Lincoln Electric delivered strong second quarter 2025 results with sales up 6.6% to $1.89 billion and adjusted EPS up 11% to $2.60, as resilient volumes, disciplined pricing, and the Harris Products Group's record margin offset weakness in International Welding and automation. Management raised its full-year operating framework on first-half actuals and the Alloy Steel acquisition, now expecting steady-to-slightly-up margins and a high 18% incremental margin. The company maintained its neutral price-cost posture and top-quartile ROIC of 21.7% while remaining cautious on near-term demand.
Thank you, Tameka, and good morning, everyone. Welcome to Lincoln Electric Second Quarter 2025 Conference Call. We released our financial results earlier today, and you can find our release and this call's slide presentation at lincolnelectric.com in the Investor Relations section. Joining me on the call today is Steve Hedlund, Chair, President, and Chief Executive Officer, and Gabe Bruno, our Chief Financial Officer. Following our prepared remarks, we're happy to take your questions. 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 risk factors and uncertainties which are provided in our press release and in our SEC filings on Forms 10-K and 10-Q. In addition, we do discuss financial measures that do not conform to U.S.
GAAP, and 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. With that, I'll turn the call over to Steve Hedlund. Steve.
Thank you, Amanda. Good morning, everyone. Turning to slide three, I am pleased to report strong second quarter results. Our 7% sales growth reflected diligent price management, benefits from our M&A strategy, and improved volume performance from the Americas Welding and Harris Products Group segments. Our team has done an excellent job managing inflationary headwinds and navigating supply chain complexities while maintaining our neutral price-cost posture. These efforts, combined with $11 million from savings actions and stronger operating leverage from SG&A, have delivered strong profit performance. These results demonstrate the long-term value creation we are generating from our higher standard strategy initiatives and how we are shaping the business to outperform in the next growth cycle. I would like to recognize and thank the global Lincoln Electric team for their ongoing hard work and commitment to serving our customers and advancing the business towards our targets.
Our earnings expanded in the quarter with adjusted earnings per share up 11% to $2.60. Year-to-date cash flow generation has been strong with 100%+ cash conversion of free cash flow. We have maintained top quartile ROIC performance, which reinforces our disciplined and balanced capital allocation strategy of investing in growth through the cycle and returning excess cash to shareholders. As we highlighted in our earnings release, we are pleased to announce that tomorrow we expect to close our acquisition of the remaining 65% interest in Alloy Steel. We are excited to bring the Alloy Steel team aboard and work together to scale their proprietary wear plate solutions into new geographies and end markets. We've had a chance to work with them for a few months, and they are a great addition with a strong business that will be accretive to margins and earnings on day one.
Turning to slide four to discuss organic sales performance, we achieved an approximate 3% increase in organic sales in the quarter led by pricing actions taken to mitigate higher input costs. Volume declines narrowed to 2.3% as North American manufacturing activity and the industrial gas distribution channel in Americas Welding remained more resilient than expected. In addition, the Harris Products Group generated 11% higher volumes primarily from the rollout of product to support a new national U.S. retail partner, as well as ongoing strength in HVAC due in part to data center buildouts. We continue to see customers defer capital spending and maintain a wait-and-see approach due to policy uncertainty, which continues to impact our equipment and automation portfolios. Our automation sales have stabilized around $215 million per quarter, which we expect to continue in the third quarter and possibly through year-end.
We are encouraged by automation's steady order rates and backlog quarter over quarter, and quoting activity remains elevated across their end markets. Year-to-date automotive and energy sector projects are growing, and we saw general industries pivot to growth in the second quarter. Looking at end market organic sales trends, three of five end markets grew in the quarter. This was largely price-driven, but we achieved volume growth across general industries, which incorporates HVAC and in consumables supporting domestic manufacturing activity. Energy also grew, led by domestic and international power generation projects and strong pipe activity in Americas Welding. Heavy industries remain challenged, but it is incrementally improving on easier prior-year comparisons. As agricultural machinery OEMs continue to destock, it sets up for a recovery in production in 2026.
Construction infrastructure is generally choppy given the timing of project activity, but looking at the first half of the year, which smooths out project timing, organic sales were relatively steady. Finally, automotive transportation volumes were compressed due to slower production levels, while equipment investments did expand. I am pleased by the progression of the business year-to-date and would like to underscore our team's continued focus on serving customers, investing in growth, and driving productivity and operational efficiency throughout the organization. We also remain disciplined on price-cost management and are continuing to shape the operating model to position the business for more profitable growth as end markets recover. I will now pass the call to Gabe Bruno to cover second quarter financials and our raised outlook in more detail.
Thank you, Steve. Moving to slide five, our second quarter sales increased 6.6% to $1.89 billion from 5.2% higher price, a 3% benefit from acquisitions, and 70 basis points from favorable foreign exchange translation. These increases were partially offset by 2.3% lower volumes. Gross profit dollars increased approximately 6% to $406 million, and gross profit margin held relatively steady at 37.3%, down 30 basis points versus prior year. A $3 million benefit from our savings actions, as well as diligent cost management and operational initiatives, substantially offset the impact of lower volumes and $8.5 million LIFO charge in the quarter and acquisitions. Year-to-date, we have incurred approximately $10 million in LIFO charges, which is expected to repeat in the second half of the year. Our SG&A expense increased approximately 1% or $2 million, primarily from acquisitions.
$8 million from our savings actions offset an incremental $4 million of employee costs, reflecting our decision to reinstate the annual compensation merit increase in the quarter, which adds approximately $5 million per quarter. SG&A as a percent of sales improved 100 basis points to 19.4% of sales. Reported operating income increased 29%. The year-over-year increase reflects special item charges in the prior year period. Excluding special items, adjusted operating income increased approximately 10% to $195 million. Our adjusted operating income margin increased 50 basis points to 17.9%, reflecting a 26% incremental margin. Acquisitions had a 30 basis point unfavorable impact to our margin. Other income, excluding special items, was 19% higher from our initial Alloy Steel investment. We reported second quarter diluted earnings per share of $2.56. On an adjusted basis, EPS increased 11% to $2.60.
Our EPS results include $0.03 from favorable foreign exchange translation and $0.06 from the impact of share repurchases. Moving to our reportable segments on slide six, Americas Welding sales increased approximately 7%, driven by 6.5% higher price and an approximate 5% contribution from our Van Air acquisition, which anniversaries August 1st. Volumes were lower by approximately 3%. Higher price reflects actions taken through the first half of the year to address rising input costs. We anticipate higher price in the third quarter due to the timing of our actions throughout the second quarter, and we will continue to monitor trade policy and decisions and take appropriate actions as needed. Americas Welding segment's second quarter adjusted EBIT increased 1% to $138 million.
The adjusted EBIT margin declined 130 basis points to 18.6%, primarily due to higher incentive compensation and the impact from the acquisition and higher allocation of corporate expenses, which anniversaries in the third quarter. These factors offset the benefits of cost management and our savings actions. We expect Americas Welding to continue to operate in the 18%-19% EBIT margin range for the remainder of the year. Moving to slide seven, the International Welding segment sales declined 2.5% as approximately 4% favorable foreign exchange translation was partially offset by 7% lower volumes. Demand trends for the weekend in the EMEA region, largely outside of core Europe and Asia-Pacific, was challenged with stronger prior-year project activity. Adjusted EBIT increased approximately 19% to $31 million.
Margin increased 230 basis points to a more normalized rate of 12.7%, which reflects seasonality, benefits from savings actions, and equity earnings from our Alloy Steel investment. We expect International Welding's margin performance to operate on the higher end of their 11%-12% margin range for the balance of the year, reflecting the inclusion of Alloy Steel. Moving to the Harris Products Group on slide eight. Second quarter sales increased 19% with 11% higher volumes and 7% higher price. Volumes reflected strength from the HVAC sector and expansion of our brand in the retail channel requiring initial inventory stocking. Underlying retail trends remain challenged in the quarter. Price increased on metal costs and price actions taken to mitigate rising input costs. Adjusted EBIT increased approximately 28% to $32 million, and margin improved 100 basis points to a record 19.4% on volume growth, effective cost management, and strategic initiatives.
We expect the Harris segment to operate in the 17%- 18% margin range for the balance of the year due to seasonality and normalized volume trends. Moving to slide nine, we continue to generate strong cash flows from operations in the quarter. For the first half, cash flows have increased approximately 9% with a 104% conversion ratio. Average operating working capital rose 40 basis points to 18.4% versus the comparable prior-year period. Moving to slide 10. We're executing well to our capital allocation plan. We invested $57 million in growth, reflecting CapEx investments in our initial investment in Alloy Steel. We also returned $169 million to shareholders through our higher dividend payout rate and the $127 million of share repurchases. We maintained a solid adjusted return on invested capital of 21.7%. Moving to slide 11 to discuss our operating assumptions for 2025.
We are raising our operating framework assumptions given first-half actuals and the inclusion of Alloy Steel. Year-to-date, we have seen volumes only partially offset price increases, and our updated operating assumptions assume this dynamic will continue through the balance of the year given the relative resilience in North America. We expect this will result in a low single-digit percent organic sales growth for the full year. With the announced agreement to acquire the remaining interest in Alloy Steel on August 1st, we now expect acquisitions to generate approximately 270 basis points in sales growth this year, with Alloy Steel contributing $20 million-$25 million in sales for the balance of the year. We are continuing to target a neutral price-cost position.
Our supply chain initiatives are focused on maximizing domestic supply, and we are pursuing benefits from operational initiatives and savings actions to help offset inflation in addition to price actions. Our savings program anniversaried in July, and in the first four quarters of the program, we generated $47 million in incremental savings, with approximately 65% from temporary cost savings actions. As we look ahead to the balance of the year, we estimate an additional $10 million-$15 million will be realized, largely from permanent structural savings now that we have anniversaried our temporary cost savings actions. These permanent savings will be split evenly between our two welding segments. The savings mix shift reflects the reintroduction of some discretionary spending into the business to support our commercial teams and strategic initiatives, which have been margin neutral, as demonstrated in the second quarter.
By year-end, we expect to achieve approximately $60 million in savings from the six-quarter program at a 50/50 temporary and permanent split, and we continue to assess where we can further shape the operating model. With more favorable volume performance in the first half of the year and the inclusion of Alloy Steel, we now expect our full-year adjusted operating income margin to be steady to slightly up versus the prior-year period, with a high 18% incremental margin. This builds on our first-half incremental margin rate of 17%. Our interest expense, tax, and CapEx assumptions are being maintained, but we are now including $0.07 of EPS contribution from the Alloy Steel acquisition for the balance of the year. We believe these updated operating assumptions reflect the progression of the business while remaining cautious on demand trends in the near term. I would like to turn the call over for questions.