributing to sales growth

    The Alloy Steel acquisition contributed to Q1 sales and is expected to provide a 70 basis point M&A benefit for the full year, anniversaring in early August.

    Risks & headwinds

    7
    Geopolitical and trade negotiation complexityQ1 FY26 and ongoing

    heightened operating complexity

    Mitigation: agile operations, customer-focused, investing in long-term growth

    Inflationary pressuresQ1 FY26 and ongoing

    10% higher price did not fully offset inflation; unfavorable 90 basis points price/cost impact

    Mitigation: announced new price actions across welding segments effective early May to achieve neutral price/cost target

    Middle East conflictQ1 FY26 and persisting

    approximate $8 million sales impact in Q1; expected $8 million to $10 million impact per quarter while it persists

    Mitigation: engaged with regional customers, global team ready to support repair and expansion needs

    International market compressionQ1 FY26

    10% lower volumes in International Welding segment

    Choppiness in European demandQ1 FY26 and ongoing

    activity may reflect pre-buying ahead of higher inflation and regional commodity supply concerns

    Mitigation: monitoring for consistency

    Lower auto productionQ1 FY26

    slower auto production

    Mitigation: offset by factory activity and infrastructure investments in energy and data centers

    Challenged end markets (nonresidential structural steel and transportation)Q1 FY26

    choppy results quarter-to-quarter

    What to watch in Q2 FY26

    5

    Americas Welding volume growth

    second quarter
    Currentvolume declines narrowed to 40 basis points
    Targetmodest growth

    Why it matters

    Indicates a recovery in core welding demand in the largest segment, crucial for overall company performance.

    We expect volumes to inflect to modest growth in the second quarter.

    Q&A highlights

    6

    Seeking color on overall demand acceleration and broadening product growth, especially given choppier equipment trends vs. strong consumables.

    Management is cautiously optimistic, seeing good order rates in Americas and strong PMI data, but wants more consistency. Europe shows choppiness, and Middle East conflict adds uncertainty. Automation is expected to turn to modest growth in Q2, with broader improvement in H2.

    “We're cautiously optimistic, right? We're seeing good order rates in the Americas business. We've got continued strength in the PMI data, conversations with customers are encouraging, but we don't want to get ahead of ourselves, right? We want to see a little bit more consistency month-to-month.”

    asked by Bryan Blair · answered by Steven Hedlund

    2 min read6 chapters

    Detailed Narrative

    01

    RISE Strategy and Spotlight Initiative Launch

    Lincoln Electric successfully launched its new RISE strategy, marked by early achievements including the U.S. introduction of the Elite customer program. This initiative aims to elevate customer service through superior on-time delivery, hassle-free support, and value-added services. The strategy underscores the company's commitment to long-term growth and reimagining operational processes.

    02

    Manufacturing and Process Innovation

    The company commissioned a new automated manufacturing line at a Harris facility, significantly boosting productivity and quality. This investment highlights Lincoln Electric's capabilities in advanced manufacturing solutions beyond traditional welding. Additionally, a new center-led process innovation function was established in welding consumables to accelerate product development and market entry.

    03

    Americas Demand Trends and Outlook

    The Americas region showed encouraging sales and order momentum through April, supported by three consecutive months of expanding manufacturing PMI data. This positive trend is expected to drive modest volume growth in the Americas Welding segment starting in Q2, with further improvements anticipated in the second half of the year if current conditions persist.

    04

    International Market Dynamics and Headwinds

    Internationally, broad sales improvements were observed in European markets, India, and Australia, with organic sales pivoting to growth in several regions. However, the international business faced headwinds from challenging prior-year comparisons in regional automation and energy projects, as well as an estimated $8 million sales impact from the Middle East conflict in Q1.

    05

    End Market Performance Highlights

    Three of five end markets achieved flat to higher organic sales growth. General fabrication saw high 30% growth, fueled by Americas factory activity, data center, and HVAC projects. Heavy industries grew, led by global off-highway demand. Energy remained steady, with high teens growth in the Americas offsetting international softness. Nonresidential structural steel and transportation were challenged by international weakness and lower capital spending.

    06

    Price/Cost Management and Margin Performance

    Despite a 10% price increase, the company's gross profit margin declined 80 basis points due to lower volumes, timing of📎 price/cost recovery, and a $1 million LIFO charge, resulting in an unfavorable 90 basis points price/cost impact. To achieve neutral price/cost, new pricing actions were announced across welding segments, effective early May, with full impact expected in Q3.

    AI-generated summary of the company’s earnings call. Not investment advice.