What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-08-09 compared with 2022-05-10 · 202 added, 136 removed, 261 unchanged (56% of the section changed)

2 unchanged sentences

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 Combined Condensed Financial Statements and related footnotes included in Part I.

“Financial Statements” of this Quarterly Report on Form 10-Q for the quarterly period ended April 1, 2022 (this “Form 10-Q”) and the Combined Financial Statements and related footnotes included in the Company’s Information Statement filed with the Company’s Registration Statement on Form 10-12B/A filed with the SEC on March 17, 2022 (the “Form 10”).

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 Combined Condensed Financial Statements and related footnotes included in Part I.

“Financial Statements” of this Quarterly Report on Form 10-Q for the quarterly period ended July 1, 2022 (this “Form 10-Q”) and the Consolidated and Combined Financial Statements and related footnotes included in the Company’s Information Statement filed with the Company’s Registration Statement on Form 10-12B/A filed with the SEC on March 17, 2022 (the “Form 10”).

You should review the discussion titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements.

20 unchanged sentences

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:

• the Separation and our ability to operate as a stand-alone public company;

• our ability to operate as a stand-alone public company;

• our ability to achieve the intended benefits from the Separation;

9 unchanged sentences

• our ability to accurately estimate the cost of or realize savings from our restructuring programs;

• the amount of and our ability to estimate our asbestos-related liabilities;

• the amount of, a nd our ability to estimate our asbestos-related liabilities;

• the solvency of our insurers and the likelihood of their payment for asbestos-related costs;

21 unchanged sentences

• other risks and factors set forth under “Risk Factors” in the Information Statement filed with the Form 10.

The effects of the COVID-19 pandemic and the Russia and Ukraine conflict, including actions by governments, businesses and individuals in response to the situation, may give rise or contribute to or amplify the risks associated with many of these factors.

The effects of the COVID-19 pandemic and the Russia and Ukraine conflict, including actions by governments, businesses and individuals in response to these situations, may give rise or contribute to or amplify the risks associated with many of these factors.

See “Risk Factors” in the Information Statement filed with the Form 10 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.

1 unchanged sentence

We do not assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events and developments or otherwise.

Separation from Enovis

On April 4, 2022 (the “Distribution Date”), Colfax Corporation (“Colfax” or the “Former Parent”) completed the spin-off of Colfax’s Fabrication Technology business and certain other corporate entities as discussed in the “Separation from Enovis” section within Note 1, “Organization and Basis of Presentation” in the accompanying notes to Consolidated and Combined Condensed Financial Statements (“Notes”) contained elsewhere in this Form 10-Q.

through a tax-free, pro rata distribution (the “Distribution”) of 90% of the outstanding common stock of ESAB to Colfax stockholders (the “Separation”).

To effect the Separation, each Colfax stockholder of record as of close of business on March 23, 2022 received one share of ESAB common stock for every three shares of Colfax common stock held on the record date.

Upon completion of the Distribution, Colfax changed its name to Enovis Corporation and continued to hold 10% of the outstanding common stock of ESAB.

Enovis is expected to divest the 10% retained shares in ESAB within 12 months after the Distribution Date.

In connection with the Separation, on April 4, 2022, ESAB and Enovis entered into a separation and distribution agreement as well as various other related agreements that govern the Separation and the relationships between the parties going forward, including a transition services agreement, an employee matters agreement, a tax matters agreement, an intellectual property matters agreement, and license agreement for ESAB Business Excellence System ("EBX").

In conjunction with the Separation on April 4, 2022, the Company entered into a credit agreement (the “Credit Agreement”).

The Company drew down $1.2 billion under the Credit Agreement and used these proceeds to make payments to Enovis of $1.2 billion, which were used as part of the consideration for the contribution of certain assets and liabilities to the Company by Enovis in connection with the Separation.

Refer to Note 10, “Debt” in the accompanying Notes contained elsewhere in this Form 10-Q for additional information on the Credit Agreement.

Basis of Presentation

The accompanying Combined Condensed Financial Statements present the historical financial position, results of operations, changes in equity and cash flows of the Company in accordance with accounting principles generally applied in the United States of America (“U.S.

GAAP”) for the preparation of carved‑out Combined Condensed Financial Statements.

We are a premier global fabrication and specialty gas control technology company focused on welding technology, advanced equipment, consumables, specialty gas control, robotics, and digital solutions.

The Company’s products are utilized to solve challenges in a wide range of industries, including cutting, joining and automated welding.

The Company’s products are marketed to customers primarily under the ESAB brand name.

Historically, our business has comprised the Fabrication Technology Business of Colfax Corporation.

On April 4, 2022, Colfax Corporation (“Colfax” or the “Parent”) completed the spin-off of Colfax’s Fabrication Technology business and certain other corporate entities as described in Note 1, “Organization and Basis of Presentation” and Note 14, “Subsequent Events” in the accompanying unaudited Combined Condensed Financial Statements contained elsewhere in this Form 10-Q, through a tax-free, pro rata distribution (the “Distribution”) of 90% of the outstanding common stock of ESAB to Colfax stockholders (the “Separation”).

Upon completion of the Distribution, Colfax changed its name to Enovis Corporation (“Enovis”).

The Company has historically operated as part of the Parent and not as a stand-alone company.

The financial statements have been derived from the Parent’s historical accounting records and are presented on a carve-out basis.

All revenues and costs as well as assets and liabilities directly associated with the business activity of the Company are included as a component of the financial statements.

The financial statements also include allocations of certain general and administrative expenses from the Parent’s corporate office.

The allocations have been determined on a reasonable basis;

however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had the Company been an entity that operated independently of the Parent.

Further, the historical financial statements may not be reflective of what our results of operations, comprehensive income, historical financial position, equity or cash flows might be in the future as a separate public company.

The accompanying Consolidated and Combined Condensed Financial Statements present our historical financial position, results of operations, changes in equity and cash flows in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

The combined condensed financial statements for periods prior to the Separation were derived from Enovis’s consolidated financial statements and accounting records and prepared in accordance with GAAP for the preparation of carved-out combined financial statements.

Through the date of the Separation, all revenues and costs as well as assets and liabilities directly associated with ESAB and certain corporate entities have been included in the Consolidated and Combined Condensed financial statements.

Prior to the Separation, the combined condensed financial statements also included allocations of certain general, administrative, sales and marketing expenses from Enovis’s corporate office and from other Enovis businesses to us and allocations of related assets, liabilities, and the Former Parent’s investment, as applicable.

The allocations were determined on a reasonable basis, however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had we been an entity that operated independently of Enovis during the applicable periods.

Certain factors could impact the nature and amount of these separate public company costs, including the finalization of our staffing and infrastructure needs.

Following the Separation, pursuant to agreements with Enovis, Enovis will continue to provide us with some of the services related to these functions on a transitional basis in exchange for agreed‑upon fees, and we incur other costs to replace the services and resources that are not provided by Enovis.

Costs associated with services provided by Enovis on a transitional basis are expected to be immaterial.

Related party allocations are discussed further in Note 13, “Related Party Transactions” in the accompanying unaudited Combined Condensed Financial Statements contained elsewhere in this Form 10-Q.

We will also incur additional costs as a separate public company.

As a separate public company, our total costs related to such support functions may differ from the costs that were historically allocated to us.

Costs associated with services provided by Enovis on a transitional basis are immaterial.

Related party allocations are discussed further in Note 14, “Related Party Transactions” in the accompanying Notes contained elsewhere in this Form 10-Q.

We also incur additional costs as a separate public company.

These additional costs are primarily for the following:

3 unchanged sentences

We expect these separate public company costs to exceed the costs that have been historically allocated to us.

We expect separate public company costs to be approximately $35 million per year.

During the first quarter of 2022 the Parent allocated costs were $6.0 million as described in Note 13, “Related Party Transactions” in the accompanying unaudited Combined Condensed Financial Statements contained elsewhere in this Form 10-Q.

We expect such separate public company costs to be approximately $35 million per year.

During the three months ended April 1, 2022, the Former Parent allocated costs were $6.0 million included in the accompanying Notes contained elsewhere in this Form 10-Q.

In addition to these separate public company costs, we expect to incur certain nonrecurring costs as a result of the Separation.

As part of the Parent, the Company was dependent on Colfax for all of its working capital and financing requirements, which utilized a centralized approach to cash management and financing of its operations.

Financing transactions relating to the Company were accounted for through the Net Parent investment account of the Company.

Accordingly, none of the Parent’s cash, cash equivalents or debt were assigned to the Company in the accompanying unaudited Combined Condensed Financial Statements included elsewhere in this quarterly report on Form 10-Q.

Following the Separation, the Consolidated and Combined Condensed Financial Statements include the accounts of ESAB and its wholly-owned subsidiaries and no longer include any allocations of expenses from Enovis.

• The Consolidated Balance Sheet as of July 1, 2022, consists of our consolidated balances, while the Combined Condensed Balance Sheet as of December 31, 2021, consists of the combined balances of the former Fabrication Technology business of Enovis.

• The Consolidated and Combined Condensed Statement of Operations and Statement of Comprehensive Income for the six months ended July 1, 2022 consists of our consolidated results for the three months ended July 1, 2022 and the combined results of the former Fabrication Technology business of Enovis and the certain entities discussed in the “Separation from Enovis” section within Note 1, “Organization and Basis of Presentation” in the accompanying Notes contained elsewhere in this Form 10-Q, for the three months ended April 1, 2022.

The Combined Condensed Statement of Operations and Statement of Comprehensive Income for the six months ended July 2, 2021, consist of the combined results of the former Fabrication Technology business of Enovis.

• The Consolidated and Combined Condensed Statement of Changes in Equity for the six months ended July 1, 2022 consists of the consolidated activities of ESAB for the three months ended July 1, 2022 and our combined activity and the former Fabrication Technology business of Enovis and the certain entities discussed in the “Separation from Enovis” section within Note 1, “Organization and Basis of Presentation” in the accompanying Notes contained

elsewhere in this Form 10-Q, for the three months ended April 1, 2022.

The Combined Condensed Statements of Changes in Equity for the three and six months ended July 2, 2021 consist of the combined activity of the former Fabrication Technology business of Enovis.

• The Consolidated and Combined Condensed Statement of Cash Flows for the six months ended July 1, 2022 consists of our consolidated activities for the three months ended July 1, 2022 and the combined activity of the former Fabrication Technology business of Enovis and the certain entities discussed in the “Separation from Enovis” section within Note 1 for the three months ended April 1, 2022.

The Combined Condensed Statement of Cash Flows for the three and six months ended July 2, 2021 consist of the combined activity of the former Fabrication Technology business of Enovis.

Our Consolidated and Combined Condensed Financial Statements may not be indicative of our results had we been a separate stand-alone entity throughout the periods presented, nor are the results stated herein indicative of what our financial position, results of operations and cash flows may be in the future.

Prior to the Separation, we were dependent on Enovis for all of our working capital and financing requirements under Enovis’s centralized approach to cash management and financing of its operations.

With the exception of cash, cash equivalents and borrowings clearly associated with ESAB and related to the Separation, financing transactions relating to us during the period prior to the separation were accounted for through our Net Former Parent investment account.

Accordingly, none of Enovis’s cash, cash equivalents or debt at the corporate level has been assigned to us in these financial statements.

As part of our new capital structure post Separation, we expect interest expense in 2022 to be in the range of $35 million to $40 million.

Net Parent investment, which includes retained earnings, represents the Parent’s interest in the recorded net assets of the Company.

All significant transactions between the Company and the Parent have been included in the accompanying Combined Condensed financial statements.

Transactions with the Parent are reflected in the accompanying Combined Condensed Statements of Equity as “Transfers from (to) Parent, net” and in the accompanying Combined Condensed Balance Sheets within “Net Parent investment.”

Former Parent’s investment, which included retained earnings, represented Enovis’s interest in our recorded net assets.

All significant transactions between us and the Former Parent prior to the Separation have been included in the accompanying Financial Statements.

Transactions with the Former Parent are reflected in the accompanying Consolidated and Combined Condensed Statements of Equity as “Transfers from (to) Former Parent, net” and in the accompanying Consolidated and Combined Condensed Balance Sheets within “Former Parent’s investment”.

Please see Part I, Item 1.

“Business” in our Form 10, for a discussion of ESAB’s objectives and methodologies for delivering shareholder value.

“Business” in our Form 10, for a discussion of ESAB’s objectives and methodologies for deliver ing stockholder va lue.

ESAB is a world leader in fabrication and specialty gas control technology, providing our partners with advanced equipment, consumables, specialty gas control, robotics, and digital solutions, which enable the everyday and extraordinary work that shapes our world.

9 unchanged sentences

Our business mix is well balanced between sales in emerging and developed markets, and equipment and consumables.

We intend to continue to utilize our strong global presence and worldwide network of salespeople and distributors to capitalize on growth opportunities by selling regionally-developed and/or marketed products and solutions throughout our served markets.

We intend to continue to utilize our strong global presence and worldwide network

of salespeople and distributors to capitalize on growth opportunities by selling regionally-developed and/or marketed products and solutions throughout our served markets.

Our geographic and end market diversity helps mitigate the effects from cyclical industrial market exposures.

1 unchanged sentence

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.

We face a number of challenges and opportunities, including the successful integration of acquired businesses, the application and expansion of our EBX tools to improve business performance, the ability to realize the expected benefits of the Separation and operate as an independent, public company, and rationalization of assets and costs.

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.

The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the three months ended April 1, 2022 and April 2, 2021.

The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the three and six months ended July 1, 2022 and July 2, 2021.

Results of Operations

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, Segment operating income, which represents Operating income before Restructuring and other related charges, Adjusted EBITA and Adjusted EBITDA as defined in the “Non-GAAP Measures” section.

Our management evaluates the operating results of each of its reportable segments based upon Net sales, Adjusted EBITA and Adjusted EBITDA as defined in the “Non-GAAP Measures” section.

Items Affecting Comparability of Reported Results

The comparability of our operating results for the three months ended April 1, 2022 , and April 2, 2021 is affected by the following additional significant items:

The comparability of our operating results for the three and six months ended July 1, 2022 , and July 2, 2021 is affected by the following additional significant items:

The COVID-19 Pandemic

In December 2019, a novel coronavirus disease (“COVID-19”) was first reported in China.

In December 2019, a novel coronavirus disease was first reported in China.

On March 11, 2020, due to worldwide spread of the virus, the World Health Organization characterized COVID-19 as a pandemic.

2 unchanged sentences

In an effort to contain COVID-19 or slow its spread, governments around the world have enacted measures including periodically closing businesses not deemed “essential,” isolating residents to their homes, limiting access to healthcare, curtailing activities including sporting events, and practicing social distancing.

While increased access to vaccinations has contributed to slowing the spread of COVID-19 in certain jurisdictions, allowing a return to more normal activity and operational levels during the first half of 2021, the emergence and subsequent spread of COVID-19 variants slowed the pace of recovery during the second half of 2021 through the first quarter of fiscal 2022.

While conditions related to the pandemic generally have improved in 2022 compared to 2021, conditions vary significantly by geography.

As reflected in the discussions that follow, the pandemic and actions taken in response to it have had a variety of impacts on our results of operations during 2021 and 2022, including sales levels, and together with other market dynamics has contributed to inflation and widespread supply chain challenges, including labor, raw material, and component shortages.

As a result, we have experienced supply constraints in our businesses, which have led to cost inflation and logistics delays.

We are taking actions in an effort to mitigate impacts to our supply chain, however, we expect these pressures to continue.

We are taking actions in an effort to mitigate impacts to our supply chain;

however, we expect these pressures to continue.

We continue to monitor the evolving situation and guidance from international and U.S.

3 unchanged sentences

Russia and Ukraine conflict

The invasion of Ukraine by Russia and the sanctions imposed in response to this crisis have increased the level of economic and political uncertainty in Russia.

On April 25, 2022, based upon continued developments within the month, we announced that we have decided it may be required to transition out of business in Russia and are evaluating options and possible timing for this transition.

We continue to fulfill current contractual obligations while addressing applicable laws and regulations.

In the first quarter of 2022, Russia represented approximately 6% of our total revenue, and $5 million in Net income.

Russia also had approximately 2% of our total net assets as of April 1, 2022.

Russia has a cumulative translation loss of approximately $100 million, which could be realized upon a transition.

To cover credit risks related to Russian and Ukrainian operations, we increased our allowances on receivables by approximately $4.0 million during the first quarter of 2022.

We are closely monitoring the developments in Ukraine and Russia.

Changes in laws and regulations or other factors impacting our ability to fulfill our contractual obligations could have an adverse effect on our results of operations.

The invasion of Ukraine by Russia and the sanctions imposed in response to this crisis have increased the level of economic and political uncertainty.

Refer to Note 1, “Organization and Basis of Presentation” in the accompanying Notes contained elsewhere in this Form 10-Q for additional information.

Foreign Currency Fluctuations

A significant portion of our Net sales, 77.8% for the three months ended April 1, 2022, are outside the United States, with the majority of those sales denominated in currencies other than the U.S.

A significant portion of our Net sales, 77.4% and 77.6% for the three and six months ended July 1, 2022, respectively, are outside the United States, with the majority of those sales denominated in currencies other than the U.S.

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.

Changes in foreign exchange rates can impact our results of operations and are quantified when significant.

For the three months ended April 1, 2022 compared to the three months ended April 2, 2021 , fluctuations in foreign currencies had an unfavorable impact on the change in Net sales of 3.8%, negatively affected Gross profit by 4.0% and favorably affected Selling, general and administrative expenses by 3.9%.

For the three months ended July 1, 2022 compared to the three months ended July 2, 2021 , fluctuations in foreign currencies had an unfavorable impact on the change in Net sales of 3.7%, negatively affected Gross profit by 4.3% and favorably affected Selling, general and administrative expenses by 4.9%.

For the six months ended July 1, 2022 compared to the six months ended July 2, 2021 , fluctuations in foreign currencies had an unfavorable impact on the change in Net sales of 3.7%, negatively affected Gross profit by 4.2% and favorably affected Selling, general and administrative expenses by 4.4%.

Our European operations typically experience a slowdown during the July, August and December vacation seasons.

4 unchanged sentences

Adjusted EBITA and Adjusted EBITDA

Adjusted EBITA and Adjusted EBITDA are non-GAAP performance measures that we include in this report because they are a key metric used by our management to assess our operating performance.

Adjusted EBITA excludes from Net income from continuing operations the effect of Restructuring and other related charges, acquisition-related intangible asset amortization, separation costs, Income tax expense and interest income, net.

Adjusted EBITA and Adjusted EBITDA are non-GAAP performance measures that we include in this report because they are key metrics used by our management to assess our operating performance.

Adjusted EBITA excludes from Net income from continuing operations the effect of Restructuring and other related charges, acquisition-related intangible asset amortization, pension settlement gain, separation costs, Income tax expense and Interest expense (income) and other, net.

Adjusted EBITDA further excludes depreciation and other amortization from the Adjusted EBITA calculation.

We also present Adjusted EBITA and Adjusted EBITDA margins, which are subject to the same adjustments as Adjusted EBITA and Adjusted EBITDA, respectively.

Further, we present these non-GAAP performance measures on a segment basis, where we exclude the impact of Restructuring and other related charges, acquisition-related intangible asset amortization, separation costs from segment operating income for Adjusted EBITA and further exclude depreciation and other amortization for 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-related intangible asset amortization and separation costs from operating income for Adjusted EBITA and further exclude depreciation and other amortization for Adjusted EBITDA.

We also present Adjusted EBITDA excluding Russia and Adjusted EBITDA margin excluding Russia which are subject to the same adjustments as Adjusted EBITDA and Adjusted EBITDA margins, respectively, further removing the impact of Russia.

Adjusted EBITA and 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 discrete restructuring plans and other initiatives that are fundamentally different from our ongoing productivity improvements.

4 unchanged sentences

The following tables set forth a reconciliation of Net income from continuing operations, the most directly comparable GAAP financial measure, to Adjusted EBITA and Adjusted EBITDA.

Three Months Ended

April 1, 2022 April 2, 2021

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

(Dollars in millions) (1)

1 unchanged sentence

Income tax expense 20.0 15.6 45.8 29.6

Interest income, net (2)

Interest expense (income) and other, net (2)

7.9 (0.1) 7.4 (0.2)

Pension settlement gain — (11.2) — (11.2)

Restructuring and other related charges (3)

4.6 3.5 10.0 6.6

Separation costs (4)

3.5 0.1 7.1 0.1

Acquisition-related amortization (5)

7.6 9.1 15.3 18.2

Adjusted EBITA (non-GAAP) 101.6 95.1 201.9 179.7

1 unchanged sentence

Adjusted EBITDA (non-GAAP) $ 110.5 $ 104.7 $ 219.8 $ 198.9

Adjusted EBITDA attributable to Russia (non-GAAP) 5.5 11.9 13.9 22.4

Adjusted EBITDA excluding Russia (non-GAAP) $ 105.0 $ 92.8 $ 205.9 $ 176.5

Net income margin from continuing operations (GAAP) 8.8 % 12.4 % 8.9 % 11.4 %

1 unchanged sentence

Adjusted EBITDA margin (non-GAAP) 16.7 % 16.6 % 16.8 % 16.6 %

Adjusted EBITDA margin excluding Russia (non-GAAP) (6)

16.6 % 15.8 % 16.6 % 15.8 %

(1) Numbers may not sum due to rounding.

(2) Relates to the removal of interest income, net included within the Interest income and other, net line within the Combined Condensed Statement of Operations.

(2) Mainly relates to the removal of interest expense and income included within the Interest expense (income) and other, net line within the Consolidated and Combined Condensed Statement of Operations.

(3) 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.

(4) Includes non-recurring professional fees incurred in the planning and execution of the separation from Enovis within the Selling, general and administrative expense line within the Consolidated and Combined Condensed Statements of Operations.

(5) Includes amortization of acquired intangibles.

(5) Includes depreciation and all other amortization.

The following tables set forth a reconciliation of Operating income, the most directly comparable financial statement measure, to Adjusted EBITA and Adjusted EBITDA by segment for the three months ended April 1, 2022 and April 2, 2021.

Three Months Ended April 1, 2022

Americas EMEA & APAC Total

(6) Net sales relating to Russia included within the EMEA & APAC segment were $29.5 million and $70.4 million for the three and six months ended July 1, 2022, respectively, and $44.0 million and $80.6 million for the three and six months ended July, 2 2021, respectively.

Three Months Ended July 1, 2022

Six Months Ended July 1, 2022

Americas EMEA & APAC Total Americas EMEA & APAC Total

(Dollars in millions) (1)

1 unchanged sentence

Restructuring and other related charges 3.6 1.1 4.6 7.2 2.8 10.0

Segment operating income (non-GAAP) 33.8 55.1 88.9

Separation costs 1.5 1.9 3.5 3.8 3.3 7.1

Acquisition-related amortization 4.2 3.4 7.6 8.3 7.0 15.3

Other income (expense), net (1)

— — — 0.3 (0.2) 0.1

2 unchanged sentences

Adjusted EBITDA (non-GAAP) $ 48.6 $ 61.9 $ 110.5 $ 92.6 $ 127.2 $ 219.8

Segment operating income margin (non-GAAP) 12.4 % 14.7 % 13.7 %

Adjusted EBITDA attributable to Russia (non-GAAP) — 5.5 5.5 — 13.9 13.9

Adjusted EBITDA excluding Russia (non-GAAP) $ 48.6 $ 56.4 $ 105.0 $ 92.6 $ 113.3 $ 205.9

Adjusted EBITA margin (non-GAAP) 15.5 % 15.3 % 15.4 % 15.2 % 15.6 % 15.4 %

Adjusted EBITDA margin (non-GAAP) 16.7 % 16.7 % 16.7 % 16.4 % 17.1 % 16.8 %

(1) Relates to the adjustment for other income (expense), net items included within the Interest income and other, net line within the

Combined Condensed Statements of Operations.

Three Months Ended April 2, 2021

Americas EMEA & APAC Total

Adjusted EBITDA margin excluding Russia (non-GAAP) 16.7 % 16.6 % 16.6 % 16.4 % 16.8 % 16.6 %

(1) Numbers may not sum due to rounding.

(2) Relates to the adjustment for certain items included within the Interest expense (income) and other, net line within the Consolidated and Combined Condensed Statements of Operations.

Three Months Ended July 2, 2021

Six Months Ended July 2, 2021

Americas EMEA & APAC Total Americas EMEA & APAC Total

(Dollars in millions)

1 unchanged sentence

Restructuring and other related charges 2.1 1.4 3.5 4.5 2.1 6.6

Segment operating income (non-GAAP) 24.8 50.6 75.4

Separation costs 0.1 — 0.1 0.1 — 0.1

Acquisition-related amortization 4.7 4.4 9.1 9.4 8.8 18.2

Other income (expense), net (1)

0.3 (0.1) 0.2 0.6 (0.3) 0.3

2 unchanged sentences

Adjusted EBITDA (non-GAAP) $ 38.0 $ 66.7 $ 104.7 $ 71.2 $ 127.7 $ 198.9

Segment operating income margin (non-GAAP) 11.0 % 14.8 % 13.3 %

Adjusted EBITDA attributable to Russia (non-GAAP) — 11.9 11.9 — 22.4 22.4

Adjusted EBITDA excluding Russia (non-GAAP) $ 38.0 $ 54.8 $ 92.8 $ 71.2 $ 105.3 $ 176.5

Adjusted EBITA margin (non-GAAP) 13.5 % 16.2 % 15.1 % 13.3 % 16.1 % 15.0 %

Adjusted EBITDA margin (non-GAAP) 15.0 % 17.7 % 16.6 % 14.8 % 17.8 % 16.6 %

(1) Relates to the adjustment for other income (expense), net items included within the Interest income and other, net line within the

Combined Condensed Statements of Operations.

Adjusted EBITDA margin excluding Russia (non-GAAP) 15.0 % 16.5 % 15.8 % 14.8 % 16.5 % 15.8 %

(1) Relates to the adjustment for certain items included within the Interest expense (income) and other, net line within the Consolidated and Combined Condensed Statements of Operations.

Total Company

Net sales increased for the three months ended April 1, 2022 as compared with the three months ended April 2, 2021.

The following table presents the components of changes in our combined Net sales.

Net sales increased for the three and six months ended July 1, 2022 as compared with the three and six months ended July 2, 2021.

The following table presents the components of changes in our consolidated and combined Net sales.

Three Months Ended Six Months Ended

Net Sales Change % Net Sales Change %

(Dollars in millions)

For the three months ended April 2, 2021 $ 568.1

For the three and six months ended July 2, 2021

$ 629.8 $ 1,197.9

Components of Change:

Existing businesses (1)

54.7 8.7 % 155.9 13.0 %

Foreign Currency translation (2)

(23.3) (3.7) % (44.7) (3.7) %

For the three months ended April 1, 2022 $ 647.9

31.4 5.0 % 111.2 9.3 %

For the three and six months ended July 1, 2022

$ 661.2 $ 1,309.1

(1) Excludes the impact of foreign exchange rate fluctuations and acquisitions, thus providing a measure of change due to organic growth factors such as price, product mix and volume.

(2) 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.

Net sales from existing businesses increased $101.2 million during the three months ended April 1, 2022 compared to the prior year period primarily due to inflation-related customer pricing increases of approximately $82 million and, to a lesser extent, new product initiatives and improved sales volume.

Net sales from existing businesses increased $54.7 million and $155.9 million during the three and six months ended July 1, 2022, respectively, compared to the prior year period primarily due to inflation-related customer pricing increases of approximately $82 million and $164 million, respectively, partially offset by reduced sales volumes due to the Russia and Ukraine conflict.

The strengthening of the U.S.

dollar relative to other currencies caused a $21.4 million unfavorable currency translation impact.

dollar relative to other currencies caused a $23.3 million and $44.7 million unfavorable currency translation impact during the three and six months ended July 1, 2022, respectively.

Operating Results

The following table summarizes our results for the comparable periods.

Three Months Ended

April 1, 2022 April 2, 2021

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

(Dollars in millions)

2 unchanged sentences

Selling, general and administrative expense $ 136.9 $ 132.7 $ 272.4 $ 257.1

Operating income $ 83.6 $ 72.3

Operating income margin 12.9 % 12.7 %

Net income from continuing operations $ 57.9 $ 78.1 $ 116.3 $ 136.6

6 unchanged sentences

Restructuring and other related charges (1)

$ 4.6 $ 3.5 $ 10.0 $ 6.6

Acquisition-related amortization (2)

$ 7.6 $ 9.1 $ 15.3 $ 18.2

Separation costs $ 3.5 $ 0.1 $ 7.1 $ 0.1

Interest income, net $ (0.5) $ —

Interest expense (income) and other, net (3)

$ 7.9 $ (0.1) $ 7.4 $ (0.2)

Income tax expense $ 20.0 $ 15.6 $ 45.8 $ 29.6

4 unchanged sentences

(2) Includes amortization of acquired intangibles.

First Quarter of 2022 Compared to First Quarter of 2021

Gross profit increased $24.5 million in the first quarter of 2022 compared with the prior year period.

The increase in Gross profit was primarily attributable to benefit from price increases, new product initiatives, and favorable product mix.

(3) Mainly relates to the removal of interest expense and income included within the Interest expense (income) and other, net line within the Consolidated and Combined Condensed Statement of Operations.

Second Quarter of 2022 Compared to Second Quarter of 2021

Gross profit increased $9.1 million in the second quarter of 2022 compared with the prior year period.

The increase in Gross profit was primarily attributable to benefit from price increases, new product initiatives, and favorable product mix partially offset by inflation-related cost increases, reduced sales volumes due to the Russia and Ukraine conflict and unfavorable currency translation.

Gross profit margin declined primarily due to the dilution effect caused by customer inflation-related pricing and cost increases.

Selling, general and administrative expense increased $4.2 million in the second quarter of 2022 compared to the prior year period.

This increase is primarily driven by inflation-related cost increases, increased employee compensation costs, and $3.5 million of separation costs, partially offset by currency fluctuations.

The effective tax rate of 25.7% for the quarter ended July 1, 2022 differed from the effective tax rate of 16.7% for the same period ending July 2, 2021 due to the change in discrete tax liabilities, net of any benefits, in the comparable periods.

Additionally, our mix of foreign income was higher in jurisdictions that tax at lower rates than the U.S.

federal statutory rate in the second quarter of 2021.

Net income from continuing operations decreased $20.2 million in the second quarter of 2022 compared with the prior year period due to changes discussed above as well as the increase in interest expense related to our new Term Facility and Revolving Facility, higher income tax expenses and a pension settlement gain of $11.2 million recorded in the second quarter of 2021, offset by improved Gross profit.

Net income margin from continuing operations decreased primarily due to the items discussed above and a higher tax rate and interest expense versus the prior period.

Adjusted EBITA, Adjusted EBITDA, and related margins increased primarily due to improved sales, partially offset by inflation-related pricing and cost increases.

Excluding Russia Adjusted EBITDA increased from $92.8 million to $105.0 million, and the related adjusted EBITDA margins expanded 80 basis points from 15.8% to 16.6%.

Six months ended July 1, 2022 Compared to Six months ended July 2, 2021

Gross profit increased $33.6 million in the six months ended July 1, 2022 compared with the prior year period.

The increase in Gross profit was primarily attributable to benefit from price increases, new product initiatives, and favorable product mix partially offset by inflation-related cost increases and, to a lesser extent, reduced sales volumes due to the Russia and Ukraine conflict.

Gross profit margin declined primarily due to dilution effect caused by customer inflation-related pricing and cost increases, which compressed the margin.

Selling, general and administrative expense increased $11.0 million in the first quarter of 2022 compared to the prior year period.

This increase is primarily driven by inflation-related cost increases, increased allowances on receivables of approximately $4.0 million relating to Russian and Ukrainian operations, increased employee compensation costs, and $3.6 million of separation costs, partially offset by currency fluctuations.

The effective tax rate for the first three months ending April 1, 2022 differed from the effective tax rate for the period ending April 2, 2021 due to the change in discrete tax liabilities, net of any benefits, in the comparable periods.

Additionally, the tax impact of taxable foreign exchange gains and non-deductible expenses was higher in the first three months of 2022.

Net income from continuing operations remained consistent in the first quarter of 2022 compared with the prior year period due to improved Gross profit being offset by higher employee related costs, Separation-related cost and income tax expenses.

Net income margin from continuing operations decreased by 130 basis points primarily due to a change in the tax rate versus the prior year.

Selling, general and administrative expense increased $15.2 million in the six months ended July 1, 2022 compared to the prior year period.

This increase is primarily driven by inflation-related cost increases, $7.1 million of Separation-related costs, increased allowances on receivables of approximately $4.0 million relating to Russian and Ukrainian operations in the first quarter of 2022 and increased costs related to being an independent public company, partially offset by currency fluctuations.

The effective tax rate of 28.2% for the six months ended July 1, 2022 differed from the effective tax rate of 17.8% for the same period ending July 2, 2021 due to the change in discrete tax liabilities, net of any benefits, in the comparable periods.

Additionally, The Company's mix of foreign income was higher in jurisdictions that tax at lower rates than the U.S.

federal statutory rate in the second quarter of 2021.

Net income from continuing operations decreased $20.3 million in the six months ended July 1, 2022 compared with the prior year period due to changes discussed above as well as the increase in interest expense related to our new Term Facility and Revolving Facility, higher income tax and a pension settlement gain of $11.2 million recorded in second quarter of 2021 offset by improved Gross profit.

Net income margin from continuing operations decreased primarily due to the items discussed above and a change in the tax rate versus the prior period.

Adjusted EBITA, Adjusted EBITDA, and related margins increased primarily due to improved sales, partially offset by inflation-related pricing and cost increases.

9 unchanged sentences

The following table summarizes selected financial data for our Americas segment:

Three Months Ended

April 1, 2022 April 2, 2021

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

(Dollars in millions)

3 unchanged sentences

Selling, general and administrative expense $ 60.4 $ 55.4 $ 115.8 $ 108.2

Segment operating income (non-GAAP) $ 33.8 $ 24.8

Segment operating income margin (non-GAAP) 12.4 % 11.0 %

Adjusted EBITA (non-GAAP) $ 45.2 $ 34.3 $ 85.7 $ 64.0

8 unchanged sentences

Depreciation and other amortization $ 3.4 $ 3.7 $ 6.9 $ 7.2

First Quarter of 2022 Compared to First Quarter of 2021

Net sales in our Americas segment increased $46.1 million in the first quarter of 2022 compared with the prior year period primarily due to inflation-related pricing increases and, to a lesser extent, new product initiatives.

Gross profit increased due to a favorable product mix, and benefit from price increases, while gross profit margin decreased 150 basis points due to dilution effect caused by inflation-related pricing and cost increases.

Selling, general and administrative expense increased due to increased sales and increased costs related to the Separation.

Segment operating income, Adjusted EBITA, Adjusted EBITDA, and related margins improved primarily due to increased sales.

Second Quarter of 2022 Compared to Second Quarter of 2021

Net sales in our Americas segment increased $37.5 million in the second quarter of 2022 compared with the prior year period.

Net sales from existing business increased $38.1 million primarily due to inflation-related pricing increases.

Gross profit increased due to the benefit from price increases partially offset by inflation-related cost increases.

Gross profit margin increased 90 basis points for the same reasons.

Selling, general and administrative expense increased primarily due to increased travel expenses and increased costs related to the Separation.

Adjusted EBITA, Adjusted EBITDA, and related margins improved primarily as a result of the aforementioned factors.

Six months ended July 1, 2022 Compared to Six months ended July 2, 2021

Net sales in our Americas segment increased $83.6 million in the six months ended July 1, 2022 compared with the prior year period.

Net sales from existing business increased $85.8 million prim arily due to inflation-related pricing increases and, to a lesser extent, new product initiatives.

Gross profit increased primarily due to benefit from price increases partially offset by inflation-related cost increases, while gross profit margin decreased 20 basis points due to dilution effect caused by unfavorable product mix and inflation-related pricing and cost increases.

Selling, general and administrative expense increased due to increased travel expenses and increased costs related to the Separation.

Adjusted EBITA, Adjusted EBITDA, and related margins improved primarily due to improved sales, partially offset by inflation-related pricing and cost increases.

The following table summarizes the selected financial data for our EMEA & APAC segment:

Three Months Ended

April 1, 2022 April 2, 2021

Three Months Ended Six Months Ended

July 1, 2022 July 2, 2021 July 1, 2022 July 2, 2021

(Dollars in millions)

3 unchanged sentences

Selling, general and administrative expense $ 76.6 $ 77.2 $ 156.5 $ 148.9

Segment operating income (non-GAAP) $ 55.1 $ 50.6

Segment operating income margin (non-GAAP) 14.7 % 14.8 %

Adjusted EBITA (non-GAAP) $ 56.4 $ 60.8 $ 116.2 $ 115.7

8 unchanged sentences

Depreciation and other amortization $ 5.5 $ 5.9 $ 11.0 $ 12.0

First Quarter of 2022 Compared to First Quarter of 2021

Net sales increased for our EMEA & APAC segment by $33.6 million in the first quarter of 2022 compared with the prior year period primarily due to inflation-related pricing increases and, to a lesser extent, new product initiatives and sales volume, partially offset by an unfavorable currency translation impact of $19.7 million.

Gross profit increased in the first quarter of 2022 compared to the first quarter of 2021 due primarily to a favorable product mix and benefit from price increases, partially offset by an unfavorable currency translation impact.

Gross profit margin improved by 20 basis points mainly due to favorable product mix being partially offset by dilution effect from inflation related pricing and cost increases.

Second Quarter of 2022 Compared to Second Quarter of 2021

Net sales decreased for our EMEA & APAC segment by $6.1 million in the second quarter of 2022 compared with the prior year period.

Net sales from existing business increased $16.5 million offset by $22.6 million in unfavorable currency translation.

The increase in Net sales from existing business was primarily due to inflation- related pricing increases and to a lesser extent, new product initiatives which were offset by a decrease in sales volumes due to the Russia and Ukraine conflict.

Gross profit decreased in the second quarter of 2022 compared with the prior year period due primarily to higher energy costs and other inflation-related cost increases, reduced sales volumes, and an unfavorable currency translation impact partially offset by benefit from price increases and a favorable product mix.

Gross profit margin decreased 100 basis points for the same reasons.

Selling, general and administrative expense remained largely consistent compared to the same period in 2021.

Adjusted EBITA, Adjusted EBITDA, and related margins declined due to lower Gross profit margin.

Excluding Russia Adjusted EBITDA increased from $54.8 million to $56.4 million and the related adjusted EBITDA margins expanded 10 basis points from 16.5% to 16.6%.

Six months ended July 1, 2022 Compared to Six months ended July 2, 2021

Net sales increased for our EMEA & APAC segment by $27.6 million in the six months ended July 1, 2022 compared with the prior year period.

Net sales from existing business increased $70.1 million offset by $42.5 million in unfavorable currency translation.

The increase in Net sales from existing business was primarily due to inflation-related pricing increases and, to a lesser extent, new product initiatives partially offset by reduced sales volumes due to the Russia and Ukraine conflict.

Gross profit increased in the second quarter of 2022 compared with the prior year period due primarily to a favorable product mix and benefit from price increases, partially offset by inflation-related cost increases, reduced sales volumes and an unfavorable currency translation impact.

Gross profit margin decreased 40 basis points mainly due to dilution effect from inflation related pricing and cost increases.

Selling, general and administrative expense increased over the same period primarily driven by higher sales, an increase in Separation costs, increased allowances on receivables of approximately $4.0 million relating to Russian and Ukrainian operations and employee compensation costs.

Segment operating income, Adjusted EBITA and Adjusted EBITDA improved due to increased sales and favorable product mix, partially offset by increased Selling, general and administrative expenses.

Segment operating income margin, Adjusted EBITA margin, and Adjusted EBITDA margin declined due to increased Selling, general and administrative expenses.

Adjusted EBITA and Adjusted EBITDA remained consistent compared to the same period in 2021 while related margins declined primarily due to lower Gross profit margin.

Liquidity and Capital Resources

Prior to the completion of the Separation, we financed our working capital requirements through cash flows from operating activities and arrangements with our Parent.

Prior to the completion of the Separation, we financed our working capital requirements through cash flows from operating activities and arrangements with our Former Parent.

We currently 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.

In connection with the Separation, we incurred $1.2 billion in aggregate principal amount of indebtedness pursuant to a $1.75 billion credit facility, consisting of (i) a senior revolving facility in an initial aggregate principal amount of up to $750 million, (ii) a senior term loan A-1 facility in an initial aggregate principal amount of up to $400 million and (iii) a 364-day senior term loan A-2 facility in an initial aggregate principal amount of up to $600 million.

Amounts outstanding under our 364-day senior term loan A-2 facility will be automatically and immediately reduced on a dollar-for-dollar basis by the first $600 million of net proceeds from the incurrence or issuance of any additional permanent financing, including any issuance of senior unsecured notes.

We have used the proceeds of these facilities, in part, to fund the cash distribution to Colfax as partial consideration for the transfer of Colfax’s Fabrication Technology business to us and to pay fees and expenses in connection with the Separation and Distribution.

Following payment of the $1.2 billion of outstanding financing, ESAB will have the capacity for additional indebtedness, up to $550 million.

The debt may also restrict our business and may adversely impact our financial condition, results of operations or cash flows.

The Separation may increase the overall cost of debt funding and decrease the overall debt capacity and commercial credit available to us.

In addition to the $550 million described in the preceding paragraph, we also have the ability to incur $50 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 14.

Subsequent Events” of the Combined Condensed Financial Statements for more information related to the Credit Facilities.

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.

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.

Also on June 28, 2022, we borrowed the entire $600 million under 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 remains unchanged.

As of July 1, 2022, we are in compliance with the covenants under Credit Agreement.

As of July 1, 2022, the weighted average interest rate of borrowings under the Credit Agreement was 2.39%, excluding accretion of deferred financing fees and the impact from swap agreements entered into after the completion of the second quarter.

Refer to Note 15, “Subsequent Events” in the accompanying Notes contained elsewhere in this Form 10-Q for more information related to swap agreements.

As of end of the second quarter, we had the capacity for additional indebtedness, up to $565 million available on the Revolving Facility.

Additionally, we have the ability to incur $50 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 Credit Facilities.

We believe that we could raise additional funds in the form of debt or equity if it was determined to be appropriate for strategic acquisitions or other corporate purposes.

We believe that our sources of liquidity are adequate to fund our operations for the next twelve months.

As of April 1, 2022, we had $56.6 million of Cash and cash equivalents, an increase of $15.4 million from the balance as of December 31, 2021 of $41.2 million.

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.

As of July 1, 2022, we had $53.5 million of Cash and cash equivalents, an increase of $12.3 million from the balance as of December 31, 2021 of $41.2 million.

The following table summarizes the change in Cash and cash equivalents during periods indicated:

Three Months Ended

April 1, 2022 April 2, 2021

Six Months Ended

July 1, 2022 July 2, 2021

(Dollars in Millions) (1)

4 unchanged sentences

Net cash used in investing activities (10.3) (14.4)

Repayments of borrowings, net (0.5) —

Proceeds from borrowings on term credit facility 1,000.0 0.3

Proceeds from borrowings on revolving credit facility 265.0 —

Repayments of borrowings on revolving credit facility and other (79.6) —

Payment of deferred financing fees (5.6) —

Payments of deferred consideration (1.5) —

Distributions to noncontrolling interest holders (0.9) (1.1)

Transfers from (to) Parent, net 2.8 (55.1)

Consideration to Former Parent in connection with the Separation (1,200.0) —

Transfers from (to) Former Parent, net 2.8 (111.1)

Net cash used in financing activities (19.9) (111.9)

2 unchanged sentences

(1) Numbers may not sum due to rounding.

Cash used in operating activities related to discontinued operations for the three months ended April 1, 2022 was $4.6 million .

Cash flows from operating activities can fluctuate significantly from period to period due to changes in working capital and the timing of payments for items such as pension funding, asbestos-related costs and restructuring program funding.

Changes in significant operating cash flow items are discussed below.

• During the three months ended April 1, 2022 and April 2, 2021, cash payments of $6.7 million and $3.4 million, respectively, were made related to our restructuring initiatives.

• During the three months ended April 1, 2022 cash provided by operating activities decreased $46.8 million over the same period in 2021 mainly due to a decrease in cash provided by changes in operating assets and liabilities of $47.2 million resulting from increased trade receivables and higher inventories to support growth and manage supply chain challenges as result of COVID-19.

Cash flows used in investing activities during the three months ended April 1, 2022 and April 2, 2021 includes $5.9 million and $4.7 million, respectively, of cash used for the Purchases of property, plant and equipment.

Cash flows used in financing activities during the three months ended April 1, 2022 and April 2, 2021 primarily relates to activity with Parent.

Our Cash and cash equivalents as of April 1, 2022 includ e $48.9 million held in jurisdictions outside the U.S.

• Cash used in operating activities related to discontinued operations for the six months ended July 1, 2022 was $13.7 million, which was mainly asbestos related.

• During the six months ended July 1, 2022, we paid $12.9 million and $7.5 million for Separation costs and interest related to our term loans and revolving credit facility, respectively.

• During the six months ended July 1, 2022 and July 2, 2021, cash payments of $12.8 million and $6.8 million, respectively, were made related to our restructuring initiatives.

• Additionally, during the six months ended July 1, 2022 cash provided by operating activities decreased compared to the same period in 2021 also due to a decrease in cash provided by changes in operating assets and liabilities resulting from investment in inventories and other working capital to primarily support growth and manage supply chain challenges as result of COVID-19.

Cash flows used in investing activities during the six months ended July 1, 2022 and July 2, 2021 includes $13.7 million and $10.8 million, respectively, of cash used for the Purchases of property, plant and equipment.

Cash flows used in financing activities decreased by $92.0 million during the six months ended July 1, 2022 and July 2, 2021 primarily due to the receipt of proceeds from the issuance of our debt of $1.3 billion, of which $1.2 billion was paid to our

Former Parent in connection with the Separation.

Transfers from (to) Former Parent, net also significantly decreased compared to the prior period.

The remaining change was primarily due to a $80.0 million repayment on the revolving credit facility.

Our Cash and cash equivalents as of July 1, 2022 includ e $47.7 million held in jurisdictions outside the U.S.

Cash repatriation of non-U.S.

9 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis