What changed in this filing

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Item 1. Business

2024-02-29 compared with 2023-03-07 · 48 added, 62 removed, 90 unchanged (55% of the section changed)

Founded in 1904, ESAB Corporation is a world leader in connected fabrication technology and gas control solutions.

Founded in 1904, ESAB Corporation, is a focused premier industrial compounder.

On April 4, 2022, ESAB completed its Separation from Colfax Corporation and became an independent, publicly-traded company, listed on the New York Stock Exchange (“NYSE”).

We provide our partners with advanced equipment, consumables, gas control equipment, robotics and digital solutions.

Our rich history of innovative products and workflow solutions and our business system, ESAB Business Excellence (“EBX”), allows us to realize our purpose of Shaping the world we imagine.

Our rich history of innovative products and workflow solutions and our business system, ESAB Business Excellence (“EBX”), enables our purpose of Shaping the world we imagine TM .

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

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Products are sold into a wide range of global end markets, including general industry, infrastructure, renewable energy, medical and life sciences, transportation, construction and energy.

Our sales channels include both independent distributors and direct salespeople who, depending on geography and end market, sell our products to our end users.

ESAB Corporation is based in North Bethesda, Maryland and employs approximately 9,000 associates and serves customers in approximately 150 countries.

ESAB Corporation is a Delaware corporation and was incorporated in 2021 for the purpose of holding the fabrication technology business of Colfax in connection with the separation of ESAB from Colfax.

On December 29, 2021, in anticipation of the Distribution (as defined below), certain subsidiaries of Colfax were transferred into the ownership of ESAB in a common-control transaction.

We completed the Separation on April 4, 2022 and became an independent, publicly-traded company, listed on the New York Stock Exchange.

The Separation was effected through a pro-rata distribution of 90% of the then outstanding shares of common stock of ESAB Corporation to the holders of common stock of the Former Parent (the “Distribution”).

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

In November 2022, Enovis sold a total of 6.0 million shares of the Company’s common stock as part of a secondary offering.

After the secondary offering, Enovis no longer owned any of the Company’s outstanding common stock.

We believe our company, which competes in an estimated $30 billion market, is one of the prominent industry players with a substantial position in every major market in the world, combining global scale with regional agility to maximize growth and profits.

We define our addressable market as established equipment products and new products in automation, software and services, and estimate its size based on public data from peer companies, customer surveys, and market analysis conducted by our sales function.

Our sales channels include both independent distributors and direct salespeople that, depending on geography and end market, sell our products to our end users.

ESAB is based in North Bethesda, Maryland and employs approximately 9,000 associates and serves customers in approximately 150 countries.

We believe our Company, which competes in an estimated $30 billion m arket, is one of the prominent industry players with a substantial position in every major market in the world, combining global scale with regional agility to maximize growth and profits.

We define our addressable market as established fabrication technology equipment products and new products in automation, software and services, and estimate its size based on public data from peer companies, customer surveys and market analysis conducted by our sales function.

Approximately 50% of our 2023 revenues were derived from developing markets, which we define as South America, Eastern Europe, India, Asia, Australia and the Middle East, and which are expected to grow at greater than twice the rate of more mature markets in North America and Europe, based on publicly available economic data from sources such as IHS Markit and the International Monetary Fund.

Our gas control business is also well-positioned in attractive markets like healthcare and life sciences.

Our gas control business is also well-positioned in attractive markets such as medical and specialty gas control.

Acquisitions are a core part of our strategy and are used to strengthen our Company and accelerate growth.

Acquisitions follow our disciplined process to ensure strategic alignment, rapid integration and attractive long-term financial returns.

During the year ended December 31, 2022, we completed two acquisitions and we expect to complete more acquisitions in the following years.

See Note 5, “Acquisitions” in Item 8 of this Form 10-K for further information.

During the year ended December 31, 2023, we completed one acquisition and we expect to complete more acquisitions in the following years.

See Part II, Item 8, Note 5, “Acquisitions” of this Form 10-K for further information.

The Company has been built through a series of acquisitions, as well as organic growth.

We seek to build an enduring premier global enterprise by applyi ng EBX, our business management system to continuously improve our Company and pursue growth in revenues and improvements in profit and cash flow.

We seek to build an enduring premier global enterprise by applying EBX to continuously improve our Company and pursue growth in revenues and improvements in profit and cash flow.

EBX is integral to our operations.

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Our products and services are marketed worldwide and the markets we serve are fragmented and competitive.

Because we compete in selected niches of these markets and due to the diversity of our products and services, no single company competes directly with us across all our markets.

Because we compete in selected niches of these markets and due to the diversity of our products and services, no single company competes directly with us across all of our markets.

We encounter a wide variety of competitors that differ by product line, including well-established regional competitors, competitors with greater specialization in particular markets, as well as larger competitors.

The markets that we compete in are also served by Lincoln Electric and the welding business within Illinois Tool Works, Inc.

The markets that we compete in are also served by Lincoln Electric and the welding business within Illinois Tool

Our customer base is broadly diversified across many sectors of the economy and we believe customers place a premium on quality, reliability, availability, design and application engineering support.

We believe the principal elements of competition in

our served markets are the technical ability to meet customer specifications, product quality and reliability, brand names, price, application expertise and engineering capabilities, timely delivery and strong aftermarket support.

We believe the principal elements of competition in our served markets are the technical ability to meet customer specifications, product quality and reliability, brand names, price, application expertise and engineering capabilities, timely delivery and strong aftermarket support.

We believe that we are a leading competitor in each of our markets.

We continue to actively monitor the effects of COVID-19, including the rise, prevalence and severity of variants of the virus, the related government regulations, and the impacts on our results and operations.

The pandemic and actions taken in response to it have had a variety of impacts on our results of operations including sales levels, and together with other market dynamics has contributed to inflation and widespread supply chain challenges;

including labor, raw materials, and component shortages.

For additional information on the risks of COVID-19 to our operations refer to Item 1A.

“Risk Factors — Risks Related to Our Business — The effects of the COVID-19 pandemic have adversely impacted, and may in the future adversely impact, our results of operations, financial condition, and overall financial performance.”

Reportable Segments

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In addition, we believe that our exposure to developing economies will provide additional opportunities for growth in the future.

Our principal markets as a whole outside the United States are Europe, Asia, South America, and the Middle East.

Our principal markets outside the United States are Europe, Asia, South America and the Middle East.

Our international operations subject us to certain risks.

“Risk Factors — Risks Related to Our Business”.

The majority of our sales are derived from international operations.

“Risk Factors — Risks Related to Our Business - The majority of our sales are derived from international operations.

We are subject to specific risks associated with international operations.”

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Our principal raw materials and components for our business are steel, iron, copper and aluminum.

We believe that our sources of raw materials are adequate for our needs for the foreseeable future and the loss of any one supplier would not have a material adverse effect on our business or results of operations.

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

However, the business impact caused by the COVID-19 pandemic, as well as general economic conditions, may distort the effects of historical seasonality patterns and impact future seasonal variations.

We believe that our sources of raw materials are adequate for our needs for the foreseeable future and the loss of any one supplier would

not have a material adverse effect on our business or results of operations.

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

However, the business impact caused by general economic conditions, geopolitical conflicts and other disruptions, may distort the effects of historical seasonality patterns and impact future seasonal variations.

Working Capital

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These are not the only regulations that our businesses must comply with.

For a description of risks related to the regulations that our businesses are subject to, please refer to “Risk Factors—Risks Related to Our Business.”

So me of our gas control pro ducts are related to medical device products and are subject to extensive regulation by the United States Food and Drug Administration (the “FDA”), EU Medical Device Regulation (the “EU MDR”), and numerous other federal, state, and foreign governmental authorities.

These regulations include significant new requirements for medical devices, including enhanced requirements for clini cal evidence and documentation, increased focus on device identification and traceability, and additional post-market surveillance and diligence.

For a description of risks related to the regulations that our businesses are subject to, refer to Item 1A.

“Risk Factors—Risks Related to Our Business.”

So me of our gas control products are related to medical device products and are subject to extensive regulation by the United States Food and Drug Administration (the “FDA”), European Union Medical Device Regulation (the “EU MDR”) and numerous other federal, state and foreign governmental authorities.

These regulations include significant new requirements for medical devices, including enhanced requirements for clinical evidence and documentation, increased focus on device identification and traceability and additional post-market surveillance and diligence.

The process of obtaining regulatory approvals to market these products can be costly and time consuming and approvals might not be granted for future products on a timely basis, if at all.

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We establish objectives and appropriate targets for significant environmental aspects of our business operations and activities including, but not limited to, the reduction of energy and water consumed and waste minimization.

For a discussion of risks related to compliance with environmental and health and safety laws and risks related to past or future releases of, or exposures to, hazardous substances, please refer to “Risk Factors—Risks Related to Business.”

For a discussion of risks related to compliance with environmental and health and safety laws and risks related to past or future releases of, or exposures to, hazardous substances, refer to Item 1A.

“Risk Factors—Risks Related to Business.”

Export/Import Compliance

We are required to comply with various U.S.

export/import control and economic sanctions laws, including:

• the International Traffic in Arms Regulations administered by the U.S.

Department of State, Directorate of Defense Trade Controls, which, among other things, imposes license requirements on the export from the United States of defense articles and defense services (which are items specifically designed or adapted for a military application and/or listed on the United States Munitions List);

• the Export Administration Regulations administered by the U.S.

Department of Commerce, Bureau of Industry and Security, which, among other things, impose licensing requirements on the export or re-export of certain dual-use goods, technology and software (which are items that potentially have both commercial and military applications);

• the regulations administered by the U.S.

Department of Treasury, Office of Foreign Assets Control, which implement economic sanctions imposed against designated countries, governments and persons based on United States foreign policy and national security considerations;

• the import regulatory activities of the U.S.

Customs and Border Protection.

We are required to comply with various United States export/import control and economic sanctions laws, including:

• the International Traffic in Arms Regulations administered by the United States Department of State, Directorate of Defense Trade Controls, which, among other things, imposes license requirements on the export from the United States of defense articles and defense services (which are items specifically designed or adapted for a military application and/or listed on the United States Munitions List);

• the Export Administration Regulations administered by the United States Department of Commerce, Bureau of Industry and Security, which, among other things, impose licensing requirements on the export or re-export of certain dual-use goods, technology and software (which are items that potentially have both commercial and military applications);

• the regulations administered by the United States Department of Treasury, Office of Foreign Assets Control, which implement economic sanctions imposed against designated countries, governments and persons based on United States foreign policy and national security considerations;

• the import regulatory activities of the United States Customs and Border Protection.

Other nations’ governments have implemented similar export and import control regulations, which may affect our operations or transactions subject to their jurisdictions.

For a discussion of risks related to export/import control and economic sanctions laws, please refer to “Risk Factors—Risks Related to Litigation and Regulatory Compliance—We have done and may continue to do business in countries subject to U.S.

sanctions and embargoes.

For a discussion of risks related to export/import control and economic sanctions laws, refer to Item 1A.

“Risk Factors—Risks Related to Litigation and Regulatory Compliance— We have done and may continue to do business in countries subject to United States sanctions and embargoes.

Failure to comply with various sanction and embargo laws may result in enforcement or other regulatory actions ” and “Risk Factors—Risks Related to Litigation and Regulatory Compliance— If we fail to comply with export control regulations, we could be subject to substantial fines or other sanctions, which could have a material adverse effect on our business, financial condition and results of operations .”

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Employee Profile

As of December 31, 2022, we employed approximately 9,000 persons, of whom approximately 1,200 were employed in the United States and approximately 7,800 were employed outside of the United States.

As of December 31, 2023, we employed approximately 9,000 associates, of whom approximately 1,300 were employed in the United States and approximately 7,700 were employed outside of the United States.

Talent Development

In our effort to enable our purpose, “Shaping the World We Imagine”, we strive to find extraordinary people and support them across their entire associate lifecycle, so they stay engaged in building, growing and sustaining the company.

As a result, we’re committed to a “Talent First” strategy which starts with our associates’ health and safety.

Our talent strategy is also about attracting great talent, elevating the associate experience, retaining our workforce, and building the leadership bench strength needed for our future growth and success.

In our effort to enable our purpose, Shaping the world we imagine TM , we strive to find extraordinary people and support them across their entire associate lifecycle, so they stay engaged in building, growing and sustaining the Company.

As a result, we are committed to a “Talent First” strategy which starts with our associates’ health and safety.

Our talent strategy is also focused on attracting great talent, elevating the associate experience, retaining our workforce and building the leadership bench strength needed for our future growth and success.

We know associate development is critical to our success.

To nurture talent and build our bench strength, we offer a variety of global learning and development opportunities available to associates at all levels of our organization.

We also offer mechanisms by which our associates can steer and request their own development.

Our suite of programs focuses on leadership, business skills and compliance.

Employee Safety

The safety and well-being of ESAB's colleagues around the world has been, and always will be, a top priority.

The safety and well-being of ESAB's associates around the world has been, and always will be, a top priority.

Guided by the Company's Environment, Health & Safety Policy, ESAB strives every day to foster a proactive safety culture.

The Company is committed to continual improvement of its environment, health and safety management system through assessments, actionable planning and implementation of best practices.

The Company is committed to continually improving its environment, health and safety management system through assessments, actionable planning, and evaluation and benchmarking of best practices.

Compensation and Benefits

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Diversity and Inclusion

As a world leader for welding, cutting, fabrication, and gas control technology solutions, ESAB is dedicated to creating an inclusive, welcoming culture in which every voice is valued.

ESAB is dedicated to creating an inclusive, welcoming culture in which every voice is valued.

To advance this commitment, we have developed our Diversity, Equity and Inclusion Strategy.

Our strategy is about embracing diversity & inclusion in our everyday actions while empowering and elevating others, leading inclusively, learning about celebrating our differences and ensuring every voice is valued.

Our strategy is about embracing diversity and inclusion in our everyday actions while empowering and elevating others through equal opportunities, leading inclusively and ensuring every voice is valued.

Labor Relations

Approximately 18% o f our U.S.

associates are covered by collective bargaining agreements with U.S.

trade unions.

In addition, approximately 37% of our non-U.S.

associates are represented by foreign trade unions and work councils in Europe, Asia, Central and South America, Canada, Africa and Australia, which could subject us to arrangements very similar to collective bargaining agreements.

Approximate ly 17% of our United States associates are covered by collective bargaining agreements with United States trade unions.

In addition, approximately 42% of our non-United States associates are represented by foreign trade unions and work councils in Europe, Asia, Central and South America, Canada, Africa and Australia, which could subject us to arrangements very similar to collective bargaining agreements.

We have not experienced any work stoppages or strikes that have had a material adverse impact on operations.

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You may also request a copy of these filings, at no cost, by writing or telephoning us at:

Investor Relations, ESAB Corporation, 909 Rose Avenue, 8th Floor, Bethesda, MD 20852, telephone (301) 323-9099.

Investor Relations, ESAB Corporation, 909 Rose Avenue, 8th Floor, North Bethesda, MD 20852, telephone (301) 323-9099.

Information contained on our website is not incorporated by reference in this report.

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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-K

Item 1. Business