Lincoln Electric Holdings, Inc.

Greetings and welcome to the Lincoln Electric 2022 First Quarter Financial Results Conference Call. At this time, all participants are in 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, Paul, and good morning, everyone. Welcome to Lincoln Electric's First Quarter 2022 Conference Call. We released our financial results earlier today, and you can find our release as an attachment to this call slide presentation, as well as on the Lincoln Electric website at lincolnelectric.com in the investor relations section. And 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 results and business trends. Gabe will cover our first quarter financial performance in more detail, and then we'll pass the call to Chris to conclude with a review of updated assumptions for the year. Following our prepared remarks, we are 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. A reconciliation of non-GAAP measures to the most comparable GAAP measure is found in the financial tables in our earnings release, which is, again, available in the investor relations section of our website at lincolnelectric.com. And with that, I'll turn the call over to Chris May. Chris?

Thank you, Amanda. Good morning, everyone. Turning to slide three. We're pleased to report record first quarter sales, profitability, earnings, and return performance, executing on a strong start to 2022. Sales increased 22% to a record $925 million, led by 22% organic growth. While we expected pricing strength from prior pricing actions, volume performance in our welding segments accelerated, reinforcing continued recovery momentum in end markets and demand for our automation solutions. In addition to volume leverage, our diligent management of inflation, improved operational execution and automation, mix and structural savings offset higher employee costs. delivering a record 17.6% adjusted operating income margin at a 32% incremental margin. All of our segments delivered strong profit performance within the mid to high end of their higher standard strategy 2025 profit target ranges. Adjusted earnings per share increased 53% to $2.10, a record performance. Additionally, we achieved a record 25% return on our invested capital and maintained strong cash flow generation. We returned approximately $138 million to shareholders through $105 million in share repurchases and paid out $33 million in dividends. In mid-March, we chose to cease operations in Russia. Russia represents less than 1% of sales and asset value, so the impact is immaterial. but our focus has been on the continued support and safety of our employees during this time. While a dynamic quarter to manage through, I am proud of our results and our team's ability to execute in this market. Looking at the first quarter demand on slide four, our organic sales increased 22% with 3% volume growth. Demand improved through the quarter, and benefited by a pull forward in orders following the start of the Ukraine conflict as global supply chains were disrupted. In the quarter, all reportable segments, geographic regions, and main product families all achieved positive organic sales growth. Automation and consumable organic sales increased at a mid-20% rate and outperformed equipment organic sales, which increased mid-teens percent. Our automation portfolio achieved a record $154 million in sales in the quarter and is on track to achieve over $600 million in sales this year. Our end markets are showing good momentum with positive customer sentiment despite the tight supply conditions as customer backlogs grow and they pursue capital investments. All end markets achieved organic growth in the quarter, led by infrastructure construction, automotive, and general fabrication, which all grew above 20% and represent over 60% of our revenue mix. Energy and heavy industries achieved high to low teen percent growth respectively, reflecting tougher comparisons in heavy industries and some choppiness in demand given customer supply constraints. We expect to see accelerated demand sequentially from heavy industries, automotive, and energy as customers continue to resolve supply chain constraints and infrastructure and energy investments are deployed into the market. And now I'll pass the call to Gabe to cover first quarter financials in more detail.