Lincoln Electric Holdings, Inc.

All lines have been placed on mute, 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, Greg, and good morning, everyone. Welcome to Lincoln Electric's second quarter 2024 conference call. We released our financial results earlier today, and you can find our release and this call slide presentation at lincolnelectric.com in the Investor Relations section. Joining me on the call today is Steve Hedlund, President and Chief Executive Officer, and Gabe Bruno, our Chief Financial Officer. Following our prepared remarks, we're happy to take your questions. But 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 and uncertainties, which 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 measures 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 Steve Hedlund. Steve?

Thank you, Amanda. Good morning, everyone. Turning to slide three, I am pleased to report solid second quarter results demonstrating the team's strong execution of our higher standard strategy initiatives, structural improvements in the business, and diligent management of costs, which has enabled us to successfully navigate through a more challenging portion of the cycle. Despite an organic sales decline of 4% in the quarter, we held our operating income margin steady at last year's record 17.4% rate. I would like to thank the global team for staying focused on our customers and executing our commercial and operational initiatives in a dynamic environment. We also reported solid earnings performance, cash flow generation, and cash conversion at 110%. We continued to invest not only in growth via internal CapEx and two acquisitions, but also returned $91 million in cash to shareholders in the quarter through our dividend and share repurchases. We did this while maintaining top quartile ROIC performance, highlighting strong capital stewardship in the business. Turning to slide four to discuss organic sales trends in the quarter. We experienced lower demand in our two welding segments due to lower production levels among heavy industry OEM customers, moderating automotive production, and weak macroeconomic conditions impacting our customers in the general industry sector. We also saw a pause in capital spending for automation projects as the automotive OEMs rebalance future product plans between EVs, hybrids, and internal combustion powertrain platforms, and as small and medium-sized fabricators moderate their capital investment in the face of increasing economic uncertainty. These factors, along with challenging prior year comparisons and equipment, resulted in a 4% organic sales decline. Looking at our end markets, two of our five end markets, or approximately 30% of our end sector sales mix, grew in the quarter, led by strong international growth in construction infrastructure and global energy projects. General industries declined modestly while heavy industry and automotive sectors were more challenged. Moving to slide five and investments for long-term growth, I am pleased to report that we have added approximately $175 million of annualized sales from three acquisitions year-to-date. This generates 400-plus basis points of sales growth versus prior year, which is in line with our strategy. We previously highlighted our Red Viking Automation acquisition in April, and I am pleased to discuss two new acquisitions, including VanAire, which we announced earlier today. First, Inrotech is a small but impressive automation integrator in Denmark that has developed a proprietary AI-based solution that automatically programs a welding robot with minimal human intervention. This technology enables customers to reduce the time it takes to program a robot to make complex, repetitive welds from days to minutes. Initially designed for shipbuilding applications, we believe this technology is a game changer that can be deployed across a broad range of solutions. Earlier today, we announced the acquisition of VanAir, which is a leading player in mobile power solutions for the service truck industry. This acquisition extends our channel reach to sell our existing welding products to this customer segment while expanding our portfolio of mobile and battery-powered solutions. We have been working with VanAir on several co-development projects and have seen very strong customer response to the products we have launched to date. We estimate that our three acquisitions will generate an initial full year earnings run rate of 14 to 16 cents per share pre-synergies as we work to integrate their operations. Moving to slide six and an update on our EV fast charger initiative. I am proud to report that we successfully launched our initial 150 kilowatt Velion fast charger that was designed specifically to meet the U.S. NEVI requirements. We have achieved several key milestones and have received very encouraging feedback from prospective customers and continue to pursue a number of sales opportunities tied to NEVI program and private fleets. However, the EV charger market has evolved significantly in the last six months. The deployment of NEVI funds has been very slow, and with new vehicles able to accept much higher charging levels, the market has begun to question how to future-proof investments in charging hardware. As a result, several leading EV charging hardware manufacturers have become insolvent, exited the industry, or announced significant layoffs. While response to our technology, manufacturing capabilities, and value proposition has been overwhelmingly positive, many customers now want products that differ materially from NEVI specifications. In response, we are leveraging the modular nature of our product architecture to accelerate the introduction of new products to enable us to better serve evolving customer needs. We expect this will extend the start of any meaningful revenue ramp to late 2025. We remain confident that the long-term market potential is attractive and that we will continue to pursue this opportunity without the need for significant further investment. The incremental operating expenses associated with the EV Charger Initiative are almost fully offset by the improved performance of our additive manufacturing business which is reaching an inflection point in commercial adoption. The maturation of additive manufacturing after several years of technology development and incubation is evidence of our ability to leverage our core competencies to create value outside of our legacy welding business. I am pleased with the team's execution of our strategy in a challenging environment while we continue to invest in long-term growth and operational efficiency. These efforts position us to capitalize on the many opportunities ahead that deliver superior value through the cycle. And now I'll pass the call to Gabe Bruno to cover second quarter financials in more detail.