Lincoln Electric Holdings, Inc.

Greetings, and welcome to the Lincoln Electric 2022 Third Quarter Financial Results Conference Call. At this time, all participants are on a listen-only mode, and this call is being recorded. It is now my pleasure to introduce your host, Amanda Butler, Vice President of Investor Relations and Communications. Thank you. You may begin.

Thank you, Tawanda, and good morning, everyone. Welcome to Lincoln Electric's Third 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. Joining me on the call today is Chris Mapes, Lincoln's chairman, president, and chief executive officer, as well as Gabe Bruno, our chief financial officer, and Steve Hedlund, chief operating officer. Chris and Steve will begin the discussion with an overview of our results and business trends. Gabe will cover our quarterly financial performance in more detail. And finally, Chris will conclude with a review of our full year assumptions and discuss our announced definitive agreement to acquire Foree Automation. 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 STC 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, 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. I'm pleased to report another quarter of record sales, profitability, earnings and returns on great momentum in America's welding and automation on strong industrial activity as well as capital investment. The organization did an excellent job servicing customers and capturing growth in an increasingly dynamic operating environment. Our focus on putting customers first, innovating, driving operational excellence, and investing in our employees shapes our higher standard 2025 strategic initiatives and has been key to successfully navigating through the cycle and through current market conditions. We achieved record sales of $935 million, led by 21% organic growth on 13% higher price and a 9% increase in volumes. Our third quarter sales also benefited 1% from acquisitions, which partially offset an approximate 7% unfavorable impact from foreign exchange translation. Our third quarter marks our return to 2019 volume levels at the consolidated level and with an operating model that is generating considerably more value compared to three years ago. We achieved record third quarter profitability with a 16.4% adjusted operating margin with a 24% incremental margin. We are operating at our long-term higher standard 2025 strategy margin target. while managing segments that are navigating through unique end market dynamics, but year to date are also operating within their higher standard margin ranges. Supply chain conditions are improving in our consumables portfolio. However, we continue to be challenged in our equipment. While we've achieved a neutral cost price position year to date, we continue to operate in an inflationary environment and are driving productivity to mitigate the impact. However, in certain products and markets, we have implemented further pricing actions to offset inflationary pressures. Returning to our third quarter highlights, adjusted earnings per share increased 31% to $2.04, a record performance despite a $0.07 foreign currency headwind. We achieved a record 28.7% adjusted return on our invested capital and a 19% increase in cash flows from operations with a 94% cash conversion rate. We returned $59 million to shareholders in the quarter through dividends and share repurchases, bringing our year-to-date returns to $255 million, which includes $156 million of share repurchases. We also recently announced our 27th consecutive dividend increase at 14.3%, reaffirming our confidence in our business model and our progress towards achieving our higher standard 2025 strategy targets. And now I'm going to pass the call to Steve Hedlund, our Chief Operating Officer to cover organic sales trends.