Lincoln Electric Posts Record Q3 Sales, Increases 2026 Assumptions

Lincoln Electric Holdings reported record third-quarter net sales and adjusted earnings as broad volume growth lifted its Americas business, prompting the welding equipment maker to increase its full-year sales and capital-spending assumptions to reflect stronger demand trends.

Net sales rose 15.1% year over year to $1.22 billion in the quarter ended Sept. 30, 2026. Organic sales increased 14.5%, with overall growth comprising an 8.8% contribution from volume, 5.7% from pricing, 0.5% from acquisitions and divestitures, and 0.1% from foreign exchange.

Adjusted operating income increased 19.2% to $220.0 million, while the adjusted operating margin expanded 60 basis points to 18.0%, primarily reflecting sales leverage. Adjusted diluted earnings per share reached a record $2.98, up 20.6% from $2.47 a year earlier. On a GAAP basis, operating income rose to $211.4 million from $176.7 million, and diluted EPS increased 19% to $2.63.

Gross profit advanced 9.2% to $425.0 million, but gross margin declined 190 basis points to 34.8%. The effect was more than offset at the operating level by selling, general and administrative expenses falling to 16.9% of sales from 19.5% a year earlier.

Americas Welding leads growth

Americas Welding, Lincoln Electric’s largest segment, generated net sales of $801.3 million, up 15.8%. Volume contributed 13.2 percentage points to growth, led by high-teens percentage increases in equipment and automation. Pricing added 2.4 points, reflecting a price action taken in May.

The segment’s adjusted EBIT increased 26.5% to $166.5 million, and its adjusted EBIT margin expanded 190 basis points to 20.1%. Lincoln Electric attributed the improvement to sales leverage and better automation performance, partly offset by price-cost headwinds.

International Welding sales increased 3.3% to $226.9 million. Organic sales grew 1%, as pricing and growth in Asia Pacific offset lower volumes in Europe, the Middle East and Africa. The Alloy Steel acquisition, which reached its anniversary in August, contributed 2.3 percentage points to sales growth.

International adjusted EBIT declined 7.2% to $24.0 million, while adjusted EBIT margin contracted 100 basis points to 10.3%, primarily because of weaker automation performance.

The Harris Products Group posted the strongest reported sales increase, with revenue rising 28.9% to $193.1 million. Pricing contributed 25.7 percentage points, reflecting higher year-over-year metal costs, primarily silver, while volume added 3 points. Demand for heating, ventilation and air-conditioning applications and gas equipment supported volume growth.

Harris adjusted EBIT rose 21.4% to $34.1 million as higher sales provided SG&A leverage. Its adjusted EBIT margin nevertheless declined 100 basis points to 17.3% because of product mix and operating inefficiencies.

Across the company, organic sales increased in all three major product groups. Consumables grew at a mid-teens percentage rate, equipment increased at a low-teens rate and automation rose by a high-teens percentage. Lincoln Electric said volume gains were led by increased capital spending. All end markets measured through its direct channel recorded double-digit year-over-year growth, with general fabrication up in the mid-20% range, energy and structural steel up in the mid-teens, and transportation and heavy industries up at low-double-digit rates.

Cash flow and capital allocation

Cash provided by operating activities totaled $215.8 million, down 9% from $236.7 million a year earlier. After $41.2 million of capital expenditures, free cash flow was $174.5 million, compared with $205.1 million in the prior-year quarter. Cash conversion was 107%, while the average operating working-capital-to-sales ratio improved to 16.6% from 18.6% at Sept. 30, 2025.

Lincoln Electric returned $143 million to shareholders during the quarter, including $43 million in dividends and $99 million in share repurchases. The company also announced a 10% increase in its quarterly dividend to $0.87 per share, payable in January 2027. Adjusted return on invested capital reached 23.9%, up 170 basis points year over year.

Full-year assumptions and risks

For 2026, Lincoln Electric now assumes net sales growth in the low-teens percentage range, with organic growth expected to comprise roughly 40% volume and 60% price. Management expects neutral price-cost conditions in the fourth quarter and adjusted operating margin improvement at a mid-20% incremental margin during the period.

The company projects full-year capital expenditures of $140 million to $150 million and cash conversion of 100%. It also expects net interest expense of $50 million to $55 million and a full-year tax rate in the low-to-mid-20% range. Share repurchases are expected to include both maintenance and opportunistic activity.

Lincoln Electric identified trade and regulatory policies, commodity prices, economic and geopolitical headwinds, and inflation in raw materials and labor as risks to its assumptions. Potential acquisitions and the impact of a Middle East ceasefire were listed as opportunities but were not included in the outlook.