Q2 2024 Lincoln Electric Holdings Inc Earnings Call

Operator: Greetings and welcome to the Lincoln Electric 2024 second quarter financial results conference call. All lines have been placed on mute, and this call is being recorded.

Operator: Greetings and welcome to the Lincoln Electric 2024 second quarter financial results conference call. All lines have been placed on mute, and this call is being recorded.

Greetings and welcome to the Lincoln Electric 2020 for a second quarter financial results Conference call. All lines have been placed on mute and this call is being recorded.

Amanda Butler: It is my pleasure to introduce your host, Amanda Butler, Vice President of Investor Relations and Communications. Thank you. You may begin.

Operator: It is my pleasure to introduce your host, Amanda Butler, Vice President of Investor Relations and Communications. Thank you. You may begin.

Speaker Change: It is my pleasure to introduce your host Amanda Butler, Vice President of Investor Relations and communications. Thank you you may begin.

Amanda Butler: Thank you, Greg, and good morning, everyone.

Amanda H. Butler: Thank you, Greg, and good morning, everyone. Welcome to Lincoln Electric's second quarter 2024 conference call. We released our financial results earlier today, and you can find our release and this call slide presentation at LincolnElectric.com in the Investor Relations section. Joining me on the call today is Steve Hedlund, President and Chief Executive Officer, and Gabe Bruno, our Chief Financial Officer. Following our prepared remarks, we're happy to take your questions. But before we start our discussion, please note that certain statements made during this call may be forward-looking, and actual results may differ materially from our expectations due to a number of risk factors and uncertainties, which are provided in our press release and in our SEC filings on Forms 10-K and 10-Q.

Speaker Change: Thank you, Greg and good morning, everyone welcome to Lincoln Electric's second quarter 2024 Conference call. We released our financial results earlier today and you can find our release and this call slide presentation at Lincoln Electric Dot Com in the Investor Relations section joining me on the call today is Steve headland, President and Chief Executive Officer, and Gabe Bruno our Chief financial.

Amanda Butler: Welcome to Lincoln Electric's second quarter 2024 conference call. We released our financial results earlier today, and you can find our release and this call. We will file a presentation at linkinelectric.com in the Investor Relations section.

Amanda Butler: Joining me on the call today is Steve Hedlund, President and Chief Executive Officer, and Gay Bruno, our Chief Financial Officer. Following our prepared remarks, we're happy to take your questions.

Speaker Change: Officer following our prepared remarks, we're happy to take your questions, but before we start our discussion. Please note that certain statements made during this call may be forward looking and actual results may differ materially from our expectations due to a number of risk factors and uncertainties, which are provided in our press release and in our SEC filings on forms 10-K and 10-Q.

Amanda Butler: But before we start our discussion, please note that certain statements made during this call may be forward-looking and actual results may differ materially from our expectations due to a number of risk factors and uncertainties, which are provided on our press release and in our SEC filings on forms 10-K. In addition, we discussed financial measures that do not conform to US GAAP, a reconciliation of non-GAAP measures to the most comparable GAAP measures found in the financial tables in our earnings release, which again is available in the Investor Relations section for website at linkinelectric.com.

Speaker Change: In addition, we discuss financial measures that you're not conform to U S. GAAP a reconciliation of non-GAAP measures to the most comparable GAAP 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 Dot Com.

Steve Hedlund: And with that, I'll turn the call over to Steve Hedlund.

Amanda H. Butler: In addition, we discuss financial measures that do not conform to U.S. GAAP, a reconciliation of non-GAAP measures to the most comparable GAAP measures found in the financial tables in our earnings report, which again is available in the Investor Relations section of our website at LincolnElectric.com. And with that, I'll turn the call over to Steve Hedlund. Thank you, Amanda. Good morning, everyone.

Speaker Change: And with that I'll turn the call over to Steve headline Steve.

Steve Hedlund: Steve. Thank you, Amanda.

Steve: Thank you Amanda good morning, everyone turning to slide three I am pleased to report solid second quarter results demonstrating the team's strong execution of our higher standard strategy initiatives structural improvements in the business and diligent management of costs, which has enabled us to successfully navigate through a more challenging poor.

Steve Hedlund: Good morning, everyone. Turning to slide three, I am pleased to report solid second quarter results demonstrating the team's strong execution of our higher standard strategy initiatives, structural improvements in the business, and diligent management of costs, which has enabled us to successfully navigate through a more challenging portion of the cycle. Despite an organic sales decline of 4% in the quarter, we held our operating income margin steady at last year's record 17.4% rate. I would like to thank the global team for staying focused on our customers and executing our commercial and operational initiatives in a dynamic environment.

Steven B. Hedlund: Turning to slide three, I am pleased to report solid second-quarter results demonstrating the team's strong execution of our higher-standard strategy initiatives, structural improvements in the business, and diligent management of costs, which has enabled us to successfully navigate through a more challenging portion of the cycle. Despite an organic sales decline of 4% in the quarter, we held our operating income margin steady at last year's record 17.4% rate. I would like to thank the global team for staying focused on our customers and executing our commercial and operational initiatives in a dynamic environment.

Speaker Change: <unk> of the cycle despite.

Speaker Change: Despite an organic sales decline of 4% in the quarter, we held our operating income margin steady at last year's record 17, 4% rate.

Speaker Change: We'd like to thank the global team for staying focused on our customers and executing our commercial and operational initiatives in a dynamic environment.

Steve Hedlund: We also reported solid earnings performance, cash flow generation, and cash conversion at 110%. We continued to invest not only in growth via internal CAPX and two acquisitions, but also returned $91 million in cash to shareholders in the quarter through our dividend and share repurchases. We did this while maintaining top quartile ROIC performance, highlighting strong capital stewardship in the business.

Steven B. Hedlund: We also reported solid earnings performance, cash flow generation, and cash conversion at 110%. We continued to invest not only in growth via internal CapEx and two acquisitions but also returned $91 million in cash to shareholders in the quarter through our dividend and share repurchase. We did this while maintaining top quartile ROIC performance, highlighting strong capital stewardship in the business. Turning to slide four, we discuss organic sales trends in the quarter. We experienced lower demand in our two welding segments due to lower production levels among heavy industry OEM customers, moderating automotive production, and weak macroeconomic conditions impacting our customers in the general industry sector.

Speaker Change: We also reported solid earnings performance cash flow generation and cash conversion at 110%.

Speaker Change: We continued to invest not only in growth via internal Capex and two acquisitions, but also returned $91 million in cash to shareholders in the quarter through our dividend and share repurchases. We did this while maintaining top quartile ROIC performance highlighting strong capital stewardship.

Speaker Change: In the business.

Steve Hedlund: Turning to slide four to discuss organic sales trends in the quarter. We experienced lower demand and our two welding segments due to lower production levels among heavy industry OEM customers, moderating automotive production, and weak macroeconomic conditions impacting our customers in the future. We also saw a pause in capital spending for automation projects as the automotive OEMs rebalance future product plans between EVs, hybrids, and internal combustion powertrain platforms, and as small and medium-sized fabricators moderate their capital investment in the face of increasing economic uncertainty. These factors, along with challenging prior year comparisons and equipment, resulted in a 4% organic sales decline.

Steven B. Hedlund: We also saw a pause in capital spending for automation projects as the automotive OEMs rebalance future product plans between EVs, hybrids, and internal combustion powertrain platforms, and as small and medium-sized fabricators moderate their capital investment in the face of increasing economic uncertainty. These factors, along with challenging prior year comparisons in equipment, resulted in a 4% organic sales decline.

Speaker Change: Turning to slide four to discuss organic sales trends in the quarter.

Speaker Change: We experienced lower demand in our two welding segments due to lower production levels, among heavy industry OEM customers moderating automotive production and weak macroeconomic conditions impacting our customers and the general industry sector.

Speaker Change: We also saw a pause in capital spending for automation projects as the automotive Oems rebalanced future product plans between Evs and hybrids in internal combustion powertrain platforms and is.

Speaker Change: Small and medium sized fabricators moderate their capital investment and the pace of increasing economic uncertainty.

Speaker Change: These factors along with challenging prior year comparisons and equipment resulted in a 4% organic sales decline.

Steve Hedlund: Looking at our end markets, two of our five end markets, or approximately 30% of our end sector sales mix, grew in the quarter, led by strong international growth and construction, infrastructure, and global energy projects. General industries decline modestly, while heavy industry and automotive sectors were more challenged.

Steven B. Hedlund: Looking at our end markets, 2 of our 5 end markets, or approximately 30% of our end sector sales mix, grew in the quarter, led by strong international growth in construction infrastructure and global energy projects. General industries declined modestly, while heavy industry and the automotive sectors were more challenged. Moving to slide five and investments for long-term growth, I am pleased to report that we have added approximately $175 million of annualized sales from three acquisitions year to date.

Speaker Change: Looking at our end markets two of our five end markets or approximately 30% of our end sector sales mix grew in the quarter led by strong international growth in construction infrastructure and global energy projects Gen.

Speaker Change: In general industries declined modestly while heavy industry and automotive sectors were more challenged.

Steve Hedlund: Moving to slide five and investments for long-term growth, I am pleased to report that we have added approximately 175 million dollars of annualized sales from three acquisitions year to date. This generates 400 plus basis points of sales growth versus prior year, which is in line with our strategy. We previously highlighted our Red-Viking automation acquisition in April, and I am pleased to discuss two new acquisitions, including Vanair, which we announced earlier today. First, Interotec is a small but impressive automation integrator in Denmark that has developed a proprietary AI-based solution that automatically programs a welding robot with minimal human intervention.

Speaker Change: Moving to slide five and investments for long term growth I am pleased to report that we have added approximately $175 million of annualized sales from three acquisitions year to date.

Steven B. Hedlund: This generates 400 plus basis points of sales growth versus the prior year, which is in line with our strategy. We previously highlighted our Red Viking Automation Acquisition in April, and I am pleased to discuss two new acquisitions, including Bayonaire, which we announced earlier today. First, Inrotec is a small but impressive automation integrator in Denmark that has developed a proprietary AI-based solution that automatically programs a welding robot with minimal human intervention.

Speaker Change: This generates 400 plus basis points of sales growth versus prior year, which is in line with our strategy.

Speaker Change: We've previously highlighted our Red Viking automation acquisition in April and I am pleased to discuss two new acquisitions, including ban air, which we announced earlier today.

Speaker Change: First <unk> is a small but impressive automated it shouldn't integrator in Denmark that has developed a proprietary AI based solution that automatically programs of welding robot with minimal human intervention.

Steve Hedlund: This technology enables customers to reduce the time it takes to program a robot to make complex, repetitive welds from days to minutes. Initially designed for shipbuilding applications, we believe this technology is a game changer that can be deployed across a broad range of solutions. Earlier today, we announced the acquisition of Vanair, which is a leading player in mobile power solutions for the service truck industry. This acquisition extends our channel reach to sell our existing welding products to this customer segment, while expanding our portfolio of mobile and battery-powered solutions. We have been working with Vanair on several co-development projects and have seen very strong customer response to the products we have launched today.

Steven B. Hedlund: This technology enables customers to reduce the time it takes to program a robot to make complex, repetitive welds from days to minutes. Although initially designed for shipbuilding applications, we believe this technology is a game changer that can be deployed across a broad range of solutions. Earlier today, we announced the acquisition of Van Air, which is a leading player in mobile power solutions for the service truck industry. This acquisition extends our channel reach to sell our existing welding products to this customer segment while expanding our portfolio of mobile and battery-powered solutions.

Speaker Change: This technology enables customers to reduce the time it takes to program a robot to make complex repetitive world from days to minutes.

Speaker Change: Initially designed for shipbuilding applications. We believe this technology is a game changer that can be deployed across a broad range of solutions.

Speaker Change: Earlier today, we announced the acquisition of Van Air, which is a leading player in mobile power solutions for the service truck industry.

Speaker Change: This acquisition extends our channel reach to sell our existing welding products to this customer segment, while expanding our portfolio of mobile and battery powered solutions.

Steven B. Hedlund: We have been working with BAN Air on several co-development projects and have seen very strong customer response to the products we have launched to date. We estimate that our three acquisitions will generate an initial full-year earnings run rate of $0.14 to $0.16 per share, pre-synergies, as we work to integrate their operations. Moving to slide 6 and an update on our EV fast charger initiative, I am proud to report that we successfully launched our initial 150-kilowatt Valeon fast charger that was designed specifically to meet U.S. NEBI requirements.

Speaker Change: We have been working with van are on several co development projects and have seen very strong customer response to the products, we have launched to date.

Steve Hedlund: We estimate that our three acquisitions will generate an initial full-year earnings run rate of 14 to 16 cents per share, pres synergies, as we work to integrate their operations.

Speaker Change: We estimate that our three acquisitions will generate an initial full year earnings run rate of 14 to 16 <unk> per share pre synergies as we work to integrate their operations.

Steve Hedlund: Moving to slide 6 and an update on our EV Fast Charger initiative, I am proud to report that we successfully launched our initial 150 kilowatt Vellion Fast Charger that was designed specifically to meet the U.S. Navy requirements. We have achieved several key milestones and have received very encouraging feedback from prospective customers and continue to pursue a number of sales opportunities tied to the Navy program and private fleets. However, the EV charger market has evolved significantly in the last six months. The deployment of Navy funds has been very slow, and with new vehicles able to accept much higher charging levels, the market has begun to question how to future-proof investments in charging hardware.

Speaker Change: Moving to slide six and an update on our EV fast Charger initiative I am proud to report that we successfully launched our initial 150 kilowatt belly on fast charger that was designed specifically to meet the U S. Navy requirements. We have achieved several key milestones and have received very encouraging feedback from prospective customers.

Steven B. Hedlund: We have achieved several key milestones and have received very encouraging feedback from prospective customers and continue to pursue a number of sales opportunities tied to the NEBI program and private fleet. However, the EV charger market has evolved significantly in the last six months. The deployment of NEVI funds has been very slow, and with new vehicles able to accept much higher charging levels, the market has begun to question how to future-proof investments in charging hardware. As a result, several leading EV charging hardware manufacturers have become insolvent, exited the industry, or announced significant layoffs.

Speaker Change: And continue to pursue a number of sales opportunities tied that nervy program imply private fleets.

Speaker Change: However, the EV charger market has evolved significantly in the last six months the deployment of nervy funds has been very slow and with new vehicles able to accept much higher charging levels. The market has begun to question how to future proof investments and charging hardware.

Steve Hedlund: As a result, several leading EV charging hardware manufacturers have become insolvent, exited the industry, or announced significant layoffs. While response to our technology, manufacturing capabilities, and value proposition has been overwhelmingly positive, many customers now want products that differ materially from Navy specifications. In response, we are leveraging the modular nature of our product architecture to accelerate the introduction of new products to enable us to better serve evolving customer needs. We expect this will extend the start of any meaningful revenue ramp to late 2025. We remain confident that the long-term market potential is attractive and that we will continue to pursue this opportunity without the need for significant further investment.

Speaker Change: As a result, several leading EV charging hardware manufacturers have become insolvent exited the industry or announced significant layoffs.

Steven B. Hedlund: While response to our technology, manufacturing capabilities, and value proposition has been overwhelmingly positive, many customers now want products that differ materially from NEBI's specifications. In response, we are leveraging the modular nature of our product architecture to accelerate the introduction of new products to enable us to better serve evolving customer needs. We expect this will extend the start of any meaningful revenue ramp to late 2025. We remain confident that the long-term market potential is attractive and that we will continue to pursue this opportunity without the need for significant further investment.

Speaker Change: While response to our technology manufacturing capabilities and value proposition has been overwhelmingly positive many customers now want products that differ materially from W. Specifications. In response, we are leveraging the modular nature of our product architecture to accelerate the introduction of new products to enable us to better serve them.

Speaker Change: Balding customer needs.

Speaker Change: We expect this will extend the start of any meaningful revenue ramp to late 2025, we remain.

Speaker Change: Confident that the long term market potential is attractive and that we will continue to pursue this opportunity without the need for significant further investment.

Steve Hedlund: The incremental operating expenses associated with the EV Charger Initiative are almost fully offset by the improved performance of our additive manufacturing business, which is reaching an inflection point in commercial adoption. The maturation of additive manufacturing after several years of technology development and incubation is evidence of our ability to leverage our core competencies to create value outside of our legacy welding business.

Steven B. Hedlund: The incremental operating expenses associated with the EV charger initiative are almost fully offset by the improved performance of our additive manufacturing, which is reaching an inflection point in commercial adoption. The maturation of additive manufacturing after several years of technology development and incubation is evidence of our ability to leverage our core competencies to create value outside of our legacy welding business.

Speaker Change: The incremental operating expenses associated with the EV Charger initiative are almost fully offset by the improved performance of our additive manufacturing business, which is reaching an inflection point in commercial adoption.

Speaker Change: The maturation of additive manufacturing after several years of technology development and incubation is evidence of our ability to leverage our core competencies to create value outside of our legacy welding business.

Steve Hedlund: I am pleased with the team's execution of our strategy in a challenging environment while we continue to invest in long-term growth and operational efficiency. These efforts position us to capitalize on the many opportunities ahead to deliver superior value through the cycle.

Gabriel Bruno: I am pleased with the team's execution of our strategy in a challenging environment while we continue to invest in long-term growth and operational efficiency. These efforts position us to capitalize on the many opportunities ahead to deliver superior value through the cycle. Now, I'll pass the call to Gabe Bruno to cover the second quarter financials in more detail. Thank you, Steve.

Speaker Change: I am pleased with the team's execution of our strategy in a challenging environment, while we continue to invest in long term growth and operational efficiency.

Speaker Change: These efforts position us to capitalize on the many opportunities ahead to deliver superior value through the cycle.

Gabriel Bruno: Moving to slide seven, our second quarter sales declined 4% to $1,022,000,000, primarily due to 5.4% lower volume. We achieved 1% higher prices and benefited 1.2% from acquisitions, which were partially offset by 40 basis points of unfavorable foreign exchange. Gross profit dollars increased approximately 3% to $384 million, to a record 37.6% gross profit margin, which increased 240 basis points versus the prior year. Effective cost management and operational improvements generate strong profit performance. We recognize a $2.2 million LIFO benefit in the quarter.

Gabriel Bruno: And now I'll pass the call to Gabe Bruno to cover second quarter financials in more detail. Thank you, Steve. Moving to slide 7, our second quarter sales declined 4% to $1 billion, $22 million, primarily from 5.4% lower volumes. We achieved 1% higher price and benefited 1.2% from acquisitions, which were partially offset by 40 basis points of unfavorable foreign exchange. Growth profit dollars increased to approximately 3% to $384 million, to a record 37.6% growth profit margin, which increased 240 basis points versus a prior year. Effective cost management and operational improvements generated strong profit performance. We recognize a 2.2 million dollar life will benefit in the quarter.

Speaker Change: And now I'll pass the call to Gabe Bruno to cover second quarter financials in more detail.

Gabriel Bruno: Our SG&A expense increased 8% or approximately $16 million from a combination of acquisitions, higher employee-related costs, and incremental, unallocated corporate overhead costs. SG&A as a percent of sales increased 220 basis points to 20.4% versus the prior year on lower sales, but was relatively steady sequentially. We expect corporate expenses to be closer to $3 million per quarter in the back half of the year. Reported operating income declined 16% to $149 million, primarily due to $29 million in special item charges, including a $23 million non-cash rationalization charge from the final liquidation of our Russian business.

Gabriel Bruno: Thank you Steve.

Gabriel Bruno: We also incurred a $5 million loss from an asset disposal related to a small international divestiture, which helped shape our model, and $2 million in acquisition-related transaction costs. Excluding special items, Adjusted Operating Income declined approximately 4% to $178 million, while our Adjusted Operating Income Margin held steady versus the prior year at 17.4%, and interest expense net in the quarter declined 9% to $10.7 million. We expect our interest expense net for the full year 2024 to be relatively flat versus the prior year.

Gabriel Bruno: Moving to slide seven our second quarter sales declined 4% to $1.022 billion primarily from five.

Gabriel Bruno: 4% lower volumes, we achieved 1% higher price and benefited one 2% from acquisitions, which were partially offset by 40 basis points of unfavorable foreign exchange.

Gabriel Bruno: Gross profit dollars increased approximately 3% to $384 million to a record 37, 6% gross profit margin, which increased 240 basis points versus the prior year.

Gabriel Bruno: Fact of cost management and operational improvements generated strong profit performance.

Gabriel Bruno: Recognize a $2 2 million dollar LIFO benefit in the quarter.

Gabriel Bruno: Our SNA expense increased 8% or approximately $16 million from a combination of acquisitions, higher employee-related costs, and incremental, unallocated corporate overhead costs. SNA's percent of sales increased 2 to 20 basis points to 20.4% versus prior year on lower sales but was relatively steady sequentially. We expect corporate expenses to be closer to $3 million per quarter in the back half of the year.

Gabriel Bruno: Our SG&A expense increased 8% or approximately $16 million from a combination of acquisitions higher employee related costs and incremental unallocated corporate overhead costs SG&A as a percentage of sales increased 220 basis points to 24% versus prior year on lower sales, but was relatively soon.

Gabriel Bruno: Sequentially.

Gabriel Bruno: We expect corporate expenses to be closer to $3 million per quarter in the back half of the year.

Gabriel Bruno: Reported operating income declined 16% to 149 million dollars, primarily due to $29 million in special item charges, including a $23 million non-cash rationalization charge from the final liquidation of our Russian business. We also incurred a $5 million loss from an asset disposal related to a small international divestiture, which helped shape our model, and $2 million in acquisition-related transaction costs. Excluding special items, adjusted operating income declined approximately 4% to $178 million, while our adjusted operating income margin held steady versus prior year at 17.4%. Interest expense net in the quarter declined 9% to $10.7 million. We expect our interest expense net for the full year 2024 to be relatively flat versus prior year.

Gabriel Bruno: Reported operating income declined 16% to $149 million, primarily due to $29 million in special item charges, including a $23 million noncash rationalization charge from the final liquidation of our Russian business.

Gabriel Bruno: We also incurred a 5 million dollar loss from an asset disposal related to a small international and divestiture, which helped shape, our model and $2 million in acquisition related transaction costs.

Gabriel Bruno: Excluding special items adjusted operating income declined approximately 4% to $178 million, while our adjusted operating income margin held steady versus prior year at 17, 4%.

Gabriel Bruno: Interest expense net in the quarter declined 9% to $10 $7 million, we expect our interest expense net for the full year 2024 to be relatively flat versus prior year.

Gabriel Bruno: This reflects our recent refinancing announced in late June, where we issued $550 million of senior unsecured notes and used the proceeds to repay our $400 million term loan and fund acquisition. Once these new note transactions complete in August, we will have $1.25 billion in total debt with a weighted average interest rate, including the impact of interest rate swaps, of 4.08%. Moving further down the income statement, we reported a $1.6 million dollar other expense in the quarter. This reflects the net impact of a $2.4 million gain from the termination of interest rate swaps, offset by the $5 million loss on asset disposal, which I previously discussed.

Gabriel Bruno: This reflects our recent refinancing announced in late June where we issued $550 million of senior unsecured notes and used the proceeds to repay our $400 million term loan and fund acquisitions.

Gabriel Bruno: This reflects our recent refinancing announced in late June, where we issued $550 million of senior unsecured notes and used the proceeds to repay our $400 million term loan and fund acquisitions. Once these new note transactions complete in August, we will have $1.25 billion in total debt with a weighted average interest rate, including the impact of interest rate swaps, of 4.08%. We also entered into a new 5-year, $1 billion revolving credit facility to increase liquidity and align with our higher EBITDA performance. As of June 30th, we did not have any borrowings against the revolvers.

Gabriel Bruno: Once these new note transactions completed in August we will have one point to $5 billion in total debt with a weighted average interest rate, including the impact of interest rate swaps a 4.08%.

Gabriel Bruno: We also entered into a new five year $1 billion revolving credit facility to increase liquidity and align with our higher EBITDA performance at June 30th we did not have any borrowings against our revolver.

Gabriel Bruno: Moving further down the income statement, we reported a $1.6 million other expense in the quarter. This reflects the net impact of a $2.4 million gain from the termination of interest rate swaps offset by the $5 million loss on asset disposal, which I previously discussed. Excluding special items, other income was $3.4 million and was $6.7 million in the prior year period. Our second quarter effective tax rate was 25.6% on lower reported income.

Gabriel Bruno: Moving further down the income statement, we reported a $1 $6 million of other expense in the quarter. This reflects the net impact of the $2 $4 million gain from the termination of interest rate swaps.

Gabriel Bruno: Set by the 5 million dollar loss on asset disposal, which I previously discussed excluding special items. Other income was $3.4 million and was $6 $7 million in the prior year period.

Gabriel Bruno: Excluding special items, other income was $3.4 million and was $6.7 million in the prior year period. Our second quarter effective tax rate was 25.6% on lower reported income. On an adjusted basis, our tax rate was 21.2%. We continued to expect our full year 2024 adjusted 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 $1.77. Excluding special items, adjusted diluted earnings per share was $2.34.

Gabriel Bruno: Our second quarter effective tax rate was 25, 6% on lower reported income.

Gabriel Bruno: On an adjusted basis, our tax rate was 21, 2%. We continue to expect our full year 2024, adjusted 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.

Gabriel Bruno: On an adjusted basis, our tax rate was 21.2%. We continue to expect our full year 2024 adjusted effective tax rate to be in the low to mid 20% range, subject to the mix of earnings and anticipated extent of discrete tax hikes. Second quarter diluted earnings per share was $1.77. Excluding special items, adjusted diluted earnings per share was $2.34.

Gabriel Bruno: Second quarter diluted earnings per share was $1 77.

Gabriel Bruno: Excluding special items adjusted diluted earnings per share was $2 and 34 sacks.

Gabriel Bruno: Moving to our reportable segments on Slide 8. America's welding sales decreased 4% in the quarter, primarily due to 6.7% lower volumes with compression across all three product areas, reflecting factors previously discussed in a challenging prior comparison in automation and equipment systems. Price and the benefits of our Red Viking and Power Make acquisitions contributed approximately 3% sales growth. We expect price benefits of 50 to 100 basis points in the third quarter. America's welding segment second quarter adjusted EBIT decline to approximately 2% to $137 million. The adjusted EBIT margin increased 10 basis points versus prior year to 19.9% on effective cost management.

Gabriel Bruno: Moving to our reportable segments on slide eight, America's welding sales decreased 4% in the quarter, primarily due to 6.7% lower volumes with compression across all three product areas, reflecting factors previously discussed in a challenging prior comparison in automation and equipment systems. Price and the benefits of our Red Viking and Power MIG acquisitions contributed approximately 3% of sales growth. We expect price benefits of 50 to 100 basis points in the third quarter. America's welding segment second quarter adjusted EBIT declined approximately 2% to $137 million.

Gabriel Bruno: Moving to our reportable segments on slide eight.

Speaker Change: Americas welding sales decreased 4% in the quarter, primarily due to six 7% lower volumes with compression across all three product areas, reflecting factors, Steve previously discussed and a challenging prior year comparison in automation and equipment systems price and the benefits of our Red Viking and power and make act.

Speaker Change: Physicians contributed approximately 3% sales growth, we expect price benefits of 50 to 100 basis points in the third quarter.

Speaker Change: Americas welding segment's second quarter, adjusted EBIT declined approximately 2% to $137 million. The adjusted EBIT margin increased 10 basis points versus prior year to 19, 9% on effective cost management.

Gabriel Bruno: The adjusted EBIT margin increased 10 basis points versus the prior year to 19.9% on effective cost management. We expect America's welding to operate in the 19-20% EBIT margin range for the remainder of the year. Moving to slide nine, the international welding segment sales declined approximately 6% on 4% lower volume.

Gabriel Bruno: We expect America's welding to operate in the 19 to 20% EBIT margin range for the remainder of the year.

Speaker Change: We expect Americas welding to operate in the 19% to 20% EBIT margin range for the remainder of the year.

Gabriel Bruno: Moving to slide 9. The international welding segment sales declined approximately 6% on 4% lower volumes. Strong automation sales and project activity in portions of the Middle East and Asia Pacific regions continued to be offset by weak European macros. Price declined 1.2%, but did not impact underlying margin performance as lower price was offset by discipline cost management, which helped mitigate lower volumes. A 10.4% adjusted EBIT margin performance reflects quarter-specific operating inefficiencies, which we do not expect to repeat. We continue to expect the segment to perform in the 11 to 12% EBIT margin range for the full year 2024.

Speaker Change: Moving to slide nine the international welding segment sales declined approximately 6% on 4% lower volumes strong automation sales and project activity in portions of the Middle East and Asia Pacific regions continued to be offset by weak European macros.

Gabriel Bruno: Strong automation sales and project activity in portions of the Middle East and Asia-Pacific regions continue to be offset by weak European macros. Price declined 1.2% but did not impact underlying margin performance as lower price was offset by disciplined cost management, which helped mitigate lower volume. A 10.4% adjusted EBIT margin performance reflects quarter-specific operating inefficiencies, which we do not expect to repeat. We continue to expect the segment to perform in the 11-12% EBIT margin range for the full year 2024.

Speaker Change: Price declined one 2%, but did not impact underlying margin performance as lower price was offset by disciplined cost management, which helped mitigate lower volumes of 10, 4% adjusted EBIT margin performance reflects quarter specific operating inefficiencies, which we do not expect to repeat.

Speaker Change: We continue to expect the segment to perform in the 11% to 12% EBIT margin range for the full year 2024.

Gabriel Bruno: Moving to the Harris Products Group on slide 10, second quarter sales increased to approximately 3%, led by 5% higher price on rising metal costs, which was partially offset by 2% lower volumes. Volume declines continued to narrow in Harris as retail and specialty gas grew, though were offset by the challenge HVAC market. Adjusted EBIT increased to approximately 28% to $25 million. The adjusted EBIT margin increased 350 basis points to a record 18.2%, reflecting a seasonally high quarter, structural improvements in their operations, and effective cost management. We expect the team to generate EBIT margins in the 16-17% range for the balance of the year.

Gabriel Bruno: Moving to the Harris Products Group on slide 10, second quarter sales increased approximately three percent, led by a five percent higher price on rising metal costs, which was partially offset by two percent lower volume. Volume declines continued to narrow in Harris as retail and specialty gas grew, but were offset by the challenged HVAC market.

Speaker Change: Moving to the Harris products group on Slide 10 second quarter sales increased approximately 3% led by 5% higher price on rising metal costs, which was partially offset by 2% lower volumes volume declines continued to narrow and Harris as retail and specialty gas grew.

Speaker Change: But were offset by the challenge HVAC market.

Gabriel Bruno: Adjusted EBIT increased approximately 28% to $25 million. The adjusted EBIT margin increased 350 basis points to a record 18.2%, reflecting a seasonally high quarter, structural improvements in their operations, and effective cost management. We expect the team to generate EBIT margins in the 16-17% range for the balance of the year. Moving to slide 11. We generated $171 million in cash flows from operations in the quarter, resulting in 110% cash conversion.

Speaker Change: Adjusted EBIT increased approximately 28% to $25 million the.

Speaker Change: The adjusted EBIT margin increased 350 basis points to a record 18, 2%, reflecting a seasonally high quarter structural improvements in their operations and effective cost management, we expect the team to generate EBIT margins in the 16% to 17% range for the balance of the year.

Gabriel Bruno: Moving to slide 11, we generated $171 million in cash flows from operations in the quarter, resulting in 110% cash conversion. Our average operating work in capital decreased 90 basis points to 18% versus the comparable year period on improved inventory levels.

Speaker Change: Moving to slide 11, we.

Gabriel Bruno: We generated $171 million in cash flows from operations in the quarter, resulting in 110% cash conversion.

Gabriel Bruno: Our average operating working capital decreased 90 basis points to 18% versus the comparable year period on improved inventory levels. Moving to slide 12. We invested $176 million in growth in the quarter, from $23 million in CapEx and $153 million in acquisitions. We returned $91 million to shareholders through our higher dividend payout and approximately $50 million of share repurchases. We maintain a solid adjusted return on invested capital of 23.7%. For the balance of the year, we will continue to focus on growth and opportunistic share repurchase. Turning to slide 13 in our full-year 2024 Operating Assumption, we are maintaining the assumptions we provided in late May that reflect slowing end-market trends in a more challenged portion of the industrial cycle.

Gabriel Bruno: Our average operating working capital decreased 90 basis points to 18% versus the comparable year period on improved inventory levels.

Gabriel Bruno: Moving to slide 12, we invested $176 million in growth in the quarter from $23 million in CAPX and $153 million in acquisitions. We returned $91 million to shareholders through our higher dividend payout and approximately $50 million of share repurchases. We maintained a solid adjusted return on invested capital of 23.7%. For the balance of the year, we will continue to focus on growth and opportunistic share repurchases.

Gabriel Bruno: Moving to slide 12, we invested $176 million in growth in the quarter from $23 million in Capex and $153 million in acquisitions.

Gabriel Bruno: We returned $91 million to shareholders through our higher dividend payout and approximately $50 million of share repurchases. We maintain a solid adjusted return on invested capital of 23, 7%.

Gabriel Bruno: For the balance of the year, we will continue to focus on growth and opportunistic share repurchases.

Gabriel Bruno: Turning to slide 13 in our full year 2024 operating assumptions. We are maintaining the assumptions we provided in late May that reflect slowing end market trends in a more challenged portion of the industrial cycle. Our sales in June and July have tracked to these lower assumptions. As we progress through the second half of the year, we are focused on heavy industries' demand trends and the timing of automotive OEM's capital expenditure plans. As these two factors present added risk to our operating assumptions. As stated in May, we expect a mid-single-digit percent decline in organic sales in 2024, likely at the higher end of the range with typical seasonality.

Gabriel Bruno: Turning to slide 13, and our full year 2024 operating assumptions, we are maintaining the assumption assumptions. We provided in late may that reflects slowing end market trends in a more challenged portion of the industrial cycle or sales in June and July have track to these lower assumptions.

Gabriel Bruno: Our sales in June and July have tracked to these lower assumptions. As we progress through the second half of the year, we are focused on heavy industry demand trends and the timing of automotive OEMs' capital expenditure plans, as these two factors present added risk to our operating assumptions. As stated in May, we expect a mid-single-digit percent decline in organic sales in 2024, likely at the higher end of the range with typical seasonality.

Gabriel Bruno: As we progressed through the second half of the year. We are focused on heavy industries demand trends and the timing of automotive Oems capital expenditure plans as these two factors present added risk to our operating assumptions.

Gabriel Bruno: As stated in May we expect a mid single digit percent decline in organic sales in 2024 likely at the higher end of the range with typical seasonality.

Gabriel Bruno: We expect price to contribute 50 to 100 basis points of growth, with volume headwinds from weak industrial activity and slower capital spending, which will be most notable in our welding segments. Acquisitions are expected to contribute $75 to $85 million of sales in the second half of the year, primarily in America's welding. We anticipate acquisition sales will be weighted to the fourth quarter based on the timing of revenue recognition. In the third quarter, we expect an approximate 300 basis point contribution to consolidate sales growth with the addition of Vanair. We expect acquisitions to contribute between 5 to 7 cents of adjusted EPS in the second half of the year with high integration activity.

Gabriel Bruno: We expect price to contribute 50 to 100 basis points of growth with volume headwinds from weak industrial activity and slower capital spending, which will be most notable in our welding segment. Acquisitions are expected to contribute $75 to $85 million of sales in the second half of the year, primarily in America's welding.

Gabriel Bruno: We expect price to contribute 50 to 100 basis points of growth, but volume headwinds from weak industrial activity and slower capital spending which will be most notable in our welding segments.

Gabriel Bruno: Acquisitions are expected to contribute $75 million to $85 million of sales in the second half of the year, primarily in Americas welding, we anticipate acquisition sales will be weighted to the fourth quarter based on the timing of revenue recognition.

Gabriel Bruno: We anticipate acquisition sales will be weighted to the fourth quarter based on the timing of revenue recognition. In the third quarter, we expect an approximate 300 basis point contribution to consolidate sales growth with the addition of Van Air. We expect acquisitions to contribute between $0.05 to $0.07 of adjusted EPS in the second half of the year with high integration activity. Excluding acquisitions, we continue to anticipate solid operating income margin performance at approximately 17.5% on a full-year basis.

Gabriel Bruno: In the third quarter, we expect an approximate 300 basis point contribution to consolidated sales growth with the addition of van Air We expect acquisitions to contribute between five to seven of adjusted EPS in the second half of the year with high integration activity.

Gabriel Bruno: Excluding acquisitions, we continue to anticipate solid operating income margin performance at approximately 17.5 percent on a full-year basis. This reflects the benefits of diligent cost management, structural improvements in both Harris and Automations operating model, as well as their early benefits from cost-saving initiatives. We estimate that the acquisitions may unfavorably impact our estimated full-year average operating income margin by up to 30 basis points, but we are working to minimize the impact.

Gabriel Bruno: Excluding acquisitions, we continue to anticipate solid operating income margin performance at approximately 17, 5% on a full year basis. This reflects the benefits of diligent cost management structural improvements in both Harris and automation is operating model as well as early benefits from cost savings.

Gabriel Bruno: This reflects the benefits of diligent cost management, structural improvements in both Harris and Automation's operating models, as well as their early benefits from cost-saving initiatives. We estimate that the acquisitions may unfavorably impact our estimated full-year average operating income margin by up to 30 basis points, but we are working to minimize the impact. Before I pass the call for questions, I would like to summarize that while we are managing through a challenging portion of the cycle, we remain focused on growth.

Gabriel Bruno: <unk>.

Gabriel Bruno: We estimate that the acquisitions made unfavorably impact our estimated full year average operating income margin by up to 30 basis points, but we are working to minimize the impact.

Gabriel Bruno: Before I pass the call for questions, I would like to summarize that while we are managing through a challenging portion of the cycle, we remain focused on growth, whether through innovation by driving new solutions into the market, from our core businesses, as well as through our adjacent new technology initiatives and by accelerating the top line with acquisitions. We are also operating a more efficient business as demonstrated by our ability to mitigate weakness in demand with stable margins, strong cash flows, and 100 plus percent cash conversion.

Gabriel Bruno: Before I pass the call for questions I would like to summarize while we are managing through a challenging portion of the cycle, we remain focused on growth.

Gabriel Bruno: Whether through innovation by driving new solutions into the market from our core businesses as well as through our adjacent new technology initiatives and by accelerating the top line through acquisition. We're also operating a more efficient business as demonstrated by our ability to mitigate weakness in demand with stable margins, strong cash flows, and 100 plus percent cash conversion. And now I would like to turn the call over to you for questions. Thanks, Gabe. Ladies and gentlemen, at this time, we will be conducting a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad.

Gabriel Bruno: Through innovation by driving new solutions into the market from our core businesses as well as through our adjacent new technology initiatives and by accelerating the top line with acquisitions.

Gabriel Bruno: We're also operating a more efficient business as demonstrated by our ability to mitigate weakness in demand with stable margins strong cash flows and 100 plus percent cash conversion and now I would like to turn the call over for questions.

Operator: And now I would like to turn the call over for questions. Thanks, Gabe. Ladies and gentlemen, at this time we will be conducting a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Once again, star one. And if you would like to withdraw your question, simply press star one again. To ensure that everyone has an opportunity to participate, we ask that you limit your questions to one question and one follow-up question, and then return to the queue.

Operator: Once again, press star one. And if you'd like to withdraw your question, simply press star one again. To ensure that everyone has an opportunity to participate, we ask that you limit your questions to one question and one follow-up question, and then return to the Q&A. Now we will pause for just a moment to compile the Q&A roster. And it looks like our first question today comes from the line of Angel Castillo from Morgan Stanley. Angel, please go ahead.

Gabriel Bruno: Thanks, Gabe ladies and gentlemen at this time, we will be conducting a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad once again star one and if you'd like to withdraw your question simply press Star one again.

Speaker Change: To ensure that everyone has an opportunity to participate we ask that you limit your questions to one question and one follow up question and then Richard to the queue.

Operator: And now we will pause just a moment to compile the queue in a roster.

Speaker Change: And now we will pause just a moment to compile the Q&A roster.

Angel Castillo: And it looks like our first question today comes from the line of Angel Caspio from Morgan's Family. Angel, please go ahead. Hi. Good morning. Thanks for taking my question.

Angel Castillo: Hi, good morning. Thanks for taking my question. I was hoping we could unpack a little bit more just what you're seeing from the kind of end market demand perspective. It looked like there were, you know, some buckets where maybe we saw a little bit of kind of sequential improvement. But others where we're hearing, you know, under production, or just, you know, continued deterioration in the second half. So just based on kind of your order books that you see today, just, you know, where the kind of conditions 3Q to date are and kind of evolving. Yeah, so Angel, thanks for that question.

Speaker Change: And it looks like our first question today comes from the line of Angel Castillo from Morgan Stanley Angel. Please go ahead.

Angel Castillo: Hi, Good morning, Thanks for taking my question I was hoping we could unpack a little bit more just what youre seeing it kind of from an end market demand perspective. It looks like there were some buckets, where maybe we saw a little bit of kind of sequential improvement, but others, where we're hearing you know under production or just continued deterioration into the second half. So just based on kind of your order book.

Steve Hedlund: I was hoping we could unpack a little bit more just what you are seeing at the end market demand perspective. It looked like there were some buckets where maybe we saw a little bit of sequential improvement, but others were hearing under production or just continued deterioration into the second half.

Steve Hedlund: So just based on kind of your order books that you see today, we are kind of conditioned and piqued a date and kind of evolving.

Speaker Change: So you see today, just a you know we're kind of conditions in pre K to date and kind of evolving.

Steve Hedlund: Yes, Angel. Thanks for that question. Just to emphasize, as we adjusted our assumptions at the end of May, we saw the progression of those same demand patterns in June and July. And, as we noted, we saw an acceleration of softness in certain areas within heavy industry, particularly in the ag side of our business. And so we see more of that progressively into the second half. When we think about demand within our automation business, and we've talked about some pause between how the market is considering its next steps between EV investment, ICE, and even hybrid. And so we see that air pocket or pause continuing.

Steven B. Hedlund: Just to emphasize, you know, as we adjusted our assumptions at the end of May, we saw the progression of those same demand patterns in June and July. And, you know, as we noted, we saw an acceleration of softness in certain areas within heavy industry, particularly in the ag side of our business. And so we see more of that in the second half.

Angel Castillo: Yes, Hi, Angel. Thanks for that question, just just to emphasize you know as.

Angel Castillo: As we adjusted our assumptions at the end of May and we saw the progression of those same demand patterns in June and July.

Gabriel Bruno: And as we noted we saw an acceleration of softness in certain areas within heavy industry, particularly in the AG side of our business and so we see more of that progressively into the second half when we think about demand within our automation business and we've talked about some pause between how the market.

Steven B. Hedlund: When we think about demand within our automation business, and we've talked about some pause between how the market is considering its next steps between EV investment, ICE, and even hybrid, we see that air pocket or pause continuing. And so as we look at end market progression, we see more of the same in what we have seen in our business to date. And that's why we've maintained the assumptions as we have. And could you maybe help us quantify just the degree of coverage you now have within automation?

Gabriel Bruno: Is considering its next steps between EV investment ice and even hybrid and so we see that air pocket or pause continuing and so as we look at.

Steve Hedlund: And so, as we look at end market progression, we see more of the same in what we have seen our business to date, and that's why we've maintained the assumptions as we have.

Gabriel Bruno: And market progression, we see more of the same and in what we have seen in our business to date and that's why we've maintained the assumptions as we have.

Steve Hedlund: Nick, could you maybe help us quantify the degree of coverage you now have within automation? I think historically, you've had kind of six months' visibility within that. Is that still kind of the case, or just given some of the pause that we've seen in order to, you know, how is that kind of coverage level evolving? Yeah, you know, I think that's a fair assumption still, on average, in that six month type of outlook. But we did point to, on the short cycle sign, which is about 15% of our automation business, we saw some pullback, particularly in the small-to-mid science fabricators.

Speaker Change: And then could you maybe help us quantify the degree of coverage are you now have within automation I think historically, you've had kind of six month visibility within that.

Steven B. Hedlund: I think, historically, you've had kind of six-month visibility within that. Is that still kind of the case, or just given some of the pause that we've seen in order to, you know, how is that kind of coverage level evolving? Yeah.

Speaker Change: Is that still kind of a case or just given some of the pause that we've seen in order of scale. You know how is that kind of coverage level are evolving.

Steven B. Hedlund: You know, Angel, I think that's a fair assumption still, on average, in that six-month type of outlook. But we did point out that on the short cycle side, which is about 15 percent of our automation business, we saw some pullback, particularly in the small-to-midsize fabricators. So that continues to be a challenge for us. But in general, when we look at projects, they do extend between three to six months on the shorter end, and some of the longer projects, 4E, for example, are beyond that. But six months is a fair representation of our mission. Very helpful. Thank you. Thanks, Angel.

Speaker Change: I think that's a fair assumption still on average and at six months type of outlook, but we did point to the short cycle side, which is about 15% of our automation business. We saw some pullback, particularly in the small to midsize fabricators. So that continues to be a challenge for us, but it but in general I mean, we.

Steve Hedlund: So that continues to be a challenge for us. But in general, I mean, we look at projects. I mean, they do extend between three, six months on the shorter end and some of the longer projects, for example, are beyond that. But six months is a fair representation of them.

Speaker Change: Look at projects I mean, they do extend between three to six months on the shorter end and some of the longer projects for <unk> for example, or beyond that but six months is a fair representation of our mix.

Angel Castillo: Thanks. Very helpful.

Angel Castillo: Thank you.

Speaker Change: Very helpful. Thank you.

Operator: Thanks, Angel.

Bryan Francis Blair: And our next question comes from the line of Bryan Blair with Oppenheimer. Bryan, please go ahead. Thank you. Good morning, everyone.

Angel Castillo: Thanks Angel.

Bryan Blair: And our next question comes from the line of Brian Blair with Oppenheimer. Brian, please go ahead. Thank you. Good morning, everyone.

Speaker Change: And our next question comes from the line of Bryan Blair with Oppenheimer. Brian. Please go ahead.

Bryan Francis Blair: Thank you good morning, everyone Hey.

Bryan Blair: Hey, Brian. In terms of valiant commercialization, you're not surprising that that timeline has been pushed back as your team's view on the medium-term revenue potential shifted, given all the moving parts of the competitive landscape. And similarly, it's still the expectation that DC Saster after revenue will be mixed accretive as it perhaps.

Speaker Change: Brian.

Steven B. Hedlund: In terms of... Valium commercialization, and not surprising that that timeline has been pushed back a bit. Has your team's view on the medium-term revenue potential shifted given all the moving parts of the competitive landscape? And similarly, is it still the expectation that DC fast charger revenue will be mixed accretive as it wraps? Yes. So Bryan, take that in reverse order.

Speaker Change: In terms of.

Speaker Change: Valeant commercialization.

Speaker Change: And not surprising.

Speaker Change: Timeline has been pushed back a bit has your your team's view on the medium term revenue potential shift.

Speaker Change: Shifting given all the moving parts of the competitive landscape and similarly.

Speaker Change: Is it still your expectation to that DC SaaS charter revenue moving mix accretive as it ramps.

Steve Hedlund: Yes, so Brian, take that in reverse order. Yes, we still expect EV revenue to be accretive to the business. We still believe the market is there. The US needs more robust DC fast charging infrastructure in order to drive the adoption of electric vehicles. The real question is on the timing of how the money is going to be invested to do that. And, as I mentioned, the prepared remarks, the NEBI program roll out of the funds has been much slower than anyone anticipated, which has had two effects. One, people aren't buying the hardware at the rate that we and everyone else in the market thought they were going to be buying at.

Steven B. Hedlund: Yes, we still expect EV revenue to be accretive to the business. We still believe the market is there. The US needs more robust DC fast charging infrastructure in order to drive the adoption of electric vehicles. The real question is the timing of how the money is going to be invested to do that. And, as I mentioned in my prepared remarks, the NEBI program rollout of the funds has been much slower than anyone anticipated, which has had two effects.

Speaker Change: Yes, so Brian take that in reverse order, yes, we still expect revenue to be accretive to the business. We still believe the market is there the U S needs a more robust DC fast charging infrastructure in order to drive the adoption of electric vehicles the rail.

Speaker Change: Question is on the timing of how the money is going to be invested to do that and as I mentioned in the prepared remarks. The Navy program rollout of the funds has been much slower than anyone anticipated.

Speaker Change: Which has had two effects one people arent buying the hardware at the rate that we and everyone else in the market that they're going to be buying at and second is I think the U S has missed the opportunity to drive standardization around a common platform of 150, kilowatts, charger, which spending or the seven or 8 billion relatively quickly.

Steven B. Hedlund: One, people aren't buying the hardware at the rate that we and everyone else in the market thought they were going to be buying at. And second, I think the U.S. has missed the opportunity to drive standardization around, which would have driven everybody to adopt that as the main standard in the industry. Now what you're seeing is a lot of people looking at the vehicles that can take higher charging levels, looking at the finite capacity they have in terms of electrical service to a site, and trying to figure out how to best optimize that.

Steve Hedlund: And second, as I think the US has missed the opportunity to drive standardization around a common platform of 150 kilowatt charger, which spending the seven or eight billion relatively quickly would have driven everybody to adopt that as the main standard in the industry. Now what you're seeing is a lot of people looking at the vehicles that can take higher charging levels, looking at the finite capacity they have in terms of electrical service to a site and trying to figure out how to best optimize that. And so you've got a lot of different customers with a lot of different ideas about how to do that.

Speaker Change: Would have driven everybody to adopt that as the the main standard in the industry now what Youre seeing is a lot of people are looking at the vehicles that can take higher charging levels looking at the finite capacity. They have in terms of electrical service to a site and trying to figure out how to best optimize that and so you've got a lot of different customer.

Steven B. Hedlund: And so you've got a lot of different customers with a lot of different ideas about how to do that. We typically involve the idea of power sharing, dynamic power sharing between two different charge dispensers, which was something we had on our roadmap anyway, and so we're accelerating the work on that so that we would be in a position to be able to offer that capability to customers.

Speaker Change: As with a lot of different ideas about how to do that they typically involve the idea of power sharing dynamic power sharing between two different charged dispensers, which was something we had on our road map anyway, and so we are accelerating the work on that so that we'd be in a position to be able to offer that capability to customers, but it's still anyone's.

Steve Hedlund: They typically involve the idea of power sharing, dynamic power sharing between two different charge dispensers, which was something we had on our roadmap anyway. And so we're accelerating the work on that so that we'd be in a position to be able to offer that capability to customers, but it's still anyone's guess as to when and how quickly this is going to mature.

Steven B. Hedlund: But it's still anyone's guess as to when and how quickly this is going to mature, but we believe in the long-term potential, and I think the team has been doing a great job of getting us to where we are now in a very short period of time.

Speaker Change: Guess as to when and how quickly this is going to mature, but we believe in the long term potential and I think the team has been doing a great job of getting us to where we are now in a very short period of time.

Steve Hedlund: But we believe in the long-term potential, and I think the team has been doing a great job of getting us to where we are now in a very short period of time.

Bryan Blair: Understand, very helpful color and your comments on additives were quick, encouraging those directionally sell.

Steven B. Hedlund: Your comments on additives were quite encouraging, at least directionally. So we've always found that to be a very intriguing technology and initiative for your team. I guess, just to level the playing field, what's the run rate revenue now for additives? What's the current profitability?

Speaker Change: Understood very helpful color.

Speaker Change: Uh huh.

Speaker Change: Comments on additive.

Speaker Change: Yeah quite encouraging at least directionally.

Steve Hedlund: We've always found that to be very intriguing technology and initiative for your team. I guess just a level said what's the run rate revenue now of additives, what's current profitability, and how does your team think about the medium term potential of platform or initiative scale. Yeah, so so Brian, the run rate of the business now on a revenue basis is on the order of 10 million, which I can appreciate isn't necessarily sound all that exciting. To outside observers, we’ve progressed from the position of printing blocks and test coupons and things of that nature to be able to validate that the technology works to prospective customers.

Speaker Change: And we've always found that students are very intriguing technology initiatives for your team.

Speaker Change: I guess just to level set what's the run rate revenue now are additive.

Speaker Change: What's current profitability.

Speaker Change: How does your team think about the medium term potential.

Speaker Change: Platform or initiatives scale.

Steven B. Hedlund: And how does your team think about the medium term potential of, platform or initiative scale. Yeah, so, so Brian, the run rate of the business now on a revenue basis is on the order of 10 million, which I can appreciate doesn't necessarily sound all that exciting, to outside observers, but we've progressed from the position of printing blocks and test coupons and things of that nature to be able to validate that the technology works to prospective customers to we're now actually printing parts that would go into production, doing destructive testing on those, passing all those tests with flying colors.

Speaker Change: Yeah. So so Brian the run rate of the business now on a revenue basis is on the order of $10 million, which Ah I can appreciate it isn't necessarily sound all that exciting to us.

Speaker Change: Outside observers, but we've progressed from the position of printing blocks and test coupons and things of that nature to be able to validate that the technology works to perspective customers to wear now actually printing parts that would go into production doing destructive testing on those passing.

Steve Hedlund: So we're now actually printing parts that would go into production, doing destructive testing on those, passing all those tests with flying colors. And so we're seeing a real groundswell of enthusiasm among the targeted customer base to use additive manufacturing to replace large castings for which there's a very long supply chain and for which the quality of those parts is not particularly good. The customer typically has to do a lot of well repairs on them before they can put them into service. So our technology gives them a higher quality product and a much shorter lead time.

Speaker Change: All of those tests with flying colors, and so we're seeing a real groundswell of enthusiasm among the targeted customer base to use additive manufacturing to replace large castings for which there is a very long supply chain and for which the quality of those parts is not particularly good the customer typically has to do a lot of well repairs on them.

Steven B. Hedlund: And so we're seeing a real groundswell of enthusiasm among the targeted customer base to use additive manufacturing to replace large castings for which there is a very long supply chain and for which the quality of those parts is not particularly good. The customer typically has to do a lot of weld repairs on them before they can put them into service.

Speaker Change: Before they can put them into service so our technology gives them a higher quality product in a much shorter lead times. So we're seeing just a tremendous uptick in the activity level from our customers around trying to move this from a validation stage into actually using additive parts and production.

Steven B. Hedlund: So our technology gives them a higher quality product and a much shorter lead time. So we're seeing just a tremendous uptick in the activity level from our customers around trying to move this from a validation stage into actually using additive parts in production. The more exciting part about this, at least from a financial standpoint, is that while the revenues are not that large at this point, we're getting the bearings off the business.

Steve Hedlund: So we're seeing just a tremendous uptick in the activity level from our customers around trying to move this from a validation stage into actually using additive parts in production.

Steve Hedlund: The more exciting part about this, at least from a financial standpoint, is that while the revenues are not that large at this point, we're getting the brackets off the business. We've been investing about five to six million dollars of operating expense for several years to develop this technology, and to be able to get that to flip from the red to the black is a very significant milestone for us in varying.

Speaker Change: The more exciting part about this at least from a financial standpoint is while the revenues are not that.

Speaker Change: Large at this point, we're getting the brackets off the business, we've been investing about $5 million to $6 million of operating expense for several years to develop this technology and to be able to get that to flip from the red to the black is a great a very significant milestone for us and very encouraging.

Steven B. Hedlund: We've been investing about $5 to $6 million in operating expenses for several years to develop this technology and to be able to get that to flip from the red to the black. Got it. I appreciate all the detail. Thanks again.

Speaker Change: Got it I appreciate all the detail thanks again.

Nathan Jones: Thanks, Brian. And our next question comes from the line of Nathan Jones with Steven. Nathan, please go ahead. Good morning, everyone. Nathan, I guess I'll start off following up to Bryan's question on Addictive there. Run rate revenue 10 million today. What do you think the, I don't know, growth rate for that potential addressable market size for that would be still very early in the commercialization of that as well. And it would seem like a relatively small addressable market, but with extremely high value to the customer.

Brian: Thanks, Brian.

Bryan Francis Blair: Thanks, Bryan. And our next question comes from the line of Nathan Jones with Stiefel. Nathan, please go ahead. Good morning, everyone. Good morning, Nathan.

Speaker Change: And our next question comes from the line of Nathan Jones with Stifel. Nathan. Please go ahead.

Nathan Hardie Jones: Good morning, everyone.

Nathan Hardie Jones: I guess I'll start off following up on Bryan's question on attitude there. Run rate revenue, 10 million today. What do you think the, I don't know, growth rate for that potential addressable market size for that would be? Because you're still very early in the commercialization of that as well.

Nathan: Nathan that's all.

Nathan Hardie Jones: I guess I'll start off following up to Brian.

Nathan Hardie Jones: Question on attitude there.

Speaker Change: Run rate revenue $10 million today, what do you think.

Speaker Change: Our growth rate for that potential addressable market size for that would be but it's still very early in the commercialization of that as well and it would seem like.

Steven B. Hedlund: And it would seem like a relatively small addressable market but with extremely high value to the customer. Yeah, so Nate, let me piggyback on your comment that we're very early in the commercialization of this, and we have customers that are talking really big numbers and are very excited about it, but yet we don't have all the proof points to justify those really big numbers we're talking about. So, you know, we view this as a long-term play for the business with great upside and optionality, but we're not yet at a point where we're ready to give you projections or guidance around revenue. And they just say, I don't know, you know, the dynamics of that.

Speaker Change: A relatively small addressable market, but with extremely high value to the customer.

Nathan Jones: Yeah, so Nate, let me, let me piggyback on your comment that we're very early in the commercialization of this, and we have customers that are talking really big numbers and are very excited about it, but yet we don't have all the POs to justify those really big numbers we're talking about. So, you know, we view this as a long-term play for the business with great upside and optionality, but we're not yet at a point where we're ready to give you projections or guidance around revenue and the like. And the dynamics that Steve shared in terms of investment, both capital and operating, just gives us the patience to navigate, you know, how we create value in both these areas DC fast charges and additive, and that just gives us a very promising outlook long term while we're navigating the development of these commercial strategies.

Speaker Change: Yeah. So Nate let me let me piggyback on your comment that we're very early in the commercialization of this and we have customers that are talking really big numbers and are very excited about it but yet we don't have all the pose to justify those really big numbers, we're talking about so we view this.

Speaker Change: As a long term play for the business with great upside and Optionality, but we're not yet at a point, where we're ready to give you projections or guidance around revenue and the like.

Speaker Change: Fair enough.

Chip: The dynamics that chip.

Steven B. Hedlund: Steve shared in terms of investment, both capital and operating, just gives us the patience to navigate, you know, how we create value in both these areas, DC fast charges and additive, and that just gives us a very promising outlook long-term while we're navigating the development of these commercial strategies. Okay, thanks for that.

Chip: Steve shared in terms of investment both capital and operating just gives us the patience to navigate.

Nathan Hardie Jones: How we create value in both these areas DC fast charge as an additive and that just gives us.

Nathan Hardie Jones: Very promising outlook long term, while we are navigating the development of these commercial strategies.

Nathan Hardie Jones: Okay.

Nathan Jones: Okay, thanks for that.

Steven B. Hedlund: I'm going to ask my second question on the Van Air acquisition. It's a little bit of a departure from your recent acquisitions that are focused on automation. Can you talk about the strategic value you think that that brings to LECO? How can you leverage either your own portfolio to grow that business faster or leverage Vanair to grow your own portfolio? What kind of cost synergies and, if you're willing, the purchase multiple?

Speaker Change: Okay. Thanks for that.

Nathan Jones: I'm going to, my second question, I'm going to ask on the Vanair acquisition. It's a little bit of a departure from your recent acquisitions that are focused in automation. Can you talk about the strategic value you think that that brings to Lego how you can leverage that your own portfolio to grow that business faster or leverage Vanair to grow your own portfolio. What kind of cost energy then, and if you're willing to purchase multiple.

Speaker Change: My second question I'm going to ask on that the ban air acquisition, it's a little bit of a departure for them.

Speaker Change: Your recent acquisitions that are focused in automation.

Speaker Change: Can you talk about the strategic value you think that that brings to leak out how you can leverage that.

Speaker Change: Your own portfolio.

Speaker Change: Portfolio to grow that business faster or leverage vantage of Gregory Ryan portfolio, what kind of costs.

Speaker Change: Cost synergies and and if youre willing the purchase multiple.

Steve Hedlund: Sure, Nate, I'll talk about the strategy, and then I'll let Gabe handle the purchase multiple. So, we're really excited about this acquisition. We have been selling products into the work truck industry for several years. One of our leading competitors is actually much stronger in this market than we are, and we've found that our ability to reach the customers and penetrate the market through our traditional channels of distribution has been fairly limited. We think that this acquisition will significantly accelerate our ability to sell existing welding-based products to the work truck industry. And then both we and Vanair have been working on battery powered solutions that provide customers with a lot of environmental and operating benefits to be able to use a battery instead of a diesel or gasoline powered engine.

Steven B. Hedlund: Sure, Nate, I'll talk about the strategy and then I'll let Gabe handle the purchase multiple. So we're really excited about this acquisition. We have been selling products into the work truck industry for several years. One of our leading competitors is actually much stronger in this market than we are, and we've found that our ability to reach customers and penetrate the market through our traditional channels of distribution has been fairly limited.

Speaker Change: Sure Nate I'll talk about the strategy and then I'll, let gabe handle the purchase multiple so we're really excited about this acquisition, we have been selling products into the work truck industry for several years.

Speaker Change: One of our leading competitors is actually much stronger in this market than we are and we have found.

Speaker Change: That our ability to reach the customers and penetrate the market through our traditional channels of distribution has been fairly limited.

Steven B. Hedlund: We think that this acquisition will significantly accelerate our ability to sell existing welding-based products to the work truck industry. And then, both we and Van Air have been working on battery-powered solutions that provide customers with a lot of environmental and operating benefits to be able to use a battery instead of a diesel or gasoline-powered engine.

Speaker Change: We think that this acquisition will significantly accelerate our ability to sell existing welding based products to the work truck industry and then both we and van are have been working on battery powered solutions that provide customers with a lot of environmental and operating benefits to be able to use a battery.

Speaker Change: Third of a diesel or gasoline.

Nathan Hardie Jones: Powered engine, so we see that as the future of this part of the industry and we bring some strengths to that they bring some strengths that and we think together, we're going to be able to to really expand and accelerate the product portfolio. So I would say that theres a lot of a lot of reasons for us to be excited about this transaction.

Gabriel Bruno: So, we see that as the future of this part of the industry, and we bring some strengths to that; they bring some strengths to that, and we think together we're going to be able to really expand and accelerate the product portfolio. So, I see that there's a lot of reasons for us to be excited about this.

Steven B. Hedlund: So we see that as the future of this part of the industry, and we bring some strengths to that. And we think together we're going to be able to really expand and accelerate the product portfolio. So I see that there are a lot of reasons for us to be excited about this. Nate, just to add a couple of comments on the financials, you saw that we pointed to a low double-digit type EBIT profile. Our objectives, as you know, are to drive to that corporate average on these acquisitions, and we think about it in terms of a three-year type of cycle.

Gabriel Bruno: of this transaction. They just added a couple comments on the financial, so you saw that we pointed to a low double-digit type EBIT profile. Our objectives, as you know, are to drive to that corporate average on these acquisitions, and we think about it like in a three-year type of cycle. So we're excited about what we can do in shaping the operating model of this business. This business has been in a double-digit growth trajectory, so we see maintaining that kind of growth as the particular potential here. That's very exciting for us, and then when you think about multiple, if you exclude some of the real estate components that we're talking about, a high single-digit type of purchase price multiples.

Speaker Change: Let me just add a couple of comments on the financials. So you saw that we pointed to a low double digit type EBIT profile you know our objectives. As you know are to drive to that corporate average on these acquisitions and we think about it like in a three year type of cycle. So we're excited about what we can do in shaping the operating model.

Gabriel Bruno: So we're excited about what we can do in shaping the operating model of this business. This business has been on a double-digit growth trajectory, so we see maintaining that kind of growth as the potential here, so that's very exciting for us, and then when you think about the multiple, you know, if you exclude some of the real estate components, we're talking about a high single-digit type of purchase price multiples. So we're pretty excited at how this fits within our business. And I'll just reinforce one of the comments you made.

Speaker Change: This business. This business has been in the double digit growth trajectory. So we see maintaining that kind of growth is the potential here. So that's very exciting for us and then when you think about multiple.

Speaker Change: Exclude some of the real estate components and they were talking about a high single digit type of purchase price multiples. So we're pretty excited on how this fits within our business and I'll just reinforce one of the comments. You made are we have had a larger percentage of automation type of transactions acquisitions, but you have seen us.

Gabriel Bruno: So we're pretty excited how this fits within our business.

Steve Hedlund: I just reinforced one of the comments you made. We have had a larger percentage of automation type of transactions acquisitions, but you have seen us in a very steady way, emphasized growth through acquisitions also within our core, a welding business. So we look at all parts of our business in driving growth and using acquisitions as a way to accelerate growth.

Gabriel Bruno: We have had a larger percentage of automation-type transactions and acquisitions. But you have seen us, in a very steady way, emphasize growth through acquisitions also within our core welding business. So we look at all parts of our business for driving growth and using acquisitions as a way to accelerate growth. Awesome, thanks very much for taking my question. Thanks, Nathan. And our next question comes from the line of Mig Dobre with Baird. Mig, please go ahead. Hey, good morning, guys. It's Joe Grabowski on for MIG this morning.

Speaker Change: In a very steady way emphasize growth through acquisitions also within our core welding business.

Speaker Change: We look at all parts of our business and driving growth and using acquisitions as a way to accelerate growth.

Nathan Jones: Awesome. Thanks very much for taking my questions.

Speaker Change: Awesome, Thanks, very much for taking my questions.

Mick Dobre: Thanks, Nathan. And our next question comes from the line of Mick Dobre with Beard. Mick, please go ahead. Hey, good morning, guys.

Speaker Change: Thanks Nathan.

Mig <unk>: And our next question comes from the line of Mig <unk> with Baird. Please go ahead.

Unknown Attendee: Hey, Joe. Hey, Joe. Good morning.

Speaker Change: Hey, Good morning, guys, it's Joe Grabowski on for Mig This morning, Hey, Joe Hey, Joe Hey, Good morning.

Joseph Grabowski: It's Joe Garbowski on from Mick this morning.

Joseph Grabowski: Hey, Joe. Hey, good morning. I guess I wanted to drill in a little further on the trends you saw in June and July. You know, were they steady? Were they choppy? Does it seem like we've kind of settled out at this new level, and you're, you know, I guess your confidence on the visibility, the final five months of the year based on what you saw in June and July. Well, Joe, just in general, the environment has been relatively choppy. You know, I just, for example, I'd point to the first general industry. So you saw that we were down low, low single digits in general fab.

Unknown Attendee: I guess I wanted to drill in a little further on the trends you saw in June and July. You know, were they steady? Were they choppy?

Joe Grabowski: I wanted to drill down a little further.

Speaker Change: Trends you saw in June and July.

Speaker Change: Where are they steady where they choppy.

Unknown Attendee: Do you seem like we've kind of settled out at this new level, and I guess your confidence in the visibility of the final five months of the year based on what you saw in June and July? Well, Joe, just in general, the environment has been relatively choppy. For example, I'd point to first general industry. You saw that we were down low single digits in general fab.

Speaker Change: Does it seem like we've kind of settled out at this new level.

Speaker Change: Your.

Speaker Change: I guess your confidence on the visibility of the final <unk>.

Speaker Change: Five months of the year based on what you saw in June and July.

Joe: But Joe just in general.

Speaker Change: The environment has been relatively choppy just for example, I would point to first general industry. So you saw that we were down.

Joe: Down low low single digits in general Fab.

Gabe Bruno: But on balance, I mean, what we've seen in June and July is in line with what that mid single digit profile looks like. You know, we're largely a short cycle business; still, obviously, the automation components do extend and are longer cycle type of business. But that's what gives us confidence in maintaining our assumptions. So there are areas of risk that we pointed to, you know, how heavy industry progresses, particularly in an Ag. You've seen some of the announcements. There is an area of monitoring closely how the market responds on the automotive side to some of the capital decision making long term.

Gabriel Bruno: But on balance, I mean, what we've seen in June and July is in line with what that mid single-digit profile looks like. We're largely a short cycle business still, although obviously, the automation components do extend to our longer cycle type of business. But that's what gives us confidence in maintaining our assumptions. So there are areas of risk that we pointed out, you know, as heavy industry progresses, particularly in ag. You've seen some of the announcements; this is an area we're monitoring closely, how the market responds on the automotive side to some of the capital decisions made long term. They are pretty important for us.

Joe: But on balance I mean, what we've seen in in June and July are in line to what that mid single digit profile looks like we're largely.

Joe: Short cycle business still obviously, the automation components to extend in our longer cycle type of business, but that's what gives us confidence in maintaining our.

Joe: <unk> so.

Joe: So there are areas of risk that we pointed to you know how heavy industry progresses, particularly in an egg you've seen some of the announcements there.

Joe: <unk> is an area we're monitoring closely how the market responds on the automotive side to some of the capital decision, making long term those are pretty important for us but in general I mean, we saw that June July follow the patterns that we've seen and that's what gives us confidence in maintaining the assumptions.

Gabe Bruno: Those are pretty important for us. But in general, I mean, we saw that June, July, follow the patterns that we've seen, and that's what gives us confidence in maintaining the assumptions.

Steve Hedlund: I will add an interesting point, Joe, on the automotive side. You know, obviously we're staying very close to that. We are hearing that the industry, in general, has not pushed out production schedules out from 2026 and 2027. So that gives us a little bit of optimism in seeing how this pause or air pocket progresses in the coming months. So that's what gives us confidence inherently in maintaining our assumptions.

Gabriel Bruno: I will add an interesting point, Joe, on the automotive side, you know, obviously, we're staying very close to that we are hearing that the industry, in general, has not pushed out production schedules out from 2026 and 2027. So that gives us a little bit of optimism and see how this pause or air pocket progresses in the coming months. So that's what gives us confidence inherently in maintaining our, Joe, this is Steve. I'll just add a little bit of color to Gabe's comments.

Joe: Interesting.

Joe: Point, Joe on the automotive side, you know obviously, we're staying very close to that we are hearing that the industry has in general has not pushed out production schedules out from 2026, and 2027, and so that gives us a little bit of optimism in and seeing how this pause or air pocket progresses in the coming up.

Steve: And so that's what gives us confidence are inherently and maintaining our assumptions. Joe. This is Steve I'll, just add a little bit of color to <unk> comments. So when we look at heavy industries in particular the <unk>.

Steve Hedlund: Joe, this is Steve. I'll just add a little bit of color to Gabe's comments. So, when we look at heavy industries in particular, the production cuts in the Ag portion of that business have really grabbed most of the headlines. But when we look at that business so far through the second quarter, we did see a step down in the construction and mining sub-sectors of heavy industries, not quite as significant as the Ag portion, but still down, down materially. So we believe that we've already seen the step down in all of heavy industries. We're assuming that we're going to remain flat at these production levels through the balance of the year. There could be some recovery from that, and there also could be potentially some downside depending on what our customers decide to do with their production levels.

Steven B. Hedlund: So when we look at heavy industries in particular, you know, the production cuts in the ag portion of that business have really grabbed most of the headlines. But when we look at that business so far through the second quarter, we did see a step down in the construction and mining subsectors of heavy industries, not quite as significant as the ag portion, but still down materially. So we believe that we've already seen the step down in all heavy industries, and we're assuming that we're going to remain flat at these production levels through the balance of the year.

Speaker Change: Production cuts in the AG portion of that business have really grabbed most of the headlines, but when we look at that business. So far through the second quarter, we did see a step down in the construction and mining subsectors of heavy industries, not quite as significant as the AG portion, but still down.

Speaker Change: Down materially so we believe that we've already seen the step down in all of heavy industries. We're assuming that we're going to remain flat at these production levels through the balance of the year there could be some recovery from that and there also could be potentially some downside depending on what our customers decide to do with their production.

Steven B. Hedlund: There could be some recovery from that, and there also could be potentially some downside depending on what our customers decide to do with their production levels. So we're watching that very closely. And then, as Gabe mentioned, we saw a pause in the automation side of the automotive businesses. The OEMs were rethinking their product plans. They have not pushed out the start of production dates for a lot of the products they're going to launch in 25, 26, and 27, so we believe that we're going to get answers very quickly on, "OK, you didn't want me to do product A." Do I have the business for product B?

Steve Hedlund: So we're watching that very closely. And then, as Gabe mentioned, we saw a pause in the automation side of the automotive businesses. The OEMs were rethinking their product plans; they have not pushed out the start of production dates for a lot of the products they're going to launch in 25, 26, and 27. So we believe that we're going to get answers very quickly on, okay, you didn't want me to do product A, do I have the business for product B? And there's some indication that the OEMs have made those decisions, and the projects are starting to flow again, but the next 30 to 60 days will be really critical for us to be able to assess how long that air pocket will continue and whether we've seen the backside of that.

Gabriel Bruno: Level. So we're watching that very closely and then as Gabe mentioned, we saw a pause in the automation side of the automotive business as the Oems who are rethinking their product plans. They have not pushed out the startup production dates for a lot of the products theyre going to launch in $25 26, and 27%. So we believe.

Speaker Change: Leave that we're going to get answers very quickly on okay. You didn't want me to do product a do I have the business for product B and there is some indication that the Oems have made those decisions and the projects are starting to flow again, but the next 30 to 60 days will be really critical for us to be able to assess how how long.

Steven B. Hedlund: And there's some indication that the OEMs have made those decisions, and the projects are starting to flow again. But the next 30 to 60 days will be really critical for us to be able to assess how long that air pocket will continue and whether we've seen the back side of that. That's very helpful, Culler. Thank you very much.

Steve: Air Pocket will continue and whether we've seen the back side of that.

Gabe Bruno: That's very helpful color, thank you very much, and then maybe just a quick follow-up on international. You mentioned a challenging macro in Europe, maybe some additional color on that, and then maybe your thoughts on we're pricing in the international segment. We'll turn the second half of the year. So I would just say we should see more of the same. I mean, we've seen some strength in areas of millies in Asia, and Europe continues to be challenged.

Speaker Change: Okay very helpful color. Thank you very much and maybe just a quick follow up on international you mentioned.

Unknown Attendee: And then maybe just a quick follow-up on international. You mentioned, you know, a challenging macro in Europe. Maybe some additional color on that and then maybe kind of your thoughts on where pricing in the international segment will trend in the second half of the year. So I would just say we should see. More of the same. I mean, we've seen some strength in areas of the Middle East and Asia, and Europe continues to be challenged.

Speaker Change: A challenging.

Speaker Change: The macro in Europe, maybe some additional color on that.

Speaker Change: And then maybe kind of your thoughts on where pricing in the international segment will trend in the second half of the year.

Speaker Change: So John I would just say we should see.

John: More of the same I mean, we've seen some strengths in areas Middle East in Asia, and Europe continues to be challenged I did point to some improvement in their expectations and the EBIT profile, but from an overall volume.

Gabriel Bruno: I did point to some improvement in our expectations for the EBIT profile, but from an overall volume perspective, pricing, what you saw in the first half of the year, we expect to see more of those types of trends in the second, being very disciplined in managing costs and in pricing with some improvement in the EBIT profile. Got it. Okay. Thank you very much.

Gabe Bruno: I did point to some improvement in expectations in the EBIT profile, but from an overall volume perspective pricing, what you saw first half of the year, we expect to see more of those types of trends in the second half. Being very disciplined and managing costs and pricing with some improvement in the EBIT profile.

John: Volume perspective pricing, what you saw first half of the year, we expect to see more of those types of trends in the second half being very disciplined in managing costs and pricing with some improvement in the EBIT profile.

Gabe Bruno: Okay, thank you very much.

Speaker Change: Got it okay. Thank you very much.

Saree Boroditsky: All right, thanks, Joe. And our next question comes from the line of Sirri Borditsky with Jefferies. Sirri, please go ahead. Hi, thanks for taking my question. You talked about auto OEMs pausing investments to reconsider EVs versus ICE.

Gabriel Bruno: All right. Thanks, Joe. And our next question comes from the line of Saree Boroditsky with Jeffreys. Saree, please go ahead.

Joe Grabowski: Alright, Thanks, Joe.

Speaker Change: And our next question comes from the line of <unk> with Jefferies. Sorry. Please go ahead.

Saree Emily Boroditsky: Hi, thanks for taking my question. You talked about auto OEMs pausing investments to reconsider EVs versus ICE. I guess, one, when would you expect the air pocket to end?

Speaker Change: Hi, Thanks for taking my question.

Speaker Change: Good morning.

Speaker Change: Can you talk about other Oems have even destiny to reconsider Evs first ice I guess, one when would you expect the air pockets and and then what would our recovery look like if they back away from EV investments does that mean less equipment needed for model changeovers or how do we think about that.

Saree Boroditsky: I guess one, when would you expect the air pockets to end, and then what would a recovery look like if they back away from EV investments? Does that mean less equipment needed for model changeovers, or how do we think about that?

Steven B. Hedlund: And then what would a recovery look like if they back away from EV investments? Does that mean less equipment needed for model changeovers? Or how should we think about that?

Saree Emily Boroditsky: Yeah, so, Saree, we're expecting to get answers on a lot of these projects in the next 30 to 60 days. So, hopefully, by the time we're on the next quarterly earnings call, we'll have much better visibility on how that's playing out. We're relatively indifferent whether the automakers make an EV, a hybrid, or an ICE vehicle based on the type of work that we do for them. We're relatively agnostic.

Steve Hedlund: Yes, Sirri, we're expecting to get answers on a lot of these projects in the next 30 to 60 days. So, hopefully, by the time we're at the next quarterly earnings call, we'll have much better visibility to how that's played out. We're relatively indifferent whether the automakers make an EV hybrid or an ICE vehicle based on the type of work that we do for them. We're relatively agnostic. We just need them to decide to make something so that they will invest in the automation to make that production more efficient. and so we fully expect, since they haven't been canceling programs outright, they haven't been pushing back the start of production; they need to release the orders here pretty quickly in order to hold those dates.

Speaker Change: Yes, so three we're expecting to get answers on a lot of these projects in the next 30 to 60 days. So hopefully by the time, we're at the next quarterly earnings call, we'll have much better visibility to how that's played out.

Speaker Change: We're relatively indifferent, whether the automakers make an EV or hybrid or an ice vehicle based on the type of work that we do for them. We're relatively agnostic, we just need them to decide to make something.

Steven B. Hedlund: We just need them to decide to make something so that they will invest in the automation to make that production more efficient. And so we fully expect, since they haven't been canceling programs outright, and they haven't been pushing back the start of production, that they need to release the orders here pretty quickly in order to hold those dates. So that's why we say it's a 30- to 60-day wait.

Speaker Change: So that they will invest in the automation to make that production more efficient.

Speaker Change: And so we fully expect since they haven't been canceling programs out or outright they haven't been pushing back the start of production.

Speaker Change: They need to release the orders here pretty quickly in order to hold to those dates.

Steve Hedlund: So that's why we say it's a 30 to 60-day window.

Speaker Change: Why we say, it's a 30 to 60 day window.

Saree Boroditsky: Great, that's helpful.

Saree Emily Boroditsky: Great, that's helpful. And then just going back to the risk to guidance, you talked a little bit about the auto investment and heavy industries, but could you just explain what the assumptions built into the guide are and then what would drive weakness in that? Thank you so much.

Speaker Change: Great. That's helpful. And then just going back to the rest of the guidance you talked a little bit about the island bastinade heavy industry, but could you just explain what what are the assumptions built into the guide and then what we drive witness to that thank you so much.

Gabriel Bruno: And then just going back to the risk to guidance, you talked a little bit about the auto investment and heavy industries, but could you just explain what are the assumptions built into the guide and then what would drive weakness to that? Thank you so much. Saree, just, you know, those risk factors are just highlighted to be watchful of and how we're progressing within our business. But what the assumptions entail are what we're seeing in our business to date, you know, the activity in June, July, the mix of business. You know, Steve highlighted some of the components of heavy industries and construction that we've already seen in mining.

Gabriel Bruno: Saree, just, you know, those risk factors are just highlighted to be watchful of and how we're progressing within our business. But what the assumptions entail are what we're seeing in our business to date, the activity in June and July, the mix of business, you know, Steve highlighted some of the components of heavy industries, ag construction, that we've already seen, mining. So it's more of the same that we've seen in our business through the current second quarter into July.

Speaker Change: So sorry just.

Speaker Change: Those risk factors or just highlighted to be watchful of and how we are progressing within our business, but what the.

Speaker Change: Assumptions entail or what we're seeing in our business today you know the activity in June July the mix of business you know Steve highlighted some of the components of heavy industries AG construction that we've already seen mining. So it's more of the same that we've seen in our business.

Gabriel Bruno: So it's more of the same that we've seen in our business through the current second quarter into July, but we just highlight those risks of areas that we're watchful of that could have an impact and the progression of the man patterns. Appreciate the color.

Speaker Change: Through the current second quarter into July.

Speaker Change: But we just highlight those risk of areas that we're watchful of that could have an impact in the progression of demand patterns.

Speaker Change: I appreciate the color. Thank you.

Christopher Dankert: Thank you. Thanks from the line of Chris Dankert with Loop Capital. Chris, please go ahead. Good morning, thanks for taking the questions. I guess maybe just to round out the discussion of end markets here, you know, construction infrastructure up low team that the pretty impressive growth rate. Maybe just can you level set us on where you're seeing the growth geographically and just going to be. And how that has fronted, you know, kind of through July here. Yeah, so Chris, we have seen generally a chopping environment, as you've noted some areas of infrastructure or construction into the international markets have been positive. But just to give you perspective, you were up.

Gabriel Bruno: But we did highlight those risks of areas that we're watchful of that could have an impact on the progression of the demand pattern. Appreciate the color. Thank you, from the line of Chris Dankert with Loop Capital. Chris, please go ahead.

Speaker Change: Comes from the line of Chris Dankert with loop capital Chris. Please go ahead.

Christopher M. Dankert: Hey, good morning. Thanks for taking the questions. I guess maybe just to round out the discussion of end markets here, you know, construction and infrastructure up low teens, that's a pretty impressive growth rate. Maybe just can you give us some context on where you're seeing the growth geographically and just kind of how that has trended, you know, kind of through July here? Yeah, so, Chris, we have seen a generally choppy environment, as you've noted. However, some areas of infrastructure construction in the international markets have been positive.

Christopher M. Dankert: Hey, good morning, Thanks for taking the questions.

Christopher M. Dankert: I guess, maybe just to round out the discussion of end markets here construction and infrastructure up low teens, but that's a pretty impressive growth rate. Maybe just can you level set us on where you're seeing the growth geographically and just kind of how that has trended kind of through July here.

Gabriel Bruno: But just to give you a perspective, we're up mid-teens in this quarter, we were down mid-single digits last quarter, we're up high-teens in Q4, so it's been very choppy. So we haven't seen consistency after we had a pretty strong run throughout 2022, and just a lot of choppy. And that's more of what we would expect to see, so We're hopeful to see a little bit more infrastructure investment in the U.S. that could drive more demand, but it's been a relatively choppy environment.

Christopher M. Dankert: Yes, so Chris we have seen generally a choppy environment as you've noted.

Speaker Change: Some areas of infrastructure construction and into the international markets have been positive, but just to give you a perspective, we're up.

Gabe Bruno: Med teens in this quarter where we're down mid single digits. Last quarter were up. High teen cue course has been very choppy, so we haven't seen consistency after we had a pretty strong run it throughout 2022, and just a lot of choppiness. And that's more of what we would expect to see, so a little bit more continued choppiness.

Speaker Change: Teens and this quarter, we were down mid single digits last quarter were up.

Speaker Change: High teens Q4, so it's been very choppy. So we haven't seen consistency. After we had a pretty strong run it throughout 2022, and just a lot of Choppiness and that's more of what we would expect to see so little of it but a more continued choppiness.

Gabe Bruno: So we're hopeful to see a little bit more infrastructure investment in the U.S. that could drive more demand but spend relatively a choppy environment. Got it.

Speaker Change: We're hopeful to see a little bit more infrastructure investment in the U S that could drive more demand, but it's been relatively choppy environment.

Gabriel Bruno: Thanks for the call there. And then you highlighted the expectation for some improvement in the EBIT margin for the back half in international. Can you just kind of maybe give a little bit of detail there? Is it, again, you're expecting better? It doesn't sound like it's volume related, so are there cost actions specifically? Is it mixed driven?

Gabe Bruno: Thanks for the color there, and then you highlighted your expectation for some improvement in the EBIT margin for the back half in international. Can you just kind of maybe give a little bit of detail? There is it again, you're expecting better. It doesn't sound like it's a volume related towards our cost action specifically. Is it mixed driven?

Speaker Change: Got it got it thanks for the color there and then.

Speaker Change #107: You highlighted your expectation for some improvement in the EBIT margin for the back half in international but can you just kind of maybe give a little bit of detail. There is it again youre expecting better it doesn't sound like it's a volume related towards their cost actions specifically is it mix driven maybe just any comments on what's kind of helping drive that improvement in the back half.

Gabe Bruno: There's just any comments on what's kind of helping drive that improvement to the back half. So press in my comments you may have picked up that during a second quarter we had some isolated operational efficiencies adjustments that were specific to the quarter. So that gives us confidence that, as you pull those out, we're actually in line to our 11 to 12% type of range. So it's just highlighting there's some operational costs that are more one time in nature that should reverse itself. And we should see more of our expected range of performance in that 11% to 12%.

Gabriel Bruno: Maybe just any comments on what's kind of helping drive that improvement in the back half? Yeah, so Chris, in my comments, you may have picked up that during the second quarter, we had some isolated operational efficiencies, adjustments that were specific to the quarter. So that gives us confidence that as you pull those out, we're actually in line with our 11 to 12% type of range. So it's just highlighting that there are some operational costs that are more one-time in nature that should reverse themselves, and we should see more of our expected range of performance. Yeah, that's helpful. Thanks so much.

Speaker Change: Yes, so Chris and in my comments you may have picked up during the second quarter, we had some.

Speaker Change: Isolated operational efficiencies adjustments that were specific to the quarter so that gives us.

Speaker Change: As confidence that as you pull those out we were actually in line to our 11% to 12% type of range. So its just highlighting there. There's some operational costs that are more onetime in nature that should reverse itself and then we should see more of our expected range of performance in that 11% to 12%.

Speaker Change #112: Got it that's helpful. Thanks, so much.

Walt Liptak: All right, thanks, Chris. One final reminder: if you'd like to ask a question today against R1 on your telephone keypad. And it looks like our next question comes from the line of Walt Liptak with Seaport Research. Walt, please go ahead. Hey, thanks. Good morning, guys. Hey, Walt. Hi. One day I was wondering about the macro, and it just sounds like some of these heavy industry. You know, we get that that's slowing, but for general industrial, you know, we kind of paused here, like you said, in May. What do you think is going on with your customers for this pause?

Christopher M. Dankert: All right, thanks, Chris. One final reminder, if you'd like to ask a question today, again, just press one on your telephone keypad. And it looks like our next question comes from the line of Walt Liptak with Seaport Research. Walt, please go ahead.

Speaker Change: Alright, Thanks, Chris One final reminder, if you'd like to ask a question today again star one on your telephone keypad.

Speaker Change: And it looks like our next question comes from the line of Walter Liptak with Seaport Research. Please go ahead.

Walter Scott Liptak: Hey, thanks. Good morning, guys. One day I asked one about the macro, and you know, just sounds like, you know, some of these heavy industries, you know, we get that that's slowing, but for general industrial, you know, we've kind of paused here, like you said in May. What do you think is going on with your customers during this pause? Like, have you gotten any feedback from them?

Walter Scott Liptak: Hey, Thanks, Good morning, guys, Hey wanted to ask.

Walter Scott Liptak: I wanted to ask one about.

Walter Scott Liptak: The macro and it sounds like some of these heavy industry, we got that that that slowing but for general industrial.

Speaker Change #108: We kind of paused here like you said it may.

Speaker Change #106: What do you think is going on with your customers for this pause or have you gotten any feedback from them on.

Steve Hedlund: Like, have you gotten any feedback from them on, you know, why, you know, some of the demand is slowed. Well, in general, when you think Walt of general industry, you'd like to point to small mid-size fabricators, and the uncertainties, the broad uncertainty in the market is going to drive a level of activity. So, the choppiness and PMI and the mix of new orders and production inventory, all of that has just been inconsistent. And so I think that just drives some uncertainty in the progression in general industry. So, you know, we're hopeful of the trend that we saw Q1 and Q2, but the choppiness and PMI indices and industrial production inherently just don't point to a consistent outlook.

Gabriel Bruno: And, you know, why, you know, some of the demand is slowed? Well, in general, when you think of the general industry, you like to point to small, mid-sized fabricators, and the uncertainties, the broad uncertainty in the market, is going to drive a level of activity. So the choppiness and PMI and the mix of new orders and production, and inventories, all of that has just been inconsistent. And so I think that just drives some uncertainty in the progression of the general industry.

Speaker Change: Why you know some of the demand has slowed.

Speaker Change: Well in general I mean, when you think Walt a general industry and you'd like to point to a small midsize fabricators and the uncertainties. The broad uncertainty in the market is going to drive the level of activity. So.

Speaker Change: The choppiness in PMI and the mix of new orders and production and inventories of all of that has just been.

Speaker Change: Inconsistent and so I think that just drives some uncertainty in their progression and general industry. So.

Gabriel Bruno: So we're hopeful of the trend that we saw, Q1 to Q2, but the choppiness in PMI indices and industrial production inherently just don't point to a consistent outlook. So that's why we're a little bit more choppy in our perspective of how general industry progresses. Okay, great. And, you know, I guess, as we think about the future and where some of those macro trends could go, are, you know, In the past, I think, especially in North America, you guys don't, like, when things step down; you guys adjust automatically.

Speaker Change: We are hopeful that the trend that we saw Q1 to Q2, but the choppiness and PMI indices.

Speaker Change: Industrial production inherently just don't point to a consistent outlook.

Steve Hedlund: So that's why we're a little bit more chopping in our perspective on how general industry progresses.

Gabriel Bruno: So that's why we're a little bit more.

Speaker Change: Choppy and our perspective on how Jonah industry progresses.

Speaker Change: Yeah.

Gabe Bruno: Okay, great. And, you know, I guess as we think about, you know, the future and where sort of those, some of those macro trends could go are, you know, in the past, I think, especially in North America, you guys don't, like when things step down, you guys adjust automatically. I think the program that Lincoln has just adjusts automatically. But is anything changing in the way that you think you'll deal with things either, you know, ramping down or the other way around? Like, you know what I mean? Like, do you have to cut costs or something like that if things start ramping down?

Speaker Change: Okay great.

Speaker Change: And.

Speaker Change: I guess as we.

Speaker Change: Think about.

Speaker Change: The future and we're sort of those some of those macro trends could go.

Speaker Change: Sure.

Speaker Change #101: In the past I think especially in North America, you guys you guys don't like.

Speaker Change: <unk> stepped down you guys adjust automatically I think.

Gabriel Bruno: I think the program that Lincoln has just adjusts automatically. But is anything changing in the way that you think you'll deal with things, either, you know, ramping up or the other way around? Like, do you understand what I mean?

Speaker Change #100: The program that Lincoln has just adjust automatically but is there anything changing in the way that you think you'll deal with things either you know ramping.

Speaker Change #113: Ramping down or the other way around like Oh, you know what I mean like do you have to cut costs or something like that if things start ramping down how do you look at your cost structure.

Gabriel Bruno: Like, do you have to cut costs or something like that if things start ramping down? How do you look at your cost structure? So, Walt, as you know, we're very disciplined in looking at discretionary-type spending. You're referring to the profit-sharing, the larger component, being in the Americas. So that does move with profitability. So our posture is consistent in pulling the levers where needed.

Gabe Bruno: How do you look at your cost structure? So, for a while, as you know, we're very disciplined in looking at discretionary type spending; you're referring to the profit sharing, the larger component being in the Americas. So that does move with profitability. So we're, our pastures consistent in pulling the lovers where needed. So what you're seeing, though, is a mix of softness and demand, and yet our ability to maintain margins. And a lot of what we're doing in our enterprise-wide initiatives are very much focused on cost and cost reduction and efficiency. And so you're seeing improvements within our business; at the same time, we will continue to be very disciplined in managing costs.

Speaker Change #109: What as you know, we're very disciplined and looking at discretionary type spending youre, referring to the profit sharing a larger component of being in the Americas. So that does move with profitability. So.

Speaker Change: Our posture is consistent and pulling the levers where needed so what youre seeing though.

Gabriel Bruno: So what you're seeing, though, is a mix of softness in demand and yet our ability to maintain margins. And a lot of what we're doing in our enterprise-wide initiatives are very much focused on costs and cost reduction and efficiency. And so you're seeing improvements within our business. But at the same time, we'll continue to be very disciplined in managing costs. And all the levers we have still exist, and that playbook is still in effect.

Speaker Change: Mix of softness in demand and yet our ability to maintain margins in a lot of what we're doing in our enterprise wide initiatives are very much focused on costs and cost reduction and efficiency and so youre seeing improvements within our business at the same time, we'll continue to be very disciplined and <unk>.

Gabriel Bruno: Managing costs and all the levers we have.

Gabe Bruno: And all the lovers we have still adjust, and that playbook is still in play. So, remanding it two ways. You have all the cost, dynamic short-term, but then all the enterprise-wide cost initiatives and profit-improving initiatives that are driven by our enterprise-wide. Thank you.

Gabriel Bruno: Phil exists and that playbook is still still in play.

Gabriel Bruno: So we're managing it two ways. Yeah, okay, great. Yeah. What we're seeing is a weakness in the equipment and a small automation portion of that segment, right, which really reflects their confidence in the future direction of the economy and their willingness to then spend capital, which they are appreciating there's a tremendous amount of uncertainty around where interest rates are headed. There's a tremendous amount of uncertainty around who will win the election and what policies will they put in place.

Speaker Change: Play so we're.

Speaker Change: We're managing a two way so you have all the cost dynamic short term, but in all of our enterprise wide cost.

Speaker Change: Initiatives and profit improvement initiatives that are driven by our enterprise wide initiatives.

Speaker Change: Yes, that's great.

Speaker Change: Bob This is Steve I'll, just add if we look at the Gen fab portion of the business and we focus particularly in the Americas region.

Speaker Change #111: What we're seeing is a weakness in the equipment and small automation portion of that segment right, which really reflects their.

Gabriel Bruno: Their confidence in the future direction of the economy.

Speaker Change #111: Or in their willingness to then spend capital and as you can I'm sure. Appreciate you know there's tremendous amount of uncertainty around where interest rates are headed there is a tremendous amount of uncertainty around who will win the election, and what policies, where they put in place and so what we're seeing is that impact on the capex side of the business. The opex side, the consumables not doing too bad.

Walt Liptak: You can appreciate your tremendous amount of uncertainty around where interest rates are headed. There's a tremendous amount of uncertainty around who will win the election and what policies where they put in place. And so what we're seeing is that impact on the CAP-X side of the business, the OP-X side that consumables not doing too bad. Just to give you that perspective on it. Okay, great, great. Thanks for that, Cecil.

Gabriel Bruno: And so what we're seeing is that impact on the CapEx side of the business. The OpEx side, the consumables, is not doing too bad. Unknown Attendee, Mircea Dobre, Gabriel Bruno, Angel Castillo, Robert Jamieson, Lincoln Electric Holdings Inc. Unknown Attendee, Mircea Dobre, Gabriel Bruno, Angel Castillo, Robert Jamieson, Lincoln Electric, Okay, great.

Gabriel Bruno: Just to just to give you that perspective on it.

Walter Scott Liptak: And then maybe a final one for me just around the commodities part of the business. I wonder if you could talk a little bit about, you know, channel inventory levels and pricing and, you know, we've seen some commodity prices come down recently. I mean, you know, this. Can you maintain pricing within that consumable as part of your business? So you've seen what we've done to date, right?

Speaker Change: Okay, great great. Thanks for that.

Gabe Bruno: And then maybe a final one for me, just around the commodities part of the business. You know, I wonder if you could talk a little bit just about, you know, channel inventory levels and pricing, and, you know, we've seen some commodities prices come down recently. I mean, you know, can you maintain pricing within that consumables part of your business? So while you see what we've done today, right, so we expect pricing. You may have picked up on my comments of 50 to 100 basis points of pricing progressively now into this third quarter. So our posture is to hold price.

Walter Scott Liptak: And then maybe a final one for me just around the commodities part of the business.

Speaker Change:

Walter Scott Liptak: I Wonder if you could talk a little bit just about you know.

Saree Emily Boroditsky: Channel inventory levels and pricing and we've seen some commodities.

Speaker Change: Prices come down.

Speaker Change #104: Recently, I mean does.

Speaker Change #105: Can you maintain pricing within that are the consumables part of your business.

Speaker Change #102: So while you've seen what we've done to date right. So we expect pricing you may have picked up on my comments of 50 to 200 basis points of pricing progressively now into this third quarter. So our posture is to is to hold price.

Gabriel Bruno: So we expect pricing, and you may have picked up on my comments, of 50 to 100 basis points of pricing progressively now into this third quarter. So our posture is to hold prices, with the exception of the Harris Metals impact. We have more of an adjustment to make depending on how things move with silver and copper, but our posture is to manage pricing in a very disciplined way. We walked into the second quarter with some inflationary pressures, wage and otherwise.

Gabe Bruno: With the exception of the Harris metals impact, they have more of an adjustment, depending on how things move with silver and copper. But our posture is to manage pricing in a very disciplined way. We walked into the second quarter with some inflationary pressures, wage and otherwise. And so we've taken those actions to protect our model and maintain that posture progressively. Okay, great.

Gabriel Bruno: With the exception of the Harris metals impact that you have more of a an adjustment depending on how things move with silver and copper, but our posture is to.

Speaker Change #102: Manage pricing in a very disciplined way.

Speaker Change #102: We walked into the second quarter with some inflationary pressures wage and otherwise and so we've taken those actions to protect our model and maintain that posture progressively.

Gabriel Bruno: And so we've taken those actions to protect our model and maintain that posture progressively. Okay, great. Okay. Thanks. Good luck with the second half.

Speaker Change: Okay, great. Okay. Thanks, Good luck with the second half okay. Thanks. Thank you.

Walt Liptak: Okay. Thanks. Good luck with the second half. Thank you.

Steve Varger: Thanks. Well, and our final question today comes from the line of Steve Varger with Key Bank. Steve, please go ahead.

Walter Scott Liptak: Thank you. Thanks, Walt. And our final question today comes from the line of Steve Barger with KeyBank. Steve, please go ahead. Thanks. The automation strategy has always been concentrated in the Americas.

Speaker Change #110: Thanks, a lot.

Robert Stephen Barger: But given the breadth of the product line now, is there opportunity to increase automation exposure in international markets or sales focus in international markets even if conversion is delayed until markets firm up? Yes, Steve, we've always had a very keen interest in expanding the automation business globally. The question really comes down to where the industry structure and market dynamics are attractive to us, and just based on some historical evolution of where and how the robot manufacturers decided to participate or not in integration really impacts the attractiveness of some of the markets to us. For example, in Europe, most of the robot manufacturers have chosen to be in the automation integration business, which means we're competing with our suppliers, and there's a lot more pressure on price and margins there.

Speaker Change: And our final question today comes from the line of Steve Barger with Keybanc, Steve. Please go ahead.

Speaker Change #110: Thanks.

Steve Hedlund: Thanks. The automation strategy has always been concentrated in the Americas, but given the breadth of the product line now, is there opportunity to increase automation exposure in international or sales focus? And international, even if conversion is delayed until markets from up? Yes, Steve, we've always had a very keen interest in expanding the automation business globally. The question really comes down to where is the industry structure and market dynamics attractive to us? And just based on some historical evolution of where and how the robot manufacturers decided to participate or not in integration, really impacts the attractiveness of some of the markets to us.

Robert Stephen Barger: The automation strategy has always been concentrated in the Americas, but given the breadth of the product line now is there opportunity to increase automation exposure in international or sales focus in international even if conversion is delayed until markets firm up.

Speaker Change #114: Yeah, Steve we've always had a very keen interest in expanding the automation business globally.

Speaker Change: Question really comes down to where is the industry structure and market dynamics are attractive to us and just based on some historical evolution of where and how the robot manufacturers decided to participate or not an integration really impacts the attractiveness of some of the markets to us so it just.

Steve Hedlund: So just, for example, in Europe, most of the robot manufacturers have chosen to be in the automation integration business, which means we're competing with our suppliers. And there's a lot more pressure on price and margins there. So you've seen our strategy in Europe has been to focus on very high technology plays with Zeeman and now within Rotech Automation integrators that have a very specialized, very proprietary high value solution, as opposed to just being a general integrator. We continue to look for opportunities around the world; we continue to test our hypothesis around what markets we think will be attractive for us to enter, and we'll continue to execute that strategy.

Robert Stephen Barger: For example in Europe, most of the robot manufacturers have chosen to be in the automation integration business, which means we're competing with our suppliers.

Speaker Change #114: There's a lot more pressure on price on margins there. So you've seen our strategy in Europe has been to focus on very high technology plays with zieman and now within <unk>.

Steven B. Hedlund: So you've seen our strategy in Europe has been to focus on very high-tech plays with Zeman and now with InroTech, automation integrators that have a very specialized, very proprietary, high-value solution as opposed to just being a general integrator. We continue to look for opportunities around the world. We continue to test our hypothesis around what markets we think will be attractive for us to enter, and we'll continue to execute that strategy.

Steven B. Hedlund: Automation integrators that have a very specialized very proprietary high value solution as opposed to just being a general integrator.

Speaker Change: We continue to look for opportunities around the world. We continue to test our hypothesis around what markets. We think will be attractive for us to enter and we will continue to execute that strategy.

Steve Hedlund: Yeah, to the point on InRotek, it seems super interesting. Is the AI programming vision-based? And with 10 million in sales, is this technology still working out the kinks, or is this a finished product that just needed a bigger platform to scale? Yeah, you're, you're correct, Steve; it is vision based. One of the great attributes of it is it does not require a CAD file that it's comparing what it sees to, to decide what to do. It's just looking at the parts and then making decisions on its own, which don't ask me to explain how it does it because I don't really understand it myself, being a liberal arts major.

Steven B. Hedlund: Yeah, to the point on InroTech, it seems super interesting. Is the AI programming vision based? And with 10 million in sales, is this technology still working out the kinks? Or is this a finished product that just needed a bigger platform to scale?

Speaker Change #110: Yes.

Speaker Change #116: On <unk>. It seems super interesting is is the AI programming vision based and with $10 million. In sales is this technology is still working out the kinks or is this a finished product that just needed a bigger platform to scale.

Steven B. Hedlund: Yeah, you're correct, Steve. It is vision based. One of the great attributes of it is that it does not require a CAD file that it's comparing what it sees to decide what to do. It's just looking at the parts and then making decisions on its own. Don't ask me to explain how it does it, because I don't really understand it myself being a liberal arts major, but I've seen the demonstrations of it, and it's really quite impressive.

Speaker Change: Yes, you're correct Steve at his vision based one of the great attributes of it is it does not require a CAD file that it's comparing what it sees two to decide what to do it's just looking at the parts and then making decisions on its own which.

Steven B. Hedlund: Don't ask me to explain how it does it because I don't really understand it myself being a liberal arts major but I've seen the demonstrations of it and it's really quite impressive so I think the technology.

Steve Hedlund: But I've seen the demonstrations of it, and it's really quite impressive. So I think the technology is fairly robust. There'll be some work to integrate it into our platforms, but it's really the investment is around giving them a bigger platform to scale the business and to access the market.

Steven B. Hedlund: So I think the technology is fairly robust. There'll be some work to integrate it into our platforms, but the real investment is around giving them a bigger platform to scale the business and access it. How do you think about the TAM or addressable market for an application like that? And can that technology translate to Harris as well? When we think about the TAM for automation in general, I mean, it is much, much larger than our current business. So we're a very, a relatively small share player in a, you know, 35 plus billion dollar market.

Steven B. Hedlund: <unk> is fairly robust there'll be some work to integrate it into our platforms, but it's really a.

Steven B. Hedlund: The investment is around giving them a bigger platform to scale the business and to access the market.

Steve Hedlund: How do you think about TAM, or addressable market for an application like that? And can that technology translate to Harris as well? When we think about the TAM for automation in general, I mean, it is much, much larger than our current business. So we're a very relatively small share player in a 35-plus billion dollar market. When you look at the in-road technology in particular, I mean, that's new to the world technology, and it really remains to be seen how many different places we can take it. But based on what we know about it and what we know about our customers' pain points, we're really excited about it.

Steven B. Hedlund: How do you think about Tam.

Operator: <unk> market for an application like that and Ken that technology translate to Harris as well.

Speaker Change #110:

Speaker Change: When we think about the Tam for automation in general I mean, it is much much larger than our current business. So we're a very a relatively small share player and a 35 plus billion dollar market right.

Steven B. Hedlund: When you look at the InroTech technology in particular, I mean, that's new to the world of technology, and it really remains to be seen how many different places we can take it, but based on what we know about it and what we know about our customers' pain points, we're really excited about it. Great, thanks very much. Thanks, Steve. And that does conclude our question and answer session. I would like to turn the call back to Gabe Bruno for his closing remarks.

Speaker Change: When you look at the <unk> technology in particular I mean, that's that's.

Steven B. Hedlund: New to the World technology, and it really remains to be seen how many different places we can take it but based on what we know about it and what we know about our customer's pain points, we're really excited about it.

Steve Hedlund: Great, thanks very much.

Gabriel Bruno: Great. Thanks very much.

Steve Hedlund: Thanks, Steve.

Gabriel Bruno: Thanks, Steve.

Gabriel Bruno: And that does conclude our question-and-answer session. I would like to turn the call back to Gabe Bruno for closing remarks. Gabe, the floor is yours. I'd like to thank everyone for joining us on the call today and for your continued interest in Link Electric. We look forward to discussing the progression of our strategic initiatives in the future and showcasing new technologies at the upcoming FabTech trade show in October. Thank you very much.

Steven B. Hedlund: And that does conclude our question and answer session I would like to turn the call back to Gabe Bruno for closing remarks, Gabe the floor is yours.

Steven B. Hedlund: Gabe, the floor is yours. 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 and showcasing new technologies at the upcoming Fabtech trade show in October.

Gabriel Bruno: Thank you very much. And, ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.

Steven B. Hedlund: I'd 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 and showcasing new technologies at the upcoming Fab Tech trade show in October. Thank you very much.

Operator: And ladies and gentlemen, that concludes today's call. Thank

Gabriel Bruno: And ladies and gentlemen that concludes today's call. Thank you all for joining and you may now disconnect.

Speaker Change #110: Okay.

Speaker Change #110: [music].

Walter Scott Liptak: Sure.

Gabriel Bruno: Yes.

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Speaker Change #110: Sure.

Gabriel Bruno: [music].

Gabriel Bruno: Yes.

Speaker Change #110: [music].

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