Executives from Lincoln Electric (NASDAQ:LECO) used a presentation at Barclays’ 43rd Industrial Conference in Miami to outline the company’s updated strategic framework, discuss its approach to M&A, and share the operational signals it is watching for a stronger second-half volume outlook.
RISE strategy positioned as an evolution
CEO Steve Hedlund described Lincoln Electric’s newly announced “RISE” strategy as an evolution of the company’s prior “Higher Standard” approach, aimed at accelerating growth and performance while continuing margin expansion across cycles. Hedlund said the company sees opportunity for “higher highs in good times” and “higher lows in challenging times,” alongside organic growth and capital deployment through acquisitions.
- R: Reimagine how work gets done to drive safety, productivity, and quality in factories.
- I: Innovate to differentiate, including moving ideas through R&D “faster” into the market.
- S: Serve customers better than today and better than competitors to take share.
- E: Elevate team members to support career aspirations and improve teamwork.
Management said the company planned to launch the strategy to global employees starting the following week and characterized early internal feedback as “extremely positive.”
“Center-led” standardization without full centralization
On the “Reimagine” pillar, Hedlund contrasted Lincoln Electric’s historical decentralized structure—where regions maintained similar but different processes—with a “center-led” model intended to improve consistency in data and workflows. He said the company wants functional leaders in areas such as finance, IT, HR, supply chain planning, and R&D to set common processes, policies, and tools globally, while still keeping regional teams close to local market needs.
Hedlund pointed to progress in finance as an example, crediting CFO Gabe Bruno’s organization with reducing finance costs by about 50 basis points as a percent of sales over the past five years. Other functions, including IT and HR, are following, while initiatives such as R&D and global purchasing were described as newer. Hedlund said benefits are expected to layer in steadily over a five-year program rather than arriving in a late “hockey stick.”
M&A priorities: margin profile, channel access, and proprietary automation technology
Management addressed an investor question on how Lincoln Electric expects to achieve roughly 300–400 basis points of growth contribution from M&A, noting that recent deals have been balanced between the legacy welding business and the automation segment. Hedlund said the company looks for acquisitions that either bring an accretive margin structure or have a clear path to become at least margin neutral, ideally margin accretive.
He cited Alloy Steel as an example of a high-margin business with a proprietary wear-plate process and “tremendous growth opportunities” to expand globally. He also cited Vanair as a deal that was initially margin-dilutive but came with a “really clear growth strategy” and cost synergies to bring margins up to corporate averages quickly.
Hedlund said larger deals could become somewhat more likely as the company grows, though he downplayed the likelihood of a “truly transformative” acquisition. Channel access was highlighted as a key rationale in some cases; Hedlund said Vanair’s presence in mobile work-truck channels enables Lincoln Electric to reach customers it previously could not access. He added that the company may look for acquisitions that strengthen distribution positions in geographies where Lincoln is less established, such as India and parts of South America.
What Lincoln is watching for a second-half inflection
In discussing the volume outlook, management pointed to two primary elements. First, Hedlund said Lincoln’s long-cycle automation backlog is expected to mature in the second half, with projects that are back-end loaded under percent-completion accounting. Second, he said the company tracks purchasing managers’ indexes (PMI) as a proxy for customer confidence, noting consumables volume typically follows sustained PMI improvement with roughly a one-month lag, while capital equipment and standard automation investment may follow one to two quarters later.
Bruno added that Lincoln’s mid-single-digit sales growth assumption for the year includes contributions from acquisitions and pricing actions already implemented through the end of 2025, while second-half volume expectations are supported by order and backlog visibility in automation. He described management as “cautiously optimistic” on broader short-cycle improvement, but emphasized the company is providing visibility based on what it “does know” in its own business.
Pricing posture, regional share dynamics, and automation margin levers
On pricing, Bruno said the company’s assumptions reflect pricing actions taken through the end of 2025 and anticipate pricing to be “flat” in the back half due to anniversary effects, with no incremental pricing embedded. He said Lincoln would take additional pricing if cost inflation persists but believed prior actions were sufficient to cover the current cost structure into 2026. On commodity pass-through exposure in the Harris business (such as silver and copper), Bruno said the company did not assume a significant level of pricing due to unpredictability, but still expects to hold to a mid-20s incremental margin framework regardless of those moves.
Hedlund said welding market share tends to move slowly due to customer risk aversion, codes and standards, and product qualification requirements. He attributed share gains to innovation and out-serving competitors. In North America, he said Lincoln has “re-embraced a more balanced route to market” after a prior period that leaned more direct and strained distributor relationships, and he said the company is seeing share gains in distribution channels. He described Europe as more challenging due to industrial weakness, high fixed labor costs, and competitors willing to discount to keep factories running.
In automation, Hedlund said about 20% of the business is short cycle, with the remainder tied to projects spanning six to 24 months. He said margins are driven less by cycle length and more by proprietary content, including Lincoln welding technology and software-driven solutions. He said the company’s M&A focus in automation is to expand proprietary technology, citing a recent Denmark-based vision-system acquisition as an example of differentiated capability. Hedlund said key levers toward a mid-teens automation margin target include a return to prior volume levels, more proprietary technology and AI-enabled solutions, and thoughtful M&A. Bruno noted peak automation sales were $940 million in 2023, when EBIT was in the low-teens percentage range, and said management has “line of sight” to recover and expand margins.
About Lincoln Electric (NASDAQ:LECO)
Lincoln Electric Holdings, Inc (NASDAQ: LECO) is a global manufacturer and distributor of welding products, robotic welding systems, plasma and oxyfuel cutting equipment, and surface treatment systems. The company’s portfolio encompasses welding consumables such as electrodes and wires, as well as power sources, torches, and automated welding cells. Lincoln Electric also offers software solutions and training services designed to optimize productivity and quality in fabrication and manufacturing operations.
Founded in 1895 by John C.
