Good morning, this is Tom Hayes, the senior industrial analyst for CL King. Welcome to our 22nd annual CL King Best Ideas Conference. I'm pleased to have the management team of Lincoln Electric with me today, specifically CFO Gabe Bruno. Again, good morning to all, and thank you for joining us today. For those in the audience, if you wish to ask a question, you can type that question into the Ask a Question box at the bottom of your webcast screen. All questions will be sent to me, and I'll work diligently to try to integrate those throughout the discussion. I've asked Gabe to kind of give us a brief overview of Lincoln Electric to kind of kick things off, and then we'll jump into some Q&A. Gabe, thank you very much for being with us today. Great, Tom. Thanks for having me and all of your interest in Lincoln Electric. So a brief overview. You know, we've been in business for almost 130 years, and we are the global leaders in arc welding. And so we like to emphasize we're only one of three companies in our industry that have a broad portfolio, complete portfolio of products. We also emphasize technology, as you can appreciate, and solutions, so we've got a broad portfolio of solutions. And one of the things that we differentiate ourselves within the industry is our automation platform. So our automation platform now is about a $1 billion run rate and is anchored on the solutions and areas of productivity and quality that our customers have been accustomed to appreciate from how we engage in the markets. We are broad-based. We've got a very broad level of customer interactions, from small mid-sized fabricators to large, multinational global types of businesses. We serve broad end markets, from automotive to construction to heavy industries, general industries, energy, and the like, so we serve a broad base of end markets. As well, we're global, so we're all over in different geographies around the world. If you consider our strategy, we're emphasizing accelerated growth, and that's both organic and inorganic growth, so when you look at the building blocks of our 2025 strategy, it anchors around innovation, technology, accelerated growth through our automation platform, as well as acquisitions and acquisitions, we like to emphasize an objective of 300-400 basis points of CAGR throughout our business strategy periods. We also like to emphasize an expansion of our operating margin. So over each cycle over the last 20 years, you will see a 200 basis point improvement in our operating model, and that can come alongside different work across segments. So we manage our business through three segments, the Americas, International, and Harris segments, and then also within the automation portfolio, an emphasis of improving our margins and the business model. So we're a strong, cash-generating business. We like to emphasize 100% plus cash conversion, very disciplined, managing working capital, and also our capital allocation strategy, which yields strong ROIC performance of our business. So just a couple of thoughts there for our business. No, that was great, and I think there's a lot in there that we'll kind of build on today. But I think maybe first off, you touched a little bit about your... you guys have been operating for a bit of a few years on your current operating strategy of a higher standard, you know, 2025. Maybe just kind of touch on some of those key tenets. I'm sure we'll hear about maybe a new longer-term strategy coming up in the next couple quarters, but maybe just your thoughts on how you're operating against that strategy and some of the goals. Yeah, so you, when you think about the objectives that I already emphasized on growth and our margin profile, cash generation, including working capital type of performance, we'll start with growth. So we're ahead of our progression in our targets. Our objective is to progress into a CAGR of high single digit, low double digit type of growth, and that includes acquisitions. During the current year cycle, we've got some pressure on the organic side of our business, but you can see also on the acquisition side, we're ahead of our objective in this year. So growth's very important for us. Again, as I mentioned, leading with technology, and if you look into our deck, you'll see the building blocks of that with solutions technology. So we're progressing well on growth. When you think about the operating margins, we like to emphasize an average operating margin for the period. So, for example, up through 2019, we were just shy of 14% on average over the previous five-year period or so. Our current objective is an expansion of 200 basis points on average, which in this period, 2025, would amount to 16%, so that's a 200 basis point improvement from the last cycle. And within that, you can see we're performing ahead of that in an annual basis. But because it's an average and takes into account 2020, 2021, et cetera, we're slightly behind coming into 2024, but we're right on top of the objective when you consider the continued important performance and profitability in this year and as we continue into the wrap-up 2025 strategy period as well. Cash generation is also part of the profile that we like to emphasize from a strategic standpoint. You see, we're exceeding 100% on cash conversion this year. Top quartile type of focus on working capital. Top decile performance is the objective at 15% of sales in our working capital to sales type of metric, and you can see the ROIC. We're performing very well. And also from a capital allocation standpoint, very balanced in looking at how we're driving growth through our investments, and then also returning cash to shareholders. So we're progressing right ahead of all the key objectives and working through the current challenging environment from an organic sales standpoint. No, I appreciate that color. Maybe kind of touching on automation a little bit, because I think you guys got to and kind of built your offering a little bit different than your competitors. I think you throughout M&A and organically you built kind of an internal, I'll call it internally delivered automation solution, which I think probably connects better to customers. Maybe just kind of touch on you know, maybe how you see that as a competitive advantage and you know, how you can continue to build that out. Yeah. So, Tom, that's, we're really excited about our automation, strategy and the portfolio that we've been able to develop over the last, 10 years. So the key first element to consider is it anchors on how we are, introducing solutions to our customers to address labor needs, as well as, drive productivity, quality, safety, in our customer, needs. When you consider what we've done within our automation portfolio, we are serving a broad-based industries that can go from small, mid-sized fabricators, now with cobots or pre-engineered type robotic systems, to large-scale lines and capabilities. Currently, we're about 55% of our portfolio tied to welding-related capabilities, and then 35% that's non-welding, that surrounds the automation, profile of our needs of customers. So we've deepened the capabilities of our offering over the years through organic, development, but also through acquisitions, and we've broadened the footprint on how we serve end markets. So when you think about the industry, the industry was led by the likes of automotive and heavy industry, but we've been focused in driving adoption into automation capabilities far deeper into the markets. And so prior to our acquisition of a business called Fori a couple of years ago, we had progressed our model to be about a third automotive, a third heavy industry, and a third, general industries. The Fori acquisition, which was a $200 million type of business in sales, was almost all automotive, so that also changed the profile a bit, but we're still focused on deepening general industry adoption through the likes of the cobot introduction in just the last couple of years. We're now about 45% automotive, 25% general industries, and 30% heavy industry. We're serving a broad level of end markets. When we think about how we've grown, you commented on both organic and inorganic type of growth. When we entered this strategy period in 2020, our automation business was a $400 million business, and we had discussed in the markets about our objective to achieve $1 billion of revenues. And so we've achieved that, and that was both through inorganic, but plus organic type of growth. And we believe we just have a strong platform to continue to drive accelerated growth, part of our core growth strategy, but also considering the platform within automation as opportunities to also bolt on businesses into our model. We believe that the TAM associated with automation is about $35 billion, and lots of fragmentation. When we talk about the key competitors within the automation space, we're not talking about the other welding competitors inherently. We're talking about other integrators, particularly in North America, that typically are around that $50 million-$100 million range, and just a lot of fragmentation, which becomes ripe for an acquisition bolt-on type of strategy. You saw that in this year, we've acquired three businesses. Two businesses are tied to our automation. One continues, building out material handling capabilities. That's the RedViking acquisition that we completed in April. Then we had an acquisition in June, Inrotech, which adds on technology, and that was a vision-based technology that we added. We look at inorganic opportunities to continue to shape our presence, the capabilities, our growth focus over the long term. The last point I'll make on automation is that, you know, when you enter into a strategy with a lot of bolt-on types of acquisitions, there's a fragmentation in running the businesses. We've developed what we call a Lincoln Business System that pulls together all of our different operations to a single business strategy and model. And that's what's key to our projects disciplines around the quoting process and managing orders, managing change orders, should there be changes in our customer requirements throughout the life cycle of the project, and then continuing to drive and leverage capabilities in also our operating margins. So when you look at our business model from 2020, 2021 to today, we've just about doubled the margin profile from a mid to high single-digit profile to doubling that, and our objective is to be at the corporate average. So, typically, acquisitions are a little bit of a drag in overall margin profile, being typically in the low double digits, but we expect by the third year to be in line to what our strategic objective is from a operating model standpoint. So gives you a lot of flavor on Okay kind of how we think of automation. No, I appreciate that, Keller, 'cause I think it's an important part of what's happening across the environment, so, no, that's appreciated. We did get some questions from clients. I just maybe kinda trying to work these ones in. You know, how. And I apologize, I didn't go back and read the 2Q transcript, but I just, you know, how should we think about the price cost building blocks as we kind of, you know, look to the balance of 2024? Should we expect a tailwind from raw materials? Are there any offsets? Yeah, so in terms of price cost, you know, our overall strategic posture is to be price-cost neutral. And when we think about pricing for this year, while we have updated broader organic assumptions to be down mid to high single digits, we expect to be positive on price. So, you know, generally throughout this cycle, we hold price. It's a little bit different when we look at some of the segments. So on the America side, you had more movement on the equipment side. When you look at Harris, that's gonna move with metal, silver, and copper, and we were a little slightly down Q2 for international. But in general, expect to be price positive, while overall volumes to be down. Okay, and this is kind of a two-part one. You know, maybe your thoughts on some of the margin building blocks in the Americas for the back half of this year, and just your thoughts on any implied decremental margins as well. And kind of, I guess it ties to the bigger picture of, you know, your guys' playbook for these, you know, less-than-robust industrial times. Yeah, so, I've commented on some of the webcasts of prior webcasts, but for the Americas, there's two dynamics that we're working through in the back half of 2024. One is some of the softening demand levels, particularly in short-cycle automation. Automation's got. You know, we just talked about automation, but automation has a larger fixed cost structure. So typically, with automation, you have higher incrementals, and incrementals would be into the low to mid-30s, but also higher decrementals, because it's a highly engineering, technical capability, and a lot of floor space required to be able to serve our customers. So that higher decrementals, you'll see some of that in the second half of this year in the Americas segment, so we'll have some pressure on our EBIT profile in Americas because of that. We're also gonna have some pressure due to acquisitions. The acquisitions are largely impacting the Americas. They're typically with integration types of costs into the mid- to high single-digit EBIT profile, so expect some of that on the Americas side and the building blocks of the EBIT profile. So we could be in the range of 17%-18% on the Americas segment EBIT margin for the second half of this year. Now, that said, you mentioned our playbook. We're very disciplined, as you know, in managing through cycles. We've pulled out our playbook, and we'll be pretty aggressive in pulling the levers on temporary cost savings. So those are the likes of, contractors, supplies, travel, you know, discretionary types of areas of spending, and we'll be pretty aggressive in pulling back the levers, to be able to manage and offset some of the margin pressures because of the, softening organic, sales trends. And then we also look at accelerating, opportunities, where we know of in shaping our operating model. We call those permanent or structural changes, and so we'll have a little bit more pressure as we see the second half progress into the Q3, and then as the levers take a couple of months to really get the full impact on those, temporary cost reduction actions, and then we'll see more of an offset to that into the Q4. But that's how we're operating in this, second half. Okay, no, I appreciate that, and hopefully that answered the participant's question. Maybe shifting gears a little bit, I think one area that I think you started talking about a little bit at Fabtech last year was you're moving into the DC charging business. You know, maybe just you know, any updates and thoughts you can give me on that segment? Yeah, so we're pretty excited in how our team has progressed with our strategy, and that means that we look at our, our strategic positioning in three ways. One's operational, and commercial, and products. On the operational side, you know, we had leveraged our internal infrastructure operations to be able to develop a capacity of 500 units a month, beginning this January, and we're there. This is a modest investment, which is different than our competitive environment in our industry that's dealing with a lot of pressures in the markets right now. But we're leveraging key capabilities and power electronics in our own facilities and people to be able to achieve that capacity, so we've done that. On the commercial side, you know, we've brought in some experienced industry leaders on the commercial side, and we're looking at engaging in charge point operators or fleet managers, engineering firms, and developing our relationship with them, and what it means to work with Lincoln Electric. So we've done that. On the product side, you know, we had anchored our development around a 50-kilowatt modular design upwards towards the NEVI specifications of 150 kilowatts, and we achieved that. So we launched that. This is the end of this Q2, beginning of the third, but the market has shifted. There is a hesitation in the market to deepen investment while the evolution of EV and consumer engagement evolves. So we've seen a push to drive to higher. Charging powers in terms of the fast chargers to more of the 300-400 type kW. Our team is working with the building blocks of our modular design to be able to achieve that over the next few quarters. We expect there to be a pause in their ability to roll out and progress our product offering into the markets until probably the back half of 2025. We're on target with the objectives that we have set for our business. These are modest investments, so we can be patient as we navigate the development of these markets. These are not distractions to our core strategy, but we look at this as low risk, low investment, with potential high upside. And so we're pleased with where we are at, and now we've got to navigate the development of the industry. Okay, no, that's great. Over the next few quarters. Maybe kind of getting back to the core manufacturing business, I think one of the things I hear frequently from investors is, you know, the initiative to kind of reshore manufacturing to the US, and it seems to be kind of outside of semi, it seems to be kind of a mixed bag. I mean, maybe just A, your thoughts on kind of what you're seeing out there, and B, you know, the opportunity going forward. Look, nearshoring or onshoring, particularly into the Americas regions, is going to be positive for us, whether it's in the US or Mexico, whatever it is. So we look at this as an opportunity in building out the industrial space in North America, which is where, as you know, our largest profit-generating in businesses is at. So we're excited about that. It's an opportunity. It's hard to quantify, like, what does that mean in terms of real business activity and growth for us? But we know that the more manufacturing industrial capabilities that are built out into the North American regions, that we'll have our share of activity that's tied to that. So we think it's an opportunity for us. You know, maybe a topic that's certainly floating out there, maybe not specifically for manufacturing, but I thought I'd bring it up with most of the companies I'm talking about today is, you know, AI, and you know, how is that maybe impacting your business, or how are you guys thinking about it, maybe both internally and externally? Yeah, so we're still in the development stage when we look at operational or commercial capabilities tied to, like, generative AI. And that's, you know, applications that could be welding knowledge and know-how, operational capabilities. Where we're seeing a lot of progression within our model is on the product side with the additive-based wire-based process that we have deployed, and we're working through development commercially. This is a machine learning type of software that is an iterative process in taking AI, or Artificial Intelligence, and refining welding paths and capability in driving a wire-based capability. So and that's progressing. We're excited about where our additive business is developing with some of the key business cases there. But we're still kind of developing the AI positioning from an operating standpoint. We see more so on the product side. Okay. I, I think you touched on it a little bit, but I just wanted to make sure we, we kind of went back to it as far as, you know, coming out of 2Q, you had some commentary on the automakers maybe pausing their CapEx as they kind of reevaluate where they want to go between EVs and ICE. Maybe just kind of refresh us where, where we were or where you guys are on, on your thinking on that. Yeah, so there's been just a lot of movement and thinking through across the automotive industry on where investment's progressing, whether or not to stay the course on some of their EV plans that were contemplated or migrating to either a hybrid or ICE. And so that has caused a slowing in making decisions from a quoting to order process, and so we pointed to that as being an air pocket, if you will. While the industry is kind of repositioning, do they continue EV or otherwise? So we look at, in general, a typical timeframe of six months between quote to order. And so we're seeing that it elongates another to three months, so to, like, nine months. And so what does that mean is that, the visibility we have in actually booking orders and then becoming revenue, because a lot of our business and the larger projects are percentage completion type of revenue recognition, just haven't seen that come to pass, and so we pointed that to be a pause. Now, the interesting thing is we're agnostic as to whether or not there's an EV, or ICE, or hybrid decision. It's really about the pause in making decisions and then ability to actually book the orders and then begin the revenue recognition type of process. We're starting to see some decisions being made. For example, when you see a cancellation of an EV program, that's not a bad thing for us. That just points to a decision being made, and that's good for us. Ultimately, the industry has a couple of key dates in looking at some of the downstream programs. One is in April, and one is October. Our team is and our industry segment leaders are working with the industry to think through now what does this mean ultimately between an EV program for 2026, 2027, or is there a shift over to hybrid or ICE? And so we haven't seen that change much over the last few months. Starting to see more decisions being made, but we're looking forward to the Q4 is where we believe that we'll see more activity in refining the direction of the industry in pursuing EV, ICE, or hybrid investments for the 2026, 2027 timeframes. It's about an 18-month lead time to be able to position projects to serve that timeframe. So it's pretty important that the industry make those types of decisions to be ready for 2026, 2027 in this Q4 or so. But I think the key point is that you're again, agnostic to which direction that you wanted to go. You just wanted to go somewhere. We just want decisions to be made, right? And where the investment will go. Okay. Maybe just circling back a little bit, you touched on, or maybe I'll just shift gears a little bit, and one of the things that's been an issue for the industry for a while, and I just wanted to get your take on it and kind of how you're addressing it, is the continued chronic shortage of welders in the space, whether it's. We touched on obviously bringing automation, but I think there's much more that you are, and others are doing, whether it's from, you know, educational benefits to, you know, simplifying some of the equipment. Maybe it's, you know, is there anything else I'm missing or, you know, kind of how you guys view the industry progressing? You know, Tom, I know that's a fair observation. So you're right. There are two key drivers in how we address the response to the labor constraints on the welder side. One is automation. So the automation obviously is a solution that ties right into factory productivity, production, quality, safety, and we've talked about that. But the other is, as you mentioned, is education and training. And when we are having this conference, and I'm sitting in our welding technology and training center, and we have the longest-running weld school in the industry, 107 years. So very much anchored on education, training, application development. We like to think about the training aspect to education in a few different ways. So one is accelerating our ability to get welders trained and into an effective operational capacity. The introduction of different tools and techniques and training software enables that. We've got a VRTEX-type system that allows for welding training development on a remote and type solution. Then we also have another product called Voyage Arc that introduces welding to middle schoolers, high schoolers who are contemplating trades, and that allows them to kind of get a sense of what welding means. We've got products that one accelerate training, one uses in a fun type of way, gamification to introduce welding to high schoolers, middle schoolers, and so on and sort. We also use it to qualify welders. Using the tools to be able to progress someone who's being trained and how well they are learning the skills and processes associated with welding. Very deep in introducing education and schooling capabilities. It's broad-based around the globe, so we've got a lot of trade associations that we work with, and that's a deep part of how we look at our own participation within the industry. We had talked about for years about our desire to paint the world red, which means getting into the schools and the trades, and showing our products, and having them learn welding within our power sources and our consumables. That provides long-term stickiness in knowing our products and offering, and being comfortable in using our capabilities and leveraging what we do in the markets. Very deep in education and also leveraging automation because of the labor constraints. Are those labor constraints universally kind of applied globally, or there are pockets. Yeah Pockets where, you know, maybe you have a younger workforce that's maybe not as constrained? Just wondering. No, we're this is a global dynamic. So we look at this from a global perspective. The associations that we're engaged in are around the globe. It's not just a US dynamic. Okay. Maybe shifting gears a little bit, and I think you mentioned this at a recent event, but you brought in a chief procurement officer and a chief transformation officer. You know, certainly you're a company with a long legacy, long history. You know, maybe just kind of, you know, since you brought those, you know, topics out, maybe your thoughts on what they can deliver. Yeah, no, it's pretty, that's pretty important for us. I didn't mention the 2030 strategy. We haven't rolled that out. But part of that, I mean, you could expect a continuation of driving accelerated growth and a continued focus on shaping our operating model. And as I mentioned, we've been very consistent in expanding our operating margins by 200 basis points for each of the strategy periods. So when you start thinking about what are some of the next steps, the Chief Procurement Officer transformation are all about how do we leverage capabilities across all of our segments and regions? So looking at material buying practices, and how do we leverage our spend on direct materials or indirect materials and sourcing, that's where we think we can find a lot of opportunity to kind of develop our operating model. So that, plus the transformation officer looking at best practices, how do we look to across our regions and leveraging our capabilities, those will be building blocks on how we continue to shape our operating model, again, to continue to expand our operating margins. So those are center-led corporate initiatives that we're investing in to be able to drive more improvement and efficiencies across our business. Okay, yeah, that. So expect that to continue to shape our model. Okay. And will we see. I'm gonna see if I can press you on this. Will we see the 2030 strategy rolled out three Q or four Q? No, we're thinking about end of Q1, Q2 of next year is probably the timeframe, 'cause we'll be wrapping up. We'll be deep into 2025, so it kind of is a nice transition. Okay, great. To '23. We did get another question from the investor base here. Maybe just anything you can provide on general market commentary. It was noted that you noted broad-based weakness in August at a prior conference. Are you seeing any difference in that so far? No, I mean, we're where we are, we are at. I mean, kind of the drivers to our updates in over the last couple of weeks were some of the continued softness we've seen in automation. Let me just back up for a moment, so during our Q2, we had updated the markets to expect an organic trend of mid-single digits down, and if you recall in my comments during our Q2 earnings, I mentioned that we're tracking on the higher end of the unfavorable range, so that implies 6%, so we've seen continued pressure, and we commented that August is always difficult to really gauge, but there was enough there that we felt that we should be updating the organic trends to mid to high single digits. So slight change, but enough to give perspective that it's a more challenging type of environment, and that also progressed us to be considering what it means in margins and also our playbook. And so that's really the context, but nothing really to add to that commentary. Okay. I just looked, there, there's no further questions, and we've kind of exhausted my list of questions. So unless I missed anything, or if you'd like to add anything else, I think we're about done for this morning. Okay. No, I'd just like to thank all of you who are on the call for your interest and just continue to look at us as the industry leaders in continuing to shape and drive growth within our business. Great. Thank you.