Lincoln Electric (NASDAQ:LECO) reported second-quarter results marked by a return to volume growth after nine quarters of compression, supported by stronger demand in its Americas Welding business, higher pricing and improved capital spending by customers.
Chairman and Chief Executive Officer Steve Hedlund said consolidated organic sales increased 10%, with growth across equipment, automation and consumables. The company cited stronger activity in the Americas and parts of Asia-Pacific, including China, India and Vietnam, while Europe remained affected by weak industrial conditions.
Quarterly Financial Results
Second-quarter sales increased 12% to $1.22 billion. Chief Financial Officer Gabe Bruno said the increase reflected approximately 8% higher pricing, 2% volume growth, a 1.5% contribution from the Alloy Steel acquisition and a 40-basis-point benefit from foreign exchange translation.
Gross profit rose about 11%, though gross margin declined 50 basis points to 36.8%. Bruno attributed the margin compression to persistent inflation, unfavorable sales mix and a $4.2 million LIFO charge, which offset the benefits of pricing actions and a tariff refund. The company now expects LIFO to be a $10 million headwind for the full year.
Reported and adjusted operating income each increased 15%. Adjusted operating margin improved 50 basis points to 18.4%, with a 22% incremental margin. Diluted earnings per share rose 12.5% to $2.88, while adjusted EPS increased 13% to $2.93. Foreign exchange translation reduced EPS by $0.01, while share repurchases added $0.05, Bruno said.
Lincoln Electric generated record operating cash flow of $254 million in the quarter, resulting in cash conversion of 138%. Year-to-date cash conversion was 95%, and management said it remains on track to meet its 100% full-year target. The company spent $31 million on capital expenditures and returned $120 million to shareholders through dividends and share repurchases. Adjusted return on invested capital reached 23%.
Americas Strength and Segment Performance
Americas Welding sales rose approximately 11%, driven by 7% volume growth, about 4% pricing and favorable foreign exchange. Equipment volumes grew at a low-double-digit rate, while Americas Welding equipment organic sales growth accelerated to the high teens. Consumables in the segment grew at a high-single-digit rate.
Americas Welding adjusted EBIT increased 15% to $158 million, and its adjusted EBIT margin improved 110 basis points to 19.7%. Lincoln Electric expects the segment to operate within a 19% to 20% EBIT margin range for the remainder of 2026.
Management said industrial gas distribution demand remained strong, while direct original equipment manufacturer and rental customers increased capital spending. On a consolidated basis, general fabrication sales grew more than 30%, aided by improved U.S. industrial production and commercial HVAC demand at Harris Products Group. Heavy industries and non-residential structural steel each grew at mid-single-digit rates, while energy demand held up well, including nearly 30% growth in oil and gas sales within Americas Welding.
Transportation sales continued to decline at a mid-single-digit rate, although management said declines narrowed as equipment systems demand improved. The company expects transportation to improve during the remainder of the year as automation projects advance and customers invest in new lightweight vehicle platforms.
International and Harris Trends
International Welding sales increased 4.5%, supported by the Alloy Steel acquisition, pricing and favorable currency translation. However, volumes declined about 5% as demand slowed in Europe following first-quarter customer buy-ahead activity and continued weak industrial production.
International Welding adjusted EBIT fell 13% to $27 million, with margin declining 210 basis points to 10.6%. Lincoln Electric expects the segment’s full-year EBIT margin to be in a 10% to 11% range as European demand and operating efficiency remain challenged.
The company said the Middle East created a $2 million to $3 million consolidated sales headwind in the second quarter during a ceasefire. With fighting resuming, management expects the conflict to create a $6 million to $7 million quarterly sales headwind in International Welding, an improvement from its prior expectation of an $8 million to $10 million impact.
Harris Products Group sales increased 27%, led by 34% higher pricing. Adjusted EBIT rose about 33% to $42 million, and adjusted EBIT margin improved 100 basis points to 20.4%, aided by SG&A leverage and a tariff refund. Management expects Harris to operate at an 18% to 19% margin in the second half at current metal prices.
Raised Sales Outlook
Lincoln Electric raised its full-year net sales growth outlook to a low-double-digit percentage rate. Organic sales are now expected to grow at a high-single-digit to low-double-digit rate, composed of roughly one-third volume growth and two-thirds price and mix.
Bruno said the company expects to achieve a neutral price-cost position in the second half after reporting a 10-basis-point price-cost headwind in the second quarter. Lincoln Electric expects higher adjusted operating margin than in the prior year and a mid-20% incremental margin through the balance of 2026.
Hedlund said six consecutive months of favorable macroeconomic data in the Americas, strong order rates and a record automation backlog support management’s confidence in an industrial recovery. He added that customers are showing greater willingness to invest in productivity, capacity and automation, particularly in general industries.
Management identified commodity-cost volatility, trade-policy changes and the duration of the Middle East conflict as risks to its outlook.
About Lincoln Electric (NASDAQ:LECO)
Lincoln Electric Holdings, Inc (NASDAQ: LECO) is a global manufacturer and distributor of welding products, robotic welding systems, plasma and oxyfuel cutting equipment, and surface treatment systems. The company’s portfolio encompasses welding consumables such as electrodes and wires, as well as power sources, torches, and automated welding cells. Lincoln Electric also offers software solutions and training services designed to optimize productivity and quality in fabrication and manufacturing operations.
Founded in 1895 by John C.
