Q2 2023 Lincoln Electric Holdings Inc Earnings Call
Greetings and welcome to the Lincoln Electric 20, 2023 second quarter financial results Conference call.
This time, all participants are in a listen only mode and this call is being recorded.
It's my pleasure to introduce your host Amanda Butler, Vice President of Investor Relations and communications.
You may begin.
Thank you Theresa good morning, everyone welcome to Lincoln Electric second quarter of 2023 Conference call. We released our financial results earlier today and you can find our release as an attachment to this call slide presentation as well as on the Lincoln Electric website at Lincoln Electric Dot Com and the Investor Relations section and joining me on the call today is Chris.
Mapes, Lincoln's Chairman, President and Chief Executive Officer, Gay Bruno Bruno our Chief Financial Officer, and Steve Headlands, Chief Operating Officer, Chris will begin with quarterly highlights Steve will provide a discussion of and market trends and gable cover quarterly financial performance in more detail as well as our 2023 assumptions.
Following are prepared remarks, we were happy to take your questions, but before we started discussion today. Please note that certain statements made during this call may be forward looking and actual results results may differ materially from our expectations due to a number of risk factors a discussion of some of the risks and uncertainties that may affect.
Our results are provided in our press release and in our SEC filings on forms 10-K and 10-Q in.
In addition, we discuss financial measures that do not conform to use gas a reconciliation of non-GAAP measures to the comparable gap measure is found in the financial tables in our earnings release, which again is available in the Investor Relations section of our website at Lincoln Electric Dotcom and with that I'll turn the call over to Chris Mapes, Chris. Thank you ma'am.
Good morning, everyone.
Turning to slide through I am pleased to report we generated another quarter are record results.
Record second quarter sales adjusted operating income profit margin adjusted earnings per share and cash flow generation, all reinforced solid momentum in the business.
We continued to within the market's supporting solid industrial production activity strong capital spending and the continued adoption of automation.
And the second quarter, we effectively managed dynamic operating conditions and achieved are neutral price cost target year to date.
A team is doing an excellent job balancing the constraints of tight supply chain conditions and elevated inflation levels in our equipment portfolio with more normalized supply chain conditions across the rest of our portfolio.
And the quarter all of our reportable segments generated profit margins within their higher standards strategy EBIT margin ranges, demonstrating the effectiveness of our commercial and operational initiatives.
We also achieved over 100% cash conversion in the first six months of the year, which is ahead of plan on improve profit performance and inventory levels.
We also maintain top decile returns with an adjusted.
R O I C of 22.9% and returned $90 million to shareholders in the quarter.
Our integration of 40 automation and power Meg is on track, which will drive or automation portfolio margins from low double digit percent to mid teens percent by 2025.
In addition are planned fourth quarter 2000, twenty-three production and launch of our 150 kilowatt D. C. Fast charger remains on schedule and we are planning a knacks and Ccs compatible version in early 2024.
The the team continues to do an exceptional job, serving our customers driving innovation and advancing operational excellence across our facilities.
I couldn't be more pleased by our progress which positions us to meet and exceed our higher standard 2025 strategy targets now.
Now to share more detail on our second quarter sales performance I'll pass the call to Steve headland.
Thank you, Chris and good morning, everyone.
Turning to slide four or 4.5% organic sales growth reflects resilient industrial activity and strong capital investment across our welding segments with higher volumes and our three main product groups and volume growth in all key regions led by Americas Asia Pacific in the Middle East.
Second quarters organic growth rate moderated as compared with the first quarter, primarily from the Anniversarying of substantially all of our 2022 price actions.
And market perspective, we saw strong growth in energy led by high levels of midstream activity and pipe mill and pipeline activity and as we look ahead, we expect to accelerating demand across our energy and markets.
Heavy industry also remains strong led by large agricultural and construction equipment production as well as shipbuilding activity.
Automotive transportation all down on the quarter due to the timing of equipment and automation deliveries had strong consumables growth, which continues to serve auto production activities as Oems work to replenish inventory levels. We.
We expect automotive to inflict positively in the balance of the year driven by the completion of automation projects.
Our general industry organic sales rate declines low single digit percent in the quarter from weakness in international welding and Harris.
And America's General industry grew and strengthened as we ended the quarter into July .
The compression we have seen in our nonresidential construction infrastructure sector narrowed to mid teen percent in the quarter on challenging prior year comparisons and off peak cycle conditions. We.
We are managing through a strong order book in this sector and expect improved sequential performance.
For Harris, we remain cautious on retail and residential related trends in the back half of the year given seasonality in that segment challenged demand trends in a challenging third quarter comparison.
Overall wall and market performance was mixed in the quarter. We remain in growth mode. We entered the third quarter supported by solid industrial demand across all product areas more favorable timing of equipment and automation deliveries and high backlog levels.
Now I will pass the call the gay Bruno to cover second quarter financials.
Thank you Steve move.
Moving to slide five are consolidated second quarter sales increased 9% to $1 billion $61 million the increase reflected a five 2% benefit from acquisitions, three 6% higher volumes and a 90 basis point increase in price.
Foreign exchange translation was relatively steady versus the prior year.
Gross profit dollars increased approximately 12% or $40 million versus the prior year on higher volumes effective cost management and benefits from acquisitions.
Our second quarter gross profit margin increased 80 basis points to 35.2% on volumes and effective cost management, including a neutral price cost position for the first half of the year.
Our SG&A expense increased approximately 16% or $26 million, primarily due to higher incentive compensation and employee related costs and unfavorable foreign exchange transaction costs.
SG&A as a percent of sales increased 100 basis points to 82%, which is comparable to first quarter results.
Reported operating income increased 6% to $178 million.
Excluding approximately $6 million of special items from rationalization charges and the amortization of step up of acquired inventories adjusted operating income increased 10% to $184 million.
Higher volumes cost management and contributions from acquisitions drove higher profit dollar growth, which helped to offset elevated inflation in the business or.
Are adjusted operating income margin increased 10 basis points to $17, 4% on challenging prior year comparisons at higher volumes and effective cost management was partially offset by the impact of acquisitions.
We recorded approximately $12 million of interest expense net in the quarter and continued to expect full year interest expense of 45% to $55 million, we recognize approximately $7 million of other income in the quarter, which represents non-recurring items, including non-operating gains of which.
Really have is offset and SG&A.
Our second quarter effective tax rate as reported and adjusted was approximately 26% due to our mix of earnings Indiscreet items. This compares to an adjusted tax rate of 22% in the prior year.
We continued to expect our full year 2023, the effective tax rate to be in the low to mid 20% range subject to the mix of earnings and anticipated extent of discrete tax items.
Second quarter diluted earnings per share was $2.36, excluding special items adjusted diluted earnings per share was a record $2.44.
Moving to a reportable segments on slide six.
America's welding segments second quarter, adjusted EBIT increased approximately 19% to $140 million. The adjusted EBIT margin increased 90 basis points to 19.8% on higher volumes and effective cost management, which was partially offset by <unk>.
Acquisitions.
America is welding sales increased 14% in the quarter driven by an approximate 7% increase in organic sales and a 7% benefit from acquisitions.
The segment generated 6% higher volumes from growth across all product lines on continued momentum and regional industrial activity and capital investment U S exports continued to strengthen in the quarter.
Backlogs remain high at quarter end in both equipment and automation.
Price primarily reflects targeted pricing actions implemented in early second quarter of 2023 to mitigate inflation as well as the Anniversarying a prior price increases in 2022.
Moving to slide seven the industrial welding segments, adjusted EBIT decreased 3.5% or approximately $1 million to $34 million. The adjusted EBIT margin declined 130 basis points to 12.9% versus prior year, but improved one <unk>.
<unk> 50 basis points sequentially and is within that targeted higher standard range of 12% to 14%.
Organic sales increased approximately 4% led by 4% volume growth with greatest strength in Asia Pacific and the Middle East and Africa.
Price increase 40 basis points, reflecting select new pricing actions year to date and the anniversary of prior year price actions.
Moving to the Harris products group on slide eight second quarter, adjusted EBIT increased approximately 9% to $19.5 million, they're adjusted EBIT margin increased 190 basis points to 14.7%, reflecting effective cost management and operational improve.
Movements from integration initiatives.
Harris's organic sales declined approximately 5% on approximately 6% lower volumes and 1% higher price performance.
Volume is reflected continued softness in retail modest compression and HVAC and a challenging prior comparison in industrial applications.
Moving to slide nine Lee.
We generated a record $199 million in cash flows from operations in the quarter, resulting in 125% cash conversion.
Average operating working capital to sales ratio decreased to 18.9% unimproved inventory levels, while we have largely normalized inventory levels in our consumables portfolio. We continued to maintain elevated inventory to mitigate challenging equipment supply chain conditions and support sales.
Moving to slide 10.
We invested $54 million and growth initiatives in the quarter, reflecting our <unk> acquisition and $22 million in Capex spending we returned $90 million to shareholders through approximately $53 million of share repurchases and our higher dividend payout.
We maintained a solid return on invested capital of 22.9%.
Turning to slide 11, and our full year assumptions.
We're maintaining our full year assumptions, but are adjusting the mix of organic growth drivers to reflect volume strength in the business.
We now expect approximately two thirds of our full year organic growth from volumes and the balance from price.
Our full year price assumption returns price contribution to a more normalize right.
We recognize that cash conversion has outperformed our initial assumption and we are highly confident that we look seat our full year 2023 estimate.
We continue to expect to progress seasonally and the back half of the year and.
And now I would like to turn the call over to Chris for concluding remarks.
Thank you Gabe.
Earlier today, we announced my upcoming retirement as President and CEO of Lincoln Electric at year end.
Effective January 1st 1004, I will serve as executive chairman of the company and will work closely with Steve headlined will be promoted to the position of president and CEO and will be appointed as a member of our board.
After what will be 11 years in the CEO roll My plan retirement comes after a very thoughtful multiyear secession planning process I believe the timing of lines well with the near completion of our higher standard 2025 strategy and as the organization advances towards next longterm strategy.
I'm tremendously thankful for the support of our organization the board and the investment community. During my tenure as CEO . It has been a privilege working with the industry's best team and serving great customers.
I am, especially proud of how we have transformed the business over the last decade by accelerating innovation growth and operational excellence, which has led to significant value creation and accelerated our position as a high performing global industrial company, and the global leader and welding cutting and automation salute.
<unk>.
During these years I've worked alongside Steve and our leadership team and I am confident in Steve's ability to lead the company and continue the strong momentum we have achieved together to ensure the company's future success. Please.
Please join me in congratulating, Steve on his new role and now I'd like to turn the call over for questions.
Ladies and gentlemen at this time, we will be conducting the question and answer session.
To ask the question Press Star one one on your telephone.
To ensure that everyone has an opportunity to participate we do ask that you ask one question and one last question and then return to return to the queue.
Please hold while we compile our question.
One moment.
Alright first question comes from <unk> from Jeffrey New.
Your line is open.
Thank you good morning, and congratulations to Steve on the new Rolling experienced on your retirement fine authenticated strong performance, leading link and you'll be carrying nest.
I guess.
Wanted to go through some of the end markets in more detail you know it looks like <unk> industries to remind negative in a corner.
Auto she didn't like Pennsylvania second half still any color on that and then maybe just on general industrial if that was also <unk> are expected to continue thank you.
Yeah, sorry. This is Steve if we look at automotive the decline there was really driven by capital projects automation and large equipment purchases the volume, we adding consumables was up.
Which gives us encouragement that that's really a bellwether of automotive production and continuing strong demand in that category and in general industry. It was really driven by the residential and retail exposure that we have in the Harris products group and by softness in Europe , and the international segment the <unk>.
S General industry.
Sales growth was very strong and we saw it accelerate during the quarter, Yeah, sorry, I think Steve's comment that's a really important thematic as it relates to the performance of the business in the quarter. We we saw momentum throughout the quarter ended the quarter with strong momentum and where we didn't see softness in some areas.
Some of our industrial segments.
Portions of that were in the Harris business, where we knew that was going to be a software quarter for us and not surprising that as we recognize certain of the market's internationally, especially in Europe have turned slightly more negative that we would see that there when I think about our business.
And I think about our America's business, that's generating 5.8% volume in the quarter.
That is just really strong momentum across the business and I like the positioning of the company. Although we are having some regional impacts right now the strength that America's and the volume performance that America has has.
Has been has.
Has been very strong.
I appreciate the color and just given unexpected increasing auto in about half a year should we expect a few volumes attackers T T levels.
Okay. Thanks, sorry, I think what's important is you heard engaged comments, we're actually we're at the start of the year. We thought that we would really be almost an even mix between volume and price says we were thinking about the business is we're looking at the back half of the business. The volumes of actually stepped up and are probably about two thirds of what we believe.
We will see within that portion of the organic so that just naturally tells us that we believe are volumes are stepping up from what we've seen in the first half the momentum that we've seen exiting Q too.
We would certainly expect to see that I would also acknowledge that when you think about the back half of the year. We do have two last days one each quarter that will be that will be confronted with as we think about the year over year comparison, but again strong momentum a shift towards more volume and I think you've seen us.
Be able to operationally leverage that volume as it comes into our business.
I appreciate the color and I'll <unk>.
Thank you very much.
Alright next question is coming from Brian <unk> with Oppenheimer, Brian Your line is open.
Okay.
Brian Your line is open.
No apologies like cut out for a minute Sir good morning, everyone and congratulations to Chris very successful tenure and.
Steve on a well deserved promotion.
Yeah. Thank you.
Just wanted to level set it seems like they're in terms of capital spending and.
Particularly automation.
There was some pushback.
Timing shifted to you know Q3, or perhaps Q4, what was that impacts in the quarter. If you if you don't mind.
Quantifying that and is it a Q3 or Q for catch up in terms of pets man.
Right I wouldn't describe that as some kind of shifting in our business and I'd just remind you of our assumptions for the year right. So we're mid to high single digit assumptions at the mid point, we're at 6.5% organic growth.
Right on top of our operating assumptions that said the mix of our business and automation, we do expect to ask.
Accelerate in the back half of the year with contributions as we've talked about on the automotive sector. So I don't see any particular shifting in our posture between what we saw in automation for the first half of the year, Yeah, Brian and probably the only other comment I would add the games is that we have been talking about the <unk> acquisition, which was a large addition into our autumn.
Nation portfolio, we brought that into our portfolio in December last year, and we knew that we had quite a bit of integration work to do the early portion of that of that ownership of the team and we just had our board meeting up there last week, it's they're just doing a spectacular job for the company. So I couldn't be happier with the progress.
We're making but as you can imagine integration in the first couple of quarters that just is continuing to get better and better and we would expect the back half of the year to be better than the first half of the year and that's another thing we've been talking about as it relates to automation, but I completely agree with Gabe I'm not aware of anything that has moved to the back half because some <unk>.
Sort of softness and demand our operational issue O'brien quite the contrast, we still see very good order activity in the automation business. We see very strong proposal activity motivation business. There is some timing of large projects in terms of when they get completed and the revenue gets recognized that might move business from one quarter to another but.
We don't we didn't see any softening in automation in the second quarter.
Okay understood that's great to hear.
And sticking with automation.
What should we think about as an organic growth rate for the platform. This year.
With 40 there is.
Substantial stepped up group.
For the for organic just done.
The Brian <unk> yesterday.
Hi, six single digits.
Okay excellent. Thank.
Thank you again.
Thank you for your question.
One moment.
Alright next question comes to make <unk> from our W. Bird Your line is open.
Thanks and Chris.
Like everybody else congratulations on a on a great career, and let's see right to you as well.
Thanks for me if I have two questions.
Yeah, two questions for me one a short term one and maybe a longer term to follow up the from a shorter term perspective I guess.
With a head scratcher for me in terms of how you you've kind of tweak the components of the guide.
Pricing coming down a bit.
Looking to sort of understand.
Kind of what's driving what's driving that and you know.
Should we actually think breaking turns negative at any point in time in a year, maybe two four for instance.
And then on a volume side.
[noise] tweaking that up I'm sort of curious as to.
How much visibility you have on on that volume, but what gives you the confidence that.
Volumes accelerate is it purely a function of the.
Automotive.
Business and automation or is there something else going on.
So let me just start off with the volume side of it. So as we noted are backlogs remains strong.
We have strong orders entering.
The third quarter. So what does that mean think about the mix of our business in the second quarter, while we speak to general industries.
Being low single digits, and automotive being down to mid single digits. I mean, we see progression within automotive that tips to to strengthening in volumes and we see more.
More strengthening on the general industry side, so that gives us confidence that our overall organic mix.
Is going to lean on the volume side in terms of pricing.
We continue to operate an inflationary environment and I'd like to 0.2 and <unk>.
Mentioned this in my comments, but what's a run rate for <unk> for the year, we're running now at $5 million, we we did.
Deploy wage increases in the second quarter. So we're operating in an inflationary environment, but we're anchored on our.
Philosophy of price cost neutral and will enact pricing as required and right now we're at that neutral posture and we feel very confident that will continue to execute along those lines as you've seen in the long term.
The gate to clarify.
Your.
Your outlook for full year pricing is moderated relative to three months ago is that a function of raw materials, and how that flows through consumables or where am I misunderstanding something here.
It is a function and how we see overall inflation rate and that includes.
Material cost trends, so we don't see the acceleration in our business that we've seen over the last few years. So that's going to drive a moderation in pricing actions.
And will respond with pricing in how we see the progression of inflation that we feel very very good positioning currently when we look at price cost and and right now we don't see any drivers to accelerate our pricing posture.
Currently so we'll continue to manage.
Price costs in a very disciplined ways as you know we do.
Understood then I guess my longer term question.
Might be.
Chris or maybe even more so for Steve.
Transition is happening here from a leadership perspective, I'm kind of curious as to how you were thinking about the.
The company three five years out where you see the biggest opportunities and you know obviously fourie has.
Started to expand the definition of automation within within Lincoln Electric So I I'd love to hear Steve's thoughts on that and then of course, the EV charging opportunity. You you you mentioned it a little bit in your prepared remarks, but I'd love to hear more about how you see that playing a longer term. Thank you.
Yeah, we'll make this is Chris look a couple of comments first I will play with you, but I think the future for Lincoln Electric books enormously strong.
And it looks enormously strong because of what I believe occurred within the company over the last several years as we've just transformed into what I believe to be a higher performing industrial company in the space and we have we have these underlying catalysts in our business like the automation business.
And the automation business today, which is well over a $900 million run right and we're going to continue to deploy capital and with high single digit growth rates that we're looking for that business and I believe.
Trends are quite frankly may permeate.
Even beyond what we might see an industrial cycle's. There's no reason to believe that that won't be calm a larger and larger portion of the portfolio over the next 357 years, we're very committed to that.
And then we have these other.
Growth elements associated with business, whether that's additive or the charter initiative that create other catalysts for value creation within the company as well as continued investment as the global leader in welding and cutting technology. So when we aggregate those I think you'll see.
Lincoln continuing to accelerate and Stephen the leadership team, probably because it's being a larger company needing to make even larger investments and some of those areas in the business, but I think just enormously well positioned as we think about the company.
And I think Stephen the leadership team are ready to to do that and to drive that and that's why it's the right time for me to step into the chairman's role and support them.
B a voice in those discussions, but let the let the team take over the operating side associated with that Steven I have worked together since the day I came to Lincoln.
So I'm I'm very familiar with his perspectives on the business and I know you will look forward to.
So the February timeframe, when Steve steps in as CEO and starts to provide more guidance to you as it relates to that next long term strategy will be providing for the company.
We can thank you.
Thank you for your question.
As a reminder to ask the question. Please press star one one on your telephone.
Alright next question comes from Nathan Jones.
<unk> Your line is open.
Good morning, everyone.
Add my congratulations and and best wishes decrease in congratulations mistakes.
I just had a question on the on the commentary about strengthening throughout the quarter I think it's fairly typical to see strengthening throughout the quarter. So you are you talking about it you know having strengthened more than it typically would as you went through the quota.
And maybe you could talk to you feel a little bit more about the business as an underlying trends that you think you're driving that.
Yes look I would tell you that I think that's the right tone, which is strengthened a little more than what we had normally seen seasonally within the business with a lot of strength as we were exiting the quarter and I think the other catalyst that I think about when we think about that strength is that strengthen the America's wallowing segment and.
And seeing that underlying volume at 5.8%. So I wouldn't want to tell you that the quarter was backloaded that wouldn't be fair I mean, we had solid progression through the quarter, but real acceleration at the end of the quarter and we saw nice demand trends over the first couple of weeks of July as we are as we are.
Continuing to see some of those favorable after abuse within the business.
Thanks for that and then my follow up question is going to be on the international wellbeing.
Still.
Pretty good 4% volume growth I think an international welding given some of the challenges and some of the macro numbers coming out of Europe is is really quite strong maybe.
Comment on the outlook bad whether or not you think you can continue to say volume growth to any international world.
Particularly some of the macro data coming out of Europe .
Yeah, I think that'll be a really an area that will need to stay focused with Nathan it's probably if I think about the elements of the business in the back half of the year, where there could be risk I mean, we could probably towards international business just simply from a demand perspective are demand held up well in the quarter very proud of our team their ability to manage.
Through this portion of the international cycle.
But we also know we've got August coming up which at least in that core European market tends to be when we see businesses out Ah closures will they extend the some of those we have not seen anything yet or heard of anything but because of the softness in that market could those be extended but the confidence I have is that we've shown on the ability to manage through these.
Cycles, and they've exhibited that in in their queue to performance.
I see it as upside for the business when we see some better demand trends in international longer term and certainly as it relates to thinking about the business in the back half of the year a lot of confidence in the demand trends, we see in America as well, but.
[noise], thanks, very much for taking my question.
[noise]. Thank you very much.
And that's final question comes from Steve Burger with Keybanc capital market.
Mine is open.
Hey, Thanks, good morning.
Burning.
Focus on some of the newer businesses [laughter].
For the charging station initiatives, we've gotten a lot of questions about why a customer or partner would particularly go versus some other manufacturer can you talk through the value proposition, you're presenting to customers and any initial feedback as you start those conversations.
Sure. Steve This is Steve headline we hear consistently from everyone. When we talk to the two main drivers in the market right now our reliability and availability so outside of the Tesla Supercharger network.
The network. That's been built is highly unreliable. There's all kinds of press you can read or social media can follow about <unk>.
Consumer frustration with pulling up to nev charger that the App says is online and they pull up and it's either not working or its derated from a power perspective, and then there are also a very long lead time on getting charging equipment from the established manufacturers as the U S ramps up its investment and.
D C fast Chargers I think that's really behind what you saw with all the announcements of the automakers adopting the knack standard is that they're looking for a reliable network for.
Their vehicle customers to be able to use.
So as we've talked to prospective customers they understand our value proposition. They get it. They are excited about it and they are anxious to get sample product in their hands.
So we continue to focus on driving the industrialization and manufacturing ability of this product.
So we remain very optimistic about the future.
And Steve I would say the other value proposition that icy for it is that let's let's just let's just acknowledge that we would be one of only a handful of individuals a U S based company, making these charges in Cleveland, Ohio.
And I think that a lot of the individuals are having conversations with us about the build out that's necessary here in the United States are excited about dealing with an established successful manufacturing company based here in the U S. That's going to manufacture these locally because we've got our own printed circuit board manufacturing facilities and we.
Have you been doing these types of power electronics for decades.
And I think that gives Ah that gives the marketplace. Some comfort in our ability to be able to execute on this strategy for this product portfolio.
I know your capacity for 2024, but what what's the timeline for getting some of the prototypes out into into customers hands.
That'll be happening later this year.
Got it and then in the automation business once you sell an arm or a welding sell to a customer what percentage of the time are you able to convert that into additional cells or higher dollar systems and how is the salesforce incentivised, if if one way or another new customers versus existing.
Well, there's two aspects to keep in mind, Steve of an automation sale first is we have a very high retention rate on the consumables that robot uses so the welding wire.
Our wire is highly differentiated for those types of high volume robotic applications. So we think automation.
We get not only those the one time first sale of the system, but also the ongoing consumable annuity stream associated with it and then we see a tremendous amount of repeat business from customers are buying an automation system is a risky prospect for the decisionmaker because they have to take.
It is our existing production down or they have to use a summer shutdown or some other narrow window of opportunity to get the new equipment in place and.
Imperative that the system function as intended the first time and that the supplier hits the schedule in terms of delivery and commissioning and so once we've demonstrated to them and we can do that they start pointing to hey can you help me with this can you help me with with this other thing and we just see an opportunity to expand.
The relationship with that customer and that's that's right in the wheelhouse of are selling model.
Got it and maybe one quick follow up with with automation trending towards $1 billion in.
Getting into charging now is there any thought at some point of pulling out automation additive and charging into a standalone segment. So we could get a better sense of how those.
Growth initiatives are progressing.
Steve is a as we continue to advance the those areas of the business and we acknowledged are getting larger and larger and they're a very important piece of the portfolio will continue to evaluate that as we're looking at the next long term strategy for the company, but I I certainly believe that as we're executing on.
The next three to five years of the company those areas are going to continue to be growth engines for Lincoln Electric and we'll have to continue to emphasize those and provide details on those for our investment community as well as the other individuals that are stakeholders that Lincoln electric.
Understood. Thank you for the time and congratulations to both of you.
Right.
Thank you.
Concludes our question and answer session and I'd like to turn the call back to date Ruby now for closing remarks.
I would like to thank everyone for joining us on the call today and for your continued interest in Lincoln Electric we look forward to discussing the progression of our strategic initiatives in the future. Thank you very much.
[music].
[music].
[music].
[music].