Q2 2025 Lincoln Electric Holdings Inc Earnings Call

Greetings, and welcome to the Lincoln Electric to 2025 second quarter by natural results. Conference call Alliance have been placed on mute and this call is being recorded. It is my pleasure to introduce your host. Amanda Butler, vice president of investor relations and Communications. Thank you. You may begin.

And Gabe, Bruno Archie, 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 forums, 10K and 10 Q.

In addition, we do discuss financial measures that do not conform to U.S. GAAP, and 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 lincolnelectric.com. And with that, I'll turn the call over to Steve Hedlund. Steve, thank you, Amanda. Good morning, everyone. Turning to slide 3, I am pleased to report strong second quarter results. Our 7% sales growth reflected diligent price management, benefits from our M&A strategy, and improved volume performance from the Americas Welding and Harris Products Group segments.

Our team is at an excellent job managing inflationary headwinds and navigating supply chain complexities, while maintaining our neutral price cost position.

These efforts combined with 11 million from savings actions and stronger operating. Leverage from sdna. Has delivered strong profit performance.

These results, demonstrate the long-term value creation. We are generating from our higher standard strategy initiatives and how we are shaping the business to outperform in the next growth cycle.

I would like to recognize and thank the global Lincoln Electric team for their ongoing, hard work and commitment to serving our customers and Advance the business for our targets.

Our earnings expanded in the quarter with adjusted earnings per share up 11% to $2.60.

Year to date cash flow. Generation has been strong with 100, plus percent cash conversion of free cash flow.

We have maintained top quartile roic performance which reinforces our disciplined and balanced Capital, allocation strategy of investing and growth through the cycle and returning excess cash to shareholders.

And as we highlighted in our earnings release, we are pleased to announce that tomorrow. We expect to close our acquisition of the remaining 65% interest in alloy Steel.

We are excited to bring the Alloy Steel team aboard and work together at scale, their proprietary wear plate solutions, into new geographies and end markets. We've had a chance to work with them for a few months, and they are a great addition with a strong business that will be accretive to margins and earnings on day one.

Turning the slide 4 to discuss. Organic sales performance. We achieved an approximate 3%. Increase in organic sales in the quarter led by pricing actions, taken to mitigate higher input costs.

Volume declines narrowed to 2.3% as North American manufacturing activity and the industrial Gas Distribution channel in America's welding remained more resilient than expected.

In addition, the Harris products group generated, 11% higher volumes primarily from the rollout of product to support a new National us retail partner, as well as ongoing strength and HVAC due in part to Data Center buildout.

We continue to see customers, defer Capital spending, and maintain a weight, and see approach due to policy uncertainty, which continues to impact our equipment and automation portfolios.

Our automation sales have stabilized around 215 million per quarter, which we expect to continue in the third quarter and possibly, through year end.

We are encouraged by automation steady order rates and backlog a quarter over quarter and quoting activity remains elevated across their end markets.

Year to date automotive and energy sector projects are growing and we saw General Industries pivot to growth in the second quarter.

Looking at market or organic sales trends, 3 of 5 markets grew in the quarter. This was largely price-driven, but we achieved volume growth across general industries, which incorporates HVAC, and in consumables supporting domestic manufacturing activity.

Energy also, grew led by domestic and international power, generation projects, and strong pipe, activity in America's welding.

Heavy Industries remains challenged but it is incrementally. Improving on easier prior year comparisons and as agricultural, Machinery oems continue to destock it sets up for a recovery and production in 2026.

About project timing. Organic sales were relatively steady and finally Automotive Transportation volumes were compressed due to slower production levels while equipment Investments, did expand.

I am pleased by the progression of the business year to date and would like to underscore our teams continued. Focus on serving customers investing in growth and driving productivity and operational efficiency throughout the organization.

We also remain disciplined on price cost management and our continuing to shape the operating model to position the business for more profitable growth as end markets recover.

And I will now pass the call to Gabe. Bruno to cover second quarter financials and our raised Outlook in more detail.

Thank you, Steve.

Moving to slide 5, our second quarter sales, increase 6.6% to 1 billion, 89 million from 5.2% higher price. A 3% benefit from Acquisitions and 70 basis points. From favorable Thorn exchange translation, these increases were partially offset by 2.3%, lower volumes.

Gross profit dollars increased approximately 6% to $46 million in gross profit. The margin held relatively steady at 37.3%, down 30 basis points versus the prior year.

A 3 million dollar benefit from our savings actions, as well as diligent cost management and operational initiatives substantially offset the impact of lower volumes and 8.5 million lifo charge in the quarter and acquisitions.

Year to date. We have incurred approximately $10 million in lifo charges, which is expected to repeat in the second half of the year.

Our sgn expense increased approximately 1% or 2 million dollars primarily from Acquisitions 8 million from our savings actions offset. An incremental 4 million of employee costs reflecting. Our decision to reinstate the annual compensation Merit increase in the quarter which adds approximately 5 million dollars per quarter.

Sgna as a percent of sales, improved 100 basis points to 19.4% of sales.

Reported operating income increased 29%, the year-over-year increase, reflects special item charges in the prior year period, excluding special items adjusted operating income increased approximately 10% to 195 million.

All right, adjusted operating income margin increased, 50 basis points to 17.9% reflecting a 26% incremental margin.

Acquisitions at a 30 basis point, unfavorable impact to our margin.

Other income excluding special items was 19% higher from our initial alloy steel investment.

We reported second quarter diluted earnings per share of 2.56 an adjusted basis EPS increased 11% to 2.60.

Our EPS results include 3 cents from favorable foreign exchange translation and 6 cents from the impact of Sherry purchases.

Moving to our reportable segments, on slide 6.

America's Welding sales increase the approximately 7% driven by 6.5% higher price and an approximate 5% contribution from our vanair acquisition, which anniversaries August 1st.

Volumes were lowered by approximately 3%.

Higher price. Reflects actions taken through the first half of the year to address Rising input costs. We anticipate higher price in the third quarter due to the timing of our actions throughout the second quarter and we will continue to monitor trade policy and decisions and take appropriate actions as needed.

America's welding segments, second quarter, adjusted ebit increased 1% to 138 million.

The adjusted ebit margin declined, 130 basis points to 18.6%, primarily due to higher incentive compensation, and the impact from the acquisition and higher allocation of corporate expenses, which anniversaries in the third quarter, these factors offset, the benefits of cost Management. In our savings actions, we expect America's welding to continue to operate in the 18-19 percent. Ebit margin range for the remainder of the year.

Ation was partially offset by 7% lower volumes demand trends for the weekend in the Amia region largely outside of core Europe. And asia-pacific was challenged with stronger prior year project activity.

Adjusted ebit increased approximately, 19% to 31 million.

Margin increased 230 basis points to a more normalized rate of 12.7%, which reflects seasonality benefits from savings actions and Equity earnings from our alloy steel investment.

We expect International weldings margin performance to operate on the higher end of their 11 to 12%. Margin range for the balance of the Year, reflecting the inclusion of alloy Steel.

Moving to the Harris products group on slide 8, second quarter sales, increase, 19% with 11% higher volumes and 7% higher price.

Volumes reflected strength from the HVAC sector and expansion of our brand in the retail Channel. Requiring initial inventory stocking underlying retail Trends, remain challenged in the quarter.

Price increase on metal costs and price actions taken to mitigate Rising input costs.

Adjusted ebit increased approximately 28% to 32 million in margin improved, 100 basis points to a record 19.4% on volume growth, effective cost management and strategic initiatives. We expect the Harris segment to operate. In the 17th to 18% margin range for the balance of the year, due to seasonality, and normalized volume trends.

Moving to slide 9.

We continue to generate strong cash flows from operations in the quarter for the first half. Cash flows have increased approximately 9% with 104% conversion ratio.

Average, operating working capital rows, 40 basis points to 18.4% versus the comparable prior year period.

Moving to slide 10.

We are executing well to our Capital allocation plan. We invested 57 million in growth, reflecting capex investments in our initial investment in alloy steel. We also returned 169 million to shareholders through our higher dividend payout rate, and the 1277 million of share repurchases. We maintained a solid adjusted return on invested capital of 21.7%.

Moving to slide 11 to discuss our operating assumptions for 2025.

We are raising our operating framework assumptions, given first-half actuals and the inclusion of Alloy Steel.

Year to date. We have seen volumes only partially offset price increases in our updated operating assumptions assume. This Dynamic will continue through the balance of the Year. Given the relative resilience in North America. We expect this bill result in a low single digit percent organic sales growth for the full year.

With the announced agreement to acquire the remaining interest in Alloy Steel on August 1st, we now expect acquisitions to generate approximately 270 basis points in sales growth this year, with Alloy Steel contributing $20 to $25 million in sales for the balance of the year. We are continuing to target a neutral price-cost position.

Our supply chain, initiatives are focused on maximizing domestic Supply and we are pursuing benefits from operational initiatives and savings actions to help offset inflation. In addition to price actions.

Our savings program anniversary in July, and the first 4 quarters of the program, we generated 47 million in incremental savings, with approximately 65% from temporary cost, savings actions.

As we look ahead to the balance of the year, we estimate an additional 10 to 15 million dollars will be realized largely from permanent structural savings. Now that we have anniversary our temporary cost savings actions.

These permanent savings will be split evenly between our two welding segments.

The savings mix, uh, shift, reflects the reintroduction of some discretionary spending into the business, to support our commercial teams and strategic initiatives, which have been margin neutral as demonstrated in the second quarter.

Model.

With more favorable volume performance in the first half of the year and the inclusion of alloy steel, we now expect our full-year adjusted operating income margin to be steady to slightly up versus the prior year period, with a high-teens percent incremental margin.

this Builds on our first half incremental margin rate of 17%

Our interest expense, tax, and capex assumptions are being maintained, but we are now including $0.07 of EPS contribution from the alloy steel acquisition for the balance of the year.

We believe these updated operating assumptions, reflect the progression of the business while remaining cautious on demand Trends in the near term.

And now I would like to turn the call over for questions.

Ladies and gentlemen.

We will conduct a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad,

If you would like to withdraw your question press star followed by the number 1.

To ensure everyone has an opportunity to ask to participate. We ask that you ask 1 question and 1, follow-up question and then return to the queue

We'll pause for just a moment to compile the Q&A roster.

Your first question is from the line of Angel, Costello with Morgan Stanley.

Hi, good morning. Thanks for taking my question. I I was hoping you could uh help unpack a little bit more, what you're seeing in terms of orders and um, you know, just kind of customer demand in particular. If you could talk about, maybe what you're seeing in terms of Trends in July and how that kind of progressed, you know, from 2 Q into July and how that's kind of informing your your second half Outlook

Yeah, so thanks for that question, Angel. Uh, we are seeing July order Trends, hold. So this is what gives us confidence as we uh uh provided an update to the assumptions, we're seeing more strengths uh in general Industries as we wound up. The second quarter is is uh Steve commented uh, volume trends for improving and general Industries, uh, more cautious as you can expect and heavy Industries, uh, being down low, teens seeing that progression, uh, still into, uh, the third quarter. Um, and then on the automotive side that comment that, um, while the overall Trends were up low single digits, a little bit more pressure on volumes as we saw, uh, progressively in second quarter. And as we enter the third quarter,

That's helpful. Thank you. And then I was hoping you could help me, understand, I guess a little bit more of the kind of the Harris segment volume Dynamic. It sounds like some of the volume uplift. There was was kind of driven by some uh inventory stocking. Um ahead of the I think you said product rollout, but just curious can you help us understand I guess maybe the underlying what the underlying kind of organic demand Trends are are like, when you back that out. And as we think about that re or that that stocking, I guess. Um, how does that ultimately impact your second half or, or potentially, first half of next year?

Yeah, it's a great question. So in in general just think if we remove the initial uh stocking uh for a new retail uh customer in the channel. We're probably more flattish type of volumes progressively. As we go into the third quarter,

Your next question is from the line of survey for bordofsky with Jeffries.

Hi, thanks for taking the question. Um, you know, kind of building on the End Market commentary, but you talked about customers, differing decisions. It was just curious. If we get more tariffs certainty. We have we now have the big beautiful Bill. If you see in any changes in behavior and if not what our customers waiting to see the execute on

Some of this elevated quoting levels that you talked about.

Uh, yeah. Sorry. I I think what you're seeing is um, as the Trump Administration starts to provide some clarity around the Tariff rates for individual countries, uh, the rules of the rotor starting to get more firmly set up, which is I think been the key hang up for a lot of, uh, our customers who look at investments in capex, particularly around equipment, and automation, you know, not wanting to put capacity or investments in the wrong place as the uh trade policy wins were were shifting constantly. So I think, as we start to get a little bit more clarity on the what the rules are going to be going forward, and hopefully those stabilize, uh, I think that will really go a long way towards addressing the wait and see attitude. That a lot of our customers have taken, uh, the 1 big beautiful Bill. Uh, will obviously try to create incentives and pressures for uh, reshoring in America. And I think that will primarily benefit the General Industry segment, where we have a lot of the more smaller

And and need to invest, particularly in automation, to handle the additional volume, You know, despite the labor shortages.

Appreciate the color.

Did the $10 to $15 million in savings come in the second half from permanent cost tax savings? Could you just expand on some of those actions that you're taking?

Yes, so just think about the actions as a continued uh uh focus on uh, evolving the operating model, so whether it's an organization or looking at facilities and shaping, uh, uh, efficiencies for the long term, we just continue to look create opportunities to shape the model.

Your next question is from the line Brian Blair with Oppenheimer.

Thank you morning, everyone.

Good morning. Bye.

Uh, you noted that automation quoting activity, you know, it's been strong that that's encouraging, but wondering, if you could offer any finer points on that front, um, you just mentioned 1, the 1, big, beautiful Bill, uh, that I suspect that's going to be a good guy in terms of automation demands. Um,

You know, near to medium term. Um, yeah. Just curious what, what color you can offer and in the end, um, um, you know, mostly curious how your team is feeling about, you know, potential inflection in in demand and sales right into 2026.

Yeah, Brian. Thanks for the question. You know, a lot of what's happening is our customers are trying to figure out how they're going to respond to the changes in trade policy in terms of what they make. Where, um,

And a lot of the quoting activity is driven by their contingency planning, uh, and their abil, their desire to respond to whatever the ultimate rules of the road, become the wait and see approach is well, the the rules aren't finalized. So I don't really know whether to pull the trigger on the investment you quoted for me in the US versus Canada versus Mexico. Uh, what capacity should buy I be assuming, uh, and the like so our, our team is very encouraged that as the trade policy starts to get, uh, more firmly established, that that will encourage customers. Then pull the trigger on, uh, projects that we've quoted for them, uh, already. Now we've been in this wait and see approach for a while now. So I think we're a little bit conservative, in trying to prognosticate when you know, the spigot is going to get turned on. Uh, and there are portions of our business that are fairly long Cycles. So we need to get the orders in hand before. Uh, we can be confident about a forecasting, the future of Revenue.

1 of those. Uh, but in general, the market situation is very encouraging and, and we're optimistic about the future with a, a conservative assumption that the businesses, the automation business will basically stay steady through the second half,

Okay, understood appreciate the color and you mentioned that International welding, demand incrementally weakened during the quarter, with that weakness more. So outside, core Europe, uh, can you offer a little more detail on that Dynamic? It would be helpful to

you know, to know how International Welling orders trended through the quarter, uh, and into July gave you mentioned that July Trends have held overall, uh, does that, you know include International welding, just any

Any color or nuanced would be helpful. Yeah. Brian. You know when I talk about July we're I'm talking overall. So so that is uh, good observation, you've made Brian. But when you think about International, there are a couple of dynamics that we kind of pointed to 1 at the timing of projects, particularly comparing in the Asia side, the prior year. And then on the the, the Amia side, um, turkey continues to operate in a challenge, uh, economic environment. Um, and as well as some project timing in Middle East and some areas of, uh, Europe. So if, if you back those, uh, core Europe is probably tracking more into low single digit type progressing progression of uh on a real organic uh trends

On the time of projects have a meaningful impact on the overall trend. So that's built in to the overall Outlook that we built into the assumptions.

Your next question is from the line of MiG debris with beard.

Yeah, good morning. Um,

So 2 things that, that sort of stood out to me in your end Market. Commentary was, was automation, is you, you talked about this business stabilizing? And I think that's interesting. And I'd like to hear more, uh, of what you're seeing in Auto component of that business, which is, you know, is quite large versus

Uh, maybe some of the other industries that you're supposed to do in automation. And then the second thing is general industries being off high single-digit percent.

I know smaller Fabricators, as you mentioned, but I would imagine maybe some of your Distributors, um, are are in this category as well. Do you have the sense that there's been any demand pulled forward or anything unusual happening in the channel as a result of these pairs and uh, uh, your your own price increases?

Yeah, Mick. I I'll provide some high level commentary and then let Gabe uh comment on specifics with respect to automation. I think it's important to note that our outlook for Automation in the second half of the year is steady from the first half and there is normally a fourth quarter, pickup and automation. So the Outlook that says steady for the second half actually does imply a decline versus prior year. Uh, but we think given where the business has settled in, that's a, a pretty realistic and conservative call for the second half with maybe a little bit of upside potential for that. And then with respect to your comment about General Industries and uh, the industrial distribution Channel. Remember that when we spoke last quarter, Our concern was that we had to raise prices to offset tariffs. We were anticipating, uh, demand. Elasticity response. Are a call. Was that volume would offset price and and we'd be flat. And what we've seen is that volume has been less negative than we feared

So, that leads you to the overall uh, organic up.

it's just to add, uh, big, uh,

On the automation side of things when Steve refers to things being flat that does imply for the for the full year that we're uh down call it mid single digits. And we just haven't seen the inflection of incremental orders yet. Although Steve mentioned, the quoting activity is very strong. The pipeline is very strong. We are uh, very positive in terms of the framework. When we do see more confidence in the commitment to Capital. So we're very well postured for growth. And on on on the automation side of things in general Industries, you know, we do have the impact on HVAC activity, HVAC activity in general Industries, uh but overall volumes are were positive and so while I can't point to an inflection, I'm not aware of any by forward of inventories that are occurring. We're not seeing that in the channels. Um, so we're monitoring that closely real positive within that on the consumable activity. As you know, that's a reflection of factory activity. So we're staying real close.

Close to it. Uh, trying to understand uh, the drivers there progressively uh, from pm and I industrial production Trends. And and what we saw on the industrial distribution side of things is, is is activity holding and I'm considering uh, price impact and volumes and just seeing a more favorable steady trend on Industrial distribution. Uh so those are

Positive uh, Trends and and they are better than expected. As we entered the second quarter.

Understood.

I guess my follow-up then um if you you you kind of hinted in your prepared remarks at the next cycle and uh and and talked and mentioned margins. So I guess I want to ask you a question about that.

Um, when, when we're kind of looking here this year last year, having to deal with, obviously the volume, uh, pressure that you have to deal with margins, have been quite resilient and I'm, I'm wondering how you think about or what the right framework to think about margins, as we're starting to see. Hopefully this volume of the recovery extended to 2026 and Beyond. How do you guys think about incremental margins? Um, what's the uh, right opportunity for for the company especially with the, the cost takeout that you had here? And with automation? Now being a bigger part of the mix relative to where we were in the early cycle portion of the prior cycle?

like, you know, make the margin performance, as you point out, uh, we're pleased with the progression, particularly with we with the known opportunities, we see within the business, and I just point to a couple, you mentioned volume and I would point to our historical, uh, incremental when we perform in volumes and to call it, the mid single digits, we're talking about potentially uh mid 20s type of uh incremental uh, the automation side, which is you

Got opportunities continuing on our, the automation side of our business and I point to International as well, you know, the targets we've established and with uh, some volume Improvement. We should also see Improvement in margins on, on the international side.

As a reminder to ask a question, press '*', followed by the number '1' on your telephone keypad.

Your next question is from the line of Nathan Jones with stifel.

Good morning, everyone.

Morning.

Guess a bit of a follow-up question on consumables and, and particularly focusing on the Americas. There's obviously, you know, a lot of Steel in the consumables that you sell interested in just hearing a little bit, uh, you know, find a point on what volume versus price was in the consumables. Just thinking, primarily about, you know, as you said it's, it's an indicator of what overall activity is. So, so just interested in some more color on volume versus price in the consumables business.

Yeah. You know, Nathan in general, we don't break out the pricing between the product offerings. But uh, you could assume that pricing is a little bit higher on the consumable side than on the equipment side. And then uh, what that means is that volumes help on the consumable side of our business to to be flattish, type of a look. Uh, so, uh, we're pleased with the progression. It is, uh, has been more resilient um, than we were expecting and and we're monitoring uh Factory activity and how that progresses that's on the macro level.

Okay, that's helpful. And then maybe just, uh, any call you can give us on what we should expect for pricing in Q3. Just given, you know, pricing is going to be higher in the third quarter, just based on the timing of what you implemented during Q2.

And then I guess just to follow up on that would be, do you expect to have to go to back to the market for any more price? Just given, you know, higher steel, tariffs and potential copper tires coming along here or anything else that's in the pipeline that might fit. You have to go back to the market for more price. Thanks.

Uh, so maybe I'll answer that question. First, the letter, the letter, question, anything we're going to respond with our price cost neutral posture, as we've done. And so we'll have to monitor what progresses from a trade actions standpoint as well as input costs.

Uh, in terms of pricing, going into uh, the third quarter and the timing of actions taken. In the second quarter, we do expect another 200, 100, 200 basis points of incremental, uh, pricing impact. Going into the third quarter from actions taken.

And Nate just a follow up on that. We have already taken pricing actions to cover. The announced tariffs on steel and aluminum. Uh so we would unless that uh policy changes, right? We we would not need to take additional price on steel and aluminum but as the country by country tariffs get finalized then we'll respond accordingly as Gabe indicates.

Ated to maintain the the neutral price cost model.

Your next question is from the line of Walt Lipic with Seaport Research Partners.

Hi, thanks. Good morning.

I wanted to ask about hi. I wanted to ask about the, um,

Uh, the comments around incentive comp programs and how those were brought back in. So I just wanted to understand your thinking about why I brought it back. Was it? Because of the second quarter and you know, the the uh you know the volume and pricing discussion that we've been having or is it you know what, you know what is it about? You know, now that you would bring back that incentive comp.

Yeah. So um, well, there's 2 elements to that 1 the incentive comp. Uh, and bonus is really just formulaic based on the performance of the business. Uh, so there wasn't really a decision to make on incentive comp on the Merit increases, which are base salary. Increases, if you recall, we announced a temporary pause in that because we were very concerned as we saw the, uh, shockingly High tariff proposals from the Trump Administration and factored in the pricing that we would have to take to try and offset that we were very concerned. Uh, that there was going to be an overwhelming uh demand elasticity response and that volumes could potentially you know, fall off a cliff. Um, so as a

The Merit increase, you know, per our normal uh program.

Okay, that's great. Yeah. Thanks for uh, for clarifying that um, yeah. And I guess this is a, a follow-up. Um, you know, we've we've talked about the volume, um, holding up a little bit better in the second quarter. Uh, was there anything else that stood out to you? In the quarter that was, uh, you know, better than expected was it, you know, the price realization that you're getting and push back or um, anything else about the quarter that that looked that was, you know, uh, on the positive side.

Yeah, again it's it's important to keep in mind, Walt that in the first quarter, we had a big headwind from Turkey, right? That was a, a 1-time related to the work stoppage and the the labor negotiations there. And in the second quarter, we we didn't have that headwind. And we also had a little bit of a Tailwind from the load in to a new large retail partner. So absent. Uh, those 2 things were still encouraged by the strength of the business and the progression, uh, and the resiliency that we see, uh, but you have to include those 2 1 times, as you're comparing the sequential move from q1 to Q2,

Just to add Vault, you know, the pricing sides based on, uh, what we saw, where, right in line to what our Communications have been. If you recall, we said, uh, we expected pricing uh, to move in the mid single digits and, and that's what we've seen. Now we're probably pushing with the full at full maturity and the higher end of that. Uh, but really, as we've been speaking to on the call, is the, the resiliency and volumes are are where you've you've seen the, uh, which were stronger than expected.

Our final question will come from the line of Steve Barger with keybanc capital markets.

Hey thanks. Good morning, guys.

Hey, Steve.

Going back to some of the third quarter commentary. I hear you on the continued uncertainty, but as you noted pricing, is strong. Comps are easy. So, should we expect normal 3Q, revenue? Seasonality of down? Kind of low single digit sequentially? Or is there some other Factor? We should think about.

No, I think that's a fair observation. Just progressing. In our normal, uh, seasonality is a good assumption.

Yeah, with the caveat, Steve, that we'll start to see the sell-through replenishment of the new retail customer. But we won't have the one-time load-in that we had in the second quarter. Yeah.

Yeah. Understood

um, back to the quoting activity in robotics during the quarter. We saw an announcement between the largest cobat OEM and 1 of the biggest Global robotics consumers.

It in some Industries seeing a big player make an investment. Can spur activity from Fast followers. Do you see Dynamics like that in your business or is each deal more idiosyncratic?

Um Steve we're really focused on trying to, you know, solve the customer's challenge of um, attracting and retaining labor to um, to drive their operations. And, you know, 1 of the biggest barriers for somebody to adopt automation is ease of use ease of programming, ease of setting, the welding parameters, uh,

And the like, so we're singularly focused on trying to make automation easier for customers to deploy and adopt into their operations, uh, to the degree that there are other participants in the market that help amplify the message to the end user that they need to automate to survive. Um, you know, that that's fine with us. But we're focused on our strategy and plan our game.

This concludes our question and answer session. I will now turn the call back to Gabe Bruno for closing remarks.

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. Thank you very much.

This concludes today's call, thank you for joining. You may now disconnect your lines.