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DATE

Thursday, April 30, 2026 at 10 a.m. ET

CALL PARTICIPANTS

  • President and Chief Executive Officer — Steven B. Hedlund
  • Chief Financial Officer, Executive Vice President, and Treasurer — Gabriel Bruno

TAKEAWAYS

  • Sales Growth -- Total sales rose approximately 12% to $1.121 billion, driven by 10% higher pricing, 2% favorable foreign exchange, and a 1.6% contribution from the alloy steel acquisition, offset by a 2.6% decrease in volume.
  • Gross Profit -- Gross profit increased 9% to $399 million, while gross margin declined 80 basis points to 35.6% due to reduced volumes, unfavorable price-cost timing, and a $1 million LIFO charge.
  • Adjusted Operating Income -- Adjusted operating income increased 11.5% to $189 million, maintaining an adjusted operating margin of 16.9% year over year, with a 17% incremental margin.
  • Diluted Earnings Per Share -- Diluted EPS rose 18% to $2.47; adjusted EPS grew 16% to $2.50, including a $0.04 benefit from foreign exchange and $0.05 from share repurchases.
  • Americas Welding Segment -- Segment sales climbed approximately 8%, nearly all from price, with volumes declining just 0.4%; adjusted EBIT grew 3% to $128 million, but EBIT margin fell 100 basis points to 17.2% due to price-cost lag and increased allocated corporate expense.
  • International Welding Segment -- Sales increased approximately 4%, aided by foreign exchange and the alloy steel acquisition, while volumes dropped 10% due to automation project timing and Middle East impacts; adjusted EBIT fell 1.5% to $23 million, and margin declined 50 basis points to 9.7%.
  • Harris Products Group -- Sales soared 42%, with 41% due to price actions against elevated metal costs; adjusted EBIT jumped 68% to $41 million, and margin improved 330 basis points to 21.2% as segment achieved price-cost neutrality and favorable mix.
  • Cash Flow and Working Capital -- Cash flow from operations was $102 million, down due to increased working capital use for higher inventories to support customer service and product transitions; operating working capital-to-sales ratio increased 80 basis points to 18.6%.
  • Capital Allocation and Returns -- $39 million invested in CapEx, and $101 million returned to shareholders via dividends and buybacks; adjusted ROIC sustained at 21.5%.
  • 2026 Sales Guidance Update -- Management raised net sales growth guidance to a high single-digit percent range, now assuming three-quarters of organic sales growth from price at a mid single-digit rate, and one-quarter from volume.
  • Middle East Conflict Impact -- Company anticipates an $8 million to $10 million sales impact per quarter for the duration of the conflict, split equally between Americas and International Welding segments.
  • RISE Strategy Initiatives -- Implementation of new automated line boosted productivity threefold at a Harris facility; new center-led weld consumables innovation function launched to accelerate speed to market.

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RISKS

  • The Middle East conflict is causing an $8 million estimated quarterly sales impact as "several customers suspended activity," and may persist while regional instability continues.
  • International Welding segment volume fell 10% from automation project timing and temporary customer declines due to geopolitical issues, negatively affecting margin performance.
  • Gross margin declined 80 basis points while price-cost was unfavorable by 90 basis points in the quarter, with the company stating, "our 10% higher price did not fully offset inflation in the quarter. To ensure we achieve our neutral price-cost target this year, we have already announced new price actions."
  • Cash flow from operations decreased due to "a temporary increase in inventory levels" necessary to maintain high service levels during product transitions, pressuring working capital metrics.

SUMMARY

Lincoln Electric Holdings (LECO +3.08%) reported record quarterly sales and adjusted EPS, heavily driven by pricing actions and early contributions from the recent alloy steel acquisition. Operational complexity increased due to geopolitical headwinds, with quantifiable sales disruption from the Middle East conflict and pronounced margin compression in international markets. Management emphasized the execution of the RISE strategy, including successful automation initiatives and new processes to expedite product launches, while cash flow from operations reflected increased working capital as the company positioned for ongoing demand. New price actions, effective in May, are designed to return the company to price-cost neutrality by the third quarter, following a quarter where price increases did not fully offset input cost inflation. The Americas region outperformed on both order momentum and broad-based end market demand, with automation and consumables driving growth and segment volume set to turn positive next quarter, while management stated its updated high single-digit percent 2026 sales growth guidance primarily relies on continued strong pricing.

  • Management stated, "Our goal is to be price-cost neutral at the margin level, and we have a long history of achieving that objective," but currently expects full impact of announced welding segment price actions beginning in the third quarter, not the second.
  • Organic volume growth is anticipated to accelerate in the back half of 2026, as prior price initiatives are annualized, and order momentum persists in The Americas and Asia Pacific regions.
  • The Harris Products Group delivered outsized price and margin performance that management expects to moderate, with historical retail channel dynamics creating challenging second quarter comparisons before volume growth resumes in the second half.
  • International Welding's margin is now forecast to remain near 11% until Middle East operations normalize, as acquisition benefits will also begin to annualize in early August.
  • SG&A expense guidance was set at a $150 million per quarter run rate for the balance of the year, following a $6 million per quarter increase from the April merit cycle.

INDUSTRY GLOSSARY

  • RISE strategy: Lincoln Electric Holdings' enterprise-wide operational and growth initiative focused on automation, customer service improvement, and process innovation.
  • PMI: Purchasing Managers’ Index, commonly referenced as an indicator of manufacturing sector health and factory activity trends influencing welding product demand.
  • Price-cost neutrality: The goal of maintaining alignment between realized sales price increases and input cost inflation, such that overall gross margin is preserved.
  • Incremental margin: The percentage by which profits increase relative to additional sales, excluding special items, used here to assess operational leverage.

Full Conference Call Transcript

Steven B. Hedlund: Thank you, Amanda. Good morning, everyone. Turning to slide three, we achieved solid results led by record quarterly sales and adjusted EPS performance while also navigating heightened operating complexity from geopolitics and evolving trade negotiations. Teamwork exemplified our success this quarter. We remained agile in addressing short-term dynamics while staying customer-focused, investing in long-term growth, and reimagining how work gets done. The global launch of our new RISE strategy was successful, and we celebrated a string of early wins which include the U.S. launch of our elite customer program as part of our enterprise-wide Spotlight initiative, which raises the bar for customer service in our industry.

It enables us to provide superior on-time delivery, hassle-free support, and value-added services to help customers grow their business with us. In addition, we commissioned a new automated manufacturing line in one of our Harris facilities that triples the line's productivity while significantly improving quality. This investment also showcases the breadth of automated manufacturing solutions we engineer beyond traditional welding robots. Finally, we launched a new center-led process innovation function in welding consumables to accelerate our speed to market. I am pleased by the speed of progress, and we will work hard to maintain this pace. Turning back to quarterly performance, we are encouraged by improving sales and order momentum in The Americas region through April.

This aligns well with three consecutive months of expanding manufacturing PMI data. In the quarter, we held our adjusted operating income margin steady with prior year. While we targeted a slight margin improvement, our 10% higher price did not fully offset inflation in the quarter. To ensure we achieve our neutral price-cost target this year, we have already announced new price actions across our welding segments which go into effect in early May. Cash flows, while seasonally lower, were further affected by a temporary increase in inventory levels we put in place to maintain high fill rates and service levels while we pursue our Spotlight initiative and migrate select products to next-generation versions.

We continue to invest in long-term growth through CapEx and R&D and return cash to shareholders through both dividends and share repurchases. ROIC performance remained at top quartile levels at 21.5%. Turning to slide four to spend a few minutes on demand trends. The Americas region continued to outperform other geographies and consumables remained the most resilient product category. This was driven by factory activity and infrastructure investment, investments in energy and data centers, which helped offset slower auto production. These same end market drivers along with an increase in capital spending from off-highway customers supported modest automation growth in The Americas in the quarter as well.

Globally, our automation portfolio achieved $210 million in sales versus $215 million in the prior year with compression from international markets where we have a challenging prior-year comparison. We have been encouraged by the continued acceleration in both equipment and automation order rates and backlog levels in The Americas through April. This should support modest volume growth in The Americas welding segment starting in the second quarter with further improvement in the back half of the year if conditions are sustained. Internationally, we also saw a broad improvement in sales from Europe with organic sales pivoting to growth across Northern, Eastern, and Central Europe and in Turkey. In addition, India and Australia improved.

The headwind in our international business was largely from challenging prior-year comparisons in regional automation and energy projects and, to a lesser extent, the Middle East conflict. On a consolidated basis, the Middle East represents a relatively small portion of sales, and we estimate an approximate $8 million sales impact from the conflict as several customers suspended activity. In April, EMEA order rates continued to improve, and we are monitoring for any potential prebuying ahead of higher inflation and regional commodity supply concerns.

In the Middle East, we are engaged with regional customers servicing active requests, and our global team of welding experts are ready to support their repair and expansion needs as called upon, whether for rapid large-scale metal 3D printing of replacement and spare parts, to core welding and automation solutions. Pivoting to end market performance, we continue to see three of our five end markets achieving flat to higher organic sales growth in the quarter. Most notable is the high-30% growth rate in general fabrication, which represented accelerated factory and fabrication activity in The Americas as well as in data center and HVAC projects. Heavy industries grew in the quarter led by growth in off-highway globally.

Both construction and ag equipment grew across a broad mix of solutions including automation. Energy was steady but was bifurcated between a high-teens percent growth rate in The Americas which was offset internationally. We remain bullish on energy and expect The Americas to continue to outperform international with a strong pipeline of pending LNG projects and energy infrastructure projects needed to support data center investments. With our strong broad presence across oil and gas and power generation applications, including gas turbine, battery, nuclear, and renewables, our energy team is encouraged by the opportunities ahead. Our two challenged end markets, nonresidential structural steel and transportation, are both project-oriented and capital intensive, which can result in choppy results quarter to quarter.

Nonresidential was largely impacted by international weakness, while transportation was broader and largely driven by lower capital spending versus prior year and a slight decline in production rates. To conclude before passing the call to Gabriel, while we are operating in a more complex environment, we are well positioned to adapt and react effectively to short-term dynamics. We are financially disciplined, maintain a solid balance sheet profile, continue to generate strong cash flows, and manage the business for long-term profitable growth. This is evident in our balanced capital allocation strategy as well as our track record of compounding earnings and increasing shareholder returns through the cycle to deliver superior long-term value.

This is an exciting time at Lincoln Electric Holdings, Inc. with the launch of our new RISE strategy, and the entire team is energized to achieve our mission of being the essential link to help customers build better and execute on our 2030 goals. And now I will pass the call to Gabriel Bruno to cover first quarter financials in more detail.

Gabriel Bruno: Thank you, Steven. Moving to slide five, our first quarter sales increased approximately 12% to $1.121 billion from approximately 10% higher price, 2% favorable foreign exchange translation, and a 1.6% benefit from the alloy steel acquisition. This was partially offset by 2.6% lower volumes. Gross profit increased approximately 9% to $399 million reflecting higher sales. Our gross profit margin declined 80 basis points to 35.6% due to lower volumes, timing of price-cost recovery, and an approximate $1 million LIFO charge. Price-cost was unfavorable 90 basis points in the quarter. We continue to target a neutral price-cost posture and have implemented new pricing actions in our welding segment which will go into effect in early May.

Our SG&A expense increased by 7%, or $14 million, to $211 million. The increase was driven by foreign exchange translation, higher discretionary spending which was largely commercially driven, and higher employee costs. SG&A as a percent of sales improved 80 basis points to 18.8% on higher sales levels. On April 1, we implemented our seasonal merit increase which raises employee costs by approximately $6 million per quarter on a year-over-year basis. We expect our quarterly SG&A run rate to be at $150 million for the balance of the year. For analysts reviewing our segment EBIT schedule, our corporate expense of approximately $14 million reflects our decision to allocate additional center-led enterprise investments to our reportable segments.

Looking ahead, we expect corporate expense to be approximately $1 million to $2 million per quarter for the balance of the year. Reported operating income increased 13% on higher sales. Excluding special items, adjusted operating income increased 11.5% to $189 million, and we held our adjusted operating income margin steady year over year at 16.9% with a 17% incremental margin. Our steady margin performance reflected favorable SG&A leverage which offset the impact of lower volumes and an unfavorable price-cost position. First quarter diluted earnings per share performance increased 18% to $2.47. On an adjusted basis, earnings per share increased 16% to $2.50. We recognized a $0.04 benefit from foreign exchange translation and $0.05 from share repurchases.

Moving to our reportable segments on slide six. The Americas Welding sales increased approximately 8% in the quarter driven by nearly 8% higher price and 1% favorable foreign exchange translation. Volume declines narrowed to 40 basis points as orders accelerated through the quarter across all three product areas on improving demand trends from most end markets. We expect volumes to inflect to modest growth in the second quarter. First quarter Americas price marked peak levels in the segment as we started to anniversary last year's actions in the second quarter. The team has recently announced new pricing actions to mitigate rising raw material and logistics costs.

We expect The Americas Welding to achieve a full-quarter benefit of these new actions starting in the third quarter at a 150-basis-point-per-quarter run rate. We will continue to monitor evolving operating conditions and will respond as necessary. The Americas Welding segment’s first quarter adjusted EBIT increased 3% to $128 million on higher sales. The adjusted EBIT margin declined 100 basis points to 17.2% primarily due to timing of price-cost recovery and higher corporate expense allocated to the segment. We expect The Americas Welding margin to perform in the 18% to mid-19% EBIT margin range for the remainder of the year.

Moving to slide seven, the International Welding segment sales increased approximately 4% primarily from favorable foreign exchange translation and strong sales in our alloy steel acquisition which will anniversary in early August. This increase was partially offset by 10% lower volumes primarily from automation and, to a lesser extent, a temporary decline in customer activity due to the Middle East conflict. Adjusted EBIT decreased 1.5% to $23 million. Margin declined 50 basis points to 9.7% as the benefit from alloy steel was offset by lower volumes and higher corporate expense allocated to the segment. We now expect International Welding's margin performance to improve sequentially but remain in the 11% range until conditions improve in the Middle East.

Moving to the Harris Products Group on slide eight. First quarter sales increased 42% led by 41% higher price. The outsized price impact reflects actions taken to mitigate record high metal costs, most notably in silver and copper. The segment effectively managed costs and achieved their neutral price-cost target in the quarter. While metal prices remain elevated, we expect Harris’s price to moderate from first-quarter record levels based on current metal price trends and prior-year comparisons. Harris volume compression narrowed, benefiting from growth in the retail channel as well as an improvement in HVAC production activity, which we anticipate will inflect positive by midyear.

Looking ahead to the second quarter, we expect segment volumes to compress due to a challenging comparison from last year’s retail channel load-in of a new customer. Volumes are then expected to pivot to growth in the back half of the year. Adjusted EBIT increased approximately 68% to $41 million and margin improved 330 basis points to 21.2%. The profitability improvement reflects SG&A leverage from higher sales dollars and favorable mix. We expect the Harris segment will operate in the 19% to 20% margin range at current metal prices. Moving to slide nine. We generated $102 million in cash flows from operations in the quarter which was lower due to higher uses of working capital.

We strategically increased inventory levels on a short-term basis to ensure high customer service levels while we transition select products to newer models and ensure we capitalize on early strengthening of demand, especially in The Americas. We expect to reduce inventory levels in the second half of the year. The increase in inventories resulted in an 80-basis-point increase in our average operating working capital-to-sales ratio to 18.6%. Moving to slide 10. We continue to execute on our capital allocation strategy by investing $39 million in CapEx and returned $101 million to shareholders from a combination of our higher dividend payout and share repurchases. We maintained a solid adjusted return on invested capital ratio of 21.5%.

Moving to slide 11 to discuss our operating assumptions for 2026. We have increased our net sales growth assumption to incorporate recently announced price actions taken to offset rising input costs. We now expect net sales growth to be in the high single-digit percent range as compared to our initial assumption of mid single-digit percent growth. Our organic sales mix is now expected to be three-quarters price at a mid single-digit percent rate and one-quarter volume. Given how early we are in the year and the potential trade-off of strong order rates in The Americas offsetting lower sales from the Middle East conflict, we have not changed our original volume growth assumption of a low single-digit percent growth rate.

We estimate the sales impact from the Middle East conflict to be $8 million to $10 million per quarter while the conflict persists, which is split evenly between The Americas and International Welding segments. We also continue to anticipate a 70-basis-point M&A benefit from the alloy steel acquisition which again anniversaries in early August. We are maintaining our other full-year assumptions on operating income margin improvement, a mid-20% incremental margin, interest expense, tax rate, CapEx, and cash conversion. And now I would like to turn the call over for questions.

Operator: 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. If you would like to withdraw your question, press star one again. To ensure that everyone has an opportunity to participate, we ask that you ask one question and one follow-up question. Your first question comes from the line of Bryan Francis Blair of Oppenheimer. Your line is now open.

Bryan Francis Blair: Thank you. Good morning, everyone. It would be great to hear a little more on how your team is thinking about cycle positioning here and the prospects for overall demand acceleration and broadening product growth over the coming quarters. Consumables growth has been encouraging since Q2 of last year, obviously very robust in Q1. Trends have been a bit choppier on the equipment side, but it sounds like you do expect near-term improvement. Just any additional color on that front would be helpful.

Steven B. Hedlund: Yes, Bryan. This is Steve. I would say we are cautiously optimistic. We are seeing good order rates in The Americas business. We have got continued strength in the PMI data. Conversations with customers are encouraging, but we do not want to get ahead of ourselves. We want to see a little bit more consistency month to month. In Europe, there is a lot of choppiness. We are concerned that some of the volume growth we saw there might have been pull-forward around pricing and other regulatory issues in terms of carbon taxes and the like.

We do not really have any more clarity than anybody about what is going to happen in the Middle East, and we are keeping our fingers crossed there. So cautiously optimistic, I guess, is our overall position.

Gabriel Bruno: Just to add, as we mentioned, in The Americas Welding segment, if you look at real volumes, consumables and automation were up. And as Steven mentioned, the progression in the quarter on orders was strengthening through March as well as into April, and it also positions us for growth on the equipment side. So the keyword for us is being cautiously optimistic about what we are seeing in the business.

Bryan Francis Blair: And specific to automation, is the expectation that the strategy turns to growth in Q2? Is mid single-digit range still a reasonable outlook for 2026? And have you seen any improvements in the scope of quoting outside of the large projects that you cited last quarter?

Gabriel Bruno: We do expect to turn to modest growth on the automation side as we exit Q2 with an expectation that in the second half we see broad volume improvement across the automation business. Our order intake continues to be strong, backlog levels strong, and while there is a lot of project activity which creates some choppiness, particularly on the international side in this first quarter, we do expect to posture to growth in the second half.

Operator: Your next question comes from the line of Angel Castillo of Morgan Stanley. Please go ahead.

Oliver Z Jiang: Hey. Good morning, Steve and Gabe. This is Oliver on for Angel this morning. Just a question on your Gen Fab end markets. I know you were up high-30s this quarter. Can you help us unpack that in terms of how much of that was driven by price versus volume? And then on the back half of the year, we are seeing some of your customers talk about order numbers that are higher than that even. How does that translate in terms of volume growth for you in the back half of the year?

Gabriel Bruno: High level, our volumes on consumables in The Americas Welding segment were up low double digits, so we are pleased with the mix. You do have a significant component of the overall increase tied to automation projects in this first quarter, but overall, we are seeing broad-based strength across general industry. We are cautiously optimistic as almost a third of our business is tied to general industries, and with now three months in a row of PMI improving and the flash numbers in April also pointing to positive, we are tracking that closely because it is a key part of our business.

Oliver Z Jiang: And then maybe just one on automation. Was that a drag on The Americas margin this quarter? And looking forward, how does the margin look in terms of what you see in your backlog? I know you are targeting mid-teens there.

Gabriel Bruno: For the first quarter, we did have some pressure on automation margins. As you know, automation is dilutive to the overall business. It was not the key driver to the overall margin performance in The Americas Welding segment because, as I mentioned, it was driven by price-cost where we are trailing a bit, as well as the increase in corporate allocations into the segment, which is about 40 basis points. We expect improvement in volumes to also track with a high single-digit type of margin in the automation business.

Operator: Your next question comes from the line of Mircea Dobre of Baird. Please go ahead.

Mircea Dobre: Hey, good morning, everyone. I just have a couple of points of clarification here. In terms of pricing, do you expect to be back to neutral from a price-cost standpoint in Q2, or is that delayed until later in the year? And as far as the embedded price in the guide, does that reflect the actions that you talked about in the welding business that occurred in May—is that embedded in that or not? And how about Harris, because what we saw in Q1 at Harris is just outsized, and I know things are moderating, but at what pace should we expect that to happen?

Steven B. Hedlund: Our goal is to be price-cost neutral at the margin level, and we have a long history of achieving that objective. What you saw was an inflection in input costs for us in the latter part of Q1, and then there is a little bit of a delay for us to be able to announce the pricing, communicate all that, and have it go effective. I would expect that we are going to recover most of that in Q2 as the pricing goes into effect in May, and our guide for the year on total price reflects that assumption of the pricing we have already announced.

Gabriel Bruno: I would expect price-cost neutral as we enter the third quarter. The timing of the price increases will have an impact in the second quarter, but we will have the full impact in the third quarter. In terms of our price assumptions, if you think about the increase between 300 and 400 basis points, about a quarter of that on a full-year basis is tied to the new price actions and the balance really tied to Harris and what we have seen there.

We do not get the full-year impact of the new price actions being taken, so if you think about that 150 basis points that I mentioned that begins in the third quarter, take about half of that, and that is really about a quarter of the overall pricing change assumption.

Mircea Dobre: And then, going back to International, I am trying to make sense of the volume decline that you have in there. I understand the Middle East impact, something around 200 to 300 basis points. But what about the rest of it? The prior year comparison did not look that difficult. Can you unpack what is going on here and what regions are doing what outside of the Middle East?

Gabriel Bruno: The largest driver was the timing of projects within our automation business. We did see pockets of strength in certain markets within Europe; you have the impact of the Middle East, but timing of projects was the key driver. In Asia, you have seen favorable trends in the likes of India and Australia. Biggest driver overall was the timing of projects and the tough comps on the automation side. We were down in automation International and slightly up on The Americas side.

Operator: We have our next question from Nathan Jones of Stifel. Please go ahead.

Analyst: Good morning, everyone, and thanks for the question. This is Andre on for Nathan. Just moving on to the margin side, can you talk about some of the cost management actions Lincoln Electric Holdings, Inc. has taken to drive improved margins near term?

Steven B. Hedlund: We have a series of initiatives we are driving under the RISE strategy in terms of enterprise-led initiatives. We are focusing on sourcing and trying to get more leverage out of our global spend. We are looking at improving supply chain planning so we can become more efficient in how we run the factories and service our customers with less inventory going forward. We are looking at SG&A productivity initiatives, and the combination of all those things are reflected in our assumptions around incremental margins over the course of the RISE strategy period.

Gabriel Bruno: And just to remind you, when we talk about our expectations in the operating margins as well as incrementals for 2026, we are targeting mid-20s. If you think about our 2030 targets, we are talking about high-20s. So we are looking to make a step change, and a lot of the investments we are making currently have longer-term implications while we are continuing to improve the short-term margin outlook.

Analyst: And just specifically to Harris, can you walk us through what were the primary margin drivers? Was it mainly mix related?

Gabriel Bruno: Mix was certainly favorable. We did have some strengthening across the retail side as well as what we have seen in HVAC, which was better than expected. And then we also have the pricing impact where we achieved our price-cost neutral posture, and with the leverage on SG&A, we probably have about low to mid-20s type of incremental margin on that. So mix is a big part of it and our pricing strategy as well.

Operator: The next question comes from Walter Scott Liptak of Seaport Research Partners. Please proceed.

Walter Scott Liptak: Hi. Thanks. Good morning. I wanted to ask about the lower International margins. I think you, Gabe, talked about an 11% International margin throughout the year, and I think previously it was 11% to 12%. Is this more price-cost, or is it the Middle East volume overhang? Help us understand what is going on with International profitability.

Gabriel Bruno: The volume impact in the first quarter—being down 9.9%—had an impact, and we do expect to see more stability in the overall business profile as we enter the second quarter. Timing of projects, as I mentioned, in automation has an impact. Depending on how the conflict progresses in the Middle East, we will continue to see an impact there. The mix is good from an alloy steel acquisition standpoint; that will anniversary in August, and we expect that to also have a favorable impact. So the impact on volumes had an impact coming into the second quarter, which we expect to stabilize.

Walter Scott Liptak: Going back to the earlier questions about some of the general fab markets and the way that things trended, was this quarter in line with what you were thinking going into it, or did you see more of a pickup as the quarter went on and into April?

Gabriel Bruno: As I mentioned, The Americas Welding consumable volumes being up low double digits was stronger than we would have expected as we spoke in February. We saw strengthening in real volume activity in general fabrication. We continue to see that momentum into April. That is what gives us the cautious optimism on the early parts of recovery, particularly on The Americas Welding side.

Steven B. Hedlund: I would add the improvement in Gen Fab, particularly in The Americas, with consumables maybe a little bit ahead of what we were anticipating and standard equipment maybe a little bit behind what we were anticipating. Consumables are a great barometer of factory activity, and with continued strength in factory activity and hopefully improving confidence, we should see the standard equipment follow in fairly short order.

Operator: Your next question comes from the line of Steve Parker of KeyBanc. Please go ahead.

Christian Zyla: Morning, everyone. This is Christian Zyla on for Steve Barger. One clarifying question: with your earlier comments on the Q2 volume expectations, are you expecting overall margins in Q2 to be somewhat similar to Q1 and then a pretty meaningful step up to get to your full guide of slight improvement? Can you help us with the cadence for the full year?

Gabriel Bruno: I expect the second quarter to show a step improvement compared to what we realized in the first quarter and see that progress progressively stabilize as we get full realization of price-cost neutral in the third quarter.

Christian Zyla: And to follow up on that, is that driven primarily by volume or mix in the back half? Help us parse that out.

Gabriel Bruno: Volumes should progressively improve. Prior to the increase in our pricing assumptions for the year, we pointed to the mix of price and volume progressing into volumes in the back half of the year as we anniversary the price actions we had taken in 2025. So we have pivoted to volume in the back half of the year. The only comment to reinforce mix is that strengthening in The Americas, depending on progress within the Middle East conflict, could be an offset, which we estimate to be about $8 million to $10 million per quarter.

Steven B. Hedlund: Our expectation is still for continued volume improvement in the second half of the year. We have not seen anything yet to have us come off of that, but we are cautiously monitoring demand trends to stay on top of it. Hence our cautious optimism.

Christian Zyla: One final one for me is on the cash flow for the year. I think I understood the comment of the increased working capital or inventory levels. Do you expect that to repeat as we go for the full year, or should we expect a similar 2026 versus 2025 free cash flow which then would imply about $140 million to $150 million per quarter?

Gabriel Bruno: We are still anchored on 100% cash conversion, so we expect that while we are investing short term with some product transitions, that would turn around in the back half of the year.

Christian Zyla: Great. Thank you.

Operator: We have one last follow-up question from Mircea Dobre of Baird. Please go ahead.

Mircea Dobre: Thanks for taking a follow-up. Still on International for me. If we are leaving out the Middle East conflict and the drag that you have outlined from that—so excluding this—do you expect to see volume growth in the rest of that business at any point in 2026? And as far as inflation goes, what is the impact on that flow-through in pricing in International Welding?

Steven B. Hedlund: We are expecting volume growth in the Asia Pacific region of the business. Western Europe in particular, and the broader European region excluding the Middle East, we are a little more cautious. We were pleased to see a little bit of an uptick this quarter versus prior quarters, but we are concerned that might be pull-forward related to pricing actions and also some of the government regulations around the Carbon Border Adjustment Mechanism coming into play. It is too early to call any bottoming and improvement in Europe at this point in time. But we continue to see growth in Asia Pac and believe that we are investing appropriately to take advantage of that growth.

Gabriel Bruno: And our posture in International markets is to be price-cost neutral. We will take actions to achieve that objective, and that is what drives the improvement as we see from Q1 into that 11% type EBIT margin profile that we expect from the business.

Operator: This concludes our question-and-answer session. I would like to turn the call back over to Gabriel Bruno for the closing remarks.

Gabriel Bruno: I would like to thank everyone for joining us on the call today and for your continued interest in Lincoln Electric Holdings, Inc. We look forward to discussing the progression of our RISE strategy in the future.

Unknown Speaker: Thank you very much.

Operator: Ladies and gentlemen, that concludes today’s call. Thank you, everyone, for joining. You may now disconnect.