Lincoln Electric Holdings, Inc. (LECO) Earnings Call Transcript & Summary

Good morning, and welcome to the 2021 Annual Meeting of Shareholders of Lincoln Electric Holdings, Inc. I'm Chris Mapes, Chairman, President and Chief Executive Officer of Lincoln Electric and chairman of this meeting. As a part of our precautions regarding COVID-19, we have shareholders attending via the web portal. The first order of business this morning is the introduction of your Board of Directors. All of our Directors are on the line and in attendance of this meeting. Your Director nominees standing for election at this year's Annual Meeting until the 2022 Annual Meeting are: Curtis E. Espeland, former Executive Vice President and Chief Financial Officer of Eastman Chemical Company; Patrick P. Goris, Senior Vice President and Chief Financial Officer of Carrier Global Corporation; Stephen G. Hanks, former President and Chief Executive Officer of Washington Group International; Michael F. Hilton, former President and Chief Executive Officer of Nordson Corporation; G. Russell Lincoln, President of Nast Inc.; Kathryn Jo Lincoln, Chair and Chief Investment Officer of the Lincoln Institute of Land Policy; William E. MacDonald III, former Vice Chairman of National City Corporation; Phillip J. Mason, former President of the Europe, Middle East and Africa sectors of Ecolab; Ben P. Patel, Senior Vice President and Chief Technology Officer of Cooper Tire & Rubber Company; Hellene S. Runtagh, former President and Chief Executive Officer of the Berwind Group; Kellye L. Walker, Executive Vice President and Chief Legal Counsel of Eastman Chemical Company; and I am also a nominee. Next, Aaron Swartz and Bill Donatone from Ernst & Young LLP, independent registered public accounting firm for the company in 2020, are also on the line. Mr. Swartz does not wish to make a formal statement and no auditor questions were submitted online prior to this meeting. We will now proceed with the business part of the meeting. I hereby appoint Broadridge as the inspector of elections at this meeting. Amy Pavich is representing Broadridge. Jennifer Ansberry, General Counsel and Secretary of Lincoln Electric, will act as secretary of the meeting. After the proposals are properly presented and put to a vote, the inspector of elections will announce the results. At this time, will the Secretary please report on the affidavit of mailing?

Mr. Chairman, I have the affidavit of distribution from Broadridge Financial Solutions as mailing agent as to the giving of notice of this meeting to shareholders of record as of February 26, 2021, and to the mailing of such notice, together with the proxy statement and proxy voting instruction form, which mailing commenced on or about March 19, 2021.

Please incorporate the affidavit of distribution, together with the related proxy materials into the minutes of this meeting. The Secretary has a list of shareholders of record as of February 26, 2021, the list of shareholders is available for inspection during this meeting by any shareholder. It can be viewed through the website used to access this meeting. The secretary will file a copy of the list of shareholders with the records of the company. Ladies and gentlemen, many of you have already mailed your proxy and voting instruction forms or given your voting instructions by telephone or over the internet, indicating that you intend to have your shares voted by the designated proxies or by the trustee of the company's 401(k) plan. Is the inspector ready to report as to the existence of a quorum?

Mr. Chairman, on February 26, 2021, the record date for this Annual Meeting, there were outstanding and entitled to vote a total of 59,659,764 common shares. There are present, or by valid proxy, holders of at least 53,130,184 common shares or 89% of the total outstanding common shares constituting a quorum.

Thank you. I declare that a quorum is present or represented by proxy, we may proceed with the meeting. It is now 11:04 a.m. Eastern Time on April 22, 2021, and the polls are open. Any shareholder who hasn't yet voted or wishes to change their vote may do so by clicking the voting button on the web portal and following the instructions there. Shareholders who do not want to change their vote, do not need to take any further action. The first order of business to come before the meeting is the matters to be voted upon. There were no shareholder questions regarding the proposals submitted prior to the meeting. Proposal 1 is the nomination and election of Directors. It is recommended of the Board of Directors that the following persons be nominated to serve until the 2022 Annual Meeting. They are Curtis E. Espeland, Patrick P. Goris, Stephen G. Hanks, Michael F. Hilton, G. Russell Lincoln, Kathryn Jo Lincoln; William E. MacDonald III, Phillip J. Mason, Ben P. Patel, Hellene S. Runtagh, Kellye L. Walker, and I am also a Director nominee. All nominees other than Ms. Walker, who was elected to the Board on October 20, 2020, have been previously elected by the shareholders. Proposal 2 is the ratification of the appointment of the firm Ernst & Young LLP as the independent registered public accounting firm of the company for the fiscal year ending December 31, 2021. Proposal 3 is the advisory vote to approve the compensation of our named executive officers as described in Proposal 3 of the proxy statement. The polls are about to close. So if you have not yet voted, please do so. [Voting]

Now that everyone has had the opportunity to vote, I now declare the polls for the 2021 Lincoln Electric Holdings, Inc. Annual Shareholder Meeting closed at 11:07 a.m. Eastern Time on April 22, 2021. I call upon the inspector of elections to please report the preliminary results of the vote on Proposal 1.

Mr. Chairman, the inspector of elections reports a majority of votes in favor of each of the Director nominees.

Thank you. I declare that Curtis E. Espeland, Patrick P. Goris, Stephen G. Hanks, Michael F. Hilton, G. Russell Lincoln, Kathryn Jo Lincoln, William E. MacDonald III, Phillip J. Mason, Ben P. Patel, Hellene Runtagh, Kellye L. Walker and I have been duly elected as Directors of the company for the term proposed. I call upon the inspector of elections to please report the preliminary results of the vote on Proposal 2. Passage requires the affirmative vote of a majority of the common shares present or represented by proxy and entitled to vote on the matter. Would the inspector of elections, please report the results of voting?

The inspector of elections reports that 52,483,613 common shares, representing 98% of the common shares present or represented by proxy and entitled to vote on the matter, have been voted in favor of the ratification of the appointment of Ernst & Young LLP as the company's independent registered public accounting firm for the fiscal year ending December 31, 2021.

The appointment of Ernst & Young has received sufficient votes for ratification, and Ernst & Young will be in charge of our 2021 independent audit. I call upon the inspector of elections to please report the preliminary results of the vote on Proposal 3. Approval requires a favorable vote of a majority of the common shares present or represented by proxy and entitled to vote on the matter. Would the inspector of elections, please report the results of voting?

The inspector of elections reports that 46,075,034 common shares, representing 94% of the common shares present or represented by proxy and entitled to vote on the matter, have approved, on an advisory basis, the compensation of our named executive officers.

Thank you. I declare that the compensation of our named executive officers has been duly approved on an advisory basis. We will be reporting the final vote results with the SEC within 4 business days of this meeting. There being no further business to come before the meeting, the 2021 Annual Meeting of Shareholders of Lincoln Electric Holdings, Inc. is now adjourned.

Before we conclude today's webcast, I would like to address a few of the questions we received from shareholders. One question regarding capital allocation, a shareholder has asked if we have a stock buyback plan, and if we are considering a stock split? I am pleased to report that we have a solid track record of returning capital to our shareholders through our dividend program and share repurchases. In fact, in the last 5 years, we've returned nearly $1.5 billion to shareholders, with nearly $1 billion from share buybacks. This is in addition to our dividend program, which has increased annually for 25 consecutive years. Regarding a stock split, we feel that our current share price remains accessible to both retail and institutional investors and is below the average share price of the companies that comprise the S&P 500. And finally, shareholders asked if President Biden's proposed infrastructure plan would provide growth opportunities for Lincoln Electric in the fabrication of EV charging stations? While we would have to study the opportunities that are specific to EV charging stations in more detail, we know that investments in infrastructure and renewable energy offer exciting growth prospects for Lincoln Electric. Before I wrap up the call, I would just like to thank our employees for their resilience and commitment in serving our customers during this challenging time. I'd like to thank our customers for their valued partnerships and for choosing Lincoln Electric, and to our shareholders who have continued to support our organization and strategy. We look forward to seeing everyone next year at our annual meeting. Take care, and have a great day.