Lincoln Electric Holdings, Inc.

Greetings and welcome to the Lincoln Electric fourth quarter and full year 2021 financial results conference call. At this time, all participants are on a listen-only mode, and this call 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 welcome to lincoln electric's fourth quarter and full year 2021 conference call we released our financial results earlier today and you can find our release as an attachment to this call's slide presentation as well as on the lincoln electric website at lincolnelectric.com in the investor relations section joining me on the call today is chris mapes lincoln's chairman president and chief executive officer and Gabe Bruno, our chief financial officer. Chris will begin the discussion with an overview of our full year results and business trends. And Gabe will cover our fourth quarter financial performance in more detail. And finally, we will conclude with comments on our outlook and updates to our 2025 higher standard strategy. And following our prepared remarks, we're happy to take your questions. Before we start our discussion, please note that certain statements made during this call may be forward-looking and actual results may differ materially from our expectations due to a number of risk factors. A discussion of some of the risks and uncertainties that may affect our results are provided in our press release and in our SEC filings on Forms 10-K and 10-Q. In addition, we discussed financial measures that do not conform to U.S. GAAP and a reconciliation of non-GAAP measures to the most comparable GAAP measure is found in the financial tables in our earnings release, which again is available in the investor relations section of our website at lincolnelectric.com. And with that, I'll turn the call over to Chris Mates. Chris?

Thank you, Amanda. Good morning, everyone. Turning to slide three, we finished the year with a solid fourth quarter and achieved record sales, operating income, earnings and returns for full year 2021. Our results demonstrate the strength of our business and our team's perseverance and commitment to put our customers first while still advancing our strategic initiatives, even under these unprecedented conditions. So I would like to thank our team, as well as our suppliers and partners who tirelessly worked with us to help us serve our customers and generate record results. Our 2021 sales increased 22% to a record $3.2 billion on 19% organic growth led by higher volumes and 2% from acquisitions, reflecting a strong recovery in the early stages of an industrial expansion. We achieved a 240 basis point increase in our adjusted operating income margin to 14.8%. with a 26% incremental margin reflecting solid commercial and operational execution across our business. We achieved neutral price cost due to diligent price management, which offset unprecedented inflation and approximately $39 million in LIFO charges. We also benefited from structural cost savings and our higher standard strategy operational initiatives. Our adjusted earnings per share increased 50% to a record $6.22, and we achieved record returns of 23.9%. Cash generation grew to $365 million and represented approximately 81% cash conversion, which is lower than our standard 100% plus performance. This reflects our early decision in this pandemic to use our balance sheet to strategically elevate inventory levels to service customers' needs. I am proud that we increased our dividend nearly 10% this year, making our 26th consecutive increase, which again reinforces our confidence in the business and cash flow generation through a cycle. Combined with $165 million in share repurchases, we returned approximately $286 million to shareholders this year. We also maintained a solid balance sheet profile, have approximately $729 million in liquidity, and have no near-term debt maturities. We enter 2022 with over 80 new product families, a higher vitality index of new products, a strong pipeline of additional product launches, new acquisitions to scale up, and are seeing strong quoting activity and record backlogs for both our equipment systems and our automation solutions. I believe Lincoln Electric is better positioned today than ever before to capture growth and accelerate our performance in this industrial cycle. Looking at in-market trending in the fourth quarter on slide four, We achieved organic sales growth across all of our end markets despite challenging operating conditions for our customers. Our end sector organic sales growth was led by a strong mid-30% increase in construction infrastructure, which reflects the strength of non-residential, pre-engineered building projects and our competitive advantage in that market with our unique solutions. Where we see the most opportunity for resurgence is in the automotive sector and in general industries, which face the tightest supply and labor challenges, as well as in energy, which is still in the early stages of recovery. We achieve solid organic sales growth across all product areas, led by broad in-sector demand for our equipment and automation solutions. While consumable volumes grew in the quarter, we anticipate performance will increase as customers' operating conditions improve, and we navigate past challenging first quarter comparisons, which represented strong consumable demand last year prior to weakening supply chain conditions. Geographically, North American European organic growth outpaced Asia Pacific due to slow industrial output in China. Despite this pocket of weakness, the underlying fundamentals of our end markets are strong, with customers expressing needs for added capacity to address high demand for their products, record backlogs, and low inventory levels. Paired with long-term demand drivers, including skilled labor shortages, reshoring, EV investments, aging fleets, infrastructure maintenance and repair, and renewable energy, Lincoln is well positioned to serve customers' needs. And now, I'll pass the call to Gabe to cover fourth quarter financials in more detail.