Tuesday, Lincoln Electric Holdings, Inc. (LECO), a manufacturer of welding and cutting products, reported a sharp fall in second-quarter earnings from a year ago, as revenues declined more than 40%, reflecting lower level of business activity. However, on a per-share basis, earnings came in ahead of Street expectations.
Cleveland, Ohio-based Lincoln's second quarter income plunged to $15.1 million or $0.35 per share from $70.1 million or $1.62 per share in the prior-year quarter.
Excluding items, net income for the quarter was $14.5 million or $0.34 per share, down from $70.13 million or $1.62 per share a year ago. On average, eight analysts polled by Thomson Reuters expected the company to earn $0.24 per share for the quarter. Analysts' estimates typically exclude special items.
Special items recorded for the quarter were pre-tax rationalization charges of $6.9 million and a pre-tax pension settlement gain of $1.5 million. A gain on the sale of a property by the company's joint venture in Turkey of $5.7 million was included in equity earnings in affiliates.
Quarterly sales fell 40.9% to $413.3 million from $699.8 million in the year-ago quarter and fell short of analysts estimate of $432.09 million.
John Stropki, chairman and chief executive officer, said, "Our second quarter results continue to reflect the difficult economic realities of the global markets. Although volumes are generally stabilizing with trends in the most recent quarters, this lower level of business activity has resulted in a significant reduction in profitability compared with the second quarter 2008."
Lincoln's North American operations had sales of $239.7 million for the quarter, down 40.2% from $400.7 million last year. Sales at Lincoln subsidiaries outside North America slipped 42% to $173.6 million from $299.1 million in prior-year period. Excluding acquisitions and the effect of changes in foreign currency exchange rates, sales outside North America decreased 33.2% in the quarter.
Net income for the first half was $11.5 million or $0.27 per share, down from $123.6 million or $2.87 per share in the corresponding period last year. Excluding items, net income was $18.33 million or $0.43 per share, compared to $123.61 million or $2.87 per share a year ago.
Sales for the first six months declined 37.5% to $825.0 million from $1.320 billion in the comparable 2008 period.
LECO is trading at $44.04, up $1.63 or 4.34%, on a volume of about 184 thousand shares.
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