Lincoln Electric (LECO) 21 Feb 232022 Q4 Earnings call transcript

Greetings, and welcome to the Lincoln Electric 2022 Fourth Quarter and Full-Year Financial Results Conference Call. At this time, all participants are in a listen-only mode, and this conference is being recorded.

It is my pleasure to introduce your host, Amanda Butler, Vice President of Investor Relations and Communications. Thank you, you may begin.

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

Hedland, of today then discussion cover will our the Chris Gabe Financial market Chief Bruno, will Lincoln's on our provide Operating President trends; Chris performance will will Chairman, Steve Steve assumptions. highlights; Officer. with Chief Gabe end our me with in and Joining is and the full-year begin conclude our Officer; call XXXX full-year Mapes, Chief Officer; and more finally, financial quarterly detail. And Executive Chris

to Following your take our prepared questions. remarks, happy are we

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

available discussed at of the GAAP in website to not that measures GAAP. A in Investor tables in most our U.S. financial the Relations of lincolnelectric.com. which reconciliation In do is measure release, we non-GAAP addition, again the financial to found section measures conform comparable is earnings our

the turn I'll that, to Mapes. with over And Chris Chris? call

everyone. you, Thank Amanda. morning, Good

earnings $X.XX share. record year sales three, Turning at pleased record at $X.X I'm billion, per record at and to profitability of to another report XX.X% slide performance

price/cost a results. substantially superior but pre-pandemic XXXX We finished XXXX with volume with levels position, and at at neutral levels

and performance flows, for while our generated ROIC shareholders. leading metrics these organization. returns also And We levels all ranked among cash to strong records, not performance

to Standard a to ability to ability our XXXX team execute Higher on very is challenging conditions testament focused global and Strategy. stay under Our our their

the where significantly business improved of several have we performance. generated areas We have

XX% One to our the million. areas over strength growth sales of achieved which key $XXX of these was automation portfolio,

company's of also rate $XXX addition the our million Automation, completed positions We at largest which with an sales run entering us acquisition XXXX. Fori

expect now offering target have automation of most industry's solutions comprehensive leadership and automated our reinforced $X XXXX in sales exceed billion position We the lights-out manufacturing. to from our to solutions, range automated Cobots

ability segments We North industry strength welding to America attractive customers' our across the new and technologies of our with strength our also in exceeded to expectations market on distribution model notable bring applications. segment and

for continued strategies of important our and leading of examples in around stakeholders. and an ESG we progress greenhouse gas strong in by world on the rule and teams our performance with successfully of strategy at Additionally, the executing excelled again achieved our golden emissions, conservation part reduction our the living water all

our detail Now Operating performance Chief end the our market Hedlund, here to more fourth Officer. share in Steve quarter, on is

Thank you, Chris, and good everyone. morning,

exposure. sales largely on can you As our the diverse market and geographic benefiting slide organic as see product, quarter from finished we we maintained momentum XX% growth in solid year, end four, the the

end retained relatively markets and remained mitigate positions automation price backlog strong demand we industrial of Our levels resilient, with elevated inflation. to continued

softness Americas, generated on Both expected. by applications slightly organic led percent we Products in which welding Group whereas of Harris retail, compressed double-digit our growth, in continued segments residential

and increased America Asia automation consumables and percent high teens product On achieved Pacific. geographies double-digit expanded our organic percent with with a International percent. up of basis, mid-teens growth, strength All both North mid-teens in percent

General industries up XX%. with from Americas achieved industries quarter continued in rates solutions. quarter markets end mid-teens XX% we in modestly remained Energy heavy automotive higher of end benefit percent that our Looking the remained revenue markets positive. strong, at to served with the were up as growing fourth our in our transportation and proprietary growth

Our on construction market. in portions challenging construction year of and slowing prior record some the non-residential infrastructure sales compressed a period

half we the the demand, to Looking levels continue and and sustain they of with and inventory, invest year XXXX, industries and rebuild first to electrification transition are in ahead healthy aging expect to good entering and capital energy production continue to fleets infrastructure automotive, to support as the momentum heavy service address and renewables.

And the to quarter Gabe to pass fourth now I'll Bruno call cover financials.

Thank you, Steve.

December our that Xst covering in results operating our to exclude everyone fourth Fori begin like quarter remind I results fourth would acquisition. detail, quarter I Before our

December include quarter XXXX, XXXX. our in operating to will the Fori’s in where Fori of XXXX from results begin will first February We through providing results we be

in and our from Fori term reflected the fourth included loan quarter. million sheet additional have XXXX our the have new $XXX expense also balance end-of-year We interest in

five. to slide Moving

euro quarter reflected increased acquisitions. increase and fourth a The to exchange from foreign partially Our volumes XX-basis X% in from the sales translation a unfavorable $XXX offset lira. increase approximately by price, million. X.X% benefit a were These primarily Turkish XX% higher and consolidated X.X% increases point

the $XX and versus volumes, year XX% prior increased profit million mix higher management. Gross or cost on

also We approximately lower benefit in than expected. was quarter, which initially headwind LIFO a $XXX,XXX a recorded of the

offset lower business million from foreign impact $XX in Our unfavorable currency translation. was leverage partially approximately profit operating and by improvement the areas of

position. Our fourth gross neutral margin points profit basis XX.X% to and XX reflected quarter increased price/cost a

SG&A XX.X% $X million and approximately discretionary or million to $X SG&A employee as sales. increased due points higher a Our XX of costs, primarily on million as higher well higher expense to of sales basis as decreased spending. of percent compensation X% incentive $XX

$XXX increased XX% to Reported operating income million.

to income rationalization and volumes adjusted profit $X of transaction increased special acquisition, improvements asset growth. items impairment from XX% acquisition costs Excluding recent operational contributed and to Higher automations our charges million. related our to million Automation $XXX and operating Fori

had million translation unfavorable exchange an Foreign impact. $X

increased XX.X% term on $X basis our margin incremental new to generating higher $XXX margin. the expense million points from quarter income a million operating Interest in adjusted borrowings million XXX XX.X%, Our $X.X loan. approximately to increased

items. earnings quarter rate was approximately reported discrete Our mix to XX%, and tax effective our fourth as adjusted and due of

the and anticipated tax rate earnings of discrete the our of XXXX subject effective extent expect low in to full-year mid-XX% items. We mix to range, be tax to

quarter diluted $X.XX. earnings share XX% Fourth to per increased

to We a incurred $X.XX a special share unfavorable per foreign Excluding XX% $X.XX. diluted translation. items, impact EPS adjusted exchange increased earnings from record to

Moving XX% increased basis to fourth EBIT approximately Americas six. adjusted expected. headwind million. increased management $XXX LIFO from XXX to effective The our and points slide segments solid volume margin XX% to in Welding segment's on operational a cost quarter reportable than initially lower EBIT automation, adjusted growth, improvements

with the demand across capital and XX%-plus regional sales Welding reflecting including growth energy, in of increased their production markets in automotive Americas activity end XX% and organic solid growth industries acceleration quarter, an in and heavy approximately all investment. strong

The implemented pricing, acquisition approximately achieved actions led high which approximate inflation. previously and XX% volume We sales contributed largely Kestra equipment, from continued to from points XXX mitigate basis Organic sales growth backlog included growth. an X% growth approximately maintain to automation benefit to levels. by

I quarter As first XXXX mentioned in the our earlier, Fori will be results acquisition presented

EBIT $X absorption. translation. slide segment's Welding approximately million $X XXX X.X%, adjusted foreign to margin The lower of to seven. overhead unfavorable or due Moving International million The to basis which adjusted to EBIT cost exchange by million, declined decreased $XX XX% impacted approximately was points

to improve our margin performance expect sequentially. We

X% by inflation actions higher XX%, and approximately adjustments price, to increased led growth. from price mitigate sales consumable translation. XX% Volumes by and Organic unfavorable pricing prior increased foreign exchange made led primarily

China strength of European mixed the country faced an early improvement Geographically, comparisons. to as was Middle shifts year the challenging we and demand stages East see Turkey, and industrial recovery. the prior continue across to in we India and

to Moving Harris reflecting metals XXX certain to and and $XX pricing lower decreased EBIT adjusted Group on eight. margin to sales volumes X.X% commodity slide in XX.X%, price the Harris’ EBIT approximately quarter points basis X.X% million. Products adjusted leverage, XX% Fourth mix operating organic steady unfavorable declined on offerings. decreased relatively lower performance. The declining

in Harris’ areas Gas tied retail revenue exposure the of residential Solutions, was Specialty to like in was HVAC two-thirds channel. and volume While strong applications the challenged

flows million from capital cash nine. an our to We sales. quarter, working in XX.X%, working sheet the Average to Fori’s to operations reflecting $XXX inclusion conversion. balance Moving without XX% of generated increased on the commensurate slide capital cash operating due in

sales our maintaining XX.X%, mitigate to support average that we challenging portfolio. ratio Excluding equipment working Fori, are higher operating in supply the conditions our reflecting was persist capital chain and levels

returned million million X.X shares repurchases. our a approximately spending our spent through share XX. On $XXX slide invested X% approximately and shareholders to We of million to million dividend or million we $XX basis, and Moving of repurchased $XX full-year payout $XX higher and in count. on approximately CapEx share buybacks share outstanding

new see million room ratio, $XXX as you balance On increasing which our loan. navigate operating provides slide will total X.X an strong target and us This we while leverage needs is a approximate profile, our that to the and close with we our positions with to ample debt cycle. support XX, times term M&A have maintained sheet

both from improve. improved XXXX as will to expect chain supply improved We levels generation in expect cash conditions and inventory Fori continue we

now Chris pass over back to our the assumptions. I'll And call to XXXX discuss

Gabe. you, Thank

rate roughly discuss XX assumptions. price. Turning our comparisons year to growth full-year to with ease between prior rate low challenging to growth. to organic sales percent digit this We our mid-single and growth Fori generate in the and will our sales anticipate of and against combination slide double-digit recent organic a split expect percent mode We XXXX acquisition remain volume a year XX-XX

to We back prior peak at Quarter-to-date, to entered last momentum, to market conditions X with percent the a peak of estimate higher mid-single sectors down markets rate X Electric. XXXX see we specifically market good favorable are with continue balance seeing digit only period than levels, and our their position trailing of a from in that our Lincoln We year. energy. end for the still XX%, we're backlog comparable

mentioned, support through of automotive, first year Steve heavy best the energy appear to growth. half this As industries and continued positioned

and benefit shortages, derisk from the infrastructure, civil sector. renewables near-shoring the also electrification of such drivers of early-stage to labor strong and funding demand supply secular transportation energy as and chains We

double-digit business. growth integrate expect our mid approximately million Fori we which portfolio at low will sales recent we in which to margin, from sales contributes single-digit percent $XXX expand Additionally, our to percent generate automation EBIT the as a to acquisition, high

added XXXX, EPS, double EPS will to $X.XX accounting to $X.XX to to of expect integration $X.XX contribute expense $X.XX In XXXX. will Fori reflecting purchase by costs, full-year we and interest

Our acquisition be continues as continue M&A part market. active opportunities the team Higher and of we our in to pipeline work to our Standard strategy, of

momentum within dynamic, remain Group. Products are monetary labor confident conditions tightening Americas automation and demand and in and most and continued operating While Harris tensions, in geopolitical we global tight improving the supply, given

see demand dynamics recovery business. a possible the and presents in market International our upside, While China we in challenging

of within International of our Welding the profitability, year all Harris in first year. half at XXXX ranges with year-end, Standard the Strategy and of the back margin to by expect in be half operating in second Looking range reportable we segments Higher the EBIT their

with prior core the business Including expect low We range. mid expect range, to margins incrementals in is Fori, Electric line we our performance. margin in income Lincoln be percent generate incremental in operating XX% high-teens which consolidated the to to

we to interest is to expected and rate the $XX in Our expense be $XX million expect to tax our low to to increase mid-XX% range. million,

increasing continue EV charger to to we XXXX to add are initiative. $XX in and investments productivity spending capacity automate platform, the core on fund $XXX capital growth our to our as business support expand We million capital jobs our million and new investments in to tough our

target. charger EV on is Our initiative

conversion XXXX Although capacity our We estimate partially We down higher Fori. this quarter inventory improving to benefit offset planning levels the of a we expenditures. revenue anticipate higher for we in expect here over XXXX. discussions and which in by ratio as expansion not do excess XX% selling and will levels, manufacturing work units of be generation be today year levels contemplate cash cash with capital from in full-year fully of inventory XXXX, fourth and are

by living leading superior to By stakeholders. for strategy, to in XXXX on and the executing global generate the for golden like hand rule we the I'd of success performance over for am and our Higher call how beyond. they and will I outstanding all continue organization value have proud before in our reiterate continued well questions, I So how XXXX Standard team's our positioned our values, of

I now turn over to call the And for like would questions.

comes Saree question Boroditsky first Our Instructions] with [Operator Jefferies. from

open. is line Your

International, Thanks morning. off talk versus guess guidance bit your growth within in for seem starting on have taking Good organic given better questions. little just could you how Americas mid-single-digit to Americas? for you seeing about you're view growth, that my a just I in

Yes, Chris. morning, is good Saree, Yes, this

that confidence seeing I we were don't As more that in business it's lot in we the in see in a our what a as as growth what other as if automation got world. the QX, trends of at our we're we have our exiting first in perspective, the well areas seeing we're as confidence trends the QX. mentioned both not business part from in Look, we've see discussions, of and we Americas

very a to a in the bit growth the China We're that of some business. segments International wildcard of is side think globally. little I solid seeing still relative industry

I the offshore year know and a when of we're associated seeing what more to with we're made we're the interesting Southeast about Asia business especially that XXXX. we some bringing the energy markets. confidence are moving some think personally of have market, into our in in have trends into very solutions those activity in and the trip markets But business this the and our seen I automation as the total, that in Americas business

and from perspective? that position automation also could the timing in related projects? high just end then about And market included referenced backlog perspective talk in you Is to then a backlog you And this Americas. of an from most what's

is Yes. Saree, Steve. this

So projects, which But nature both of see consists to continue long we backlog the business the here we our also based the that in be backlogs in on automation U.S. have in of equipment those to tend cycle the Americas engineered-to-order systems. high

made We towers, the and for Cleveland. battery equipment offshore around lot applications that are other world in like deploying EV wind have of trays that we're all technology solutions a high things leveraging here

And up products. those keeping see continue with for so challenges to demand in we some

is Chris. Yes. Saree, this

for very also that we higher we the entering Just does saw entering when and is talk Fori backlog not the performing Fori, about XXXX include backlog what from well. from clarity, XXXX,

business. the on an basis So of that apples-to-apples backlog the just is

that order I'd know highest of history also portfolio in equipment of company. you we this in our business, have run Americas rate QX year for the our in the let the

we've levels demand to So the strong got a order solutions the relates our and in business. it for very as start

That’s questions. taking great for to hear. my Thanks

for One our next moment question.

comes question with from next Oppenheimer. Blair Our Bryan

open. is Your line

you. Thank everyone. Good morning,

morning, Bryan. Good

basis, as XXXX Cobot more a automation offerings, in there? has of kind and then work well-accepted particular, much solutions progressed Cooper, rollout, be project automation the been the between on entry-level backlog there In terms your in a legacy shift of of that’s backlog composition to seem of standard customized

had demand, it's has But well to the Cooper larger as at that First other. general can't exceptionally seeing it of level, some that company our XXXX. offering all, X investment that for energy, Cobot as that Electric, and business EV. automotive with that applications, Lincoln growth we in growing faster of we its fastest-growing the solutions capital with of We're in we towards the a well areas one tailored automotive well continues as as of our done the industry both saying strong very area solutions any point segment as the portfolio, saw like and across the Cobot broad engineered really across seeing in growth I is transition other as have those that and the lot cells we're industries are as or than

applications well really growth as but growth as nice spread across is very So that segments.

add note specifically tend Cobot not the to a just within make-to-stock us, that as it I'd a the large very we Steve. so on is a item Cobots. Cooper, the do ship of automation typically this relates backlog, carry for order. week getting to Brian, is those backlog We just

tracking have in Okay, how your a going in the Fori? owning unique shifted Fori, of be OE understood. any the capabilities about great your integration automation days but more and the with that's way solutions you're since And I hear whether little set early to plan, of it'd early legacy combining conversations realize in

we of them use Fori I'd for interest managing Steve. in unbalanced the at outside that effective manage Fori and heavy see tools the handling say to AGVs really and so particularly the They The arms. integration And solutions tremendous well. efficient from processes in extremely more a business we've that and automation Bryan, their embraced portfolio, technology Lincoln our much going is this that open with system to large as business. brings business that be of the lot our helping customers the parts. they've automotive has is seen embraced team that

well. very So it's going

Gabe. this Bryan, is

very from in add a what financial standpoint, what marketplace. the disclosed to to in line we've we see to Just we're much

again. good All Thanks hear. to

Yes.

One moment for our question. next

question from Baird. Mig comes with Dobre Our next

Your is line open.

and automation question morning, a have you also on here. Thank good I everyone.

this understand than of different because obviously kind it's business Just your sort trying equipment to operates how business. of traditional

think how at operate XXXX, So with if frankly, of $XXX what's you have with? differently, to this ‘XX? equipment or trends when in compare run a visibility of you hold-up about you able regular growth million are kind rate, the you in point, would of put revenue at normally normal to that level that of you kind look this have business, that backlog your natural being And comfortable does you as business? with, how Maybe

Yes.

you the think of and providing, in host would Electric. our ways average and So range. even providing at utilization our business the the so general, you in broader to different backlog Fori the the say in business But it, Lincoln when the Lincoln one the Mig, think products than is solutions you that and had think be I about to they're average the would and the about of acquisition six-to-eight-month slightly be those marketplace we would solutions out, that Electric they're that of the that

did looking be have mentioned frankly, we and So engineering that within, might the have could them for solutions provided solutions quite be some And maybe us XX somewhere to maybe The between actually either two than take it's design, or probably that could the we're you months. was We years longer Steve that. or actually that six looking a at all earlier, Cobot to average some closer to But provided shelf business -- when something Fori that, move within when it do week. off business three out. months. Fori like eight at the slightly probably the out, was those

the pretty for And got good we business into that doing business, Fori as what of see is and automation here we're the we already we understand February, business. that have that executing the full-year automation visibility very the we the have. So those orders on we in should we've backlog rest much for be sit

might, visibility to As some at And as provided OEMs month some or solutions we distribution equipment customers that as obviously, you have large we the a shelf, are our of we by then to our orders of those comparison business, longer releasing think is by that, global frankly, we is we about there time. some need asked, that quite for order quite that's which for out provide what lead provide really our two that backlog have of our receive the business, and have equipment being large they on orders, them Lincoln visibility equipment or very business right immediately. quarter the with that a in rental they're to that way have groups you comparing large Electric. think about partners a that those or the us But frankly, we those so areas in

Chris. well? of super opportunities about America. I'm is as international No, Are it on North helpful, And curious, here the here. I'm the And specifically thinking horizon that's seems that as -- focus like Europe you think automation, there

Yes.

actually doing America-centric, from take we us. at are are because in are, manufacturers I right core do of on this but there. of relationships so have in deeper some us that to look, us the this even growth lot so about the other much there. growth that So of you seeing the we we're in acquired in core that model a capturing of opportunities now, there was around that opportunities things I market they're tell OEMs our are Excited with Korea And world. of that Provides the Fori some we're that will operations there for automotive the quarter. areas front in believe is We that country. focused that

we footprint. great where example be from of grow may So able that's a to that

into our ago, of which are Europe, there couple exceptional steel is a to years. opportunities us the that capital now drive mentioned, Europe. automation that for the you of put at solution Zeman continue years That's an business in more we been structural into we Europe, actually We've Remember acquired in that a look to business. couple exceptional. portfolio It's marketplace. been As

We have business. into that to expand

we to a for example continue got identify. in can think sheet, into to Europe an in there or looking find to Lincoln that that in very people market balance we it's still message an I have be business. quite we continuing others So those of frankly, we automation are assets, think they're solution as active we whether That's that for them important the why strategic and Electric, they're great portfolio, to Americas, thinking into Europe, about want at place the we're assets whether the in and my M&A strategic the bring

Okay.

how one, I allow opportunity I'm you'll final the guess you If me you It be know big don't this mover Can it. I needle if a all that don't EV XXXX? can charger but obviously frame you. get here one to play Thank business. in for sort curious growth be that. of for us. know I a much about will in could just specifically this market,

is this Mig, Steve. Yes,

be in I absolutely mover can think XXXX. it needle a

has strength And high separates Level public, to to the conditions. the very and charge X environmental rough trickle that at cycles the area are a but home to the very of our called and And power DC then That play our charging so at market reputation duty being able of for that's it electronics, is category example. in. several hotel, third build There's equipment typically plays choosing in chargers. hours really today, Fast market are the in X design out that the for we're into really a Level off chargers, vehicle, If EV take tiers. you chargers, three look which what there's overnight

money opportunity going network U.S. where is the market into lot DC us. in that's of charger building the think There So we the for federal Fast is out a

demand private fleets. from tremendous There's also

fleet ‘XX think you want then in a for probably have to electric get into at people in off-road don't into line delivery they want charging So and all of you things own vehicles, you X not waiting equipment. you And into but their mining have ‘XX, get as further charging so construction XXXX like own equipment, infrastructure. ahead drivers Class time, in example, get their their vans, station, that

If of you it And read in critical. from chasing any ability charge electrification. everyone more the press large various the just people industries, becomes those heavy quickly even equipment, for is to

to So ag initial meet as we're needs? talking you about. scale which excited calls customers And can your product, for potential Formula our to scalable our saying, a from We've out people and very NEVI is is in XXX-kilowatt very also modular, platform absolutely. answer EV We're the product getting meet that the equipment charger we're up requirements. built to construction

to ability need then like got position year. of which We're have that And into this quickly in we demand. expand quarter right the product fourth get I we to the to we've that racing So start if XXXX it the that to production, first now. meet we relatively expect capacity doing in

it's Mig, Yes. Steve's around just project, ‘XX ‘XX. of -- that put we centers Look, that capital this million growth we're in in we $XX could to and to add the of see capital I'd most going think comments. and on

participant at to current So the have. be be latter we've able the of got with the to year market ability capacities part the the we

to and nearly could understand capital, Lincoln just our to competencies capital that that at -- the Electric you The also technologies, of driven all our ability that all develop how interesting of utilized welding and other being power it's from show electronics, for that be nearly needed. equipment if thing

you'll leverage great this us us move core to to to a and to this more is from hear year. I market, on throughout expect for opportunity the this competencies, So these continue

Thank Great. you.

our for next moment One question.

Our next with Nathan question comes Jones from Stifel.

open. Your line is

Good Adam for morning. Farley is on Nathan. This

Good Adam. morning,

price/cost. first My around is question

And over? be to expected for the about staying price/cost So in is or is inflation XXXX. expect aggregate is Could your on or you on same? implement color price in provide in just actions any XXXX, mainly moving up, additional you expectations down carry costs to do neutral pricing what

Yes.

I'll So Adam, perspective so give -- think a LIFO. about on you

to also inflationary not from in but So in to environment, and continue just we labor raw within the in expect an other costs standpoint, indirect operate business. a

So When we operate in keeping expect price/cost, inflationary in cost price/cost from drivers you an about position to an our inflationary to our think environment. expect respond we to neutral. standpoint

actions respond neutral to to that enact we'll cost but maintain drivers posture. price/cost price So

And is Adam, Chris. this

Just aware, end said, we're many have a of in so business at our the need of pricing We've and pricing Gabe that Electric the -- as Lincoln to going inflation. you're that we to experiencing before already areas here other implement taken we're actions actions couple of quarter.

may residential-oriented Okay. those be channels quarter you did to Thank continues I the some see for over outsized? in and Business applications. any within to the then channel that those Harris. was the that. of turning just in And softness see retail wondering, destocking you inventory

think see inventory consumer only softening the a the demand throughout did XXXX. from Hey Adam, standpoint year. for year it in adjustments the big also throughout about boxes not just We but

going on is that it pressure continued those perspective but currently demand. new stable Our into relatively should year, consumer be the

think we target is in Harris this that of that EBIT mix at we XX% believe The we to first about first range EBIT as business of profile, that quarter. target we've to key lower us to that XX% And established. have end now for be the quarter returning the entering thing this that

So Harris. about business that's we a as key driver to think our

questions. Alright, great. you Thank taking for my

Okay, thank you.

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

is open. Your line

question. the for Thanks morning. good Great,

and wanted on infrastructure. construction one Just ask to

weakness was heard is the had out called from see chunk quarter. the down in I more any rest some to in of on think, we've if I something you decent rate. there a color not know channel the And was the Just wanted I quarter-to-date. you weakness comp, XX% of kind a non-resi, think which challenging

curious what on just seeing ground So you're there. the

would in in have optimistic sequential basis, -- year. that had half us structural the the of On we're we're And They're -- year, in Steve. Zeman we industry market. a their is we this steel that. construction first demand the Yes. year for against that the is for that I Australia really solutions. -- seeing really last Dillon, reasonably say comping the on focuses tremendous with this particularly issue just a a in Austria structural fantastic business

think really a to I it's come. things So a rather year-over-year comparison harbinger than of

two-part it. got on margins. can then ask And just I a International Okay, follow-up if

So I we think the margins expected. bit quarter were than itself, weaker for a first

and Gabe, cost any just if wanted you called some color then there. think out see you lingering to more FX But I absorption. have lower

rolling Gabe, into increasing Fori got sequentially of be will I the margin year? believe, of And I year. the this sequentially But you in the to you've through to sequentially, that FX getting the Is progression think related rest expectation should mentioned continue be given improve margins first should the just better margins well. at terms that question quarter. point also as the in, that

the of Yes. expect through to We it improve certainly year. sequentially rest the

business some strength challenges in energy. in As back Gabe be week the all to now It I there. Higher targets Ukraine expect that as we're the I see do Standard defense. a the through in caused to is year. within exiting been war said, we managing expect their some But actually This for XXXX. in unique has them we strength some certainly have see

very Our managing a good very teams of job think, challenged a there environment. in I are doing,

and business earlier than shared, Harris year. to the our in improvement that to the some moving improvements we improving And some the year. lot see as side, in both International improvements of expect we'll see through expect maybe But as portfolio the see but a we got have in of throughout we're confidence improving

add pacing, to bit Just perspective keep a of little just that. to a on

into that XX% at the EBIT to on International half the quarter. continuing be exit mentioned the double-digit we as comments, side, the level of back second be range our So at to we And first in within in expect, to EBIT we as a the range year. the XX% quarter,

challenges, we positions some the through ending So with at ended EBIT to profile look at that the we is challenges on we performance year, the as worked the quarter. XXXX, to International the return pleased our way digits double we and of up enter And us we're an XX%. operational as it production on very second side,

much. very Thanks helpful. very It’s

our for question. next moment One

with comes last Steve Our from question KeyBanc. Barger

Your open. line is

double-digit to in said the of Hey, organic thanks. mid-single-digit Good into morning. year, you the given strong how lower XXXX. Or the lot part organic momentum you do I to the balance the want year? back expect was drive and in in that's just growth you Chris, more this half? expect understand, then half growth Americas through expect in a first just you do first

mean you would than we trend in shouldn't loaded we frankly, automation say year, Americas I I, Steve, that back-end those that piece, the about secular it Well, comfort front-end portfolio should fact throughout be the as with think that Americas stronger quite begin that could we areas certainly get piece and see easily the that segments we side in to International the see the loaded. the start tell the within on and automation, growth I of being to versus

not We're demand talking for drivers expecting There not potential there with that associated would risks probably the business. be a the are marketplace. in that. in seeing out those recession the that We're about

the half. and about stronger half a back the Americas You time. that accelerating very us to thinking have first in for with half, business adjust we Lincoln not that really first If the here followed long we'll business, we model being the occurs could to at those quickly believe strength throughout see the I Electric. in able But year. be really the automation a

Americas low-double organic? would that versus So high-single, to a International mid-single lower get rate put in growth and that Harris more to

Steve, particular It the business. Yes, the think of of could other that the recovery, areas business. well back the the see about what we you that of rate to think from comes part in recovery as impact, But very it could. that I again, have

side maybe way. mentioned the we more business on and the were Gabe we seeing we're may Harris automation impact as quite if earlier, piece International again, much ratios side. But to the the side improvements versus are on see But side. the International the in in improvement, see to earlier, the the Americas not We confidence in what seeing start some that

Keep mind... in

Yes. Makes sense.

in the and These the are quarters. And we've the for right? done operating progress still to as we shape continue throughout It's past, we very assumptions update market year, the early. as

how guess, Or given for if you you Thinking I growth. SG&A year? thinking Fori, yes. are organic top in SG&A course, percentage the leverage basis on additional you line in you about just And XXXX, can really the add as and leverage? Gabe, about drove nice ’XX, drive moderates a Of

SG&A Well, low mid-XX% in in be we're -- on wages we'll spending. range. mid-single-digits to we're upticks And into when to going But general, that discretionary the on that in in in pressure XX% have believe low that that some mid volumes, built shared. we've and some type that's all to I mean, assumptions incremental we that

historically maintaining When why And we're talking have double-digit The math. that dynamic with so to incrementals. low million mid- that's margins, to driver and operated is of $XXX the add you the Fori business that the posture. framework EBIT is that plus teens about high we we're

do to as continue expect our past. model business the we drive So done to in we've

automation cycles Steve, And and to ask think that Chris you alluded talked same business. if CapEx the decision this. just we've I by maybe is it. can as Got But Equipment as guys more, X about I historically, affected your or Welding being a

think strength any of will in reshoring automation, and than that be? you less used automation cyclical else, the or to forward be As do it going anything industries heavy some you expect activities about

of started great next a question. would these more be of faster we nine And the years Electric we actually a than we're early trends about conversations beginning to Yes, when the But it talking out portfolio. that build as around some at some strategy Steve, that much long-term accelerated the of we're Lincoln thought our automation that's because we secular strategy, ago, portion eight, estimated. had cyclical really have

is the it stabilizing see be believe being conversation than had frankly, challenge we really through as that a keep window, not to it issues of at labor, to we quite this may particular more going to that greater be a the us with the lead even economic have since to find labor, the to sourcing around can ability become supply chain And COVID challenges portfolio and be that, expected. able the may portion cyclical least

that business, months, traditional XX seen being out over of the of we to that solution might of XX through the because choice think we've The as has engineered those months, other been with associated for some of some it have benefit in for the years. be XX our tail you and cells business these with months, or would those that providing, the the had we've some last Fori XX of actually large ability if seen is the about Welding and what provider the XX down get actually, you cycle cycles that

We're it's It to look I great that question. think evaluate I continuing to you, that that be assure at any continue look less it. So But a and build on update as we it to certainly cyclical. looks doesn't can more cyclical. able business. We'll

Thanks. Appreciate that detail.

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

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

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

may now You disconnect, wonderful day. have a and