Lincoln Electric Holdings, Inc.

Greetings, and welcome to the Lincoln Electric 2023 First Quarter Financial Results Conference Call. At this time, all participants are in listen-only mode, and the 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 now begin.

Well, thank you, Gerald, and good morning, everyone. Welcome to Lincoln Electric's First Quarter 2023 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, Gabe Bruno, our chief financial officer, and Steve Hedlund, chief operating officer. Chris will begin with quarterly highlights. Steve will provide a discussion of end market trends, and Gabe will cover our quarterly financial performance in more detail, as well as our full year 2023 assumptions. 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 discuss 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 Mapes.

Thank you, Amanda. Good morning, everyone. Turning to slide three, I'm pleased to report another record quarter of sales at over $1 billion, a milestone for our organization. We also achieved record adjusted earnings per share performance at $2.13 and generated a record $124 million in cash flow from operations, all of which demonstrate solid momentum in the business, continuous improvement in our operational performance, leveraging our Lincoln business system and higher standard 2025 strategy initiatives. And it reinforces how our innovative solutions, automation leadership, and industry leading application experts are winning in the market. While we have challenging profit margin comparisons in the first half of this year, we're very pleased by the strong sequential profit improvement across all of our reportable segments. This is most notable in our international welding and Harris Products Group segments, which contributed to a consolidated 16.3% adjusted operating profit margin in the quarter. Our ROIC performance remained top decile at 22.4%, and we continued to return cash to shareholders with a 14% higher dividend payout rate and share repurchases. We remain focused on putting our customers first implementing our long-term strategic initiatives, and pursuing a balanced capital allocation plan, which is continuing to yield strong results. The first quarter also marked the inclusion of Foray Automation in our results, which had a slightly diluted impact to margin, as expected. We are pleased to report that the integration of the organization is on track, and we're looking forward to supporting growth and margin expansion in the business as we work to deploy our Lincoln business system in the operation, which will support driving Forey's margins to our mid-teens percent target by the end of 2025. We're also on track with our EV charger initiative and are actively investing in our operational platform ahead of our targeted fourth quarter start of production. These investments provide capacity to produce up to 500 units per month. All of this work is a true testament to our unique, high-performance culture and our values, rooted in integrity and the golden rule. And during the quarter, I'm proud that our team was recognized externally for what I believe truly sets us apart, our culture. This year, we were awarded for the fifth time as one of the world's most ethical companies by Ethisphere, and for the second time by Newsweek as one of America's most trusted companies. These endorsements, as well as our solid first quarter momentum, position us well at the start of the year, and our global team is energized to execute on our higher standard strategy. Now, to share more details on our first quarter performance, here is Steve Hedlund, our Chief Operating Officer. Thank you, Chris, and good morning, everyone. Turning to slide four, our 8.5% growth in organic sales reflected strengthening demand through the quarter, ending with strong March results. We also had one additional shipping day in the quarter. On a consolidated basis, we achieved organic growth across all three product groups, led by strong sales in equipment, which increased low teens percent with strong demand across both our direct and distribution channels. We also achieved a high single-digit percent increase in automation. Both automation and equipment backlogs reached record levels from strong capital investments across key end markets, including automotive, heavy industry, and energy applications, where our innovative solutions continue to win in the market. Regionally, we are seeing the highest levels of industrial and project activity in Americas, Asia Pacific, and the Middle East, with uneven areas of performance in Europe primarily due to challenging comparisons in the first half of this year led by our decision to cease operations in Russia in 2022. Excluding the challenging comparison, European organic sales increased low single-digit percent. Similar to the fourth quarter, end markets continued to trend positively in four of our five end markets accounting for approximately 85% of revenue exposure. We are expecting continued strength in transportation due to resilient production levels and continued capital spending on new platforms. We expect ongoing demand from heavy industries, notably in large equipment systems to support agriculture, construction, and mining. Energy project activity is expected to continue, both in oil and gas to support accelerated investments in LNG and pipe. as well as in on and offshore wind projects. Shipbuilding and defense applications, while small on a relative basis, are expected to accelerate. We are seeing continued challenges around the consumer at retail. In construction infrastructure, we are seeing strong orders for our proprietary automation solutions serving that sector. However, the timing of projects against the challenging prior year comparison and some softening in non-residential spending is the primary driver of the quarterly decline in that sector. And now I will pass the call to Gabe Bruno to cover first quarter financials.