| SEGMENT INFORMATION |
NOTE 5 — SEGMENT INFORMATION The Company’s primary business is the design, development and manufacture of arc welding products, automated joining, assembly and cutting systems, plasma and oxy-fuel cutting equipment. The Company also has a leading global position in brazing and soldering alloys. The Company’s products include arc welding, brazing and soldering filler metals (consumables), arc welding equipment, plasma and oxyfuel cutting systems, wire feeding systems, fume control equipment, welding accessories, specialty gas regulators, and education solutions; as well as a comprehensive portfolio of automated solutions for joining, cutting, material handling, module assembly, and end of line testing. The Company has aligned its organizational and leadership structure into three operating segments to support growth strategies and enhance the utilization of the Company’s worldwide resources and global sourcing initiatives. The operating segments consist of Americas Welding, International Welding and The Harris Products Group. The Americas Welding segment includes welding operations in North and South America. The International Welding segment includes welding operations in Europe, Africa, Asia and Australia. The Harris Products Group includes the Company’s global cutting, soldering and brazing businesses, specialty gas equipment, as well as its retail business in the United States. Segment performance is measured and resources are allocated based on a number of factors, the primary measure being the adjusted earnings before interest and income taxes ("Adjusted EBIT") profit measure. Adjusted EBIT is defined as Operating income plus Other income (expense), adjusted for special items as determined by management such as the impact of rationalization activities, certain asset impairment charges and gains or losses on disposals of assets. The Company’s chief operating decision maker (“CODM”) is the Chief Executive Officer. The CODM uses segment Adjusted EBIT to allocate resources for each segment predominantly in establishing the Company’s long-term strategy and in developing the annual budget. The CODM considers actual performance using Adjusted EBIT when making decisions about allocating capital and resources to the segments. The following tables present Adjusted EBIT by segment and other segment information: | | | | | | | | | | | | | | | | | | | | | The Harris | | | | | | Americas | | International | | Products | | | | | | Welding | | Welding | | Group | | Total | Three Months Ended September 30, 2025 | | | | | | | | | | | | | Net sales | | $ | 691,794 | | $ | 219,629 | | $ | 149,804 | | $ | 1,061,227 | Inter-segment sales | | | 30,058 | | | 9,830 | | | 3,441 | | | 43,329 | | | | 721,852 | | | 229,459 | | | 153,245 | | | 1,104,556 | Reconciliation to Consolidated Net sales | | | | | | | | | | | | | Elimination of inter-segment sales | | | | | | | | | | | | (43,329) | Net sales | | | | | | | | | | | $ | 1,061,227 | Cost of goods sold (1) | | | 438,400 | | | 164,747 | | | 111,126 | | | | Other segment expenses (1) (3) | | | 156,212 | | | 41,653 | | | 14,357 | | | | Addback: Special items charge (1) | | | (4,375) | | | (2,762) | | | (316) | | | | Segment Adjusted EBIT | | $ | 131,615 | | $ | 25,821 | | $ | 28,078 | | $ | 185,514 | | | | | | | | | | | | | | Other Segment Information | | | | | | | | | | | | | Total assets | | $ | 2,454,340 | | $ | 1,240,393 | | $ | 438,659 | | $ | 4,133,392 | Capital expenditures | | | (27,038) | | | (3,697) | | | (902) | | | (31,637) | Depreciation and amortization | | | 17,176 | | | 6,119 | | | 2,576 | | | 25,871 | | | | | | | | | | | | | | Three Months Ended September 30, 2024 | | | | | | | | | | | | | Net sales | | $ | 637,026 | | $ | 216,224 | | $ | 130,509 | | $ | 983,759 | Inter-segment sales | | | 30,845 | | | 7,371 | | | 3,155 | | | 41,371 | | | | 667,871 | | | 223,595 | | | 133,664 | | | 1,025,130 | Reconciliation to Consolidated Net sales | | | | | | | | | | | | | Elimination of inter-segment sales | | | | | | | | | | | | (41,371) | Net sales | | | | | | | | | | | $ | 983,759 | Cost of goods sold (2) | | | 410,715 | | | 164,274 | | | 98,093 | | | | Other segment expenses (2) (3) | | | 154,998 | | | 42,146 | | | 14,881 | | | | Addback: Special items charge (2) | | | (23,357) | | | (2,926) | | | (1,269) | | | | Segment Adjusted EBIT | | $ | 125,515 | | $ | 20,101 | | $ | 21,959 | | $ | 167,575 | | | | | | | | | | | | | | Other Segment Information | | | | | | | | | | | | | Total assets | | $ | 2,520,357 | | $ | 1,087,973 | | $ | 361,292 | | $ | 3,969,622 | Capital expenditures | | | (28,748) | | | (6,208) | | | (765) | | | (35,721) | Depreciation and amortization | | | 14,751 | | | 5,551 | | | 2,538 | | | 22,840 |
| (1) | In the three months ended September 30, 2025, special items within Other segment expenses primarily include Rationalization and asset impairment net charges of $4,150, $1,365 and $316 in Americas Welding, International Welding and The Harris Products Group, respectively, as discussed in Note 6. Special items within Cost of goods sold primarily include an amortization of step up in value of acquired inventories of $1,397 in International Welding. |
| (2) | In the three months ended September 30, 2024, special items within Other segment expenses include Rationalization and asset impairment net charges of $16,282, $2,676 and $1,269 in Americas Welding, International Welding and The Harris Products Group, respectively, and a pension settlement charge of $3,966 in Americas Welding. Special items within Cost of goods sold primarily include an amortization of step up in value of acquired inventories of $3,109 and $250 in Americas Welding and International Welding, respectively. |
| (3) | Other segment expenses primarily include: |
| a. | Selling, general & administrative expenses – including bonus and research and development expenses. |
| b. | Rationalization and asset impairment net charges – refer to Note 6 for further discussion. |
| | | | | | | | | | | | | | | | | | | | | The Harris | | | | | | Americas | | International | | Products | | | | | | Welding | | Welding | | Group | | Total | Nine Months Ended September 30, 2025 | | | | | | | | | | | | | Net sales | | $ | 2,041,631 | | $ | 671,514 | | $ | 441,143 | | $ | 3,154,288 | Inter-segment sales | | | 103,821 | | | 24,303 | | | 12,535 | | | 140,659 | | | | 2,145,452 | | | 695,817 | | | 453,678 | | | 3,294,947 | Reconciliation to Consolidated Net sales | | | | | | | | | | | | | Elimination of inter-segment sales | | | | | | | | | | | | (140,659) | Net sales | | | | | | | | | | | $ | 3,154,288 | Cost of goods sold (1) | | | 1,305,298 | | | 498,475 | | | 327,074 | | | | Other segment expenses (1) (3) | | | 453,841 | | | 123,684 | | | 42,893 | | | | Addback: Special items charge (1) | | | (7,415) | | | (5,725) | | | (580) | | | | Segment Adjusted EBIT | | $ | 393,728 | | $ | 79,383 | | $ | 84,291 | | $ | 557,402 | | | | | | | | | | | | | | Other Segment Information | | | | | | | | | | | | | Total assets | | $ | 2,454,340 | | $ | 1,240,393 | | $ | 438,659 | | $ | 4,133,392 | Capital expenditures | | | (68,776) | | | (11,911) | | | (3,340) | | | (84,028) | Depreciation and amortization | | | 50,429 | | | 16,982 | | | 7,837 | | | 75,248 | | | | | | | | | | | | | | Nine Months Ended September 30, 2024 | | | | | | | | | | | | | Net sales | | $ | 1,910,061 | | $ | 690,743 | | $ | 385,835 | | $ | 2,986,639 | Inter-segment sales | | | 98,624 | | | 24,628 | | | 9,520 | | | 132,772 | | | | 2,008,685 | | | 715,371 | | | 395,355 | | | 3,119,411 | Reconciliation to Consolidated Net sales | | | | | | | | | | | | | Elimination of inter-segment sales | | | | | | | | | | | | (132,772) | Net sales | | | | | | | | | | | $ | 2,986,639 | Cost of goods sold (2) | | | 1,210,212 | | | 517,219 | | | 285,936 | | | | Other segment expenses (2) (3) | | | 423,919 | | | 161,795 | | | 45,324 | | | | Addback: Special items charge (2) | | | (23,711) | | | (37,230) | | | (2,666) | | | | Segment Adjusted EBIT | | $ | 398,265 | | $ | 73,587 | | $ | 66,761 | | $ | 538,613 | | | | | | | | | | | | | | Other Segment Information | | | | | | | | | | | | | Total assets | | $ | 2,520,357 | | $ | 1,087,973 | | $ | 361,292 | | $ | 3,969,622 | Capital expenditures | | | (68,879) | | | (13,500) | | | (2,738) | | | (85,117) | Depreciation and amortization | | | 42,095 | | | 16,061 | | | 7,528 | | | 65,684 |
| (1) | In the nine months ended September 30, 2025, special items within Other segment expenses primarily include Rationalization and asset impairment net charges of $7,190, $4,468 and $580 in Americas Welding, International Welding and The Harris Products Group, respectively, as discussed in Note 6. Special items within Cost of goods sold primarily include an amortization of step up in value of acquired inventories of $1,257 in International Welding. |
| (2) | In the nine months ended September 30, 2024, special items within Other segment expenses include Rationalization and asset impairment net charges of $16,521 in Americas Welding, $32,030 in International Welding, including the impact of the Company’s disposition of its Russian entity, and $2,666 in The Harris Products. In addition, there was a loss on asset disposal of $4,950 recorded to Other (expense) income in International Welding and a pension settlement charge of $3,966 in Americas Welding. Special items within Cost of goods sold primarily include an amortization of step up in value of acquired inventories of $3,224 and $250 in Americas Welding and International Welding, respectively. |
| (3) | Other segment expenses primarily include: |
| a. | Selling, general & administrative expenses – including bonus and research and development expenses. |
| b. | Rationalization and asset impairment net charges – refer to Note 6 for further discussion. |
The following table presents reconciliations of segment information to the Company’s consolidated totals: | | | | | | | | | | | | | | | Three Months Ended September 30, | | Nine Months Ended September 30, | | | | 2025 | | | 2024 | | | 2025 | | | 2024 | Reconciliation of Segment Adjusted EBIT to Consolidated Income before income taxes | | | | | | | | | | | | | Segment Adjusted EBIT | | $ | 185,514 | | $ | 167,575 | | $ | 557,402 | | $ | 538,613 | Addback: Segment special items charge | | | (7,453) | | | (27,552) | | | (13,720) | | | (63,607) | Corporate special items charge (1) | | | (452) | | | (610) | | | (1,683) | | | (4,656) | Elimination of inter-segment profit | | | (972) | | | 31 | | | (3,794) | | | (1,753) | Unallocated corporate expenses, net | | | 3,006 | | | 4,472 | | | 2,978 | | | (10,087) | Interest income | | | 1,501 | | | 2,108 | | | 5,418 | | | 7,301 | Interest expense | | | (15,149) | | | (14,082) | | | (43,812) | | | (38,715) | Consolidated Income before income taxes | | $ | 165,995 | | $ | 131,942 | | $ | 502,789 | | $ | 427,096 | | | | | | | | | | | | | | (1) Corporate special items primarily include acquisition transaction costs. | | | | | | | | | | | | | | Reconciliation of Other Segment Information to Consolidated Information | | | | | | | | | | | | | Capital expenditures | | | | | | | | | | | | | Segment totals | | $ | (31,637) | | $ | (35,721) | | $ | (84,028) | | $ | (85,117) | Adjustments | | | — | | | — | | | — | | | — | Consolidated totals | | $ | (31,637) | | $ | (35,721) | | $ | (84,028) | | $ | (85,117) | | | | | | | | | | | | | | Depreciation and amortization | | | | | | | | | | | | | Segment totals | | $ | 25,871 | | $ | 22,840 | | $ | 75,248 | | $ | 65,684 | Adjustments | | | (1,127) | | | (195) | | | (2,258) | | | (589) | Consolidated totals | | $ | 24,744 | | $ | 22,645 | | $ | 72,990 | | $ | 65,095 | | | | | | | | | | | | | | Reconciliation of Segment Assets to Consolidated Assets | | | | | | | | September 30, 2025 | | December 31, 2024 | Total segment assets | | | | | | | | $ | 4,133,392 | | $ | 3,813,383 | Corporate assets | | | | | | | | | 36,301 | | | 20,745 | LIFO reserve not allocated to segments | | | | | | | | | (135,721) | | | (120,633) | Eliminations | | | | | | | | | (218,867) | | | (193,353) | Total consolidated assets | | | | | | | | $ | 3,815,105 | | $ | 3,520,142 |
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