ESAB Corp
For the period ended Jun 28, 2024. Filed Aug 2, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 28, 2024 · Filed Aug 2, 2024
ESAB$82.83+4.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-29; filed 2024-05-01.
0001877322-24-000088
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-28; filed 2024-08-02.
0001877322-24-000120
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 131 previous paragraphs and 135 current paragraphs.
84 unchanged; 38 reworded; 10 added; 6 removed; 3 previous and 3 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
(2)Includes severance and other termination benefits, including outplacement services as well as the cost of relocating associates, relocating equipment, impairment of long-lived assets and other costs in connection with the closure and optimization of facilities and product lines.
Current report
Net sales from existing businesses increased $8.4 million during the three months ended June 28, 2024, compared to the prior year period, due to an increase in sales volumes and new product initiatives for a combined $6.9 million and customer pricing increases of $1.5 million. During the three months ended June 28, 2024, the increase in net sales from acquisitions was attributable to Sager S.A. The strengthening of the U.S. Dollar relative to other currencies caused a $24.4 million unfavorable currency translation impact during the three months ended June 28, 2024.
Current report
Core Sales from existing businesses increased $16.9 million during the six months ended June 28, 2024, compared to the prior year period primarily due to an increase in sales volume of $12.6 million and customer pricing increases of $4.3 million during the six months ended June 28, 2024. During the six months ended June 28, 2024, the increase in net sales from acquisitions was attributable to Therapy Equipment and Sager S.A. The changes in foreign exchange rates caused a $25.1 million unfavorable currency translation impact during the six months ended June 28, 2024.
Current report
Gross profit increased $6.4 million in the second quarter of 2024, which resulted in gross profit margin expanding 160 basis points to 38.2% compared with the prior year period. This increase was primarily attributable to lower overall material costs and favorable product mix partially offset by unfavorable currency translation.
Current report
Net income from continuing operations increased $16.7 million in the second quarter of 2024, compared with the prior year period primarily due to the aforementioned factors. Net income margin from continuing operations increased by 250 basis points due to the aforementioned factors.
Current report
Selling, general and administrative expense decreased $8.8 million in the six months ended June 28, 2024, compared to the prior year period. This decrease was primarily driven by savings from restructuring initiatives and currency translation.
Current report
Net sales in our Americas segment decreased $0.5 million in the second quarter of 2024, compared with the prior year period. Net sales from existing business increased $12.5 million, and was offset by $15.7 million in unfavorable currency translation. The increase in Net sales from existing business was mainly due to pricing increases. The acquisition of Sager S.A. contributed to $2.7 million of the overall sales increase. Gross profit increased $7.8 million and Gross profit margin expanded by 260 basis points to 39.7% in the second quarter of 2024. These increases were primarily due to price increases, lower material costs, ongoing product simplification and restructuring partially offset by an unfavorable currency impact. Adjusted EBITDA increased $6.4 million to $64.7 million and margins expanded 210 basis points to 20.9% primarily due to the aforementioned factors.
Current report
Net sales in our Americas segment increased $4.0 million in the six months ended June 28, 2024 compared with the prior year period. Net sales from existing business increased $21.4 million, and was partially offset by $21.0 million in unfavorable currency translation. The increase in Net sales from existing business was primarily due to inflation-related pricing increases partially offset by a decrease in sales volumes. The Sager S.A. acquisition contributed to $3.6 million of the overall sales increase. Gross profit increased $13.0 million to $233.9 million due to price increases, benefits from a product line simplification initiative, and the Sager S.A. acquisition, partially offset by an unfavorable currency impact. Gross profit margin increased 190 basis points to 38.6% primarily due to price increases, benefits from a product line simplification initiative, and the accretive impact of the Sager S.A. acquisition, partially offset by the impacts of inflation. Selling, general and administrative expense remained relatively consistent year over year. Adjusted EBITDA increased $11.1 million to $118.8 million and margins expanded 170 basis points to 19.6% primarily because of the aforementioned factors.
Current report
Net sales in our EMEA & APAC segment decreased $11.6 million in the six months ended June 28, 2024 compared with the prior year period. Net sales from existing business increased $3.6 million, and was partially offset by $15.3 million in unfavorable currency translation. The increase in Net sales from existing business was primarily due to an increase in sales volumes partially offset by decreases in customer pricing. The Therapy Equipment acquisition contributed to $0.1 million of the overall sales increase. Gross profit and Gross profit margin increased $0.9 million and 60 basis points, respectively, due to lower cost of materials and improved product mix partially offset by an unfavorable currency impact. Selling, general and administrative expense decreased $8.8 million primarily due to lower employee costs, savings from restructuring initiatives and favorable currency translation. Adjusted EBITDA increased to $151.3 million and margins expanded 140 basis points to 19.1% primarily because of the aforementioned factors. Adjusted Core EBITDA increased to $138.5 million and margins expanded 120 basis points to 19.3% primarily because of the aforementioned factors.
Current report
Critical Accounting Policies and Estimates
Removed paragraphs (6)
Previous report
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
Previous report
Net sales in our Americas segment increased $4.4 million in the first quarter of 2024, compared with the prior year period. Net sales from existing business increased $8.9 million partially offset by $5.3 million in unfavorable currency translation. The increase in Net sales from existing business was mainly due to pricing increases partially offset by a decrease in sales volumes due to fewer trading days from adverse weather in January in North America and the timing of Easter holidays versus the prior year. The acquisition of Sager S.A. contributed to $0.9 million of the overall sales increase. Gross profit increased $5.4 million due to price increases, partially offset by inflation-related cost increases and an unfavorable currency impact. Gross profit margin expanded 120 basis points to 37.5%, due to price increases, partially offset by inflation. Adjusted EBITDA increased $4.7 million to$54.1 million and margins expanded 130 basis points to 18.3% primarily because ofthe aforementioned factors.
Previous report
In conjunction with the Separation on April 4, 2022, we drew down $1.2 billion under the Credit Agreement and 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 us by Enovis in connection with the Separation.
Previous report
On June 28, 2022, we 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 A-3 Facility with a maturity date of April 3, 2025 to refinance our existing Term Loan A-2 Facility (the “Term Loan A-3 Facility” and together with the Term Loan A-1 Facility, the “Term Loans”). Also on June 28, 2022, we borrowed the entire $600 million under the Term Loan A-3 Facility to fund the repayment of the Term Loan A-2 Facility. The Company’s total borrowing capacity under the Credit Agreement remained unchanged.
Previous report
After the quarter ended March 29, 2024, 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, representing all outstanding borrowings under the 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.
Previous report
Critical Accounting Policies
Reworded paragraphs (38)
Previous wording
The following discussion of the financial condition and results of operations of ESAB Corporation (“ESAB,” the “Company,” “we,” “our” and “us”) should be read in conjunction with the Consolidated and Condensed Financial Statements and related footnotes included in Part I. Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q for the quarterly period ended March 29, 2024 (this “Form 10-Q”) and the Consolidated and Financial Statements and related footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Form 10-K”). You should review the discussion titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements. Our actual results could differ materially from those discussed in the forward looking statements.
Current wording
The following discussion of the financial condition and results of operations of ESAB Corporation (“ESAB,” the “Company,” “we,” “our” and “us”) should be read in conjunction with the Consolidated and Condensed Financial Statements and related footnotes included in Part I. Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q for the quarterly period ended June 28, 2024 (this “Form 10-Q”) and the Consolidated Financial Statements and related footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Form 10-K”). You should review the discussion titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements. Our actual results, outcomes or the timing of results or outcomes could differ materially from those discussed in the forward looking statements.
Previous wording
Some of the statements contained in this Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Exchange Act. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Form 10-Q is filed with the SEC. All statements other than statements of historical fact are statements that could be deemed to be forward-looking statements, including statements regarding: the impact of the war in Ukraine and the resulting escalating geopolitical tensions on our business; projections of revenue, profit margins, expenses, tax provisions and tax rates, earnings or losses from operations, impact of foreign exchange rates, cash flows, pension and benefit obligations and funding requirements, synergies or other financial items; plans, strategies and objectives of our management for future operations, including statements relating to potential acquisitions, compensation plans or purchase commitments; developments, performance or industry or market rankings relating to products or services; future economic conditions or performance, including the impact of inflationary pressures; the outcome of outstanding claims or legal proceedings, including asbestos-related liabilities and insurance coverage litigation; potential gains and recoveries of costs; assumptions underlying any of the foregoing; and any other statements that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. Forward-looking statements may be, but not always, characterized by terminology such as “believe,” “anticipate,” “should,” “would,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “targets,” “aims,” “seeks,” “sees,” and similar expressions. These statements are based on assumptions and assessments made by our management as of the filing date of this Form 10-Q in light of their experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties and actual results or outcomes could differ materially due to numerous factors, including but not limited to the following:
Current wording
All statements contained in this Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Exchange Act. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Form 10-Q is filed with the Securities and Exchange Commission (the “SEC”). Statements that could be deemed to be forward-looking statements, include statements regarding: the impact of the wars in Ukraine and the Middle East and the resulting escalating geopolitical tensions on our business; projections of revenue, profit margins, expenses, tax provisions and tax rates, earnings or losses from operations, impact of foreign exchange rates, cash flows, pension and benefit obligations and funding requirements, synergies or other financial items; plans, strategies and objectives of our management for future operations, including statements relating to potential acquisitions, compensation plans or purchase commitments; developments, performance or industry or market rankings relating to products or services; future economic conditions or performance, including the impact of inflationary pressures, foreign exchange fluctuations and commodity prices; the outcome of outstanding claims or legal proceedings, including asbestos-related liabilities and insurance coverage litigation; potential gains and recoveries of costs; assumptions underlying any of the foregoing; and any other statement that addresses activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. Forward-looking statements may be, but are not always, characterized by terminology such as “believe,” “anticipate,” “should,” “would,” “could,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “targets,” “aims,” “seeks,” “sees,” and similar expressions. These statements are based on assumptions and assessments made by our management as of the filing date of this Form 10-Q in light of their experience and perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties and actual results or outcomes, or the timing of results or outcomes, could differ materially due to numerous factors, including but not limited to the following:
Previous wording
•the impact of natural or man-made disasters, adverse weather events or conditions, epidemics, pandemics and other global health events;
Current wording
•the impact of natural or man-made disasters, adverse or extreme weather events or conditions, epidemics, pandemics and other global health events;
Previous wording
•other risks and factors set forth under Item 1A. “Risk Factors” in Part I in our 2023 Form 10-K.
Current wording
•other risks and factors set forth under “Risk Factors” in Part I. Item 1A. in our 2023 Form 10-K.
Previous wording
See Part I. Item 1.A. “Risk Factors” in our 2023 Form 10-K and Part II. Item 1.A “Risk Factors” in this Form 10-Q for a further discussion regarding reasons that actual results and outcomes may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Forward-looking statements speak only as of the date of the report, document, press release, webcast, call materials or other communication in which they are made. We do not assume any obligation to update or revise any forward-looking statement, whether because of new information, future events and developments or otherwise.
Current wording
See Part I. Item 1.A. “Risk Factors” in our 2023 Form 10-K for a further discussion regarding reasons that actual results and outcomes, and the timing of results and outcomes, may differ materially from the results, developments and business decisions contemplated by our forward-looking statements. Forward-looking statements speak only as of the date this form 10-Q. We do not assume any obligation to update or revise any forward-looking statement, whether because of new information, future events and developments or otherwise.
Previous wording
We expect strategic acquisitions to contribute to our growth. We believe that the extensive experience of our leadership team in acquiring and effectively integrating acquisition targets should enable us to capitalize on future opportunities. We believe that the recent acquisitions of Sager S.A. on February 26, 2024 and Therapy Equipment Limited (“Therapy Equipment”) on January 11, 2023 are aligned with this strategic direction. Refer to Note 3, “Acquisitions” in the accompanying Notes contained elsewhere in this Form 10-Q for additional information.
Current wording
We expect strategic acquisitions to contribute to our growth. We believe that the extensive experience of our leadership team in acquiring and effectively integrating acquisition targets should enable us to capitalize on future opportunities. We believe that the recent acquisitions of Linde Industries Private Limited on July 2, 2024, Sager S.A. on February 26, 2024 and Therapy Equipment Limited (“Therapy Equipment”) on January 11, 2023 as well as the April 30, 2024 agreement to acquire SUMIG Soluções para Solda e Corte Ltda are aligned with this strategic direction. Refer to Note 3, “Acquisitions” and Note 16, “Subsequent Events” in the accompanying Notes contained elsewhere in this Form 10-Q for additional information.
Previous wording
The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the three months ended March 29, 2024 and March 31, 2023.
Current wording
The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the three and six months ended June 28, 2024 and June 30, 2023.
Previous wording
The following discussion of Results of Operations addresses the comparison of the periods presented. Our management evaluates the operating results of each of its reportable segments based upon Net sales, Adjusted EBITDA and Core adjusted EBITDA as defined in the “Non-GAAP Measures” section.
Current wording
The following discussion of our Results of Operations addresses the comparison of the periods presented. Our management evaluates the operating results of each of its reportable segments based upon Net sales, Adjusted EBITDA and Core adjusted EBITDA as defined in the “Non-GAAP Measures” section.
Previous wording
The comparability of our operating results for the three months ended March 29, 2024 and March 31, 2023 is affected by the following additional significant items:
Current wording
The comparability of our operating results for the three and six months ended June 28, 2024 and June 30, 2023 is affected by the following significant factors:
Previous wording
A significant portion of our Net sales,78%, for the three months ended March 29, 2024 are outside the United States, with the majority of those sales denominated in currencies other than the U.S. Dollar. Because much of our manufacturing and employee costs are outside the United States, a significant portion of our costs are also denominated in currencies other than the U.S. Dollar. Changes in foreign exchange rates can impact our results of operations and are quantified when significant.
Current wording
A significant portion of our Net sales,77% and 78%, for the three and six months ended June 28, 2024, respectively, are outside the United States, with the majority of those sales denominated in currencies other than the U.S. Dollar. Because much of our manufacturing and employee costs are outside the United States, a significant portion of our costs are also denominated in currencies other than the U.S. Dollar. Changes in foreign exchange rates can impact our results of operations and are quantified when significant.
Previous wording
For the three months ended March 29, 2024 compared to the three months ended March 31, 2023, fluctuations in foreign currencies reduced Net sales by 1.7% and Gross profit by 1.7% and increased Selling, general and administrative expenses by 0.1%.
Current wording
For the three months ended June 28, 2024 compared to the three months ended June 30, 2023, fluctuations in foreign currencies reduced Net sales by 3.4% and Gross profit by 3.6% and Selling, general and administrative expenses by 1.4%.
Previous wording
Adjusted EBITDA is a non-GAAP performance measure that we include in this report because it is a key metric used by our management to assess our operating performance. ESAB presents this non-GAAP financial measure including and excluding Russia due to economic and political volatility caused by the Russia and Ukraine conflict, which we believe results in enhanced investor interest in these alternative presentations. Adjusted EBITDA excludes from Net income from continuing operations the effect 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. We also present Adjusted EBITDA margin, which is subject to the same adjustments as Adjusted EBITDA. Further, we present these non-GAAP performance measures on a segment basis, where we exclude the impact of Restructuring and other related charges, acquisition-amortization and other related charges and depreciation and other amortization from operating income. We also present Core adjusted EBITDA and Core adjusted EBITDA margins, which are subject to the same adjustments as Adjusted EBITDA and Adjusted EBITDA margins, respectively, and which removes the impact of Russia for three months ended March 29, 2024 and March 31, 2023. Adjusted EBITDA and Core adjusted EBITDA assist management in comparing our operating performance over time because certain items may obscure underlying business trends and make comparisons of long-term performance difficult, as they are of a nature and/or size that occur with inconsistent frequency or relate to unusual events or discrete restructuring plans and other initiatives that are fundamentally different from our ongoing productivity and core business. Management also believes that presenting these measures allows investors to view our performance using the same measures that we use in evaluating our financial and business performance and trends.
Current wording
Adjusted EBITDA is a non-GAAP performance measure that we include in this Form 10-Q because it is a key metric used by our management to assess our operating performance. ESAB presents this non-GAAP financial measure including and excluding Russia due to economic and political volatility caused by the Russia and Ukraine conflict, which we believe results in enhanced investor interest in these alternative presentations. Adjusted EBITDA excludes from Net income from continuing operations the effect 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. We also present Adjusted EBITDA margin, which is subject to the same adjustments as Adjusted EBITDA. Further, we present these non-GAAP performance measures on a segment basis, where we exclude the impact of Restructuring and other related charges, acquisition-amortization and other related charges and depreciation and other amortization from operating income. We also present Core adjusted EBITDA and Core adjusted EBITDA margins, which are subject to the same adjustments as Adjusted EBITDA and Adjusted EBITDA margins, respectively, and which removes the impact of Russia for the three and six months ended June 28, 2024 and June 30, 2023. Adjusted EBITDA and Core adjusted EBITDA assist management in comparing our operating performance over time because certain items may obscure underlying business trends and make comparisons of long-term performance difficult, as they are of a nature and/or size that occur with inconsistent frequency or relate to unusual events or discrete restructuring plans and other initiatives that are fundamentally different from our ongoing productivity and core business. Management also believes that presenting these measures allows investors to view our performance using the same measures that we use in evaluating our financial and business performance and trends.
Previous wording
The following tables set forth a reconciliation of Net income from continuing operations, the most directly comparable GAAP financial measure, to Adjusted EBITDA, Adjusted EBITDA margin, Core adjusted EBITDA and Core adjusted EBITDA margin by segment for the three months ended March 29, 2024 and March 31, 2023.
Current wording
The following tables set forth a reconciliation of Net income from continuing operations, the most directly comparable GAAP financial measure, to Adjusted EBITDA, Adjusted EBITDA margin, Core adjusted EBITDA and Core adjusted EBITDA margin by segment for the three and six months ended June 28, 2024 and June 30, 2023.
Previous wording
(5)Net sales were $37.1 million relating to Russia for the three months ended March 31, 2023.
Current wording
(5)Net sales were$40.7 million and$74.4 million relating to Russia for thethree and six months ended June 28, 2024, respectively.
Previous wording
(5)Net sales were $33.6 million relating to Russia for the three months ended March 29, 2024.
Current wording
(5)Net sales were $40.3 million and $77.5 million relating to Russia for the three and six months ended June 30, 2023, respectively.
Previous wording
Net sales increased for the three months ended March 29, 2024 as compared with the three months ended March 31, 2023. The following table presents the components of changes in our consolidated and condensed Net sales.
Current wording
Net sales decreased for the three and six months ended June 28, 2024 as compared with the three and six months ended June 30, 2023. The following table presents the components of changes in our Net sales.
Previous wording
Net sales from existing businesses increased $16.6 million during the three months ended March 29, 2024, compared to the prior year period, dueto an increase in sales volumes of $8.2 million and customer pricing increases of $8.4 million. During the three months ended March 29, 2024, net sales from acquisitions were attributable to Therapy Equipment and Sager S.A. The strengthening of the U.S. Dollar relative to other currencies caused a $11.9 million unfavorable currency translation impact during the three months ended March 29, 2024.
Current wording
Net sales from existing businesses increased $25.0 million during the six months ended June 28, 2024, compared to the prior year period, due to an increase in sales volumes of $16.7 million and customer pricing increases of $8.3 million. During the six months ended June 28, 2024, the increase in net sales from acquisitions was attributable to Therapy Equipment and Sager S.A. The strengthening of the U.S. Dollar relative to other currencies caused a $36.3 million unfavorable currency translation impact during the six months ended June 28, 2024.
Previous wording
Sales excluding Russia (“Core Sales”) increasedfor the three months ended March 29, 2024 as compared with the three months ended March 31, 2023. The following table presents the components of changes in our consolidated and condensed Net sales.
Current wording
Sales excluding Russia (“Core Sales”) decreased for the three and six months ended June 28, 2024 as compared with the three and six months ended June 30, 2023. The following table presents the components of changes in our Core Sales.
Previous wording
(2)Excludes the impact of acquisitions and foreign exchange rate fluctuations, thus providing a measure of change due to organic growth factors such as price, product mix and volume.
Current wording
(1)Excludes the impact of acquisitions and foreign exchange rate fluctuations, thus providing a measure of change due to organic growth factors such as price, product mix and volume.
Previous wording
(3)Represents the incremental sales in comparison to the portion of the prior period during which we did not own the business.
Current wording
(2)Represents the incremental sales in comparison to the portion of the prior period during which we did not own the business.
Previous wording
(4)Represents the difference between prior year sales valued at the actual prior year foreign exchange rates and prior year sales valued at current year foreign exchange rates.
Current wording
(3)Represents the difference between prior year sales valued at the actual prior year foreign exchange rates and prior year sales valued at current year foreign exchange rates.
Previous wording
(5)Net sales relating to Russia were $33.6 million for the three months ended March 29, 2024, and $37.1 million for the three months ended March 31, 2023.
Current wording
(4)Net sales relating to Russia were $40.7 million and $74.4 million for the three and six months ended June 28, 2024, respectively, and $40.3 million and $77.5 million for the three and six months ended June 30, 2023, respectively.
Previous wording
Core Sales from existing businesses for ESAB increased $13.0 million during the three months ended March 29, 2024, compared to the prior year period primarily due to customer pricing increases of $5.3 million and an increase in sales volume of $7.7 million during the three months ended March 29, 2024. During the three months ended March 29, 2024, net sales from acquisitions were attributed to Therapy Equipment and Sager S.A. The changes in foreign exchange rates caused a $4.8 million unfavorable currency translation impact during the three months ended March 29, 2024.
Current wording
Core Sales from existing businesses increased $3.9 million during the three months ended June 28, 2024, compared to the prior year period primarily due to a $3.3 million increase in sales volume and customer pricing increases of $0.6 million during the three months ended June 28, 2024. During the three months ended June 28, 2024, the increase in net sales from acquisitions was attributable to Sager S.A. The changes in foreign exchange rates caused a $20.4 million unfavorable currency translation impact during the three months ended June 28, 2024.
Previous wording
Selling, general and administrative expense decreased $4.8 million in the first quarter of 2024, compared to the prior year period. This decrease is primarily driven by savings from restructuring initiatives.
Current wording
Selling, general and administrative expense decreased $3.9 million in the second quarter of 2024, compared to the prior year period. This decrease was primarily driven by savings from restructuring initiatives and currency translation.
Previous wording
In the first quarter of 2024, Adjusted EBITDA increased $11.1 million and Adjusted EBITDA margin increased by 150 basis points compared to the same period in 2023 benefiting from higher Gross profit and lower Selling, general and administrative expense. Core adjusted EBITDA increased from $112.7 million to $123.2 million, and Core adjusted EBITDA margins expanded 140 basis points from 17.4% to 18.8%.
Current wording
In the second quarter of 2024, Adjusted EBITDA increased $8.9 million and Adjusted EBITDA margin increased by 160 basis points compared to the same period in 2023 benefiting from higher Gross profit and lower Selling, general and administrative expense. Core adjusted EBITDA increased $7.5 million, and Core adjusted EBITDA margins expanded by 150 basis points compared to the same period in 2023.
Previous wording
Gross profit increased $7.6 million in the first quarter of 2024, which resulted in the gross profit margin expanding 80 basis points to 37.0% compared with the prior year period. This increase was primarily attributable to benefits from price and product mix, partially offset by unfavorable currency translation.
Current wording
Gross profit increased $14.0 million in the six months ended June 28, 2024, which resulted in the gross profit margin expanding 120 basis points to 37.6% compared with the prior year period. This increase was primarily attributable to benefits from price, lower overall material costs and favorable product mix, partially offset by unfavorable currency translation.
Previous wording
The effective tax rate of 22.7% for the quarter ended March 29, 2024 differed from the effective tax rate of 52.0% for the same period ending March 31, 2023 due to discrete tax adjustments in 2023 for dividend withholding taxes and an increase in unrecognized tax benefits due to an adverse court ruling in a tax case in a foreign jurisdiction that do not recur in 2024.
Current wording
The effective tax rate of 19.7% for the six months ended June 28, 2024 differed from the effective tax rate of 36.0% for the same period ending June 30, 2023 due to discrete tax adjustments in 2023 for dividend withholding taxes and an increase in unrecognized tax benefits due to an adverse court ruling in a tax case in a foreign jurisdiction and a discrete tax adjustment in 2024 for a favorable final ruling in a tax case in a foreign jurisdiction.
Previous wording
Net income from continuing operations increased $28.8 million in the first quarter of 2024, compared with the prior year period primarily due to lower restructuring charges, interest expenses and other, net and tax expense partially off set by a pension settlement loss. Net income margin from continuing operations increased due to the items discussed above.
Current wording
Net income from continuing operations increased $45.4 million in the six months ended June 28, 2024, compared with the prior year period primarily due to lower restructuring charges, currency translation and tax expense partially offset by a pension settlement loss. Net income margin from continuing operations increased by 330 basis points due to the aforementioned factors.
Previous wording
Net sales increased for our EMEA & APAC segment by $1.3 million in the first quarter of 2024, compared with the prior year period. Net sales from existing business increased $7.7 million offset by $6.6 million in unfavorable currency translation. The increase in Net sales from existing business was primarily due to an increase in sales volumes. Gross profit increased $2.3 million inthe first quarter of 2024 compared with the prior year period primarily due to an increase in sales volumes and improved product mix. Gross profit margin expanded 50 basis points compared to the same period in 2023 due to the increase in sales as mentioned above. Selling, general and administrative expense decreased compared to the same period in 2023 due to savings from restructuring initiatives. Core adjusted EBITDA increased from $63.2 million to $69.1 million and the related Core adjusted EBITDA margins expanded 140 basis points from 17.8% to 19.2% primarily because of the aforementioned factors.
Current wording
Net sales decreased for our EMEA & APAC segment by $12.9 million in the second quarter of 2024, compared with the prior year period. This decrease was due to a $4.1 million decrease in Net sales from existing business and a $8.8 million unfavorable currency translation. The decrease in Net sales from existing business was primarily due to a decrease in customer pricing and unfavorable currency exchange impact. Gross profit decreased $1.4 million in the second quarter of 2024 compared with the prior year period primarily due to lower pricing and an unfavorable currency impact partially offset by lower overall material costs and improved product mix. Gross profit margin expanded 80 basis points compared to the same period in 2023 primarily due to improved product mix and lower overall material costs. Selling, general and administrative expense decreased compared to the same period in 2023 mainly due to savings from restructuring initiatives. Core adjusted EBITDA increased to $69.3 million and the related Core adjusted EBITDA margins expanded 110 basis points to 19.5% primarily because of the aforementioned factors.
Previous wording
We expect to finance our working capital requirements through cash flows from operating activities. We expect that our primary ongoing requirements for cash will be for working capital, funding of acquisitions, capital expenditures and restructuring related cash outflows, asbestos-related cash outflows, and debt service and required amortization of principal and, pending Board approval, payment of cash dividends.
Current wording
We expect to finance our working capital requirements through cash flows from operating activities. We expect that our primary ongoing requirements for cash will be for working capital, funding of acquisitions, capital expenditures and restructuring related cash outflows, asbestos-related cash outflows, and debt service and required amortization of principal and, pending approval from the Board of Directors, payment of cash dividends.
Previous wording
As of the end of the first quarter, we had the capacity for additional indebtedness of up to $738 million available on the Revolving Facility, subject to meeting financial covenants and other requirements. Additionally, we have the ability to incur $77 million of indebtedness pursuant to certain uncommitted credit lines, consisting of an uncommitted credit line that we currently have in place, which we have used from time to time in the past for short-term working capital needs. Refer to Note 10, “Debt” in the accompanying Notes contained elsewhere in this Form 10-Q for more information related to the Facilities. We believe that we could raise additional funds in the form of debt or equity if it were determined to be appropriate for strategic acquisitions or other corporate purposes. We believe that our sources of liquidity between debt and cash flows from operating activities are adequate to fund our operations for the next twelve months and thereafter.
Current wording
As of June 28, 2024, we were in compliance with the covenants under the Credit Agreement and the Company’s weighted average interest rate of Debt was 5.13%, excluding accretion of deferred financing fees and net of interest rate hedge impacts. As of the end of the second quarter, we had the capacity for additional indebtedness of up to $750 million available on the Revolving Facility, subject to meeting financial covenants and other requirements. Additionally, we have the ability to incur $50.0 million of indebtedness pursuant to certain uncommitted credit lines, consisting of an uncommitted credit line that we have used from time to time in the past for short-term working capital needs. Refer to Note 10, “Debt” and Note 11, “Derivatives” in the accompanying Notes contained elsewhere in this Form 10-Q for more information related to the Facilities and derivative instruments. We believe that we could raise additional funds in the form of debt or equity if it were determined to be appropriate for strategic acquisitions or other corporate purposes. We believe that our sources of liquidity between debt and cash flows from operating activities are adequate to fund our operations for the next twelve months and thereafter.
Previous wording
As of March 29, 2024, we had$76.5 million of Cash and cash equivalents, a decrease of $25.5 million from the balance of$102.0 millionas of December 31, 2023.
Current wording
As of June 28, 2024, we had$228.5 million of Cash and cash equivalents, an increase of $126.5 million from the balance of$102.0 millionas of December 31, 2023.
Previous wording
•Operating cash flow was positively impacted by increased operating incomefor the three months ended March 29, 2024, partly offset by higher working capital to support growth.
Current wording
•Operating cash flow was positively impacted by increased operating income for the six months ended June 28, 2024, partially offset by higher working capital to support growth.
Previous wording
•Discontinued operations for the three months ended March 29, 2024 and March 31, 2023 included outflows of $3.7 million and $5.4 million, respectively, which were mainly asbestos-related.
Current wording
•Discontinued operations for the six months ended June 28, 2024 and June 30, 2023 included outflows of $8.5 million and $9.7 million, respectively, which were mainly asbestos-related.
Previous wording
•Restructuring initiative payments were $2.9 million for the three months ended March 29, 2024 and$4.2 million for the three months ended March 31, 2023, which includes severance and other termination benefits including outplacement services as well as 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.
Current wording
•Restructuring initiative payments were $5.4 million for the six months ended June 28, 2024 and $10.2 million for the six months ended June 30, 2023, which included severance and other termination benefits, including outplacement services as well as the cost of relocating associates, relocating equipment and other costs in connection with the closure and optimization of facilities and product lines.
Previous wording
Cash flows used in investing activities include $18.1 million of cash used primarily for the acquisition of Sager S.A. during the three months ended March 29, 2024.
Current wording
Cash flows used in investing activities include $18.1 million of cash used primarily for the acquisition of Sager S.A. during the six months ended June 28, 2024.
Previous wording
Cash outflows used in financing activities of $33.9 million during the three months ended March 29, 2024 was primarily driven by net repayment of borrowings on the Revolving Facility of $20.0 million, repayment of $6.3 million on the term credit facility and cash dividends of $3.6 million.
Current wording
Cash inflows provided by financing activities of $46.3 million during the six months ended June 28, 2024 was primarily driven proceeds from borrowings on long-term debt of $905.0 million partially off-set by net repayment of borrowings on the long-term debt of $834.5 million, payment of debt issuance cost of $10.4 million and cash dividends of $7.3 million.
Previous wording
Our Cash and cash equivalents as of March 29, 2024 include $69.5 million held in jurisdictions outside the United States. Cash repatriation of non-United States cash into the United States may be subject to withholding taxes, other local statutory restrictions and minority owner distributions.
Current wording
Our Cash and cash equivalents as of June 28, 2024 included $217.8 million held in jurisdictions outside the United States. Cash repatriation of non-United States cash into the United States may be subject to withholding taxes, other local statutory restrictions and minority owner distributions.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
For the six months ended June 28, 2024 compared to thesix months ended June 30, 2023, fluctuations in foreign currencies reduced Net sales by 2.6% and Gross profit by 2.7% and Selling, general and administrative expenses by 0.7%.
Current report — wording carried from elsewhere
The effective tax rate of 17.3% for the quarter ended June 28, 2024 differed from the effective tax rate of 23.4% for the same period ended June 30, 2023 due to a favorable ruling in a tax case in a foreign jurisdiction in 2024.
Current report — wording carried from elsewhere
In the six months ended June 28, 2024, Adjusted EBITDA increased $20.0 million and Adjusted EBITDA margin increased by 150 basis points compared to the same period in 2023 benefiting from higher Gross profit and lower Selling, general and administrative expense. In the six months ended June 28, 2024, Core adjusted EBITDA increased by $18.0 million, and Core adjusted EBITDA margins expanded by 150 basis points.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Previous report — wording carried elsewhere
(2)Includes severance and other termination benefits, including outplacement services as well as the cost of relocating associates, relocating equipment, lease termination expenses, impairment of long-lived assets and other costs in connection with the closure and optimization of facilities and product lines.
Previous report — wording carried elsewhere
As of March 29, 2024, we were in compliance with the covenants under the Credit Agreement. As of March 29, 2024, the weighted average interest rate of borrowings under the Credit Agreement was 5.09%, excluding accretion of deferred financing fees. Refer to Note 11, “Derivatives” in the accompanying Notes contained elsewhere in this Form 10-Q for more information related to swap agreements.