Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2025
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number: 0-1402
LINCOLN ELECTRIC HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Ohio
34-1860551
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
22801 St. Clair Avenue, Cleveland, Ohio
44117
(Address of principal executive offices)
(Zip Code)
(216) 481-8100
(Registrant’s telephone number, including area code)
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of exchange on which registered
Common Shares, without par value
LECO
The NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ⌧ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “small reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ⌧
The number of shares outstanding of the registrant’s common shares as of September 30, 2025 was 55,026,176.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
3
Item 1. Financial Statements
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
4
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
5
CONSOLIDATED STATEMENTS OF EQUITY (UNAUDITED)
6
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
8
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
24
Item 3. Quantitative and Qualitative Disclosures About Market Risk
35
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
36
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
37
Signatures
38
2
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
Three Months Ended
Nine Months Ended
September 30,
2025
2024
Net sales (Note 2)
$
1,061,227
983,759
3,154,288
2,986,639
Cost of goods sold
671,916
631,681
1,993,982
1,882,349
Gross profit
389,311
352,078
1,160,306
1,104,290
Selling, general & administrative expenses
206,823
186,291
614,349
593,523
Rationalization and asset impairment net charges (Note 6)
5,831
20,227
12,238
51,322
Operating income
176,657
145,560
533,719
459,445
Interest expense, net
13,648
11,974
38,394
31,414
Other income (expense)
2,986
(1,644)
7,464
(935)
Income before income taxes
165,995
131,942
502,789
427,096
Income taxes (Note 11)
43,367
31,186
118,278
101,217
Net income
122,628
100,756
384,511
325,879
Basic earnings per share (Note 3)
2.23
1.78
6.92
5.74
Diluted earnings per share (Note 3)
2.21
1.77
6.86
5.68
Cash dividends declared per share
0.75
0.71
2.25
2.13
See notes to these consolidated financial statements.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Three Months Ended September 30,
Nine Months Ended September 30,
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on derivatives designated and qualifying as cash flow hedges
83
(960)
1,085
(6)
Defined benefit pension plan activity
(685)
2,772
(2,007)
2,851
Currency translation adjustment
(651)
12,267
89,147
(8,824)
Other comprehensive income (loss):
(1,253)
14,079
88,225
(5,979)
Comprehensive income
121,375
114,835
472,736
319,900
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
September 30, 2025
December 31, 2024
(NOTE 1)
ASSETS
Current Assets
Cash and cash equivalents
292,997
377,262
Accounts receivable (less allowance for doubtful accounts of $15,089 in 2025; $12,674 in 2024)
501,538
481,979
Inventories (Note 8)
671,515
544,037
Other current assets
313,922
242,003
Total Current Assets
1,779,972
1,645,281
Property, plant and equipment (less accumulated depreciation of $928,004 in 2025; $865,634 in 2024)
677,257
619,181
Goodwill
887,885
804,927
Other assets
469,991
450,753
TOTAL ASSETS
3,815,105
3,520,142
LIABILITIES AND EQUITY
Current Liabilities
Short-term debt (Note 10)
88,203
110,524
Trade accounts payable
398,721
296,590
Accrued employee compensation and benefits
212,626
104,374
Other current liabilities
339,874
367,314
Total Current Liabilities
1,039,424
878,802
Long-term debt, less current portion (Note 10)
1,150,315
1,150,551
Other liabilities
210,733
163,356
Total Liabilities
2,400,472
2,192,709
Shareholders' Equity
Common shares, without par value - at stated capital amount; authorized 240,000,000 shares; issued 98,581,434 shares in 2025 and 2024; outstanding 55,026,176 shares in 2025 and 56,211,219 in 2024
9,858
Additional paid-in capital
595,644
566,740
Retained earnings
4,247,355
3,993,016
Accumulated other comprehensive loss
(211,910)
(300,135)
Treasury shares, at cost - 43,555,258 shares in 2025 and 42,370,215 shares in 2024
(3,226,314)
(2,942,046)
Total Equity
1,414,633
1,327,433
TOTAL LIABILITIES AND TOTAL EQUITY
CONSOLIDATED STATEMENTS OF EQUITY
Accumulated
Common
Additional
Other
Shares
Paid-In
Retained
Comprehensive
Treasury
Outstanding
Capital
Earnings
Income (Loss)
Total
Balance at December 31, 2024
56,211
118,487
Defined benefit pension plan activity, net of tax
(1,285)
Unrealized gain on derivatives designated and qualifying as cash flow hedges, net of tax
829
Currency translation adjustment, net of tax
29,679
Cash dividends declared – $0.75 per share
(42,073)
Stock-based compensation activity
157
13,105
1,501
14,606
Purchase of shares for treasury
(542)
(106,694)
1,405
(2,217)
(812)
Balance at March 31, 2025
55,826
581,250
4,067,213
(270,912)
(3,047,239)
1,340,170
143,396
(37)
173
60,119
(41,080)
3,985
80
4,065
(648)
(127,130)
999
(1,062)
(63)
Balance at June 30, 2025
55,186
586,234
4,168,467
(210,657)
(3,174,289)
1,379,613
(41,449)
66
6,661
639
7,300
(226)
(52,664)
2,749
(2,291)
458
Balance at September 30, 2025
55,026
Balance at December 31, 2023
56,977
523,357
3,688,038
(229,847)
(2,682,554)
1,308,852
123,415
73
3,715
(13,395)
Cash dividends declared – $0.71 per share
(41,273)
397
34,981
3,647
38,628
(466)
(110,405)
2,101
(3,883)
(1,782)
Balance at March 31, 2024
56,908
560,439
3,766,297
(239,454)
(2,789,312)
1,307,828
101,708
Unrealized loss on derivatives designated and qualifying as cash flow hedges, net of tax
(2,761)
(7,696)
(40,236)
4,646
86
4,732
(242)
(50,415)
(5,758)
5,498
(260)
Balance at June 30, 2024
56,675
559,327
3,833,267
(249,905)
(2,839,641)
1,312,906
Unrealized (loss) on derivatives designated and qualifying as cash flow hedges, net of tax
(40,105)
17
1,863
160
2,023
(267)
(50,392)
(42)
(35)
(77)
Balance at September 30, 2024
56,425
561,148
3,893,883
(235,826)
(2,889,873)
1,339,190
7
CONSOLIDATED STATEMENTS OF CASH FLOWS
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments to reconcile Net income to Net cash provided by operating activities:
Rationalization and asset impairment net charges
1,211
25,919
Depreciation and amortization
72,990
65,095
Deferred income taxes
71,395
(13,340)
Stock-based compensation
15,910
19,503
Pension settlement net charges
—
3,966
Other, net
(3,119)
3,321
Changes in operating assets and liabilities, net of effects from acquisitions:
Decrease in accounts receivable
9,430
36,166
Increase in inventories
(87,222)
(21,696)
Increase in other current assets
(66,050)
(19,911)
Increase (decrease) in trade accounts payable
90,555
(6,888)
Increase in other current liabilities
78,458
67,310
Net change in other assets and liabilities
(1,861)
17,858
NET CASH PROVIDED BY OPERATING ACTIVITIES
566,208
503,182
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures
(84,028)
(85,117)
Acquisition of businesses, net of cash acquired
(136,655)
(252,746)
Proceeds from sale of property, plant and equipment
6,408
2,506
NET CASH USED BY INVESTING ACTIVITIES
(214,275)
(335,357)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings
77,678
5,521
Proceeds from long-term borrowings
550,000
Payments on long-term borrowings
(100,169)
(400,508)
Proceeds from exercise of stock options
10,061
25,880
(286,488)
(211,212)
Cash dividends paid to shareholders
(126,476)
(121,979)
NET CASH USED BY FINANCING ACTIVITIES
(425,394)
(152,298)
Effect of exchange rate changes on Cash and cash equivalents
(10,804)
(5,096)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(84,265)
10,431
Cash and cash equivalents at beginning of period
393,787
CASH AND CASH EQUIVALENTS AT END OF PERIOD
404,218
Dollars in thousands, except per share amounts
NOTE 1 — SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of Lincoln Electric Holdings, Inc. and its wholly-owned and majority-owned subsidiaries for which it has a controlling interest (the “Company”) after elimination of all inter-company accounts, transactions and profits.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, these unaudited consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements. However, in the opinion of management, these unaudited consolidated financial statements contain all the adjustments (consisting of normal recurring accruals) considered necessary to present fairly the financial position, results of operations and cash flows for the interim periods. Operating results for the nine months ended September 30, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025.
The accompanying Condensed Consolidated Balance Sheet at December 31, 2024 has been derived from the audited financial statements at that date, but does not include all of the information and notes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
Certain reclassifications have been made to the prior period amounts to conform to the current period presentation, none of which are material.
New Accounting Pronouncements:
This section provides a description of new accounting pronouncements (“Accounting Standards Updates” or “ASUs”) issued by the Financial Accounting Standards Board (“FASB”) that are applicable to the Company.
The following ASU was adopted as of January 1, 2025:
Standard
Description
ASU No. 2023-09, Income Taxes (Topic 740), issued December 2023.
Requires disclosure of specific categories in rate reconciliation and additional information for reconciling items that meet a quantitative threshold, additional information about income taxes paid, and disclosure of disaggregated income tax information. The Company will adopt the required disclosures for the 2025 annual period.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The Company is currently evaluating the impact on its financial statements of the following ASUs:
ASU No. 2025-06, Intangibles—Goodwill and Other—Internal-Use Software, issued September 2025
Updates requirements for capitalization of internal-use software costs. The amendments are effective for annual periods beginning after December 15, 2027 and interim periods within those annual reporting periods. Early adoption is permitted.
ASU No. 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures, issued November 2024
Requires enhanced disclosures of specified information about certain costs and expenses. The amendments are effective for annual periods beginning January 1, 2027, and interim periods beginning January 1, 2028. Early adoption is permitted.
ASU No. 2023-06, Disclosure Improvements, issued October 2023
Requires amending certain disclosure and presentation requirements for a variety of topics within the ASC. The effective date for each amended topic in the ASC is either the date on which the SEC’s removal of the related disclosure requirement from Regulation S-X or S-K becomes effective, or June 30, 2027, if the SEC has not removed the requirements by that date. Early adoption is prohibited.
NOTE 2 — REVENUE RECOGNITION
The following table presents the Company’s Net sales disaggregated by product line:
Consumables
590,873
514,575
1,706,122
1,588,734
Equipment
470,354
469,184
1,448,166
1,397,905
Net sales
Consumable sales consist of welding, brazing and soldering filler metals. Equipment sales consist of arc welding equipment, welding accessories, wire feeding systems, fume control equipment, plasma and oxy-fuel cutting systems, specialty gas regulators, and education solutions; as well as a comprehensive portfolio of automated solutions for joining, cutting, material handling, module assembly, and end of line testing. Consumable and Equipment products are sold within each of the Company’s operating segments.
Within the Equipment product line, there are certain customer contracts related to automation products that may include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines the standalone selling price based on the prices charged to customers or using expected cost plus margin. Approximately 10% of the Company’s Net sales are recognized over time.
At September 30, 2025, the Company recorded $49,608 related to advance customer payments and $43,427 related to billings in excess of revenue recognized. These contract liabilities are included in Other current liabilities in the Condensed Consolidated Balance Sheets. At December 31, 2024, the balances related to advance customer payments and billings in excess of revenue recognized were $63,473 and $57,960, respectively. Substantially all of the Company’s contract liabilities are recognized within twelve months based on contract duration. The Company records an asset for contracts where it has recognized revenue, but has not yet invoiced the customer for goods or services. At September 30, 2025 and December 31, 2024, the Company recorded $109,078 and $81,781, respectively, related to these contract assets which are included in Other current assets in the Condensed Consolidated Balance Sheets. Contract asset amounts are expected to be billed within the next twelve months.
10
NOTE 3 — EARNINGS PER SHARE
The following table sets forth the computation of basic and diluted earnings per share:
Numerator:
Denominator (shares in 000's):
Basic weighted average shares outstanding
55,097
56,565
55,567
56,749
Effect of dilutive securities - Stock options and awards
477
501
453
600
Diluted weighted average shares outstanding
55,574
57,066
56,020
57,349
Basic earnings per share
Diluted earnings per share
For the three months ended September 30, 2025 and 2024, common shares subject to equity-based awards of 19,416 and 43,250, respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive. For the nine months ended September 30, 2025 and 2024, common shares subject to equity-based awards of 2,089 and 38,665, respectively, were excluded from the computation of diluted earnings per share because the effect of their exercise would be anti-dilutive.
NOTE 4 — ACQUISITIONS
The acquired companies discussed below are accounted for as business combinations and are included in the consolidated financial statements as of the date of acquisition. The acquired companies are not material individually, or in the aggregate, to the actual or pro forma Consolidated Statements of Income or Consolidated Statements of Cash Flows; as such, pro forma information related to these acquisitions has not been presented.
On April 1, 2025, the Company acquired a 35% ownership interest of Alloy Steel Australia (Int) Pty Ltd. (“Alloy Steel”), a privately held manufacturer of maintenance and repair solutions headquartered in Perth, Australia. On August 1, 2025, the Company acquired the remaining 65% ownership of Alloy Steel. In total, the Company acquired 100% ownership of Alloy Steel for a total purchase price of $131,238, net of cash acquired and certain debt-like items. Alloy Steel supplies proprietary technology, engineering services and digital monitoring to the mining sector.
On July 30, 2024, the Company acquired 100% ownership of Vanair Manufacturing, LLC (“Vanair”), a privately held, Michigan City, Indiana-based, manufacturer for a total purchase price of $108,651, net of cash acquired and certain debt-like items. Vanair offers a comprehensive portfolio of mobile power solutions, including vehicle-mounted compressors, generators, welders, hydraulics, chargers/boosters and electrified power equipment.
On June 3, 2024, the Company acquired 100% ownership of Inrotech A/S (“Inrotech”), a privately held automation system integration and technology firm headquartered in Odense, Denmark. The purchase price was $42,352, net of cash acquired. Inrotech specializes in automated welding systems that are differentiated by proprietary adaptive intelligence software and computer vision which guides and optimizes the welding process without the need for programming or the use of computer aided design files. The state-of-the-art vision-based technology is used in the shipbuilding, energy, and heavy industry sectors, where welding accessibility can be challenging for traditional automated systems, but precision and quality are mission critical.
On April 1, 2024, the Company acquired 100% ownership of Superior Controls, LLC (“RedViking”), a privately held automation system integrator based in Plymouth, Michigan. The purchase price was $107,447, net of cash acquired.
11
RedViking specializes in the development and integration of state-of-the-art autonomous guided vehicles and mobile robots, custom assembly and dynamic test systems, and proprietary manufacturing execution system software.
The Company recognized acquisition costs of $452 and $1,683 during the three and nine months ended September 30, 2025, respectively, and $610 and $4,551 during the three and nine months ended September 30, 2024, respectively. Acquisition costs are included in Selling, general & administrative expenses on the Consolidated Statements of Income and are expensed as incurred.
NOTE 5 — SEGMENT INFORMATION
The Company’s primary business is the design, development and manufacture of arc welding products, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment. The Company also has a leading global position in brazing and soldering alloys.
The Company’s products include arc welding, brazing and soldering filler metals (consumables), arc welding equipment, plasma and oxyfuel cutting systems, wire feeding systems, fume control equipment, welding accessories, specialty gas regulators, and education solutions; as well as a comprehensive portfolio of automated solutions for joining, cutting, material handling, module assembly, and end of line testing.
The Company has aligned its organizational and leadership structure into three operating segments to support growth strategies and enhance the utilization of the Company’s worldwide resources and global sourcing initiatives. The operating segments consist of Americas Welding, International Welding and The Harris Products Group. The Americas Welding segment includes welding operations in North and South America. The International Welding segment includes welding operations in Europe, Africa, Asia and Australia. The Harris Products Group includes the Company’s global cutting, soldering and brazing businesses, specialty gas equipment, as well as its retail business in the United States.
Segment performance is measured and resources are allocated based on a number of factors, the primary measure being the adjusted earnings before interest and income taxes ("Adjusted EBIT") profit measure. Adjusted EBIT is defined as Operating income plus Other income (expense), adjusted for special items as determined by management such as the impact of rationalization activities, certain asset impairment charges and gains or losses on disposals of assets.
The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM uses segment Adjusted EBIT to allocate resources for each segment predominantly in establishing the Company’s long-term strategy and in developing the annual budget. The CODM considers actual performance using Adjusted EBIT when making decisions about allocating capital and resources to the segments.
12
The following tables present Adjusted EBIT by segment and other segment information:
The Harris
Americas
International
Products
Welding
Group
Three Months Ended September 30, 2025
691,794
219,629
149,804
Inter-segment sales
30,058
9,830
3,441
43,329
721,852
229,459
153,245
1,104,556
Reconciliation to Consolidated Net sales
Elimination of inter-segment sales
(43,329)
Cost of goods sold (1)
438,400
164,747
111,126
Other segment expenses (1) (3)
156,212
41,653
14,357
Addback: Special items charge (1)
(4,375)
(2,762)
(316)
Segment Adjusted EBIT
131,615
25,821
28,078
185,514
Other Segment Information
Total assets
2,454,340
1,240,393
438,659
4,133,392
(27,038)
(3,697)
(902)
(31,637)
17,176
6,119
2,576
25,871
Three Months Ended September 30, 2024
637,026
216,224
130,509
30,845
7,371
3,155
41,371
667,871
223,595
133,664
1,025,130
(41,371)
Cost of goods sold (2)
410,715
164,274
98,093
Other segment expenses (2) (3)
154,998
42,146
14,881
Addback: Special items charge (2)
(23,357)
(2,926)
(1,269)
125,515
20,101
21,959
167,575
2,520,357
1,087,973
361,292
3,969,622
(28,748)
(6,208)
(765)
(35,721)
14,751
5,551
2,538
22,840
13
Nine Months Ended September 30, 2025
2,041,631
671,514
441,143
103,821
24,303
12,535
140,659
2,145,452
695,817
453,678
3,294,947
(140,659)
1,305,298
498,475
327,074
453,841
123,684
42,893
(7,415)
(5,725)
(580)
393,728
79,383
84,291
557,402
(68,776)
(11,911)
(3,340)
50,429
16,982
7,837
75,248
Nine Months Ended September 30, 2024
1,910,061
690,743
385,835
98,624
24,628
9,520
132,772
2,008,685
715,371
395,355
3,119,411
(132,772)
1,210,212
517,219
285,936
423,919
161,795
45,324
(23,711)
(37,230)
(2,666)
398,265
73,587
66,761
538,613
(68,879)
(13,500)
(2,738)
42,095
16,061
7,528
65,684
14
The following table presents reconciliations of segment information to the Company’s consolidated totals:
Reconciliation of Segment Adjusted EBIT to Consolidated Income before income taxes
Addback: Segment special items charge
(7,453)
(27,552)
(13,720)
(63,607)
Corporate special items charge (1)
(452)
(610)
(1,683)
(4,656)
Elimination of inter-segment profit
(972)
31
(3,794)
(1,753)
Unallocated corporate expenses, net
3,006
4,472
2,978
(10,087)
Interest income
2,108
5,418
7,301
Interest expense
(15,149)
(14,082)
(43,812)
(38,715)
Consolidated Income before income taxes
(1) Corporate special items primarily include acquisition transaction costs.
Reconciliation of Other Segment Information to Consolidated Information
Segment totals
Adjustments
Consolidated totals
(1,127)
(195)
(2,258)
(589)
24,744
22,645
Reconciliation of Segment Assets to Consolidated Assets
Total segment assets
3,813,383
Corporate assets
36,301
20,745
LIFO reserve not allocated to segments
(135,721)
(120,633)
Eliminations
(218,867)
(193,353)
Total consolidated assets
NOTE 6 — RATIONALIZATION AND ASSET IMPAIRMENTS
The Company has rationalization plans within all three of its reportable segments. The plans impacted headcount and included the consolidation of manufacturing facilities to better align with the cost structure, economic conditions and operating needs of the business. As a result of these plans, in the nine months ended September 30, 2025, the Company recorded Rationalization and asset impairment net charges of $7,190 in Americas Welding, $4,468 in International Welding and $580 in The Harris Products Group. In the nine months ended September 30, 2024, the Company recorded Rationalization and asset impairment net charges of $32,030 in International Welding, of which $22,566 is associated with the disposal of the Company’s Russian entity. The Company also incurred Rationalization and asset impairment net charges of $16,521 in Americas Welding and $2,666 in The Harris Products Group in the same period.
At September 30, 2025 and December 31, 2024, rationalization liabilities of $5,731 and $14,146, respectively, were recognized in Other current liabilities in the Company’s Condensed Consolidated Balance Sheet. The Company does not anticipate significant additional charges related to the completion of these plans.
The Company believes the rationalization actions will positively impact future results of operations and will not have a material effect on liquidity and sources and uses of capital. The Company continues to evaluate its cost structure and additional rationalization actions may result in charges in future periods.
15
The following table summarizes the activity related to rationalization liabilities for the nine months ended September 30, 2025:
The Harris Products
Consolidated
5,628
7,562
956
14,146
Payments and other adjustments
(11,630)
(6,380)
(1,432)
(19,442)
Charged to expense
7,190
3,257
580
11,027
1,188
4,439
104
5,731
NOTE 7 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ("AOCI")
The following tables set forth the total changes in AOCI by component, net of taxes:
Unrealized gain
(loss) on derivatives
designated and
Defined benefit
Currency
qualifying as cash
pension plan
translation
flow hedges
activity
adjustment
18,257
(2,370)
(226,544)
Other comprehensive income (loss) before reclassification
1,300
649
Amounts reclassified from AOCI
(1,217)
(1,902)
Net current-period other comprehensive income (loss)
18,340
(3,055)
(227,195)
17,490
(1,917)
(265,478)
Other comprehensive (loss) income before reclassification
(1,332)
10,935
372
3,144
Net current-period other comprehensive (loss) income
16,530
855
(253,211)
17,255
(1,048)
(316,342)
Other comprehensive income before reclassification
3,405
92,552
(2,320)
(4,327)
16
16,536
(1,996)
(244,387)
1,021
(7,803)
(1,027)
1,824
NOTE 8 — INVENTORIES
Inventories in the Condensed Consolidated Balance Sheets are comprised of the following components:
Raw materials
170,509
153,596
Work-in-process
141,357
123,406
Finished goods
359,649
267,035
At both September 30, 2025 and December 31, 2024, approximately 35% of total inventories were valued using the last-in, first-out ("LIFO") method. The excess of current cost over LIFO cost was $135,721 and $120,633 at September 30, 2025 and December 31, 2024, respectively.
NOTE 9 — LEASES
The table below summarizes the right-of-use assets and lease liabilities in the Company’s Condensed Consolidated Balance sheets:
Operating Leases
Balance Sheet Classification
Right-of-use assets
55,553
54,276
Current liabilities
13,829
13,110
Noncurrent liabilities
42,352
42,124
Total lease liabilities
56,181
55,234
Total lease expense, which is included in Cost of goods sold and Selling, general & administrative expenses in the Company’s Consolidated Statements of Income, was $7,964 and $20,298 in the three and nine months ended September 30, 2025 and $5,657 and $18,390 in the three and nine months ended September 30, 2024, respectively. Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended September 30, 2025, respectively, were $4,340 and $10,882 and are included in Net cash provided by operating activities in the Company’s Consolidated Statements of Cash Flows. Cash paid for amounts included in the measurement of lease liabilities for the three and nine months ended September 30, 2024, respectively, were $3,771 and $11,918 and are included in Net cash provided by operating activities in the Company’s Consolidated Statements of Cash Flows. Right-of-use assets obtained in exchange for operating lease liabilities were $6,981 and $11,634 during the three and nine months ended September 30, 2025 and $5,426 and $16,043 during the three and nine months ended September 30, 2024, respectively.
The total future minimum lease payments for noncancelable operating leases were as follows:
5,564
2026
15,010
2027
12,013
2028
10,085
2029
7,259
After 2029
14,293
Total lease payments
64,224
Less: Imputed interest
8,043
Operating lease liabilities
As of September 30, 2025 the weighted average remaining lease term is 6.2 years and the weighted average discount rate used to determine the operating lease liability is 3.7%.
NOTE 10 — DEBT
At September 30, 2025 and December 31, 2024, debt consisted of the following:
Long-term debt
Interest Rate
Senior Unsecured Notes
2015 Notes - Series A due August 20, 2025(1)
3.15
%
100,000
2015 Notes - Series B due August 20, 2030
3.35
2015 Notes - Series C due April 1, 2035
3.61
50,000
2015 Notes - Series D due April 1, 2045
4.02
2016 Notes - Series A due October 20, 2028
2.75
2016 Notes - Series B due October 20, 2033
3.03
2016 Notes - Series C due October 20, 2037
3.27
2016 Notes - Series D due October 20, 2041
3.52
2024 Notes - Series A due August 22, 2029
5.55
75,000
2024 Notes - Series B due August 22, 2031
5.62
2024 Notes - Series C due June 20, 2034
400,000
Other borrowings due through 2030
Variable(2)
1,150,010
1,250,010
Plus interest rate swap adjustment
2,847
3,355
Less current portion(1)
100,004
Less debt issuance costs
2,810
Long-term debt, less current portion
Short-term debt
Amounts due to banks
Variable(3)
88,199
10,520
Current portion long-term debt(1)
Total short-term debt
Total debt
1,238,518
1,261,075
18
As of September 30, 2025, the Company’s total weighted average effective interest rate and remaining weighted average tenure of the senior unsecured notes is 4.16%, including the impact from terminated swap agreements, and 8.9 years, respectively. The senior unsecured notes contain certain affirmative and negative covenants. As of September 30, 2025, the Company was in compliance with all of its debt covenants relating to the senior unsecured notes.
On August 20, 2025, the Company repaid its $100,000 2015 Series A notes in full at maturity.
Revolving Credit Agreements
On June 20, 2024, the Company entered into a $1 billion revolving credit facility, which may be increased, subject to certain conditions including the consent of its lenders, by an additional amount up to $300,000. The revolving credit facility matures on June 20, 2029. The revolving credit facility will initially bear interest on outstanding borrowings at a per annum rate equal to secured overnight finance rate (“SOFR”) plus 1.10% and could fluctuate based on the Company’s total net leverage ratio at a spread ranging from SOFR plus 1.10% to SOFR plus 1.60%. The financial covenants consist of a maximum net leverage ratio of 3.5x EBITDA and a minimum interest coverage ratio of 2.5x EBITDA. The revolving credit facility contains customary representations and warranties, as well as customary affirmative, negative and financial covenants for credit facilities of this type (subject to negotiated baskets and exceptions), including limitations on the Company and its subsidiaries with respect to liens, investments, distributions, mergers and acquisitions, dispositions of assets and transactions with affiliates. As of September 30, 2025, the Company was in compliance with all of its covenants. The Company had borrowings under the revolving credit facility of $85,000 as of September 30, 2025.
The Company has other lines of credit and debt agreements totaling $31,386. As of September 30, 2025, the Company was in compliance with all of its covenants and had outstanding debt under short-term lines of credit of $3,199.
Fair Value of Debt
At September 30, 2025 and December 31, 2024, the fair value of long-term debt, including the current portion, was approximately $1,124,349 and $1,184,313, respectively. The approximate fair value of the Company’s long-term debt, including current maturities, was based on a valuation model using Level 2 observable inputs using available market information and methodologies requiring judgment. The carrying value of this debt at such dates was $1,150,319 and $1,250,555, respectively. Since judgment is required in interpreting market information, the fair value of the debt is not necessarily the amount which could be realized in a current market exchange.
NOTE 11 — INCOME TAXES
The One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States on July 4, 2025. Many of the tax provisions within the OBBBA are designed to accelerate tax deductions and could lead to lower tax payments. The OBBBA has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027.
During the third quarter of 2025, the Company recognized tax expense of approximately $8,800 related to the cumulative impact of the OBBBA provisions to date. This tax expense primarily relates to restoration of immediate expensing for current and previously capitalized domestic research and development expenditures and the reinstatement of 100% bonus depreciation on qualified property both of which impact international tax provisions regarding foreign-derived intangible income. While the ultimate impact the OBBBA will have on the Company’s financial position, results of operations, and cash flows remains to be determined, the Company expects to realize lower tax payments in the current year.
19
The Company recognized $118,278 of tax expense on pre-tax income of $502,789, resulting in an effective income tax rate of 23.5% for the nine months ended September 30, 2025. The effective income tax rate was 23.7% for the nine months ended September 30, 2024. The effective tax rate was lower for the nine months ended September 30, 2025, as compared with the same period in 2024, primarily due to the mix of earnings and timing of discrete tax items partially offset by the impact of the OBBBA as discussed above.
NOTE 12 — DERIVATIVES
The Company uses derivative instruments to manage exposures to currency exchange rates, interest rates and commodity prices arising in the normal course of business. Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable. Hedge ineffectiveness was immaterial in the three and nine months ended September 30, 2025 and 2024.
The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. None of the concentrations of risk with any individual counterparty was considered significant at September 30, 2025. The Company does not expect any counterparties to fail to meet their obligations.
Cash Flow Hedges
Certain foreign currency forward contracts are qualified and designated as cash flow hedges. The dollar equivalent gross notional amount of these short-term contracts was $91,061 and $96,444 at September 30, 2025 and December 31, 2024, respectively.
The Company had interest rate forward starting swap agreements that were qualified and designated as cash flow hedges that were terminated during 2024. Upon termination of the contracts in 2024, the Company had a gain of $25,852 recorded in AOCI that will be amortized to Interest expense, net over the life of the associated debt.
Net Investment Hedges
The Company has foreign currency forward contracts and zero-cost collar contracts that qualify and are designated as net investment hedges. The dollar equivalent gross notional amount of the foreign currency forward contracts and zero-cost collar contracts were $376,744 and $319,450 at September 30, 2025 and December 31, 2024, respectively.
Derivatives Not Designated as Hedging Instruments
The Company has certain foreign exchange forward contracts that are not designated as hedges. These derivatives are held as economic hedges of certain balance sheet exposures. The dollar equivalent gross notional amount of these contracts was $479,502 and $421,754 at September 30, 2025 and December 31, 2024, respectively.
20
Fair values of derivative instruments in the Company’s Condensed Consolidated Balance Sheets consisted of the following:
Current
Derivatives by hedge designation
Assets
Liabilities
Designated as hedging instruments:
Foreign exchange contracts
2,745
423
1,663
2,972
Net investment contracts
534
26,280
10,276
Not designated as hedging instruments:
417
1,186
1,560
4,251
Total derivatives
3,696
27,889
13,499
7,223
The effects of undesignated derivative instruments on the Company’s Consolidated Statements of Income consisted of the following:
Classification of gain (loss)
Not designated as hedges:
113
3,108
22,071
(3,663)
The effects of designated hedges on AOCI consisted of the following:
Total gain (loss) recognized in AOCI, net of tax
1,517
Forward starting swap agreements
16,823
18,067
(3,303)
20,403
The Company expects a gain of $1,517 related to existing contracts to be reclassified from AOCI, net of tax, to earnings over the next 12 months as the hedged transactions are realized.
The effects of designated hedges on the Company’s Consolidated Statements of Income consisted of the following:
Gain (loss) recognized in the
Derivative type
Consolidated Statements of Income:
Sales
1,387
(630)
1,052
657
(219)
40
324
524
689
2,066
706
21
NOTE 13 — FAIR VALUE
The following table provides a summary of assets and liabilities as of September 30, 2025, measured at fair value on a recurring basis:
Quoted Prices in
Active Markets for
Identical Assets or
Significant Other
Significant
Balance as of
Observable Inputs
Unobservable
(Level 1)
(Level 2)
Inputs (Level 3)
Assets:
3,162
Pension surplus
19,059
22,755
Liabilities:
1,609
Deferred compensation
35,454
Total liabilities
63,343
The following table provides a summary of assets and liabilities as of December 31, 2024, measured at fair value on a recurring basis:
3,223
27,059
40,558
55,425
62,648
The fair value of the Company’s pension surplus assets are based on quoted market prices in active markets and are included in the Level 1 fair value hierarchy. The pension surplus assets were invested in money market and short-term duration bond funds at both September 30, 2025 and December 31, 2024.
The Company’s derivative contracts are valued at fair value using the market approach. The Company measures the fair value of foreign exchange contracts and net investment contracts using Level 2 inputs based on observable spot and forward rates in active markets.
The deferred compensation liability is the Company’s obligation under its executive deferred compensation plan. The Company measures the fair value of the liability using the market values of the participants’ underlying investment fund elections.
22
The fair value of Cash and cash equivalents, Accounts receivable, Short-term debt excluding the current portion of Long-term debt and Trade accounts payable approximated book value due to the short-term nature of these instruments at both September 30, 2025 and December 31, 2024.
The Company has various financial instruments, including cash and cash equivalents, short and long-term debt and forward contracts. While these financial instruments are subject to concentrations of credit risk, the Company has minimized this risk by entering into arrangements with a number of major banks and financial institutions and investing in several high-quality instruments. The Company does not expect any counterparties to fail to meet their obligations.
NOTE 14 — SUPPLIER FINANCING PROGRAM
The Company’s suppliers, at the supplier’s sole discretion, are able to factor receivables due from the Company to a financial institution on terms directly negotiated with the financial institution without affecting the Company’s balance sheet classification of the corresponding payable. The Company pays the financial institution the stated amount of the confirmed invoices from its designated suppliers on the original maturity dates of the invoices. At September 30, 2025 and December 31, 2024, Trade accounts payable included $36,599 and $29,164, respectively, payable to suppliers that have elected to participate in the supplier financing program.
23
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands, except per share amounts)
This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with the Company’s unaudited consolidated financial statements and other financial information included elsewhere in this Quarterly Report on Form 10-Q.
General
The Company is the world’s largest designer and manufacturer of arc welding and cutting products, manufacturing a broad line of arc welding equipment, consumable welding products and other welding and cutting products. Welding products include arc welding power sources, computer numerical control and plasma cutters, wire feeding systems, robotic welding packages, integrated automation systems, fume extraction equipment, consumable electrodes, fluxes, welding accessories and specialty welding consumables and fabrication. The Company’s product offering also includes oxy-fuel cutting systems and regulators and torches used in oxy-fuel welding, cutting and brazing. In addition, the Company has a leading global position in the brazing and soldering alloys market.
The Company’s products are sold globally. In the Americas, products are sold principally through industrial distributors, retailers and also directly to users of welding products. Outside of the Americas, the Company has an international sales organization comprised of Company employees and agents who sell products from the Company’s various manufacturing sites to distributors and product users.
The Company’s business units are aligned into three operating segments. The operating segments consist of Americas Welding, International Welding and The Harris Products Group. The Americas Welding segment includes welding operations in North and South America. The International Welding segment includes welding operations in Europe, Africa, Asia and Australia. The Harris Products Group includes the Company’s global oxy-fuel cutting, soldering and brazing businesses as well as its retail business in the United States.
In 2025, the U.S. government announced a series of tariffs on imported goods into the U.S., which prompted retaliatory actions from some of its trading partners. The Company has taken actions to address the impact of these trade policies and while the Company cannot predict the ultimate impact on its business, the Company will continue to monitor evolving trade negotiations to determine if additional measures are warranted.
Results of Operations
The following table shows the Company’s results of operations:
Favorable (Unfavorable)
2025 vs. 2024
Amount
% of Sales
77,468
7.9
(40,235)
(6.4)
36.7
35.8
37,233
10.6
19.5
18.9
(20,532)
(11.0)
0.5
2.1
14,396
71.2
16.6
14.8
31,097
21.4
(1,674)
(14.0)
4,630
281.6
15.6
13.4
34,053
25.8
Income taxes
(12,181)
(39.1)
Effective tax rate
26.1
23.6
(2.5)
11.6
10.2
21,872
21.7
0.44
24.9
167,649
5.6
(111,633)
(5.9)
36.8
37.0
56,016
5.1
19.9
(20,826)
(3.5)
0.4
1.7
39,084
76.2
16.9
15.4
74,274
16.2
(6,980)
(22.2)
8,399
898.3
15.9
14.3
75,693
17.7
(17,061)
(16.9)
23.5
23.7
0.2
12.2
10.9
58,632
18.0
1.18
20.8
25
Net Sales:
The following table summarizes the impact of volume, acquisitions, price and foreign currency exchange rates on Net sales on a consolidated basis:
Change in Net Sales due to:
Net Sales
Foreign
Volume
Price
Acquisitions
Exchange
Lincoln Electric Holdings, Inc.
(21,187)
76,410
16,710
5,535
% Change
(2.2)
7.8
0.6
(82,635)
155,116
95,359
(191)
(2.8)
5.2
3.2
Net sales increased for the three and nine months ended September 30, 2025 due to an increase in organic sales and a benefit from acquisitions. The increase in organic sales for both the three and nine months ended September 30, 2025 is driven by an increase in pricing primarily due to higher input costs, partially offset by lower volumes.
Gross Profit:
Gross profit as a percentage of sales increased 0.9% for the three months ended September 30, 2025 as compared to the same 2024 period, driven by effective cost management and favorable mix. Gross profit as a percentage of sales decreased 0.2% for the nine months ended September 30, 2025 as compared to the same 2024 period, driven by lower volumes partially offset by effective cost management. The three and nine months ended September 30, 2025 includes last-in, first-out (“LIFO”) charges of $4,804 and $15,088, respectively, which are primarily due to rising input costs. This compares with a benefit of $1,196 and $3,971 in the comparable 2024 periods.
Selling, General & Administrative Expenses:
Selling, general and administrative expenses increased in the three and nine months ended September 30, 2025 as compared to the same 2024 periods, primarily due to increases in employee costs and acquisitions, partially offset by effective cost management.
Operating Income:
Operating income as a percentage of sales was 16.6% for the three months ended September 30, 2025 as compared to 14.8% in the prior year period. Excluding special items, Operating income as a percentage of sales was 17.4% for the three months ended September 30, 2025 as compared to 17.3% in the prior year period. Operating income as a percentage of sales was 16.9% for the nine months ended September 30, 2025 as compared to 15.4% in the prior year period. Excluding special items, Operating income as a percentage of sales, was 17.4% for both comparable periods. Refer to explanations above for additional details. Also refer to Non-GAAP Financial Measures for a reconciliation of Adjusted operating income.
Rationalization and Asset Impairment Net Charges:
Charges in 2025 and 2024 relate to rationalization plans within all three reportable segments. Charges in 2024 include the impact of the Company’s disposition of its Russian entity. Refer to Note 6 to the consolidated financial statements for further information on the Company’s rationalization plans.
26
Income Taxes:
The effective tax rate was higher for the three months ended September 30, 2025 as compared to the same 2024 period, primarily driven by the impact of the One Big Beautiful Bill Act (“OBBBA”), as discussed in Note 11, partially offset by the mix of earnings and timing of discrete tax items.
Segment Results
The following table presents components of sales by segment:
Volume (1)
Price (2)
Acquisitions (3)
Exchange (4)
Operating Segments
Americas Welding
(15,011)
60,885
8,842
52
International Welding
(9,174)
93
7,868
4,618
The Harris Products Group
2,998
15,432
865
(2.4)
9.6
1.4
8.6
(4.2)
3.7
1.6
2.3
11.8
0.7
(62,097)
116,519
86,361
(9,213)
(38,994)
1,773
8,998
8,994
18,456
36,824
28
(3.3)
6.1
4.5
(0.4)
6.9
(5.6)
0.3
1.3
1.2
4.8
9.5
Segment performance is measured and resources are allocated based on a number of factors, the primary measure being the Adjusted EBIT profit measure. Adjusted EBIT is defined as Operating income plus Other income (expense), adjusted for special items as determined by management such as the impact of rationalization activities, certain asset impairment charges and gains or losses on disposals of assets.
27
The following table presents Adjusted EBIT by segment:
Americas Welding:
54,768
(787)
(2.6)
Total Sales
53,981
8.1
Adjusted EBIT (1) (4)
6,100
4.9
As a percent of total sales (1)
18.2
18.8
(0.6)
International Welding:
2,459
33.4
5,864
2.6
Adjusted EBIT (2) (5)
5,720
28.5
As a percent of total sales (2)
11.3
9.0
The Harris Products Group:
19,295
286
9.1
19,581
14.6
Adjusted EBIT (3) (6)
27.9
As a percent of total sales (3)
18.3
16.4
1.9
Corporate / Eliminations:
(1,958)
(4.7)
Adjusted EBIT (7)
2,034
4,503
(2,469)
(54.8)
Consolidated:
As a percent of total sales
Adjusted EBIT (8)
187,548
172,078
15,470
As a percent of sales
17.5
131,570
5,197
5.3
136,767
6.8
(4,537)
(1.1)
18.4
19.8
(1.4)
(19,229)
(325)
(1.3)
(19,554)
(2.7)
5,796
11.4
10.3
1.1
55,308
3,015
31.7
58,323
17,530
26.3
18.6
(7,887)
(816)
(11,840)
11,024
93.1
556,586
526,773
29,813
5.7
17.6
(0.0)
29
Non-GAAP Financial Measures
The Company reviews Adjusted operating income, Adjusted net income, Adjusted EBIT, Adjusted effective tax rate, Adjusted diluted earnings per share, Adjusted return on invested capital (“Adjusted ROIC”), Adjusted net operating profit after taxes, Cash conversion and Organic sales, all non-GAAP financial measures, in assessing and evaluating the Company’s underlying operating performance. These non-GAAP financial measures exclude the impact of special items on the Company’s reported financial results. Non-GAAP financial measures should be read in conjunction with the generally accepted accounting principles in the United States ("GAAP") financial measures, as non-GAAP measures are a supplement to, and not a replacement for, GAAP financial measures.
30
The following table presents the reconciliations of Operating income as reported to Adjusted operating income, Net income as reported to Adjusted net income and Adjusted EBIT, Effective tax rate as reported to Adjusted effective tax rate and Diluted earnings per share as reported to Adjusted diluted earnings per share:
Operating income as reported
Special items (pre-tax):
Rationalization and asset impairment charges (2)
Acquisition transaction costs (3)
452
610
1,683
4,551
Amortization of step up in value of acquired inventories (5)
1,622
3,359
1,482
3,474
Adjusted operating income (1)
184,562
169,756
549,122
518,792
As a percentage of net sales
17.4
17.3
Net income as reported
Special items:
Pension settlement charges (4)
Loss on asset disposal (6)
4,950
Tax effect of Special items (7) (8)
6,685
(6,550)
4,772
(8,858)
Adjusted net income
137,218
122,368
404,686
385,284
Income taxes as reported
(6,685)
6,550
(4,772)
8,858
Adjusted EBIT (1)
Effective tax rate as reported
Net special item tax impact (8)
(5.0)
(1.6)
(1.5)
Adjusted effective tax rate (1)
21.1
21.9
22.2
Diluted earnings per share as reported
Special items per share
0.26
0.37
0.36
1.04
Adjusted diluted earnings per share (1)
2.47
2.14
7.22
6.72
Liquidity and Capital Resources
Overview
The Company’s primary sources of liquidity are operating cash flows and revolving credit facilities. As of September 30, 2025, the Company had $292,997 of cash and cash equivalents on hand and $88,199 of outstanding borrowings under its $1,031,386 revolving credit facilities.
The Company’s capital allocation priorities include internal investment to support existing operations and organic growth, investment in acquisitions to grow the business and then returning capital to shareholders through dividends and share repurchases.
The Company’s cash flow from operations can be cyclical. In assessing liquidity, the Company reviews working capital measurements to define areas for improvement. Management anticipates the Company will be able to satisfy cash requirements for its ongoing businesses for the foreseeable future primarily with cash generated by operations, existing cash balances, borrowings under its existing credit facilities and raising debt in capital markets.
The Company continues to expand globally and periodically consider acquisitions that would involve significant investments. The Company can fund its global expansion plans with operational cash flow, but a significant acquisition may require access to capital markets, in particular, the long-term debt market, as well as the syndicated bank loan market. The Company’s financing strategy is to fund itself at the lowest after-tax cost of funding. Where possible, the Company utilizes operational cash flows and raises capital in the most efficient market, usually the United States, and then lends funds to the specific subsidiary needing or requiring funding. If additional acquisitions providing appropriate financial benefits become available, additional expenditures may be made.
Cash Flow
The following table reflects changes in key cash flow measures:
$ Change
Cash provided by operating activities (1)
63,026
Cash used by investing activities
121,082
1,089
116,091
Cash used by financing activities (2)
(273,096)
72,157
(550,000)
300,339
(75,276)
(4,497)
(Decrease) increase in Cash and cash equivalents
(94,696)
As of September 30, 2025, the Company had cash of $292,997, of which $272,870 was held by international subsidiaries.
32
In October 2025, the Company paid a cash dividend of $0.75 per share, or $41,270, to shareholders of record on September 30, 2025.
The Company currently anticipates capital expenditures of $100,000 to $120,000 in 2025. Anticipated capital expenditures include investments to increase capacity, improve operational effectiveness and for general maintenance. Management critically evaluates all proposed capital expenditures and expects each project to increase efficiency, reduce costs, support sales growth or improve the overall safety and environmental conditions of the Company’s facilities.
On June 20, 2024, the Company entered into a $1 billion revolving credit facility. The revolving credit facility matures on June 20, 2029. As of September 30, 2025, the Company had $915,000 of availability under the revolving credit facility. Additionally, the Company has other lines of credit with total availability of $28,187 as of September 30, 2025. Refer to Note 10 for further information on our revolving lines of credit.
Working Capital Ratios
September 30, 2024
Average operating working capital to Net sales (1)
19.1
Days sales in Inventories
127.1
106.0
123.4
Days sales in Accounts receivable
46.9
51.4
Average days in Trade accounts payable
60.8
45.8
52.3
Stock Repurchase Program
On February 12, 2020, the Company’s Board authorized a share repurchase program for up to 10 million shares of the Company’s common stock. As of September 30, 2025, there were 5.3 million shares available under the authorization. The Company is not obligated to make any repurchases.
Rationalization and Asset Impairments
Refer to Note 6 to the consolidated financial statements for a discussion of the Company’s rationalization plans. The Company believes the rationalization actions will positively impact future results of operations and will not have a material effect on liquidity and sources and uses of capital.
Refer to Note 4 to the consolidated financial statements for a discussion of the Company’s recent acquisitions.
Return on Invested Capital
The Company reviews ROIC in assessing and evaluating the Company’s underlying operating performance. As discussed in the Non-GAAP Financial Measures section above, Adjusted ROIC is a non-GAAP financial measure that the Company believes is a meaningful metric to investors in evaluating the Company’s financial performance. The calculation may be different than the method used by other companies to calculate ROIC. Adjusted ROIC is defined as rolling 12 months of Adjusted net income excluding tax-effected interest income and expense divided by invested capital. Invested capital is defined as total debt, which includes Short-term debt and Long-term debt, less current portions, plus Total equity.
33
The following table presents the reconciliations of ROIC and Adjusted ROIC to net income:
\
Twelve Months Ended September 30,
524,740
482,523
Plus: Interest expense (after-tax)
43,488
37,665
Less: Interest income (after-tax)
6,181
7,845
Net operating profit after taxes
562,047
512,343
16,776
29,390
Acquisition transaction costs
4,174
4,554
Pension settlement net (gains) charges
(174)
4,811
Amortization of step up in value of acquired inventories
3,034
3,471
Loss on asset disposal
Tax effect of Special items (1)
2,117
(2,413)
Adjusted net operating profit after taxes
587,974
557,106
Invested Capital
111,993
1,150,616
1,262,609
Total equity
Invested capital
2,653,151
2,601,799
Return on invested capital as reported
21.2
19.7
Adjusted return on invested capital
New Accounting Pronouncements
Refer to Note 1 to the consolidated financial statements for a discussion of new accounting pronouncements.
Forward-looking Statements
The Company’s expectations and beliefs concerning the future contained in this report are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management’s current expectations and involve a number of risks and uncertainties. Forward-looking statements generally can be identified by the use of words such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “forecast,” “guidance” or words of similar meaning. Actual results may differ materially from such statements due to a variety of factors that could adversely affect the Company’s operating results. The factors include, but are not limited to: general economic, financial and market conditions; the effectiveness of commercial and operating initiatives; the effectiveness of information systems and cybersecurity systems; presence of artificial intelligence technologies; completion of planned divestitures; interest rates; disruptions, uncertainty or volatility in the credit markets that may limit our access to capital; currency exchange rates and devaluations; adverse outcome of pending or potential litigation; actual costs of the Company’s rationalization plans; possible acquisitions, including the Company’s ability to successfully integrate acquisitions; market risks and price fluctuations related to the purchase of commodities and energy; global regulatory complexity; the effects of changes in tax law, including any changes from the new legislation implemented in the OBBBA; tariff rates in the countries where the Company conducts business; and the possible effects of events beyond
34
our control, including but not limited to, the ongoing geopolitical conflicts, political unrest, acts of terror, natural disasters and pandemics on the Company or its customers, suppliers and the economy in general. For additional discussion, see “Item 1A. Risk Factors” presented herein, as well as in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in the Company’s exposure to market risk since December 31, 2024. See “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company carried out an evaluation under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2025.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended September 30, 2025 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 1. LEGAL PROCEEDINGS
The Company is subject, from time to time, to a variety of civil and administrative proceedings arising out of its normal operations, including, without limitation, product liability claims, regulatory claims and health, safety and environmental claims. Among such proceedings are the cases described below.
As of September 30, 2025, the Company was a co-defendant in cases alleging asbestos induced illness involving claims by approximately 1,233 plaintiffs, which is a net decrease of 3 claims from those previously reported. In each instance, the Company is one of a large number of defendants. The asbestos claimants seek compensatory and punitive damages, in most cases for unspecified sums. Since January 1, 1995, the Company has been a co-defendant in asbestos cases that have been resolved as follows: 57,155 of those claims were dismissed, 23 were tried to defense verdicts, 7 were tried to plaintiff verdicts (which were reversed or resolved after appeal), 1 was resolved by agreement for an immaterial amount and 1,021 were decided in favor of the Company following summary judgment motions.
ITEM 1A. RISK FACTORS
In addition to the other information set forth in this Quarterly Report on Form 10-Q, the reader should carefully consider the factors discussed in “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer purchases of its common shares during the third quarter of 2025 were as follows:
Total Number of
Maximum Number
Repurchased
of Shares that May
as Part of Publicly
Yet be Purchased
Average Price
Announced Plans or
Under the Plans or
Period
Paid Per Share
Programs
Programs (2)
July 1 - 31, 2025
109,235
(1)
220.16
99,867
5,424,374
August 1 - 31, 2025
59,698
''''
242.12
59,282
5,365,092
September 1 - 30, 2025
57,546
246.08
57,139
5,307,953
226,479
232.53
216,288
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
During the quarter ended September 30, 2025, none of the Company’s directors or officers adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Item 408(a) of Regulation S-K.
ITEM 6. EXHIBITS
31.1
Certification of the Chair, President and Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
31.2
Certification of the Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 (filed herewith).
32.1
Certification of the Chair, President and Chief Executive Officer (Principal Executive Officer) and Executive Vice President, Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
Cover page Interactive Data File (formatted as Inline XBRL and contained in the Exhibit 101 attachments)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
/s/ Gabriel Bruno
Gabriel Bruno
Executive Vice President, Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
October 30, 2025