Snapshot
Lincoln Electric Holdings Inc reported $1.12B of revenue in Q1 2026, up 11.7% year over year, with diluted EPS of $2.47 and an operating margin of 16.6%.
- Revenue
- $1.12B
- YoY growth
- +11.7%
- Diluted EPS
- $2.47
- Operating margin
- 16.6%
What management said
- •Turning to slide 3, we achieved solid results led by record quarterly sales and adjusted EPS performance while also navigating heightened operating complexity from geopolitics and evolving trade negotiations.
- •We remained agile in addressing short-term dynamics while staying customer-focused, investing in long-term growth, and reimagining how work gets done.
- •In the quarter, we held our adjusted operating income margin steady with prior year.
- •While we targeted a slight margin improvement, our 10% higher price did not fully offset inflation in the quarter.
- •We continue to invest in long-term growth through CapEx and R&D and return cash to shareholders through both dividends and share repurchases.
- •Turning to slide 4 to spend a few minutes on demand trends.
- •These same end market drivers, along with an increase in capital spending from off-highway customers, supported modest automation growth in the Americas in the quarter as well.
- •We have been encouraged by the continued acceleration in both equipment and automation order rates and backlog levels in the Americas through April.
- •This should support modest volume growth in the Americas Welding segment starting in the Q2, with further improvement in the back half of the year if conditions are sustained.
- •Internationally, we also saw a broad improvement in sales from European customers, with organic sales pivoting to growth across Northern, Eastern, and Central Europe and in Turkey.
- •Pivoting to end market performance, we continue to see 3 of our 5 end markets achieving flat to higher organic sales growth in the quarter.
- •Most notable is the high 30% growth rate in general fabrication, which represented accelerated factory and fabrication activity in the Americas, as well as in data center and HVAC projects.
What went well
- •First quarter sales increased approximately 12% to a record $1.121 billion, driven by approximately 10% higher price, 2% favorable foreign exchange, and a 1.6% Alloy Steel benefit.
- •Adjusted EPS increased 16% to a record $2.50, including a $0.04 foreign exchange benefit and $0.05 from share repurchases.
- •The Harris Products Group delivered standout results with sales up 42%, adjusted EBIT up approximately 68% to $41 million, and margin up 330 basis points to 21.2% on SG&A leverage and favorable mix.
- •Americas region sales and order momentum improved through April, aligning with three consecutive months of expanding manufacturing PMI, and Americas Welding volume declines narrowed to 40 basis points.
- •International Welding saw a broad improvement in European sales with organic growth pivoting positive across Northern, Eastern, and Central Europe and Turkey, plus improvement in India and Australia.
- •ROIC remained at top-quartile levels of 21.5%, and the company successfully launched its RISE strategy with early wins including the U.S. elite customer program and a new automated Harris manufacturing line that triples productivity.
What went wrong
- •Volumes declined 2.6% in the quarter, and price cost was unfavorable 90 basis points as 10% higher price did not fully offset inflation, holding adjusted operating margin flat rather than improving.
- •International Welding volumes fell 10% (primarily automation) and adjusted EBIT decreased 1.5% to $23 million with margin down 50 basis points to 9.7%, also affected by the Middle East conflict.
- •Americas Welding adjusted EBIT margin declined 100 basis points to 17.2% due to price-cost timing and higher corporate expense allocation to the segment.
- •Cash flow from operations was lower at $102 million due to a strategic short-term increase in inventory to maintain service levels during product transitions, raising the working capital ratio 80 basis points to 18.6%.
- •The Middle East conflict caused several customers to suspend activity, with an estimated approximate $8 million sales impact in the quarter.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Full-year net sales growth | FY2026 | Mid-single-digit % range | High single-digit % range, incorporating new price actions | Raised |
| Organic sales mix | FY2026 | 50/50 price and volume | Three-quarters price (mid-single-digit %) and low-single-digit % volume | Revised |
| Americas Welding new pricing actions | Starting Q3 2026 | N/A | 150 basis points per quarter run rate, effective early May | New |
| Quarterly SG&A run rate | Balance of FY2026 | N/A | Approximately $250 million per quarter | New |
| Middle East conflict sales impact | Per quarter while conflict persists | N/A | $8 million-$10 million, split evenly between Americas and International Welding | New |
| Incremental operating margin, interest, tax, capex, cash conversion | FY2026 | Mid-20% incremental; in-line assumptions | Maintained at mid-20% incremental margin with other assumptions unchanged | Maintained |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Total sales | +approximately 12% to $1.121 billion | ~10% higher price, 2% favorable FX, and 1.6% Alloy Steel benefit, offset by 2.6% lower volumes |
| Adjusted EPS | +16% to $2.50 | Higher sales and operating income plus $0.04 FX and $0.05 share-repurchase benefits |
| Americas Welding sales | +approximately 8% | Nearly 8% higher price and 1% favorable FX, with volume declines narrowing to 40 bps on accelerating orders |
| International Welding sales | +approximately 4% | Favorable FX and strong Alloy Steel sales offset by 10% lower volumes from automation and Middle East conflict |
| Harris Products Group sales | +42% | 41% higher price from actions to mitigate record-high silver and copper costs, with narrowing volume compression |
| Global automation sales | $210 million versus $215 million prior year | Compression from international markets on a challenging prior-year comparison, with modest Americas growth |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Americas demand recovery | Early signs of recovery, awaiting consistency | Improving sales and order momentum through April with consumables up low double digits, supporting cautious optimism | Improving |
| Automation | Strong Q4 orders/backlog expected to drive 2026 growth from Q2 | Modest Americas growth in Q1; expected to turn to modest growth exiting Q2 with broad second-half volume improvement | Improving |
| Price-cost position | Neutral target; price weighted to first half | Unfavorable 90 bps in Q1 on input cost inflation; new May price actions expected to restore neutral by Q3 | Temporarily unfavorable |
| European demand | Challenged; recovery not assumed | Broad uptick to organic growth, but concern it may reflect pre-buying ahead of pricing and carbon border regulations | Cautiously improving |
| Middle East conflict | Not a prior factor | New headwind suspending some customer activity, estimated $8M-$10M per quarter impact while it persists | New headwind |
Q&A summary
How is the team thinking about cycle positioning and broadening product growth over the coming quarters?
Cautiously optimistic, with good Americas order rates, strong PMI, and encouraging customer conversations, but wanting more month-to-month consistency; European choppiness may reflect pull-forward and the Middle East remains uncertain.
Does automation turn to growth in Q2, is mid-single-digit growth still reasonable for 2026, and is quoting broadening?
Automation is expected to turn to modest growth exiting Q2 with broad second-half volume improvement; order intake and backlog are strong, though project mix creates choppiness.
How much of the high-30s General Fabrication growth was price versus volume, and what does it imply for the back half?
Americas Welding consumables volumes were up low double digits with a significant automation project component; broad-based general industry strength and three months of improving PMI underpin cautious optimism.
Do you expect to be price-cost neutral in Q2, and how should we think about the embedded price including Harris?
Most price-cost recovery is expected in Q2 with full neutrality by Q3; the guide reflects announced actions, with about a quarter of the 300-400 bps full-year pricing change tied to new actions and the balance to Harris.
What is driving the lower 11% International margin outlook and what regions are weak outside the Middle East?
The first-quarter volume impact (down 9.9%), automation project timing, and the Middle East conflict pressured margins; pockets of European strength and favorable Asia trends in India and Australia exist, but project timing on automation was the biggest driver.
On full-year cash flow, will the elevated working capital repeat?
The company remains anchored on 100% cash conversion; the short-term inventory investment for product transitions is expected to turn around in the back half of the year.