LINCOLN ELECTRIC HOLDINGS INC (LECO)
SIC breadcrumb: Manufacturing > Industrial And Commercial Machinery And Computer Equipment > SIC 3540 Metalworkg Machinery & Equipment
SEC company page: https://www.sec.gov/edgar/browse/?CIK=59527. Latest filing source: 0000059527-26-000006.
Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
|---|---|---|---|---|
| Revenue | 4,233,003,000 | USD | 2025 | 2026-02-25 |
| Net income | 520,533,000 | USD | 2025 | 2026-02-25 |
| Assets | 3,777,577,000 | USD | 2025 | 2026-02-25 |
Financials
Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-25. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000059527.json. Derived margins are computed from the extracted annual SEC facts.
| Metric | 2009 | 2010 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Revenue | 3,003,272,000 | 2,655,400,000 | 3,234,180,000 | 3,761,211,000 | 4,191,636,000 | 4,008,670,000 | 4,233,003,000 | |||||
| Net income | 48,576,000 | 130,244,000 | 287,066,000 | 293,109,000 | 206,115,000 | 276,580,000 | 472,224,000 | 545,248,000 | 466,108,000 | 520,533,000 | ||
| Operating income | 283,614,000 | 376,942,000 | 375,539,000 | 370,910,000 | 282,071,000 | 461,669,000 | 612,336,000 | 717,849,000 | 636,462,000 | 718,059,000 | ||
| Gross profit | 786,559,000 | 875,107,000 | 1,028,521,000 | 1,007,587,000 | 871,341,000 | 1,068,605,000 | 1,280,760,000 | 1,465,445,000 | 1,472,912,000 | 1,534,252,000 | ||
| Diluted EPS | 2.91 | 3.71 | 4.37 | 4.68 | 3.42 | 4.60 | 8.04 | 9.37 | 8.15 | 9.32 | ||
| Assets | 1,943,437,000 | 2,406,547,000 | 2,349,825,000 | 2,371,213,000 | 2,314,453,000 | 2,592,307,000 | 3,180,546,000 | 3,377,297,000 | 3,520,142,000 | 3,777,577,000 | ||
| Liabilities | 1,231,231,000 | 1,474,094,000 | 1,462,233,000 | 1,552,136,000 | 1,524,203,000 | 1,728,398,000 | 2,146,505,000 | 2,068,445,000 | 2,192,709,000 | 2,307,783,000 | ||
| Stockholders' equity | 711,477,000 | 931,637,000 | 886,942,000 | 818,172,000 | 790,250,000 | 863,909,000 | 1,034,041,000 | 1,308,852,000 | 1,327,433,000 | 1,469,794,000 | ||
| Cash and cash equivalents | 379,179,000 | 326,701,000 | 358,849,000 | 199,563,000 | 257,279,000 | 192,958,000 | 197,150,000 | 393,787,000 | 377,262,000 | 308,789,000 | ||
| Net margin | 9.76% | 7.76% | 8.55% | 12.56% | 13.01% | 11.63% | 12.30% | |||||
| Operating margin | 12.35% | 10.62% | 14.27% | 16.28% | 17.13% | 15.88% | 16.96% |
Financial Charts
Quarterly
Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-04-30. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000059527.json.
| Quarter | End Date | Revenue | Net Income | Diluted EPS | Method |
|---|---|---|---|---|---|
| 2022-Q2 | 2022-06-30 | 2.18 | reported discrete quarter | ||
| 2022-Q3 | 2022-09-30 | 1.87 | reported discrete quarter | ||
| 2023-Q1 | 2023-03-31 | 2.09 | reported discrete quarter | ||
| 2023-Q2 | 2023-06-30 | 1,060,565,000 | 137,331,000 | 2.36 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 1,033,214,000 | 129,343,000 | 2.22 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 1,058,514,000 | 156,643,000 | derived Q4 = FY annual - nine-month YTD | |
| 2024-Q1 | 2024-03-31 | 981,197,000 | 123,415,000 | 2.14 | reported discrete quarter |
| 2024-Q2 | 2024-03-31 | 123,415,000 | reported discrete quarter | ||
| 2024-Q3 | 2024-06-30 | 101,708,000 | reported discrete quarter | ||
| 2024-Q2 | 2024-06-30 | 1,021,683,000 | 1.77 | reported discrete quarter | |
| 2024-Q3 | 2024-09-30 | 983,759,000 | 1.77 | reported discrete quarter | |
| 2024-Q4 | 2024-12-31 | 1,022,031,000 | 140,229,000 | derived Q4 = FY annual - nine-month YTD | |
| 2025-Q1 | 2025-03-31 | 1,004,388,000 | 118,487,000 | 2.10 | reported discrete quarter |
| 2025-Q2 | 2025-03-31 | 118,487,000 | reported discrete quarter | ||
| 2025-Q3 | 2025-06-30 | 143,396,000 | reported discrete quarter | ||
| 2025-Q2 | 2025-06-30 | 1,088,673,000 | 2.56 | reported discrete quarter | |
| 2025-Q3 | 2025-09-30 | 1,061,227,000 | 2.21 | reported discrete quarter | |
| 2025-Q4 | 2025-12-31 | 1,078,715,000 | 136,022,000 | derived Q4 = FY annual - nine-month YTD | |
| 2026-Q1 | 2026-03-31 | 1,121,434,000 | 136,382,000 | 2.47 | reported discrete quarter |
Quarterly Charts
Macro Cross-References
- CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
- UNRATE - Unemployment Rate
- FEDFUNDS - Federal Funds Effective Rate
- CES0500000003 - Average Hourly Earnings of All Employees, Total Private
- DFEDTARU - Federal Funds Target Range - Upper Limit
- DFEDTARL - Federal Funds Target Range - Lower Limit
- DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
- DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
- T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
- CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
- CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
- CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
- PCEPI - Personal Consumption Expenditures: Chain-type Price Index
- PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
- PPIACO - Producer Price Index by Commodity: All Commodities
- T10YIE - 10-Year Breakeven Inflation Rate
- U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
- PAYEMS - All Employees, Total Nonfarm
- CIVPART - Labor Force Participation Rate
- EMRATIO - Employment-Population Ratio
- UNEMPLOY - Unemployed
- CE16OV - Employment Level
- ICSA - Initial Claims
- JTSJOL - Job Openings: Total Nonfarm
- JTSQUR - Quits: Total Nonfarm
- GDPC1 - Real Gross Domestic Product
- A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
- INDPRO - Industrial Production: Total Index
- TCU - Capacity Utilization: Total Index
- HOUST - New Privately-Owned Housing Units Started: Total Units
- PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
- RSAFS - Advance Retail Sales: Retail Trade
- PCE - Personal Consumption Expenditures
- DSPIC96 - Real Disposable Personal Income
- PSAVERT - Personal Saving Rate
- M2SL - M2
- BOPGSTB - U.S. International Trade in Goods and Services: Balance
- MSPUS - Median Sales Price of Houses Sold for the United States
- HSN1F - New One Family Houses Sold: United States
- RHORUSQ156N - Homeownership Rate in the United States
- TTLCONS - Total Construction Spending: Total Construction in the United States
- RRVRUSQ156N - Rental Vacancy Rate in the United States
- TOTALSL - Total Consumer Credit Owned and Securitized
- REVOLSL - Revolving Consumer Credit Owned and Securitized
- DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
- GDP - Gross Domestic Product
- GPDI - Gross Private Domestic Investment
- GCE - Government Consumption Expenditures and Gross Investment
- PCEC - Personal Consumption Expenditures
- NETEXP - Net Exports of Goods and Services
- GFDEBTN - Federal Debt: Total Public Debt
- GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
- FYFSD - Federal Surplus or Deficit
- FGRECPT - Federal Government Current Receipts
- FGEXPND - Federal Government: Current Expenditures
- MANEMP - All Employees, Manufacturing
- USCONS - All Employees, Construction
- USTRADE - All Employees, Retail Trade
- USFIRE - All Employees, Financial Activities
- USGOVT - All Employees, Government
- AWHAETP - Average Weekly Hours of All Employees, Total Private
- DGORDER - Manufacturers' New Orders: Durable Goods
- NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
- BUSINV - Total Business Inventories
- EXPGS - Exports of Goods and Services
- IMPGS - Imports of Goods and Services
- IR - Import Price Index (End Use): All Commodities
- PPIFIS - Producer Price Index by Commodity: Final Demand
Latest quarter (10-Q)
Latest 10-Q source: 0000059527-26-000012.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except per share amounts) This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with the Company’s unaudited consolidated financial statements and other financial information included elsewhere in this Quarterly Report on Form 10-Q. General The Company is a high-performance industrial machinery and technology leader who helps customers manufacture and maintain vital equipment and infrastructure. The Company’s innovative solutions enable higher quality and productivity across a variety of processes including welding, cutting, brazing, machining, process automation, and field repair. The Company’s products include arc welding equipment, filler metals (welding, brazing and soldering consumables), cutting systems (laser, plasma and oxyfuel), wire feeding systems, fume control equipment, welding accessories, specialty gas regulators, mobile power equipment, wear solutions, software, and education solutions; as well as a comprehensive portfolio of automated solutions and system integration services for joining, cutting, material handling, module assembly, and end of line testing. Services include additive manufacturing, precision fabrication, wear services, upfitting, and training. Solutions range in technology and features from basic units used for personal, maintenance and light manufacturing use to highly sophisticated robotic solutions for complex fabrication and production activities. 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 Americas Welding segment includes welding operations in North and South America. The International Welding segment includes welding operations in Europe, Africa, Asia and Australia. The Harris Products Group includes the Company’s global cutting, soldering and brazing businesses, specialty gas equipment, as well as the retail business which is primarily in the United States. 21 Table of Contents Results of Operations The following table shows the Company’s results of operations: Three Months Ended March 31, Favorable (Unfavorable) 2026 2025 2026 vs. 2025 Amount % of Sales Amount % of Sales $ % Net sales $ 1,121,434 $ 1,004,388 $ 117,046 11.7 % Cost of goods sold 722,302 638,940 (83,362) (13.0) % Gross profit 399,132 35.6 % 365,448 36.4 % 33,684 9.2 % Selling, general & administrative expenses 210,811 18.8 % 196,665 19.6 % (14,146) (7.2) % Rationalization and asset impairment net charges 2,163 0.2 % 3,865 0.4 % 1,702 44.0 % Operating income 186,158 16.6 % 164,918 16.4 % 21,240 12.9 % Interest expense, net 13,374 12,127 (1,247) (10.3) % Other income 570 444 126 28.4 % Income before income taxes 173,354 15.5 % 153,235 15.3 % 20,119 13.1 % Income taxes 36,972 34,748 (2,224) (6.4) % Effective tax rate 21.3 % 22.7 % 1.4 % Net income $ 136,382 12.2 % $ 118,487 11.8 % $ 17,895 15.1 % Diluted earnings per share $ 2.47 $ 2.10 $ 0.37 17.6 % Net Sales: The following table summarizes the impact of volume, acquisitions, price and foreign currency exchange rates on Net sales on a consolidated basis: Three Months Ended March 31, Change in Net Sales due to: Net Sales Foreign Net Sales 2025 Volume Price Acquisitions Exchange 2026 Lincoln Electric Holdings, Inc. $ 1,004,388 $ (25,641) $ 104,558 $ 15,794 $ 22,335 $ 1,121,434 % Change Lincoln Electric Holdings, Inc. (2.6) % 10.4 % 1.6 % 2.3 % 11.7 % Net sales increased for the three months ended March 31, 2026 due to an increase in organic sales and a benefit from acquisitions and foreign exchange. The increase in organic sales for the three months ended March 31, 2026 is driven by an increase in pricing primarily due to higher input costs, partially offset by lower volumes. Gross Profit: Gross profit as a percentage of sales decreased 0.8% for the three months ended March 31, 2026 as compared to the same 2025 period, driven by an unfavorable impacts from volumes and product mix. The three months ended March 31, 2026 and 2025 includes last-in, first-out (“LIFO”) charges of $838 and $1,761, respectively, which was primarily due to rising input costs. Selling, General & Administrative Expenses: Selling, general & administrative expenses increased in the three months ended March 31, 2026 as compared to the same 2025 period, primarily due to increases in discretionary spend, employee costs and the unfavorable impact of foreign currency translation. Selling, general & administrative expenses as a percentage of sales decreased primarily due to higher organic sales. 22 Table of Contents Operating Income: Operating income as a percentage of sales was 16.6% for the three months ended March 31, 2026 as compared to 16.4% in the prior year period. Excluding special items, Operating income as a percentage of sales was 16.9% for both the three months ended March 31, 2026 and 2025. Refer to explanations above for additional details. Also refer to Non-GAAP Financial Measures for a reconciliation of Adjusted operating income. Income Taxes: The effective tax rate was lower for the three months ended March 31, 2026 as compared to the same 2025 period, primarily due to the mix of earnings and timing of discrete tax items. Segment Results The following table presents components of Net sales by segment: Three Months Ended March 31, Change in Net Sales due to: Net Sales Foreign Net Sales 2025 Volume (1) Price (2) Acquisitions (3) Exchange (4) 2026 Operating Segments Americas Welding $ 653,107 $ (2,635) $ 49,479 $ — $ 6,274 $ 706,225 International Welding 219,061 (21,631) 297 15,794 13,514 227,035 The Harris Products Group 132,220 (1,375) 54,782 — 2,547 188,174 % Change Americas Welding (0.4) % 7.6 % — 0.9 % 8.1 % International Welding (9.9) % 0.1 % 7.2 % 6.2 % 3.6 % The Harris Products Group (1.0) % 41.4 % — 1.9 % 42.3 % (1) Decrease for the three months ended March 31, 2026 in International Welding is primarily related to lower project volumes within the Automation product line and the Middle East conflict. (2) Increase in Americas Welding and The Harris Products Group due to price actions taken in response to higher input costs. (3) Increase in International Welding due to the acquisition discussed in Note 4 to the consolidated financial statements. (4) Increase for the three months ended March 31, 2026 for all three segments relates to the weaker U.S. dollar. Segment performance is measured and resources are allocated based on a number of factors, the primary measure being the Adjusted EBIT profit measure. Adjusted EBIT is defined as Operating income plus Other income, 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. 23 Table of Contents The following table presents Adjusted EBIT by segment: Favorable (Unfavorable) March 31, 2026 vs. 2025 2026 2025 $ % Americas Welding: Net sales $ 706,225 $ 653,107 $ 53,118 8.1 % Inter-segment sales 36,709 30,372 6,337 20.9 % Total Sales $ 742,934 $ 683,479 $ 59,455 8.7 % Adjusted EBIT (1) (4) $ 127,468 $ 124,198 $ 3,270 2.6 % As a percent of total sales (1) 17.2 % 18.2 % (1.0) % International Welding: Net sales $ 227,035 $ 219,061 $ 7,974 3.6 % Inter-segment sales 5,807 6,832 (1,025) (15.0) % Total Sales $ 232,842 $ 225,893 $ 6,949 3.1 % Adjusted EBIT (2) (5) $ 22,662 $ 23,012 $ (350) (1.5) % As a percent of total sales (2) 9.7 % 10.2 % (0.5) % The Harris Products Group: Net sales $ 188,174 $ 132,220 $ 55,954 42.3 % Inter-segment sales 4,664 3,984 680 17.1 % Total Sales $ 192,838 $ 136,204 $ 56,634 41.6 % Adjusted EBIT (3) (6) $ 40,809 $ 24,329 $ 16,480 67.7 % As a percent of total sales (3) 21.2 % 17.9 % 3.3 % Corporate / Eliminations: Inter-segment sales $ (47,180) $ (41,188) $ (5,992) (14.5) % Adjusted EBIT (7) (1,395) (1,650) 255 15.5 % Consolidated: Net sales $ 1,121,434 $ 1,004,388 $ 117,046 11.7 % Net income $ 136,382 $ 118,487 $ 17,895 15.1 % As a percent of total sales 12.2 % 11.8 % 0.4 % Adjusted EBIT (8) $ 189,544 $ 169,889 $ 19,655 11.6 % As a percent of sales 16.9 % 16.9 % — % (1) Adjusted EBIT increased for the three months ended March 31, 2026 as compared to March 31, 2025 driven by the favorable net impact of organic sales, partially offset by unfavorable impact of product mix; Adjusted EBIT as a percent of sales decreased for the same period due to the timing of pricing actions, higher employee costs and an increase in allocated corporate costs related to strategic initiatives. (2) Adjusted EBIT and Adjusted EBIT as a percent of sales decreased for the three months ended March 31, 2026 as compared to March 31, 2025 primarily driven by the unfavorable impact of lower volumes and an increase in allocated corporate costs related to strategic initiatives, partially offset by the benefit of acquisitions. (3) Adjusted EBIT and Adjusted EBIT as a percent of sales increased for the three months ended March 31, 2026 as compared to March 31, 2025 primarily driven by operating leverage from higher organic sales. (4) The three months ended March 31, 2026 and 2025 exclude Rationalization and asset impairment net charges of $573 and $2,135, respectively, as discussed in Note 6 to the consolidated financial statements. (5) The three months ended March 31, 2026 and 2025 exclude Rationalization and asset impairment net charges of $1,772 and $1,552, respectively, as discussed in Note 6 to the consolidated financial statements. 24 Table of Contents (6) The three months ended March 31 [Excerpt truncated for page length; source filing is linked above.]
Latest 10-K MD&A
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with the Company’s consolidated financial statements and other financial information included elsewhere in this Annual Report on Form 10-K. This Annual Report on Form 10-K contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those indicated in the forward-looking statements. See "Item 1A. Risk Factors" for more information regarding forward-looking statements.
General
The Company is a high-performance industrial machinery and technology leader who helps customers manufacture and maintain vital equipment and infrastructure. The Company’s innovative solutions enable higher quality and productivity across a variety of processes including welding, cutting, brazing, machining, process automation, and field repair.
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Table of Contents
The Company’s products include arc welding equipment, filler metals (welding, brazing and soldering consumables), cutting systems (laser, plasma and oxyfuel), wire feeding systems, fume control equipment, welding accessories, specialty gas regulators, mobile power equipment, wear solutions, software, and education solutions; as well as a comprehensive portfolio of automated solutions and system integration services for joining, cutting, material handling, module assembly, and end of line testing. Services include additive manufacturing, precision fabrication, wear services, upfitting, and training.
Solutions range in technology and features from basic units used for personal, maintenance and light manufacturing use to highly sophisticated robotic solutions for complex fabrication and production activities.
The Company invests in the research and development of its solutions in order to continue its market leading product offering and improve the quality, productivity and sustainability of its solutions. In addition, the Company actively protects its innovations with patents and trade secrets globally. The Company believes its significant investment in research and development, its highly trained technical sales force and its extensive distributor network provide a competitive advantage in the marketplace.
The Company’s products are sold globally through industrial distributors, direct to end users, retailers and wholesalers.
The Company’s major end-user markets include:
●
general fabrication,
●
energy (oil and gas, power generation and process industries),
●
heavy industries (heavy fabrication, ship building and maintenance and repair),
●
automotive and transportation, and
●
construction and infrastructure.
The Company has, through wholly owned subsidiaries, manufacturing and automation 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 principal raw materials essential to the Company’s business are steel, electronic components, engines, brass, copper, silver, aluminum alloys, robotic components and various chemicals, all of which are normally available for purchase in the open market.
In 2025, the U.S. government announced a series of tariffs on imported goods into the U.S., which prompted retaliatory actions from some of its trading partners. The Company has taken actions to address the impact of these trade policies and while the Company cannot predict the ultimate impact on its business, the Company will continue to monitor evolving trade negotiations to determine if additional measures are warranted.
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. 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 49 facilities worldwide.
The Company ensures compliance and the continuous improvement of the environmental performance of its products and operations through its global EHS&Q systems. The Company’s systems are guided by Corporate EHS&Q Policy, global directives and corporate standards that establish consistent guidelines for the management, measurement and reporting of environmental, health and safety activities, as well as quality across the Company’s global platform. The Company’s products support our customers' sustainable operations through enhanced worker safety, reduced emissions, improved energy efficiency, reduced waste and regulatory compliance.
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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. 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. Although these measures provide key information on trends relevant to the Company, the Company does not have available a more direct correlation of leading indicators which can provide a forward-looking view of demand levels in the markets which ultimately use the Company’s welding products.
Key financial measures utilized by the Company’s executive management and operating units in order to evaluate the results of its business and in understanding key variables impacting the current and future results of the Company include: sales; gross profit; selling, general and administrative expenses; operating income; earnings before interest and taxes; net income; adjusted operating income; adjusted earnings before interest and income taxes; adjusted net income; adjusted diluted earnings per share; operating cash flows; and capital expenditures, as well as applicable ratios such as return on invested capital, adjusted return on invested capital and average operating working capital to sales. 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, 2025 and 2024. For a comparison of the Company’s results of operations, liquidity and capital resources for the fiscal years ended December 31, 2024 and 2023, see “Item 7. 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, 2024, which was filed with the SEC on February 25, 2025.
Results of Operations
The following table shows the Company’s results of operations:
Year Ended December 31,
Favorable (Unfavorable)
2025
2024
2025 vs. 2024
Amount
% of Sales
Amount
% of Sales
$
%
Net sales
$
4,233,003
$
4,008,670
$
224,333
5.6
%
Cost of goods sold
2,698,751
2,535,758
(162,993)
(6.4)
%
Gross profit
1,534,252
36.2
%
1,472,912
36.7
%
61,340
4.2
%
Selling, general & administrative expenses
797,994
18.9
%
780,590
19.5
%
(17,404)
(2.2)
%
Rationalization and asset impairment net charges
18,199
0.4
%
55,860
1.4
%
37,661
67.4
%
Operating income
718,059
17.0
%
636,462
15.9
%
81,597
12.8
%
Interest expense, net
51,561
42,786
(8,775)
(20.5)
%
Other income
8,952
473
8,479
1,792.6
%
Income before income taxes
675,450
16.0
%
594,149
14.8
%
81,301
13.7
%
Income taxes
154,917
128,041
(26,876)
(21.0)
%
Effective tax rate
22.9
%
21.6
%
(1.3)
%
Net income
$
520,533
12.3
%
$
466,108
11.6
%
$
54,425
11.7
%
Diluted earnings per share
$
9.32
$
8.15
$
1.17
14.4
%
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Net Sales:
The following table summarizes the impacts of volume, acquisitions, price and foreign currency exchange rates on Net sales for the year ended December 31, 2025 on a consolidated basis:
Change in Net Sales due to:
Net Sales
Foreign
Net Sales
2024
Volume
Price
Acquisitions
Exchange
2025
Lincoln Electric Holdings, Inc.
$
4,008,670
$
(147,682)
$
246,540
$
106,478
$
18,997
$
4,233,003
% Change
Lincoln Electric Holdings, Inc.
(3.7)
%
6.2
%
2.7
%
0.4
%
5.6
%
Net sales increased for the year ended December 31, 2025 primarily due to an increase in organic sales and a benefit from acquisitions. The increase in organic sales is driven by an increase in pricing primarily due to higher input costs, partially offset by lower volumes.
Gross Profit:
Gross profit as a percentage of sales decreased 0.5% for 2025 as compared to 2024 driven by lower volumes partially offset by effective cost management. The year ended December 31, 2025 includes a last-in, first-out (“LIFO”) charge of $17,956, which is primarily due to rising input costs. This compares with a LIFO benefit of $9,313 in 2024.
Selling, General & Administrative ("SG&A") Expenses:
SG&A expenses increased in 2025 as compared to 2024 primarily due to acquisitions. SG&A expenses as a percentage of sales decreased primarily due to effective cost management.
Rationalization and Asset Impairment Net Charges:
Charges in 2025 and 2024 relate to rationalization plans within all three reportable segments. Charges in 2024 include the impact of the Company’s disposition of its Russian entity. Refer to Note 7 to the consolidated financial statements for further information on the Company’s rationalization plans.
Operating Income:
Operating income as a percentage of sales was 17.0% in 2025 as compared to 15.9% in 2024. Excluding special items, Operating income as a percentage of sales was 17.6% for both 2025 and 2024. Refer to explanations above for additional details. Also refer to Non-GAAP Financial Measures for a reconciliation of Adjusted operating income.
Other Income:
Other income for 2025 primarily relates to the non-recurring items such as equity income and other non-operating gains.
Income Taxes:
The effective tax rate was higher in 2025 as compared to 2024 primarily driven by the impact of the One Big Beautiful Bill Act (“OBBBA”), partially offset by the mix of earnings and timing of discrete tax items. Refer to Note 13 to the consolidated financial statements for further details.
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Segment Results
Net Sales:
The table below summarizes the impacts of volume, acquisitions, price and foreign currency exchange rates on Net sales for the year ended December 31, 2025:
Change in Net Sales due to:
Net Sales
Foreign
Net Sales
2024
Volume (1)
Price (2)
Acquisitions (3)
Exchange (4)
2025
Operating Segments
Americas Welding
$
2,564,847
$
(107,480)
$
184,483
$
86,361
$
(4,650)
$
2,723,561
International Welding
933,722
(47,629)
3,062
20,117
21,593
930,865
The Harris Products Group
510,101
7,427
58,995
—
2,054
578,577
% Change
Americas Welding
(4.2)
%
7.2
%
3.4
%
(0.2)
%
6.2
%
International Welding
(5.1)
%
0.3
%
2.2
%
2.3
%
(0.3)
%
The Harris Products Group
1.5
%
11.6
%
—
0.3
%
13.4
%
(1)
Decrease in Americas Welding and International Welding due to lower capital spending impacting equipment and automation, as well as weakened industrial demand trends in portions of International Welding. Increase in The Harris Products Group due to the expanded market presence in the retail channel.
(2)
Increase in all segments due to price actions taken in response to higher input costs.
(3)
Increase for Americas Welding and International Welding due to the acquisitions discussed in Note 4 to the consolidated financial statements.
(4)
Increase for International Welding relates to the weaker U.S. dollar.
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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. Adjusted EBIT is defined as Operating income plus Other income, 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.
The following table presents Adjusted EBIT by segment:
Favorable
(Unfavorable)
December 31,
2025 vs. 2024
2025
2024
$
%
Americas Welding:
Net sales
$
2,723,561
$
2,564,847
$
158,714
6.2
%
Inter-segment sales
128,922
135,758
(6,836)
(5.0)
%
Total Sales
$
2,852,483
$
2,700,605
$
151,878
5.6
%
Adjusted EBIT (1)(4)
$
534,839
$
530,188
$
4,651
0.9
%
As a percent of total sales (1)
18.7
%
19.6
%
(0.9)
%
International Welding:
Net sales
$
930,865
$
933,722
$
(2,857)
(0.3)
%
Inter-segment sales
30,160
35,861
(5,701)
(15.9)
%
Total Sales
$
961,025
$
969,583
$
(8,558)
(0.9)
%
Adjusted EBIT (2)(5)
$
110,585
$
106,117
$
4,468
4.2
%
As a percent of total sales (2)
11.5
%
10.9
%
0.6
%
The Harris Products Group:
Net sales
$
578,577
$
510,101
$
68,476
13.4
%
Inter-segment sales
15,084
12,321
2,763
22.4
%
Total Sales
$
593,661
$
522,422
$
71,239
13.6
%
Adjusted EBIT (3)(6)
$
107,608
$
88,328
$
19,280
21.8
%
As a percent of total sales (3)
18.1
%
16.9
%
1.2
%
Corporate / Eliminations:
Inter-segment sales
$
(174,166)
$
(183,940)
$
(9,774)
(5.3)
%
Adjusted EBIT (7)
(400)
(11,028)
10,628
96.4
%
Consolidated:
Net sales
$
4,233,003
$
4,008,670
$
224,333
5.6
%
Net income
$
520,533
$
466,108
$
54,425
11.7
%
As a percent of Net sales
12.3
%
11.6
%
0.7
%
Adjusted EBIT (8)
$
752,632
$
713,605
$
39,027
5.5
%
As a percent of Net sales
17.8
%
17.8
%
0.0
%
(1)
Adjusted EBIT increased for 2025 as compared to 2024 primarily driven by the favorable net impact of organic sales and acquisitions, partially offset by unfavorable impact of product mix; Adjusted EBIT as a percent of sales decreased for the same period due to the unfavorable impact of lower volumes, product mix and acquisitions.
(2)
Adjusted EBIT and Adjusted EBIT as a percent of sales increased for 2025 as compared to 2024 primarily as a result of acquisitions and effective cost management, partially offset by the unfavorable impact of lower volumes.
(3)
Adjusted EBIT and Adjusted EBIT as a percent of sales increased for 2025 as compared to 2024 primarily as a result of higher organic sales and effective cost management.
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(4)
2025 primarily excludes Rationalization and asset impairment net charges of $9,838 and pension settlement charges of $647. 2024 primarily excludes Rationalization and asset impairment net charges of $18,840 and amortization of the step up in value of acquired inventories of $4,776 and pension settlement charges of $4,205.
(5)
2025 primarily excludes Rationalization and asset impairment net charges of $7,293, the amortization of the step up in value of acquired inventories of $3,739 and pension settlement charges of $72. 2024 primarily 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, a loss on asset disposal of $4,950, amortization of the step up in value of acquired inventories of $250 and pension settlement gain of $413.
(6)
2025 excludes Rationalization and asset impairment net charges of $1,068. 2024 excludes Rationalization and asset impairment net charges of $3,955.
(7)
2025 excludes acquisition transaction costs of $2,401 as discussed in Note 4. 2024 excludes acquisition transaction costs of $7,042.
(8)
See non-GAAP Financial Measures for a reconciliation of Net income as reported and Adjusted EBIT.
Non-GAAP Financial Measures
The Company reviews Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate, Adjusted diluted earnings per share, Adjusted return on invested capital (“Adjusted ROIC”), Adjusted net operating profit after taxes, Free cash flow, Cash conversion and Organic sales, all non-GAAP financial measures, in assessing and evaluating the Company’s underlying operating performance. These non-GAAP financial measures exclude the impact of special items on the Company’s reported financial results. Non-GAAP financial measures should be read in conjunction with the generally accepted accounting principles in the United States ("GAAP") financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures. 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.
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The following table presents the reconciliations of Operating income as reported to Adjusted operating income, 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,
2025
2024
Operating income as reported
$
718,059
$
636,462
Special items (pre-tax):
Rationalization and asset impairment net charges (1)
18,199
55,860
Acquisition transaction costs (2)
2,739
7,042
Amortization of step up in value of acquired inventories (3)
3,964
5,026
Adjusted operating income
$
742,961
$
704,390
As a percentage of net sales
17.6%
17.6%
Net income as reported
$
520,533
$
466,108
Special items:
Rationalization and asset impairment net charges (1)
18,199
55,860
Acquisition transaction costs (2)
2,739
7,042
Amortization of step up in value of acquired inventories (3)
3,964
5,026
Pension settlement net charges (4)
719
3,792
Loss on asset disposal (5)
—
4,950
Tax effect of Special items (6) (7)
5,177
(11,513)
Adjusted net income
551,331
531,265
Interest expense, net
51,561
42,786
Income taxes as reported
154,917
128,041
Tax effect of Special items (6) (7)
(5,177)
11,513
Adjusted EBIT
$
752,632
$
713,605
Effective tax rate as reported
22.9
%
21.6
%
Net special item tax impact (7)
(1.5)
%
(0.8)
%
Adjusted effective tax rate
21.4
%
20.8
%
Diluted earnings per share as reported
$
9.32
$
8.15
Special items per share
0.55
1.14
Adjusted diluted earnings per share
$
9.87
$
9.29
(1)
2025 and 2024 net charges primarily relate to rationalization plans within all three segments. Charges in 2024 include the impact of the Company’s disposition of its Russian entity.
(2)
Transaction costs related to acquisitions which are included in Selling, general & administrative expenses.
(3)
Costs related to acquisitions which are included in Cost of goods sold.
(4)
Pension settlement net charges are included in Other income. 2024 net charges are primarily due to the final settlement associated with the termination of a pension plan. Refer to Note 11 to the consolidated financial statements for further discussion.
(5)
Loss on asset disposal 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 applicable tax rates reflect the taxable jurisdiction and nature of each Special item.
(7)
During 2025, the Company recognized tax expense of approximately $11,700, reflecting the cumulative impact of the OBBBA provisions. Refer to Note 13 to the consolidated financial statements for further details.
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Liquidity and Capital Resources
Overview
The Company’s primary sources of liquidity are operating cash flows and revolving credit facilities. As of December 31, 2025, the Company had $308,789 of cash and cash equivalents on hand and $143,780 of outstanding borrowings under its $1,026,854 revolving credit facilities.
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.
The Company’s cash flow from operations can be cyclical. In assessing liquidity, the Company reviews working capital measurements to define areas for improvement. 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 Company can fund its global expansion plans with operational cash flow, but a significant acquisition may require access to capital markets, particularly the long-term debt market, as well as the syndicated bank loan market. The Company’s financing strategy is to fund itself at the lowest after-tax cost of funding. Where possible, the Company utilizes operational cash flows and raises capital in the most efficient market, usually the United States, and then lends funds to the specific subsidiary needing or requiring funding. If additional acquisitions providing appropriate financial benefits become available, additional expenditures may be made.
Cash Flow
The following table reflects changes in key cash flow measures:
Year Ended December 31,
$ Change
2025
2024
2025 vs. 2024
Cash provided by operating activities (1)
$
661,173
$
598,977
$
62,196
Cash used by investing activities
(257,326)
(361,231)
103,905
Capital expenditures
(126,974)
(116,603)
(10,371)
Acquisition of businesses, net of cash acquired
(137,530)
(252,746)
115,216
Cash used by financing activities (2)
(461,887)
(244,640)
(217,247)
Proceeds from (payments on) short-term borrowings
133,252
8,449
124,803
Proceeds from long-term borrowings
—
550,000
(550,000)
Payments on long-term borrowings
(100,169)
(400,677)
300,508
Purchase of shares for treasury
(338,308)
(263,751)
(74,557)
Cash dividends paid to shareholders
(168,240)
(162,143)
(6,097)
(Decrease) increase in Cash and cash equivalents
(68,473)
(16,525)
(51,948)
(1)
Cash provided by operating activities increased in 2025 as compared to 2024 primarily due to the net favorable impacts of the election of provisions from the OBBBA, partially offset by unfavorable working capital.
(2)
Cash used by financing activities increased in 2025 as compared to 2024 primarily due to the increase in purchases of shares for treasury and proceeds from long-term borrowings in the prior year.
As of December 31, 2025, the Company had cash of $308,789, of which $294,130 was held by international subsidiaries.
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The Company paid $168,240 and $162,143 in cash dividends to its shareholders during 2025 and 2024, respectively. In January 2026, the Company paid a cash dividend of $0.79 per share, or $43,328, to shareholders of record on December 31, 2025, which reflects a 5.3% increase in the Company’s dividend payout rate.
The Company currently anticipates capital expenditures of $110,000 to $130,000 in 2026. 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.
Revolving Credit Agreements
The Company has a $1 billion revolving credit facility which matures on June 20, 2029. As of December 31, 2025, the Company had $858,000 of availability under the revolving credit facility. Additionally, the Company has other lines of credit with total availability of $25,074 as of December 31, 2025. Refer to Note 9 to the consolidated financial statements for further information on our revolving credit agreements.
Working Capital Ratios
2025
2024
Average operating working capital to Net sales (1) (2)
17.9
%
16.9
%
Days sales in Inventories (1) (2)
116.4
106.0
Days sales in Accounts receivable
49.4
46.9
Average days in Trade accounts payable
53.4
45.8
(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.
(2)
Due to the strategic increase of inventory to serve customers, the Company had higher inventories relative to expected Net sales resulting in higher Days sales in Inventories and Average operating working capital to Net sales.
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, 2025, there were 5.1 million shares available under the authorization. The Company is not obligated to make any repurchases.
Contractual Obligations
Debt
As of December 31, 2025, the total amount of debt outstanding was $1,294,008, which includes $143,780 in short-term debt. Refer to Note 9 to the consolidated financial statements for further information on our debt and interest.
Lease Obligations
As of December 31, 2025, the Company’s total future minimum lease payments were $59,773, which includes $15,232 in short-term lease obligations. Refer to Note 17 to the consolidated financial statements for further information on our lease obligations.
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Table of Contents
Purchase Commitments
Purchase commitments include contractual obligations for raw materials and services. As of December 31, 2025, the Company had total purchase commitments of $76,500, which includes $76,348 in current liabilities.
Other Material Obligations
As of December 31, 2025, there was a total liability of $24,456 for deferred compensation, which includes $894 in Other current liabilities.
Off-Balance Sheet Arrangements
The Company utilizes letters of credit to back certain payment and performance obligations. 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. 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.
Return on Invested Capital
The Company reviews return on invested capital ("ROIC") in assessing and evaluating the Company’s underlying operating performance. Adjusted ROIC is a non-GAAP financial measure that the Company believes is a meaningful metric to investors in evaluating the Company’s financial performance and may be different than the method used by other companies to calculate ROIC. Adjusted ROIC is defined as rolling 12 months of Adjusted net income excluding tax-effected interest income and expense divided by invested capital. Invested capital is defined as total debt, which includes Amounts due to banks, Current portion of long-term debt and Long-term debt, less current portions, plus Total equity.
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Table of Contents
The following table presents the reconciliation of ROIC and Adjusted ROIC to net income:
Return on Invested Capital
2025
2024
Net income as reported
$
520,533
$
466,108
Plus: Interest expense (after-tax)
43,762
39,665
Less: Interest income (after-tax)
5,118
7,593
Net operating profit after taxes
559,177
498,180
Special items:
Rationalization and asset impairment net charges
18,199
55,860
Acquisition transaction costs
2,739
7,042
Pension settlement net charges
719
3,792
Amortization of step up in value of acquired inventories
3,964
5,026
Loss on asset disposal
—
4,950
Tax effect of Special items (1)
5,177
(11,513)
Adjusted net operating profit after taxes
$
589,975
$
563,337
Invested Capital
Short-term debt
$
143,780
$
110,524
Long-term debt, less current portion
1,150,228
1,150,551
Total debt
1,294,008
1,261,075
Total equity
1,469,794
1,327,433
Invested capital
$
2,763,802
$
2,588,508
Return on invested capital as reported
20.2
%
19.2
%
Adjusted return on invested capital
21.3
%
21.8
%
(1)
Includes the net tax impact of Special items recorded during the respective periods, including the cumulative impact of the OBBBA provisions. 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. The costs associated with these claims are predominantly defense costs which are recognized in the periods incurred.
The long-term impact of product liability contingencies, in the aggregate, on operating results, operating cash flows and access to capital markets is difficult to assess, particularly since claims are in many different stages of development and the Company benefits significantly from cost sharing with co-defendants and insurance carriers. Moreover, the Company has been largely successful to date in its defense of these claims.
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. These estimates and assumptions are reviewed periodically by management and compared to historical trends to determine the accuracy of estimates and assumptions used. If warranted, these estimates and assumptions may be changed as current trends are assessed and updated.
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Table of Contents
Historically, the Company’s estimates have been determined to be reasonable. No material changes to the Company’s accounting policies were made during 2025. 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. 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. 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 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. Many of the current cases are in differing procedural stages and information on the circumstances of each claimant, which forms the basis for judgments as to the validity or ultimate disposition of such actions, varies greatly. Therefore, in many situations a range of possible losses cannot be made. Reserves are adjusted as facts and circumstances change and related management assessments of the underlying merits and the likelihood of outcomes change. Moreover, reserves only cover identified and/or asserted claims. Future claims could, therefore, give rise to increases to such reserves.
The Company is subject to taxation from U.S. federal, state, municipal and international jurisdictions. The calculation of current income tax expense is based on the best information available and involves significant management judgment. The actual income tax liability for each jurisdiction in any year can in some instances be ultimately determined several years after the financial statements are published.
The Company maintains liabilities for unrecognized tax benefits related to uncertain income tax positions in various jurisdictions. The Company uses judgment in determining whether the technical merits of tax positions are more-likely-than-not to be sustained. Judgment is also used in measuring the related amount of tax benefit that qualifies for recognition, including the interpretation of applicable tax law, regulation and tax ruling.
Liabilities are settled primarily through the completion of audits within each individual tax jurisdiction or the closing of the statute of limitations. Liabilities can be affected by changes in applicable tax law, regulations, tax rulings or such other factors, which may cause management to believe a revision of past estimates is appropriate. Management believes that an appropriate liability has been established for uncertain income tax positions; however, actual results may materially differ from these estimates. Refer to Note 13 to the consolidated financial statements for further discussion of uncertain income tax positions.
Deferred Income Taxes
Deferred income taxes are recognized at currently enacted tax rates for temporary differences between the GAAP and income tax basis of assets and liabilities and operating loss and tax credit carry-forwards. The Company will repatriate earnings for certain non-U.S. subsidiaries, which are subject to foreign withholding taxes. The Company considers any remaining earnings and outside basis in all other non-U.S. subsidiaries to be indefinitely reinvested and has not recorded any deferred taxes as such estimate is not practicable.
At December 31, 2025, the Company had approximately $116,893 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. 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. At December 31, 2025,
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Table of Contents
a valuation allowance of $4,802 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. The amount of net deferred tax assets considered realizable could be increased or reduced in the future if the Company’s assessment of future taxable income or tax planning strategies changes.
Inventories
Inventories are valued at the lower of cost or net realizable value. 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 38% and 35% of total inventories at December 31, 2025 and 2024, respectively. Cost of other inventories is determined by costing methods that approximate a FIFO basis. The valuation of LIFO inventories is made at the end of each year based on inventory levels and costs at that time. Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs. Actual year-end inventory levels and costs may differ from interim LIFO inventory valuations. The excess of current cost over LIFO cost was $138,589 and $120,633 at December 31, 2025 and 2024, respectively.
Long-Lived Assets
The Company periodically evaluates whether current facts or circumstances indicate that the carrying value of its depreciable long-lived assets, including leases and intangible assets that do not have indefinite lives, to be held and used may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted future cash flows produced by the long-lived asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether impairment exists. If an asset is determined to be impaired, a loss is recognized to the extent that carrying value exceeds fair value. Fair value is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including the discounted value of estimated future cash flows.
Goodwill and Intangibles
The Company performs an annual impairment test of goodwill and indefinite-lived intangible assets in the fourth quarter using the same date each year or more frequently if changes in circumstances or the occurrence of events indicate potential impairment.
The fair value of each indefinite-lived intangible asset is compared to its carrying value and an impairment charge is recorded if the carrying value exceeds the fair value. For goodwill, the Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, and whether it is necessary to perform the quantitative goodwill impairment test. The quantitative test is only required if the Company concludes that it is more-likely-than-not that a reporting unit’s fair value is less than its carrying amount. The Company may also perform a quantitative test in instances where the more-likely-than-not threshold has not been met, including when general macroeconomic conditions, changes to the reporting unit or the passage of time warrants a refresh of the baseline used in a qualitative test. For quantitative testing, the Company compares the fair value of each reporting unit with its carrying amount. 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.
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. Changes in economic and operating conditions, actual growth below the assumed market participant assumptions or an increase in the discount rate could result in an impairment charge in a future period.
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Acquisitions
Upon acquisition of a business, the Company uses the income, market or cost approach (or a combination thereof) for the valuation as appropriate. The valuation inputs in these models and analyses are based on market participant assumptions. Market participants are considered to be buyers and sellers unrelated to the Company in the principal or most advantageous market for the asset or liability.
Fair value estimates are based on a series of judgments about future events and uncertainties and rely on estimates and assumptions. Management values property, plant and equipment using the cost approach supported where available by observable market data, which includes consideration of obsolescence. Management values acquired intangible assets using the relief from royalty method or excess earnings method, forms of the income approach supported by observable market data for peer companies. The significant assumptions used to estimate the value of the acquired intangible assets include discount rates and certain assumptions that form the basis of future cash flows (such as revenue growth rates, customer attrition rates and royalty rates). Acquired inventories are marked to fair value. For certain items, the pre-acquisition carrying value is determined to be a reasonable approximation of fair value based on information available to the Company. Refer to Note 4 to the consolidated financial statements for additional details.
Revenue Recognition
Revenue is recognized when obligations under the terms of a contract are satisfied and control is transferred to the customer. Revenue is measured as the amount of consideration the Company expects to be entitled to in exchange for goods or services. Substantially all of the Company’s sales arrangements are short-term in nature involving a single performance obligation. The Company recognizes revenue when the performance obligation is satisfied and control of the product is transferred to the customer based upon shipping terms. In addition, certain customized automation performance obligations are accounted for over time. Under this method, revenue recognition is primarily based upon the ratio of costs incurred to date compared with estimated total costs to complete. 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.
The Company recognizes any discounts, credits, returns, rebates and incentive programs based on reasonable estimates as a reduction of sales to arrive at Net sales at the same time the related revenue is recorded. Taxes collected by the Company, including sales tax and value added tax, are excluded from Net sales. The Company recognizes freight billed as a component of Net sales and shipping costs as a component of Cost of goods sold when control transfers to the customer. Sales commissions are expensed when incurred because the amortization period is generally one year or less. These costs are recorded within Selling, general and administrative expenses in the Company’s Consolidated Statements of Income.
Refer to Note 2 to the consolidated financial statements for additional details.