ESAB Corp
For the period ended Apr 4, 2025. Filed May 1, 2025.
View on SEC.govAbout this filing
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.
Apr 4, 2025 · Filed May 1, 2025
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 2024-09-27; filed 2024-10-29.
0001877322-24-000138
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-04-04; filed 2025-05-01.
0001877322-25-000084
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 136 previous paragraphs and 120 current paragraphs.
78 unchanged; 32 reworded; 8 added; 23 removed; 3 previous and 2 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 (8)
Current report
Because our products and services are available worldwide, we rely on a global supply chain to source raw materials, parts and components. The majority of our sales are derived from international operations and, as such, we are subject to specific risks associated with changes in the United States policy regarding international trade and other retaliatory trade measures that the United States and foreign governments may take, including the imposition of tariffs, sanctions, export or import controls and other measures that restrict international trade. The United States has announced significant new tariffs on imports from a wide range of countries, including China, which was followed by retaliatory tariffs by China and a number of countries and a cycle of further retaliatory announcements and trade actions. While certain of the tariffs have been and may be delayed, others have taken or may take effect. Further, tariffs announced or imposed by the United States could be altered or delayed through presidential action, bilateral negotiations, judicial orders or congressional actions, and tariffs announced by other counties can be affected by similar developments. These and future changes in tariffs and trade policies have resulted and could result in additional costs and pricing pressures, supply chain disruptions, volatile or unpredictable customer spending patterns and increased economic or geopolitical risks, any or all of which could adversely affect our business, financial condition and results of operations, perhaps materially or in ways that we cannot predict.
Current report
We are actively monitoring and evaluating these developments and the potential impacts of trade policy and tariffs on our business, supply chain and results of operations. We maintain operations worldwide, including in the jurisdictions impacted by the recently announced and contemplated tariffs. If tariffs continue to be maintained at current levels, and/or the United States government or foreign governments impose further retaliatory tariffs or other trade restrictive measures in response, we expect that such actions could negatively impact our revenue growth and margins in future periods through increased supply chain costs, decreased demand and other adverse economic impacts. The net effect of these actions on our company will depend on our ability to successfully mitigate and offset their impact, which efforts may not be effective. If we are unable to mitigate these risks through supply chain adjustments, pricing strategies or other measures, our business could be negatively affected and produce additional impacts. Please refer to Part I. Item 1.A. “Risk Factors” in our 2024 Form 10-K and in Part II. Item 1A in this Form 10-Q for additional information. The full impact of the matters noted above on the Company, our customers and suppliers, the overall economy and capital markets remains uncertain.
Current report
Gross profit and related margin remained relatively consistent in the first quarter of 2025 compared to the prior year period. Selling, general and administrative expense decreased by $1.6 million in the first quarter of 2025 compared to the prior year period primarily due to a gain on disposition of a property, EBX driven restructuring savings and currency translation benefits partially offset by increases from acquisitions and growth initiatives. The effective tax rate of 22.0% for the quarter ended April 4, 2025 differed from the effective tax rate of 22.7% for the same period ended March 29, 2024 primarily due to withholding taxes. Net income from continuing operations increased $9.7 million and related margin expanded by 160 basis points in the first quarter of 2025 compared with the prior year period primarily due to the aforementioned factors as well as the $12.2 million non-cash pension settlement loss in the prior year period that did not recur in the first quarter of 2025.
Current report
In the first quarter of 2025, Adjusted EBITDA increased $4.8 million and related margin expanded by 100 basis points compared to the same period in the prior year primarily due to lower Selling, general and administrative expense. Core adjusted EBITDA increased $4.7 million and related margin expanded by 100 basis points compared to the same period in the prior year.
Current report
Reportable Segments
Current report
Net sales in our Americas segment decreased $15.3 million in the first quarter of 2025 compared with the prior year period. Net sales from existing business decreased $7.0 million primarily due to reduced sales volumes in filler metals partially offset by pricing increases and higher sales volumes of gas control and welding equipment. In addition, there was $17.9 million of unfavorable currency translation. The acquisition of Sager S.A. and SUMIG contributed a $9.6 million increase to Net sales from acquisitions. Gross profit decreased by $1.0 million due to lower sales volumes; however, gross profit margin expanded by 170 basis points due to EBX initiatives, including value pricing. Selling, general and administrative expense remained relatively consistent with the same period prior year. Adjusted EBITDA increased $0.4 million and related margin expanded by 110 basis points primarily due to the aforementioned factors.
Current report
Net sales in our EMEA & APAC segment increased $3.8 million in the first quarter of 2025 compared with the prior year period. This was primarily due to an increase in Net sales from existing business of $5.9 million driven by increases in sales volume partially offset by lower pricing and a $5.2 million increase related to the acquisition of ESAB Bangladesh partially offset by $7.4 million unfavorable currency translation. Gross profit and related margin remained relatively consistent with the same period prior year. Selling, general and administrative expense decreased in the first quarter of 2025 compared with the prior year period due to a gain on disposition of a property, EBX driven savings, restructuring initiatives and currency translation benefit partially offset by an increase in growth investments. Adjusted EBITDA increased $4.4 million and related margin expanded by 90 basis points and Core adjusted EBITDA increased to $73.4 million and the related margin expanded by 80 basis points primarily because of the aforementioned factors.
Current report
•Operating cash flow for the three months ended April 4, 2025 is a result of operating income partially offset by higher working capital requirements, including additional investment in inventory due to uncertainties related to tariffs.
Removed paragraphs (23)
Previous report
General
Previous report
Integral to our operations is EBX. EBX is our culture and includes our values, a comprehensive set of tools and repeatable, teachable processes that we use to drive continuous improvement and create superior value for our customers, stockholders and associates. We believe that our management team’s access to, and experience in, the application of the EBX methodology is one of our primary competitive strengths.
Previous report
On July 2, 2024, the Company completed the acquisition of Linde Industries, a leading welding company in Bangladesh. 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. During the first quarter of 2023, the Company completed the acquisition of Therapy Equipment, a regional leader in oxygen regulators. For additional information on these acquisitions, refer to Note 3, “Acquisitions” in the accompanying Notes contained elsewhere in this Form 10-Q.
Previous report
Net sales from existing businesses increased $31.6 million during the nine months ended September 27, 2024, compared to the prior year period, due to an increase in sales volumes of $14.6 million and customer pricing increases of $17.0 million. The increase in net sales from acquisitions was attributable to Therapy Equipment, Sager S.A. and Linde Industries. The changes in foreign exchange rates caused a $57.3 million unfavorable currency translation impact.
Previous report
Core Sales from existing businesses increased $24.9 million during the nine months ended September 27, 2024 compared to the prior year period primarily due to an increase in sales volume of $12.4 million and customer pricing increases of $12.5 million. The increase in net sales from acquisitions was attributable to Therapy Equipment, Sager S.A. and Linde Industries. The changes in foreign exchange rates caused a $48.3 million unfavorable currency translation impact.
Previous report
Gross profit increased $4.1 million in the third quarter of 2024, with gross profit margin expanding 100 basis points compared with the prior year period. This increase was primarily attributable to customer pricing, lower material costs and favorable product mix partially offset by unfavorable currency translation.
Previous report
Selling, general and administrative expense remained relatively consistent in the third quarter of 2024 compared to the prior year period.
Previous report
The effective tax rate of 20.3% for the quarter ended September 27, 2024 differed from the effective tax rate of 24.6% for the same period ended September 29, 2023 due to an agreement with a tax authority on the treatment of subsidy income in a foreign jurisdiction in 2024.
Previous report
Net income from continuing operations increased $10.2 million in the third quarter of 2024 compared with the prior year period primarily due to the aforementioned factors as well as lower interest expense. Net income margin from continuing operations increased by 170 basis points due to the aforementioned factors.
Previous report
In the third quarter of 2024, Adjusted EBITDA increased $4.9 million and Adjusted EBITDA margin increased by 90 basis points compared to the same period in 2023 benefiting from higher Gross profit. Core adjusted EBITDA increased $7.0 million, and Core adjusted EBITDA margin expanded by 130 basis points compared to the same period in 2023.
Previous report
Gross profit increased $18.1 million in the nine months ended September 27, 2024, with gross profit margin expanding 110 basis points compared with the prior year period. This increase was primarily attributable to benefits from customer pricing and lower material costs partially offset by unfavorable currency translation.
Previous report
Selling, general and administrative expense decreased $8.3 million in the nine months ended September 27, 2024, compared to the prior year period. This decrease was primarily driven by savings from restructuring initiatives and currency translation.
Previous report
The effective tax rate of 19.9% for the nine months ended September 27, 2024 differed from the effective tax rate of 32.2% for the same period ending September 29, 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 discrete tax adjustments in 2024 for a favorable final ruling in a tax case in a foreign jurisdiction and an agreement with a taxing authority on the treatment of subsidy income in a foreign jurisdiction in 2024.
Previous report
Net income from continuing operations increased $55.7 million in the nine months ended September 27, 2024 compared with the prior year period primarily due to the aforementioned factors as well as lower interest and income tax expenses. Net income margin from continuing operations increased by 270 basis points due to the aforementioned factors.
Previous report
In the nine months ended September 27, 2024, Adjusted EBITDA increased $24.9 million and Adjusted EBITDA margin increased by 130 basis points compared to the same period in 2023 benefiting from higher Gross profit and lower Selling, general and administrative expense. In the nine months ended September 27, 2024, Core adjusted EBITDA increased by $25.2 million and Core adjusted EBITDA margin expanded by 140 basis points.
Previous report
Business Segments
Previous report
We formulate, develop, manufacture and supply consumable products and equipment, including cutting, joining and welding robotics, as well as gas control equipment. Our products are marketed under several brand names, most notably ESAB, providing a wide range of products with innovative technologies to solve challenges in virtually any industry. ESAB’s comprehensive range of welding consumables includes electrodes, cored and solid wires and fluxes using a wide range of specialty and other materials, and cutting consumables including electrodes, nozzles, shields and tips. ESAB’s equipment ranges from portable welding machines, gas control equipment and customized automated cutting and welding systems. ESAB also offers a range of software and digital solutions to help its customers increase their productivity, remotely monitor their welding operations and digitize their documentation. Products are sold into a wide range of end markets, including general industry, infrastructure, renewable energy, medical and life sciences, transportation, construction and energy.
Previous report
Net sales in our Americas segment decreased $17.0 million in the third quarter of 2024 compared with the prior year period. Net sales from existing business increased $6.2 million primarily due to pricing increases, which was more than offset by $26.0 million in unfavorable currency translation. The acquisition of Sager S.A. contributed a $2.8 million increase to Net sales from acquisitions. Despite lower sales, Gross profit remained relatively consistent with the same period in the prior year due to customer pricing increases, lower material costs and EBX driven business improvements that also expanded Gross profit margin by 170 basis points. Selling, general and administrative expense decreased by $5.3 million primarily due to savings from restructuring initiatives and currency translation. Adjusted EBITDA increased $2.2 million and Adjusted EBITDA margin expanded 190 basis points primarily due to the aforementioned factors.
Previous report
Net sales in our Americas segment decreased $13.0 million in the nine months ended September 27, 2024 compared with the prior year period. Net sales from existing business increased $27.6 million, which was more than offset by $47.0 million in unfavorable currency translation. The increase in Net sales from existing business was primarily due to customer pricing increases, partially offset by a decrease in sales volumes. The Sager S.A. acquisition contributed to $6.4 million of the overall sales increase. Gross profit increased $11.4 million and Gross profit margin increased 180 basis points due to price increases, benefits from EBX driven business improvements and the Sager S.A. acquisition, partially offset by an unfavorable currency impact. Selling, general and administrative expense decreased by $5.6 million primarily due to savings from restructuring initiatives and currency translation. Adjusted EBITDA increased $13.3 million and Adjusted EBITDA margin expanded 170 basis points primarily because of the aforementioned factors.
Previous report
Net sales increased for our EMEA & APAC segment by $9.3 million in the third quarter of 2024 compared with the prior year period. This increase was primarily due to an increase in Net sales from existing business of $0.4 million, a $3.8 million increase related to the acquisition of Linde Industries and a $5.1 million favorable currency translation. Gross profit increased $5.7 million in the third quarter of 2024 compared with the prior year period primarily due to improved product mix and lower material costs partially offset by lower pricing. Gross profit margin expanded 70 basis points compared to the same period in 2023 primarily due to improved product mix, lower material costs and EBX driven business improvements. Selling, general and administrative expense remained relatively consistent compared to the same period in 2023. Adjusted EBITDA increased $2.8 million and Adjusted EBITDA margin expanded 30 basis points and Core adjusted EBITDA increased to $65.5 million and the related Core adjusted EBITDA margin expanded 100 basis points primarily because of the aforementioned factors.
Previous report
Net sales in our EMEA & APAC segment decreased $2.4 million in the nine months ended September 27, 2024 compared with the prior year period. Net sales from existing business increased $4.0 million, with the Therapy Equipment and Linde Industries acquisitions contributing an additional increase of $3.9 million. These increases were offset by $10.3 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. Gross profit and Gross profit margin increased $6.7 million and 70 basis points, respectively, due to EBX driven business improvements, lower material costs and improved product mix partially offset by an unfavorable currency impact. Selling, general and administrative expense decreased $5.8 million primarily due to savings from restructuring initiatives. Adjusted EBITDA increased $11.7 million and Adjusted EBITDA margin expanded 110 basis points and Core adjusted EBITDA increased to $203.9 million and Core adjusted EBITDA margin expanded 110 basis points primarily because of the aforementioned factors.
Previous report
•Operating cash flow was positively impacted by increased operating income for the nine months ended September 27, 2024, partially offset by higher working capital to support growth.
Previous report
Cash inflows provided by financing activities of $40.6 million during the nine months ended September 27, 2024 was primarily driven by proceeds from borrowings on long-term debt of $905.0 million partially offset by net repayment of borrowings on long-term debt of $834.1 million, payment of debt issuance costs of 10.4 million and cash dividends of $12.1 million. The new Senior Notes borrowing in April 2024 provided liquidity beyond the amount needed to refinance extinguished debt.
Reworded paragraphs (32)
Previous 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, 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” or 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:
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 war in Ukraine and the conflict in 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, industry or market rankings relating to products or services; future economic conditions or performance, including the impact of inflationary pressures, tariffs and trade policies, 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” or 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 wars in Ukraine and the Middle East, escalating geopolitical tensions and the related impact on energy supplies and prices;
Current wording
•the war in Ukraine and conflict in the Middle East, escalating geopolitical tensions and the related impact on energy supplies and prices;
Previous wording
•supply chain constraints and backlogs, including risks affecting raw material, part and component availability, labor shortages and inefficiencies, freight and logistical challenges and inflation in raw material, part, component, freight and delivery costs and our ability to increase our prices to account for increased costs;
Current wording
•supply chain constraints and backlogs and risks affecting the availability and prices for raw materials, parts and components, including tariffs and trade disputes, labor shortages and inefficiencies, freight and logistical challenges and inflation in raw material, part, component, freight and delivery costs and our ability to increase our prices to account for increased costs;
Previous wording
•other risks and factors set forth under “Risk Factors” in Part I. Item 1A. in our 2023 Form 10-K.
Current wording
•other risks and factors set forth under “Risk Factors” in Part I. Item 1A. in our 2024 Form 10-K and in Part II. Item 1A in this Form 10-Q.
Previous 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.
Current wording
See Part I. Item 1.A. “Risk Factors” in our 2024 Form 10-K and in Part II. Item 1A in this Form 10-Q 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 of 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 conduct our 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. We serve a global customer base across multiple markets through a combination of direct sales and third-party distribution channels. Our customer base is highly diversified in the industrial end markets.
Current wording
We are a focused industrial compounder. Our rich history of innovative products, workflow solutions and our business system, ESAB Business Excellence (“EBX”), enables our purpose of Shaping the world we imagine TM. We conduct our 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. We serve a global customer base across multiple markets through a combination of direct sales and third-party distribution channels. Our customer base is highly diversified in the industrial end markets.
Previous wording
We believe that we are well positioned to grow our businesses organically over the long term by enhancing our product offerings and expanding our customer base. We believe our business mix is well balanced between sales in high growth and developed markets, and equipment and consumables. We believe our geographic and end market diversity helps mitigate the effects from cyclical industrial market exposures. Given this balance, management does not use indices other than general economic trends and business initiatives to predict the overall outlook for the Company. Instead, our individual businesses monitor key competitors and customers, including to the extent possible their sales, to gauge relative performance and outlook for the future.
Current wording
We believe that we are well positioned to grow our businesses organically over the long term by enhancing our product offerings and expanding our customer base. We believe our business mix is well balanced between sales in high growth and developed markets, and equipment and consumables. We believe that our geographic and end market diversity helps mitigate the effects from cyclical industrial market exposures. Given this balance, management does not use indices other than general economic trends and business initiatives to predict the overall outlook for the Company. Instead, our individual businesses monitor key competitors and customers, including to the extent possible their sales, to gauge relative performance and outlook for the future.
Previous wording
We expect strategic acquisitions to contribute to our growth. We believe that our extensive experience of 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 (“Linde Industries”) 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” 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 our extensive experience of acquiring and effectively integrating acquisition targets should enable us to capitalize on future opportunities. We believe our recent acquisitions of Sager S.A. (“Sager”), ESAB Bangladesh Private Limited (“ESAB Bangladesh”) (formerly known as Linde Industries Private Limited) and SUMIG Soluções para Solda e Corte Ltda. (“SUMIG”) in 2024 as well as the acquisition of Bavaria Schweisstechnik completed April 30, 2025 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.
Previous wording
The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the three and nine months ended September 27, 2024 and September 29, 2023.
Current wording
The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the three months ended April 4, 2025 and March 29, 2024.
Previous wording
The comparability of our operating results for the three and nine months ended September 27, 2024 and September 29, 2023 is affected by the following significant factors:
Current wording
The comparability of our operating results for the three months ended April 4, 2025 and March 29, 2024 is affected by the following significant factors:
Previous wording
A significant portion of our Net sales,79% and 78%, for the three and nine months ended September 27, 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.
Current wording
A significant portion of our Net sales,78%for the three months ended April 4, 2025 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 September 27, 2024 compared to the three months ended September 29, 2023, fluctuations in foreign currencies reduced Net sales by 3.1% and Gross profit by 3.6% and Selling, general and administrative expenses by 1.6%.
Current wording
For the three months ended April 4, 2025 compared to the three months ended March 29, 2024, fluctuations in foreign currencies reduced Net sales by 3.7% and Gross profit by 3.0% and Selling, general and administrative expenses by 2.9%.
Previous 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 margin, which are subject to the same adjustments as Adjusted EBITDA and Adjusted EBITDA margin, respectively, and which removes the impact of Russia for the three and nine months ended September 27, 2024 and September 29, 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 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 margin, which are subject to the same adjustments as Adjusted EBITDA and Adjusted EBITDA margin, respectively, and which removes the impact of Russia for the three months ended April 4, 2025 and March 29, 2024. 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 and nine months ended September 27, 2024 and September 29, 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 months ended April 4, 2025 and March 29, 2024.
Previous wording
(5)Net sales were$37.7 million and$112.0 million relating to Russia for thethree and nine months ended September 27, 2024, respectively.
Current wording
(5)Net sales were$31.3 million relating to Russia for thethree months ended April 4, 2025.
Previous wording
(5)Net sales were $36.9 million and $114.4 million relating to Russia for the three and nine months ended September 29, 2023, respectively.
Current wording
(5)Net sales were $33.6 million relating to Russia for the three months ended March 29, 2024.
Previous wording
Net sales decreased for the three and nine months ended September 27, 2024, compared to the prior year period. The following table presents the components of changes in our Net sales.
Current wording
Net sales decreased for the three months ended April 4, 2025, compared to the prior year period. The following table presents the components of changes in our Net sales.
Previous wording
(2) Represents the incremental sales in comparison to the portion of the prior period during which we did not own the business.
Current wording
(3) Represents the incremental sales attributable to acquired businesses in comparison to the portion of the prior period during which we did not own the business.
Previous wording
Net sales from existing businesses increased $6.6 million during the three months ended September 27, 2024, compared to the prior year period, due to customer pricing increases of $8.7 million that was partially offset by a $2.1 million decrease in sales volumes. The increase in net sales from acquisitions was attributable to Sager S.A. and Linde Industries. The changes in foreign exchange rates caused a $20.9 million unfavorable currency translation impact.
Current wording
Net sales from existing businesses decreased $1.1 million during the three months ended April 4, 2025, compared to the prior year period, due to a $7.1 million decrease in sales volumes partially offset by customer pricing increases of $6.0 million. The increase in net sales from acquisitions was attributable to Sager S.A., ESAB Bangladesh and SUMIG. The changes in foreign exchange rates caused a $25.3 million unfavorable currency translation impact.
Previous wording
Sales excluding Russia (“Core Sales”) decreased for the three and nine months ended September 27, 2024, compared to the prior year period. The following table presents the components of changes in our Core Sales.
Current wording
Net sales excluding Russia (“Core sales”) decreased for the three months ended April 4, 2025, compared to the prior year period. The following table presents the components of changes in our Core sales.
Previous 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.
Current 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.
Previous 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.
Current 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.
Previous wording
(5)Net sales relating to Russia were $37.7 million and $112.0 million for the three and nine months ended September 27, 2024, respectively, and $36.9 million and $114.4 million for the three and nine months ended September 29, 2023, respectively.
Current wording
(5)Net sales relating to Russia were $31.3 million and $33.6 million for the three months ended April 4, 2025 and March 29, 2024, respectively.
Previous wording
Core Sales from existing businesses increased $8.0 million during the three months ended September 27, 2024 compared to the prior year period primarily due to customer pricing increases of $8.3 million partially offset by a $0.3 million decrease in sales volume. The $6.6 million increase in net sales from acquisitions was attributable to Sager S.A. and Linde Industries. The changes in foreign exchange rates caused a $23.1 million unfavorable currency translation impact.
Current wording
Core sales from existing businesses increased $1.3 million during the three months ended April 4, 2025 compared to the prior year period primarily due to customer pricing increases of $4.9 million partially offset by a $3.6 million decrease in sales volume. The $14.8 million increase in net sales from acquisitions was attributable to Sager S.A., ESAB Bangladesh and SUMIG. The changes in foreign exchange rates caused a $25.4 million unfavorable currency translation impact.
Previous wording
As of September 27, 2024, we were in compliance with the covenants under the Credit Agreement and the Company’s weighted average interest rate of Debt was 5.01%, excluding accretion of deferred financing fees and net of interest rate hedge impacts. As of the end of the third 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.
Current wording
As of April 4, 2025, we were in compliance with the covenants under the Credit Agreement and the Indenture. The Company’s weighted average interest rate of borrowings under the Credit Agreement and the Indenture was 5.16%, excluding accretion of deferred financing fees and net of interest rate hedge impacts. As of the end of the first 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
On August 13, 2024, the Board of Directors authorized and approved a stock repurchase program to repurchase up to five million shares of the Company’s Common stock, par value $0.001 per share, from time-to-time on the open market, in privately negotiated transactions or as may otherwise be determined by the Company’s management in its discretion. No repurchases of the Company’s Common stock have been made through the nine months ended September 27, 2024. The timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions, applicable legal requirements and other factors. There is no term associated with the remaining repurchase authorization.
Current wording
On August 13, 2024, the Board of Directors authorized and approved a stock repurchase program to repurchase up to five million shares of the Company’s Common stock, par value $0.001 per share, from time-to-time on the open market, in privately negotiated transactions or as may otherwise be determined by the Company’s management in its discretion. No repurchases of the Company’s Common stock have been made through the three months ended April 4, 2025. The timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions, applicable legal requirements and other factors. There is no term associated with the remaining repurchase authorization.
Previous wording
As of September 27, 2024, we had$253.7 million of Cash and cash equivalents, an increase of $151.7 million from the balance of$102.0 millionas of December 31, 2023.
Current wording
As of April 4, 2025, we had$291.3 million of Cash and cash equivalents, an increase of $42.0 million from the balance of$249.4 millionas of December 31, 2024.
Previous wording
The following table summarizes the change in Cash and cash equivalents during periods indicated:
Current wording
The following table summarizes the change in Cash and cash equivalents during the periods indicated:
Previous wording
•Discontinued operations for the nine months ended September 27, 2024 and September 29, 2023 included outflows of $12.1 million and $12.2 million, respectively, which were mainly asbestos-related.
Current wording
•Discontinued operations for the three months ended April 4, 2025 and March 29, 2024 included outflows of $2.3 million and $3.7 million, respectively, which were primarily asbestos-related.
Previous wording
•Restructuring initiative payments were $8.3 million and $15.4 million for the nine months ended September 27, 2024 and September 29, 2023, respectively. These payments 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.
Current wording
•Restructuring initiative payments were $3.3 million and $2.9 million for the three months ended April 4, 2025 and March 29, 2024, respectively. These payments 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 $86.5 million of cash used for the acquisition of Sager S.A. and Linde Industries during the nine months ended September 27, 2024.
Current wording
Cash flows used in investing activities during the three months ended March 29, 2024, include $18.1 million of cash used for the acquisition of Sager S.A.
Previous wording
Our Cash and cash equivalents as of September 27, 2024 included $231.9 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 April 4, 2025 included $269.8 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 (2)
Current report — wording carried from elsewhere
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
Current report — wording carried from elsewhere
(2) Includes transaction expenses, amortization of acquired intangibles, fair value charges on acquired inventories and integration expenses.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
We are a focused premier industrial compounder. Our rich history of innovative products, workflow solutions and our business system, ESAB Business Excellence (“EBX”), enables our purpose of Shaping the world we imagine TM.
Previous report — wording carried elsewhere
For the nine months ended September 27, 2024 compared to thenine months ended September 29, 2023, fluctuations in foreign currencies reduced Net sales by 2.7% and Gross profit by 3.0% and Selling, general and administrative expenses by 1.0%.
Previous report — wording carried elsewhere
(2) Includes transaction expenses, amortization of intangibles, fair value charges on acquired inventories and integration expenses.