Welcome back, everybody. I am Steve Volkmann with Jefferies. I cover Lincoln Electric and a number of other industrial companies. We are very pleased to welcome Gabe Bruno, who is the CFO for Lincoln Electric. We are going to do a fireside chat up here for the next 35 minutes or so. We would love to have your participation as well. If you have any questions, I will make sure to make time and poll the audience as well. I will kick it off. Welcome, Gabe. Thank you so much for coming. Thank you, Steve. It is always great to be here. Good. I have been starting off all my sessions like this because yesterday somebody yelled at me for not doing it. We are on a webcast here, so I want to just provide the opportunity if you have any updates to how things are going in the third quarter, we would love to hear them. Yeah, sure. One of the key things, Steve, as you know, on the earnings call for the second quarter at the end of July, we had increased our sales assumptions. We have seen strength, broadly speaking, across the Americas segment, across all the product lines, consumables, standard equipment, and automation, and continue to see that, in fact, through the August timeframe. I want to reinforce that the strength and the momentum that we saw in our business, we are continuing to affirm that kind of strength. Similarly, challenges in Europe, August is a tough timeframe to really gauge what is going on in Europe, so more of a choppy environment. Continue to see strength in the Indian, the Southeast Asia, Chinese portions of our Asia business. And then Harris, we are starting to see a little bit more volume. Very good progression, consistent with what we saw at the end of July. That said, we've been managing through some persistent inflation. We talked about that in our call. We did take actions in pricing in the Americas segment. They have impacts beginning of September. You'll see that mature in the fourth quarter. We also took actions on the international side, price actions that are going to take effect towards the end of September. You'll see that fully realized in the fourth quarter. We estimate that at maturity is probably another 100 basis points of pricing actions that we'll see at maturity in the fourth quarter, and that's driven, again, by a lot of cost pressures. It's the logistics, some supply chain challenges. We're seeing the components, so pretty important for us. What that implies is that we're looking at our incrementals for third quarter more into the low 20s. We had talked about mid-20s. But right now, we're tracking around the low 20s in terms of an update. We're really excited about the market profile, but we continue to manage the pressures of inflation and some supply chain dynamics we're working through. Okay. For that extra 100 basis points by year-end, does that put you sort of price-cost neutral or maybe-- Yeah, that's our focus. As you recall on the call, we talked about second half being price-cost neutral, and that's the drivers of the action. More inflation, more cost pressures translates into more pricing actions, and that's driving to a price-cost neutral posture. Got it. Okay. I think you've been at Lincoln Electric quite a while, 31 years or something. 31 years this year. 31 years. Okay. You've seen a few cycles. I'm curious, I think the second quarter was the first volume growth quarter in like nine quarters or something. How durable does this recovery look to you and sort of how broad-based? Well, the key drivers are seeing consistency in production levels across the different end markets we serve and how that translates into conviction of capital. I would point to that outside of what you see in automation, because we had already seen coming into 2026, significant increases in the order activity, the order book, the backlogs in automation that pointed to volume expectations towards the end of the second quarter, which was what you saw. We have, as you know, experienced an extended contraction on the industrial side. So when you see PMI now eight months in a row of expanding, that's real positive. The sentiment followed by steady increases in industrial production trends point to pretty positive trends in a broader macro sense. The conviction of capital, both in standard welding equipment as well as investment in automation, also provide a framework for strength in the industrial cycle. Typically, consumable leads in a cycle by a few months, a couple of quarters, and so seeing the turn coming into the second quarter and significant improvement in capital investment on standard welding equipment is very positive. That follows the typical trajectory of a cycle. Now, how long? Who knows? But certainly, the dynamics point to very positive progression, particularly in the Americas segment. Okay. Are there certain end markets that are really leading the charge here, or how broad-based is it? I mean, general industry for sure. You saw that we were up in the 30s, not just because of pricing within Harris, because the Harris HVAC components within the general industries, but just broadly in the Americas side. The general industry markets are very strong. When you point to heavy industries or structural, seeing some good activity, heavy industries we believe are hitting a trough and then starting to accelerate capital investment. Structural is choppy, generally speaking, but seeing good project activity as well on structural. When you think about automotive, it is a little bit of a contraction still, but the contractions are narrowing on the automotive side, so pointing to pretty positive trajectories across end markets. Now, a couple of areas to be watchful of is, for example, on the retail side. As consumer activity continues to be a pressure point, looking to see how that translates into improvements on the retail side. Second quarter was kind of tough on the Harris side, which is where our retail channel is served, because of tough comps. We are hopeful of seeing more progression on volumes on the Harris side, on retail, as well as some of the HVAC activity we expect out of the Harris business. Okay. Let us talk about the consumable versus the equipment side of things. You said consumables tend to lead, but I think we are seeing equipment follow as well. Yes. I will point to Americas in particular for volume. We take out pricing to want to see what is the real activity going on from a production standpoint. In the Americas segment, for example, in Q2, consumable volumes were up about mid-single digits. It has been consistently trending higher, seeing a slight uptick into that, translates then into capital investment. So, a significant improvement in standard equipment volumes. That continues deeply into the third quarter through August. That really points to the strength of an industrial trend. Consumables, stability, increasing, as well as then the level of investment through standard welding products. Okay. One of the questions that seems to be very broad here at the conference is folks thinking about interest rates, which unfortunately seem to be kind of going in the wrong direction. Have you seen any sign that that's a problem or does that worry you? No, we haven't seen it to be a driver. A lot of the larger scale investments, particularly on the automation side of our business, aren't driven by the financing decisions. They're driven by what kind of productivity needs, what kind of quality, what kind of efficiencies that are driven by an investment. We've seen less pressure on the financing drivers on projects decisions. Okay, great. Maybe let's go international now. Sure. We've had some headwinds, I guess, from the Middle East, and talk about how that's impacted and what you're seeing now. Well, we started off, as the conflict progressed, expecting about $8 million -$10 million type of headwind per quarter. Second quarter played off pretty well. Actually, we were down $1 million-$2 million in Q2, and that's driven by how we serve that region through their international markets, but also exports out of the U.S. W e did temper the impacts to about $6 million-$7 million per quarter versus the $8 million- $10 million. We've seen less of an impact, but still very watchful. We do expect that at this point, and we're close to our commercial teams. We'll see how that plays out as the quarter progresses, but that's kind of where we're anchored at, $6 million-$7 million type of a headwind, crossing both what you see in international, also exports out of the U.S. On the other side of the coin, is there any sort of pent-up demand brewing that might? No, we're very well-positioned as, hopefully, the conflict is beyond us and you start to see project activity as well as rebuilding occurring in the region. We're very well-positioned to drive the support for the region. Okay, good. Longer term, internationally, I think is a growth opportunity for you. How do you prosecute that? Yeah. If you look at our long-term objectives on organic growth, we're into that low to mid-single digit type of trajectory. Much more bullish on what we see in Asia. You've seen our comments around what we see in India or China, Southeast Asia, et cetera. The acquisition we did last year in Australia, very nicely positioned for growth. But our posture for Europe is not an aggressive volume expectation. Our posture is to really drive a business model that's going to be accretive to our margin expectations there. We're hopeful that the level of defense or general industrial activity improves in the European markets, but our strategy expects, is planned to have more of a stable type volume expectation. How do you win in Asia versus local competition? Well, we differentiate on our value proposition solutions. If you go back to our history, we stayed away from, and we pulled out of areas that we weren't getting paid for our value proposition. It's about our solutions, the applications, and our welding offer that differentiates us. That's how we go to market. We'll walk away from a lower margin type of contribution in the markets and stay away from any commodity-type focus and really focus on our solutions and how we tie in creating value for our customers. Are there certain types of customers that are most likely to lead that penetration? Well, again, it is broad based. When you look at China, for example, it is a niche-type focus, so it is going to be in different parts of heavy industries. We get customers that are global in nature. They are going to drive some more activity in region. Those that have a level of sensitivity and really focus on creating value through productivity improvements and tying in the complete solution, consumable or equipment or automation. It gets more niche-y as we serve in those markets. Okay. All right. Maybe we will talk about a few of the end markets, specifically energy is a fan favorite at the conference here. Talk about what you do in energy and what the opportunities are for growth there. Yeah. We are bullish on energy. You have seen the level of activity on the Americas side has been real positive. About 2/3 of energy is driven by oil and gas. We just talked about the Middle East, that has an impact to that. But in general, we feel we have a lot of momentum, a lot of potential in oil and gas. You see midstream being a key part of that. So level of investment in pipeline, that is really our sweet spot. Then you have downstream type of investments in process industries that have a real impact to how we present our value proposition to the market. Over the long term, real bullish on energy. A lot of strength coming out of the Americas. We expect strength out of Southeast Asia and the Middle East, a very important market for us. And power gen and nuclear, is there opportunity there? Nuclear is included, yep. That is included. It is broad-based solutions. As an example, one of the pressure points we have is in wind. It is an alternative energy type source. You have tough comps, particularly in the America side, less investment, relatively speaking in wind. But we serve a broad-based level of power generation in that is outside of oil and gas as well. And just remind us how big energy is as a percent. I think we are tracking around 17% of our overall business, so it is talking about high teens. Okay. You mentioned automotive quickly. That has historically been a strength for you guys. Just bring us up to speed on kind of what you are seeing there. Yeah. We were down mid-single digit type of activity in the second quarter. When you look at automotive, I like to split it up between what is happening in production, and we are following that, so level of consumable volume serving the production requirements in automotive. We have seen that a little challenged, but it is tracking to the overall market. The level of capital investment is where we have seen some stalling decision making. Some of that could be extending just some of the program years. But the positive of what we pointed to is seeing an acceleration of requests for proposals, requests for quotes, and some of the longer lead time items. W e expect more activity over the next few months coming through some of the longer lead time items in capital investment, in automation, on automotive. In the industry, there are two key reporting dates in April and October, where the industry is announcing what program launches look like 2028, 2029. We are looking for the October affirmation of what are we seeing in activity translates into real investment and program launches in 2028, 2029. They announce the new platforms. How long until you might get an order? Yeah, expect 18-24 months before the actual launch. So right now, it is a key timeframe in getting into 2028. Okay. Do they always need to upgrade equipment when they change platforms? Usually they're complete investment changeovers. All right. Interesting. Anything happening with share in that end market? I would say in general, it's held. Good question, Steve. I think about the whole EV, ICE change-out that happened in 2024. We're agnostic as to whether you have EV or ICE or hybrid. You see more accelerated demand on the hybrid side. We're very much agnostic in how our welding applications and the content within vehicles play out between each of those drivers. I would look at more steadiness in the market. Okay. You mentioned the difference between production and capital investment. How is that break down for you guys? Think about the consumable side of our business, serving production, and then you have the standard equipment and the automation serving the equipment. Longer cycle portion serving the automotive side versus consumables tied to production. Think about consumables overall, it is probably a good bellwether. Little over half. Half and half. The business is tied to consumables. Got it. Okay, good. Automation has been, I think, a bright spot for you guys. I think the backlogs are at record levels, and you are starting to see the volumes turn. Just talk about what you are seeing in automation. Yeah. We have seen, after challenging 2024, 2025, as we exited 2025, significant level of orders, increased record levels of backlog, and broad-based. Except for the comments we just went through on the automotive side, whether it is general industry, whether it is energy, whether it is heavy industry, structural type work, broad-based activity on the automation side. So that is what points us to growth. If you think about it from a long-term perspective, we expect kind of high single digits, organic type of growth on the automation side. We are seeing that play out. And while we are doing that, also continuing to drive improvements in our EBIT margins within our automation business. So broad-based level of activity. With the exception of automotive, we expect automotive to start seeing some real growth opportunities here short term, and then continuing to shape our business model in automation. You mentioned margins. Remind us kind of your midterm targets there and kind of how you get there. We exit a second quarter, high single-digit type of an EBIT profile. Our targets are to be mid-teens type of an EBIT, and driven by how we continue to drive leverage off our platform. That's more volume growth at a high single-digit organic growth. We continue to shape our business processes, so think of a lot of project execution and management. We call it our Lincoln Business System. How do we continue to drive the kind of disciplines for incremental margins? We also look at the mix of our business. There are components, and we talk a little bit about some of our pre-engineered type businesses that drive a higher margin, relatively speaking. We're going to continue to look to richening the mix of our business within automation, and then just continuously focus on the broad execution. That's just how we do it. We feel we have a clean line of sight. It's still dilutive to our overall objectives from an operating margin perspective, but going from a low double-digit to mid-teens, 50% improvement is kind of where we're at a nd we're targeting. All right, good. So another topic that's pretty broad here is just kind of AI and how you're starting to integrate that. I think, you had the Inrotech acquisition to help along that process. Just talk about how that's going to play out. Look, we're really excited. We've been developing technology, which is our first entry into what we call physical AI. That's tying to vision, that's tying machine learning, all of the welding knowledge that we introduced into a solution. We're going to anchor on Cobots initially. We have an industry trade show, FABTECH, coming up in October. We'll be continuing to showcase our product. We expect to take orders on new technology platform yet this year. We're pretty excited about driving what we've acquired through vision capabilities, through machine learning, through AI into a new introduction. We're pretty excited about what this could look like for us. What does that AI-enabled system do that[crosstalk]. Yeah, think of-- We can't do today? I like how we've talked about, think about a master human welder being able to make adjustments to a welding process without a CAD file, without having structural computer-aided designs leading a path for welding. Think about a human being able to make those kinds of adjustments to a weld process. Our team's actively working on this, and I would look for technology introduction in the coming months. Okay. All right, good. Maybe I'll stop just for a second. Does anybody want to chime in on end markets or technology? Nope? Okay. Maybe let's talk a little bit about pricing and how margins and tariffs. We touched on that, I think, in your opening commentary, but give us a sense of how that's evolved through 2026. Well, we are actively managing price costs, and our strategy is to be price cost neutral. We had announced some pricing actions in the second quarter. You see that mature in the third. You see persistent inflation. We respond with additional pricing actions, and I mentioned both in the Americas and international segments have an impact that will have incremental pricing mature in this fourth quarter. That's our discipline. As we are seeing inflationary pressures, could be tariffs, could be otherwise, the actions we see coming out of Canada, whatever that means to us, we're going to quantify it, we're going to understand it, and then we're going to take action to protect our business model. There are quarters, like we started the year off, first quarter, we're 90 basis points behind. We narrowed that to 10 basis points behind, with a very much disciplined focus on that neutral price cost posture. Okay. It sounds like you maybe take a small step back in the third quarter and then forward again in the fourth. We expect the pressure to get. That is what is driving a lot of our slight reductions from that mid-20s type of incrementals to low 20s type incremental margins. How much total inflation have we seen in these end markets, in 2026? Well, think about the overall low double digits for the year. We are talking about two-thirds of that being driven by pricing. Add a little bit more to that. Okay. Are you finding all your competitors, especially, I guess, in the consumable space, are they also being pretty disciplined? That is pretty disciplined market. I would point to longer term, Steve, because I think it is important how we look at our strategy. When you look at high single digit, low double digit type of growth, and you take out the inorganic 300-400 basis points, we expect a normalized level pricing to be in that 100-200 basis points. That is how we look at our business long term. We do not want to be driving our strategy for growth through pricing, but we want to be disciplined in managing the model depending on what we see on inflationary pressures to protect the inherent part of our business objectives with operating profit. Okay. You mentioned incremental margins maybe at the lower end near term, but I think you still have sort of a high 20s longer term forecast. Do you have confidence in that? Yeah, absolutely. Mid-20s is typical for our model when you think about the normalized level of volume. We come through higher standard period with very modest increases in volumes and yet increase our operating margin by 200 basis points. We are pointing to a 300 basis point improvement in our 2030 objectives, which is a step change from what we have done historically. That is going to be driven by a higher level of incremental. I will peel some of the key drivers. We talked about automation, improving the EBIT profile by more than 50%, because of the fixed cost nature and our automation business with facilities and engineering, typically that is a higher incremental, low to mid-30s type of an incremental type margin. We expect growth and improvement in the margin profile there. Each of our business segments have objectives to improve their EBIT profile in the strategy period. It is a little different story. We just went through international and Europe shaping, strength on the growth side for Asia. In the America side, we have the component of automation tied to Americas, but then you also have growth. We have on top of that, enterprise initiatives. Think about 2/3 of the overall improvement in margins and incrementals driven by what I just went through. Think about enterprise initiatives then driving another third. We expect another 100-125 basis points of margin improvement driven by either center-led activities across our business, our continued investment and rationalization of our facilities and operations to drive productivity, how we engage with our customers. All those are contributors to how we shape the operating model. That is what gives us confidence in a step change with improvements in the volume trajectory of our business and how we look to innovation to drive the kind of incrementals that are going to be a step change in our business. Look, we had a question at the last earnings call of how to expect this trajectory over the next five years, and our comment is think about it on a ratable basis. We are continuously looking at process capability, best practice to contribute to a level of growth there. Okay. So enterprise initiatives, I think, include centralizing some functions, modernizing factories, improving customer service. Which of these are furthest along, and which has the most upside? I would say they all have equally upside. Okay. However, I'd like to point to the center-led activities. We've been talking about, for example, procurement as a function where historically more regionally driven, the buying, whether direct or indirect type of resources, are tied into that. How do we look to leverage capabilities across all of our regions? And we pointed to the historical examples of functional areas like in finance or in IT and HR, where historically you would've had more regional concentration of resources to more how do we leverage strategies across all of our regions? That's what's more progressive. So think about procurement, supply chain, engineering, product development being more center-led and moving away from regional type of focus to more of a corporate center-led focus. You still have resources in region, of course, and those in-region resources, for example, if they're customer focused, they're there to drive the intimacy with our local presence with customers, but have best practices and capabilities that leverage across the enterprise. That's really the focus. Okay. Maybe let's switch to M&A and capital allocation. I know you've targeted, I think, 300 or 400 basis points of growth through M&A, over the long term. Talk about how you build a funnel, what types of things you're looking for. Yeah. I point to the last 10 years, our CAGR is 480 basis points of growth. As we drove our building blocks for the long term, we said 300- 400 basis points kind of fits the model. But very active level of engagement. We have a corporate-led function on M&A and strategy that works alongside our business units to identify bolt-on opportunities in a very disciplined way. We're very mindful of valuation, what kind of bolt-on strategies that make sense for our long-term positioning in the markets. How do we ensure we're at that mid-teens returns by year three? So very disciplined, active level of engagement, and it's broad-based. What you see in our materials, what the last few years meant to us in terms of acquisitions. You've got Americas transactions, international transactions, you got Harris transactions. It's all driven by a level of engagement across our business units with an active level of oversight and drive across the enterprise, the executive team. That's how we manage it. The board's very much engaged. Very much we want to deploy capital and growth, so we've focused on, we doubled the level of internal investment and all what we just talked about and enterprise initiatives, but also look to M&A being an important strategy for us. So very key for us. Are there any metrics around what the pipeline looks like that you might be able to share? I would just point to very active, very broad based. Not a day doesn't go by where there's some level of engagement and some level of a pipeline. It's broad based, so it could be an automation type focus, could be a welding focus in the U.S. We had a couple of really nice acquisitions over the last few years that tie into technologies, whether it's in wear or whether it's in mobile power, they're just really nice, attractive ways to grow. Remind us where you are on leverage and what your targets are. We have a target that we set about 1.75x, but we're tracking, when you look at net leverage, close to 1.2x, 1.1x. We got a lot of flexibility. Okay. If the right acquisition doesn't come along, can you buy back shares, or is that not a priority? That is what we do. Our priorities are to deploy capital for growth, so that is internal investment and acquisitions. We have had a steady, since going public in 1995 on NASDAQ, had a steady increases in dividend rate for the last 30 years. Then any excess strategic cash, we are covering maintenance, which is somewhere around $75 million right now per year. Then we will buy back shares with excess strategic cash, and that is how we do it. All right, good. Another chance for questions from the field. Anybody? Pregnant pause. No. All right. That has gone through most of what I wanted to talk about today, so maybe I will just put it back to you. We seem to be seeing your first volume growth year under RISE, and what would you counsel investors to focus on? What do you think the market may be underappreciating here in terms of this? Yeah, it is a few things. One, I would point to the dynamics of the short cycle component of our business versus a longer cycle. We have been intentional in shaping our model with more long cycle capital investment opportunities to serving our customers. So while there is historically a view of Lincoln being short cycle, very much positioning to have longer capital investment driven type decisions from our customer base over the long term. So pretty important for us. The discipline of execution despite the cycle, you have seen that in our business. We have got a long track record of managing an expansion and a contraction with a continuous focus on shaping our business model. This is what gives us conviction that we will continue to enhance the operating model of our business. The conviction to go from 200 basis points on average improvement to 300 basis, moving from incrementals from mid-20s to high 20s, all very important for us, and then how we shape that. We have evolved our business to have an enterprise type focus versus a regional, particularly on the operations side, the engineering side, and we will continue to drive that. Those are real opportunities for us. When you look at a long trajectory of how we have shaped our model, it has been about gaining more leverage in the disciplines across all of our businesses. So very much focused on the areas of operational excellence. How do we drive improving level of customer intimacy with our elite program on the customer side? So very much focused. We've just finished another round of, we call it RISE sessions across our corporation, where our CEO is out and engaging all of our different teams around the world. We're pretty excited of where we're headed. It's rounding out the first year on RISE, and he has some pretty attractive objectives, and the volumes do progress positively for us, and we're excited about what the market progression looks like for us. Great. Very clear. All right. With that, we will wrap it up. Thank you so much. Thank you, Steve. We appreciate the insights, and thanks, everyone, for your attention. All right. Thank you very much.