Lincoln Electric’s first quarter results were met with a negative market reaction, as revenue growth was offset by softer volumes and earnings that missed analyst expectations. Management attributed the quarter’s performance to the impact of new tariffs, ongoing labor negotiations in Turkey, and muted customer capital spending. CEO Steve Hedlund highlighted, “Volumes were a bit softer than we expected,” noting that half of the decline was due to temporary disruptions in Turkey. The company’s efforts to maintain margins through pricing and cost controls were challenged by these headwinds, while automation project delays and cautious customer behavior further weighed on results.
Is now the time to buy LECO? Find out in our full research report (it’s free).
Lincoln Electric (LECO) Q1 CY2025 Highlights:
- Revenue: $1 billion vs analyst estimates of $976.1 million (2.4% year-on-year growth, 2.9% beat)
- Adjusted EPS: $2.16 vs analyst expectations of $2.23 (3.2% miss)
- Adjusted EBITDA: $193.2 million vs analyst estimates of $197.6 million (19.2% margin, 2.2% miss)
- Operating Margin: 16.4%, in line with the same quarter last year
- Organic Revenue fell 1.2% year on year (-6.2% in the same quarter last year)
- Market Capitalization: $11.51 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Lincoln Electric’s Q1 Earnings Call
- Saree Boroditsky (Jefferies) asked for details on volume trends by end market and the outlook for the rest of the year. CFO Gabe Bruno explained that while several sectors showed strength, ongoing uncertainty makes it difficult to forecast volume trends, especially as heavy industries and automation remain challenged.
- Bryan Blair (Oppenheimer) questioned the split between direct price increases and surcharges from tariffs. Bruno declined to specify the breakdown but emphasized that the strategy is to remain price-cost neutral, balancing both mechanisms to manage cost pressures.
- Stefan Diaz (Morgan Stanley) inquired about the integration pace for acquisitions and margin impacts. Bruno responded that integration is proceeding on schedule, with margin normalization expected over a three-year period, but near-term dilution from acquisitions persists.
- Mig Dobre (Baird) sought clarity on why management is cautious for the second half despite stable April demand. CEO Hedlund explained that automation order delays and sensitivity to further price increases remain key risks for the remainder of the year.
- Walt Liptak (Seaport Research) asked about sourcing strategies to mitigate tariff exposure and the potential for reshoring. Hedlund discussed efforts to find alternative suppliers and the challenges of relocating supply chains, particularly for steel and electronics, given global market realities.
Catalysts in Upcoming Quarters
In the upcoming quarters, the StockStory team will be monitoring (1) the pace of automation order intake and backlog normalization, (2) the effectiveness of pricing actions in offsetting tariff-related cost inflation without further eroding volumes, and (3) signs of recovery or further weakness in key end markets such as automotive, construction, and heavy industries. The progress of acquisition integration and any shifts in customer capital spending plans will also be important to watch.
Lincoln Electric currently trades at $206.12, up from $183.89 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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