Lincoln Electric Holdings Inc.
) gained around 3% and closed at $72.90 on Feb 14, after it
reported a 38% year-on-year improvement in its fourth-quarter
2013 adjusted earnings to $1.09 per share (including 22 cents per
share from Venezuelan operations). Results also beat the Zacks
Consensus Estimate of 84 cents.
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Adjusted income excluded a net effect of 2 cents pertaining to
rationalization and asset impairment charges, along with special
items attributable to non-controlling interests. The year-ago
quarter excluded 5 cents with respect to rationalization and
asset impairment charges, impact of the devaluation of the
Venezuelan currency and special items attributable to
non-controlling interests. Including these, reported earnings
were $1.07 per share in the quarter versus 74 cents in the
Total revenue increased 4.4% year over year to $715 million,
surpassing the Zacks Consensus Estimate of $697 million. A 2.2%
benefit from acquisitions and 3.1% gain from increased volume
were offset by a slightly unfavorable impact from foreign
Cost and Margins
Cost of goods sold were flat at $471 million, as compared with
the year-ago quarter. Gross profit increased 14% to $243 million.
Gross margin expanded 290 basis points (bps) year over year to
34% in the quarter aided by improved volumes, a better sales mix
and expanding margins in Venezuela.
Selling, general & administrative expenses increased 1.3% to
$123.8 million from $122 million in the year-ago quarter.
Adjusted operating profit rose 32% year over year to $119.9
million in the quarter. Adjusted operating margin inflated 350
bps to 16.7%.
Lincoln Electric ended 2013 with cash and cash equivalents of
$299.8 million, up from $286 million as of 2012-end. Cash flow
from operations was $96.8 million in the reported quarter as
against $84 million in the year-ago quarter
Debt-to-capitalization ratio was 1.2% as of Dec 31, 2013,
compared with 1.5% as of Dec 31, 2012. The company repurchased
767,531 shares for $54.2 million in the quarter. Lincoln
Electric's board of directors had announced a quarterly cash
dividend to 23 cents per share. The company paid dividends of
$16.3 million in the quarter.
Full-Year 2013 Performance
For full-year 2013, Lincoln Electric reported adjusted earnings
per share (EPS) of $3.77, up around 19% from $3.16 in 2012. The
results were ahead of the Zacks Consensus Estimate of $3.54.
Including one-time items, EPS was $3.54, up from $3.06 in the
Revenues for the year increased 3.2% year over year to $2.9
billion and beat the Zacks Consensus Estimate of $2.8 billion as
Though Lincoln Electric did not provide any specific guidance for
2013 or 2014, it believes that it will benefit from investment in
business for growth, which includes an active acquisition program
and development in manufacturing platforms. In addition, the
company's dividend program and share repurchases activity will be
accretive, going forward.
Looking ahead to 2014, Lincoln Electric will focus on innovative
solutions and margin improvements through the continued
implementation of commercial and operational initiatives. The
company continues to leverage its expertise and proprietary
technologies to capitalize on the increasing technical and high
performance requirements of OEMs and large scale engineering
projects worldwide. In the quarter, it made new investments in
these areas, which include a European robotic automation platform
based in Germany.
Furthermore, the company recorded higher prices and earnings from
Venezuelan operations during 2013. However, it believes
that the operating environment in Venezuela will remain a
challenge in 2014 due to the persistent economic uncertainty and
limitation in converting bolivars to U.S. dollars. The
various restrictions to effectively manage the Venezuelan
operations could also affect the ability to pay obligations and
maintain normal production levels
Notably, the heavy fabrication sector and agricultural sector
have not performed well in 2013. The company is cautious about
any substantial improvement in the global mining sector, going
forward. Moreover, the slow pace of economic stabilization in
Europe and volatility in raw material price remain headwinds in
the near term.
Lincoln Electric currently carries a Zacks Rank #3 (Hold).
) reported adjusted earnings per share of 44 cents in the first
quarter of fiscal 2014, up 7.3% year over year. The results,
however, missed the Zacks Consensus Estimate of 46 cents.
) reported adjusted earnings per share of 52 cents in the second
quarter of fiscal 2014. The reported figure missed the Zacks
Consensus Estimate of 61 cents but was higher than 50 cents
earned in the year-ago quarter.
Industrial tool maker
Stanley Black & Decker, Inc.
) reported earnings per share from continuing operations of $1.32
in the fourth quarter of 2013, down 6.4% from $1.41 in the
year-ago quarter but a couple of cents ahead of the Zacks