Key Highlights

  • Lincoln Electric net sales were $1,221.3 million, up 15.1%, with organic sales up 14.5%.
  • Adjusted diluted EPS was a record $2.98 versus $2.47; GAAP diluted EPS was $2.63 versus $2.21.
  • Adjusted operating margin rose to 18.0% from 17.4%, even as gross margin slipped to 34.8%.
  • Americas Welding sales rose 15.8% to $801.3 million, with adjusted EBIT margin of 20.1%.
  • The quarterly dividend was raised 10.1% to $0.87 per share.

Lincoln Electric Earnings: How Did Welding Volumes Drive a Record $2.98 Adjusted EPS?

Lincoln Electric Holdings (NASDAQ:LECO) reported third-quarter results on Tuesday, October 27. Net sales were $1,221.3 million, up 15.1% from $1,061.2 million, and adjusted diluted EPS reached a record $2.98 versus $2.47. GAAP diluted EPS was $2.63 versus $2.21, up 19.0%. As screened, the EPS estimate was $2.81.

Volume answers the title. Of the 15.1% sales growth, volume contributed 8.8 points, price 5.7 points, acquisitions 0.5 points and currency 0.1 point. The chief executive credited higher volumes and said the company is managing inflationary headwinds while accelerating its RISE strategy initiatives.

The release did not include financial guidance for future periods, so the outlook rests on management's comments about volume strength, inflation and strategy investments.

Margins: Why Did Gross Margin Fall While Operating Margin Rose?

Gross profit was $425.0 million, a 34.8% margin, down from 36.7% a year earlier. Selling, general and administrative expense fell to 16.9% of sales from 19.5%, which more than offset the decline.

Operating income was $211.4 million, a 17.3% margin, up 19.7%. Adjusted operating income was $220.0 million, an 18.0% margin versus $184.6 million and 17.4%.

Net income was $144.3 million and adjusted net income was $163.6 million. Special items of $0.35 per share included $7.9 million of pre-tax rationalization and asset impairment charges and about $13.0 million of tax expense tied to potential repatriation of foreign earnings.

Segments: Which Lincoln Electric Business Carried the Quarter?

Americas Welding sales rose 15.8% to $801.3 million on 13.2% volume and 2.4% price. Adjusted EBIT was $166.5 million, a 20.1% margin versus 18.2%.

The Harris Products Group grew 28.9% to $193.1 million, almost entirely on 25.7% price, with adjusted EBIT of $34.1 million and a 17.3% margin versus 18.3%. International Welding sales rose 3.3% to $226.9 million, but volume fell 1.4% and adjusted EBIT margin slipped to 10.3% from 11.3%.

For nine months, net sales were $3,562.4 million, up 12.9%, with adjusted EPS of $8.41 versus $7.22 and GAAP EPS of $7.97 versus $6.86.

Cash Flow and Capital Returns: What Should Investors Watch Next?

Operating cash flow was $215.8 million and free cash flow was $174.5 million, a 107% cash conversion, versus $205.1 million and 149% a year earlier. Capital expenditures rose to $41.2 million from $31.6 million.

The company repurchased $99.4 million of shares and paid $43.2 million in dividends, returning about $143 million. Total debt fell to $1,150.0 million from $1,294.0 million at year-end 2025, and debt to invested capital was 42.5%. Trailing adjusted return on invested capital was 23.9%.

The new dividend of $0.87 per share, $3.48 annualised, is payable January 15, 2027 to holders of record on December 31, 2026. Watch for fourth-quarter volume trends in Americas Welding, whether Harris pricing holds, and any recovery in International Welding volume.