FORM |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | ||||||||||
(Address of principal executive offices) | (Zip Code) |
(Registrant’s telephone number, including area code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Page | |||||
PART I - FINANCIAL INFORMATION | |||||
Item 1. Financial Statements | |||||
Consolidated and Condensed Statements of Operations | |||||
Consolidated and Condensed Statements of Comprehensive Income | |||||
Consolidated and Condensed Balance Sheets | |||||
Consolidated and Condensed Statements of Equity | |||||
Consolidated and Condensed Statements of Cash Flows | |||||
Notes to Consolidated and Condensed Financial Statements | |||||
Note 1. Organization and Basis of Presentation | |||||
Note 2. Discontinued Operations | |||||
Note 3. Acquisitions | |||||
Note 4. Revenue | |||||
Note 5. Earnings Per Share from Continuing Operations | |||||
Note 6. Income Taxes | |||||
Note 7. Inventories, Net | |||||
Note 8. Accrued and Other Liabilities | |||||
Note 9. Benefit Plans | |||||
Note 10. Debt | |||||
Note 11. Derivatives | |||||
Note 12. Financial Instruments and Fair Value Measurements | |||||
Note 13. Equity | |||||
Note 14. Commitments and Contingencies | |||||
Note 15. Segment Information | |||||
Note 16. Subsequent Events | |||||
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | |||||
Item 3. Quantitative and Qualitative Disclosures About Market Risk | |||||
Item 4. Controls and Procedures | |||||
PART II - OTHER INFORMATION | |||||
Item 1. Legal Proceedings | |||||
Item 1A. Risk Factors | |||||
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | |||||
Item 3. Defaults Upon Senior Securities | |||||
Item 4. Mine Safety Disclosures | |||||
Item 5. Other Information | |||||
Item 6. Exhibits | |||||
SIGNATURES |
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Net sales | $ | $ | |||||||||
Cost of sales | |||||||||||
Gross profit | |||||||||||
Selling, general and administrative expense | |||||||||||
Restructuring and other related charges | |||||||||||
Operating income | |||||||||||
Pension settlement loss | |||||||||||
Interest expense and other, net | |||||||||||
Income from continuing operations before income taxes | |||||||||||
Income tax expense | |||||||||||
Net income from continuing operations | |||||||||||
Loss from discontinued operations, net of taxes | ( | ( | |||||||||
Net income | |||||||||||
Income attributable to noncontrolling interest, net of taxes | ( | ( | |||||||||
Net income attributable to ESAB Corporation | $ | $ | |||||||||
Earnings (loss) per share – basic | |||||||||||
Income from continuing operations | $ | $ | |||||||||
Loss on discontinued operations | $ | ( | $ | ( | |||||||
Net income per share | $ | $ | |||||||||
Earnings (loss) per share – diluted | |||||||||||
Income from continuing operations | $ | $ | |||||||||
Loss on discontinued operations | $ | ( | $ | ( | |||||||
Net income per share – diluted | $ | $ |
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Net income | $ | $ | |||||||||
Other comprehensive (loss) income: | |||||||||||
Foreign currency translation, net of tax expense of $ | ( | ||||||||||
Unrealized income (loss) on derivatives designated and qualifying as cash flow hedges, net of tax expense (benefit) of $ | ( | ||||||||||
Defined benefit pension and other post-retirement plan activity, net of tax expense of $ | |||||||||||
Other comprehensive (loss) income | ( | ||||||||||
Comprehensive income | |||||||||||
Comprehensive income attributable to noncontrolling interest | ( | ( | |||||||||
Comprehensive income attributable to ESAB Corporation | $ | $ | |||||||||
March 29, 2024 | December 31, 2023 | ||||||||||
ASSETS | |||||||||||
CURRENT ASSETS: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Trade receivables, less allowance for credit losses of $ | |||||||||||
Inventories, net | |||||||||||
Prepaid expenses | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Lease assets - right of use | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
LIABILITIES AND EQUITY | |||||||||||
CURRENT LIABILITIES: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Other liabilities | |||||||||||
Total liabilities | |||||||||||
Equity: | |||||||||||
Common stock - $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Total ESAB Corporation equity | |||||||||||
Noncontrolling interest | |||||||||||
Total equity | |||||||||||
Total liabilities and equity | $ | $ |
Common Stock | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interest | Total | ||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||
Balance at December 31, 2023 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||
Dividends declared ($ | — | — | — | ( | — | — | ( | ||||||||||||||||
Other comprehensive loss, net of tax expense of $ | — | — | — | — | ( | ( | ( | ||||||||||||||||
Common stock-based award activity | — | — | — | — | |||||||||||||||||||
Balance at March 29, 2024 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||
Common Stock | Additional Paid in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interest | Total | ||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||
Net income | — | — | — | — | |||||||||||||||||||
Dividends declared ($ | — | — | — | ( | — | — | ( | ||||||||||||||||
Distributions to noncontrolling owners | — | — | — | — | — | ( | ( | ||||||||||||||||
Other comprehensive gain, net of tax benefit of $ | — | — | — | — | |||||||||||||||||||
Common stock-based award activity | — | — | — | — | |||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | $ | ( | $ | $ | ||||||||||||||||
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation, amortization, and other impairment charges | |||||||||||
Stock-based compensation expense | |||||||||||
Deferred income tax | ( | ||||||||||
Non-cash interest expense | |||||||||||
Pension settlement loss | |||||||||||
Changes in operating assets and liabilities: | |||||||||||
Trade receivables, net | ( | ( | |||||||||
Inventories, net | ( | ( | |||||||||
Accounts payable | |||||||||||
Other operating assets and liabilities | ( | ( | |||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Purchases of property, plant and equipment | ( | ( | |||||||||
Proceeds from sale of property, plant and equipment | |||||||||||
Acquisition, net of cash received | ( | ( | |||||||||
Other | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from borrowings on revolving credit facility | |||||||||||
Repayments of borrowings on term credit facility | ( | ||||||||||
Repayments of borrowings on revolving credit facility and other | ( | ( | |||||||||
Payment of dividends | ( | ( | |||||||||
Distributions to noncontrolling interest holders | ( | ||||||||||
Net cash used in financing activities | ( | ( | |||||||||
Effect of foreign exchange rates on Cash and cash equivalents | ( | ||||||||||
(Decrease) increase in Cash and cash equivalents | ( | ||||||||||
Cash and cash equivalents, beginning of period | |||||||||||
Cash and cash equivalents, end of period | $ | $ | |||||||||
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
(In thousands) | |||||||||||
Equipment | $ | $ | |||||||||
Consumables | |||||||||||
Total | $ | $ |
Three Months Ended March 29, 2024 | |||||||||||||||||||||||||||||
Balance at Beginning of Period | Charged to Expense, net | Write-Offs and Deductions | Foreign Currency Translation | Balance at End of Period | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||
Allowance for credit losses | $ | $ | $ | ( | $ | ( | $ |
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
(In thousands, except share and per share data) | |||||||||||
Computation of earnings per share from continuing operations – basic: | |||||||||||
Income from continuing operations attributable to ESAB Corporation(1) | $ | $ | |||||||||
Less: distributed and undistributed earnings allocated to nonvested shares | ( | ( | |||||||||
Income from continuing operations attributable to common stockholders | $ | $ | |||||||||
Weighted-average shares of Common stock outstanding – basic | |||||||||||
Income per share from continuing operations – basic | $ | $ | |||||||||
Computation of earnings per share from continuing operations – diluted: | |||||||||||
Income from continuing operations attributable to common stockholders | $ | $ | |||||||||
Weighted-average shares of Common stock outstanding – basic | |||||||||||
Net effect of potentially dilutive securities(2) | |||||||||||
Weighted-average shares of Common stock outstanding – dilution | |||||||||||
Net income per share from continuing operations – diluted | $ | $ |
March 29, 2024 | December 31, 2023 | ||||||||||
(In thousands) | |||||||||||
Raw materials | $ | $ | |||||||||
Work in process | |||||||||||
Finished goods | |||||||||||
LIFO reserve | ( | ( | |||||||||
Allowance for excess, slow-moving and obsolete inventory | ( | ( | |||||||||
$ | $ |
March 29, 2024 | December 31, 2023 | ||||||||||||||||||||||
Current | Noncurrent | Current | Noncurrent | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Accrued taxes and deferred tax liabilities | $ | $ | $ | $ | |||||||||||||||||||
Compensation and related benefits | |||||||||||||||||||||||
Asbestos liability | |||||||||||||||||||||||
Contract liabilities | |||||||||||||||||||||||
Warranty liability | |||||||||||||||||||||||
Third-party commissions | |||||||||||||||||||||||
Restructuring liability | |||||||||||||||||||||||
Other | |||||||||||||||||||||||
$ | $ | $ | $ |
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
(In thousands) | |||||||||||
Warranty liability, beginning of period | $ | $ | |||||||||
Accrued warranty expense | |||||||||||
Changes in estimates related to pre-existing warranties | |||||||||||
Cost of warranty service work performed | ( | ( | |||||||||
Foreign exchange translation effect | ( | ||||||||||
Warranty liability, end of period | $ | $ |
Three Months Ended March 29, 2024 | |||||||||||||||||||||||||||||
Balance at Beginning of Period | Charges | Payments | Foreign Currency Translation | Balance at End of Period | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||
Restructuring and other related charges: | |||||||||||||||||||||||||||||
Termination benefits(1) | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||
Facility closure costs and other(2) | ( | ( | |||||||||||||||||||||||||||
Total | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||
March 29, 2024 | December 31, 2023 | ||||||||||
(In thousands) | |||||||||||
Term loans | $ | $ | |||||||||
Revolving credit facilities | |||||||||||
Total debt | |||||||||||
Unamortized deferred financing fees | ( | ( | |||||||||
Long-term debt | $ | $ |
Three Months Ended | ||||||||||||||||||||
Derivative type | (Gain) recognized in the Consolidated and Condensed Statements of Operations: | March 29, 2024 | March 31, 2023 | |||||||||||||||||
(In thousands) | ||||||||||||||||||||
Interest rate swap agreements | Interest expense and other, net | $ | ( | $ | ( |
Three Months Ended | ||||||||||||||||||||
Derivative type | (Gain) recognized in the Consolidated and Condensed Statements of Operations: | March 29, 2024 | March 31, 2023 | |||||||||||||||||
(In thousands) | ||||||||||||||||||||
Cross currency swap agreements | Interest expense and other, net | $ | ( | $ | ( |
March 29, 2024 | December 31, 2023 | ||||||||||||||||||||||
Designated as hedging instruments | Other Liabilities | Other Assets | Other Liabilities | Other Assets | |||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Cross currency swap agreements | $ | $ | $ | $ | |||||||||||||||||||
Interest rate swap agreements | |||||||||||||||||||||||
Total | $ | $ | $ | $ |
March 29, 2024 | December 31, 2023 | ||||||||||||||||||||||
Not designated as hedging instruments | |||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Foreign currency contracts | $ | $ | $ | $ |
Three Months Ended | |||||||||||
Foreign currency contracts | March 29, 2024 | March 31, 2023 | |||||||||
(In thousands) | |||||||||||
Change in unrealized gains (losses) | $ | ( | $ | ||||||||
Realized gains (losses) | ( |
March 29, 2024 | |||||||||||||||||||||||
Level One | Level Two | Level Three | Total | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Foreign currency contracts - not designated as hedges | |||||||||||||||||||||||
Interest rate swap agreements | |||||||||||||||||||||||
Deferred compensation plans | |||||||||||||||||||||||
$ | $ | $ | $ | ||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Foreign currency contracts - not designated as hedges | $ | $ | $ | $ | |||||||||||||||||||
Cross currency swap agreements | |||||||||||||||||||||||
Deferred compensation plans | |||||||||||||||||||||||
$ | $ | $ | $ |
December 31, 2023 | |||||||||||||||||||||||
Level One | Level Two | Level Three | Total | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||
Assets: | |||||||||||||||||||||||
Cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Foreign currency contracts - not designated as hedges | |||||||||||||||||||||||
Interest rate swap agreements | |||||||||||||||||||||||
Deferred compensation plans | |||||||||||||||||||||||
$ | $ | $ | $ | ||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Foreign currency contracts - not designated as hedges | $ | $ | $ | $ | |||||||||||||||||||
Cross currency swap agreements | |||||||||||||||||||||||
Deferred compensation plans | |||||||||||||||||||||||
$ | $ | $ | $ |
Accumulated Other Comprehensive Loss Components | |||||||||||||||||||||||||||||
Net Unrecognized Pension and Other Post-Retirement Benefit Cost | Foreign Currency Translation Adjustment | Net Investment Hedges | Cash Flow Hedges | Total | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||
Balance at December 31, 2023 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
Other comprehensive income (loss) before reclassifications: | |||||||||||||||||||||||||||||
Foreign currency translation adjustment | ( | ( | |||||||||||||||||||||||||||
Gain on long-term intra-entity foreign currency transactions | |||||||||||||||||||||||||||||
Unrealized loss on cash flow hedges | |||||||||||||||||||||||||||||
Other comprehensive income (loss) before reclassifications | ( | ( | |||||||||||||||||||||||||||
Amounts reclassified from Accumulated other comprehensive loss(1)(2) | ( | ( | |||||||||||||||||||||||||||
Net current period Other comprehensive income (loss) | ( | ( | |||||||||||||||||||||||||||
Balance at March 29, 2024 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
Accumulated Other Comprehensive Loss Components | |||||||||||||||||||||||||||||
Net Unrecognized Pension and Other Post-Retirement Benefit Cost | Foreign Currency Translation Adjustment | Net Investment Hedges | Cash Flow Hedges | Total | |||||||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
Other comprehensive income (loss) before reclassifications: | |||||||||||||||||||||||||||||
Net actuarial loss | ( | ( | |||||||||||||||||||||||||||
Foreign currency translation adjustment | ( | ( | |||||||||||||||||||||||||||
Gain on long-term intra-entity foreign currency transactions | |||||||||||||||||||||||||||||
Unrealized loss on cash flow hedges | ( | ( | |||||||||||||||||||||||||||
Other comprehensive (loss) income before reclassifications | ( | ( | ( | ||||||||||||||||||||||||||
Amounts reclassified from Accumulated other comprehensive loss(1)(2) | ( | ( | |||||||||||||||||||||||||||
Net current period Other comprehensive (loss) income | ( | ( | |||||||||||||||||||||||||||
Balance at March 31, 2023 | $ | ( | $ | ( | $ | ( | $ | $ | ( | ||||||||||||||||||||
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
(Number of claims) | |||||||||||
Claims unresolved, beginning of period | |||||||||||
Claims filed(1) | |||||||||||
Claims resolved(2) | ( | ( | |||||||||
Claims unresolved, end of period |
March 29, 2024 | December 31, 2023 | ||||||||||
(In thousands) | |||||||||||
Long-term asbestos insurance asset(1) | $ | $ | |||||||||
Long-term asbestos insurance receivable(1) | |||||||||||
Accrued asbestos liability(2) | |||||||||||
Long-term asbestos liability(3) |
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
(In thousands) | |||||||||||
Net sales: | |||||||||||
Americas | $ | $ | |||||||||
EMEA & APAC | |||||||||||
$ | $ | ||||||||||
Adjusted EBITDA(1): | |||||||||||
Americas | $ | $ | |||||||||
EMEA & APAC | |||||||||||
$ | $ | ||||||||||
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
(In thousands) | |||||||||||
Net income from continuing operations | $ | $ | |||||||||
Income tax expense | |||||||||||
Interest expense and other, net(1) | |||||||||||
Pension settlement loss | |||||||||||
Restructuring and other related charges | |||||||||||
Acquisition - amortization and other related charges(2) | |||||||||||
Depreciation and other amortization | |||||||||||
Adjusted EBITDA | $ | $ |
Three Months Ended March 29, 2024 | |||||||||||||||||
Americas | EMEA & APAC | Total | |||||||||||||||
(Dollars in millions)(1) | |||||||||||||||||
Net income from continuing operations (GAAP) | $ | 62.9 | |||||||||||||||
Income tax expense | 18.5 | ||||||||||||||||
Interest expense and other, net | 17.1 | ||||||||||||||||
Pension settlement loss | 12.2 | ||||||||||||||||
Operating income (GAAP) | 46.0 | 64.7 | 110.7 | ||||||||||||||
Adjusted to add: | |||||||||||||||||
Restructuring and other related charges(2) | 0.2 | 1.7 | 1.9 | ||||||||||||||
Acquisition-amortization and other related charges(3) | 4.4 | 3.3 | 7.7 | ||||||||||||||
Depreciation and other amortization | 3.5 | 5.3 | 8.8 | ||||||||||||||
Adjusted EBITDA (non-GAAP) | $ | 54.1 | $ | 75.0 | $ | 129.1 | |||||||||||
Adjusted EBITDA attributable to Russia (non-GAAP)(4) | — | 5.9 | 5.9 | ||||||||||||||
Core adjusted EBITDA (non-GAAP) | $ | 54.1 | $ | 69.1 | $ | 123.2 | |||||||||||
Adjusted EBITDA margin (non-GAAP) | 18.3 | % | 19.1 | % | 18.7 | % | |||||||||||
Core adjusted EBITDA margin (non-GAAP)(5) | 18.3 | % | 19.2 | % | 18.8 | % |
Three Months Ended March 31, 2023 | |||||||||||||||||
Americas | EMEA & APAC | Total | |||||||||||||||
(Dollars in millions)(1) | |||||||||||||||||
Net income from continuing operations (GAAP) | $ | 34.1 | |||||||||||||||
Income tax expense | 37.0 | ||||||||||||||||
Interest expense and other, net | 19.5 | ||||||||||||||||
Operating income (GAAP) | 39.9 | 50.8 | 90.7 | ||||||||||||||
Adjusted to add: | |||||||||||||||||
Restructuring and other related charges(2) | 0.9 | 8.5 | 9.4 | ||||||||||||||
Acquisition-amortization and other related charges(3) | 5.3 | 4.0 | 9.3 | ||||||||||||||
Depreciation and other amortization | 3.3 | 5.3 | 8.6 | ||||||||||||||
Adjusted EBITDA (non-GAAP) | $ | 49.4 | $ | 68.5 | $ | 118.0 | |||||||||||
Adjusted EBITDA attributable to Russia (non-GAAP)(4) | — | 5.3 | 5.3 | ||||||||||||||
Core adjusted EBITDA (non-GAAP) | $ | 49.4 | $ | 63.2 | $ | 112.7 | |||||||||||
Adjusted EBITDA margin (non-GAAP) | 17.0 | % | 17.5 | % | 17.2 | % | |||||||||||
Core adjusted EBITDA margin (non-GAAP)(5) | 17.0 | % | 17.8 | % | 17.4 | % |
Three Months Ended | |||||||||||
Net Sales | Change % | ||||||||||
(Dollars in millions) | |||||||||||
For the three months ended March 31, 2023 | $ | 684.0 | |||||||||
Components of Change: | |||||||||||
Existing businesses (organic sales growth)(1) | 16.6 | 2.4 | % | ||||||||
Acquisitions(2) | 1.0 | 0.1 | % | ||||||||
Foreign currency translation(3) | (11.9) | (1.7) | % | ||||||||
Total sales growth | 5.7 | 0.8 | % | ||||||||
For the three months ended March 29, 2024 | $ | 689.7 |
Three Months Ended | |||||||||||
Core Sales(1)(5) | Change % | ||||||||||
(Dollars in millions) | |||||||||||
For the three months ended March 31, 2023 | $ | 646.9 | |||||||||
Components of Change: | |||||||||||
Existing businesses (core organic sales growth)(2) | 13.0 | 2.0 | % | ||||||||
Acquisitions(3) | 1.0 | 0.2 | % | ||||||||
Foreign currency translation(4) | (4.8) | (0.7) | % | ||||||||
Total core sales growth | 9.2 | 1.4 | % | ||||||||
For the three months ended March 29, 2024 | $ | 656.1 |
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
(Dollars in millions) | |||||||||||
Gross profit | $ | 255.0 | $ | 247.4 | |||||||
Gross profit margin | 37.0 | % | 36.2 | % | |||||||
Selling, general and administrative expense | $ | 142.5 | $ | 147.3 | |||||||
Net income from continuing operations | $ | 62.9 | $ | 34.1 | |||||||
Net income margin from continuing operations | 9.1 | % | 5.0 | % | |||||||
Adjusted EBITDA (non-GAAP) | $ | 129.1 | $ | 118.0 | |||||||
Adjusted EBITDA margin (non-GAAP) | 18.7 | % | 17.2 | % | |||||||
Core adjusted EBITDA (non-GAAP) | $ | 123.2 | $ | 112.7 | |||||||
Core adjusted EBITDA margin (non-GAAP) | 18.8 | % | 17.4 | % | |||||||
Items excluded from Adjusted EBITDA: | |||||||||||
Restructuring and other related charges(1) | $ | 1.9 | $ | 9.4 | |||||||
Acquisition-amortization and other related charges(2) | $ | 7.7 | $ | 9.3 | |||||||
Interest expense and other, net | $ | 17.1 | $ | 19.5 | |||||||
Income tax expense | $ | 18.5 | $ | 37.0 | |||||||
Pension settlement loss | $ | 12.2 | $ | — | |||||||
Depreciation and other amortization | $ | 8.8 | $ | 8.6 | |||||||
Items excluded from Core adjusted EBITDA: | |||||||||||
Adjusted EBITDA attributable to Russia (non-GAAP)(3) | $ | 5.9 | $ | 5.3 |
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
(Dollars in millions) | |||||||||||
Net sales | $ | 296.0 | $ | 291.6 | |||||||
Gross profit | $ | 111.1 | $ | 105.7 | |||||||
Gross profit margin | 37.5 | % | 36.3 | % | |||||||
Selling, general and administrative expense | $ | 64.8 | $ | 64.9 | |||||||
Adjusted EBITDA (non-GAAP) | $ | 54.1 | $ | 49.4 | |||||||
Adjusted EBITDA margin (non-GAAP) | 18.3 | % | 17.0 | % | |||||||
Items excluded from Adjusted EBITDA: | |||||||||||
Restructuring and other related charges | $ | 0.2 | $ | 0.9 | |||||||
Acquisition- amortization and other related charges | $ | 4.4 | $ | 5.3 | |||||||
Depreciation and other amortization | $ | 3.5 | $ | 3.3 |
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
(Dollars in millions) | |||||||||||
Net sales | $ | 393.7 | $ | 392.4 | |||||||
Gross profit | $ | 144.0 | $ | 141.7 | |||||||
Gross profit margin | 36.6 | % | 36.1 | % | |||||||
Selling, general and administrative expense | $ | 77.7 | $ | 82.4 | |||||||
Adjusted EBITDA (non-GAAP) | $ | 75.0 | $ | 68.5 | |||||||
Adjusted EBITDA margin (non-GAAP) | 19.1 | % | 17.5 | % | |||||||
Core adjusted EBITDA (non-GAAP) | $ | 69.1 | $ | 63.2 | |||||||
Core adjusted EBITDA margin (non-GAAP) | 19.2 | % | 17.8 | % | |||||||
Items excluded from Adjusted EBITDA: | |||||||||||
Restructuring and other related charges | $ | 1.7 | $ | 8.5 | |||||||
Acquisition- amortization and other related charges | $ | 3.3 | $ | 4.0 | |||||||
Pension settlement loss | $ | 12.2 | $ | — | |||||||
Depreciation and other amortization | $ | 5.3 | $ | 5.3 | |||||||
Items excluded from Core adjusted EBITDA: | |||||||||||
Adjusted EBITDA attributable to Russia (non-GAAP) | $ | 5.9 | $ | 5.3 |
Three Months Ended | |||||||||||
March 29, 2024 | March 31, 2023 | ||||||||||
(Dollars in Millions)(1) | |||||||||||
Net cash provided by operating activities | $ | 44.5 | $ | 38.1 | |||||||
Purchases of property, plant and equipment | (7.4) | (7.7) | |||||||||
Proceeds from sale of property, plant and equipment | 0.4 | 0.7 | |||||||||
Acquisition, net of cash received | (18.1) | (18.7) | |||||||||
Other | (1.5) | — | |||||||||
Net cash used in investing activities | (26.6) | (25.7) | |||||||||
Proceeds from borrowings on revolving credit facility and other | 115.0 | 187.0 | |||||||||
Repayments of borrowings on term credit facility | (6.3) | — | |||||||||
Repayments of borrowings on revolving credit facility and other | (139.0) | (189.8) | |||||||||
Payment of dividends | (3.6) | (3.0) | |||||||||
Distributions to noncontrolling interest holders | — | (1.2) | |||||||||
Net cash used in financing activities | (33.9) | (7.0) | |||||||||
Effect of foreign exchange rates on Cash and cash equivalents | (9.4) | 4.8 | |||||||||
(Decrease) increase in Cash and cash equivalents | $ | (25.5) | $ | 10.0 |
Exhibit No. | Exhibit Description | ||||
Indenture, dated as of April 9, 2024, by and among ESAB Corporation, as issuer, the guarantors named therein, and U.S. Bank Trust Company, National Association, as trustee.(incorporated by reference to Exhibit 4.1 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on April 9, 2024). | |||||
Form of Global Note (included in Exhibit 4.1) (incorporated by reference to Exhibit 4.2 to ESAB Corporation’s Form 8-K (File No. 001-41297) as filed with the SEC on April 9, 2024). | |||||
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |||||
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | ||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document. | ||||
101.CAL | Inline XBRL Extension Calculation Linkbase Document. | ||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | ||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | ||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | ||||
104 | Cover Page Interactive Data File - The cover page from this Quarterly Report on Form 10-Q for the quarter ended March 29, 2024 is formatted in Inline XBRL (included as Exhibit 101). | ||||
/s/ Shyam P. Kambeyanda | President and Chief Executive Officer | |||||||||||||
Shyam P. Kambeyanda | (Principal Executive Officer) | May 1, 2024 | ||||||||||||
/s/ Kevin Johnson | Chief Financial Officer | |||||||||||||
Kevin Johnson | (Principal Financial Officer) | May 1, 2024 | ||||||||||||
/s/ Renato Negro | Controller and Chief Accounting Officer | |||||||||||||
Renato Negro | (Principal Accounting Officer) | May 1, 2024 | ||||||||||||
1. | I have reviewed this quarterly report on Form 10-Q of ESAB Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Shyam P. Kambeyanda | ||
Shyam P. Kambeyanda President and Chief Executive Officer (Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of ESAB Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Kevin Johnson | ||
Kevin Johnson Chief Financial Officer (Principal Financial Officer) |
/s/ Shyam P. Kambeyanda | ||
Shyam P. Kambeyanda President and Chief Executive Officer (Principal Executive Officer) |
/s/ Kevin Johnson | ||
Kevin Johnson Chief Financial Officer (Principal Financial Officer) |
CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Statement of Comprehensive Income [Abstract] | ||
Net income | $ 61,594 | $ 33,216 |
Other comprehensive (loss) income: | ||
Foreign currency translation, net of tax expense of $1,531 and $45 | (25,354) | 42,084 |
Unrealized income (loss) on derivatives designated and qualifying as cash flow hedges, net of tax expense (benefit) of $295 and $(1,045) | 1,013 | (3,581) |
Defined benefit pension and other post-retirement plan activity, net of tax expense of $203 and $66 | 629 | 277 |
Other comprehensive (loss) income | (23,712) | 38,780 |
Comprehensive income | 37,882 | 71,996 |
Comprehensive income attributable to noncontrolling interest | 1,320 | 1,814 |
Comprehensive income attributable to ESAB Corporation | $ 36,562 | $ 70,182 |
CONSOLIDATED AND COMBINED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Mar. 29, 2024 |
Dec. 31, 2023 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Trade receivables, allowance for doubtful accounts | $ 25,424 | $ 25,477 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 600,000,000 | 600,000,000 |
Common stock, shares outstanding (in shares) | 60,424,421 | 60,295,634 |
CONSOLIDATED AND COMBINED CONDENSED STATEMENTS OF EQUITY (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Statement of Stockholders' Equity [Abstract] | ||
Dividends on common stock (in dollars per share) | $ 0.06 | $ 0.05 |
Other comprehensive income (loss), tax expense (benefit) | $ (2,029) | $ 934 |
Organization and Basis of Presentation |
3 Months Ended |
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Mar. 29, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | Organization and Basis of Presentation Founded in 1904, ESAB Corporation (“ESAB” or the “Company”) is a focused premier industrial compounder. ESAB provides its partners with fabrication technology advanced equipment, consumables, gas control equipment, robotics, and digital solutions. The Company’s rich history of innovative products and workflow solutions and its business system ESAB Business Excellence (“EBX”) enables the Company’s purpose of Shaping the world we imagineTM. The Company conducts its operations through two reportable segments. These segments consist of the “Americas,” which includes operations in North America and South America, and “EMEA & APAC,” which includes Europe, Middle East, India, Africa and Asia Pacific. On April 4, 2022, ESAB Corporation completed its spin-off from Colfax Corporation (“Colfax,” “Enovis” or “Former Parent”) and became an independent, public-traded company (the “Separation”). The Company’s fiscal year ends December 31. The Company’s first quarter ends on the last business day of the 13th week after the end of the prior quarter. As used herein, the first quarter results for 2024 and 2023 refer to the 13-week periods ended March 29, 2024 and March 31, 2023, respectively. Russia and Ukraine Conflict The invasion of Ukraine by Russia and the sanctions imposed in response have increased the level of economic and political uncertainty. While ESAB continues to closely monitor the situation and evaluate options, the Company is meeting current contractual obligations while addressing applicable laws and regulations. For the three months ended March 29, 2024, Russia represented approximately 5% of the Company’s total revenue, and approximately $4 million of its Net income. Russia also has approximately 3% of the Company’s total net assets excluding any goodwill allocation as of March 29, 2024. In case of a disposition of the Russia business, a portion of goodwill would need to be allocated and disposed of at the relative fair value attributable to the Russia business. Russia has a cumulative translation loss of approximately $118 million as of March 29, 2024, which could be realized upon a transition out. The Company is closely monitoring developments in Ukraine and Russia. Changes in laws and regulations or other factors impacting the Company’s ability to fulfill contractual obligations could have an adverse effect on the results of operations. Basis of Presentation The Consolidated and Condensed Financial Statements included herein have been prepared by the Company pursuant to the rules and regulations of the Security and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with the accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to SEC rules and regulations; however the Company believes that the disclosures are adequate to make the information presented not misleading. The Consolidated and Condensed Financial Statements reflect, in the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations as of and for the periods indicated. Intercompany transactions and accounts are eliminated in consolidation. In the normal course of business, the Company incurs research and development costs related to new product development, which are expensed as incurred and included in Selling, general and administrative expenses on the Company’s Consolidated and Condensed Statements of Operations. Research and development costs were $10.1 million and $9.6 million during the three months ended March 29, 2024 and March 31, 2023, respectively. These amounts do not include development and application engineering costs incurred in conjunction with fulfilling customer orders and executing customer projects, nor do they include costs related to securing third party product rights. The Company expects to continue making significant expenditures for research and development to maintain and improve its competitive positions. The accompanying interim Consolidated and Condensed Financial Statements and the related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”), filed with the SEC on February 29, 2024.
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Discontinued Operations |
3 Months Ended |
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Mar. 29, 2024 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations The Company holds certain asbestos-related contingencies and insurance coverages from divested businesses for which it does not have an interest in the ongoing operations. The Company has classified asbestos-related activity in its Consolidated and Condensed Statements of Operations as part of Loss from discontinued operations, net of taxes. This activity consists primarily of expected settlements, legal and administrative expenses associated with the above liabilities. For the three months ended March 29, 2024 and March 31, 2023, respectively, loss from discontinued operations, net of taxes was $1.3 million and $0.9 million. See Note 14, “Commitments and Contingencies” for further information. Cash used in operating activities related to discontinued operations for the three months ended March 29, 2024 and March 31, 2023 was $3.7 million and $5.4 million, respectively.
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Acquisition |
3 Months Ended |
---|---|
Mar. 29, 2024 | |
Business Combinations [Abstract] | |
Acquisition | Acquisitions On February 26, 2024, the Company completed the acquisition of Sager S.A., a welding repair and maintenance product and service leader in South America, for $18.1 million, net of cash received. On January 11, 2023, the Company completed the acquisition of Therapy Equipment Limited, a regional leader in oxygen regulators, for $18.7 million, net of cash received.
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Revenue |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue The Company provides fabrication technology advanced equipment, consumables, gas control equipment, robotics and digital solutions. The Company’s products are utilized to solve challenges in a wide range of industries. Substantially all revenue is recognized at a point in time. The Company disaggregates its revenue into the following product groups:
The sales mix in the above table is relatively consistent across both reportable segments. The consumables product grouping generally has less production complexity and shorter production cycles than equipment products. Given the nature of the business, the total amount of unsatisfied performance obligations with an original contract duration of greater than one year as of March 29, 2024 is immaterial. In some circumstances, customers are billed in advance of revenue recognition, resulting in contract liabilities. As of December 31, 2023 and December 31, 2022, total contract liabilities were $31.2 million and $25.9 million, respectively, and were included in Accrued liabilities on the Consolidated and Condensed Balance Sheets. During the three months ended March 29, 2024 and March 31, 2023, revenue recognized that was included in the contract liabilities balance at the beginning of the year was $16.2 million and $11.1 million, respectively. As of March 29, 2024 and March 31, 2023, total contract liabilities were $29.5 million and $28.3 million, respectively, and were included in Accrued liabilities on the Company’s Consolidated and Condensed Balance Sheets. Allowance for Credit Losses A summary of the activity in the Company’s allowance for credit losses included within Trade receivables in the Consolidated and Condensed Balance Sheets is as follows:
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Earnings per Share from Continuing Operations |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings per Share from Continuing Operations | Earnings per Share from Continuing Operations The Company has unvested share-based payment awards with a right to receive non-forfeitable dividends, which are considered participating securities. The Company allocates earnings to participating securities and computed earnings per share using the two-class method as follows:
(1) Net income from continuing operations attributable to ESAB Corporation for the respective periods is calculated using Net income from continuing operations, less Income attributable to noncontrolling interest, net of taxes, of $1.6 million for the three months ended March 29, 2024 and $1.3 million for the three months ended March 31, 2023. (2) Potentially dilutive securities include stock options, performance-based restricted stock units and non-performance-based restricted stock units.
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Income Taxes |
3 Months Ended |
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Mar. 29, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the three months ended March 29, 2024, Income from continuing operations before income taxes was $81.4 million, while Income tax expense was $18.5 million. The effective tax rate was 22.7% for the three months ended March 29, 2024. The effective tax rate differed from the 2024 U.S. federal statutory rate of 21.0% primarily due to withholding taxes. During the three months ended March 31, 2023, Income from continuing operations before income taxes was $71.2 million, while Income tax expense was $37.0 million. The effective tax rate was 52.0% for the three months ended March 31, 2023. The effective tax rate differed from the 2023 U.S. federal statutory rate of 21.0% primarily due to discrete tax expenses in 2023 for dividend withholding taxes and an increase in the liability for uncertain tax positions as discussed below, that do not recur in 2024. During the three months ended March 31, 2023, the Company changed its indefinite reinvestment assertion on certain undistributed earnings of the Company’s foreign subsidiaries, resulting in a total tax expense of $10.9 million, as of March 31, 2023 on such earnings that have not been indefinitely reinvested. The Company records a liability for certain unrecognized income tax benefits for which it is more likely than not that a tax position will not be sustained upon examination by the respective taxing authority (“uncertain tax positions”). During the three months ended March 31, 2023, due to an adverse court ruling in a tax case in a foreign jurisdiction, the Company increased the related liability for uncertain tax positions by $9.4 million partially offset by changes in other positions.
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Inventories, Net |
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Inventories, Net | Inventories, Net Inventories, net consisted of the following:
At March 29, 2024 and December 31, 2023, 26.0% and 27.4% of total inventories, respectively, were valued using the LIFO method.
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Accrued and Other Liabilities |
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Accrued Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued and Other Liabilities | Accrued and Other Liabilities Accrued and Other liabilities in the Consolidated and Condensed Balance Sheets consisted of the following:
Accrued Warranty Liability A summary of the activity in the Company’s warranty liability included in Accrued liabilities in the Company’s Consolidated and Condensed Balance Sheets is as follows:
Accrued Restructuring Liability The Company’s restructuring programs include a series of actions to reduce the structural costs of the Company. A summary of the activity in the Company’s restructuring liability included in Accrued and Other liabilities in the Consolidated and Condensed Balance Sheets is as follows:
(1) Includes severance and other termination benefits, including outplacement services. (2) Includes the cost of relocating associates, relocating equipment, lease termination expense and other costs in connection with the closure and optimization of facilities and product lines.
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Benefit Plans |
3 Months Ended |
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Mar. 29, 2024 | |
Retirement Benefits [Abstract] | |
Benefit Plans | Benefit Plans The Company sponsors various defined benefit plans and other post-retirement benefits plans, including health and life insurance, for certain eligible employees or former employees. During the three months ended March 29, 2024, the Company recognized a non-cash pension settlement loss of $12.2 million related to the transfer of plan assets to a third party as part of externalizing the risk associated with a foreign defined benefit plan. This amount is reflected in Pension settlement loss in the Consolidated and Condensed Statements of Operations.
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Debt |
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Long-term debt consisted of the following:
Term Loans and Revolving Credit Facility On April 4, 2022, the Company entered into a credit agreement (as amended and restated from time-to-time, the “Credit Agreement”) in connection with the Separation. The Credit Agreement initially consisted of the following facilities: •A $750 million revolving credit facility (the “Revolving Facility”) with a maturity date of April 4, 2027; •A Term A-1 loan with an initial aggregate principal amount of $400 million (the “Term Loan A-1 Facility”), with a maturity date of April 4, 2027; and •A $600 million 364-day senior term loan facility (the “Term Loan A-2 Facility”) with a maturity date of April 3, 2023. The Revolving Facility contains a $300 million foreign currency sublimit and a $50 million swing line loan sub-facility. On April 4, 2022, the Company drew down $1.2 billion available under the credit facilities consisting of (i) $200 million under the Revolving Facility, (ii) $400 million under the Term Loan A-1 Facility and (iii) $600 million under the Term Loan A-2 Facility. The Company used these proceeds to make payments to Enovis of $1.2 billion, which was used as part of the consideration for the contribution of certain assets and liabilities to the Company by Enovis in connection with the Separation. On June 28, 2022, the Company amended and restated the Credit Agreement by entering into Amendment No. 2 to Credit Agreement (“Credit Agreement Amendment”). The Credit Agreement Amendment provides for a $600 million term loan facility (the “Term Loan A-3 Facility” and, together with the Term Loan A-1 Facility, the “Term Facilities”, and together with the Revolving Facility, the “Facilities”) with a maturity date of April 3, 2025 to refinance the Company’s existing Term Loan A-2 Facility. Also on June 28, 2022, the Company borrowed the entire $600 million under Term Loan A-3 Facility to fund the repayment of the Term Loan A-2 Facility. As March 29, 2024, the Credit Agreement consisted of the following facilities: •A $750 million revolving credit facility (the “Revolving Facility”) with a maturity date of April 4, 2027, of which $12 million was drawn; •A Term A-1 loan with an aggregate principal amount of $393 million (the “Term Loan A-1 Facility”) with a maturity date of April 4, 2027; and • A Term A-3 loan with an aggregate principal amount of $589 million (the “Term Loan A-3 Facility”) with a maturity date of April 3, 2025. Refer to Note 16, “Subsequent Events” for further information. The draw-down and repayment related to these term facilities are presented net within the Consolidated and Condensed Statements of Cash Flows. The Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, incur debt or liens, merge or consolidate with others, dispose of assets, make investments or pay dividends. In addition, the Credit Agreement contains financial covenants requiring the Company to maintain (i) a maximum total leverage ratio of not more than 4.00:1.00, with step-downs to, commencing with the fiscal quarter ending June 30, 2023, 3.75:1.00, and commencing with the fiscal quarter ending June 30, 2024, 3.50:1.00, and (ii) a minimum interest coverage ratio of 3.00:1.00. The Credit Agreement contains various events of default (including failure to comply with the covenants under the Credit Agreement and related agreements) and upon an event of default the lenders may, subject to various customary cure rights, require the immediate payment of all amounts outstanding under the Term Facilities and the Revolving Facility. Certain United States subsidiaries of the Company have agreed to guarantee the obligations of the Company under the Credit Agreement. Loans made under the Term Facilities will bear interest, at the election of the Company, at either the base rate (as defined in the Credit Agreement) or at the term Secured Overnight Financing Rate (“SOFR”) rate plus an adjustment (as defined in the Credit Agreement), in each case, plus the applicable interest rate margin. Loans made under the Revolving Facility will bear interest, at the election of the Company, at either the base rate or, (i) in the case of loans denominated in dollars, the term SOFR rate plus an adjustment or the daily simple SOFR plus an adjustment, (ii) in the case of loans denominated in euros, the adjusted Euro Interbank Offered Rate (“EURIBOR”) rate and, (iii) in the case of loans denominated in sterling, Sterling Overnight Index Average (“SONIA”) plus an adjustment (as all such rates are defined in the Credit Agreement Amendment), in each case, plus the applicable interest rate margin. The applicable interest rate margin changes based upon the Company’s total leverage ratio (consolidated total debt divided by EBITDA, as defined in the credit agreement and ranging from 1.125% to 1.750% or in the case of the base rate margin, 0.125% to 0.750%). Each swing line loan denominated in dollars will bear interest at the base rate plus the applicable interest rate margin. To manage exposures to currency exchange rates and interest rates arising in Long-term debt, the Company entered into interest rate and cross currency swap agreements during the year ended December 31, 2022. Refer to Note 11, “Derivatives” for additional information. As of March 29, 2024, the weighted-average interest rate of borrowings under the Credit Agreement was 5.09%, including the net impact from the interest rate and cross currency swaps and excluding accretion of deferred financing fees, and there was $738 million of borrowing capacity available under the Revolving Facility, subject to meeting financial covenants and other requirements. Other Indebtedness In addition to the debt agreements discussed above, the Company also has the ability to incur approximately $77 million of indebtedness pursuant to certain uncommitted credit lines, consisting of an uncommitted credit line that the Company has used from time to time in the past for short-term working capital needs. The Company is party to letter of credit facilities with an aggregate capacity of $109.0 million. Total letters of credit of $28.3 million were outstanding as of March 29, 2024. Deferred Financing Fees The Company had total deferred financing fees of $1.3 million included in its Consolidated Balance Sheet as of March 29, 2024, which will be charged to Interest expense and other, net, using the straight-line method. The costs associated with the Term Facilities will be amortized over the contractual term of the Term Facilities and the costs associated with the Revolving Facility will be amortized over the life of the Credit Agreement. Of the $1.3 million, $0.8 million of deferred financing fees relating to the Revolving Facility are included in Other assets and $0.5 million of deferred financing fees relating to the Term Facilities are recorded as a contra-liability within Long-term debt.
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Derivatives |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivatives | Derivatives The Company uses derivative instruments to manage exposures to currency exchange rates and interest rates arising in connection with Long-term debt and the normal course of business. The Company has established policies and procedures that govern the risk management of these exposures. Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable. The Company is subject to the credit risk of counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. None of the concentrations of risk with an individual counterparty was considered significant as of March 29, 2024. The Company does not expect any counterparties to fail to meet their obligations. The Company records derivatives in the Consolidated and Condensed Balance Sheets at fair value. Cash Flow Hedges On July 14, 2022, the Company entered into two interest rate swap agreements to manage interest rate risk exposure. The aggregate notional amount of these contracts is $600 million and they mature in April 2025. These interest rate swap agreements utilized by the Company effectively modify the Company’s exposure to interest rate risk by converting a portion of the Company’s floating-rate debt to a fixed rate of 3.293%, plus a spread, thus reducing the impact of interest-rate changes on future interest expense. The applicable spread may vary between 1.125% to 1.750%, depending on the total leverage ratio of the Company. In March 2024, the Company received $5.5 million to settle one of the interest rate swaps associated with the Company’s floating-rate debt. The termination of the interest rate swap related to the anticipated repayment of the Term A-3 Facility when completed in April with the proceeds of the April 2024 $700 million Senior Note Offering. Refer to Note 16, “Subsequent Events” for further information. As this interest rate swap was designated as a cash flow hedge, $5.5 million was deferred in accumulated other comprehensive income (loss) (“AOCI”) and will be recognized in earnings over the period the originally forecasted hedged transaction impacts earnings. The remaining $300 million swap will continue to be hedged against the remaining floating-rate debt. For the remaining swap, the spread was 1.250% as of March 29, 2024. This agreement involves the receipt of floating-rate amounts in exchange for fixed-rate interest payments over the life of the agreement without an exchange of the underlying principal amount. This interest rate swap agreement is designated and qualifies as a cash flow hedge and as such, the gain or loss on the derivative instrument due to the change in fair value is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. If a derivative is deemed to be ineffective, the change in fair value of the derivative is recognized directly in earnings. The Company did not have any ineffectiveness related to the cash flow hedges during the three months ended March 29, 2024. The cash inflows and outflows associated with the Company’s interest rate swap agreement designated as cash flow hedges are classified in cash flows from operating activities in the accompanying Consolidated and Condensed Statements of Cash Flows. The Company expects a gain of $4.0 million, net of tax, related to interest rate swap agreements to be reclassified from AOCI to earnings over the next 12 months as the hedged transactions are realized. The expected gain to be reclassified is based on current forward rates in active markets as of March 29, 2024. The effects of designated cash flow hedges on the Company’s Consolidated and Condensed Statements of Operations consisted of the following:
Net Investment Hedges On July 22, 2022, the Company entered into two cross-currency swap agreements to partially hedge its net investment in its Euro-denominated subsidiaries against adverse movements in exchange rates between the U.S. Dollar and the Euro. In addition, the cross-currency swap agreements include provisions to exchange fixed-rate payments in U.S. Dollar for fixed-rate payments in Euro and are designated and qualify as a net investment hedge. These contracts have a Euro aggregate notional amount of approximately €270 million and a U.S. Dollar aggregate notional amount of $275 million at March 29, 2024, and they mature in April 2025. The changes in the spot rate of these instruments are recorded in AOCI in equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in AOCI. The Company uses the spot method of assessing hedge effectiveness and as such, the initial value of the hedge components excluded from the assessment of effectiveness is recognized in the Interest expense and other, net line item in the Consolidated and Condensed Statement of Operations under a systematic and rational method over the life of the cross-currency swap agreements. Any ineffective portions of net investment hedges are reclassified from AOCI into earnings during the period of change. The Company did not have any ineffectiveness related to net investment hedges during the three months ended March 29, 2024. The cash inflows and outflows associated with the excluded components of the Company’s cross-currency swap agreements designated as net investment hedges are classified in operating activities in the accompanying Consolidated and Condensed Statements of Cash Flows. The effects of the excluded components of designated net investment hedges on the Company’s Consolidated and Condensed Statements of Operations consisted of the following:
The table below shows the fair value of the derivatives recognized in the Consolidated Balance Sheet:
Derivatives Not Designated as Hedging Instruments The Company has certain foreign currency contracts that are not designated as hedges. As of March 29, 2024 and December 31, 2023, the Company had foreign currency contracts related to purchases and sales with notional values of $267.2 million and $232.5 million, respectively. The table below shows the fair value of derivative instruments not designated in a hedging relationship recognized in the Consolidated Balance Sheet:
The amounts in the table above as of March 29, 2024 reflect the fair value of the Company’s foreign currency contracts on a net basis where allowable under master netting agreements. Had these amounts been recognized on a gross basis, the impact would have been a $0.6 million increase in Other current assets with a corresponding increase in Accrued liabilities. The Company recognized the following in its Consolidated and Condensed Financial Statements related to its derivative instruments not designated in a hedging relationship:
The above gains or losses on foreign currency contracts are usually offset by foreign exchange exposure on cash and intercompany positions, all of which are recognized in Interest expense and other, net, in the Consolidated and Condensed Statements of Operations.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The carrying values of financial instruments, including Trade receivables and Accounts payable, approximate their fair values due to their short-term maturities. The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future. A summary of the Company’s assets and liabilities that are measured at fair value for each fair value hierarchy level for the periods presented is as follows:
The Company measures the fair value of foreign currency contracts, cross currency swap agreements and interest rate swap agreements using Level Two inputs based on observable spot and forward rates in active markets. Additionally, the fair value of derivatives designated in hedging relationships includes a credit valuation adjustment to appropriately incorporate nonperformance risk for the Company and the respective counterparty. For the three months ended March 29, 2024, the impact of the credit valuation adjustment on the Company’s derivatives is immaterial. Refer to Note 11, “Derivatives” for additional information. There were no transfers in or out of Level One, Two or Three during the three months ended March 29, 2024.
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Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity | Equity Accumulated Other Comprehensive Loss The following tables present the changes in the balances of each component of AOCI including reclassifications out of AOCI for the three months ended March 29, 2024 and March 31, 2023. All amounts are net of tax and noncontrolling interest, if any.
(1) The amounts on this line within the Net Unrecognized Pension and Other Post-Retirement Benefit Cost column are included in the computation of net periodic benefit cost. (2) During the three months ended March 29, 2024, the amount within Cash Flow Hedges is a component of Interest expense and other, net. See Note 11, “Derivatives” for additional details.
(1) The amounts on this line within the Net Unrecognized Pension and Other Post-Retirement Benefit Cost column are included in the computation of net periodic benefit cost. (2) During the three months ended March 31, 2023, the amount within Cash Flow Hedges is a component of Interest expense and other, net. See Note 11, “Derivatives” for additional details.
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Commitments and Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Asbestos Contingencies Certain entities that became subsidiaries of ESAB Corporation in connection with the Separation are the legal obligor, or owner, for certain asbestos obligations including long-term asbestos insurance assets, long-term asbestos insurance receivables, accrued asbestos liabilities, long-term asbestos liabilities, asbestos indemnity expenses, asbestos-related defense costs and asbestos insurance recoveries related to the asbestos obligations from the Former Parent’s other legacy industrial businesses. As a result, the Company holds certain asbestos-related contingencies and insurance coverages. These subsidiaries are each one of many defendants in a large number of lawsuits that claim personal injury as a result of exposure to asbestos from products manufactured or used with components that are alleged to have contained asbestos. Such components were acquired from third-party suppliers, and were not manufactured by any of the Company’s, or Former Parent’s, subsidiaries, nor were the subsidiaries, producers or direct suppliers of asbestos. The manufactured products that are alleged to have contained or used asbestos generally were provided to meet the specifications of the subsidiaries’ customers, including the U.S. Navy. The subsidiaries settle asbestos claims for amounts the Company considers reasonable given the facts and circumstances of each claim. The annual average settlement payment per asbestos claimant has fluctuated during the past several years while the number of cases has steadily declined. The Company expects such settlement value fluctuations to continue in the future based upon, among other things, the number and type of claims settled in a particular period and the jurisdictions in which such claims arise. To date, the majority of settled claims have been dismissed for no payment to plaintiffs. The Company has classified asbestos-related activity in Loss from discontinued operations, net of taxes in the Consolidated and Condensed Statements of Operations. This is consistent with the Former Parent’s classification on the basis that, pursuant to the purchase agreement from the Former Parent’s Fluid Handling business divestiture, the Former Parent retained its asbestos-related contingencies and insurance coverages. However, as the Former Parent did not retain an interest in the ongoing operations of the business subject to the contingencies, asbestos-related activity was classified as part of Loss from discontinued operations, net of taxes in the Condensed Consolidated Statements of Operations of the Former Parent. The Company has projected each subsidiary’s future asbestos-related liability costs with regard to pending and future unasserted claims based upon the Nicholson methodology. The Nicholson methodology is a standard approach used by experts and has been accepted by numerous courts. Consistent with the Former Parent, it is ESAB’s policy to record a liability for asbestos-related liability costs for the longest period of time that ESAB management can reasonably estimate. The Company believes that it can reasonably estimate the asbestos-related liability for pending and future claims that will be resolved in the next 15 years and has recorded that liability as its best estimate. While it is reasonably possible that the subsidiaries will incur costs after this period, the Company does not believe the reasonably possible loss or a range of reasonably possible losses is estimable at the current time. Accordingly, no accrual has been recorded for any costs that may be paid after the next 15 years. Defense costs associated with asbestos-related liabilities as well as costs incurred related to efforts to recover insurance from the subsidiaries’ insurers are expensed as incurred. Each subsidiary has separate insurance coverage acquired prior to Company ownership. The Company estimates the insurance assets for each subsidiary based upon the applicable policy language, expected recoveries and allocation methodologies, and law pertaining to the affected subsidiary’s insurance policies. Asbestos-related claims activity since December 31 is as follows:
(1) Claims filed include all asbestos claims for which notification have been received or a file has been opened. (2) Claims resolved include all asbestos claims that have been settled, dismissed or that are in the process of being settled or dismissed based upon agreements or understandings in place with counsel for the claimants. The Company’s Consolidated Balance Sheet included the following amounts related to asbestos-related litigation:
(1) Included in Other assets in the Consolidated Balance Sheets. (2) Represents current accruals for probable and reasonably estimable asbestos-related liability costs that the Company believes the subsidiaries will pay, and unpaid legal costs related to defending themselves against asbestos-related liability claims and legal action against the Company’s insurers, which is included in Accrued liabilities in the Consolidated Balance Sheets. (3) Included in Other liabilities in the Consolidated Balance Sheets. Management’s analyses are based on currently known facts and assumptions. Projecting future events, such as new claims to be filed each year, the average cost of resolving each claim, coverage issues among layers of insurers, the method in which losses will be allocated to the various insurance policies, interpretation of the effect on coverage of various policy terms and limits and their interrelationships, the continuing solvency of various insurance companies, the amount of remaining insurance available, as well as the numerous uncertainties inherent in asbestos litigation could cause the actual liabilities and insurance recoveries to be higher or lower than those projected or recorded that could materially affect the Company’s financial condition, results of operations or cash flow. General Litigation The Company is involved in various pending legal proceedings arising out of the ordinary course of the Company’s business. None of these legal proceedings is expected to have a material adverse effect on the financial condition, results of operations or cash flow of the Company. With respect to these proceedings, and the litigation and claims described in the preceding paragraphs, management of the Company believes that it will either prevail, has adequate insurance coverage or has established appropriate accruals to cover potential liabilities. Legal costs related to proceedings or claims are recorded when incurred. Other costs that management estimates may be paid related to the claims are accrued when the liability is considered probable and the amount can be reasonably estimated. There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these legal proceedings were to be determined adverse to the Company, there could be a material adverse effect on the financial condition, results of operations or cash flow of the Company.
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information ESAB is a focused premier industrial compounder. ESAB provides its partners with fabrication technology, advanced equipment, consumables, gas control equipment, welding robotics and digital solutions. The Company conducts its operations through two reportable segments. These segments consist of the “Americas,” which includes operations in North America and South America, and “EMEA & APAC,” which includes Europe, Middle East, India, Africa and Asia Pacific. The Company’s management evaluates the operating results of each of its reportable segments based upon Net sales and Adjusted EBITDA, which represents Net income from continuing operations excluding the impact of Income tax expense, Interest expense and other, net, Pension settlement (loss), Restructuring and other related charges, acquisition - amortization and other related charges and depreciation and other amortization. The Company’s segment results were as follows:
(1) The following is a reconciliation of Net income from continuing operations to Adjusted EBITDA.
(1) Relates to removal of interest expense, net included within the Interest expense and other, net line within the Consolidated and Condensed Statements of Operations. (2) Includes transaction expenses, amortization of intangibles, fair value charges on acquired inventories and integration expenses.
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Subsequent Events |
3 Months Ended |
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Mar. 29, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On April 9, 2024, the Company completed a $700.0 million Senior Note Offering (“the Offering”). The Offering has a contractual interest rate of 6.25% and expected maturity date of April 15, 2029. The Company used the net proceeds from the Offering to repay $588.8 million of borrowings under its Term Loan A-3 Facility and pay fees associated with the Offering. The Company intends to use the remaining proceeds received to repay borrowings under its Revolving Facility and other general corporate purposes. The Offering did not have any material changes to the required financial covenants for the Company. The dividend of $3.6 million included in Accrued liabilities in the Consolidated Balance Sheet at March 29, 2024 was paid on April 12, 2024 to stockholders of record as of March 29, 2024. On April 30, 2024, the Company reached an agreement to acquire SUMIG Soluções para Solda e Corte Ltda, a South American light automation and equipment business for approximately $74 million of cash consideration. This acquisition is expected to be completed during the second half of 2024, subject to the receipt of applicable regulatory approvals and customary closing conditions.
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 29, 2024 |
Mar. 31, 2023 |
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Pay vs Performance Disclosure | ||
Net income | $ 59,951 | $ 31,903 |
Insider Trading Arrangements |
3 Months Ended |
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Mar. 29, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Organization and Basis of Presentation (Policies) |
3 Months Ended |
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Mar. 29, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Fiscal Period | The Company’s fiscal year ends December 31. The Company’s first quarter ends on the last business day of the 13th week after the end of the prior quarter. As used herein, the first quarter results for 2024 and 2023 refer to the 13-week periods ended March 29, 2024 and March 31, 2023, respectively. |
Basis of Presentation | The Consolidated and Condensed Financial Statements included herein have been prepared by the Company pursuant to the rules and regulations of the Security and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in the financial statements prepared in accordance with the accounting principles generally accepted in the United States (“U.S. GAAP”) have been condensed or omitted pursuant to SEC rules and regulations; however the Company believes that the disclosures are adequate to make the information presented not misleading. The accompanying interim Consolidated and Condensed Financial Statements and the related notes should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”), filed with the SEC on February 29, 2024.
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Consolidation | The Consolidated and Condensed Financial Statements reflect, in the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations as of and for the periods indicated. Intercompany transactions and accounts are eliminated in consolidation.
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Revenue (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue by Major Customers by Reporting Segments | The Company disaggregates its revenue into the following product groups:
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Schedule of Allowance for Credit Losses | A summary of the activity in the Company’s allowance for credit losses included within Trade receivables in the Consolidated and Condensed Balance Sheets is as follows:
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Earnings per Share from Continuing Operations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share from Continuing Operations | The Company allocates earnings to participating securities and computed earnings per share using the two-class method as follows:
(1) Net income from continuing operations attributable to ESAB Corporation for the respective periods is calculated using Net income from continuing operations, less Income attributable to noncontrolling interest, net of taxes, of $1.6 million for the three months ended March 29, 2024 and $1.3 million for the three months ended March 31, 2023. (2) Potentially dilutive securities include stock options, performance-based restricted stock units and non-performance-based restricted stock units.
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Inventories, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventory, Net | Inventories, net consisted of the following:
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Accrued and Other Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Liabilities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued and Other Liabilities | Accrued and Other liabilities in the Consolidated and Condensed Balance Sheets consisted of the following:
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Schedule of Product Warranty Liability | A summary of the activity in the Company’s warranty liability included in Accrued liabilities in the Company’s Consolidated and Condensed Balance Sheets is as follows:
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Schedule of Restructuring Reserve by Type of Cost | A summary of the activity in the Company’s restructuring liability included in Accrued and Other liabilities in the Consolidated and Condensed Balance Sheets is as follows:
(1) Includes severance and other termination benefits, including outplacement services. (2) Includes the cost of relocating associates, relocating equipment, lease termination expense and other costs in connection with the closure and optimization of facilities and product lines.
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-Term Debt | Long-term debt consisted of the following:
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Derivatives (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | The effects of designated cash flow hedges on the Company’s Consolidated and Condensed Statements of Operations consisted of the following:
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Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location | The effects of the excluded components of designated net investment hedges on the Company’s Consolidated and Condensed Statements of Operations consisted of the following:
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Schedule of Fair Values of Derivative Instruments in the Financial Statements | The table below shows the fair value of the derivatives recognized in the Consolidated Balance Sheet:
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Derivatives Not Designated as Hedging Instruments | The table below shows the fair value of derivative instruments not designated in a hedging relationship recognized in the Consolidated Balance Sheet:
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Schedule of Derivative Instruments | The Company recognized the following in its Consolidated and Condensed Financial Statements related to its derivative instruments not designated in a hedging relationship:
The above gains or losses on foreign currency contracts are usually offset by foreign exchange exposure on cash and intercompany positions, all of which are recognized in Interest expense and other, net, in the Consolidated and Condensed Statements of Operations.
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value | A summary of the Company’s assets and liabilities that are measured at fair value for each fair value hierarchy level for the periods presented is as follows:
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Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | The following tables present the changes in the balances of each component of AOCI including reclassifications out of AOCI for the three months ended March 29, 2024 and March 31, 2023. All amounts are net of tax and noncontrolling interest, if any.
(1) The amounts on this line within the Net Unrecognized Pension and Other Post-Retirement Benefit Cost column are included in the computation of net periodic benefit cost. (2) During the three months ended March 29, 2024, the amount within Cash Flow Hedges is a component of Interest expense and other, net. See Note 11, “Derivatives” for additional details.
(1) The amounts on this line within the Net Unrecognized Pension and Other Post-Retirement Benefit Cost column are included in the computation of net periodic benefit cost. (2) During the three months ended March 31, 2023, the amount within Cash Flow Hedges is a component of Interest expense and other, net. See Note 11, “Derivatives” for additional details.
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Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 29, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Loss Contingencies by Number of Claims | Asbestos-related claims activity since December 31 is as follows:
(1) Claims filed include all asbestos claims for which notification have been received or a file has been opened. (2) Claims resolved include all asbestos claims that have been settled, dismissed or that are in the process of being settled or dismissed based upon agreements or understandings in place with counsel for the claimants.
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Schedule of Asbestos Related Litigation | The Company’s Consolidated Balance Sheet included the following amounts related to asbestos-related litigation:
(1) Included in Other assets in the Consolidated Balance Sheets. (2) Represents current accruals for probable and reasonably estimable asbestos-related liability costs that the Company believes the subsidiaries will pay, and unpaid legal costs related to defending themselves against asbestos-related liability claims and legal action against the Company’s insurers, which is included in Accrued liabilities in the Consolidated Balance Sheets. (3) Included in Other liabilities in the Consolidated Balance Sheets.
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | The Company’s segment results were as follows:
(1) The following is a reconciliation of Net income from continuing operations to Adjusted EBITDA.
(1) Relates to removal of interest expense, net included within the Interest expense and other, net line within the Consolidated and Condensed Statements of Operations. (2) Includes transaction expenses, amortization of intangibles, fair value charges on acquired inventories and integration expenses.
|
Discontinued Operations (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Loss from discontinued operations, net of taxes | $ (1,309) | $ (913) |
Cash used in operating activities, discontinued operations | $ 3,700 | 5,400 |
Discontinued Operations | Discontinued Operations The Company holds certain asbestos-related contingencies and insurance coverages from divested businesses for which it does not have an interest in the ongoing operations. The Company has classified asbestos-related activity in its Consolidated and Condensed Statements of Operations as part of Loss from discontinued operations, net of taxes. This activity consists primarily of expected settlements, legal and administrative expenses associated with the above liabilities. For the three months ended March 29, 2024 and March 31, 2023, respectively, loss from discontinued operations, net of taxes was $1.3 million and $0.9 million. See Note 14, “Commitments and Contingencies” for further information. Cash used in operating activities related to discontinued operations for the three months ended March 29, 2024 and March 31, 2023 was $3.7 million and $5.4 million, respectively.
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|
Asbestos Related Activity | ||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||
Loss from discontinued operations, net of taxes | $ 1,300 | $ 900 |
Discontinued Operations (Details) |
3 Months Ended |
---|---|
Mar. 29, 2024 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
Discontinued Operations | Discontinued Operations The Company holds certain asbestos-related contingencies and insurance coverages from divested businesses for which it does not have an interest in the ongoing operations. The Company has classified asbestos-related activity in its Consolidated and Condensed Statements of Operations as part of Loss from discontinued operations, net of taxes. This activity consists primarily of expected settlements, legal and administrative expenses associated with the above liabilities. For the three months ended March 29, 2024 and March 31, 2023, respectively, loss from discontinued operations, net of taxes was $1.3 million and $0.9 million. See Note 14, “Commitments and Contingencies” for further information. Cash used in operating activities related to discontinued operations for the three months ended March 29, 2024 and March 31, 2023 was $3.7 million and $5.4 million, respectively.
|
Acquisition (Details) - USD ($) $ in Millions |
Feb. 26, 2024 |
Jan. 11, 2023 |
---|---|---|
Therapy Equipment Limited | ||
Business Acquisition [Line Items] | ||
Consideration transferred for acquisition | $ 18.7 | |
Sager S.A. | ||
Business Acquisition [Line Items] | ||
Consideration transferred for acquisition | $ 18.1 |
Revenue - Disaggregation of Revenue (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Disaggregation of Revenue [Line Items] | ||
Total | $ 689,744 | $ 684,000 |
Equipment | ||
Disaggregation of Revenue [Line Items] | ||
Total | 214,860 | 200,219 |
Consumables | ||
Disaggregation of Revenue [Line Items] | ||
Total | $ 474,884 | $ 483,781 |
Revenue - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |||
---|---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
Dec. 31, 2022 |
|
Revenue [Abstract] | ||||
Contract liability | $ 29.5 | $ 28.3 | $ 31.2 | $ 25.9 |
Revenue recognized, contract liability | $ 16.2 | $ 11.1 |
Revenue - Allowance for Credit Loss Rollforward (Details) $ in Thousands |
3 Months Ended |
---|---|
Mar. 29, 2024
USD ($)
| |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | |
Balance at Beginning of Period | $ 25,477 |
Charged to Expense, net | 651 |
Write-Offs and Deductions | (439) |
Foreign Currency Translation | (265) |
Balance at End of Period | $ 25,424 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Income Tax Disclosure [Abstract] | ||
Income from continuing operations before income taxes | $ 81,407 | $ 71,153 |
Income tax expense | $ 18,504 | $ 37,024 |
Effective tax rate (as a percent) | 22.70% | 52.00% |
Undistributed foreign earnings, tax expense | $ 10,900 | |
Increase in the net liability for uncertain tax positions | $ 9,400 |
Inventories, Net (Details) - USD ($) $ in Thousands |
Mar. 29, 2024 |
Dec. 31, 2023 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 153,072 | $ 156,583 |
Work in process | 48,627 | 43,561 |
Finished goods | 253,643 | 244,580 |
Inventories, gross | 455,342 | 444,724 |
LIFO reserve | (4,980) | (4,279) |
Allowance for excess, slow-moving and obsolete inventory | (44,761) | (47,587) |
Inventories, net | $ 405,601 | $ 392,858 |
Percentage of inventory valued at LIFO | 26.00% | 27.40% |
Accrued and Other Liabilities - Warranty Liability Rollforward (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Warranty liability, beginning of period | $ 12,606 | $ 12,946 |
Accrued warranty expense | 2,457 | 1,393 |
Changes in estimates related to pre-existing warranties | 727 | 672 |
Cost of warranty service work performed | (2,647) | (2,678) |
Foreign exchange translation effect | 207 | (964) |
Warranty liability, end of period | $ 12,936 | $ 13,297 |
Accrued and Other Liabilities - Restructuring Rollforward (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Restructuring Reserve [Roll Forward] | ||
Balance at Beginning of Period | $ 5,699 | |
Payments | (2,911) | |
Foreign Currency Translation | (411) | |
Balance at End of Period | 4,301 | |
Total | 1,924 | $ 9,444 |
Termination benefits | ||
Restructuring Reserve [Roll Forward] | ||
Balance at Beginning of Period | 4,595 | |
Payments | (1,507) | |
Foreign Currency Translation | (352) | |
Balance at End of Period | 4,056 | |
Total | 1,320 | |
Facility closure costs and other | ||
Restructuring Reserve [Roll Forward] | ||
Balance at Beginning of Period | 1,104 | |
Payments | (1,404) | |
Foreign Currency Translation | (59) | |
Balance at End of Period | 245 | |
Total | $ 604 |
Benefit Plans (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Retirement Benefits [Abstract] | ||
Pension settlement loss | $ 12,155 | $ 0 |
Debt - Schedule of Long-Term Debt (Details) - USD ($) |
Mar. 29, 2024 |
Dec. 31, 2023 |
Apr. 04, 2022 |
---|---|---|---|
Debt Instrument [Line Items] | |||
Long-term debt | $ 992,798,000 | $ 1,018,057,000 | |
Long-Term Debt, Gross | 993,250,000 | 1,019,500,000 | |
Debt Instrument, Unamortized Discount (Premium) and Debt Issuance Costs, Net | (452,000) | (1,443,000) | |
Long-term Debt | 992,798,000 | 1,018,057,000 | |
Term loans | The Credit Agreement | Line of Credit | |||
Debt Instrument [Line Items] | |||
Long-Term Debt, Gross | 981,250,000 | 987,500,000 | |
Revolving credit facilities | The Credit Agreement | Line of Credit | |||
Debt Instrument [Line Items] | |||
Long-Term Debt, Gross | 12,000,000 | $ 32,000,000 | |
Long-term Debt | 12,000,000 | ||
Aggregate principal amount | $ 750,000,000 | $ 750,000,000 |
Derivatives - Schedule of Derivative Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Interest rate swap agreements | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Realized loss | $ (1,179) | $ (1,201) |
Interest rate swap agreements | Interest Expense (Income) and Other, Net | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), Reclassification, before Tax | (2,722) | (1,977) |
Cross currency swap agreements | Not Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Realized loss | (394) | 1,027 |
Change in unrealized gains (losses) | $ (49) | $ 143 |
Derivatives - Derivatives Not Designated as Hedging Instruments (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Dec. 31, 2023 |
|
Derivative [Line Items] | ||
Derivative Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accrued liabilities | Accrued liabilities |
Derivative Asset, Current, Statement of Financial Position [Extensible Enumeration] | Other current assets | Other current assets |
Increase in derivative assets and liabilities | $ 600 | |
Foreign currency contracts | Not Designated as Hedging Instrument | ||
Derivative [Line Items] | ||
Derivative liability, current | 431 | $ 596 |
Derivative asset, current | $ 874 | $ 1,088 |
Derivatives - Schedule of Fair Values of Derivative Instruments in the Financial Statements (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
Dec. 31, 2023 |
|
Derivatives, Fair Value [Line Items] | |||
Derivative assets | $ 5,174 | $ 9,522 | |
Derivative liabilities | 15,783 | 22,232 | |
Cross currency swap agreements | |||
Derivatives, Fair Value [Line Items] | |||
Derivative assets | 0 | 0 | |
Derivative liabilities | 15,783 | 22,232 | |
Interest rate swap agreements | |||
Derivatives, Fair Value [Line Items] | |||
Derivative assets | 5,174 | 9,522 | |
Derivative liabilities | 0 | $ 0 | |
Realized loss | (1,179) | $ (1,201) | |
Not Designated as Hedging Instrument | Cross currency swap agreements | |||
Derivatives, Fair Value [Line Items] | |||
Change in unrealized gains (losses) | (49) | 143 | |
Realized loss | $ (394) | $ 1,027 |
Commitments and Contingencies - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 29, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future claims period | 15 years |
Commitments and Contingencies - Asbestos-Related Claims Activity (Details) - claim |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Loss Contingency Accrual [Roll Forward] | ||
Claims unresolved, beginning of period | 13,648 | 14,106 |
Claims filed | 1,297 | 986 |
Claims resolved | (714) | (749) |
Claims unresolved, end of period | 14,231 | 14,343 |
Commitments and Contingencies - Asbestos Litigation (Details) - USD ($) $ in Thousands |
Mar. 29, 2024 |
Dec. 31, 2023 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Long-term asbestos liability | $ 223,829 | $ 234,796 |
Loss Contingency, Receivable, Current | 213,323 | 221,489 |
Loss Contingency, Receivable, Noncurrent | 18,306 | 17,868 |
Loss Contingency, Accrual, Current | 34,111 | 32,908 |
Loss Contingency, Accrual, Noncurrent | $ 223,829 | $ 234,796 |
Segment Information - Narrative (Details) |
3 Months Ended |
---|---|
Mar. 29, 2024
segment
| |
Segment Reporting [Abstract] | |
Number of reportable segments | 2 |
Segment Information - Segment Results (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 29, 2024 |
Mar. 31, 2023 |
|
Net sales | $ 689,744 | $ 684,000 |
Adjusted EBITA | 129,137 | 117,989 |
Net income from continuing operations | 62,903 | 34,129 |
Income tax expense | 18,504 | 37,024 |
Interest expense and other, net | 17,091 | 19,510 |
Restructuring and other related charges | 1,924 | 9,444 |
Acquisition - amortization and other related charges | 7,777 | 9,289 |
Depreciation and other amortization | 8,783 | 8,593 |
Pension settlement loss | 12,155 | 0 |
Americas Segment | ||
Net sales | 296,047 | 291,569 |
Adjusted EBITA | 54,098 | 49,442 |
EMEA and APAC Segment | ||
Net sales | 393,697 | 392,431 |
Adjusted EBITA | $ 75,039 | $ 68,547 |
Subsequent Events (Details) - USD ($) |
3 Months Ended | |||||
---|---|---|---|---|---|---|
Apr. 30, 2024 |
Apr. 09, 2024 |
Mar. 29, 2024 |
Mar. 31, 2023 |
Jun. 28, 2022 |
Apr. 04, 2022 |
|
Subsequent Event [Line Items] | ||||||
Repayments of borrowing on term credit facility | $ 6,250,000 | $ 0 | ||||
Dividends payable included in accrued liabilities | 3,600,000 | |||||
Subsequent Event | SUMIG Soluções para Solda Ltda | ||||||
Subsequent Event [Line Items] | ||||||
Purchase price for business combination agreement | $ 74,000,000 | |||||
Senior Note Offering | Subsequent Event | Senior Notes | ||||||
Subsequent Event [Line Items] | ||||||
Outstanding borrowings | $ 700,000,000 | |||||
Contractual interest rate | 6.25% | |||||
Term loans | The Credit Agreement | Senior Notes | ||||||
Subsequent Event [Line Items] | ||||||
Outstanding borrowings | $ 589,000,000 | $ 600,000,000 | $ 600,000,000 | |||
Term loans | The Credit Agreement | Senior Notes | Subsequent Event | ||||||
Subsequent Event [Line Items] | ||||||
Repayments of borrowing on term credit facility | $ 588,800,000 |
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