SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2023

SEGMENT INFORMATION

SEGMENT INFORMATION

NOTE 6 – 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. EBIT is defined as Operating income plus Other income. Segment EBIT is 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 accounting principles applied at the operating segment level are generally the same as those applied at the consolidated financial statement level with the exception of LIFO. Segment assets include inventories measured on a FIFO basis while consolidated inventories include inventories reported on a LIFO basis. Segment and consolidated income before interest and income taxes include the effect of inventories reported on a LIFO basis. At December 31, 2023, 2022 and 2021 approximately 37%, 38% and 36%, respectively, of total inventories were valued using the LIFO method. LIFO is used for a substantial portion of U.S. inventories included in Americas Welding. Inter-segment sales are recorded at agreed upon prices that approximate arm’s length prices and are eliminated in consolidation. Corporate-level expenses are allocated to the operating segments.

Financial information for the reportable segments follows:

					The Harris
	Americas		International		Products		Corporate /
	Welding (1)		Welding (2)		Group (3)		Eliminations (4)		Consolidated
For the Year Ended December 31, 2023
Net sales	$	2,655,546	$	1,040,006	$	496,084	$	—	$	4,191,636
Inter-segment sales		127,536		31,498		10,641		(169,675)		—
Total	$	2,783,082	$	1,071,504	$	506,725	$	(169,675)	$	4,191,636
Adjusted EBIT	$	538,269	$	136,497	$	74,144	$	(17,536)	$	731,374
Special items charge (gain)		9,858		(9,721)		—		—		137
EBIT	$	528,411	$	146,218	$	74,144	$	(17,536)	$	731,237
Interest income										6,762
Interest expense										(51,133)
Income before income taxes									$	686,866
Total assets	$	2,365,737	$	1,046,369	$	340,463	$	(375,272)	$	3,377,297
Capital expenditures		61,752		20,568		8,550		117		90,987
Depreciation and amortization		55,821		22,023		9,611		(785)		86,670
For the Year Ended December 31, 2022
Net sales	$	2,288,934	$	954,281	$	517,996	$	—	$	3,761,211
Inter-segment sales		122,019		31,503		11,040		(164,562)		—
Total	$	2,410,953	$	985,784	$	529,036	$	(164,562)	$	3,761,211
Adjusted EBIT	$	462,819	$	120,157	$	64,008	$	(10,033)	$	636,951
Special items charge (gain)		(3,060)		11,681		—		6,003		14,624
EBIT	$	465,879	$	108,476	$	64,008	$	(16,036)	$	622,327
Interest income										1,607
Interest expense										(31,107)
Income before income taxes									$	592,827
Total assets	$	2,122,729	$	994,905	$	361,989	$	(299,077)	$	3,180,546
Capital expenditures		43,003		17,955		10,925		—		71,883
Depreciation and amortization		47,291		20,949		9,819		—		78,059
For the Year Ended December 31, 2021
Net sales	$	1,824,481	$	948,125	$	461,574	$	—	$	3,234,180
Inter-segment sales		140,650		26,331		8,096		(175,077)		—
Total	$	1,965,131	$	974,456	$	469,670	$	(175,077)	$	3,234,180
Adjusted EBIT	$	329,016	$	106,208	$	68,447	$	(12,403)	$	491,268
Special items charge		123,114		15,234		3,785		1,923		144,056
EBIT	$	205,902	$	90,974	$	64,662	$	(14,326)	$	347,212
Interest income										1,567
Interest expense										(23,781)
Income before income taxes									$	324,998
Total assets	$	1,521,083	$	938,061	$	330,678	$	(197,515)	$	2,592,307
Capital expenditures		37,717		16,916		7,898		—		62,531
Depreciation and amortization		49,510		24,998		6,795		(157)		81,146

(1) 2023 special items reflect Rationalization and asset impairment net charges of $468 and amortization of step up in value of acquired inventories of $9,390.

2022 special items reflect Rationalization and asset impairment net gains of $431, final settlement gains related to the termination of a pension plan of $3,735 and amortization of step up in value of acquired inventories of $1,106.

2021 special items reflect pension settlement charges of $123,091.

(2) 2023 special items reflect Rationalization and asset impairment net gains of $11,782, amortization of step up in value of acquired inventories of $2,862, gain on asset disposal of $1,646, and pension settlement charges of $845.

2022 special items reflect Rationalization and asset impairment charges of $11,681.

2021 special items reflect Rationalization and asset impairment charges of $9,804, pension settlement charges of $446 and amortization of step up in value of acquired inventories of $4,984.

(3) 2021 special items reflect pension settlement charges of $2,965 and amortization of step up in value of acquired inventories of $820.

(4) 2022 special items reflect acquisition transaction and integration costs of $6,003 related acquisitions as discussed in Note 4 to the consolidated financial statements.

2021 special items reflect acquisition transaction and integration costs of $1,923 related acquisitions as discussed in Note 4 to the consolidated financial statements.

Export sales (excluding inter-company sales) from the United States were $238,704 in 2023, $173,033 in 2022 and $149,110 in 2021. No individual customer comprised more than 10% of the Company’s total revenues for any of the three years ended December 31, 2023.

The geographic split of the Company’s Net sales, based on the location of the customer, and property, plant and equipment were as follows:

	Year Ended December 31,
	2023		2022		2021
Net sales:
United States	$	2,398,560	$	2,128,457	$	1,726,498
Foreign countries		1,793,076		1,632,754		1,507,682
Total	$	4,191,636	$	3,761,211	$	3,234,180

	December 31,
	2023		2022		2021
Property, plant and equipment, net:
United States	$	293,172	$	267,654	$	262,247
Foreign countries		282,144		277,217		249,497
Total	$	575,316	$	544,871	$	511,744