ESAB Corporation Announces Fourth Quarter 2023 Results and Initiates Full Year 2024 Guidance

Rhea-AI Summary

ESAB Corporation reports record fourth-quarter sales and margin performance with sales and core organic growth up 4%. Operating income reached $104 million, and core adjusted EBITDA was $126 million, up 18% from the previous year. ESAB also initiated its full-year 2024 outlook.

Insights

Financial Analyst

The report from ESAB Corporation indicating a 4% increase in sales and core organic growth, along with an 18% rise in core adjusted EBITDA, is a strong performance marker, especially when considering the expanded margins of 200 basis points to 19.4%. This margin expansion is significant as it suggests operational efficiencies and possibly a favorable product mix or pricing power in the market. The reported net income and diluted earnings per share (EPS) also reflect a healthy bottom line that could be attractive to investors seeking companies with solid earnings growth.

From a financial perspective, the company's outlook for 2024, with core organic growth projected between 2.5% to 4.5% and total core sales growth of 1.5% to 3.5%, is cautiously optimistic. It factors in currency headwinds of approximately 1.0%, which is a realistic approach given the current global economic uncertainties. The expected cash conversion rate of greater than 95% is particularly notable, as it indicates the company's efficiency in turning profits into cash flow, a key metric for assessing financial health and operational effectiveness.

Market Research Analyst

ESAB's focus on innovative products and margin-expanding initiatives, as mentioned by CEO Shyam P. Kambeyanda, hints at the company's strategic direction towards differentiation and value creation. Innovation is a critical driver for long-term growth in the industrial sector and ESAB's emphasis on this area could enhance its competitive positioning. The reference to 'EBX initiatives' likely pertains to internal business excellence programs aimed at cost savings and productivity improvements, which are essential for sustaining margin growth in a competitive landscape.

The industrial compounding sector is often characterized by its cyclicality and ESAB's record-breaking performance in a period of global economic flux is noteworthy. The company's strategic investments for sustained growth and margin expansion could be a signal to the market of its resilience and potential for continued success in the face of macroeconomic challenges. Stakeholders would be interested in how ESAB's strategic investments align with evolving industry trends and customer demands.

Economist

ESAB's financial results, particularly the core organic growth and margin performance, must be contextualized within the broader economic environment. The mention of currency headwinds reflects ongoing volatility in foreign exchange markets, which can affect multinational companies' revenues and profits. An economist's perspective would consider the impact of these headwinds on future performance, as well as the potential implications of global trade tensions, inflationary pressures and supply chain disruptions on ESAB's operations.

Furthermore, the company's confidence in delivering strong shareholder returns aligns with the broader trend of industrial companies leveraging technological advancements and operational efficiencies to navigate economic cycles. The long-term goals set for 2028 suggest a strategic roadmap that could potentially buffer against economic downturns while taking advantage of growth periods. The ability to maintain and expand margins in such an environment could be indicative of a robust business model and effective cost management strategies.

• Record fourth quarter sales and margin performance
• Sales and core organic growth up 4%
• Reported operating income of $104 million and core adjusted EBITDA of $126 million, up 18% versus prior year
• Initiated full year 2024 outlook

NORTH BETHESDA, Md.--(BUSINESS WIRE)-- ESAB Corporation (“ESAB” or the “Company”) (NYSE: ESAB), a focused premier industrial compounder, today announced record financial results for the fourth quarter of 2023.

ESAB reported fourth quarter sales of $689 million, an increase of 4% on an as reported basis or 4% higher core organic growth before acquisitions and currency translation impacts, as compared to the prior year. ESAB also reported fourth quarter net income from continuing operations attributable to ESAB of $58 million or $0.96 diluted earnings per share and core adjusted net income of $69 million or $1.13 diluted earnings per share. Core adjusted EBITDA of $126 million rose 18% and margins expanded 200 basis points to 19.4%, both as compared to the prior year quarter.

“ESAB’s team continues to execute well and delivered record-breaking sales, profit, and cash flow during the fourth quarter to conclude the year. Our exciting new innovative products are driving growth and EBX initiatives are expanding margins and generating strong cash flow," stated Shyam P. Kambeyanda, President and CEO of ESAB Corporation. "As a company, we have consistently delivered on our commitments and are investing to strategically position the company for sustained growth and margin expansion. We step into 2024 with confidence in our ability to deliver strong shareholder returns and make continued strides toward our 2028 goals.”

ESAB 2024 Outlook

ESAB expects core organic growth of 2.5% to 4.5% and total core sales growth of 1.5% to 3.5% in 2024, which reflects approximately (1.0%) currency headwinds. ESAB is expecting core adjusted EBITDA of $495 to $515 million, core adjusted EPS of $4.65 to $4.85 and cash conversion of greater than 95%.

Conference Call and Webcast

The Company will hold a conference call to discuss its fourth quarter 2023 results beginning at 8:00 a.m. Eastern on Thursday, February 29, 2024, which will be open to the public by calling +1-888-550-5302 (U.S. callers) and +1-646-960-0685 (International callers) and referencing the conference ID number 4669992 and through webcast via ESAB’s website www.ESABcorporation.com under the “Investors” section. Access to a supplemental slide presentation can also be found on ESAB's website under the same heading. Both the audio of this call and the slide presentation will be archived on the website later today and will be available until the next quarterly call. To view this press release and associated financials in a PDF format click here. The Company’s annual report on Form 10-K for the fiscal year ended December 31, 2023, filed February 29, 2024, is also available on ESAB’s website under the “Investors” section.

About ESAB Corporation

Founded in 1904, ESAB Corporation (NYSE: ESAB) is a focused premier industrial compounder. The Company’s rich history of innovative products, workflow solutions and business system ESAB Business Excellence, enables its purpose of Shaping the World We Imagine^TM. ESAB Corporation is based in North Bethesda, Maryland and employs approximately 9,000 associates and serves customers in approximately 150 countries. To learn more, visit www.ESABcorporation.com.

Non-GAAP Financial Measures and Other Adjustments

ESAB has provided in this press release financial information that has not been prepared in accordance with accounting principles generally accepted in the United States of America (“non-GAAP”). ESAB presents some of these non-GAAP financial measures including and excluding Russia due to economic and political volatility caused by the war in Ukraine, which results in enhanced investor interest in this information. Core non-GAAP financial measures excludes Russia for the three months and year ended December 31, 2023, and the three months and year ended December 31, 2022. These non-GAAP financial measures may include one or more of the following: adjusted net income from continuing operations, core adjusted net income from continuing operations, adjusted EBITDA (earnings before interest, taxes, pension settlement gains, Restructuring and other related charges, separation costs, acquisition-amortization and other related charges and depreciation and other amortization), core adjusted EBITDA, organic sales growth, core organic sales growth, adjusted free cash flow, and ratios based on the foregoing measures. ESAB also provides adjusted EBITDA and adjusted EBITDA margin on a segment basis, as well as core adjusted EBITDA and core adjusted EBITDA margin on a segment basis.

Adjusted net income from continuing operations represents Net income from continuing operations, excluding Restructuring and other related charges, acquisition-amortization and other related charges, separation costs and pension settlement gains. Adjusted net income includes the tax effect of non-GAAP adjusting items at applicable tax rates. ESAB also presents adjusted net income margin from continuing operations, which is subject to the same adjustments as adjusted net income from continuing operations. Adjusted net income per diluted share from continuing operations is a calculation of adjusted net income from continuing operations over the weighted-average diluted shares outstanding. ESAB also presents Core adjusted net income from continuing operations and Core adjusted net income per share - diluted from continuing operations which are subject to the same adjustments as Adjusted net income from continuing operations and Adjusted net income per diluted share from continuing operations, further removing the impact of Russia for the three months and year ended December 31, 2023, and December 31, 2022.

Adjusted EBITDA, excludes from Net income from continuing operations, the effect of Income tax expense, Interest expense (income) and other, net, Pension settlement gains, Restructuring and other related charges, separation costs, acquisition-amortization and other related charges and depreciation and other amortization. ESAB presents adjusted EBITDA margins, which are subject to the same adjustments as adjusted EBITDA. Further, ESAB presents these non-GAAP performance measures on a segment basis, which excludes the impact of Restructuring and other related charges, separation costs, acquisition-amortization and other related charges and depreciation and other amortization from operating income. ESAB also presents Core adjusted EBITDA and Core adjusted EBITDA margins which are subject to the same adjustments as Adjusted EBITDA and Adjusted EBITDA margins, respectively, further removing the impact of Russia for the three months and year ended December 31, 2023, and December 31, 2022.

ESAB presents organic sales growth which excludes the impact of acquisitions and foreign exchange rate fluctuations and presents core organic sales growth which further excludes the impact of the Russia business for the three months and year ended December 31, 2023, and December 31, 2022 from core organic sales growth.

Adjusted free cash flow represents cash flows from operating activities excluding cash outflows related to the Company’s separation from Enovis Corporation and discontinued operations, less Purchases of property, plant and equipment net proceeds from sale of certain properties. Cash conversion represents Adjusted free cash flow divided by Adjusted net income from continuing operations.

These non-GAAP financial measures assist ESAB management in comparing its 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 the ongoing productivity and core business of the Company. ESAB management also believes that presenting these measures allows investors to view its performance using the same measures that the Company uses in evaluating its financial and business performance and trends.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of non-GAAP financial measures presented above to GAAP results has been provided in the financial tables included in this press release.

Forward Looking Statements

This press release includes forward-looking statements, including forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning the Company’s plans, goals, objectives, outlook, expectations, and intentions, and other statements that are not historical or current fact. Forward-looking statements are based on the Company’s current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements, including general risks and uncertainties such as market conditions, economic conditions, geopolitical events, changes in laws, regulations or accounting rules, fluctuations in interest rates, terrorism, wars or conflicts, major health concerns, natural disasters or other disruptions of expected business conditions. Factors that could cause the Company’s results to differ materially from current expectations include, but are not limited to, risks related to the Company’s ability to operate as a stand-alone public company; the Company’s ability to achieve the intended benefits from the Company’s separation from Enovis; the impact of the war in Ukraine and escalating geopolitical tensions; impact of supply chain disruptions; the impact on creditworthiness and financial viability of customers; other impacts on the Company’s business and ability to execute business continuity plans; and the other factors detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the U.S Securities and Exchange Commission (“SEC”) on February 29, 2024, as well as other risks discussed in the Company’s filings with the SEC. In addition, these statements are based on assumptions that are subject to change. This press release speaks only as of the date hereof. The Company disclaims any duty to update the information herein.

ESAB CORPORATION CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS Dollars in thousands, except per share data (Unaudited)
	Three Months Ended								Year Ended
	December 31, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Net sales	$	689,348			$	664,127			$	2,774,766			$	2,593,480
Cost of sales		434,623				439,738				1,759,015				1,707,950
Gross profit		254,725				224,389				1,015,751				885,530
Selling, general and administrative expense		144,639				139,343				587,475				533,369
Restructuring and other related charges		6,368				6,467				24,110				23,096
Operating income		103,718				78,579				404,166				329,065
Pension settlement gain		—				(5,836	)			—				(9,136	)
Interest expense (income) and other, net		26,243				18,434				85,074				37,950
Income from continuing operations before income taxes		77,475				65,981				319,092				300,251
Income tax expense		17,921				5,541				95,727				69,170
Net income from continuing operations		59,554				60,440				223,365				231,081
(Loss) income from discontinued operations, net of taxes		(8,082	)			1,830				(12,341	)			(3,068	)
Net income		51,472				62,270				211,024				228,013
Less: Income attributable to noncontrolling interest, net of taxes		1,233				1,563				5,739				4,266
Net income attributable to ESAB Corporation	$	50,239			$	60,707			$	205,285			$	223,747
Earnings (loss) per share – basic
Income from continuing operations	$	0.96			$	0.97			$	3.59			$	3.75
Income (loss) on discontinued operations	$	(0.13	)		$	0.03			$	(0.20	)		$	(0.05	)
Net income per share	$	0.83			$	1.00			$	3.39			$	3.70
Earnings (loss) per share – diluted
Income from continuing operations	$	0.96			$	0.97			$	3.56			$	3.74
Income (loss) on discontinued operations	$	(0.13	)		$	0.03			$	(0.20	)		$	(0.05	)
Net income per share – diluted	$	0.83			$	1.00			$	3.36			$	3.69

ESAB CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Dollars in millions, except per share data (Unaudited)
	Three Months Ended								Year Ended
	December 31, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Adjusted Net Income	(Dollars in millions)(1)
Net income from continuing operations (GAAP)	$	59.6			$	60.4			$	223.4			$	231.1
Less: Income attributable to noncontrolling interest, net of taxes		1.2				1.6				5.7				4.3
Net income from continuing operations attributable to ESAB Corporation (GAAP)	$	58.4			$	58.9			$	217.7			$	226.8
Restructuring and other related charges – pretax(2)		6.4				6.5				24.1				23.1
Acquisition - amortization and other related charges – pretax(3)		9.0				11.7				36.9				34.2
Separation costs – pretax(4)		—				6.6				—				16.3
Pension settlement gain – pretax		—				(5.8	)			—				(9.1	)
Tax effect on the above items(5)		(3.7	)			(6.8	)			(14.7	)			(15.2	)
Discrete tax adjustments(6)		0.7				(3.5	)			20.8				(7.2	)
Adjusted net income from continuing operations (non-GAAP)	$	70.8			$	67.6			$	284.8			$	268.9
Adjusted net income from continuing operations attributable to Russia (non-GAAP)(7)		2.1				3.5				12.9				19.2
Core adjusted net income from continuing operations (non-GAAP)	$	68.7			$	64.1			$	271.8			$	249.7
Adjusted net income margin from continuing operations		10.3	%			10.2	%			10.3	%			10.4	%
Adjusted Net Income Per Share
Net income per share - diluted from continuing operations (GAAP)	$	0.96			$	0.97			$	3.56			$	3.74
Restructuring and other related charges – pretax(2)		0.10				0.11				0.40				0.38
Acquisition - amortization and other related charges – pretax(3)		0.15				0.19				0.61				0.57
Separation costs – pretax(4)		—				0.11				—				0.27
Pension settlement gain – pretax		—				(0.10	)			—				(0.15	)
Tax effect on the above items(5)		(0.06	)			(0.11	)			(0.24	)			(0.25	)
Discrete tax adjustments(6)		0.01				(0.06	)			0.34				(0.12	)
Adjusted net income per share - diluted from continuing operations (non-GAAP)	$	1.16			$	1.11			$	4.67			$	4.44
Adjusted net income per share - diluted from continuing operations attributable to Russia (non-GAAP)(7)		0.03				0.06				0.21				0.32
Core adjusted net income per share - diluted from continuing operations (non-GAAP)		1.13				1.05				4.46				4.12

__________
(1)	Numbers may not sum due to rounding.
(2)	Includes severance and other termination benefits, including outplacement services as well as the cost of relocating associates, relocating equipment, lease termination expenses, and other costs in connection with the closure and optimization of facilities and product lines.
(3)	Includes transaction expenses, amortization of intangibles, fair value charges on acquired inventories and integration expenses.
(4)	Includes non-recurring charges and employee costs related to the planning and execution of the separation from Enovis. ESAB does not anticipate any further costs associated with the separation after 2023.
(5)	This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the proceeding line items of the table. ESAB estimates the tax effect of each adjustment item by applying ESAB’s overall estimated effective tax rate to the pretax amount, unless the nature of the item and/or tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.
(6)	Discrete tax adjustments for ESAB include the impact of net discrete tax expenses related to law changes, certain dividend withholding taxes and the impact of unrecognized tax benefits due to adverse court ruling in a foreign jurisdiction.
(7)	Numbers were calculated following the same definition of Adjusted Net Income and Adjusted Net Income per share for total Company.

ESAB CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Dollars in millions (Unaudited)
	Three Months Ended December 31, 2023												Year Ended December 31, 2023
	Americas				EMEA & APAC				Total				Americas				EMEA & APAC				Total
	(Dollars in millions)(1)
Net income from continuing operations (GAAP)									$	59.6											$	223.4
Income tax expense										17.9												95.7
Interest expense and other, net										26.2												85.1
Operating income (GAAP)	$	50.1			$	53.6			$	103.7			$	182.5			$	221.7			$	404.2
Adjusted to add:
Restructuring and other related charges(2)		1.1				5.3				6.4				6.5				17.6				24.1
Acquisition - amortization and other related charges (3)		5.0				4.0				9.0				20.9				15.9				36.9
Depreciation and other amortization		3.7				5.7				9.4				14.8				21.2				36.0
Adjusted EBITDA (non-GAAP)	$	59.8			$	68.6			$	128.5			$	224.7			$	276.4			$	501.1
Adjusted EBITDA attributable to Russia (non-GAAP)(4)		—				2.7				2.7				—				18.4				18.4
Core adjusted EBITDA (non-GAAP)	$	59.8			$	65.9			$	125.8			$	224.7			$	258.0			$	482.7
Adjusted EBITDA margin (non-GAAP)		19.5	%			18.0	%			18.6	%			18.5	%			17.7	%			18.1	%
Core adjusted EBITDA margin (non-GAAP)(5)		19.5	%			19.3	%			19.4	%			18.5	%			18.4	%			18.4	%

(1)	Numbers may not sum due to rounding.
(2)	Includes severance and other termination benefits, including outplacement services as well as the cost of relocating associates, relocating equipment, lease termination expenses, and other costs in connection with the closure and optimization of facilities and product lines.
(3)	Includes transaction expenses, amortization of intangibles, fair value charges on acquired inventories and integration expenses.
(4)	Numbers calculated following the same definition as Adjusted EBITDA for total Company.
(5)	Net sales were $39.4 million and $153.8 million relating to Russia for the three months and year ended December 31, 2023, respectively.

ESAB CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Dollars in millions (Unaudited)
	Three Months Ended December 31, 2022												Year Ended December 31, 2022
	Americas				EMEA & APAC				Total				Americas				EMEA & APAC				Total
	(Dollars in millions)(1)
Net income from continuing operations (GAAP)									$	60.4											$	231.1
Income tax expense										5.5												69.2
Interest expense (income) and other, net										18.4												38.0
Pension settlement gain										(5.8	)											(9.1	)
Operating income (GAAP)	$	33.7			$	44.9			$	78.6			$	136.2			$	192.8			$	329.1
Adjusted to add (deduct):
Restructuring and other related charges(2)		2.3				4.1				6.5				11.4				11.7				23.1
Separation costs(3)(4)		2.8				3.8				6.6				7.5				8.1				15.5
Acquisition-amortization and other related charges(5)		7.8				3.9				11.7				20.1				14.1				34.2
Depreciation and other amortization		3.3				5.4				8.7				13.4				21.5				34.9
Other(6)		(0.3	)			0.2				(0.1	)			—				—				—
Adjusted EBITDA (non-GAAP)	$	49.6			$	62.3			$	112.0			$	188.6			$	248.2			$	436.8
Adjusted EBITDA attributable to Russia (non-GAAP)(7)		—				5.0				5.0				—				28.4				28.4
Core adjusted EBITDA (non-GAAP)	$	49.6			$	57.3			$	107.0			$	188.6			$	219.8			$	408.4
Adjusted EBITDA margin (non-GAAP)		17.5	%			16.4	%			16.9	%			16.7	%			16.9	%			16.8	%
Core adjusted EBITDA margin (non-GAAP)(8)		17.5	%			17.3	%			17.4	%			16.7	%			16.9	%			16.8	%

(1)	Numbers may not sum due to rounding.
(2)	Includes severance and other termination benefits, including outplacement services as well as the cost of relocating associates, relocating equipment, lease termination expenses, and other costs in connection with the closure and optimization of facilities and product lines.
(3)	Includes non-recurring charges and employee costs related to the planning and execution of the separation from Enovis within the Selling, general and administrative expense line within the Consolidated and Combined Statements of Operations.
(4)	Amounts are allocated to the segments as a percentage of revenue as the costs or gain are not discrete to either segment.
(5)	Includes transaction expenses, amortization of intangibles, fair value changes on acquired inventories and integration expenses.
(6)	Relates to the adjustment for certain items included within the Interest expense (income) and other, net line within the Consolidated and Combined Statements of Operations.
(7)	Numbers calculated following the same definition as Adjusted EBITDA for total Company.
(8)	Net sales were $49.9 million and $163.6 million relating to Russia for the three months and year ended December 31, 2022, respectively.

ESAB CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Change in Sales Dollars in millions (Unaudited)
	Sales Growth(1)
	Americas							EMEA & APAC							Total ESAB
	$				Change %			$				Change %			$				Change %
For the three months ended December 31, 2022	$	283.6						$	380.6						$	664.1
Components of Change:
Existing businesses (organic sales growth)(2)		25.1			8.8	%			5.6			1.5	%			30.7			4.6	%
Acquisitions(3)		2.2			0.8	%			2.1			0.6	%			4.3			0.6	%
Foreign Currency translation(4)		(3.5	)		(1.2	)%			(6.2	)		(1.6	)%			(9.7	)		(1.5	)%
Total sales growth		23.8			8.4	%			1.5			0.4	%			25.3			3.8	%
For the three months ended December 31, 2023	$	307.3						$	382.0						$	689.4

(1)	Numbers may not sum due to rounding.
(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.
(3)	Represents the incremental sales in comparison to the portion of the prior period during which we did not own the business.
(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.

	Core Sales Growth(1)(2)
	Americas							EMEA & APAC							ESAB
	$				Change %			$				Change %			$				Change %
For the three months ended December 31, 2022	$	283.6						$	330.7						$	614.2
Components of Change:
Existing businesses (core organic sales growth)(3)		25.1			8.8	%			0.2			0.1	%			25.3			4.1	%
Acquisitions(4)		2.2			0.8	%			2.1			0.6	%			4.3			0.7	%
Foreign Currency translation(5)		(3.5	)		(1.2	)%			9.6			2.9	%			6.1			1.0	%
Total core sales growth(6)		23.8			8.4	%			11.9			3.6	%			35.7			5.8	%
For the three months ended December 31, 2023	$	307.3						$	342.6						$	649.9

(1)	Numbers may not sum due to rounding
(2)	Excludes Russia related sales of $39.4 million and $49.9 million for the three months ended December 31, 2023, and December 31, 2022.
(3)	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.
(4)	Represents the incremental sales in comparison to the portion of the prior period during which we did not own the business.
(5)	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.
(6)	Numbers calculated following the same definition as total sales growth for total Company.

ESAB CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Change in Sales Dollars in millions (Unaudited)
	Sales Growth
	Americas							EMEA & APAC							Total ESAB(1)
	$				Change %			$				Change %			$				Change %
For the year ended December 31, 2022	$	1,128.3						$	1,465.2						$	2,593.5
Components of Change:
Existing businesses (organic sales growth)(1)		60.5			5.4	%			101.1			6.9	%			161.6			6.2	%
Acquisitions(2)		43.7			3.9	%			20.2			1.4	%			63.9			2.5	%
Foreign Currency translation(3)		(17.5	)		(1.5	)%			(26.7	)		(1.8	)%			(44.2	)		(1.7	)%
Total sales growth		86.7			7.7	%			94.6			6.5	%			181.3			7.0	%
For the year ended December 31, 2023	$	1,215.0						$	1,559.8						$	2,774.8

(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.
(2)	Represents the incremental sales in comparison to the portion of the prior period during which we did not own the business.
(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.

	Core Sales Growth(1)
	Americas							EMEA & APAC							ESAB
	$				Change %			$				Change %			$				Change %
For the year ended December 31, 2022	$	1,128.3						$	1,301.6						$	2,429.9
Components of Change:
Existing businesses (core organic sales growth)(2)		60.5			5.4	%			83.6			6.4	%			144.1			5.9	%
Acquisitions(3)		43.7			3.9	%			20.2			1.6	%			63.9			2.6	%
Foreign Currency translation(4)		(17.5	)		(1.5	)%			0.5			—	%			(17.0	)		(0.7	)%
Total core sales growth(5)		86.7			7.7	%			104.3			8.0	%			191.0			7.9	%
For the year ended December 31, 2023	$	1,215.0						$	1,405.9						$	2,620.9

(1)	Excludes Russia related sales of $153.8 million and $163.6 million for the year ended December 31, 2023, and December 31, 2022.
(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.
(3)	Represents the incremental sales in comparison to the portion of the prior period during which we did not own the business.
(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.
(5)	Numbers calculated following the same definition as total sales growth for total Company.

ESAB CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Adjusted Free Cash Flow Dollars in millions (Unaudited)
	Three Months Ended								Year Ended
	December 31, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Net cash provided by operating activities (GAAP)	$	122.4			$	91.4			$	330.5			$	214.4
Purchases of property, plant and equipment (GAAP)		(19.3	)			(18.2	)			(48.2	)			(40.2	)
Proceeds from the sale of certain properties(1)		—				—				2.8				2.5
Payments related to the Separation(2)		—				5.8				4.4				19.0
Payments related to discontinued operations		2.8				3.8				15.0				23.1
Adjusted free cash flow (non-GAAP)	$	105.9			$	82.8			$	304.5			$	218.8

(1)	Includes proceeds from the sale of certain properties related to restructuring efforts for which previous cash outlays were included in Net cash used in investing activities.
(2)	Separation payments relate to one-time non-recurring professional fees and employee costs incurred in the planning and execution of the Separation from Enovis.

ESAB CORPORATION 2024 Outlook Dollars in millions (Unaudited)
ESAB 2024 Outlook
2023 Core net sales		$	2,620.9
Organic growth		2.5%-4.5%
Currency			(1.0%)
2024 Core net sales growth range		1.5%-3.5%
2023 Core adjusted EBITDA		$	482.7
2024 Core adjusted EBITDA range		$495-$515

ESAB CORPORATION CONSOLIDATED BALANCE SHEETS Dollars in thousands (Unaudited)
	December 31, 2023				December 31, 2022
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	102,003			$	72,024
Trade receivables, less allowance for credit losses of $25,477 and $23,471		385,198				374,329
Inventories, net		392,858				416,829
Prepaid expenses		61,771				56,637
Other current assets		55,890				68,851
Total current assets		997,720				988,670
Property, plant and equipment, net		294,305				284,226
Goodwill		1,588,331				1,529,767
Intangible assets, net		499,535				517,167
Lease assets - right of use		95,607				92,033
Other assets		353,131				342,152
Total assets	$	3,828,629			$	3,754,015
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	306,593			$	316,265
Accrued liabilities		313,489				285,310
Total current liabilities		620,082				601,575
Long-term debt		1,018,057				1,218,643
Other liabilities		542,833				545,339
Total liabilities		2,180,972				2,365,557
Equity:
Common stock - $0.001 par value - Authorized 600,000,000; 60,295,634 and 60,094,725 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively		60				60
Additional paid-in capital		1,881,054				1,865,904
Retained earnings		350,557				159,231
Accumulated other comprehensive loss		(624,272	)			(674,988	)
Total ESAB Corporation equity		1,607,399				1,350,207
Noncontrolling interest		40,258				38,251
Total equity		1,647,657				1,388,458
Total liabilities and equity	$	3,828,629			$	3,754,015

ESAB CORPORATION CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS Dollars in thousands (Unaudited)
	Year Ended
	December 31, 2023				December 31, 2022
Cash flows from operating activities:
Net income	$	211,024			$	228,013
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and other impairment charges		75,034				65,978
Stock-based compensation expense		16,122				12,964
Deferred income tax		(25,408	)			(20,199	)
Non-cash interest expense		1,195				1,972
Pension settlement gain		—				(9,136	)
Changes in operating assets and liabilities:
Trade receivables, net		(6,006	)			(8,142	)
Inventories, net		17,958				(10,066	)
Accounts payable		(19,819	)			(28,794	)
Other operating assets and liabilities		60,394				(18,232	)
Net cash provided by operating activities		330,494				214,358
Cash flows from investing activities:
Purchases of property, plant and equipment		(48,178	)			(40,243	)
Proceeds from sale of property, plant and equipment		4,600				4,849
Acquisitions, net of cash received		(18,665	)			(149,029	)
Net cash used in investing activities		(62,243	)			(184,423	)
Cash flows from financing activities:
Proceeds from borrowings on term credit facility		—				1,000,000
Repayments of borrowings on term credit facility		(12,500	)			—
Proceeds from borrowings on revolving credit facility and other		574,150				805,881
Repayments of borrowings on revolving credit facility and other		(763,173	)			(585,491	)
Payment of deferred financing fees and other		(972	)			(4,706	)
Payment of deferred consideration		—				(1,500	)
Payment of dividends		(13,342	)			(6,054	)
Consideration to Former Parent in connection with the Separation		—				(1,200,000	)
Distributions to noncontrolling interest holders		(3,880	)			(3,420	)
Transfers from (to) Former Parent, net		—				2,847
Net cash provided by (used in) financing activities		(219,717	)			7,557
Effect of foreign exchange rates on Cash and cash equivalents		(18,555	)			(6,677	)
Increase in Cash and cash equivalents		29,979				30,815
Cash and cash equivalents, beginning of period		72,024				41,209
Cash and cash equivalents, end of period	$	102,003			$	72,024

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240229439014/en/

Investor Relations Contact:

Mark Barbalato

Vice President, Investor Relations

E-mail: investorrelations@esab.com

Phone: 1-301-323-9098

Media Contact:

Tilea Coleman

Vice President, Corporate Communications

E-mail: mediarelations@esab.com

Phone: 1-301-323-9092

Source: ESAB Corporation

FAQ

What were ESAB's fourth-quarter sales?

ESAB reported fourth quarter sales of $689 million, an increase of 4% on an as reported basis or 4% higher core organic growth.

What was ESAB's reported operating income?

ESAB reported an operating income of $104 million for the fourth quarter of 2023.

What was the core adjusted EBITDA for ESAB?

ESAB reported core adjusted EBITDA of $126 million, up 18% compared to the prior year.

What is ESAB's 2024 outlook for core organic growth?

ESAB expects core organic growth of 2.5% to 4.5% in 2024.

When will ESAB hold a conference call to discuss its fourth-quarter results?

ESAB will hold a conference call on Thursday, February 29, 2024, at 8:00 a.m. Eastern time.