Lincoln Electric (LECO) 10 Feb 222021 Q4 Earnings call transcript

Greetings, and welcome to the Lincoln Electric Fourth Quarter and Full Year 2021 Financial Results Conference Call. [Operator Instructions]. This call is being recorded. It is my pleasure to introduce your host, Amanda Butler, Vice President of Investor Relations and Communications. Thank you.

begin. may You

find and on fourth Kevin, We everyone. to lincolnelectric.com presentation Investor you Welcome our to the an Thank call's in Lincoln this and good Electric full Electric's slide can and today, quarter results well call. section. release year Lincoln as financial attachment as you, as earlier morning, our the XXXX Relations released at conference website

and President updates the discussion on Chris our today Bruno, and following Officer. Chief your Financial And call Officer; quarter conclude of questions. on with we're our the will prepared to Gabe Chairman, me performance Joining in Higher and remarks, full take and Mapes, Chris comments Executive year fourth Standard is Strategy. our finally, and Gabe overview begin Chief our will results Lincoln's will our happy XXXX And we trends, business more detail. to with cover outlook financial our an

discussion, our certain expectations due SEC start and risk XX-K differ in filings that the our from we risks may some statements materially our of press actual a in provided affect results and note number forward-looking, and discussion call this XX-Q. our may factors. to of be Before results of during are may and made please A our uncertainties that release Forms on

And Investor non-GAAP I'll of the financial earnings available do website to the conform turn to Relations the and not of call our tables in discuss reconciliation that, to lincolnelectric.com. Mapes. is our over in again that release, Chris we the measures GAAP, addition, section Chris? is at comparable measures financial GAAP found in with In a which most measure U.S.

everyone. morning, Good Amanda. you, Thank

year Turning and income, to achieved Slide sales, for record We quarter operating and returns full earnings the XXXX. with a year fourth finished solid three.

under our put still these our our strategic business and customers strength even demonstrate team's our initiatives, advancing and results Our while first, the perseverance unprecedented of conditions. commitment to

worked to So suppliers to us us record our with serve as our as who thank like generate would team well help results. our and I tirelessly and partners customers

million adjusted incremental $X.X margin acquisitions, solid inflation the XXXX commercial XX% our led from management, with unprecedented expansion. strong our Our XX% increased or recovery reflecting operational charges. due We price X% by a XXX XX% stages growth, a volumes We $XX offset diligent to higher billion of and an and basis in to cost increase organic execution margin LIFO a early achieved point operating industrial income in neutral sales achieved which a in XX.X% business. price across to approximately and reflecting record

our benefited Strategy Standard from structural initiatives. and cost also We Higher savings operational

and consecutive increase, customers' million XX% we shareholders generation XXth cash our we returned year. business share and again cycle. year, am which $XXX our increased inventory in that $XXX needs. earnings which represented $X.XX, Our conversion, reflects performance. XX% elevate per and strategically balance our This early Cash achieved to lower is generation record XX.X%. million share adjusted approximately million repurchases, dividend levels $XXX making of to with cash the nearly service in to returns grew to to our we use increased sheet to a this our reinforces pandemic this XX% approximately in Combined than I record confidence our through a XXX%-plus decision standard proud flow this

higher of vitality performance automation products, $XXX profile, systems in capture Electric near-term million backlogs index also than no is and a families, with for strong in launches, pipeline positioned quoting a I new over strong accelerate cycle. balance our both before have this scale enter maturities. up, We our solid to have and of We industrial today better new ever to XX our activity product Lincoln approximately acquisitions seeing solutions. liquidity record equipment and believe maintained new a are growth and sheet additional debt XXXX product and

end at market end conditions fourth across quarter despite for Slide challenging our markets in growth the customers. of Looking operating achieved on trending all our four. organic sales We

as increase was we Our growth strength growth and building labor end of general and across in stages in reflects led energy, the pre-engineered the the sector for and broad by projects our solutions. resurgence solid organic most still our organic a led which sales We areas, end infrastructure, product sector faced well strong the opportunity sales with unique construction in automotive demand that is all in in advantage is sector and by solutions. which competitive mid-XX% challenges nonresidential of industries, for which supply equipment early automation recovery. tightest the as Where in achieved market see our

well I'll levels. positioned maintenance customers now consumable outpaced with to conditions. the European weakness, expressing of and anticipate detail. end first drivers, including Pacific due aging past And navigate slow challenging is growth grew more improve shortages, chain Lincoln China. prior last quarter, call While volumes which customers' record will operating Paired performance labor reshoring, are with the and of products, to fundamentals supply as strong in to represented address energy, pocket strong pass markets customers' we demand North Asia consumable needs. output high serve infrastructure, quarter this America in and underlying we Despite investments, backlogs for and and Geographically, for organic fourth low needs demand to skilled cover year weakening fleets, increase in industrial long-term capacity our financials added to conditions their EV the repair comparisons, inventory renewable Gabe to quarter demand

Chris. you, Thank

Moving to five. Slide

driven which in by fourth X% higher from volumes, approximately impact prices, consolidated a acquisitions, contribution offset sales unfavorable by quarter Our X% X% from a a foreign partially increase XX% exchange. XX% increased was

a not million profit pricing of actions actions XX.X% mitigate $XX volumes additional charge. the reduction margin basis fully and XX points Our gross cost to decreased as benefit LIFO and did

management we $XX approximately inflation and diligent LIFO For million cost achieved broad charges. offset full in year, the neutral price as price

Our compensation percent acquisitions. incentive as higher SG&A XX% primarily $XXX of approximately as as sales million a the expense to due quarter, wages million well or and $XX increased in to SG&A decreased million increased included points XXX approximately income higher million special XX.X% Operating $XXX income of $X or sales. approximately to XX% to due XX.X% Reported items. to sales. basis of operating

another in Excluding incurred adjusted million over related incremental years. the We of $XXX plan challenging and allocated special terminated, income items, operating to $XX prior approximate XX% is charge a retirement reflecting an next termination year million increased plan. of million XX.X% settlement XX% This benefit with or a substantially to income excess with comparison. employee sales expense the pension other plan a $XX several frozen fully will be noncash towards defined associated U.S. a funds margin,

was to our rate Fourth discrete earnings $X.XX. XX.X% quarter Our fourth adjusted quarter to items. mix diluted earnings per and XX% effective due of share tax increased

$X.XX approximately diluted a Excluding per the record in share increased earnings XX% to adjusted special items, quarter.

impact had an unfavorable exchange Foreign to $X.XX EPS.

fourth LIFO EBIT not approximately the X% to our higher mid-teens million. charge. moving XX% did price, by percent and Now an reportable EBIT increased $XX quarter, The construction industry a to of Organic organic compressed to Welding margin Welding led XX markets actions. adjusted volumes segments quarter all in volumes and on $XX and as in fully and sales benefit energy. million XX.X% offset Americas higher adjusted in points areas six. benefits across increased acceleration segment's Slide infrastructure XX%, from approximately led product growth end Americas pricing sales by a heavy XX% and increased the basis

a saving in margin acquisition. segment, improved equipment doubled China. EBIT $XX percent the double-digit increased The of XXX lira. increased XX%, from Moving Welding exchange, International Across EBIT to the production X% performance predominantly adjusted unfavorable million. and The a initiatives the segment volumes points management. seven. The also foreign at the approximately adjusted structural the The segment inflation. cost negative price devaluation nearly management X% Zeman industrial from mitigate Slide lower cost to as Organic to a impact of reflecting International continued Turkish result XX.X% price on benefited approximately rate. incurred reflected Welding to of segment's basis Volume sales benefits

XXX Slide Fourth approximately Harris to acquisition Group integration quarter the EBIT to mix. decreased costs on adjusted on less points XX.X% million. $XX Products margin basis and Moving XX% Adjusted favorable EBIT eight. increased to

improve performance pricing XXXX. through HVAC year raw led sales industrial end and Volumes margin which costs. comparisons actions retail increased due prior material Organic sales to by to X% increased markets, in channel. lower in the approximately XX%, offset mitigate expect We strength challenging that to on

XX% generated Moving intentionally cash to cash conversion. flows operations Slide million of support was working average mitigate and remains supply achieved XX.X% chain and year-end, capital and At availability issues. product elevated operating We nine. to sales, from $XXX in

through expect the We maintain first XXXX. to posture of this half

XX. Slide to Moving

no $XX the dividend In and million having mentioned, Chris our repurchases. a expenditures and year we million As cash full liquidity through continue ample capital with million approximately and returned and shareholders. combination basis, position. and at million million. million program we a in year-end $XX share $XXX to we prioritize towards maintained maturities strengthened sheet to our $XXX in investments On of the to year balance approximately shareholders debt liquidity return cash invested share shareholders, finished $XX strong growth We including will million quarter, in to returned and near-term repurchases. invested $XXX $XXX flows, growth With we

have with continued seen through operating which to anticipate environment We ahead momentum, Looking navigating XXXX. another dynamic we demand quarter-to-date. strong

single-digit to percent see low we what Given we high organic rate double-digit XXXX. a in anticipate today, growth

anniversary. growth organic in pricing in half actions will not assumption Our a we does as be price expect tailwind XXXX, the actions, first incremental which pricing and higher prior include

full We will for continue year to cost target price position XXXX. neutral a

to environment, growth, rates. centered acquisitions expecting at of we offset incremental assumptions as structural will year. are from sales full improved to XXXX higher the incremental organic the LIFO incremental this rate tax be employee costs. and income range. Our for current the $XX We margin and the from unfavorable mid-XX% revenue cost continued low from be half are operating cash of exchange working and lower XX% by In year expected offset foreign the sales flow The full as charges second approximate sales anticipate organic on sales year generation effective a is low million to inflation we expect in strong in capital savings

full XX% to planning $XX year. the million in We $XX capital on which conversion efficiency-oriented XXXX rate projects, invest to and million approximate expenditures in growth for suggests an cash are

continue strategic Strategy. the long-term back on year. to earnings operating ideal, like safely to our will this operating while through in serving the call So the part we and cycle and business turn our improved are sales, while of conditions navigate XXXX I'd our and Standard Higher over initiatives And discuss and to now, profitability investing effectively manage driving not customers, focus throughout Chris to the

momentum our of XXXX And for the initiatives employees. all Yes, our Gabe. Higher adjusted our I'm we Thanks, we an and solid of was team's believe see across XXXX proud them end year exceptional the value really superior to Standard strategic Strategy the we've just up have our we and revisited demand really given generate our company. reflect XXXX. through of can execution targets markets, financial

XX, our not see the on left Slide you As on side, areas changed. focus have can key

to growth. are of We higher pivoting levels

including focused best through development and to to remain Lincoln rate in sheet the of balance system, We low the XXXX standardized mix our sales Our and that from like active our continuous on to strong high greater new progress in to organization initiatives position the growth excellence technologies solid in efficiencies operational our business, program product investments be additive reported safety goals pipeline, environmental single-digit double-digit XXXX expect and bold well leveraging tools business generates line practice performance. automation, We M&A our processes. aligns position fund for through richening higher now which range. projects, our industry-leading and us advancing improvement XXXX and top percentage a

average these We range. points over was operating will with growth, initiatives, by margin in combined XXX cycle, the versus volume the mid-XX% last basis our which increase expect income

International for we to yield high to XX% is cycle. average adjusted a are to range EPS segments, now are performance targeting rate on and target of our XX%, XXXX. XXXX provided to including segment margin EBIT an expected improved This We also ranges for from growth operating income depending to XXXX XX% new low reportable achieve Welding in We've where our the margin XXXX. XX% teens between a

positioned quartile working top M&A. maintain to ROIC top capital continue and will range performance additional ROIC the We decile with to accommodate our

execute allocation our superior that XXXX like capital us over level. strong growth for our balance remain strength to confident expect strategic shares opportunistically successfully maintenance generation deliver the stakeholders. will sales, cash questions. strategy to goals, generating sheet in shareholders We cash all returning buyback and am through Higher plan. dividend committed The team investments and our the flow the to well business turn position our earnings we've our balance to program investments, higher pursuing by and Standard above profitability I our while our our on and And I'd made sheet of of for now call value repurchasing

Instructions]. [Operator

question from Bryan with Our comes first Oppenheimer. Blair

frame Lincoln's timeframe? are momentum bit levels and how start more. And 'XX to XXXX positioning are backlog entering How So XXXX, to demand higher much orders a relative year? the trending

of Bryan, just So we equipment are the first primarily as continues sense, give into that very you ended you side in strong strong, quarter this got as business. our part we've automation the a to fourth year. saw, of momentum and Backlogs the

So we're the demand in within profile pretty business. confident our

for versus sales the on low organic double-digit contribution set guide, growth? price Okay. to what volume single high Understood. are you contemplating level To the to XXXX

up we half price certainly as back volume in company. really first probably it the the two the think half reasons, Bryan. as we year half that of year, into half about than and the When driven moving by relates participate performance XXXX, more the And price ended 'XX the to at we'll have of we're in of I

that going The make as the the covered But to that through obviously, of and the comment would first quarter, you a accelerating is costs that at working see is some I look is, to year. charge. of price that portion fourth the continue we second you're in LIFO in anniversary

continued first the to the organics costs, going increased you're And thinking about in cover that the actions you than we're the of think of larger you a just and back When we the still volumes closer So those take But while energy year. obviously, industry back in portion call at because profile volume us year. think through that our question earlier levels, to sets the under and asked confident in our segments the XXXX backlog half and of is we're I which at the still I see well the where a I've our had demand target very that 'XX perspective as and we're the strong seeing to where turning XXXX. of it to half up towards with that trending - take you on critical. the confidence and the we half year that we're the fact moving about for Electric, the very process from on Lincoln thought the way got we're we're favorable probably,

a with curious That's nets And years? I'm catalysts perspectives more to catalysts the is spending very We medium of more updated infrastructure to on direct percent hear great and plan exposure term, that color. sales. any simple coming be logic over pretty and actually related helpful thinking little your about it spending indirect in XX-plus steel-intensive. would know the

HPG? in So of parts be Americas broader will across tailwinds perhaps and Welding there

leads logical industries side very of businesses you've the more it's certainly Lincoln that trickles to commercial with. those to Harris Harris that products of solutions a we type mean, as the in applications goes that industries. going lot move the as general into and demand. That seeing of business, fabrication and we plumbing If that's subsegments general portion strength driven is hard of that it's markets. through that the from utilization segment that analogy. we're that through well the require But infrastructure that I into and our Electric solutions seen that the infrastructure participate the Look, Yes. that draw not a would see

you. with So I agree

you're of businesses. automation the of tell improving enormous continue I broader businesses, positive that Electric to those see serves their the a that capital and manufacturers Lincoln continue U.S. in for customers we gives activity an our momentum within would many that that to which segments is amount I confidence and performance in want profitability me seeing today. demand you areas also in seeing think market dedicate to just to

think So over in to 'XX. here improved broader see catalyst again, a business I'm North positive industrial it's improvement I in 'XX. very continuing 'XX cycle solid we that And America. our business automation expecting the in in

Capital. from Our comes next Loop Chris question Dankert with

a Sorry, on this improvement. automation last comment I you issue. that on kind that back be a in at solid connection of guess, a for color kind about too of of optimistic to When do the follow-up had bit I point expectation what I that could in of further to kind levels guess, any or contribution bit 'XX is made the cycle? get growth? XXXX to we little

other a in in is optimistic. the have think I Chris as continue the then is last us Austrian that that we offering that be business And and Zeman. that, our acquisition might like have solution little we continuing Look, you've that did grow. to acquire shape Yes. seen into portfolio I on challenge commenting year companies with of expand that automation the and portfolio That to

you that should think We faster moving would still into core, about business, business trying core. business we being tell growing strong in closer solid I had get that our us that positioned that business to I is it margins when in we're double-digit very to that Xx talk target. we're about I drive space, we much see to and into to But want than where our well So get 'XX. a momentum for XXXX exiting that 'XX be that

impressive those of kind what International to leveraging new profitability about really here and mostly decade. helps volume we've margin I in updated target. guess in target international on past Got getting international, in that a hit you even goals it. kind Obviously, the or SG&A the new That's very guess, is that level, specifically? then I seen of very helpful. of And not kind

can job an team to margins. first it first get international just a has double-digit that which no continuing amazing in think is step step. into volume that done always those Well, region team about question look, have for performance other talked catalyst you and from we penetrating about world, still I'll get And is further to working process on there build driven us we But us think there's we've opportunities where a the just our the that to business areas to this operating relationships within better tell perspective. to to we'll step-change we've this that from those I being business, solutions reach we those is even when also perspective. segments the improvements, a an to the drive great the going performance of confidence our in make we got business an next continued have be two, targets. margin process of volume, process Catalysts in business

Understood. And the strong on really, really a 'XX. again, whole team congrats to

Thank you.

Chris. Thanks,

Mig question Baird. next from Dobre Our comes with

see that? going some starting to happens this I'm right? actually refer we're sort kind the you to positive? And This baked apparently Does you worth continue And steel think question curious, Gabe. there the as kind assumptions? to to curious I'm year, for where into Do if start your plan. of that, benefit? cost seeing I you're of see body of from back the is heard headwind prices, as to $XX were charges become 'XX do about price of lower - which LIFO 'XX. here in the the half million sort we Gabe, in LIFO you're How operating to compensating LIFO what in of that What

Yes.

to give inventory is lesson position. but a in LIFO, anchored the not LIFO on just the year remember So of that end always

material that projecting with And the what ended that's fourth actions, an that's the out At we're our price see in see did business. price we neutral. costs. the - we cost so cost the that and the on current within with we what beginning based And of year, on quarter acceleration how

around So on A We'll and that. disciplined costs conversations that's a offsetting we've pressures I that and of wanted We're why neutral. inflationary wages have on to incremental price/cost anchored inflationary other lot are anchor our got actions margins. some pressures. very

that's to I So margins in that's our change that because the of on traditional I top towards of think to of side international mid-XXs move and step incremental want on a business. the made more the our we low of margin conversation the And important. profile view

you but as baked throughout LIFO So incremental that's progressed that we'll year, expectation. into the monitor, margin know, all

sort you're this of of make that. to your what using Well, right. going right? or I'm on how into current here as here. just I'm you're Are you have And about vis-a-vis this. But to sort right are Sorry I trying you sort some saying cost, input to appreciate And to understand. a obviously, some sort spot forward curious outlook of assumptions as of prices you well? guidance you baked press having now

currently fair that's question. based what No, see. we That's a It's on okay. all

Our see will costs to of today based is for end that. and take all project date on we'll respond assumptions see year. we business our at to we it all of business. the what our where pricing to the the for full organic I play taken But actions it's be now. pricing view the what profile into of all don't growth material a that in in It's year on actions or whatever based

costs LIFO that for see the were quarter, our much was LIFO that's expected Mig, and our to this were the greater what frankly, that Chris. what results, fourth were at and quite when of input expectations we It's of performance talking costs. And the input we the QX continued why company accelerate interesting fourth about end the than we the is discussing in through had quarter. charge you

that as in in 'XX very we're And dynamics I'm to still those be products the because So costs material take the I beginning be our fourth We're dynamic that like some seeing quarter, just managed in accelerating. there's discussion that steel we'll potentially that certainly to a that around Lincoln think had we're read Lincoln's that XXXX confidence and part shows is imagine from cost continue buying you in mitigate managing. it I and that charges The able discussions believe some say not that LIFO the well business. we of would perspective. the to to that I around strongly, is from might products

but dynamic that So throughout move at this more much we is visibility to provide able materially in don't XXXX. the year, point just have it quite guidance the to on frankly, be could it you

Curious and a to the about think being fair, of bit talked growth year we Asia that business out? you I if of this me you And Totally how humor as about think negative in international softer. kind weakness little potential more. understand You do How of one here you'll about maybe 'XX? kind having for should segment terms volume think if full plays China volume continues? for the for

tell I'll the volume Well, Yes. solid you, fourth was in our very business International Mig, actually quarter. ex-China in the

associated I growth. with So growth is to going it very had continue volume solid volume business to expect show that it.

time, prior entire real the supply improve segment some it from as chain this is as point for that as chain Olympics see host in So customers, the of well had to COVID everything operation in as of to were will lockdowns within the the a we China. the how challenges challenges question at quickly it, Olympics impacting variables China relates China. things some well maybe supply as

European really I volume portions our XXXX. inside there certainly we're fully those the you, be be year. the in through thinking permeate That will business I of the but variable, So international growth will not tell will expect to

question next from comes KeyBanc Steve Capital Our with Barger Markets.

way. call or in question maybe last that - and different to the slightly just going follow-up I'm a on

organic can outlook Just automation, across you talk - single to about to for see include portfolio? double-digit those just growth, low that high the maybe relative growth rank the you assumptions, how to

Yes.

We considering Steve, would growth double-digit I would patterns volumes automation backlog automation. demand for would type strong. talked I So that expect - - mentioned about our and you automation. be our

So of we should also generally would put automation, it part we accelerates. accelerate, to And similar The consumable equipment, the factories remain manufacturing there. demand see equipment then of as But I that expect continue strength order, robust. consumables. to in our business

we're is of I quite solutions, in on-time the a consumable Most we're achieving we're our well. percent Yes. think in the and that delivery automation And high products. to having those frankly, marketplace. business about our equipment that costs Steve, may very serving in But mid- backlog like input XXs it. mean, to We to we very, not well. customers ratio move our have our

So we've Again, I that a our got sitting solutions, 'XX. fastest I grower should it most there. be portfolio that equipment and in Gabe. real with of automation growth backlog believe and completely that relates and the catalyst backlog as automation in agree to

And out of of North that all Right. right? comes America,

A Yes, basis. But that. bit of backlogs our portion. good a good on global track we a bit that of

back the and strong as half year you stronger Chris, activity in double-digit given which see given said And can you of comps probably Okay. pricing into moderate is that the in you first does progresses, the 'XX? half, growth quarter the pricing think back comps. makes Do sense the or each the just half strong those

first manage that a growth want in think to we've, good I a through stronger critically a see which that the also that's growth think the going of positioning. of But important, shown I to volume that the want underlying the strong Lincoln cycle. ability continue make inside be and is should large half. really Steve. confident I I I'm end great would to we that business. sure at we achievement our still question, know is that But Yes, a see see the pricing year to look, I the confident we And that volume expect I Electric. frankly, inside our business. demand in to quite for portfolio. the continuing we're And volume for very I'm got the But to think, should. day, solutions, in We've

our add, we just And Steve, not additional keep incorporate did maybe right? any just pricing assumptions, actions, in in that to mind

with Our Jones Nathan comes next question from Stifel.

those side. to completely or know this on of I you supply boards an those there at that's board, let guys and put Do ask wanted you is point, construct to component. of the giving a on together a your impacting components still you layer bottleneck I think own - electronics you? advantage the a question make lot your electronics of

know it's tell we And great Yes. is competitive some of here better quite been the being a associated made a investments provided maybe of investment development could electronics Cleveland. to we Lincoln I with X, in it's and since supply have those the visibility Electric years time. product able the company us chain competitive components. we provides into controls Nathan, question. processes, side us made the probably the for the X reason advantage utilization that would control I've of it the boards. a and with that that power those you, now ago, I innovation look, us with gives so which advantage by here It those

was just buying if you have a party, probably you today, industry that into who in you and boards visibility So don't back third from supply. were component someone our were

visibility. that have We

that us So some first. to provided were. business we've of Place our balance often customers. and using talked protect those cycle visibility to And about the customers then opportunity weaknesses where the in serve see sheet our

made early got So for know and out purchase need we the we've allocation an sure we've components that we very and that business. gone our

have of another been in has the our in well has catalyst in in had integration impacts served area would vertical portfolio. otherwise mitigating in that So that supply we equipment and assisting some us us

follow-up a ask automation to wanted I the margins. And on

those think get I into year. this digits you looking to said double

that the to those you large costs corporate you is robot where automation talk just margins in the is high business there's Is the think value average? think business about over because that pass-through term? add. amount very the long reasons I below get of Can can a

Yes.

average. we'll expectation Our that those get margins to corporate is our

the to of some a I had automation times will that But recapture. input you and in some tail our portfolio. that of teams of time we We making business process volume that So project, for window type on are made that a the that improvements, there's may challenge some in We that point managing been changes. through. you that's all portion of difficult driving the depending are are rising we've improvements challenges put and be ago. couple that in years tell during to within have able when a costs you

those were that high saying migrating been single-digit. have towards we - will We

'XX. think We and so double-digit be expect average those that operating those at to to expectation over to the be our margins, will make the it longer continue term. about in is our we improvements or at And corporate company above

Dillon Morgan comes from Stanley. Our Cumming next Instructions] with [Operator question

to back remarks Just quick. real to your go prepared

to automation product think out greatest the your that, some over for started called broader next is actual kind start guys year? business? I we've and which you're to the broader side few about you conversations here related kind I kind have uplift a those guess, guys activity opportunity the expecting you or over You months you is on really the look of still the expect reshoring for crystallize across And past since of from been talking something reshoring, tangible would actually qualitatively of COVID. really of But

some they're quoting protect our us automation are their with investing ability that's enhance the seeing with chains, large a automation and in sometimes needs a can telling having about demand in that Yes, that have maybe to great question, associated with the with point didn't conversations and but their automation to difficult to are or their our And lot investing that It's to for demand data I we're teams. you be us firms that, having in of Dillon. give teams the marketplace serve they supply capacities a talking context they're able share available. to activity you

segments. minimize to world. Electric seeing reshoring their many business. manufacturing be expanding working of higher drive down certainly And productivity. that is capacities inside to of mean that local increase in expand our So they're And capacities solutions equipment seeing piece of I a what our lost those to and facilities closer our requirements or of Lincoln to might productivity demand are consumable lot those providing customers does capacity have we'd capacities by inside of And activity the with gets some in other areas that the into specific to but with are equipment We're that Automation and the to we're really second come the our solutions choosing then they markets.

into with over than had But it months So last had that prior. the we many reshoring I'm X, confident our does our more discussions trickle XX of areas business. customers we've

mean, just that was freight of comment even that to color, related maybe LIFO January, have then Chris. is And given if as down curious of guys kind can That's was impacted on general into And reflection quarter extent much, charge something quarter kind or Great. Okay. I obviously it quarter? guys but in some year-over-year those margins maybe well? the not too the spilling and you significant factors helpful that the to in extent you premium what how the a Americas. over much the there, absenteeism first manufacturing were would what efficiencies. I Omicron like be in if also just things of of

Yes.

and a was First that a January softness I January the a - business. to in a issues of solid that were solid was though challenges. I Omicron challenges some customers host here you, that Even of the But associated start. when with obviously, all, were our certainly PAC in people of start the headwind QX. you, for will market, Asia a with had certain Electric's us had has in markets, have early there start in think dealing still Lincoln the solid tell were I'll saw U.S. I you tell some mean dealing,

that input LIFO math see to very margins those cover to it when quick be QX costs and portfolio, impressed. As got charges what LIFO in operating you'll of additional you through the the do that look and the margins charges at your and through in mitigating tell were manage able to the the the Americas business, had relates I you, being to we challenges

business at as levels. that and that of portfolio, I'm continue to volume expect, in still come is make that the and the And not margin Americas So happy the profile. we with to off very we'll XXXX get performance the see improvements I expand our that of leverage continue volume business, and through business

comes Walter Our Liptak with Research. Seaport from next question

on automation in revenue and do the wanted question automation now. a just follow-on a to I about how big is

Well, businesses a $XXX globally. are at rate around automation million run in Yes. aggregate our the of

the there? Great. is seeing picking that or activity Any like across you wonder they're up. I it board? backlog in color Okay. sectors sounds And are which order the But

can some across good into got we in very are and I've patterns some electric the in board some marketplace are seen internal a daily host Electric. appliance that investing our order turn traction. really orders some standard got the We've continued Lincoln of we're by in it gain activities quotes or of actually for actually in that and with those the the coming and actually providing, segment where we've weekly vehicle We've have retrofitting Real tools seeing that. quoting seeing to for a where some We're and been individuals area. on basis see visibility areas, solutions to nice where particular of marketplace that strength our solutions

also would Automotive marketplace to capital tell that outside I the investment in So industries continues there's EV. you good strength. show And of general

wins those some our impressive one to continue to show segments of segments. in multitude the So solutions that in. industry across these we we're been make goals really has participate that always sure penetrating we of a

know is happening, have if think negative - like within welding, think Okay. wonder part levels comment auto you it's thing there's demand going I Canada, I some if All could auto. the on you the just I trucker that right. quarter? a in to in And then but of impact that's and first

Yes.

Olympics, they whether could Omicron trucker another spike. we've a and exist. we are look, could and day, confidence to Canada, those execute on really challenges of real end lot I've I January. solid But a expecting talk we're our we in be issue talk the While there'd the we about of start plans. the had got business, in the the to mean, talk could about about at

a concerns? to that those we're it through see right to but don't we things where and Possibly, it to So causes lead manage and level raising today, it's Could raise challenges. those there. level some going

understand went just to then But wanted International the bit Congratulations little of you there. tackling into standard on get the but some margins there XX% that Great. a And bit, this more I Okay. at you the just higher more looking what And a strategy get to out maybe it. have for. to this the to Is to about is one. I goals XX? to structuring and XX%? you're do XX little to I think block last missed and it point to or a do

and that business. base investments there the Yes, to our see in have capital volume asset a Walt investments going lot moved through and made there's in need And piece operating We've systems, we in people really of really, leverage. and two is do that. both points first to the processes, to in the we're we volume investments our with improvements there,

work in will the But So a host Lincoln that I'm positive about of continues generate also the you thinking tell volume team improvements clearly, the us being first. business. that in I'll Business to there for the business on Systems tailwinds

do that's higher business, confidence the we stakeholders moving that in ability accomplish. some of with historically need of our business, I where get to leverage execution we're longer Harris making that that International But hope to to should ability that out that the to forward. because those great we've now strategy able - the need we with automation the really certainly give execute has accomplishments on in put to the I see what would operating our I business to I love be team business. And that targets but I'm work that we're through components want And it that type off execute in to on it's be been standard have long-term made improvements confidence and that our our the as volume, positioning term. we for So two we able that. think we're not we'll

Okay.

XX% you something As why -- I at the look XX% with it's not to to with a and I guys good wonder number, I but number, XX% XX% mean, higher went

set want to we to to improvements employees make I And I easily Yes. them you get to that's over last need be several our Well, over to tell can time. methodology very a we drive fair we're to target could has able is get for those we very be that And phases. for I'll the portfolio I where targets initiatives. slide this around a within the our we've the those working them made that over on with them tell Lincoln - that's well you and why teams worked question. we as achievable that that we provide that as programs. mean have need targets, world because We do would window able sure look, those them can we the achieve years. - today path just that we our to with put you set and want to can to but target up Electric time a no in are drive But the for to

Our from final with KeyBanc comes question Steve Markets. Barger Capital

whatever inputs Gabe, when you inflation cost do how on, normal much say, run growth sales you about XX% think expect have SG&A, you and leverage other MerPay, to in XXXX? to

margin I'd there, incremental those go assumptions back to Steve.

view. So that still low type within mid-XXs to

the on to wage little higher a bit see going are We more inflation side.

tracking that industrial as across into base. the expect you're that's But We all our assumptions. baked

the guess how versus Yes. trying margin margin you saw evolving a get gross year. SG&A for I through sense I was to

split that is volumes. level that measured I'll discretionary one restoring and we alignment we'll very some mean, you very in in introducing give be spending, of are with real I disciplined or on Yes. with that

we how of our look our of within top on much very cost the we're at drivers business. So mix

relative legacy talk Chris, the new relative past? the Got XX in played you or to or to introduced so products many 'XX, you for that's that in the suite about And products you. how rates out can of growth cohort

on the we would the bit and you depends a little that Look, we're targeting. it Yes. segment tell that solution

to we segment frankly, there it's run in the a products the some see the up very the that be has from into Steve, frame would longer see that to for fast. be the we us it's that perspective going step of our and that quite in then they expect, of you And into increase through some that into large then that time solutions the industry, get quickly, a might start industry an able shelves, channel, get a see the going it to because commercial growth. on get rate space, may As and very players instantaneously

into. think to trending in points think that business where what, it about solution that depending basis we're know we're the the ought XXX in moving different and always when those and the products aggregate, XXX be normally, above it upon segment I we new driving we're So you but way to our is that

product Understood. board sense for And time one, how to drawing a typical is And the your from launches last what's to production? really new you trying see visibility XXXX, get I'm in how there?

Yes.

visibility of of got good, detailed which might a could good we're but look, be all quickly. more in at our in can we where get those, provide our much process to it's more doing and So something that we've functionality might that those, businesses, inside some enhancements of where is tell I looking you the business some software we be

them to that to to we innovative are able execute particular that to XX actually on of months them And be XX strategy. quite months some take very frankly, expect

XXX point that your long done developed is type that, them that to with additive - CAD share solution. and that's of we had core how does move much the product that still a our number. look, haven't and it on customer can additive go I basis inside the that business. piece in and took a incubating. to customer, operations it the a an on But look, our And company, that was innovation what's innovation. apart, rate had about It's an very innovation business, business, talked additive Steve, for probably company. for the a catalyst it review inside operating of it you, and we above they small It's yesterday opportunity I our can think in company but file to will I to think and their very much quick our being back goes very, I very days. be particular that back work a back individual we the And So go new XXX to good points does term for needed with dependent with

to Bruno for our like the remarks. turn question-and-answer concludes Gabe would call back to closing This session. I

for you, for progression continued standard Thank everyone forward to us call you the XXXX Kevin. your our like much. look to the strategic initiatives joining and today would on I Lincoln the Thank higher We very of discussing thank in in future. Electric. interest

Ladies this and gentlemen, does presentation. conclude today's

a now You day. wonderful disconnect may and have