Greetings, and welcome to Lincoln Electric's 2017 Fourth Quarter and Full Year Financial Results Conference Call. At this time, all participants are in a listen-only mode and this call is being recorded. It is now my pleasure to introduce your host, Amanda Butler, Vice President of Investor Relations and Communications. Thank you. You may begin.

Thank you, Takia [Ph], and good morning, everyone. Welcome to Lincoln Electric's 2017 fourth quarter conference call. We released our financial results earlier today, and you can find our release as an attachment to this call's slide presentation as well as on the Lincoln Electric website at lincolnelectric.com in the Investor Relations section. Joining me on the call today is Chris Mapes, our Chairman, President and Chief Executive Officer; as well as our Chief Financial Officer, Vince Petrella. Chris will begin the discussion with an overview of our full year results, and Vince will cover the quarter's performance in more detail. And following our prepared remarks, we're happy to take your questions. Before we start our discussion, please note that certain statements made during this call may be forward-looking, and actual results may differ materially from our expectations due to a number of risks factors. A discussion of some of the risks and uncertainties that may affect our results are provided in our press release and in our SEC filings on Forms 10-K and 10-Q. In addition, we discuss financial measures that do not conform to U.S. GAAP. A reconciliation of non-GAAP measures to the most comparable GAAP measure is found in the financial tables in our earnings release, which again is available in the Investor Relations section of our website at lincolnelectric.com. And with that, I'll turn the call over to Chris Mapes. Chris?

Thank you, Amanda. Good morning everyone. We capped off 2017 with solid topline momentum in record or near record performance across many key financial, operational and environmental metrics in our legacy Lincoln Electric business. These achievements advance us towards our 2020 vision and strategy goals and we are well positioned to capitalize on accelerated growth and superior value creation in 2018. Before I discuss our financial results, I would like to thank and congratulate our employees for achieving an all time record performance for safety and record achievement in our global environmental metrics in 2017. Great work. Now looking at our 2017 results. Sales excluding Venezuela increased 16% to $2.6 billion from 7% organic and 8% acquisition growth. Our strategic focus on mix and diligent pricing management helped mitigate the impact of raw material inflation. Margin compressed as our commercial teams continued to implement pricing actions to recover the frequent raw material cost increases that we have been incurring globally. I am pleased to report that excluding acquisitions our adjusted operating income rose 12% and we expanded our margin by 50 basis points to 14.7%. This yielded a 22.2% incremental operating income margin for the year while continuing to invest in the business. Reported diluted earnings per share was $3.71. Excluding special item charges, adjusted EPS increased 15% to $3.79. We generated $335 million in operating cash flows, driven by a record 14.2% average operating working capital ratio in our legacy Lincoln Electric businesses. This yielded 108% free cash flow conversion of adjusted net income. ROIC remains solid at 16.2% and we continued our 23 year track record of consecutive dividend increases with an 11% increase to our 2018 dividend payout rates. Moving to slide four, industrial demand firmed and accelerated in the fourth quarter. Our organic sales increased by…

Thank you, Chris. Looking at our fourth quarter income statement highlights on Slide 6, our consolidated fourth quarter sales increased 32.5% on 6.8% volume growth, 3.2% higher price, a 20.3% benefit from the Air Liquide Welding acquisition and 2.2% from favourable foreign exchange translations. Our fourth quarter gross profit margin declined 300 basis points to 32% as compared with 35% in the prior year. The decline primarily reflected the addition of Air Liquide Welding and a $2.3 million charge from the amortization of the step up in the value of acquired inventories from this transaction. Excluding the acquisition and special items gross profit margins were 33.8% or 120 basis point decline versus the prior year on unfavourable price cost due to the raw material inflation including a $1.5 million LIFO charge in our Americas Welding segment and unfavourable product sales mix. Our SG&A expense increased 33% to $152.6 million or 20.4% of sales due to the addition of Air Liquide Welding and acquisition related expenses. Excluding the acquisition of special items, SG&A expense increased 9% to $124.4 million. The increase was primarily due to higher incentive compensation, charitable contributions and wage costs. SG&A as a percentage of sales excluding these items declined 60 basis points to 19.7% on improved sales leverage. In the fourth quarter, we incurred several special items that are listed on slide 7. These items included a $2.9 million non-cash pension settlement charge related to lumpsum payments from our U.S. defined benefit pension plan, rationalization and asset impairment charges of $6.6 million primarily from our European integration activities, a net $1.9 million bargain purchase adjustment as we continue to finalize our Air Liquide Welding purchase price allocation, and a $3.6 million charge for acquisition transaction and integration costs. Now turning back to slide 6, reported operating income…

Ladies and gentlemen, at this time, we will be conducting a question-and-answer session. [Operator Instructions] Our first question is from Joe O'Dea with Vertical Research. Your line is open.

Hi, good morning.

Morning, Joe.

First question is just a little bit of clarification, you commented on some choppiness I think with end margins over the course of the year related to pricing plans and some of the raw material inflation you are looking at. And any clarification or additional details on how you foresee that playing out whether that’s first half margins versus second half margins with some of the timing sensitivity there?

Right. So then I think it’s difficult to predict the timing of continued raw material and inflationary increases. I think we are confident but based on what we’ve seen over the past six to nine months and what our expectations are for 2018 including what we are seeing from a volume perspective across our businesses and our customers businesses that we will continue to see inflation progress as the year unfolds. We are just cautioning our investors and analyst to understand that there could be from a quarter to quarter basis some volatility and choppiness and lags and following price increases with these inflationary increases in our business that are coming more rapidly, but I would say Joe that from a intermediate longer term perspective we still are confident that we have a business model that can deliver 20% to 25% incremental on a pretty consistent basis but we are just cautious that 2018 will be represented by a more rapid inflationary increases and the Lincoln response of that could result in some choppy incremental from quarter to quarter.

I appreciate it. And then in terms of flexibility on pricing and pricing into customer channels, could you talk a little bit about how you anticipate pricing into the distribution side versus pricing into the end user side, and whether you know as we are seeing the strengthening in end markets the pricing kind of leverage that you have in end users, do you see that strengthening a little bit?

Well certainly we’d expect that the strengthening market creates an easier environment for us to move forward with raw material increases into that particular space. I think that a couple of key points is that you know this is a global impact, so we are seeing this inflationary impact in a multitude of markets. And obviously we participate in a multitude of segments, so we need to see the strength in all the various segments for us to be able to work with those customers to understand the value that Lincoln’s creating and being able to move those material cost increases into the market. When we are dealing with our channel partners obviously that’s a different conversation, they are working with a multitude of our joint customers and there are times when it is easier for that to move through because the consolidation of that customer base in with that channel partner creates one conversation for us with the channel partner but obviously we’ll continue to work with them and our message again is that we expect to continue to see inflation in our global business as we move throughout 2018 and still have great confidence in our ability to move that inflation to the market place over the longer term.

Got it. Thanks very much.

You’re welcome.

Thank you. Our next question comes from Jason Rodgers with Great Lakes Review. Your line is now open.

Yes, I just wanted to follow up the price increases and raw material cost. I was wondering what the net impact in the quarter was on from higher raw material cost net of price increases and what – and if you are seeing that raw material cost accelerating here in the first quarter?

Yes, Jason so our estimate of the price cost impact on margin in the fourth quarter was a detrimental impact of about 70 basis points from a price cost. We continue to see raw input cost rise through the end of the quarter and into 2018. We will be moving additional price increases into the market during the course of the first quarter and you know our expectations are that we will still have some detrimental impact in the first quarter, but that 70 basis points gives you some indication of the impact on fourth quarter results.

All right. And what percent of your debt is fixed currently?

Right now it’s about 80% to 85% fixed.

Okay, and you know you raised your attrition estimates for Air Liquide here in the first half, is it just a function of faster execution on the cost synergies or are you finding additional synergy opportunities?

You know I would say both. Vince and I have just returned back from Europe a couple of weeks ago, and meeting with our teams on the integration review we are very excited about the progress we are making. We are finding opportunities that we didn’t plan on initially and some of those opportunities we can execute on earlier, some of those opportunities will be pushed out some as we prioritize the actions with the teams. But still extremely excited about the progress our teams are making and the opportunity that we see with the merger of those businesses as we are moving forward.

Thank you.

You’re welcome.

Thank you. Our next question comes from Nathan Jones of Stifel. Your line is now open.

Good morning, Nathan.

Nathan, please check your mute button? Our next question comes from the line of Saree Boroditsky with Deutsche Bank. Your line is now open.

Thank you. Can you talk a little bit about the benefit from Air Liquide in the quarter from a top line perspective – came in higher than you guys were expecting. How much of that was FX versus volume?

Well in the quarter, Air Liquide contributed about $112 million of top line revenue. And so there’s really no translation effect to that because they weren’t in the prior year, right. So there wasn’t a impact from a weaker dollar on the acquisition revenues, but we did have a foreign exchange translation improvement in the overall business of $12 million or about $9 million, $10 million in the International segment.

Okay, that’s helpful. And then could you provide some color what you are seeing in the energy markets business and positive development [Indiscernible] recently. So I was just wondering if you have seen any improvement quarter to date on the international side?

Well I wouldn’t say anything necessarily quarter to date on the international side. I will share with you that I recently returned from business reviews in Asia and Southeast Asia specifically. And there was more optimism around there being activity in the offshore market and offshore construction. So I believe that energy in total is positive although I will tell you we had a challenging comp in our international segment with a portion of energy. Portion of that was a very difficult comp from prior year and probably project work, but I think offshore is beginning to show some activity probably not enough energy or activity behind that yet to say that’s it’s trending especially when we talk about the offshore segment of energy.

Great, thank you. That was very helpful.

You’re welcome.

Thank Our next question comes from Nathan Jones of Stifel. Your line is now open.

Hi, can you hear me now?

I can hear you now.

Awesome. Vince, I know you talked a little bit about expecting some choppiness in incrementals, but over the medium to long-term would expect 20% to 25% incrementals. Do you expect to be able to do that for the full year in 2018 if you may some of the quarter-to-quarter choppiness out?

Look I would think so. We did a 22% I believe incremental margin for all of 2017. You know we did have some fairly rapid inflationary increases during the course of the year. I think we’d see more of that in 2018. I think there are some other positive drivers including Air Liquide Welding, integration that should give us an upside on our incremental. We think we are going to have some more downside challenges so based on what we see in the inflationary environment. But, I think if you are looking at a rolling four quarters, I’m pretty confident that if you put four quarters together we ought to be in that kind of a range.

Okay. And then just a little bit more on Air Liquide maybe in terms of working capital. Where is that relative to where Lincoln is? Do you think you can get with the same place you are? How much cash do with that actually produce out of the business?

That’s a great question. So we – as we stated in our prepared remarks, we ended up at 14.2% average operating working capital in the legacy business Nathan. If you blend them Air Liquide were 15.9% so it’s a 170 basis point deterioration on a consolidated total. We have already freed up $17 million in inventory during the course of the five month period that we’ve owned the business in 2017. We think that 2018 we can replicate that and achieve an even greater improvement in inventory and working capital management. So we are optimistic there are good opportunities to align Air Liquide’s Welding acquired business with Lincoln’s and we think that $17 million can be replicated and perhaps exceeded during the course of 2018. Be mindful of the low hanging fruit is the first areas that would be focussed on, it will become more difficult as we own the business but I think there’s lots of opportunity to bring them in line with Lincoln’s expectations in that regard.

And then I know everybody would be focused on the cost synergy between the two businesses, but could you maybe talk about some of the opportunities you see on the revenue synergy side between the two businesses?

Yes. I think the best way to give you it would be an example of that. We’re recently doing a trip to Southeast Asia I had an opportunity to visit with one of the larger distributors for the Air Liquide business. And although most of that business was driven from core Europe, they did have a handful of distributors that were providing their products to the market globally. And during that visit, an excellent opportunity to talk to them about their perspective of the brand and the technologies, but I also got the chance to see how our teams were working with them and that particular channel partner now is bring in Lincoln Electric equipment to complement the Air Liquide Welding consumables that they've been buying. And my expectation is that that particular incident we’re going to be able to replicate in a multitude of channels and with the multitude of customers around the world. And I was very excited about the execution of that and we’ll continue to drive that as we move throughout 2018.

Those numbers you could provide that at this point?

You know that particular customer is probably going to be on an annual basis for equipment less than a $1 million, but it will be a material order. So, at this point our teams aren’t ready to be able to identify the amount of leverage will be achieving from that, but I’ve got great confidence in it and we’ll try to provide more guidance on that as we’re moving forward.

Okay. Fair enough.

Nathan, I would just only add to that that any improvement in revenues will likely be offset by our desire to reshape combined business towards a more attractive mix and richen the opportunity for margin improvement. So to the extent that we do have wins or improvements and synergies at the top line, I do fully expect that there will offset as we consolidate the platforms and we move our manufacturing platform around and integrate the businesses. Its likely that that the low end of the businesses that we view is little less attractive will have a declining impact on sales as well.

Okay. Thanks.

You’re welcome.

Thank you. Our next question comes from Jim Giannakouros with Oppenheimer. Your line is now open.

Hi. Thanks for taking my questions. Good morning everyone.

Good morning. Hi, Jim.

Sticking on international sales, you cited tough comps, was there any disruption to sales from AOW integration, if I recall, you’re making some changes on go-to-market strategic of just your sales effort there?

We just completed some reviews of that business. I mean, whenever you have this type of a large merger there’s certainly some risks associated with that, but I can’t identify any challenges that we had relative to supplying product your customers or alignment with our teams. I was very happy with our results and don't believe we've had any of those negative impacts within the business or the portfolio.

Okay. And automation, again, you cited tough comps but you did grow mid-singles. What were the sales in both 4Q and FY 2017 and do you have an outlook for 2018 as far as that bucket globally? Thanks.

You know, the run rate in 2017’s fourth quarter was roughly 100 million, and so I think we’re going to -- we expect a mid-high single digits growth rates in 2018 from that.

Okay. Thanks. And one more if I may. Price actions, I can appreciate choppiness. The only ones taking the price action and my impression is that there [Indiscernible] received if you can comment on did you get all the price that you anticipated with your November price increases? Or they concentrated in consumables or in equipment? And also just any color on if steel stays where it is do you anticipates a fully offset sometime this year and if yes, when?

Well, I think the important comment would be that we expect to be able to continue to take raw material increases and move those increases to the marketplace effectively. That's what we been able to here at Lincoln Electric for a long period of time and go and work with our customers and assure them that our solutions are going to add value to them in their business and our teams are working diligently to ensure that we accomplish that. As I mentioned earlier it's difficult to talk about any one particular increase. One we don't really like to talk about pricing in that type of granularity, but as importantly this is a global phenomenon that we’re dealing with. And any comment I might make around one region might not be representative around the global impacts that we’re seeing. I really think the important messages are confidence in being able to work with the markets and work with our customers to recover the cost increases that we’re seeing with raw materials accepting that because of the timing and acceleration of those that we may have some choppiness as we’re executing on that throughout 2018.

And then in terms of, Jim, the split between consumables and equipment, clearly the price increases are much greater on the consumable side because of the raw input costs associated with steel and other commodities. And so the bulk of our increases that you see on our pricing lines for the Americas welding and international welding segments are really focused on the consumables product lines.

Thank you.

You’re welcome.

Thank you. Our next question comes from Walt Liptak with Seaport Global. Your line is now open.

Hi, thanks. Good morning guys. I want to ask about the tough comps in international and if you could just refresh our memories on, what was it about the fourth quarter last year. I guess related to energy that was so strong. And then, as you think about comps in 2018 it doesn't look like you have any of those big volume spikes in 2017. Do you expect to see volume growth in 2018?

Right. So, we did have two end markets that we’re down in 2017th fourth quarter for international was really energy-related markets. Offshore, we had a nice a quarter last year and we were down significantly on a year-over-year basis, as well as our pipe mills which were down as well in the 2017 quarter, so that’s where we saw the bulk of the change. Also Asia-Pacific it was a much stronger as well in volumes in the prior year.

Okay. The pipe mill part of it, it sounds like oil and gas is ramping up for welding pipes. Why you think it was down during the fourth quarter? Was it just timing issue or shutdowns?

Its very project oriented, Walt, so the timing of projects that hit the quarter can flip between quarters during the course of the year. So we’re not too excited about a down quarter in these types of project-oriented industries. We do see that, for example, offshore was up in the Americas region, so we think that in 2018 we want to see a better result in international offshore and pipe mills and maybe what we saw on one individual discrete quarter.

Okay. Got it. And then if I can just ask on the price cost too. Just looking at the pricing numbers that you guys put out, Americas up 2.9, international 5.6, this is pretty good pricing. I think that’s probably the best I’ve almost ever seen. So just to be clear what you’re seeing is cost coming up faster than pricing, and this is largely a timing issue that we’re dealing with?

That’s correct. And I think these are some of the bigger pricing increases that we've seen in some time, but the increases are fairly rapid and sizable and we’re following behind those with price increases that do take some time to put into the market through our channel partners and customer user. So they are fairly sizable cost increases that we’re experiencing in raw inputs and other inflationary items.

All right. And the volatility that you’re talking about is just as raw materials come up there’s a lag. I wonder if you can talk what that lag typically is, is it month, two months?

It really varies. It depends on the relationships. You could have situations where there is longer term contracts with customers. You could have situations that you need to have individual negotiation. And so it's varies depending upon the region, the customer, the channel. But I would tell you that it can take three, four months to accomplish the complete pricing change when you're trying to move price into the marketplace on a global basis.

Okay, great. And just switching gears to the comment that you’ve made about the low hanging fruit in Air Liquide Welding. I wonder if you can talk about where – what is the low hanging fruit that you’re seeing? And what’s moving along faster on these synergies. Its great to see, but I’m wonder if you could provide some details on that?

Yes. We’re probably ahead on synergies as our -- in the purchasing area being able to identify areas where we can achieve lowest cost and highest quality vendor relationships. I think were ahead on our ability to announce and start to work on some manufacturing and distribution consolidations. I think we’re certainly ahead on trying to run the business in an integrated way. So these are all things, Walt that we’ve identified and we knew that we'd be working on from the time we announce this transaction back in the last March. And just that I think we've been little bit more effective and we've moved faster than what we anticipated to try to bring some of these synergistic opportunities forward into the front half of 2018 rather than the back half. So I think our teams and all work streams and all areas are more successful than what we had originally had anticipated at this point in time. There's still a tremendous amount of work to be done, but we’re optimistic Chris and I are optimistic that we’re going to be on track for and perhaps even bring forward little bit earlier the savings that we had identified from the outset.

Okay.

Walt, as an example to that, we’ve already developed a strategy for the commercial teams, merge the commercial organizations underneath one leadership team and have already completed that piece. And as Vince mentioned earlier I'm very happy with our ability to drive $17 million of working capital out of that business in the first five months and we believe there are further opportunities for us to improve the working capital efficiency as we move forward.

Okay, yes. It sounds great. Congratulations with that. Given what you said, is there a chance that you get more accretion in 2018 as these things -- programs move faster?

I think we need to wait there, Walt, to see how this forms up at the end of the first and second quarter. And there is certainly that that opportunity, but we’re need to see that the execution that we have laid out for the first half of the year continues to be ahead of schedule and I think we’ll wait until maybe the first half within the book to look at that again on whether or not that 30 million and whether or not the $0.06 per quarter can be revised.

Okay. Sounds great. Thank you.

Thank you. Our next question comes from Seth Weber with RBC Capital Markets. Your line is now open.

Hey, good morning.

Good morning.

Good morning. I wanted to – could you dig in a little bit to the double digit strength that you’re seeing in automotive and transport segment. Is that coming from new platforms? Is that type of growth sustainable or whether there’s some kind of one-off sales this quarter? Thanks.

Well, its really not driven by any one-off. I think if you take a look at our performance throughout 2017 we had a couple of quarters where we were performing better in that particular segment than maybe what the broad market dynamics were. We’ve had some new technologies that we brought into that segment over the last six, 12, 18 months, so I certainly think is benefiting us. We’ve also found a couple of opportunities where we can expand our presence with global OEMs by providing them some support in other regions where we maybe were providing that the previously. So I don't see any one-offs as it relates to the quarter, and I think this is just a continuation of some of the success that we've had in that segment as we trended through 2017.

Okay. So you would expect segment growth period [ph] continued to outpace the build -- auto build levels?

Yes.

Yes. That's been the case during the course of all of 2017 and just expanding in 2018. So this is not -- in this particular case this is not a discrete quarter out performance. We have a track record of us several quarters now in a row outperforming what the builds would suggest.

Sure. Okay. Thank you. And then Vince, just a clarification, I think I heard you call out incentive comp in the fourth quarter for the Americas margin. I guess can you quantify that? And is that and is that – does that go and become a tailwind in 2018 when we start to look at year-over-year comparables? Thanks.

Yes. So I estimate that we took additional $4 million charge in the Americas and actually globally for incentive compensation over and above what might have been a normal provision for the profitability of the business on a year-over-year basis. So the prior year was probably little light. Current year was little heavy. And so we had a $4 million delta that burden the fourth quarter as compared to the prior year's fourth quarter. So it should be a little bit of a tailwind on a quarterly basis in 2018.

Okay, great. Thanks very much.

Thank you. The final question in queue comes from the line of Mig Dobre with Baird. Your line is now open.

Yes. Thank you. Thanks for fitting me in. So just want to go back to volumes in America which were great, they were much better than I guess. Then I think Vince, thinking back at our conversation last quarter there were maybe better than what you were thinking as well since things picked sequentially in spite of the tougher comp. So I guess I’m wondering what in a quarter maybe worked out better than what you initially envisioned from a volume perspective?

Actually the increase was across both equipment and consumables, so we had a really a double-digit improvement in both categories. We also outperformed on the automation side of the business. You might recollect since you’re reminding me of what I said in the third quarter, you might also recollect that we’re little concerned about third quarter trends in the automation business, and actually automation picked up and became stronger and was less of a drag than what we had anticipated at the end third quarter. And as Chris stated in his comments that strength has carried over in the 2018. So we’re now optimistic that our order trend levels will be very positive in that product line segment in 2018. So just to summarize, Americas was strong across both consumables and equipment. More of those end markets picked up across the board heavy equipment manufacturers, automotive, we just had a very nice broadening of end markets during the course of the quarter.

That sounds great. And I think Seth tried to get this in terms of automotive and transportation. You said you expect to grow in excess of builds, but when you when you kind of look at Chris’s comment for mid to high single-digit organic growth in 2018 how would you think about your growth in this market versus that guidance specifically?

Well, in the quarter it was up by double digits on a global basis up stronger in the Americas and internationally, but I think that's going to be challenging to replicate. We do have the comparisons that come around in the second half and the fourth quarter of this year that will make that kind of a number difficult. But we’re at least some optimistic that we’re going to see good outpaced growth in automotive and transport compared to the build just based on our historical experience, our penetration in the automation product line, the new products that Chris mentioned in his comments. So I think we’re – I’m comfortable with Chris's guidance that were in the mid to high single digits in that area.

Okay. And then lastly, I was trying run some quick math just based on your comments on the 70 bps headwind from price cost and your pricing that you reported. And I’m guessing that raw materials are something like 20% of sales, I don't know if I have this right. And related to this two when you’re thinking about your cost more broadly is there anything else other than steel that we need to be aware of as we think about 2018?

Well, there’s a lot of things other than steel you should be aware of. My view of that is that steel is our biggest input cost, Mig, and so we’re very focused on that, because it represents hundreds of millions of dollars of our COGS in our spend, but we’re seeing inflationary increases across the board. Chemicals are a big purchase component. We buy electronics and engines and we buy lots of different commodities if you will. And so I think that inflationary comment extends across all of our inputs, including frankly wages and salaries and compensation costs will continue to rise. We believe in 2018 at a faster pace than what we seen for the last several years. But your assumption of 20% I think is rather low, it's a much higher number than 20% is raw inputs.

It is. Okay. And one more and them I’m done. When I’m looking at your reporting pricing stat in international versus the Americas, is there any color to provide it in terms of why maybe you've got a little more pricing international. Anything to be gained there?

We just been more aggressive there, because we feel that there is more business and products that are being sold at prices or margins that we view as being a less attractive than our objectives from a global perspective, so we’re being a little bit more aggressive to manage perhaps some of the less attractive business that we have in our international portfolio. So it's a matter of margin and portfolio management from an international perspective.

Very helpful. Thank you and good luck.

Thank you very much, Mig.

Thank you. Our last question comes from the line of Saree Boroditsky with Deutsche Bank. Your line is now open.

Thanks for taking my follow-up. With over 500 million of cash and marketable securities at year end, it seems like you could end up within that net cash position by the end of 2018. So could you just touch on your leverage target? And then how do you thinking about using that excess cash?

So we think about our capital allocation and debt target from a debt-to-EBITDA perspective. We’d like to have that number in the short intermediate term at somewhere between one and three quarters and two times debt to gross debt-to-EBITDA. So we fully expect to continue to follow our capital allocation plan to find those capital investments that make sense from both a strategic and a return perspective. We will continue to raise our dividend in the foreseeable future at a double-digit pace, high single digit double-digit pace than we will continue to buy shares to maintain our share account so that the wildcard frankly is what we are able to source in the M&A arena that can now use that very strong balance sheet and cash on the balance sheet for growth and advancing our strategic initiatives in our 2020 vision.

Okay. Thank you.

You’re welcome.

Thank you. And our final question in the queue comes from the line of Liam Burke with FBR. Your line is now open.

Thank you. Good morning, Chris, good morning Vince.

Good morning, Liam.

Chris, on the automation side you’ve seen that have been making nice progress on penetrating the market. Have there’s been any change in the competitive response?

No. I really can't point towards any real change in the competitive response. We’re very focused on executing that longer-term strategy that we’ve laid out for our automation business. I still and very confident in the long-term trends towards automation, and as I – as we’ve mentioned before at Lincoln we want to attack those long-term trends in two manners. We want to build our education model to train and develop the new welder and that the investment in our new welding and training technology center here at our campus in Cleveland. And that’s also providing automated solutions to the global marketplace. And we believe that trend continues strongly and that it's a long-run trend, the multiyear trend and we’re going to continue to invest behind it and identify other ways for us to expand the business whether through Greenfield's M&A or other opportunities for us to expand within automation.

Okay. And one, looking in Europe you were in an environment of a much stronger dollar over the past few years. You had tougher pricing environment there. As a weaker-to-stable dollar help pricing at all over there in terms of market share gain?

No. I really don't think the weaker dollar has played that at all. I would augment Vince’s comments earlier that at the end of the day we’re managing the portfolio over there. We do have raw input challenges that our teams are driving into the marketplace and that market has its challenges and we’re going to be aggressive and challenge our teams to continue to recover and expand upon the margin profile that we want to see in that business moving forward.

Thank you, Chris.

Thank you. This concludes our question and answer session. I would like to turn the call back over to Vincent Petrella for closing remarks.

Thank you, Takia, and thank everyone for joining us on the call today, and for your continued interesting in Lincoln Electric. We’re really excited and look forward to discussing our progression of our results and our strategic programs at the end of the first quarter. So, thank you very much and have a good day.

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes today’s program. You may now disconnect. Everyone have a great day.