UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended AprilJuly 1, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to                     
Commission file number - 001-34045
Enovis Corporation
(Exact name of registrant as specified in its charter)
Delaware 54-1887631
(State or other jurisdiction of
incorporation or organization)
 (I.R.S. Employer
Identification Number)
2711 Centerville Road,Suite 400 
Wilmington,Delaware19808
(Address of principal executive offices) (Zip Code)
(302)252-9160
(Registrant’s telephone number, including area code)
Colfax Corporation
(Former name, former address and former fiscal year, if changed since last report
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareENOVNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   ☑   No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes   ☑  No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☑     Accelerated filer ☐        Non-accelerated filer ☐
Smaller reporting company ☐    Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☑
As of April 18,July 28, 2022, there were 54,030,88054,129,530 shares of the registrant’s common stock, par value $.001 per share, outstanding.



TABLE OF CONTENTS
 Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
            Condensed Consolidated Statements of Operations
            Condensed Consolidated Statements of Comprehensive Income (Loss)
            Condensed Consolidated Balance Sheets
            Condensed Consolidated Statements of Equity
            Condensed Consolidated Statements of Cash Flows
            Notes to Condensed Consolidated Financial Statements
                 Note 1. General
                 Note 2. Recently Issued Accounting Pronouncements
                 Note 3. Discontinued Operations
                 Note 4. Acquisitions and Investments
                 Note 5. Revenue
                 Note 6. Net Income Per Share from Continuing Operations
                 Note 7. Income Taxes
                 Note 8. Equity
                 Note 9. Inventories, Net
                 Note 10. Debt
                 Note 11. Accrued Liabilities
                 Note 12. Financial Instruments and Fair Value Measurements
                 Note 13. Commitments and Contingencies
                 Note 14. Segment Information
Note 15. Subsequent EventsRelated Party Transactions
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
SIGNATURES

1


PART I - FINANCIAL INFORMATION

Item 1. Financial Statements


ENOVIS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Dollars in thousands, except per share amounts
(Unaudited)
Three Months Ended
April 1, 2022April 2, 2021
Net sales$1,023,368 $879,211 
Cost of sales593,137 508,134 
Gross profit430,231 371,077 
Selling, general and administrative expense369,390 305,724 
Restructuring and other related charges7,723 4,046 
Operating income53,118 61,307 
Interest expense, net15,099 25,660 
Income from continuing operations before income taxes38,019 35,647 
Income tax expense18,660 7,917 
Net income from continuing operations19,359 27,730 
Loss from discontinued operations, net of taxes(3,058)(7,490)
Net income16,301 20,240 
Less: income attributable to noncontrolling interest, net of taxes1,233 1,166 
Net income attributable to Enovis Corporation$15,068 $19,074 
Net income (loss) per share - basic
Continuing operations$0.34 $0.57 
Discontinued operations$(0.06)$(0.16)
Consolidated operations$0.28 $0.41 
Net income (loss) per share - diluted
Continuing operations$0.33 $0.56 
Discontinued operations$(0.06)$(0.16)
Consolidated operations$0.28 $0.40 

Three Months EndedSix Months Ended
July 1, 2022July 2, 2021July 1, 2022July 2, 2021
Net sales$395,117 $356,124 $770,574 $667,207 
Cost of sales179,211 155,531 348,768 295,332 
Gross profit215,906 200,593 421,806 371,875 
Selling, general and administrative expense225,481 197,913 444,747 375,992 
Research and development expense15,661 11,039 30,503 21,402 
Insurance settlement gain(33,034)— (33,034)— 
Restructuring and other related charges2,245 1,992 4,664 2,963 
Operating income (loss)5,553 (10,351)(25,074)(28,482)
Interest expense, net4,546 5,689 11,610 18,629 
Debt extinguishment charges20,104 29,870 20,104 29,870 
Unrealized gain on investment in ESAB Corporation(135,537)— (135,537)— 
Income (loss) from continuing operations before income taxes116,440 (45,910)78,749 (76,981)
Income tax expense (benefit)(4,211)(3,783)(3,847)(3,000)
Net income (loss) from continuing operations120,651 (42,127)82,596 (73,981)
Income (loss) from discontinued operations, net of taxes(43,666)71,829 10,690 123,923 
Net income76,985 29,702 93,286 49,942 
Less: net income attributable to noncontrolling interest from continuing operations - net of taxes130 355 397 645 
Less: net income attributable to noncontrolling interest from discontinued operations - net of taxes— 705 966 1,581 
Net income attributable to Enovis Corporation$76,855 $28,642 $91,923 $47,716 
Net income (loss) per share - basic
Continuing operations$2.23 $(0.83)$1.52 $(1.53)
Discontinued operations$(0.81)$1.39 $0.18 $2.50 
Consolidated operations$1.42 $0.56 $1.70 $0.98 
Net income (loss) per share - diluted
Continuing operations$2.21 $(0.83)$1.51 $(1.53)
Discontinued operations$(0.80)$1.39 $0.18 $2.50 
Consolidated operations$1.41 $0.56 $1.69 $0.98 
    

See Notes to Condensed Consolidated Financial Statements.

2


ENOVIS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Dollars in thousands
(Unaudited)
Three Months Ended
April 1, 2022April 2, 2021
Net income$16,301 $20,240 
Other comprehensive income (loss):
Foreign currency translation, net of tax expense of $338 and $2,280(53,461)(53,181)
Unrealized gain on hedging activities, net of tax expense of $2,711 and $4,2439,028 12,381 
Amounts reclassified from Accumulated other comprehensive loss:
Amortization of pension and other post-retirement net actuarial gain, net of tax expense of $199 and $317629 1,055 
Other comprehensive loss(43,804)(39,745)
Comprehensive loss(27,503)(19,505)
Less: comprehensive income attributable to noncontrolling interest895 1,042 
Comprehensive loss attributable to Enovis Corporation$(28,398)$(20,547)
Three Months EndedSix Months Ended
July 1, 2022July 2, 2021July 1, 2022July 2, 2021
Net income$76,985 $29,702 $93,286 $49,942 
Other comprehensive income (loss):
Foreign currency translation, net of tax expense of $—, $896 , $338, and $3,176(30,876)8,784 (84,337)(44,397)
Unrealized gain on hedging activities, net of tax expense of $—, $(737), $2,711 , $3,506— (2,150)9,028 10,231 
Amounts reclassified from Accumulated other comprehensive loss:
Amortization of pension and other post-retirement net actuarial gain, net of tax expense of $—, $314, $199 , $631— 1,045 629 2,100 
Other comprehensive income (loss)(30,876)7,679 (74,680)(32,066)
Comprehensive income46,109 37,381 18,606 17,876 
Less: comprehensive income (loss) attributable to noncontrolling interest(1,303)(369)(408)673 
Comprehensive loss attributable to Enovis Corporation$47,412 $37,750 $19,014 $17,203 


See Notes to Condensed Consolidated Financial Statements.

3


ENOVIS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
Dollars in thousands, except share amounts
(Unaudited)
April 1, 2022December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$661,504 $719,370 
Trade receivables, less allowance for credit losses of $37,871 and $32,501657,056 638,700 
Inventories, net852,814 776,295 
Prepaid expenses84,816 78,186 
Other current assets91,547 90,728 
Total current assets2,347,737 2,303,279 
Property, plant and equipment, net504,583 521,391 
Goodwill3,440,615 3,467,295 
Intangible assets, net1,637,257 1,675,462 
Lease asset - right of use178,643 184,429 
Other assets374,816 363,489 
Total assets$8,483,651 $8,515,345 
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt$422,289 $8,314 
Accounts payable537,676 504,173 
Accrued liabilities490,050 511,097 
Total current liabilities1,450,015 1,023,584 
Long-term debt, less current portion1,647,870 2,078,679 
Non-current lease liability140,704 145,326 
Other liabilities601,017 606,323 
Total liabilities3,839,606 3,853,912 
Equity:
Common stock, $0.001 par value; 133,333,333 shares authorized; 54,030,880 and 52,083,078 shares issued and outstanding as of April 1, 2022 and December 31, 2021, respectively54 52 
Additional paid-in capital4,555,369 4,544,315 
Retained earnings604,092 589,024 
Accumulated other comprehensive loss(559,479)(516,013)
Total Enovis Corporation equity4,600,036 4,617,378 
Noncontrolling interest44,009 44,055 
Total equity4,644,045 4,661,433 
Total liabilities and equity$8,483,651 $8,515,345 

July 1, 2022December 31, 2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$95,605 $680,252 
Trade receivables, less allowance for credit losses of $8,182 and $6,589255,201 254,958 
Inventories, net400,852 356,233 
Prepaid expenses29,529 26,046 
Other current assets33,782 29,176 
Investment in ESAB Corporation263,070 — 
Total current assets associated with discontinued operations— 956,614 
Total current assets1,078,039 2,303,279 
Property, plant and equipment, net226,894 235,113 
Goodwill1,925,201 1,934,258 
Intangible assets, net1,114,325 1,154,028 
Lease asset - right of use71,032 76,485 
Other assets88,224 74,700 
Total non-current assets associated with discontinued operations— 2,738,049 
Total assets$4,503,715 $8,515,912 
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt$449,459 $7,701 
Accounts payable159,136 155,208 
Accrued liabilities204,206 225,391 
Total current liabilities associated with discontinued operations— 635,284 
Total current liabilities812,801 1,023,584 
Long-term debt, less current portion— 2,078,625 
Non-current lease liability55,208 56,549 
Other liabilities144,243 122,159 
Total non-current liabilities associated with discontinued operations— 573,562 
Total liabilities1,012,252 3,854,479 
Equity:
Common stock, $0.001 par value; 133,333,333 shares authorized; 54,111,118 and 52,083,078 shares issued and outstanding as of July 1, 2022 and December 31, 2021, respectively54 52 
Additional paid-in capital2,897,207 4,544,315 
Retained earnings680,947 589,024 
Accumulated other comprehensive loss(88,941)(516,013)
Total Enovis Corporation equity3,489,267 4,617,378 
Noncontrolling interest2,196 44,055 
Total equity3,491,463 4,661,433 
Total liabilities and equity$4,503,715 $8,515,912 

See Notes to Condensed Consolidated Financial Statements.

4


ENOVIS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Dollars in thousands, except share amounts
(Unaudited)
Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossNoncontrolling InterestTotalCommon StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossNoncontrolling InterestTotal
SharesAmountSharesAmount
Balance at December 31, 2021Balance at December 31, 202152,083,078 $52 $4,544,315 $589,024 $(516,013)$44,055 $4,661,433 Balance at December 31, 202152,083,078 $52 $4,544,315 $589,024 $(516,013)$44,055 $4,661,433 
Net incomeNet income— — — 15,068 — 1,233 16,301 Net income— — — 15,068 — 1,233 16,301 
Distributions to noncontrolling ownersDistributions to noncontrolling owners— — — — — (941)(941)Distributions to noncontrolling owners— — — — — (941)(941)
Other comprehensive loss, net of tax of $3,248Other comprehensive loss, net of tax of $3,248— — — — (43,466)(338)(43,804)Other comprehensive loss, net of tax of $3,248— — — — (43,466)(338)(43,804)
Conversion of tangible equity units into common stockConversion of tangible equity units into common stock1,691,845 (2)— — — — Conversion of tangible equity units into common stock1,691,845 (2)— — — — 
Common stock-based award activityCommon stock-based award activity255,957 — 11,056 — — — 11,056 Common stock-based award activity255,957 — 11,056 — — — 11,056 
Balance at April 1, 2022Balance at April 1, 202254,030,880 $54 $4,555,369 $604,092 $(559,479)$44,009 $4,644,045 Balance at April 1, 202254,030,880 54 4,555,369 604,092 (559,479)44,009 4,644,045 
Net incomeNet income— — — 76,855 — 130 76,985 
Other comprehensive income, net of tax of $—Other comprehensive income, net of tax of $—— — — — (29,443)(1,433)(30,876)
Distribution of ESAB CorporationDistribution of ESAB Corporation— — (1,666,732)— 499,981 (40,510)(1,207,261)
Common stock-based award activityCommon stock-based award activity80,238 — 8,570 — — — 8,570 
Balance at July 1, 2022Balance at July 1, 202254,111,118 $54 $2,897,207 $680,947 $(88,941)$2,196 $3,491,463 



Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossNoncontrolling InterestTotal
SharesAmount
Balance at December 31, 202039,498,896 $40 $3,478,086 $517,367 $(452,106)$44,487 $3,587,874 
Net income— — — 19,074 — 1,166 20,240 
Distributions to noncontrolling owners— — — — — (1,054)(1,054)
Other comprehensive loss, net of tax of $6,840— — — — (39,621)(124)(39,745)
Conversion of tangible equity units into common stock114,804 — — — — — — 
Common stock offering, net of issuance costs5,366,666 711,316 — — — 711,321 
Common stock-based award activity218,744 — 12,433 — — — 12,433 
Balance at April 2, 202145,199,110 $45 $4,201,835 $536,441 $(491,727)$44,475 $4,291,069 

Common StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive LossNoncontrolling InterestTotal
SharesAmount
Balance at December 31, 202039,498,896 $40 $3,478,086 $517,367 $(452,106)$44,487 $3,587,874 
Net income— — — 19,074 — 1,166 20,240 
Distributions to noncontrolling owners— — — — — (1,054)(1,054)
Other comprehensive loss, net of tax of $6,840— — — — (39,621)(124)(39,745)
Conversion of tangible equity units into common stock114,804 — — — — — — 
Common stock offering, net of issuance costs5,366,666 711,316 — — — 711,321 
Common stock-based award activity218,744 — 12,433 — — — 12,433 
Balance at April 2, 202145,199,110 45 4,201,835 536,441 (491,727)44,475 4,291,069 
Net income— — — 28,642 — 1,060 29,702 
Other comprehensive income (loss), net of tax of $473— — — — 9,108 (1,429)7,679 
Conversion of tangible equity units into common stock2,058,000 (2)— — — — 
Common stock-based award activity190,105 — 23,510 — — — 23,510 
Balance at July 2, 202147,447,215 $47 $4,225,343 $565,083 $(482,619)$44,106 $4,351,960 

See Notes to Condensed Consolidated Financial Statements.


5


ENOVIS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Dollars in thousands
(Unaudited)
Three Months EndedSix Months Ended
April 1, 2022April 2, 2021July 1, 2022July 2, 2021
Cash flows from operating activities:Cash flows from operating activities:Cash flows from operating activities:
Net incomeNet income$16,301 $20,240 Net income$93,286 $49,942 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:Adjustments to reconcile net income to net cash (used in) provided by operating activities:Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation, amortization and other impairment chargesDepreciation, amortization and other impairment charges66,026 62,785 Depreciation, amortization and other impairment charges117,300 128,721 
Stock-based compensation expenseStock-based compensation expense9,857 7,807 Stock-based compensation expense19,793 17,262 
Non-cash interest expenseNon-cash interest expense978 1,537 Non-cash interest expense1,658 2,676 
Unrealized gain on investment in ESAB CorporationUnrealized gain on investment in ESAB Corporation(135,537)— 
Debt extinguishment chargesDebt extinguishment charges20,104 29,870 
Deferred income tax expense (benefit)Deferred income tax expense (benefit)2,232 (3,614)Deferred income tax expense (benefit)2,174 (3,865)
Loss on sale of property, plant and equipment352 257 
(Gain)/Loss on sale of property, plant and equipment(Gain)/Loss on sale of property, plant and equipment352 (1,437)
Changes in operating assets and liabilities:Changes in operating assets and liabilities:Changes in operating assets and liabilities:
Trade receivables, netTrade receivables, net(20,690)(39,950)Trade receivables, net(33,123)(83,458)
Inventories, netInventories, net(70,830)(32,743)Inventories, net(92,910)(79,338)
Accounts payableAccounts payable24,713 83,442 Accounts payable15,919 124,354 
Other operating assets and liabilitiesOther operating assets and liabilities(43,362)(15,379)Other operating assets and liabilities(48,329)(21,975)
Net cash (used in) provided by operating activitiesNet cash (used in) provided by operating activities(14,423)84,382 Net cash (used in) provided by operating activities(39,313)162,752 
Cash flows from investing activities:Cash flows from investing activities:Cash flows from investing activities:
Purchases of property, plant and equipment and intangiblesPurchases of property, plant and equipment and intangibles(24,089)(24,537)Purchases of property, plant and equipment and intangibles(47,796)(44,641)
Proceeds from sale of property, plant and equipmentProceeds from sale of property, plant and equipment2,746 — Proceeds from sale of property, plant and equipment2,746 3,191 
Acquisitions, net of cash received, and investmentsAcquisitions, net of cash received, and investments(13,823)(103,475)Acquisitions, net of cash received, and investments(35,123)(230,650)
Net cash used in investing activitiesNet cash used in investing activities(35,166)(128,012)Net cash used in investing activities(80,173)(272,100)
Cash flows from financing activities:Cash flows from financing activities:Cash flows from financing activities:
Proceeds from borrowings on term credit facilityProceeds from borrowings on term credit facility450,000 455,641 
Payments under term credit facilityPayments under term credit facility(785,000)— 
Proceeds from borrowings on revolving credit facilities and other— 179,367 
Repayments of borrowings on revolving credit facilities and otherRepayments of borrowings on revolving credit facilities and other(7,428)(185,643)Repayments of borrowings on revolving credit facilities and other(607,618)(383,384)
Repayments of borrowings on Senior notesRepayments of borrowings on Senior notes(300,000)(700,000)
Repayments of borrowings on Euro senior notesRepayments of borrowings on Euro senior notes(386,278)— 
Distribution from ESAB Corporation, netDistribution from ESAB Corporation, net1,143,369 — 
Payment of debt issuance costsPayment of debt issuance costs(2,938)— 
Proceeds from issuance of common stock, netProceeds from issuance of common stock, net1,199 716,632 Proceeds from issuance of common stock, net1,727 730,002 
Payment of debt extinguishment costsPayment of debt extinguishment costs(12,704)(24,375)
Deferred consideration payments and otherDeferred consideration payments and other(4,590)(2,704)Deferred consideration payments and other(6,857)(6,201)
Net cash (used in) provided by financing activitiesNet cash (used in) provided by financing activities(10,819)707,652 Net cash (used in) provided by financing activities(506,299)71,683 
Effect of foreign exchange rates on Cash and cash equivalents and Restricted CashEffect of foreign exchange rates on Cash and cash equivalents and Restricted Cash2,542 (1,438)Effect of foreign exchange rates on Cash and cash equivalents and Restricted Cash2,020 (1,095)
(Decrease) increase in Cash and cash equivalents and Restricted cash(57,866)662,584 
Decrease in Cash and cash equivalents and Restricted cashDecrease in Cash and cash equivalents and Restricted cash(623,765)(38,760)
Cash and cash equivalents and Restricted Cash, beginning of periodCash and cash equivalents and Restricted Cash, beginning of period719,370 101,069 Cash and cash equivalents and Restricted Cash, beginning of period719,370 101,069 
Cash and cash equivalents, end of periodCash and cash equivalents, end of period$661,504 $763,653 Cash and cash equivalents, end of period$95,605 $62,309 
    


See Notes to Condensed Consolidated Financial Statements.
6

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


1. General
Enovis Corporation (the “Company” or “Enovis”) was previously Colfax Corporation (“Colfax”) until its separation into 2 differentiated, independent, and publicly traded companies on April 4, 2022, as discussed further below. Colfax was a leading diversified technology company that provided fabrication technology and medical device products and services to customers around the world, principally under the ESAB and DJO brands. The Company conducted its operations through 2 operating segments, “Fabrication Technology”, which incorporated the operations of ESAB and its related brands, and “Medical Technology”, which incorporated the operations of DJO and its related brands.

On April 4, 2022 (the “Distribution Date”), the Company completed the separation of its fabrication technology business (the “Separation”) through a tax-free, pro-rata distribution of 90% of the outstanding common stock of ESAB Corporation (“ESAB Corp”ESAB”) to Colfax stockholders. To affect the Separation, Colfax distributed to its stockholders 1 share of ESAB Corp common stock for every three shares of Colfax common stock held at the close of business on March 22, 2022, with the Company retaining 10% of the shares of ESAB Corp common stock immediately following the Separation. At July 1, 2022, the Company’s investment in ESAB was measured at fair value based on ESAB’s closing stock price, and was valued at $263.1 million. The Company intends to divest its 10% retained sharesstake in ESAB, Corp in a tax-efficient exchange for its outstanding debt no later than 12 months after the Distribution Date. Upon completion of the Separation, Colfax, which retained the Company’s specialty medical technology business, changed its name to Enovis Corporation. On April 5, 2022, the Company began trading under the stock symbol “ENOV” on the New York Stock Exchange. For further information on

Since the Separation referoccurred in the second quarter of 2022, Enovis has classified its fabrication technology business as a discontinued operation in its historical financial statements for all periods presented.

Following the completion of the Separation, the Company revised its reporting structure to Note 15, “Subsequent Events”.now conduct its business through 2 operating segments, “Prevention and Recovery”, which consists of the Company’s bracing, recovery sciences, and footcare product lines, and “Reconstructive”, which includes the Company’s surgical implant product lines.

In connection with the Separation, ESAB Corp issued $1.2 billion of new debt securities, the proceeds from which were used to fund a $1.2 billion cash distribution to Enovis upon Separation.Enovis. The distribution proceeds were used by Enovis in conjunction with $450 million of borrowings on a term loan (the “Enovis Term Loan”) under the new Enovis credit facility as discussed below,(the “Enovis Credit Agreement”), and $52.3 million of cash on hand to repay $1.4 billion of outstanding debt and accrued interest on its Credit Facility,under the Company’s previous credit agreement, which was legally extinguished upon completion of the Separation, $302.8 million of outstanding debt and accrued interest on its 2026 Notes as well asat a redemption premium atprice of 103.188% of the principal amount, of the 2026 Notes, and other fees and expenses due at closing. Additionally, on April 7, 2022, the Company also completed thea full redemption of its Euro Senior Notes representing all of its outstanding €350 million principal 3.250% Euro Senior Notes due 2025 using cash on hand at a redemption price of 100.813% of the principal amount. For further information on the Separation, refer to Note 15, “Subsequent Events”.

Immediately following the Separation, the Company effected a one-for-three reverse stock split of all issued and outstanding shares of Enovis common stock. As a result of the reverse stock split, allprior-period share and per share figures contained in the accompanying Condensed Consolidated Financial Statements have been retroactively restated as if the reverse stock split occurred at the beginning of the periods presented.

Since the disposition occurred in the second quarter of 2022, Enovis will classify its fabrication technology business as a discontinued operation in its historical financial statements beginning in the second quarter of 2022. The assets, liabilities, revenues and expenses of the fabrication technology businesses are included in continuing operations in the accompanying Condensed Consolidated Financial Statements.

The Condensed Consolidated Financial Statements included in this quarterly report have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and accounting principles generally accepted in the United States of America (“GAAP”) for interim financial statements.statements and reflect, in the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations as of and for the periods indicated. Certain prior period amounts have been reclassified to conform to the current period presentation. The Condensed Consolidated Balance Sheet as of December 31, 2021 is derived from the Company’s audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted in accordance with the SEC’s rules and regulations for interim financial statements. The Condensed Consolidated Financial Statements included herein should be read in conjunction with the audited financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”), filed with the SEC on February 22, 2022.

The Condensed Consolidated Financial Statements reflect, in the opinion of management, all adjustments, which consist solely of normal recurring adjustments, necessary to present fairly the Company’s financial position and results of operations as of and for the periods indicated. Intercompany transactions and accounts are eliminated in consolidation.

The Company makes certain estimates and assumptions in preparing its Condensed Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the Condensed Consolidated Financial Statements, and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from those estimates.
7

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)




In the normal course of business, the Company incurs research and development costs related to new product development The COVID-19 outbreak, which are expensedwas characterized as incurred and included in Selling, general and administrative expense on the Company’s Condensed Consolidated Statements of Operations. Research and development costs were $24.4 million and $19.9 million during the three months ended April 1, 2022 and April 2, 2021, respectively.

The results of operations for the three months ended April 1, 2022 are not necessarily indicative of the results of operations that may be achieved for the full year. Quarterly results are affecteda pandemic by seasonal variations in the Company’s businesses as Medical Technology sales typically peak in the fourth quarter. General economic conditions may, however, impact future seasonal variations.

In December 2019, a novel coronavirus disease (“COVID-19”) 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. The COVID-19 global pandemic has resulted in a widespread health crisis, and the resulting impact on governments, businesses and individuals and actions taken by them in response to the situation have resulted in widespread economic disruptions, significantly affecting broader economies, financial markets, and overall demand for the Company’s products. These impacts lessened in 2021 due to broadening access to COVID-19 vaccines and gradual relaxing of some government-mandated restrictions. However, a surge of COVID-19 cases due to the emergence of certain COVID-19 variants in the third quarter of 2021 led to the reinstatement of restrictions in certain jurisdictions, slowing the overall economic recovery. Some of these restrictions have been lifted as of the end of the first quarter of 2022. The COVID-19 outbreakMarch 11, 2020, has caused increased uncertainty in estimates and assumptions affecting the reported amounts of assets and liabilities in the Condensed Consolidated Financial Statements as the extent and period of recovery from the COVID-19 outbreak and related economic disruption are difficult to
7

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



forecast. Furthermore, the historical seasonality trends have been disrupted by the commercial impacts caused by the COVID-19 pandemic.


2. Recently Issued Accounting Pronouncements

The Company has not adopted any new accounting standards during the threesix months ended AprilJuly 1, 2022. There are no recently issued accounting pronouncements that are expected to have a material effect on the Company’s financial position, results of operations or cash flows.


3. Discontinued Operations

Separation of Fabrication Technology Business

On April 4, 2022, the Company completed the Separation of its fabrication technology business into an independent, publicly traded company: ESAB, a global organization that develops, manufactures and supplies consumable welding and cutting products and equipment, as well as gas control equipment, into diversified end markets such as medical and alternative energy. The Company retainedspin-off was effected through a pro-rata distribution of 90% of the 60,034,311 outstanding common shares of ESAB to Enovis stockholders of record at the close of business on March 22, 2022 (the “Record Date”). Enovis stockholders received 1 share of ESAB for every three shares of Enovis stock they owned on the Record Date.

The carrying value of the assets and liabilities of the Company’s former fabrication technology business’ discontinued operations, other contributed legal entities, discontinued operations containing asbestos, and certain pension assets and liabilities, as of December 31, 2021 were as follows:

December 31, 2021
ASSETS(in thousands)
Cash and cash equivalents$39,118 
Trade receivables, net383,742 
Inventories, net420,062 
Prepaid expenses52,140 
Other current assets61,552 
Total current assets associated with discontinued operations956,614 
Property, plant and equipment, net286,278 
Goodwill1,533,037 
Other intangibles, net521,434 
Lease asset - right of use107,944 
Other assets289,356 
Total assets associated with discontinued operations(1)
$3,694,663 
LIABILITIES
Current portion of long-term debt$613 
Accounts payable348,965 
Accrued liabilities285,706 
Total current liabilities associated with discontinued operations635,284 
Long-term debt, less current portion54 
Non-current lease liability88,777 
Deferred tax liabilities116,198 
Other liabilities368,533 
Total liabilities associated with discontinued operations(1)
$1,208,846 
(1)Total assets and liabilities include asbestos-related contingencies and insurance coverages from divested businessespreviously reported by Colfax as discontinued operations. See Asbestos Contingencies section below for which it did not retain an interest in the ongoing operations subject to the contingencies. In conjunction with the Separation, all asbestos-related contingencies and insurance coverages from its industrial businesses were transferred fully to ESAB Corp. The Company has classified asbestos-related selling, general and administrative activity in its Condensed Consolidated Statements of Operations as part of Loss from discontinued operations, net of taxes. Asbestos-related costs, net of taxes were $2.5 million and $0.9 million during the three months ended April 1, 2022 and April 2, 2021, respectively. See Note 13, “Commitments and Contingencies” for furthermore information.

The Company also recorded Loss from discontinued operations, net of taxes of $0.6 million and $6.6 million during the three months ended April 1, 2022 and April 2, 2021, respectively, related to its divested air and gas handling business, including a settlement executed in the first quarter of 2021.

Cash used in operating activities related to discontinued operations for the three months ended April 1, 2022 and April 2, 2021 was $5.8 million and $7.3 million, respectively.

4. Acquisitions and Investments

The Medical Technology segment completed 3 transactions during the three months ended April 1, 2022 for $13.8 million, 1 of which is carried at cost as the investment does not have a readily determinable fair value, while the other 2 are accounted for as asset purchases. The 3 investments broaden the platform’s product offering and distribution network.

During the three months ended April 2, 2021, the Company completed 1 acquisition in its Fabrication Technology segment and 2 acquisitions in its Medical Technology segment for aggregate net cash consideration of $88.7 million. The
8

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



The financial results of the discontinued operation for the three and six months ended July 1, 2022 and July 2, 2021 include the fabrication technology business through the date of Separation and separation-related costs incurred and are presented as income from discontinued operations, net of income taxes, on the Company’s Consolidated Statements of Operations. The following table presents the financial results of the fabrication technology business:

Three Months EndedSix Months Ended
July 1, 2022July 2, 2021July 1, 2022July 2, 2021
(in thousands)
Net sales$— $629,803 $647,911 $1,197,932 
Cost of sales— 411,412 423,580 779,746 
Selling, general and administrative expense(1)
35,463 130,425 174,664 257,724 
Restructuring and other related charges— 3,488 5,304 6,563 
Operating loss(35,463)84,478 44,363 153,899 
Interest expense— 12,117 8,035 24,837 
Pension settlement gain— (11,208)— (11,208)
Income from discontinued operations before income taxes(35,463)83,569 36,328 140,270 
Income tax (benefit) expense8,203 11,740 25,638 16,347 
Income from discontinued operations, net of taxes$(43,666)$71,829 $10,690 $123,923 
(1) Selling, general and administrative expenses for the three months ended July 1, 2022 include certain transaction costs incurred to effect the Separation.

Total income attributable to noncontrolling interest related to ESAB, net of taxes was $1.0 million for the six months ended July 1, 2022, and $0.7 million and $1.6 million for the three and six months ended July 2, 2021, respectively.

Cash used in operating activities related to discontinued operations for the six months ended July 1, 2022 was $29.6 million. Cash provided by operating activities related to discontinued operations for the six months ended July 2, 2021 was $122.6 million. Cash used in investing activities related to discontinued operations for the six months ended July 1, 2022 and July 2, 2021 was $3.2 million and $14.4 million, respectively.

Asbestos Contingencies

The Company retained certain asbestos-related contingencies and insurance coverages from its previously divested businesses for which it did not retain an interest in the ongoing operations except for the contingencies. The net costs and cash flows associated with these contingencies and coverages were reported by the Company as discontinued operations. In conjunction with the Separation, all asbestos-related contingencies and insurance coverages from its divested businesses were transferred fully to ESAB. The Company has classified asbestos-related selling, general and administrative activity through the the date of Separation in its Condensed Consolidated Statements of Operations as part of Loss from discontinued operations, net of taxes. Subsequent to the Separation, the asbestos-related selling, general and administrative activity and asbestos assets and liabilities are no longer reflected in the Enovis financial statements.
.

4. Acquisitions and Investments

2022 Acquisitions

During the six months ended July 1, 2022, the Company completed 3 asset acquisitions, 1 business acquisition and 2 investments, which are carried at cost as they do not have a readily determinable fair value. NaN of these transactions were completed by the Company’s Reconstructive segment, and the other 4 transactions were completed by the Prevention & Recovery segment. The asset acquisitions broaden the Company’s product offering and distribution network. Aggregate purchase consideration for the 3 asset acquisitions was $18.2 million, of which $8.6 million was paid in cash and $9.6 million of deferred and contingent consideration. The investments were acquired for $12.0 million in cash consideration.

9

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



On May 6, 2022, the Company completed a business acquisition in its Reconstructive segment of KICo Knee Innovation Company Pty Limited and subsidiaries, an Australian private company doing business as 360 Med Care, by acquiring 100% of its equity interests. The entity is an Australian medical device distributor that bundles certain computer-assisted surgery and patient experience enhancement programs to add value to its device supply arrangements with surgeons, hospitals, and insurers. The acquisition is accounted for under the acquisition method of accounting, and accordingly, the Condensed Consolidated Financial Statements include the financial position and results of operations from the respective acquisition date. The Medical Technology segment’s acquisitions inCompany paid $14.3 million for the first quarteracquisition, net of 2021 included Trilliant Surgical (“Trilliant”), a national providercash received, and recorded estimated contingent consideration at fair value of foot and ankle orthopedic implants, which was acquired for net cash consideration of $79.6 million. The purchase accounting for all acquisitions made in the first quarter of 2021 has been completed.$12.8 million related to certain future revenue targets. The Company also made two investmentsallocated $13 million to goodwill and $18.2 million to intangible assets acquired. Purchase accounting procedures are ongoing and revisions to contingent consideration, intangible assets acquired, and adjustments for working capital true-ups may be recorded in medical technology businessesfuture periods during the three months ended April 2, 2021 for a totalpurchase price allocation period. The 360 Med Care acquisition broadens our customer base in Australia and adds to our overall product offerings.

Investments

As of $14.8July 1, 2022, the balance of investments held by the company without readily determinable fair values was $31.9 million. BothThe investments are carried at cost as they dominus impairments, if any, plus adjustments for fair value indicators from observable price changes in orderly transactions for the identical or similar investment of the same issuer. There have been no impairments or upward adjustments in the current year or since acquisition of the investments.

The Company holds equity securities in ESAB Corporation for total value of $263.1 million which are recorded at fair value. During the three and six months ended July 1, 2022, the Company recorded an unrealized gain of $135.5 million over cost basis. The company does not have a readily determinablehold other equity securities measured at fair value.

2021 Acquisitions

During the yearsix months ended December 31,July 2, 2021, the Company completed 1 acquisition in its Fabrication Technology segment and 53 acquisitions in its Medical TechnologyReconstructive segment for aggregate net cash consideration of $206.5 million and equity consideration of $285.7$208.1 million. The acquisitions are accounted for under the acquisition method of accounting, and accordingly, the Condensed Consolidated Financial Statements include the financial position and results of operations from the respective acquisition date.

The Reconstructive segment acquired Trilliant Surgical (“Trilliant”), a provider of foot and ankle orthopedic implants, in the first quarter of 2021 for net cash consideration of $79.6 million. The Reconstructive segment’s acquisitions in the second quarter of 2021 included MedShape, Inc. (“MedShape”), a provider of innovative surgical solutions for foot and ankle surgeons, which was acquired for net cash consideration of $124.6 million. The Trilliant and MedShape acquisitions further expand the Company’s U.S. foot and ankle product lines. The purchase accounting for all acquisitions made in the six months ended July 2, 2021 has been completed. The Company also made 2 investments in medical technology businesses during the six months ended July 2, 2021 for a total of $14.8 million. Both investments were carried at cost as of July 1, 2022, as they do not have a readily determinable fair value.

During the second half of 2021, the Reconstructive segment acquired Mathys AG Bettlach for total acquisition equity consideration of $285.7 million, which was completed in the third quarterincluded cash acquired of 2021 has yet to be finalized.
$14.7 million. Purchase allocation procedures for this acquisition are ongoing as of July 1, 2022. For further information on prior year acquisitions and investments, refer to Note 5. “Acquisitions” in the Notes to the Consolidated Financial Statements in the Company’s 2021 Form 10-K. There have been no material changes to purchase accounting estimates for the prior year acquisitions since the issuance of the Company’s 2021 Form 10-K.

5. Revenue

The Company’s Fabrication Technology segment develops, manufactures and supplies consumable welding and cutting products and equipment, as well as gas control equipment. Substantially all revenue from the Fabrication Technology business is recognized at a point in time. The Company disaggregates its Fabrication Technology revenue into the following product groups:
Three Months Ended
April 1, 2022April 2, 2021
(In thousands)
Equipment$188,348 $173,750 
Consumables459,563 394,378 
Total$647,911 $568,128 

The consumables product grouping generally has less production complexity and shorter production cycles than equipment products.

The Company’s Medical Technology segment provides orthopedic solutions, including products and services spanning the full continuum of patient care, from injury prevention to rehabilitation. While the Company’s Medical Technology sales are primarily derived from 3 sales channels including dealers and distributors, insurance, and direct to consumers and hospitals, substantiallySubstantially all its revenue is recognized at a point in time. The Company disaggregates its Medical Technology revenue into the following product groups:

Three Months Ended
April 1, 2022April 2, 2021
(In thousands)
Prevention & Recovery$244,835 $235,238 
Reconstructive130,622 75,845 
Total$375,457 $311,083 

Given the nature of the Fabrication Technology and Medical Technology businesses, the total amount of unsatisfied performance obligations with an original contract duration of greater than one year as of April 1, 2022 is immaterial.segments:

910

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



Three Months EndedSix Months Ended
July 1, 2022July 2, 2021July 1, 2022July 2, 2021
(In thousands)
Prevention and Recovery$263,783 $266,919 $508,618 $501,593 
Reconstructive131,334 89,205 261,956 165,614 
Total$395,117 $356,124 $770,574 $667,207 

Given the nature of the Company’s business, the total amount of unsatisfied performance obligations with an original contract duration of greater than one year as of July 1, 2022 is immaterial.

The nature of the Company’s contracts gives rise to certain types of variable consideration, including rebates, implicit price concessions, and other discounts. The Company includes estimated amounts of variable consideration in the transaction price to the extent that it is probable there will not be a significant reversal of revenue.

In some circumstances, customers are billed in advance of revenue recognition, resulting in contract liabilities. As of December 31, 2021 and 2020, total contract liabilities were $31.5$9.2 million and $36.6$15.0 million, respectively. During the three and six months ended AprilJuly 1, 2022, revenue recognized that was included in the contract liability balance at the beginning of the year was $2.6 million and April$6.2 million, respectively. During the three and six months ended July 2, 2021, revenue recognized that was included in the contract liability balance at the beginning of the year was $12.8$2.3 million and $14.3$3.1 million, respectively. As of AprilJuly 1, 2022 and AprilJuly 2, 2021, total contract liabilities were $31.4$3.1 million and $40.0$13.6 million, respectively, and were included in Accrued liabilities on the Company’s Condensed Consolidated Balance Sheets. The contract liabilities as of April 1, 2022 and December 31, 2021 included $2.0 million and $4.9 million respectively, of certain one-time advance payments in the Medical Technology business.payments.

Allowance for Credit Losses

The Company’s estimate of current expected credit losses on trade receivables considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. In calculating and applying its current expected credit losses, the Company disaggregates trade receivables into business segments due to risk characteristics unique to each segment given the individual lines of business and market. The business segments are further disaggregated based on either geography or product type. The Company uses a loss rate methodology in calculating its current expected credit losses, leveraging historical write-offs over a defined lookback period in deriving a historical loss rate. The expected credit loss model further considers current conditions and reasonable and supportable forecasts using an adjustment for current and projected macroeconomic factors.

A summary of the activity in the Company’s allowance for credit losses included within Trade receivables in the Condensed Consolidated Balance Sheets is as follows:
Three Months Ended April 1, 2022
Balance at
Beginning
of Period
Charged to Expense, netWrite-Offs, Deductions and Other, netForeign
Currency
Translation
Balance at
End of
Period
(In thousands)
Allowance for credit losses$32,501 $5,206 $141 $23 $37,871 
Six Months Ended July 1, 2022
Balance at
Beginning
of Period
Charged to Expense, netWrite-Offs, Deductions and Other, netForeign
Currency
Translation
Balance at
End of
Period
(In thousands)
Allowance for credit losses$6,589 $343 $1,391 $(141)$8,182 
11

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)




6. Net Income Per Share from Continuing Operations

Net income per share from continuing operations was computed as follows:
Three Months Ended
April 1, 2022April 2, 2021
(In thousands, except share and per share data)
Computation of Net income per share from continuing operations - basic:
Net income from continuing operations attributable to Enovis Corporation(1)
$18,126 $26,564 
Weighted-average shares of Common stock outstanding – basic53,872,007 46,534,463 
Net income per share from continuing operations – basic$0.34 $0.57 
Computation of Net income per share from continuing operations - diluted:
Net income from continuing operations attributable to Enovis Corporation(1)
$18,126 $26,564 
Weighted-average shares of Common stock outstanding – basic53,872,007 46,534,463 
Net effect of potentially dilutive securities - stock options, restricted stock units and tangible equity units536,967 722,639 
Weighted-average shares of Common stock outstanding – diluted54,408,974 47,257,102 
Net income per share from continuing operations – diluted$0.33 $0.56 
Three Months EndedSix Months Ended
July 1, 2022July 2, 2021July 1, 2022July 2, 2021
(In thousands, except share and per share data)
Computation of Net income (loss) per share from continuing operations - basic:
Net income (loss) from continuing operations attributable to Enovis Corporation(1)
$120,521 $(42,482)$82,199 $(74,626)
Weighted-average shares of Common stock outstanding – basic54,080,549 51,291,986 53,969,738 48,902,883 
Net income (loss) per share from continuing operations – basic$2.23 $(0.83)$1.52 $(1.53)
Computation of Net income (loss) per share from continuing operations - diluted:
Net income (loss) from continuing operations attributable to Enovis Corporation(1)
$120,521 $(42,482)$82,199 $(74,626)
Weighted-average shares of Common stock outstanding – basic54,080,549 51,291,986 53,969,738 48,902,883 
Net effect of potentially dilutive securities - stock options, restricted stock units and tangible equity units441,300 — 489,134 — 
Weighted-average shares of Common stock outstanding – diluted54,521,849 51,291,986 54,458,872 48,902,883 
Net income (loss) per share from continuing operations – diluted$2.21 $(0.83)$1.51 $(1.53)
(1) Net income (loss) from continuing operations attributable to Enovis Corporation for the respective periods is calculated using Net income (loss) from continuing operations less the continuing operations component of the income attributable to noncontrolling interest, net of taxes, of $1.2$0.1 million and $0.4 million for the three and six months ended AprilJuly 1, 2022, respectively, and April$0.4 million and $0.6 million for the three and six months ended July 2, 2021.2021, respectively.
10

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)




As a result of the reverse stock split allfollowing the Separation, prior-period share and per share figures contained in the Condensed Consolidated Financial Statements have been retroactively restated as if the reverse stock split occurred at the beginning of the periods presented.

For all periods presented,the three and six months ended July 1, 2022 and the three and six months ended July 2, 2021, the weighted-average shares of Common stock outstanding - basic includes the impact of 6.1 million shares, as adjusted for the shares related toreverse stock split, for the actual or potential issuance of theshares from tangible equity units. Duringunit purchase contracts. In January 2022, the three months ended April 1, 2022, conversionsfinal remaining amount of the Company’s tangible equity units resulted in the issuance ofunit purchase contracts were converted into approximately 1.7 million shares of Companythe Company’s common stock.stock, as adjusted for the reverse stock split. All issuances of Company common stock related to the tangible equity units were converted at the minimum settlement rate of 1.33 shares of common stock for each purchase contract as a result of the increase in the Company’s share price. TheAll the issued shares are included in the Common stock issued and outstanding as of AprilJuly 1, 2022. See Note 8, “Equity” for details.

The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for the three and six months ended AprilJuly 1, 2022 excludes 0.4 million of outstanding stock-based compensation awards as their inclusion would be anti-dilutive.

The weighted-average computation of the dilutive effect of potentially issuable shares of Common stock under the treasury stock method for the three and Aprilsix months ended July 2, 2021 excludes 0.5 million and 0.4 million, respectively, of outstanding stock-based compensation awards as their inclusion would be anti-dilutive.


12

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



7. Income Taxes

During the three and six months ended AprilJuly 1, 2022, Income from continuing operations before income taxes was $38.0$116.4 million and $78.7 million, respectively, while income tax expensebenefit was $18.7 million.$4.2 million and $3.8 million, respectively. The effective tax rate was 49.1%(3.6)% and (4.9)% for the three and six months ended AprilJuly 1, 2022.2022, both of which differed from the 2022 federal statutory rate of 21% mainly due to non-taxable unrealized gains on the investment in ESAB offset by non-deductible costs related to the tax-free separation transaction.

During the three and six months ended July 2, 2021, Loss from continuing operations before income taxes was $45.9 million and $77.0 million, respectively, while the income tax benefit was $3.8 million and $3.0 million, respectively. The effective tax rate was 8.2% and 3.9% for the three and six months ended April 1, 2022July 2, 2021, respectively, both of which differed from the 2021 U.S. federal statutory rate of 21% mainly due to withholding taxes, taxable foreign exchange gains, U.S. taxation ofon international operations and other non-deductible expenses, and various items expensed discretely to the quarter.expenses.

During the three months ended April 2, 2021, Income from continuing operations before income taxes was $35.6 million, while income tax expense was $7.9 million. The effective tax rate was 22.2% for the three months ended April 2, 2021. The effective tax rate for the three months ended April 2, 2021 differed from the 2021 U.S. federal statutory rate of 21% mainly due to withholding taxes, taxable foreign exchange gains and other non-deductible expenses partially offset by the benefit of U.S. tax credits.
1113

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)




8. Equity

Outstanding shares

As discussed in Note 1, the Company effected a reverse stock split immediately following the Separation on April 4, 2022 and all share and per share figures contained in the accompanying Condensed Consolidated Financial Statements have been retroactively restated as if the reverse stock split occurred at the beginning of the periods presented. As of December 31, 2021, the outstanding shares for the Company after the reverse stock split were 52,083,078.

Share Repurchase Program

In 2018, the Company’s Board of Directors authorized the repurchase of shares of the Company’s Common stock from time-to-time on the open market or in privately negotiated transactions. No repurchases of the Company’s Common stock have been made under this plan since the third quarter of 2018. As of AprilJuly 1, 2022, the remaining stock repurchase authorization provided by the Board of Directors was $100 million. The timing, amount and method of shares repurchased is determined by management based on its evaluation of market conditions and other factors. There is no term associated with the remaining repurchase authorization.

Accumulated Other Comprehensive Loss

The following tables present the changes in the balances of each component of Accumulated other comprehensive loss including reclassifications out of Accumulated other comprehensive loss for the threesix months ended AprilJuly 1, 2022 and AprilJuly 2, 2021. All amounts are net of tax and noncontrolling interest, if any.
Accumulated Other Comprehensive Loss Components
Net Unrecognized Pension and Other Post-Retirement Benefit CostForeign Currency Translation AdjustmentUnrealized Gain on Hedging ActivitiesTotal
(In thousands)
Balance at January 1, 2022$(85,559)$(475,125)$44,671 $(516,013)
Other comprehensive income (loss) before reclassifications:
Foreign currency translation adjustment470 (38,333)— (37,863)
Loss on long-term intra-entity foreign currency transactions— (15,260)0(15,260)
Gain on net investment hedges— — 9,028 9,028 
Other comprehensive income (loss) before reclassifications470 (53,593)9,028 (44,095)
Amounts reclassified from Accumulated other comprehensive loss629 — — 629 
Net Other comprehensive income (loss)1,099 (53,593)9,028 (43,466)
Balance at April 1, 2022$(84,460)$(528,718)$53,699 $(559,479)

Accumulated Other Comprehensive Loss Components
Net Unrecognized Pension and Other Post-Retirement Benefit CostForeign Currency Translation AdjustmentUnrealized Gain on Hedging ActivitiesTotal
(In thousands)
Balance at January 1, 2022$(85,559)$(475,125)$44,671 $(516,013)
Other comprehensive income (loss) before reclassifications:
Foreign currency translation adjustment470 (61,257)— (60,787)
Loss on long-term intra-entity foreign currency transactions— (21,779)— (21,779)
Gain on net investment hedges— — 9,028 9,028 
Other comprehensive income (loss) before reclassifications470 (83,036)9,028 (73,538)
Amounts reclassified from Accumulated other comprehensive income (loss)629 — — 629 
Net Other comprehensive income (loss)1,099 (83,036)9,028 (72,909)
Distribution of ESAB Corporation84,460 469,220 (53,699)499,981 
Balance at July 1, 2022$— $(88,941)$— $(88,941)

1214

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



Accumulated Other Comprehensive Loss ComponentsAccumulated Other Comprehensive Loss Components
Net Unrecognized Pension and Other Post-Retirement Benefit CostForeign Currency Translation AdjustmentUnrealized Gain on Hedging ActivitiesTotalNet Unrecognized Pension and Other Post-Retirement Benefit CostForeign Currency Translation AdjustmentUnrealized Gain on Hedging ActivitiesTotal
(In thousands)(In thousands)
Balance at January 1, 2021Balance at January 1, 2021$(112,783)$(360,977)$21,654 $(452,106)Balance at January 1, 2021$(112,783)$(360,977)$21,654 $(452,106)
Other comprehensive income (loss) before reclassifications:Other comprehensive income (loss) before reclassifications:Other comprehensive income (loss) before reclassifications:
Foreign currency translation adjustmentForeign currency translation adjustment709 (82,663)(2,201)(84,155)Foreign currency translation adjustment583 (71,276)(2,076)(72,769)
Gain on long-term intra-entity foreign currency transactionsGain on long-term intra-entity foreign currency transactions— 31,098 — 31,098 Gain on long-term intra-entity foreign currency transactions— 29,925 — 29,925 
Gain on net investment hedgesGain on net investment hedges— — 12,381 12,381 Gain on net investment hedges— — 10,231 10,231 
Other comprehensive income (loss) before reclassificationsOther comprehensive income (loss) before reclassifications709 (51,565)10,180 (40,676)Other comprehensive income (loss) before reclassifications583 (41,351)8,155 (32,613)
Amounts reclassified from Accumulated other comprehensive lossAmounts reclassified from Accumulated other comprehensive loss1,055 — — 1,055 Amounts reclassified from Accumulated other comprehensive loss2,100 — — 2,100 
Net Other comprehensive income (loss)Net Other comprehensive income (loss)1,764 (51,565)10,180 (39,621)Net Other comprehensive income (loss)2,683 (41,351)8,155 (30,513)
Balance at April 2, 2021$(111,019)$(412,542)$31,834 $(491,727)
Balance at July 2, 2021Balance at July 2, 2021$(110,100)$(402,328)$29,809 $(482,619)

Tangible equity unit offering

On January 11, 2019, the Company issued 4.6 million in Tangible Equity Units (“TEUs”) at the stated amount of $100 per unit. Net cash of $447.7 million was received upon closing. The gross proceeds and deferred finance costs from the issuance of the TEUs were allocated 84.4% to equity (the “TEU prepaid stock purchase contracts”) and 15.6% to debt (the “TEU amortizing notes”) based on the relative fair value of the respective components of each TEU. See Note 10, “Debt” for additional information on the TEU amortizing notes. The TEU prepaid stock purchase contracts were mandatorily converted into shares of Company common stock on January 15, 2022, unless previously settled at the holder’s option. All the TEU prepaid stock purchase contracts converted at the minimum settlement rate. Approximately 1.3 million and 0.11.6 million TEU prepaid stock purchase contracts were settled into approximately 1.7 million and 0.12.2 million shares of Company common stock as adjusted for the reverse split, during the sixthree months ended AprilJuly 1, 2022 and AprilJuly 2, 2021, respectively. Since the 4.6 million TEU prepaid stock purchase contracts were mandatorily convertibleconverted into shares of Company common stock at the minimum settlement rate or greater, 6.1 million shares, as adjusted for the reverse split, are included in basic net income per share calculations for all periods presented. See Note 6, “Net Income Per Share from Continuing Operations” for additional information.

9. Inventories, Net

Inventories, net consisted of the following:
April 1, 2022December 31, 2021
(In thousands)
Raw materials$233,031 $215,200 
Work in process76,208 69,101 
Finished goods626,911 567,281 
936,150 851,582 
LIFO reserve797 1,129 
Less: allowance for excess, slow-moving and obsolete inventory(84,133)(76,416)
$852,814 $776,295 
The valuation of LIFO inventories is made at the end of the year based on inventory levels and costs at the time. At April 1, 2022 and December 31, 2021, approximately 17.4% and 18.3% of total inventories, respectively, were valued using the LIFO method.


July 1, 2022December 31, 2021
(In thousands)
Raw materials$83,048 $66,824 
Work in process30,183 29,506 
Finished goods338,568 298,450 
451,799 394,780 
Less: allowance for excess, slow-moving and obsolete inventory(50,947)(38,547)
$400,852 $356,233 

1315

ENOVISCOLFAX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



10. Debt

Long-term debt consisted of the following:
April 1, 2022December 31, 2021July 1, 2022December 31, 2021
(In thousands)(In thousands)
Term loanTerm loan$782,653 $782,435 Term loan$448,815 $782,435 
Euro senior notesEuro senior notes383,997 395,552 Euro senior notes— 395,552 
2026 notes2026 notes298,034 297,906 2026 notes— 297,906 
TEU amortizing notesTEU amortizing notes— 6,501 TEU amortizing notes— 6,501 
Revolving credit facilities and otherRevolving credit facilities and other605,475 604,599 Revolving credit facilities and other644 603,932 
Total debtTotal debt2,070,159 2,086,993 Total debt449,459 2,086,326 
Less: current portionLess: current portion(422,289)(8,314)Less: current portion(449,459)(7,701)
Long-term debtLong-term debt$1,647,870 $2,078,679 Long-term debt$— $2,078,625 

Subsequent Event Debt Redemptions

In conjunction with the Separation which occurred on April 4, 2022, the Company repaid all obligations under its Term loan and Revolver (each as defined below)previous credit agreement and entered into a new credit agreement (the “Enovis Credit Agreement”) with certain of its banking partners.existing bank lenders. Additionally, on MarchApril 7, 2022 after the completion of the Separation, the Company announced a conditional redemptioncompleted the redemptions of its 3.25% Euro Senior Notes due 2025 and its 6.375% Senior Notes due 2026. The Euro Senior NotesAs a result of these changes, the Company recorded Debt extinguishment charges of $20.1 million in the second quarter of 2022, comprised of $12.7 million in redemption premiums and 2026 Notes were redeemed on April 7, 2022 after the completion$7.4 million in noncash write-offs of the Separation. In accordance with the redemption noticesoriginal issue discount and subsequent redemption of the debt described above, $421.3 million has been reclassified from long-term debt to current maturities. The amount reflects the debt retired that was not refinanced on a long-term basis. Refer to Note 15, “Subsequent Events” for further detail of ongoingdeferred financing arrangements.fees.

Enovis Term Loan and Revolving Credit Facility

The Company’s credit agreement (the “Credit Facility”), which was legally extinguished in conjunction with the Separationnew Enovis Credit Agreement became effective on April 4, 2022 consistedand consists of a $975$900 million revolving credit facility (the “Revolver”) with an April 4, 2027 maturity date and a Term A-1term loan with an initial aggregate principal amount of $825$450 million (the “Term Loan”), each with aand an April 4, 2023 maturity date of December 6, 2024.(the “Enovis Term Loan”). The Revolver containedcontains a $50 million swing line loan sub-facility. Certain U.S. subsidiaries of the Company guarantee the obligations under the Credit Facility.

The Credit Facility contained customary covenants limiting the ability of the Company to, among other things, incur debt or liens, merge or consolidate with others, dispose of assets, make investments or pay dividends. In addition, the Credit Facility contained maximum total leverage ratio and minimum interest coverage ratio financial covenants. For further description of the Company’s financial covenants as of April 1, 2022, refer to Note 13, “Debt” in the Notes to the Consolidated Financial Statements in the Company’s 2021 Form 10-K. As of April 1, 2022, the Company was in compliance with the covenants under the Credit Facility.

As of April 1, 2022, the weighted-average interest rate of borrowings under the Credit Facility was 1.74%, excluding accretion of original issue discount and deferred financing fees, and there was$375 million available on the Revolver.

Euro Senior Notes

The Company had senior unsecured notes with an aggregate principal amount of €350 million due in May 2025, with an interest rate of 3.25% (the “Euro Senior Notes”). The Euro Senior Notes were redeemed on April 7, 2022 after the completion of the Separation.

TEU Amortizing Notes

The Company had 6.50% TEU amortizing notes at an initial principal amount of $15.6099 per note with equal quarterly cash installments of $1.4375 per note representing a payment of interest and partial payment of principal. The final installment payment was made on January 15, 2022. The Company paid $6.5 million and $6.1 million of principal on the TEU amortizing notes in the three months ended April 1, 2022 and April 2, 2021, respectively.


14

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



2026 Notes

The Company had senior notes with a remaining principal amount of $300 million (the “2026 Notes”), which were due on February 15, 2026 and had an interest rate of 6.375%. The 2026 Notes were redeemed on April 7, 2022 after the completion of the Separation.

Other Indebtedness

In addition to the debt agreements discussed above, the Company is party to various bilateral credit facilities with a borrowing capacity of $168.2 million. As of April 1, 2022, there were no outstanding borrowings under these facilities. Subsequent to the end of the first quarter of 2022, the bilateral credit facilities are no longer available to Enovis due to the completion of the Separation as they relate to ESAB Corp or expired.

The Company is party to letter of credit facilities with an aggregate capacity of $211.9 million. Total letters of credit of $40.2 million were outstanding as of April 1, 2022. Subsequent to the end of the first quarter of 2022, substantially all of the letter of credit facilities are no longer available to Enovis due to the completion of the Separation as they relate to ESAB Corp.

Deferred Financing Fees

In total, the Company had deferred financing fees, including the original issue discount, of $11.3 million included in its Condensed Consolidated Balance Sheet as of April 1, 2022, which would be charged to Interest expense, net, primarily using the effective interest method, over the life of the applicable debt agreements. In conjunction with the Separation and debt redemptions in the second quarter of 2022, the Company expects a net loss on the early extinguishment of debt of approximately $17 million, including approximately $13 million of redemption premiums on the retired debt instruments and $4 million of noncash write-offs of original issue discount and deferred financing fees on the Euro Senior Notes and Senior Notes. The Company also expects additional charges of approximately $7 million in conjunction with entering into the new Enovis Credit Facility and the extinguishment of the prior Credit Facility, which is subject to finalization.


11. Accrued Liabilities

Accrued liabilities in the Condensed Consolidated Balance Sheets consisted of the following:
April 1, 2022December 31, 2021
(In thousands)
Accrued compensation and related benefits$122,172 $142,203 
Accrued taxes70,152 72,276 
Accrued asbestos-related liability34,494 30,572 
Warranty liability19,331 17,457 
Accrued restructuring liability - current portion9,546 10,221 
Accrued third-party commissions34,119 38,492 
Customer advances and billings in excess of costs incurred31,440 31,468 
Lease liability - current portion39,939 42,403 
Accrued interest9,586 11,065 
Other119,271 114,940 
$490,050 $511,097 
15

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)




Warranty Liability
The activity in the Company’s warranty liability consisted of the following:
Three Months Ended
April 1, 2022April 2, 2021
(In thousands)
Warranty liability, beginning of period$17,457 $15,543 
Accrued warranty expense2,129 2,042 
Changes in estimates related to pre-existing warranties836 589 
Cost of warranty service work performed(1,112)(2,472)
Acquisition-related liability— 321 
Foreign exchange translation effect21 (224)
Warranty liability, end of period$19,331 $15,799 


Accrued Restructuring Liability

The Company’s restructuring programs include a series of actions to reduce the structural costs of the Company. A summary of the activity in the Company’s restructuring liability included in Accrued liabilities and Other liabilities in the Condensed Consolidated Balance Sheets is as follows:
Three Months Ended April 1, 2022
Balance at Beginning of PeriodProvisionsPaymentsForeign Currency Translation
Balance at End of Period(3)
(In thousands)
Restructuring and other related charges:
Fabrication Technology:
Termination benefits(1)
$7,818 $452 $(1,861)$(26)$6,383 
Facility closure costs and other(2)
291 4,815 (4,796)(1)309 
8,109 5,267 (6,657)(27)6,692 
Non-cash charges(2)
37 
5,304 
Medical Technology:
Termination benefits(1)
2,470 2,438 (1,905)(9)2,994 
Facility closure costs and other(2)
358 233 (575)— 16 
2,828 2,671 (2,480)(9)3,010 
Non-cash charges(2)
282 
2,953 
Total:
Total restructuring liability activity$10,937 7,938 $(9,137)$(36)$9,702 
Total Non-cash charges319 
$8,257 
(1) Includes severance and other termination benefits, including outplacement services.
(2) Includes the cost of relocating associates, relocating equipment, lease termination expense and other costs in connection with the closure and optimization of facilities, site cost structures, and product lines. The Medical Technology segment charges include $0.5 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three months ended April 1, 2022.
(3) As of April 1, 2022, $9.5 million and $0.2 million of the Company’s restructuring liability was included in Accrued liabilities and Other liabilities, respectively.


16

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



12. Financial Instruments and Fair Value Measurements

The carrying values of financial instruments, including Trade receivables, other receivables and Accounts payable, approximate their fair values due to their short-term maturities. The estimated fair value of the Company’s debt, which was $2.1 billion as of both April 1, 2022 and December 31, 2021, was based on current interest rates for similar types of borrowings and is in Level Two of the fair value hierarchy. The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future.

A summary of the Company’s assets and liabilities that are measured at fair value for each fair value hierarchy level for the periods presented is as follows:
April 1, 2022
Level
One
Level
Two
Level
Three
Total
(In thousands)
Assets:
 Cash equivalents$5,875 $— $— $5,875 
 Foreign currency contracts - not designated as hedges— 1,628 — 1,628 
 Deferred compensation plans— 13,811 — 13,811 
$5,875 $15,439 $— $21,314 
Liabilities:
 Foreign currency contracts - not designated as hedges$— $2,984 $— $2,984 
 Deferred compensation plans— 13,811 — 13,811 
$— $16,795 $— $16,795 

December 31, 2021
Level
One
Level
Two
Level
Three
Total
(In thousands)
Assets:
 Cash equivalents$8,133 $— $— $8,133 
 Foreign currency contracts - not designated as hedges— 2,607 — 2,607 
 Deferred compensation plans— 11,213 — 11,213 
$8,133 $13,820 $— $21,953 
Liabilities:
 Foreign currency contracts - not designated as hedges$— $3,044 $— $3,044 
 Deferred compensation plans— 11,213 — 11,213 
$— $14,257 $— $14,257 

There were no transfers in or out of Level One, Two or Three during the three months ended April 1, 2022.

17

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



Foreign Currency Contracts

As of April 1, 2022 and December 31, 2021, the Company had foreign currency contracts related to purchases and sales with notional values of $203.6 million and $273.2 million, respectively.

The Company recognized the following in its Condensed Consolidated Financial Statements related to its derivative instruments:
Three Months Ended
April 1, 2022April 2, 2021
(In thousands)
Contracts Designated as Hedges:
Unrealized gain (loss) on net investment hedges(1)
$9,028 $12,381 
Contracts Not Designated in a Hedge Relationship:
Foreign Currency Contracts:
  Unrealized gain (loss)(1,356)(2,611)
  Realized gain (loss)(14,582)51 
(1) The unrealized gain (loss) on net investment hedges is attributable to the change in valuation of Euro denominated debt.



13. Commitments and Contingencies

For further description of the Company’s litigation and contingencies, reference is made to Note 18, “Commitments and Contingencies” in the Notes to Consolidated Financial Statements in the Company’s 2021 Form 10-K. Since the Company did not retain an interest in the ongoing operations of its divested businesses, the retained asbestos-related activity has been classified in its Condensed Consolidated Statements of Operations as a component of Loss from discontinued operations, net of taxes. In conjunction with the Separation, all asbestos-related contingencies and insurance coverages from the divested industrial businesses were transferred fully to ESAB Corp.
Asbestos Contingencies

Asbestos-related claims activity since December 31 is as follows:
Three Months Ended
April 1, 2022April 2, 2021
(Number of claims)
Claims unresolved, beginning of period14,559 14,809 
Claims filed(1)
1,065 1,067 
Claims resolved(2)
(779)(581)
Claims unresolved, end of period14,845 15,295 
(1) Claims filed include all asbestos claims for which notification has been received or a file has been opened.
(2) Claims resolved include all asbestos claims that have been settled, dismissed or that are in the process of being settled or dismissed based upon agreements or understandings in place with counsel for the claimants.

18

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



The Company’s Condensed Consolidated Balance Sheets included the following amounts related to asbestos-related litigation:
April 1, 2022December 31, 2021
(In thousands)
Long-term asbestos insurance asset(1)
$229,215 $231,900 
Long-term asbestos insurance receivable(1)
17,002 15,421 
Accrued asbestos liability(2)
34,494 30,572 
Long-term asbestos liability(3)
254,106 261,779 
(1) Included in Other assets in the Condensed Consolidated Balance Sheets.
(2) Represents current accruals for probable and reasonably estimable asbestos-related liability costs that the Company believes the subsidiaries will pay, and unpaid legal costs related to defending themselves against asbestos-related liability claims and legal action against the Company’s insurers, which is included in Accrued liabilities in the Condensed Consolidated Balance Sheets.
(3) Included in Other liabilities in the Condensed Consolidated Balance Sheets.

Management’s analyses are based on currently known facts and assumptions. Projecting future events, such as new claims to be filed each year, the average cost of resolving each claim, coverage issues among layers of insurers, the method in which losses will be allocated to the various insurance policies, interpretation of the effect on coverage of various policy terms and limits and their interrelationships, the continuing solvency of various insurance companies, the amount of remaining insurance available, as well as the numerous uncertainties inherent in asbestos litigation could cause the actual liabilities and insurance recoveries to be higher or lower than those projected or recorded which could materially affect the Company’s financial condition, results of operations or cash flow.

General Litigation

The Company is involved in various other pending legal proceedings arising out of the ordinary course of the Company’s business. None of these legal proceedings are expected to have a material adverse effect on the financial condition, results of operations or cash flow of the Company. With respect to these proceedings and the litigation and claims described in the preceding paragraphs, management of the Company believes that it will either prevail, has adequate insurance coverage or has established appropriate accruals to cover potential liabilities. Legal costs related to proceedings or claims are recorded as incurred. Other costs that management estimates may be paid related to the claims are accrued when the liability is considered probable and the amount can be reasonably estimated. There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these legal proceedings were to be determined adverse to the Company, there could be a material adverse effect on the financial condition, results of operations or cash flow of the Company.

19

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



14. Segment Information

The Company conducts its continuing operations through the Fabrication Technology and Medical Technology operating segments, which also represent the Company’s reportable segments.

Fabrication Technology -a leading global supplier of consumable products and equipment for use in cutting, joining and automated welding, as well as gas control equipment, providing a wide range of products with innovative technologies to solve challenges in a wide range of industries.

Medical Technology - a leader in orthopedic solutions, providing devices, software and services spanning the full continuum of patient care, from injury prevention to joint replacement to rehabilitation.
Certain amounts not allocated to the 2 reportable segments and intersegment eliminations are reported under the heading “Corporate and other.” The Company’s management evaluates the operating results of each of its reportable segments based upon Net sales and segment operating income (loss), which represents Operating income (loss) before Restructuring and certain other charges.

The Company’s segment results were as follows:
Three Months Ended
April 1, 2022April 2, 2021
(In thousands)
Net sales:
     Fabrication Technology$647,911 $568,128 
Medical Technology375,457 311,083 
$1,023,368 $879,211 
Segment operating income (loss)(1):
     Fabrication Technology$95,545 $82,305 
Medical Technology(147)2,162 
     Corporate and other(31,396)(17,361)
$64,002 $67,106 
(1) The following is a reconciliation of Income from continuing operations before income taxes to segment operating income:
Three Months Ended
April 1, 2022April 2, 2021
(In thousands)
Income from continuing operations before income taxes$38,019 $35,647 
Interest expense, net15,099 25,660 
Restructuring and other related charges(1)
8,257 4,046 
MDR and related costs(2)
2,627 1,753 
Segment operating income$64,002 $67,106 
(1) Restructuring and other related charges includes $0.5 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three months ended April 1, 2022.
(2) Primarily related to costs specific to compliance with medical device reporting regulations and other requirements of the European Union Medical Devices Regulation. These costs are classified as Selling, general and administrative expense on our Condensed Consolidated Statements of Operations.

20

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)




15. Subsequent Events

As discussed in Note 1, “General”, the Company completed the separation of its fabrication technology business on April 4, 2022 through a tax-free, pro-rata distribution of 90% of the outstanding common stock of ESAB Corp to the Company’s stockholders. In connection with the Separation, ESAB Corp and Enovis entered into various agreements to affect the Separation and provide a framework for Enovis’ relationship with ESAB Corp after the Separation, including a separation and distribution agreement, stockholders’ and registration rights agreement, employee matters agreement, tax matters agreement, transition services agreement, ESAB Business Excellence System (“EBS”) license agreement, and intellectual property matters agreement. These agreements will govern the Separation between Enovis and ESAB Corp of the assets, employees, liabilities and obligations (including its investments, property and employee benefits and tax-related assets and liabilities) of Enovis and its subsidiaries attributable to periods prior to, at and after the Separation and will govern certain relationships between Enovis and ESAB Corp after the Separation.

In connection with the Separation, ESAB Corp issued $1.2 billion of new debt securities, the proceeds from which were used to fund a $1.2 billion cash distribution to Enovis upon Separation. The distribution proceeds were used by Enovis in conjunction with $450 million of borrowings on a term loan under the new Enovis credit facility, as discussed below, and $52.3 million of cash on hand to repay $1.4 billion of outstanding debt and accrued interest on its Credit Facility, $302.8 million of outstanding debt and accrued interest on its 2026 Notes, as well as a redemption premium at 103.188% of the principal amount of the 2026 Notes, and other fees and expenses due at closing. Additionally, on April 7, 2022, the Company completed the redemption of its Euro Senior Notes representing all of its outstanding €350 million principal 3.250% Senior Notes due 2025 consisting of $392.1 million outstanding debt and accrued interest as well as a redemption premium of 100.813% of the principal amount. In the second quarter of 2022, the Company expects a net loss on the early extinguishment of debt of approximately $17 million, including approximately $13 million of redemption premiums on the retired debt instruments and $4 million of noncash write-offs of original issue discount and deferred financing fees on the Euro Senior Notes and Senior Notes. The Company also expects additional charges of approximately $7 million in conjunction with entering into the new Enovis Credit Facility and the extinguishment of the prior Credit Facility, which is subject to finalization.

In accordance with the redemption notices and subsequent redemption of the debt described above, $421.3 million has been reclassified from long-term debt to current maturities. The amount reflects the debt retired that was not refinanced on a long-term basis.

The Company retained 10% of the shares of ESAB Corp common stock as part of the Separation. The Company intends to divest its 10% retained shares in ESAB Corp in a tax-efficient exchange for its outstanding debt under the new Enovis credit facility no later than 12 months after the Distribution Date. The retained stake in ESAB Corp, based on the initial opening share price, is approximately $300 million on a fair value basis and will be marked-to-market each reporting period.

Immediately following the Separation, the Company effected a one-for-three reverse stock split of all issued and outstanding shares of Enovis common stock. As a result of the reverse stock split, all share and per share figures contained in the accompanying Condensed Consolidated Financial Statements have been retroactively restated as if the reverse stock split occurred at the beginning of the periods presented.

On April 4, 2022, the Company entered into a new credit agreement (the “Enovis Credit Agreement”) which replaces the Company’s prior credit agreement and concurrently terminated all indebtedness of the Company outstanding thereunder being repaid on such date with proceeds of the Enovis Credit Agreement and other funds of the Company.

The Enovis Credit Agreement consists of a revolving credit facility that totals $900 million in commitments with a maturity date of April 4, 2027 (the “Enovis Revolver”) and a term loan in an aggregate amount of $450 million with a maturity date of April 4, 2023 (the “Enovis Term Loan”, and together with the Enovis Revolver, the “Enovis Credit Facilities”). The Enovis Revolver includes a $50 million swingline loan sub-facility. The Enovis Revolver will be used to provide funds for the Company’s ongoing working capital requirements and for general corporate purposes.

The Enovis Term Loan bears interest, at the election of the Company, at either the base rate (as defined in the Enovis Credit Agreement) or at the term Secured overnight financing rate (“SOFR”) plus an adjustment (as defined in the Enovis Credit Agreement), in each case, plus the applicable interest rate margin. The Enovis Revolver bears interest, at the election of the Company, at either the base rate or, in the case of loans denominated in dollars, the term SOFR rate plus an adjustment or the daily simple SOFR plus an adjustment, in the case of loans denominated in euros, the adjusted EURIBOR rate and, in the case of loans denominated in sterling, SONIA plus an adjustment (as all such rates are defined in the Enovis Credit Agreement), in each case, plus the applicable interest rate margin. Initially, the applicable interest rate margin will be 1.500% or, in the case
21

ENOVIS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



of base rate loans, 0.500%, and in future quarters it may change based upon the Company’s total leverage ratio (ranging from 1.125% to 1.750% or in the case of the base rate margin, 0.125% to 0.750%). Each swing line loan denominated in dollars will bear interest at the base rate plus the applicable interest rate margin.

Certain U.S. subsidiaries of the Company have agreed to guarantee the obligations of the Company under the Enovis Credit Agreement.

The Enovis Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, incur debt or liens, merge or consolidate with others, dispose of assets, make investments or pay dividends. In addition, the Enovis Credit Agreement contains financial covenants requiring the Company to maintain (i) a maximum total leverage ratio of not more than 4.50:1.00, with a step-down to, on the date on which the Company and its subsidiaries have transferred any retained shares of ESAB common stock to one or more unaffiliated third parties, 4.00:1.00, commencing with the fiscal quarter ending June 30, 2023, 3.75:1.00 and commencing with the fiscal quarter ending June 30, 2024, 3.50:1.00, and (ii) a minimum interest coverage ratio of 3.00:1:00. The Enovis Credit Agreement contains various events of default (including failure to comply with the covenants under the Enovis Credit Agreement and related agreements) and upon an event of default the lenders may, subject to various customary cure rights, require the immediate payment of all amounts outstanding under the Enovis Term Loan and the Enovis Revolver. As of July 1, 2022, the Company was in compliance with the covenants under the Enovis Credit Agreement. For further descriptions of the Company’s financial covenants as of April 1, 2022, refer to Note 13, “Debt” in the Notes to the Consolidated Financial Statements in the Company’s 2021 Form 10-K.

As of July 1, 2022, the weighted-average interest rate of borrowings under the Enovis Credit Agreement was 2.58%, excluding accretion of original issue discount and deferred financing fees, and there was$900 million available on the Revolver.

Euro Senior Notes

The Company had senior unsecured notes with an aggregate principal amount of €350 million due in May 2025, with an interest rate of 3.25%. The Euro Senior Notes were redeemed on April 7, 2022 including a 100.813% redemption premium after the completion of the Separation.



2216

COLFAX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

TEU Amortizing Notes

The Company previously had 6.50% TEU amortizing notes at an initial principal amount of $15.6099 per note with equal quarterly cash installments of $1.4375 per note representing a payment of interest and partial payment of principal. The Company paid $6.5 million and $12.3 million of principal on the TEU amortizing notes in the six months ended July 1, 2022 and July 2, 2021, respectively. The final installment payment was made on January 15, 2022.

2026 Notes

The Company had senior notes with a remaining principal amount of $300 million, which were due on February 15, 2026 and had an interest rate of 6.375%. The 2026 Notes were redeemed on April 7, 2022 including a 103.188% redemption premium after the completion of the Separation.

Other Indebtedness

In addition to the debt agreements discussed above, the Company is party to bilateral credit facilities with a borrowing capacity of $30.0 million. As of July 1, 2022, there were $0.9 million in outstanding borrowings under these facilities.

The Company is party to a letter of credit facility with a capacity of $30.0 million. Total letters of credit of $2.3 million were outstanding as of July 1, 2022.

Deferred Financing Fees

In total, the Company had deferred financing fees of $6.2 million included in its Condensed Consolidated Balance Sheet as of July 1, 2022, which will be charged to Interest expense, net, primarily using the effective interest method, over the life of the applicable debt agreements. In conjunction with the Separation-related debt redemptions and extinguishment of its prior credit facility in the second quarter of 2022, the Company recorded $7.4 million of noncash write-offs of original issue discounts and deferred financing fees. Additionally, the Company deferred $2.9 million of financing costs in the second quarter of 2022 in connection with the new Enovis Credit Facility.


11. Accrued Liabilities

Accrued liabilities in the Condensed Consolidated Balance Sheets consisted of the following:
July 1, 2022December 31, 2021
(In thousands)
Accrued compensation and related benefits$57,352 $66,290 
Accrued taxes12,240 12,970 
Accrued freight7,957 5,299 
Contingent consideration - current portion3,975 1,816 
Warranty liability2,539 2,503 
Accrued restructuring liability2,589 2,170 
Accrued third-party commissions20,380 22,362 
Customer advances and billings in excess of costs incurred3,050 9,203 
Lease liability - current portion22,208 21,936 
Accrued interest596 11,066 
Accrued rebates11,302 12,584 
Accrued professional fees17,094 13,711 
Accrued royalties5,241 5,045 
Other37,683 38,436 
$204,206 $225,391 
17

COLFAX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)



Accrued Restructuring Liability

The Company’s restructuring programs include a series of actions to reduce the structural costs of the Company. A summary of the activity in the Company’s restructuring liability included in Accrued liabilities and Other liabilities in the Condensed Consolidated Balance Sheets is as follows:
Six Months Ended July 1, 2022
Balance at Beginning of PeriodProvisionsPaymentsBalance at End of Period
(In thousands)
Restructuring and other related charges:
Termination benefits(1)
$2,470 $2,352 $(2,233)$2,589 
Facility closure costs and other(2)
358 2,564 (2,922)— 
 Total$2,828 4,916 $(5,155)$2,589 
Non-cash charges(2)
592 
Total Provisions(3)
$5,508 
(1) Includes severance and other termination benefits, including outplacement services.
(2) Includes the cost of relocating associates, relocating equipment, lease termination expense and other costs in connection with the closure and optimization of facilities, site cost structures, and product lines. 
(3) For the six months ended July 1, 2022, $3.4 million and $2.1 million of the Company’s total provisions were related to the Prevention and Recovery and Reconstructive segments, respectively. Restructuring and other related charges includes $0.8 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the six months ended July 1, 2022.


12. Financial Instruments and Fair Value Measurements

The carrying values of financial instruments, including trade receivables, other receivables and accounts payable, approximate their fair values due to their short-term maturities. The estimated fair value of the Company’s debt, which was $0.5 billion and $2.1 billion as of July 1, 2022 and December 31, 2021, respectively, was based on current interest rates for similar types of borrowings and is in Level Two of the fair value hierarchy. The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future.

As of July 1, 2022, the Company held $25.0 million in Level Three liabilities arising from contingent consideration related to acquisitions. The fair value of the contingent consideration liabilities is determined using unobservable inputs and the inputs vary based on the nature of the purchase agreements. These inputs can include the estimated amount and timing of projected cash flows, the risk-adjusted discount rate used to present value the projected cash flows, and the probability of the acquired company attaining certain targets stated within the purchase agreements. A change in these unobservable inputs to a different amount might result in a significantly higher or lower fair value measurement at the reporting date due to the nature of uncertainty inherent to the estimates. During the six months ended July 1, 2022, the company recorded contingent consideration of $20.0 million in conjunction with current acquisitions.

There were no transfers in or out of Level One, Two or Three during the six months ended July 1, 2022.

Investment in ESAB

On April 4, 2022, the Company completed the Separation and retained 10% of the shares of ESAB common stock. The Company did not retain a controlling interest in ESAB and, therefore, the fair value of the retained shares is included in the assets of continuing operations on the Company’s Condensed Consolidated Balance Sheet as of July 1, 2022, and the subsequent fair value changes are included in results from continuing operations on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended July 1, 2022. At July 1, 2022, the Company’s investment in ESAB was measured at fair value based on ESAB’s closing stock price, and it is classified as Level 1 in the fair value hierarchy. The fair value of the ESAB investment as of July 1, 2022 was $263.1 million, and the gain on investment for the three and six months ended July 1, 2022 was $135.5 million.

18

COLFAX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)


Deferred Compensation Plans

The Company maintains deferred compensation plans for the benefit of certain employees and non-executive officers. As of July 1, 2022 and December 31, 2021 the fair value of these plans were $9.7 million and $11.2 million, respectively. These plans are deemed to be Level Two within the fair value hierarchy.

Foreign Currency Contracts

As of July 1, 2022 and December 31, 2021, the Company had foreign currency contracts related to purchases and sales with notional values of $4.6 million and $7.6 million, respectively. During the three and six months ended July 1, 2022, the Company recognized unrealized losses of $0.1 million and $0.2 million, respectively, and realized losses of $0.2 million and $0.3 million, respectively, on its Condensed Consolidated Statements of Operations related to its derivative instruments.




13. Commitments and Contingencies

The Company is involved in various pending legal proceedings arising out of the ordinary course of the Company’s business. None of these legal proceedings are expected to have a material adverse effect on the financial condition, results of operations or cash flow of the Company. With respect to these proceedings, management of the Company believes that it will either prevail, has adequate insurance coverage or has established appropriate accruals to cover potential liabilities. Legal costs related to proceedings or claims are recorded as incurred. Other costs that management estimates may be paid related to the claims are accrued when the liability is considered probable and the amount can be reasonably estimated. There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these legal proceedings were to be determined adverse to the Company, there could be a material adverse effect on the financial condition, results of operations or cash flow of the Company.

In conjunction with the Separation, all asbestos-related contingencies and insurance coverages from the divested industrial businesses were transferred fully to ESAB. The historical asbestos-related activity and balances are presented in discontinued operations on the Condensed Consolidated Statements of Operations and in assets/liabilities associated with discontinued operations on the Condensed Consolidated Balance Sheets, respectively.

For further description of the Company’s litigation and contingencies, reference is made to Note 18, “Commitments and Contingencies” in the Notes to Consolidated Financial Statements in the Company’s 2021 Form 10-K.




14. Segment Information

The Company conducts its continuing operations through the Prevention and Recovery and Reconstructive operating segments, which also represent the Company’s reportable segments.

Prevention and Recovery -a leader in orthopedic solutions and recovery sciences, providing devices, software and services across the patient care continuum from injury prevention to rehabilitation after surgery, injury, or from degenerative disease.

Reconstructive - an innovation-driven leader offering a comprehensive suite of reconstructive joint products for the hip, knee, shoulder, elbow, foot, ankle, and finger.

In conjunction with revising its reporting structure, the Company allocated $1.1 billion and $0.8 billion of goodwill to the Prevention and Recovery and Reconstructive segments, respectively. The total segment assets as of the beginning of the quarter were $2.8 billion and $1.8 billion for the Prevention and Recovery and Reconstructive segments, respectively. There have not been any material changes to the segment assets since the start of the quarter.

19

COLFAX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

The Company’s management evaluates the operating results of each of its reportable segments based upon Net sales and Adjusted EBITDA, which excludes the effect of restructuring and other related charges, MDR and related costs, strategic transaction costs, stock-based compensation, depreciation and other amortization charges, amortization of acquired intangibles, insurance settlement gains, and inventory step-up from the operating income of the Company’s operating segments. The amounts presented below have been recast for the change in operating segments for all periods presented.

The Company’s segment results were as follows:
Three Months EndedSix Months Ended
July 1, 2022July 2, 2021July 1, 2022July 2, 2021
(In thousands)
Net sales:
Prevention and Recovery$263,783 $266,919 $508,618 $501,593 
Reconstructive131,334 89,205 261,956 165,614 
$395,117 $356,124 $770,574 $667,207 
Segment Adjusted EBITDA(1):
Prevention and Recovery$35,148 $33,299 $61,518 $54,550 
Reconstructive21,042 17,350 42,399 33,349 
$56,190 $50,649 $103,917 $87,899 
(1) The following is a reconciliation of Income from continuing operations before income taxes to Adjusted EBITDA:
Three Months EndedSix Months Ended
July 1, 2022July 2, 2021July 1, 2022July 2, 2021
(In thousands)
Operating income (loss) (GAAP)$5,553 $(10,351)$(25,074)$(28,482)
Restructuring and other related charges(1)
2,555 1,992 5,508 2,963 
MDR and other costs(2)
4,421 1,919 7,048 3,672 
Strategic transaction costs12,707 4,037 24,403 4,418 
Stock-based compensation7,821 6,793 14,529 12,747 
Depreciation and other amortization19,450 16,350 37,950 33,242 
Amortization of acquired intangibles31,824 29,504 62,610 57,042 
Insurance settlement gain(3)
(33,034)— (33,034)— 
Inventory step-up4,893 405 9,977 2,297 
Adjusted EBITDA (non-GAAP)$56,190 $50,649 $103,917 $87,899 
(1) Restructuring and other related charges includes $0.3 million and $0.8 million of expense classified as Cost of sales on the Company’s Condensed Consolidated Statements of Operations for the three and six months ended July 1, 2022, respectively.
(2) Primarily related to costs specific to compliance with medical device reporting regulations and other requirements of the European Union Medical Devices Regulation. These costs are classified as Selling, general and administrative expense on our Condensed Consolidated Statements of Operations.
(3) Insurance settlement gain is related to the 2019 acquisition of DJO.

20

COLFAX CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(Unaudited)

15. Related Party Transactions

Related Party Agreements

On April 4, 2022, in connection with the Separation, the Company entered into several agreements with ESAB that govern the Separation and provide a framework for the future relationship between the parties, including a separation and distribution agreement, a transition services agreement (the “Separation Agreement”), tax matters agreement, employee matters agreements, a stockholder’s and registration rights agreement, and an intellectual property matters agreement.

The Separation and Distribution Agreement

The Company entered into the Separation Agreement with ESAB immediately prior to the distribution of ESAB’s common stock to Enovis stockholders. The Separation Agreement sets forth the Company’s agreements with ESAB regarding the principal actions to be taken in connection with the Separation. The Separation agreement contains provisions that, among other things, relate to (i) assets, liabilities and contracts to be transferred, assumed and assigned to each of ESAB and Enovis as part of the Separation; (ii) the cash distribution made to Enovis in partial consideration of the transfer of ESAB Assets in connection with the Separation; and, (iii) cross-indemnities principally designed to place financial responsibility for obligations and liabilities with either Enovis or ESAB, depending on the responsible party.

Transition Services Agreement

The transition services agreement ("TSA") sets forth the terms and conditions pursuant to which the Company and its subsidiaries and ESAB’s and its subsidiaries will provide various services to each other. The services to be provided include human resources, payroll, certain information technology services, treasury services and financial reporting services. The charges for the transition services generally are expected to allow the providing company to fully recover all actual internal and external costs and expenses in connection with providing the service (including a reasonable allocation of overhead) provided in the manner and at a level substantially consistent with that provided by the respective providing company
immediately preceding the Separation.

Tax Matters Agreement

The tax matters agreement governs the Company’s and ESAB’s respective rights, responsibilities and obligations after the Separation with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings and certain other matters regarding taxes.

Employee Matters Agreement

The employee matters agreement sets forth, among other things, the allocation of assets, liabilities and responsibilities relating to employee compensation and benefit plans, and programs and other related matters in connection with the Separation, including the treatment of outstanding equity and other incentive awards and certain retirement and welfare benefit obligations.

Stockholders and Registration Rights Agreement

The stockholders and registration rights agreement sets forth the terms and conditions pursuant to which ESAB has granted Company and its affiliates certain registration rights with respect to the shares of ESAB common stock owned by the Company. Upon the request of the Company or certain subsequent transferees as further defined in the agreement, ESAB will use its reasonable best efforts to effect the registration under applicable federal and state securities laws of any shares of ESAB common stock retained by the Company. Under the agreement, the Company has agreed to vote any shares of ESAB common stock retained by it immediately after the Separation in proportion to the votes cast by ESAB’s other stockholders.

Intellectual Property Matters Agreement

The intellectual property matters agreement sets forth the terms and conditions pursuant to which, among other things, the Company and ESAB have granted each other a non-exclusive, royalty-free, fully paid-up, irrevocable, sublicenseable (subject to certain limitations) and worldwide license to use certain intellectual property rights retained by the other party. The term of the intellectual property matters agreement is perpetual.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of operations of Enovis Corporation (“Enovis,” “the Company,” “we,” “our,” and “us”) should be read in conjunction with the Condensed Consolidated Financial Statements and related footnotes included in Part I. Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q for the quarterly period ended AprilJuly 1, 2022 (this “Form 10-Q”) and the Consolidated Financial Statements and related footnotes included in Part II. Item 8. “Financial Statements and Supplementary Data” of our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) filed with the Securities and Exchange Commission (the “SEC”) on February 22, 2022.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of the statements contained in this Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 21E of the Exchange Act. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Form 10-Q is filed with the Securities and Exchange Commission (the “SEC”). All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including statements regarding: the separation of our fabrication and medical technology businesses into two differentiated, independent publicly traded companies (the “Separation”); the anticipated benefits of the Separation; the expected financial and operating performance of, and future opportunities for, each company following the Separation; the impact of the COVID-19 global pandemic, including the rise, prevalence and severity of variants of the virus, the actions by governments, businesses and individuals in response to the situation, on the global and regional economies, financial markets, and overall demand for our products; projections of revenue, profit margins, expenses, tax provisions and tax rates, earnings or losses from operations, impact of foreign exchange rates, cash flows, synergies or other financial items; plans, strategies and objectives of management for future operations including statements relating to potential acquisitions, compensation plans or purchase commitments; developments, performance, industry or market rankings relating to products or services; future economic conditions or performance;performance, including the impact of increasing inflationary pressures; the outcome of outstanding claims or legal proceedings; potential gains and recoveries of costs; assumptions underlying any of the foregoing; and any other statements that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. Forward-looking statements may be characterized by terminology such as “believe,” “anticipate,” “should,” “would,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “targets,” “aims,” “seeks,” “sees,” and similar expressions. These statements are based on assumptions and assessments made by our management as of the filing of this Form 10-Q in light of their experience and perception of historical trends, current conditions, expected future developments and other factors we believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties and actual results could differ materially due to numerous factors, including but not limited to the following:

risks related to the impact of the COVID-19 global pandemic, including the rise, prevalence and severity of variants of the virus, actions by governments, businesses and individuals in response to the situation, such as the scope and duration of the outbreak, the nature and effectiveness of government actions and restrictive measures implemented in response, delays and cancellations of medical procedures, supply chain disruptions, the impact on creditworthiness and financial viability of customers, and other impacts on the Company’s business and ability to execute business continuity plans;

risks related to the Separation, including our ability to realize the anticipated benefits of the Separation; the potential to incur significant liability if the separation and distribution of ESAB Corp is determined to be a taxable transaction; potential indemnification liabilities to ESAB Corp pursuant to the separation and distribution agreement and related agreements entered into in connection with the Separation; developments related to the impact of the COVID-19 pandemic on the Separation and the financial and operating performance of each company following the Separation;

volatility in the commodity markets and certain commodity prices due to economic disruptions from the COVID-19 pandemic and various geopolitical events;events, including the ongoing conflict between Russia and Ukraine

changes in the general economy, including as a result of inflationary pressures, a general economic slowdown or a recession, increased interest rates or changes in monetary policy, as well as the cyclical nature of the markets we serve;

2322


supply chain constraints and backlogs, including risks affecting raw material, part and component availability, labor shortages and inefficiencies, freight and logistical challenges, and inflation in raw material, part, component, freight and delivery costs;

significant movements in foreign currency exchange rates;

our ability to identify, finance, acquire and successfully integrate attractive acquisition targets;

our exposure to unanticipated liabilities resulting from acquisitions;

our ability and the ability of our customers to access required capital at a reasonable cost;

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

disruptions in the global economy caused by the ongoing conflict between Russia and Ukraine (including any political or economic responses and counter-responses);

material disruptions at any of our manufacturing facilities;

noncompliance with various laws and regulations associated with our international operations, including anti-bribery laws, export control regulations and sanctions and embargoes;

risks associated with our international operations, including risks from trade protection measures and other changes in trade relations;

risks associated with the representation of our employees by trade unions and work councils;

our exposure to product liability claims;

potential costs and liabilities associated with environmental, health and safety laws and regulations;

failure to maintain, protect and defend our intellectual property rights;

the loss of key members of our leadership team, or the inability to attract, develop, engage, and retain qualified employees;

restrictions in our principal credit facility that may limit our flexibility in operating our business;

impairment in the value of intangible assets;

significant movements in foreign currency exchange rates;

new regulations and customer preferences reflecting an increased focus on environmental, social and governance issues, including new regulations related to the use of conflict minerals;

service interruptions, data corruption, cyber-based attacks or network security breaches affecting our information technology infrastructure;

risks arising from changes in technology;

the competitive environment in our industry;

changes in our tax rates, realizability of deferred tax assets, or exposure to additional income tax liabilities, including the effects of the COVID-19 global pandemic;liabilities;

our ability to manage and grow our business and execution of our business and growth strategies;

our financial performance;

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difficulties and delays in integrating or fully realizing projected cost savings and benefits of our acquisitions; and

other risks and factors, listed in Item 1A. “Risk Factors” in Part I of our 2021 Form 10-K and Part II. Item 1A. “Risk Factors” in thisour Form 10-Q.10-Q for the quarter ended April 1, 2022.

The effects of the COVID-19 pandemic, including the rise, prevalence and severity of variants of the virus and actions by governments, businesses and individuals in response to the situation, as well as inflationary pressures and the ongoing conflict between Russia and Ukraine, may give rise or contribute to or amplify the risks associated with many of these factors.

Any such forward-looking statements are not guarantees of future performance and actual results, developments and business decisions may differ materially from those envisaged by such forward-looking statements. These forward-looking statements speak only as of the date this Form 10-Q is filed with the SEC. We do not assume any obligation and do not intend to update any forward-looking statement except as required by law. See Part I. Item 1A. “Risk Factors” in our 2021 Form 10-K and Part II. Item 1A. “Risk Factors” in thisour Form 10-Q for the quarter ended April 1, 2022 for a further discussion regarding some of the reasons that actual results may be materially different from those that we anticipate.


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Overview

Please see Part I, Item 1. “Business” in our 2021 Form 10-K for a discussion of the Company’s objectives and methodologies for delivering shareholder value.

Prior toWe previously reported our operations through our Fabrication Technology and Medical Technology segments. These businesses operated in distinct markets, with unique business opportunities and investment requirements. Following the Separation onspin-off, the Company holds only the medical technology business reported through our Prevention and Recovery and Reconstructive segments. On April 4, 2022, the Company conductedchanged its name from “Colfax Corporation” to “Enovis Corporation”, began operating its business as “Enovis” and, as of April 5, 2022, the Company’s common stock began trading under the new ticker symbol “ENOV.” See the Results of Operations section below for further information on the Separation.

As mentioned above, beginning in the second quarter of 2022, Enovis conducts its operations through two operating segments: Fabrication TechnologyPrevention and Medical Technology.Recovery and Reconstructive. We have reflected this change in all historical periods presented.

Fabrication TechnologyPrevention and Recovery - a leading global supplier of consumable products and equipment for use in the cutting, joining and automated welding, as well as gas control equipment, providing a wide range of products with innovative technologies to solve challenges in a wide range of industries.

Medical Technology a leader in orthopedic solutions, providing devices, software and services spanningacross the full continuum of patient care continuum from injury prevention to joint replacement to rehabilitation.rehabilitation after surgery, injury, or from degenerative disease.

Certain amounts not allocated toReconstructive - an innovation-driven leader offering a comprehensive suite of reconstructive joint products for the two reportable segmentship, knee, shoulder, elbow, foot, ankle, and intersegment eliminations are reported under the heading “Corporate and other.”finger.

Prior to the Separation, we hadWe have a global footprint, with production facilities in North America, Europe, North America, South America, Asia, AustraliaAfrica and Africa, servingAsia. We serve a global customer base across multiple markets through a combination of direct sales and third-party distribution channels. Prior to our Separation, ourOur customer base wasis highly diversified in the medical and industrial end markets. Enovis, after the Separation, now serves two primary end markets in medical devices, prevention & recovery products and reconstructive surgical products, and it generates approximately 68% of its revenues in the United States and the majority of the remaining balance in Europe.market.

In conjunction with the Separation, we rebrandedIntegral to our operations is our business management system, as Enovis Growth Excellence (“EGX”)(EGX). EGX is integral to our operationsculture and includes our values and behaviors, a comprehensive set of tools, and repeatable, teachable processes that we use to drive continuous improvement and create superior value for our customers, shareholders and associates. EGX leverages our culture of continuous improvement to rapidly uncover and execute growth opportunities. We believe that our management team’s access to, and experience in, the application of the EGX methodology is one of our primary competitive strengths.

2625

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 and European Union Medical Devices Regulation (“MDR”) costs, and Adjusted EBITAEBITDA, as defined in the “Non-GAAP Measures” section.

Items Affecting Comparability of Reported Results

The comparability of our operating results for the three and six months ended AprilJuly 1, 2022 to the comparable period in 2021 is affected by the following significant items:

The Separation

On April 4, 2022 (the “Distribution Date”), we completed the Separation through a tax-free, pro-rata distribution of 90% of the outstanding common stock of ESAB Corp to Enovisour stockholders. We retained 10% of the shares of ESAB Corp common stock immediately following the Separation. We intend to divest the 10% retained shares in ESAB Corp in a tax-efficient exchange for outstanding debt no later than 12 months after the Distribution Date. The Chairman of our board of directors and co-founder of Colfax, Mitchell P. Rales, is also serving as Chairman of the board of directors of ESAB Corp.

Since the disposition occurred in the second quarter of 2022, we will classifybegan classifying our fabrication technology business as a discontinued operation in our financial statements beginning in the second quarter of 2022;2022. Accordingly, the results of our fabrication technology businesses are included inexcluded from continuing operations in the accompanying financials for the three and six months ended AprilJuly 1, 2022 and AprilJuly 2, 2021.

We expect that the Separation will allow each company to: (1) optimize capital allocation for internal investment, mergers and acquisitions, and return of capital to shareholders; (2) tailor investment to its specific business profile and strategic priorities in the most efficient manner possible; (3) increase operating flexibility and resources to capitalize on growth opportunities in its respective markets; and (4) improve both investor alignment with its clear value proposition and the ability for investors to value it based on its distinct strategic, operational and financial characteristics. The Separation also provides each company with an appropriately valued acquisition currency that could be used for larger, transformational transactions.

Refer to Note 10, “Debt” and Note 15, “Subsequent Events” in the accompanying Notes to the Condensed Consolidated Financial Statements for more information regarding the Separation.

The COVID-19 Pandemic

In December 2019, a novel coronavirus disease (“COVID-19”) 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. The COVID-19 global pandemic resulted in a widespread health crisis, and the resulting impact on governments, businesses and individuals and actions taken by them in response to the situation resulted in widespreadhas cause economic disruptions significantly affecting broader economies, financial markets, and overall demand for our products.

In an effort to contain COVID-19 or slowsince its spread, governments around the world enacted measures including periodically closing businesses not deemed “essential,” isolating residents to their homes, limitingemergence in 2020. Despite increased access to healthcare, curtailing activities including sporting events, and practicing social distancing. Increased access to vaccinations subsequently contributed to slowing the spread of COVID-19, resulting in some or all restrictions being lifted in a number of jurisdictions around the world, allowing a return to more normal activity and operational levels during the first half of 2021. However,vaccines, the emergence of variants and subsequent spread of COVID-19 variantsoutbreaks have caused some volatility, including spikes in the second half of 2021 led to the reinstatementand second quarter of certain restrictions,2022, which slowed the pace of recovery into the beginning of the first quarter ofin 2022.

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, inflation and supply chain challenges.

There may be developments outside our control that require us to further adjust our operations. Given the potential dynamic nature of this situation, including the rise, prevalence and severity of variants of the virus, we cannot reasonably estimate the full impacts of COVID-19 on our financial condition, results of operations or cash flows in the future.

27

COVID-19 and other market dynamics have caused widespread supply chain challenges due to labor, raw material, and component shortages. As a result, we continue to experience 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, including purchasing and producing additional inventory to protect our ability to meet customer demand; however, we expect these pressures to continue.

Please see Part I. Item 1A. “Risk Factors” in our 2021 Form 10-K for a further discussion of some of the risks related to the COVID-19 pandemic.

Strategic Acquisitions

We complement our organic growth plans with strategic acquisitions. Acquisitions can significantly affect our reported results, and we report the change in our Net sales between periods both from existing and acquired businesses. The change in
26

Net sales due to acquisitions for the threesix months ended AprilJuly 1, 2022 presented in this filing represents the incremental sales subsequent to the beginning of the prior year periods. During this period the Reconstructive segment completed one business combination for aggregate consideration of $27.1 million and the Prevention & Recovery segment completed three asset acquisitions for aggregate consideration of $18.2 million. The acquired business, 360 Med Care, is an Australian medical device distributor that bundles certain computer assisted surgery and patient experience enhancement programs to add value to the device supply arrangements with surgeons, hospitals, and insurers.

During 2021, we completed one acquisition in our Fabrication Technology segment and five acquisitions in our Medical TechnologyReconstructive segment for net cash consideration of $206.5$201.6 million and equity consideration of $285.7 million. The largest of these acquisitions were in our Medical Technology segment, includinginclude Trilliant Surgical, a national provider of foot and ankle orthopedic implants; MedShape, Inc., a provider of innovative surgical solutions for foot and ankle surgeons; and Mathys AG Bettlach, a Switzerland-based company that develops and distributes innovative products for artificial joint replacement, synthetic bone graft solutions and sports medicine.

Foreign Currency Fluctuations

A significant portionApproximately 31% and 25% of our Net sales approximately 61%from continuing operations for both the threesix months ended AprilJuly 1, 2022 and AprilJuly 2, 2021, respectively, were derived from operations outside the U.S., with the majority of those sales denominated in currencies other than the U.S. dollar. Because much of our manufacturing and employee costs are outside the U.S., a significant portion of ourOur costs are also denominated inexposed to currencies other than the U.S. dollar. Changes in foreign exchange rates can impact our results of operations and are quantified when significant. For the threesix months ended AprilJuly 1, 2022 compared to the threesix months ended AprilJuly 2, 2021, fluctuations in foreign currencies had an unfavorable impact on the change inreduced Net sales and Gross profit ofby approximately 3%2% and reduced Selling, general and administrative expenses by 2%1%. The changes in foreign exchange rates since December 31, 2021 also decreased net assets by approximately 1% as of AprilJuly 1, 2022.

Seasonality

European operations in our Fabrication Technology segment typically experience a slowdown during the July, August and December vacation seasons. Sales in our Medical Technology segmentOur sales typically peak in the fourth quarter. However,quarter, however, the business impact caused by the COVID-19 pandemic has distorted the effects of historical seasonality patterns.


2827

Non-GAAP Measures

Adjusted EBITAEBITDA

Adjusted EBITA, aEBITDA and Adjusted EBITDA margin, two non-GAAP performance measure, ismeasures, are included in this report because it is athey are key metricmetrics used by our management to assess our operating performance. Adjusted EBITA excludesEBITDA and Adjusted EBITDA margin exclude from NetOperating income from continuing operations(loss) the effect of restructuring and other related charges, MDR and related costs, acquisition-related intangible asset amortization and other non-cash charges, and strategic transaction costs, as well as income tax expense, pensionstock-based compensation, depreciation and other amortization charges, amortization of acquired intangibles, insurance settlement gain, debt extinguishment chargesgains, and interest expense, net.inventory step-up. We also present Adjusted EBITAEBITDA and Adjusted EBITDA margin by operating segment, which isare subject to the same adjustments asadjustments. Operating income (loss), adjusted EBITDA and adjusted EBITDA margins at the operating segment level also include allocations of certain central function expenses not directly attributable to either operating segment. Adjusted EBITA. Further, we present Adjusted EBITA (and Adjusted EBITA margin) on a segment basis, where we exclude the impact of restructuring and other related charges, MDR and related costs, acquisition-related intangible asset amortization and other non-cash charges, and strategic transaction costs from segment operating income. Adjusted EBITAEBITDA assists Enovis management in comparing its operating performance over time because certain items may obscure underlying business trends and make comparisons of long-term performance difficult, as they are of a nature and/or size that occur with inconsistent frequency or relate to discrete restructuring plans and other initiatives that are fundamentally different from our ongoing productivity improvements. Enovis management also believes that presenting these measures allows investors to view its performance using the same measuremeasures that we use in evaluating our financial and business performance and trends.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. The following tables set forth a reconciliation of NetOperating income from continuing operations,(loss), the most directly comparable GAAP financial measure, to Adjusted EBITA.EBITDA.
Three Months Ended
April 1, 2022April 2, 2021
(Dollars in millions)
Net income from continuing operations (GAAP)$19.4 $27.7 
Income tax expense18.7 7.9 
Interest expense, net15.1 25.7 
Restructuring and other related charges(1)
8.3 4.0 
MDR and related costs(2)
2.6 1.8 
Strategic transaction costs(3)
21.4 1.4 
Acquisition-related amortization and other non-cash charges(4)
43.6 38.5 
Adjusted EBITA (non-GAAP)$129.0 $107.1 
Net income margin from continuing operations (GAAP)1.9 %3.2 %
Adjusted EBITA margin (non-GAAP)12.6 %12.2 %
Three Months EndedSix Months Ended
July 1, 2022July 2, 2021July 1, 2022July 2, 2021
(Dollars in millions)
Operating income (loss) (GAAP)$5.6 $(10.4)$(25.1)$(28.5)
Adjusted to add (deduct):
Restructuring and other related charges(1)
2.6 2.0 5.5 3.0 
MDR and other costs(2)
4.4 1.9 7.0 3.7 
Strategic transaction costs(3)
12.7 4.0 24.4 4.4 
Stock-based compensation7.8 6.8 14.5 12.7 
Depreciation and other amortization19.5 16.4 38.0 33.2 
Amortization of acquired intangibles31.8 29.5 62.6 57.0 
Insurance settlement gain(4)
(33.0)— (33.0)— 
Inventory step-up4.9 0.4 10.0 2.3 
Adjusted EBITDA (non-GAAP)$56.2 $50.6 $103.9 $87.9 
Adjusted EBITDA margin (non-GAAP)14.2 %14.2 %13.5 %13.2 %
(1) Restructuring and other related charges includes $0.5$0.3 million and $0.8 million of expense classified as Cost of sales on our Condensed Consolidated Statements of Operations for the three and six months ended AprilJuly 1, 2022.2022, respectively.
(2)Primarily related to costs specific to compliance with medical device reporting regulations and other requirements of the European Union MDR. These costs are classified as Selling, general and administrative expense on our Condensed Consolidated Statements of Operations.
(3) For the three months ended April 1, 2022, Strategic transaction costs includes costs related to the Separation and certain transaction and integration costs related to recent acquisitions. For the three months ended April 2, 2021, Strategic transaction costs includes costs related to the Separation.
(4) Includes amortizationInsurance settlement gain related to the Company’s 2019 acquisition of acquired intangibles and fair value charges on acquired inventory.


DJO.









2928



The following tables set forth a reconciliation of operating income (loss), the most directly comparable financial statement measure, to Adjusted EBITAEBITDA by segment for the three and six months ended AprilJuly 1, 2022 and AprilJuly 2, 2021, respectively.
Three Months Ended April 1, 2022
 Fabrication TechnologyMedical TechnologyCorporate and otherTotal
(Dollars in millions)
Operating income (loss) (GAAP)$90.2 $(5.7)$(31.4)$53.1 
Restructuring and other related charges5.3 3.0 — 8.3 
MDR and other costs— 2.6 — 2.6 
Segment operating income (loss) (non-GAAP)95.5 (0.1)(31.4)64.0 
Strategic transaction costs3.6 2.1 15.7 21.4 
Acquisition-related amortization and other non-cash charges7.7 35.9 — 43.6 
Adjusted EBITA (non-GAAP)$106.9 $37.8 $(15.7)$129.0 
Segment operating income margin (non-GAAP)14.7 %— %— %6.3 %
Adjusted EBITA margin (non-GAAP)16.5 %10.1 %— %12.6 %

Three Months Ended July 1, 2022Six Months Ended July 1, 2022
Prevention and RecoveryReconstructiveTotalPrevention and RecoveryReconstructiveTotal
(Dollars in millions)
Operating income (loss) (GAAP)$13.4 $(7.9)$5.6 $(1.0)$(24.1)$(25.1)
Adjusted to add (deduct):
Restructuring and other related charges(1)
1.3 1.3 2.6 3.4 2.1 5.5 
MDR and other costs(2)
3.0 1.5 4.4 4.7 2.4 7.0 
Strategic transaction costs(2)
8.5 4.2 12.7 16.1 8.3 24.4 
Stock-based compensation(2)
5.2 2.6 7.8 9.6 4.9 14.5 
Depreciation and other amortization6.3 13.1 19.5 12.2 25.8 38.0 
Amortization of acquired intangibles19.5 12.3 31.8 38.6 24.1 62.6 
Insurance settlement gain(2)
(22.1)(11.0)(33.0)(22.1)(11.0)(33.0)
Inventory step-up— 4.9 4.9 — 10.0 10.0 
Adjusted EBITDA (non-GAAP)$35.1 $21.0 $56.2 $61.5 $42.4 $103.9 
Adjusted EBITDA margin (non-GAAP)13.3 %16.0 %14.2 %12.1 %16.2 %13.5 %
(1) Restructuring and other related charges includes $0.5$0.3 million and $0.8 million of expense classified as Cost of sales on our Condensed Consolidated Statements of Operations for the three and six months ended AprilJuly 1, 2022.2022, respectively.
(2) Amounts are allocated to the segments as a percentage of revenue as the costs or gain are not discrete to either segment.

Three Months Ended April 2, 2021
 Fabrication TechnologyMedical TechnologyCorporate and otherTotal
(Dollars in millions)
Operating income (loss) (GAAP)$79.2 $(0.6)$(17.4)$61.3 
Restructuring and other related charges(1)
3.1 1.0 — 4.0 
MDR and other costs— 1.8 — 1.8 
Segment operating income (loss) (non-GAAP)82.3 2.2 (17.4)67.1 
Strategic transaction costs— — 1.4 1.4 
Acquisition-related amortization and other non-cash charges9.1 29.4 — 38.5 
Adjusted EBITA (non-GAAP)$91.4 $31.6 $(15.9)$107.1 
Segment operating income margin (non-GAAP)14.5 %0.7 %— %7.6 %
Adjusted EBITA margin (non-GAAP)16.1 %10.2 %— %12.2 %
Three Months Ended July 2, 2021Six Months Ended July 2, 2021
Prevention and RecoveryReconstructiveTotalPrevention and RecoveryReconstructiveTotal
(Dollars in millions)
Operating loss (GAAP)$(1.8)$(8.5)$(10.4)$(13.5)$(14.9)$(28.5)
Adjusted to add (deduct):
Restructuring and other related charges1.3 0.7 2.0 2.0 0.9 3.0 
MDR and other costs(1)
1.4 0.5 1.9 2.8 0.9 3.7 
Strategic transaction costs(1)
3.0 1.0 4.0 3.3 1.1 4.4 
Stock-based compensation(1)
5.1 1.7 6.8 9.6 3.2 12.7 
Depreciation and other amortization6.1 10.2 16.4 12.2 21.0 33.2 
Amortization of acquired intangibles18.7 10.8 29.5 37.5 19.6 57.0 
Inventory step-up(0.5)0.9 0.4 0.7 1.6 2.3 
Adjusted EBITDA (non-GAAP)$33.3 $17.4 $50.6 $54.6 $33.3 $87.9 
Adjusted EBITDA margin (non-GAAP)12.5 %19.4 %14.2 %10.9 %20.1 %13.2 %
(1) Amounts are allocated to the segments as a percentage of revenue as the costs or gain are not discrete to either segment.





3029

Total Company

Sales

Net sales for the three and six months ended AprilJuly 1, 2022 increased from the three and six months ended AprilJuly 2, 2021. The following table presents the components of changes in our consolidated Net sales.
Three Months EndedThree Months EndedSix Months Ended
Net SalesChange %Net SalesChange %Net SalesChange %
(Dollars in millions)(Dollars in millions)
For the three months ended April 2, 2021$879.2 
For the three and six months ended July 2, 2021For the three and six months ended July 2, 2021$356.1 $667.2 
Components of Change:Components of Change:Components of Change:
Existing Businesses(1)
Existing Businesses(1)
124.5 14.2 %
Existing Businesses(1)
10.5 2.9 %33.7 5.1 %
Acquisitions(2)
Acquisitions(2)
45.6 5.2 %
Acquisitions(2)
37.4 10.5 %83.0 12.4 %
Foreign Currency Translation(3)
Foreign Currency Translation(3)
(25.9)(2.9)%
Foreign Currency Translation(3)
(8.8)(2.5)%(13.4)(2.0)%
144.2 16.4 %39.0 10.9 %103.4 15.5 %
For the three months ended April 1, 2022$1,023.4 
For the three and six months ended July 1, 2022For the three and six months ended July 1, 2022$395.1 $770.6 
(1) Excludes the impact of foreign exchange rate fluctuations and acquisitions, thus providing a measure of change due to factors such as price, product mix and volume.
(2) Represents the incremental sales as a result of acquisitions closed subsequent to the beginning of the prior year period.
(3) Represents the difference between prior year sales valued at the actual prior year foreign exchange rates and prior year sales valued at current year foreign exchange rates.

The increase in Net sales during the first quarterthree and six months ended AprilJuly 1, 2022 compared to the prior year periodperiods was primarily attributable to acquisition-related sales inflation-related pricingfrom acquired businesses and increases and organic volume increases.Both current year and prior year periods sales volumes were negatively impacted by COVID-19.from our existing businesses. Existing business sales in our Fabrication TechnologyReconstructive segment increased $101.2$5.1 million inand $13.8 million, during the three and six months ended AprilJuly 1, 2022 primarily due to inflation-related pricing increases and, to a lesser extent, new product initiatives and improved sales volume. During the three months ended April 1, 2022, existing business sales in our Medical Technology segment increased $23.3 millionrespectively, due to higher surgical sales volumes compared to the prior year period.period despite some delays in elective surgeries in the second quarter of 2022 due to a rise in COVID-19 cases. Existing business sales in our Prevention and Recovery segment increased $5.4 million and $19.9 million during the three and six months ended July 1, 2022, respectively, and included inflation-related pricing increases and improved sales volumes. Net sales from acquisitions forincreased in the three and six months ended AprilJuly 1, 2022 are due to acquisitions in our Medical TechnologyReconstructive segment that closed since the beginning of the prior year period in 2021. The strengthening of the U.S. dollar relative to other currencies most notably the Euro, resulted in a $25.9$8.8 million and $13.4 million unfavorable foreign currency translation impact.

impacts during the three and six months ended July 1, 2022, respectively.
3130

Operating Results
The following table summarizes our results of continuing operations for the comparable periods.
Three Months Ended
April 1, 2022April 2, 2021
(Dollars in millions)
Gross profit$430.2 $371.1 
Gross profit margin42.0 %42.2 %
Selling, general and administrative expense$369.4 $305.7 
Operating income$53.1 $61.3 
Operating income margin5.2 %7.0 %
Net income from continuing operations$19.4 $27.7 
Net income margin from continuing operations1.9 %3.2 %
Adjusted EBITA (non-GAAP)$129.0 $107.1 
Adjusted EBITA margin (non-GAAP)12.6 %12.2 %
Items excluded from Adjusted EBITA:
Restructuring and other related charges(1)
$8.3 $4.0 
MDR and related costs$2.6 $1.8 
Strategic transaction costs$21.4 $1.4 
Acquisition-related amortization and other non-cash charges$43.6 $38.5 
Interest expense, net$15.1 $25.7 
Income tax expense$18.7 $7.9 
Three Months EndedSix Months Ended
July 1, 2022July 2, 2021July 1, 2022July 2, 2021
(Dollars in millions)
Gross profit$215.9 $200.6 $421.8 $371.9 
Gross profit margin54.6 %56.3 %54.7 %55.7 %
Selling, general and administrative expense$225.5 $197.9 $444.7 $376.0 
Research and development expense$15.7 $11.0 $30.5 $21.4 
Operating income (loss)$5.6 $(10.4)$(25.1)$(28.5)
Operating income (loss) margin1.4 %(2.9)%(3.3)%(4.3)%
Net income (loss) from continuing operations$120.7 $(42.1)$82.6 $(74.0)
Net income (loss) margin from continuing operations (GAAP)30.5 %(11.8)%10.7 %(11.1)%
Adjusted EBITDA (non-GAAP)$56.2 $50.6 $103.9 $87.9 
Adjusted EBITDA margin (non-GAAP)14.2 %14.2 %13.5 %13.2 %
Items excluded from Adjusted EBITDA:
Restructuring and other related charges(1)
$2.6 $2.0 $5.5 $3.0 
MDR and other costs$4.4 $1.9 $7.0 $3.7 
Strategic transaction costs$12.7 $4.0 $24.4 $4.4 
Stock-based compensation$7.8 $6.8 $14.5 $12.7 
Depreciation and other amortization$19.5 $16.4 $38.0 $33.2 
Amortization of acquired intangibles$31.8 $29.5 $62.6 $57.0 
Insurance settlement gain$(33.0)$— $(33.0)$— 
Inventory step-up$4.9 $0.4 $10.0 $2.3 
Unrealized gain on investment in ESAB Corporation$(135.5)$— $(135.5)$— 
Interest expense, net$4.5 $5.7 $11.6 $18.6 
Debt extinguishment charges$20.1 $29.9 $20.1 $29.9 
Income tax expense (benefit)$(4.2)$(3.8)$(3.8)$(3.0)
(1) Restructuring and other related charges includes $0.5$0.3 million and $0.8 million of expense classified as Cost of sales on our Condensed Consolidated Statements of Operations for the three and six months ended AprilJuly 1, 2022.2022, respectively.

FirstSecond Quarter of 2022 Compared to FirstSecond Quarter of 2021

Gross profit increased in the firstsecond quarter of 2022 compared with the prior year period due to a $24.5$19.9 million increase in our Fabrication TechnologyReconstructive segment, andpartially offset by a $34.6$4.7 million increasedecrease in our Medical TechnologyPrevention and Recovery segment. The Gross profit increase was primarily attributable to business acquisition-related increases, favorableacquisitions and increased sales mix, and improved volumes. Increased Gross profit in our Medical Technology segment was also due to acquisition growth primarily in Reconstructive product lines. Improved Gross profit in both segments wasfrom existing businesses, partially offset by increased supply chain and logistic costs.costs and $4.5 million of higher inventory step-up charges related to recent acquisitions. Gross profit margin was impacted by the same drivers as Gross profit, but decreased slightly due to inflation-related customersupply chain, logistics and other cost inflation that exceeded pricing and cost increases in our Fabrication Technology segment.other benefits.

Selling, general and administrative expense increased $63.7$27.6 million in the firstsecond quarter of 2022 compared to the prior year period due to business acquisition-related increases of $26.7$17.4 million in our Medical Technology segment, a $20.0from acquired businesses and $8.7 million increase in strategic transaction costs driven by higher Separation-related costs. Research and development costs also increased compared to the prior year period primarily due to recent acquisitions. Amortization of acquired intangibles and Depreciation and other amortization also increased compared to the prior year period due to acquisition-related increases.

31

During the second quarter of 2022, we recorded an insurance settlement gain of $33.0 million related to the 2019 acquisition of DJO.

Following the Separation, the Company retained 10% of the shares of ESAB common stock, which is recorded at fair value. During the second quarter of 2022, we recorded a lesser extent, increases$135.5 million gain related to this investment.

Debt extinguishment charges of $20.1 million were recorded in compensationthe second quarter of 2022 due to debt redemptions in conjunction with the Separation and travel costs.recapitalization, while charges of $29.9 million were recorded in the second quarter of 2021 due to an early redemption of certain senior notes.

Interest expense, net decreased in the firstsecond quarter of 2022 compared to the prior year period due to a reduction in debt balances primarily as a resultdue to the Separation-related debt redemptions at the beginning of the redemption of senior notes in the second quarter of 2021.2022.

The effective tax rate for Net income from continuing operations during the firstsecond quarter of 2022 was 49.1%(3.6)%, which was higherlower than the 2022 U.S. federal statutory tax rate of 21%, mainly due to withholding taxes, taxable foreign exchangenon-taxable unrealized gains U.S. taxation of international operations, otheron the investment in ESAB offset by non-deductible expenses, and various items expensed discretelycosts related to the quarter.tax-free separation transaction. The effective tax rate for the firstsecond quarter of 2021 was 22.2%8.2%, which was higherlower than the 2021 U.S. federal statutory tax rate of 21% mainly due to withholding taxes, taxable foreign exchange gainsU.S. taxation on international operations and other non-deductible expenses.

Net income from continuing operations increased in the second quarter of 2022 compared with the prior year period primarily due to the gain on the retained ESAB common stock, as well as the insurance settlement gain and acquisition-related sales, offset by costs associated with the Separation, debt extinguishment charges and acquisition-related costs. Net income margin from continuing operations increased due to the aforementioned factors. Adjusted EBITDA increased primarily due to increased sales and lower operating expenses in existing businesses, partially offset by higher supply chain and logistic costs. Adjusted EBITDA margin stayed even period-over-period, and positive impacts were partially offset by recent acquisitions in our Reconstructive segment which were dilutive to the margin by approximately 70 basis points and are expected to be accretive to margins in future years.

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

Gross profit increased in the six months ended July 1, 2022 compared with the prior year period due to a $49.6 million increase in our Reconstructive segment and a $0.2 million increase in our Prevention and Recovery segment. The Gross profit increase was attributable to the benefit from business acquisitions and growth in our existing businesses, partially offset by higher inventory step-up charges of $7.7 million and increased supply chain and logistic costs. Gross profit margin decreased slightly due to supply chain, logistics and other cost inflation that exceeded pricing and other benefits.

Selling, general and administrative expense increased $68.7 million in the six months ended July 1, 2022 compared to the prior year period due to $39.7 million of costs included in acquired businesses and a $20.0 million increase in strategic transaction costs driven by higher Separation-related costs. Research and development costs also increased compared to the prior year period primarily due to increased spend within recently acquired businesses in our Reconstructive segment. Amortization of acquired intangibles and Depreciation and other amortization also increased compared to the prior year period due to business acquisition-related increases.

As discussed above, during the second quarter of 2022, we recorded an insurance settlement gain of $33.0 million and a $135.5 million gain on our retained investment in ESAB, which significantly impacted our results for the six months ended July 1, 2022.

Interest expense, net decreased in the six months ended July 1, 2022 compared to the prior year period due to a reduction in debt balances as a result of the Separation-related debt redemptions at the beginning of the second quarter of 2022.

The effective tax rate for Net income from continuing operations during the six months ended July 1, 2022 was (4.9)%, which was lower than the 2022 U.S. federal statutory tax credits.rate of 21%, mainly due to non-taxable unrealized gains on the investment in ESAB offset by non-deductible costs related to the tax-free separation transaction. The effective tax rate for the six months ended July 2, 2021 was 3.9%, which was lower than the 2021 U.S. federal statutory tax rate of 21% mainly due to U.S. taxation on international operations and other non-deductible expenses.

32

Net income from continuing operations decreasedincreased in the first quarter ofsix months ended July 1, 2022 compared with the prior year period, primarily due to the gain on the retained ESAB common stock, as well as the insurance settlement gain and acquisition-related sales, offset by costs associated with the Separation, increased income tax expensedebt extinguishment charges and acquisition-related costs, partially offset by improved sales volumes.costs. Net income margin from continuing operations decreasedincreased by 130 basisover 20 points due to the aforementioned factors. Adjusted EBITAEBITDA increased due to the improved sales volumes,organic growth and lower operating expenses in existing businesses, partially offset by higher supply chain and logistic costs. Adjusted EBITAEBITDA margin increased 4030 basis points for the same reasons Adjusted EBITAreasons; excluding acquisitions, margins increased partially offset by inflation-related customer pricing and cost increases in our Fabrication Technology segment, as well as recent acquisitions in our Medical Technology segment which were dilutive to the margin, but are expected to be accretive in future years.70 basis points.


Business Segments

As discussed above,Following the completion of the Separation, we report results inrevised our reporting structure and conduct our business through two reportable segments: Fabrication Technologyoperating segments, “Prevention and Medical Technology.Recovery”, which consists of our orthopedic and rehabilitation business, and “Reconstructive”, which includes our surgical business.

Fabrication TechnologyPrevention and Recovery

Our fabrication technology business formulates, develops, manufacturesWe develop, manufacture, and supplies consumabledistribute rigid bracing products, orthopedic soft goods, vascular systems and compression garments, and hot and cold therapy products, and equipment, including cutting, joining,offer robust recovery sciences products in the clinical rehabilitation and automated welding products,sports medicine markets such as well as gas control equipment.bone growth stimulators and electrical stimulators used for pain management. Our fabrication technologyPrevention and Recovery products are marketed under several brand names, most notably ESAB, providing a wide range of products with innovative technologiesDJO and Don-Joy, to solve challenges in virtually any industry. ESAB’s comprehensive range of welding consumables includes electrodes, cored and solid wires, and fluxes using a wide range of specialtyorthopedic specialists, primary care physicians, pain management specialists, physical therapists, podiatrists, chiropractors, athletic trainers, and other materials,healthcare professionals who treat patients with a variety of treatment needs including musculoskeletal conditions resulting from degenerative diseases, deformities, traumatic events and cutting consumablessports-related injuries. Many of our medical devices and related accessories are used by athletes and other patients for injury prevention and at-home physical therapy treatments. We reach a diverse customer base through multiple distribution channels, including electrodes, nozzles, shieldsindependent distributors, direct salespeople, and tips. ESAB’s fabrication technology equipment ranges from portable welding machinesdirectly to large customized automated cutting and welding systems. ESAB also offers a range of digital software and solutions to help its customers increase their productivity, remotely monitor their welding operations and digitize their documentation. Products are sold into a wide range of end markets, including general industry, construction, infrastructure, transportation, energy, renewable energy, and medical & life sciences. As part of the Separation described elsewhere in this report, on April 4, 2022, we spun-off our fabrication technology business. Refer to Note 15, “Subsequent Events” in the accompanying Notes to the Condensed Consolidated Financial Statements for more information regarding the Separation.patients.

The following table summarizes selected financial results for our Fabrication TechnologyPrevention and Recovery segment:
Three Months Ended
April 1, 2022April 2, 2021
(Dollars in millions)
Net sales$647.9 $568.1 
Gross profit$224.3 $199.8 
Gross profit margin34.6 %35.2 %
Selling, general and administrative expense$128.8 $117.5 
Segment operating income (non-GAAP)$95.5 $82.3 
Segment operating income margin (non-GAAP)14.7 %14.5 %
Adjusted EBITA (non-GAAP)$106.9 $91.4 
Adjusted EBITA margin (non-GAAP)16.5 %16.1 %
Items excluded from Adjusted EBITA:
Restructuring and other related charges$5.3 $3.1 
Strategic transaction costs$3.6 $— 
Acquisition-related amortization and other non-cash charges$7.7 $9.1 
Three Months EndedSix Months Ended
July 1, 2022July 2, 2021July 1, 2022July 2, 2021
(Dollars in millions)
Net sales$263.8 $266.9 $508.6 $501.6 
Gross profit$133.7 $138.4 $256.2 $256.0 
Gross profit margin50.7 %51.9 %50.4 %51.0 %
Selling, general and administrative expenses$124.0 $128.8 $243.4 $250.0 
Research and development expense$8.8 $7.2 $17.1 $14.2 
Operating income (loss) (GAAP)$13.4 $(1.8)$(1.0)$(13.5)
Adjusted EBITDA (non-GAAP)$35.1 $33.3 $61.5 $54.6 
Adjusted EBITDA margin (non-GAAP)13.3 %12.5 %12.1 %10.9 %
Items excluded from Adjusted EBITDA:
Restructuring and other related charges$1.3 $1.3 $3.4 $2.0 
MDR and other costs$3.0 $1.4 $4.7 $2.8 
Strategic transaction costs$8.5 $3.0 $16.1 $3.3 
Stock-based compensation$5.2 $5.1 $9.6 $9.6 
Depreciation and other amortization$6.3 $6.1 $12.2 $12.2 
Amortization of acquired intangibles$19.5 $18.7 $38.6 $37.5 
Insurance settlement gain$(22.1)$— $(22.1)$— 
Inventory step up$— $(0.5)$— $0.7 
(1) Restructuring and other related charges includes $0.3 million and $0.8 million of expense classified as Cost of sales on our Condensed Consolidated Statements of Operations for the three and six months ended July 1, 2022, respectively.

First


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Second Quarter of 2022 Compared to FirstSecond Quarter of 2021

Net sales in our Fabrication TechnologyPrevention and Recovery segment increased $79.8decreased $3.1 million, or 14%1%, in the firstsecond quarter of 2022 compared with the prior year period driven primarily by $8.5 million foreign currency translation headwinds and fewer selling days, partially offset by inflation-related customer pricing impacts, as well as new product initiativesincreases. Gross profit decreased $4.7 million, and Gross profit margin decreased 120 basis points, due to inflation-driven supply chain and logistics cost increases, partially offset by pricing increases. Selling, general and administrative expense decreased primarily due to decreased central cost allocations, partially offset by costs incurred related to the Separation. Operating income (loss) improved due to an insurance settlement gain recorded in the second quarter of 2022 and lower Selling, general and administrative expenses, partially offset by increases in supply chain costs and strategic transaction costs related to the Separation. Adjusted EBITDA and Adjusted EBITDA margin increased primarily due to the reduced Selling, general and administrative expenses compared to the prior period, partially offset by increased inflation and supply chain costs.

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

Net sales volumes,in our Prevention and Recovery segment increased $7.0 million, or 1%, in the six months ended July 1, 2022 compared with the prior year period driven primarily by organic growth in existing businesses which was aided by pricing increases to mitigate inflation, partially offset by unfavorable foreign currency translation.translation of $12.9 million. Gross profit increased $24.5$0.2 million due to the improved sales, volumes, drivenoffset by new product initiatives, and favorable product mix.inflation-driven supply chain cost increases. Gross profit margin decreased 60 basis points due to inflation-related customer pricing and cost increases, which compressed the margin. Selling, general and administrative expense increaseddecreased primarily due to a decreased central cost allocation, partially offset by increased costs related to the Separation, as well as increased allowances on receivables in certain regions and increased compensation costs. Segment operatingSeparation. Operating income and Segment operating income margin(loss) improved due to an insurance settlement gain recorded in the second quarter of 2022 and lower Selling, general and administrative expenses, partially offset by increases in supply chain costs and strategic transaction costs related to the Separation. Adjusted EBITDA and Adjusted EBITDA margin increased sales and favorable product mix,due to the reduction in central cost allocations, partially offset by increased Selling, generalinflation and supply chain costs during the six months ended July 1, 2022 compared to the prior year period.






























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administrative expenses. Adjusted EBITA and Adjusted EBITA margin increased for the same reasons, partially offset by inflation-related customer pricing and cost increases during the first quarter of 2022.

Medical TechnologyReconstructive
We develop, manufacture, and distribute high-quality medical devicesmarket a wide variety of knee, hip, shoulder, elbow, foot, ankle, and services acrossfinger implant products that serve the continuum of patient care from injury prevention toorthopedic reconstructive joint replacement to rehabilitation after surgery, injury or from degenerative disease, enabling people to regain or maintain their natural motion.implant market. Our products are primarily used by orthopedic specialists, surgeons primary care physicians, pain management specialists, physical therapists, podiatrists, chiropractors, athletic trainersfor surgical procedures, including in hospitals and other healthcare professionals. Our products primarily include orthopedic braces, rehabilitation devices, footwear, surgical implants, and bone growth stimulators.ambulatory surgery centers.

The following table summarizes the selected financial results for our Medical TechnologyReconstructive segment:
 
Three Months Ended
April 1, 2022April 2, 2021
(Dollars in millions)
Net sales$375.5 $311.1 
Gross profit$205.9 $171.3 
Gross profit margin54.8 %55.1 %
Selling, general and administrative expense$208.4 $170.9 
Segment operating income (non-GAAP)$(0.1)$2.2 
Segment operating income margin (non-GAAP)— %0.7 %
Adjusted EBITA (non-GAAP)$37.8 $31.6 
Adjusted EBITA margin (non-GAAP)10.1 %10.2 %
Items excluded from Adjusted EBITA:
Restructuring and other related charges(1)
$3.0 $1.0 
MDR and related costs(2)
$2.6 $1.8 
Strategic transaction costs$2.1 $— 
Acquisition-related amortization and other non-cash charges$35.9 $29.4 
(1) Restructuring and other related charges includes $0.5 million of expense classified as Cost of sales on our Condensed Consolidated Statements of Operations for the three months ended April 1, 2022.
Three Months EndedSix Months Ended
July 1, 2022July 2, 2021July 1, 2022July 2, 2021
(Dollars in millions)
Net sales$131.3 $89.2 $262.0 $165.6 
Gross profit$82.1 $62.2 $165.5 $115.9 
Gross profit margin62.5 %69.8 %63.2 %70.0 %
Selling, general and administrative expenses$88.7 $65.2 $176.8 $121.6 
Research and development expense$6.9 $3.8 $13.5 $7.2 
Operating loss (GAAP)$(7.9)$(8.5)$(24.1)$(14.9)
Adjusted EBITDA (non-GAAP)$21.0 $17.4 $42.4 $33.3 
Adjusted EBITDA margin (non-GAAP)16.0 %19.5 %16.2 %20.1 %
Items excluded from Adjusted EBITDA:
Restructuring and other related charges$1.3 $0.7 $2.1 $0.9 
MDR and other costs$1.5 $0.5 $2.4 $0.9 
Strategic transaction costs$4.2 $1.0 $8.3 $1.1 
Stock-based compensation$2.6 $1.7 $4.9 $3.2 
Depreciation and other amortization$13.1 $10.2 $25.8 $21.0 
Amortization of acquired intangibles$12.3 $10.8 $24.1 $19.6 
Insurance settlement gain$(11.0)$— $(11.0)$— 
Inventory step up$4.9 $0.9 $10.0 $1.6 

FirstSecond Quarter of 2022 Compared to FirstSecond Quarter of 2021

Net sales increased in our Medical TechnologyReconstructive segment in the firstsecond quarter of 2022 compared with the prior year period primarily due to acquisition-related sales growth of $45.6$37.4 million and organic growth in the current year period. Sales from existing business increased $23.3 million primarily due to higher sales volumesbusinesses in the current year period, partially offset by fewer selling days in comparison to the prior year. Gross profit increased due to acquisitions and existing business-related growth, partially offset by increased supply chain and logistic costs. Gross profit margin decreased due to increased supply chain and logistics costs. Selling, general and administrative expense increased over the same period primarily due to $17.4 million from acquired businesses including integration costs for the newly-acquired businesses and, to a lesser extent, costs associated with the Separation. Adjusted EBITDA increased primarily due to existing business-related growth. Recent acquisitions drove a reduction in the Adjusted EBITDA margin, as the recent acquisitions were dilutive to the margin by approximately 320 basis points and are expected to be accretive to margins in future years.

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

Net sales increased in our Reconstructive segment in the six months ended July 1, 2022 compared towith the prior year period both of which were impacted by COVID-19. The benefit fromprimarily due to acquisition-related sales growth of $83.0 million and increasedorganic growth in existing business sales was partially offset by unfavorable foreign currency translation.businesses of $13.8 million. Gross profit increased in the first quarter ofsix months ended July 1, 2022 compared to the first quarter ofsix months ended July 2, 2021 primarily due to acquisition-relatedacquisition and existing business growth, and favorable product mix, partially offset by increased supply chain and logistic costs and acquisition-related inventory valuation step-up charges of $8.4 million, which also led to a slight decrease in Gross profit margin. Selling, general and administrative expense increased over the same period primarily due to $39.7 million of costs associated withfrom acquisitions including integration costs for the newly-acquired businesses, as well as increased central cost allocations and increased commissions as a result of improved sales volumes. Segment operatingcosts associated with the Separation. Operating income and Segment operating income margin decreased in the six months ended July 1, 2022 compared to the six months ended July 2, 2021 primarily due to increased acquisition-related coststhe increases in Selling, general and costs related to the Separation, partially offset by improved sales volumes.administrative expenses from acquisitions. Adjusted EBITAEBITDA increased primarily due to improved sales volumesgrowth in the current year,existing businesses, partially offset by increased supply chain and logistic costs and increased Selling, general and administrative costs, while adjusted EBITAcosts.
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Recent acquisitions drove a reduction in the Adjusted EBITDA margin, decreased slightly primarily dueas they were dilutive to the dilutive impact of recent acquisitions. Restructuringmargin by approximately 250 basis points and other related charges increased by $2.0 million dueare expected to the implementation of new restructuring initiatives.


be accretive to margins in future years.
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Liquidity and Capital Resources

Overview

We finance our long-term capital and working capital requirements through a combination of cash flows from operating activities, various borrowings and the issuances of equity. We expect that our primary ongoing requirements for cash after the Separation will be for working capital, funding of acquisitions, near-term Separation costs, capital expenditures, restructuring, and debt service and principal repayments. We believe we could raise additional funds in the form of debt or equity if it waswere determined to be appropriate for strategic acquisitions or other corporate purposes.

On April 4, 2022, weESAB Separation

As discussed in Note 1, “General”, the Company completed the separation of ourits fabrication technology business on April 4, 2022 through a tax-free, pro-rata distribution of 90% of the outstanding common stock of ESAB Corp to Enovisthe Company’s stockholders. We retained 10% of the shares of ESAB Corp common stock immediately following the Separation. We intend to divest the 10% retained shares in ESAB Corpshares in a tax-efficient exchange for our outstanding debt no later than 12 months after the DistributionSeparation date.

In connection with the Separation, ESAB Corp issued $1.2 billion of new debt securities, the proceeds from which were used to fund a $1.2 billion cash distribution to us upon Separation. We used the distribution proceeds in conjunction with $450 million of borrowings on a term loan under the new credit facility, and $52.3 million of cash on hand to repay $1.4 billion of outstanding debt and accrued interest on our existing credit facility, $302.8 million of outstanding debt and accrued interest on our senior notes due February 15, 2026 (“2026 Notes”), as well as a redemption premium at 103.188% of the principal amount of our 2026 Notes, and other fees and expenses due at closing. Additionally, on April 7, 2022, we completed the redemption of our senior unsecured notes due April 2025 (“Euro Senior Notes”) representing all of itsour outstanding €350 million principal 3.250% Senior Notes due 2025 at a redemption price of 100.813% of the principal amount. Refer to Note 15, “Subsequent Events”amount and accrued interest for further information$391.2 million. See section Enovis Term Loan and Revolving Credit Facility for more detail on the new Enovis Credit Agreement.

In the second quarter of 2022, the Company recorded Debt extinguishment charges of $20.1 million, including detail$12.7 million of ongoingredemption premiums on the retired debt instruments and $7.4 million in noncash write-offs of original issue discount and deferred financing arrangements.fees.

Equity Capital
    
On March 19, 2021, we completed thean underwritten public offering of 5.4 million shares of our Common stock, as adjusted for the reverse split, resulting in net proceeds of $711.3 million, after deducting offering expenses and underwriters’ discount and commissions. We used the proceeds to pay down certain of our senior notes, as discussed further below.notes.

On July 28, 2021, the Company issued 2.2 million shares of Common stock, as adjusted for the reverse split, to the former shareholders of Mathys for acquisition consideration of $285.7 million.

In 2018, our Board of Directors authorized the repurchase of our Common stock from time-to-time on the open market or in privately negotiated transactions. No stock repurchases have been made under this plan since the third quarter of 2018. As of AprilJuly 1, 2022, the remaining stock repurchase authorization provided by our Board of Directors was $100.0 million. The timing, amount, and method of shares repurchased is determined by management based on its evaluation of market conditions and other factors. There is no term associated with the remaining repurchase authorization.

Term Loan and Revolving Credit Facility

Our previous credit agreement dated December 17, 2018, as amended (the “Credit“Colfax Credit Facility”), which was legally extinguished in conjunction with the Separation on April 4, 2022, consisted of a $975 million revolving credit facility (the “Revolver”) and a Term A-1 loan in an initial aggregate principal amount of $825 million, each with a maturity date of December 6, 2024. The Revolver contained a $50 million swing line loan sub-facility. Refer to Note 10, “Debt” and Note 15, “Subsequent Events” in the accompanying Notes to the Condensed Consolidated Financial Statements for more information. As of

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On April 1,4, 2022, the Company wasentered into a new credit agreement (the “Enovis Credit Agreement”) which replaces the Colfax Credit Facility and concurrently terminated all indebtedness of the Company outstanding thereunder being repaid on such date with proceeds of the Enovis Credit Agreement and other funds of the Company.

The Enovis Credit Agreement consists of a revolving credit facility that totals $900 million in compliancecommitments (the “Revolver”) and a term loan in an aggregate amount of $450 million (the “Enovis Term Loan”, and together with the Revolver, the “Enovis Credit Facility”). The Revolver includes a $50 million swing line loan sub-facility. The Revolver will be used to provide funds for the Company’s ongoing working capital requirements and for general corporate purposes. As of July 1, 2022, there was$900 million available on the Revolver.

The Term Loan bears interest, at the election of the Company, at either the base rate (as defined in the Enovis Credit Agreement) or at the term SOFR rate plus an adjustment (as defined in the Enovis Credit Agreement), in each case, plus the applicable interest rate margin. The Revolver bears interest, at the election of the Company, at either the base rate or, in the case of loans denominated in dollars, the term SOFR rate plus an adjustment or the daily simple SOFR plus an adjustment, in the case of loans denominated in euros, the adjusted EURIBOR rate and, in the case of loans denominated in sterling, SONIA plus an adjustment (as all such rates are defined in the Enovis Credit Agreement), in each case, plus the applicable interest rate margin. Initially, the applicable interest rate margin will be 1.5% or, in the case of base rate loans, 0.5%, and in future quarters it may change based upon the Company’s total leverage ratio (ranging from 1.125% to 1.750% or in the case of the base rate margin, 0.125% to 0.750%). Each swing line loan denominated in dollars bears interest at the base rate plus the
applicable interest rate margin.

Certain U.S. subsidiaries of the Company have agreed to guarantee the obligations of the Company under the Enovis Credit
Agreement.

The Enovis Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, incur debt or liens, merge or consolidate with others, dispose of assets, make investments or pay dividends. In addition, the Enovis Credit Agreement contains financial covenants requiring the Company to maintain (i) a maximum total leverage ratio of not more than 4.50:1.00, with a step-down to, on the date on which the Company and its subsidiaries have transferred any retained shares of ESAB common stock to one or more unaffiliated third parties, 4.00:1.00, commencing with the fiscal quarter ending June 30, 2023, 3.75:1.00 and commencing with the fiscal quarter ending June 30, 2024, 3.50:1.00, and (ii) a minimum interest coverage ratio of 3.00:1:00. The Enovis Credit Agreement contains various events of default (including failure to comply with the covenants under the Enovis Credit Facility.

AsAgreement and related agreements) and upon an event of April 1, 2022,default the weighted-average interest ratelenders may, subject to various customary cure rights, require the immediate payment of borrowingsall amounts outstanding under the Credit Facility was 1.74%, excluding accretion of original issue discountEnovis Term Loan and deferred financing fees, and there was$375 million available on the Enovis Revolver.

Euro Senior Notes

Our senior unsecured notes with an aggregate principal amount of €350 million were due in May 2025 and had an interest rate of 3.25%. TheUpon the completion of the Separation, the Euro Senior Notes were redeemed on April 7, 2022 after the completionat a redemption premium of 100.813% of the Separation.

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principal amount.

TEU Amortizing Notes

On January 15, 2022, we made the final installment payment on our TEU amortizing notes, which had an initial principal amount of $15.6099 per unit and an interest rate of 6.50% per annum. We paid $6.5 million and $6.1$12.3 million of principal on the TEU amortizing notes in the threesix months ended AprilJuly 1, 2022 and AprilJuly 2, 2021, respectively.

2026 Notes

We had senior notes with an initial aggregate principal amount of $300 million, which were due on February 15, 2026 and had an interest rate of 6.375%. TheUpon the completion of the Separation, the 2026 Notes were redeemed on April 7, 2022 after the completionat a redemption premium at 103.188% of the Separation.principal amount.

Other Indebtedness

In addition, we are party to various bilateral credit facilities with a borrowing capacity of $168.2$30.0 million. As of AprilJuly 1, 2022, there were no$0.9 million in outstanding borrowings under these facilities. Subsequent to the end of the first quarter of 2022, the bilateral credit facilities are no longer available to Enovis due to the completion of the Separation as they relate to ESAB Corp or expired.
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We are also party to a letter of credit facilitiesfacility with an aggregate capacity of $211.9$30.0 million. Total letters of credit of $40.2$2.3 million were outstanding as of AprilJuly 1, 2022. Substantially all of the letter of credit facilities relate to central banking entities and operations of ESAB Corp which was spun-off with the fabrication technology business on April 4, 2022.

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

Cash Flows

As of AprilJuly 1, 2022, we had $661.5$95.6 million of Cash and cash equivalents, a decrease of $57.9$623.8 million from the balance as of December 31, 2021 of $719.4 million. The Cash and cash equivalents as of December 31, 2021 include $39.1 million related to ESAB which was part of the Separation and are reported in Total current assets associated with discontinued operations in the Condensed Consolidated Balance Sheets. The following table summarizes the change in Cash and cash equivalents during the periods indicated:
Three Months EndedSix Months Ended
April 1, 2022April 2, 2021July 1, 2022July 2, 2021
(Dollars in millions)
(Dollars in millions)
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities$(14.4)$84.4 Net cash provided by (used in) operating activities$(39.3)$162.8 
Purchases of property, plant and equipmentPurchases of property, plant and equipment(24.1)(24.5)Purchases of property, plant and equipment(47.8)(44.6)
Proceeds from sale of property, plant and equipmentProceeds from sale of property, plant and equipment2.7 — Proceeds from sale of property, plant and equipment2.7 3.2 
Acquisitions, net of cash received, and investmentsAcquisitions, net of cash received, and investments(13.8)(103.5)Acquisitions, net of cash received, and investments(35.1)(230.7)
Net cash used in investing activitiesNet cash used in investing activities(35.2)(128.0)Net cash used in investing activities(80.2)(272.1)
Repayments of borrowings, netRepayments of borrowings, net(7.4)(6.3)Repayments of borrowings, net(1,628.9)(627.7)
Distribution from ESAB Corporation, netDistribution from ESAB Corporation, net1,143.4 — 
Proceeds from issuance of common stock, netProceeds from issuance of common stock, net1.2 716.6 Proceeds from issuance of common stock, net1.7 730.0 
Payment of debt extinguishment costsPayment of debt extinguishment costs(12.7)(24.4)
Deferred consideration payments and otherDeferred consideration payments and other(4.6)(2.7)Deferred consideration payments and other(9.8)(6.2)
Net cash provided by (used in) financing activitiesNet cash provided by (used in) financing activities(10.8)707.7 Net cash provided by (used in) financing activities(506.3)71.7 
Effect of foreign exchange rates on Cash and cash equivalentsEffect of foreign exchange rates on Cash and cash equivalents2.5 (1.4)Effect of foreign exchange rates on Cash and cash equivalents2.0 (1.1)
Increase (decrease) in Cash and cash equivalentsIncrease (decrease) in Cash and cash equivalents$(57.9)$662.6 Increase (decrease) in Cash and cash equivalents$(623.8)$(38.8)

Cash flows from operating activities can fluctuate significantly from period to periodperiod-to-period due to changes in working capital and the timing of payments for items such as pension funding, asbestos-related costs, restructuring and strategic transaction costs includingsuch as Separation costs. Changes in significant operating cash flow items are discussed below.

DuringYear-to-date 2022 cash used in operating activities of $39.3 million includes $107.5 million of outflows from working capital, primarily due to business growth and increases in inventory to insulate for supply chain volatility. Results in the threecomparable prior year period include $47.6 million of outflows for working capital increases.

Year-to-date 2022 cash used in operating activities also reflects $29.6 million of outflows for discontinued operations, which includes $41.2 million of net outflows related to the Separation. Cash provided by operating activities related to discontinued operations for the six months ended April 1, 2022 and AprilJuly 2, 2021 cash payments of $9.1was $122.6 million, and $4.7 million, respectively, were madewhich included no net outflows related to our restructuring initiatives.the Separation.

During the threesix months ended AprilJuly 1, 2022, cash payments of $7.9$53.8 million were made related to the Separation.Separation, of which $41.2 million is related to discontinued operations. The comparable amounts for the 2021 period were immaterial.
36


Year-to-date 2022 resultscash used in operating activities also include $61.9$27.0 million of outflows from workingrelating to the Company’s former capital business growth, which have caused certain increasesstructure before giving effect to the completion of the refinancing transactions in accounts receivable and inventory levels, offset by an increase in accounts payable. Results inconnection with the Separation. The first six months of 2021 included $55.6 million of comparable prior year period provided cash of $8.3 million due to an increase in accounts payable, offset by increases in accounts receivable and inventory levels due to COVID-19 recovery.outflows.

Prior year net cash provided by operating activities included a one-time cash inflow from a $36.0 million U.S. federal tax refund received in the first quarter of 2021.
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Cash used in operating activitiesDuring the six months ended July 1, 2022 and July 2, 2021, cash payments of $5.2 million and $3.4 million, respectively, were made related to discontinued operations for the three months ended April 1, 2022 was $5.8 million. Cash used in operating activities related to discontinued operations for the three months ended April 2, 2021 was $7.3 million, primarily due to a settlement related to a disposed business.our restructuring initiatives within our continuing operations.

Cash flows used in investing activities during the threesix months ended AprilJuly 1, 2022 of $80.2 million decreased compared with the $272.1 million in the prior year period due to lower acquisition and investment activity in the current year period. Cash paidoutlays for acquisitions and investmentsinvestments. The amounts included in our Medical Technology segment was $13.8 millionPurchases of property, plant and $98.5 million duringequipment related to discontinued operations for the three monthssix-month periods ended AprilJuly 1, 2022 and AprilJuly 2, 2021 were $5.9 million and $10.9 million, respectively. DuringThe amounts included in Proceeds from sale of property, plant and equipment related to discontinued operations for the three monthssix-month periods ended AprilJuly 1, 2022 and July 2, 2021 we also had an acquisition outlaywere $2.7 million and $1.4 million, respectively. The amount included in our Fabrication Technology segmentAcquisitions, net of $5.0cash received, and investments related to discontinued operations for the six-month period ended July 2, 2021 was $4.9 million.

Cash flows used in financing activities during the threesix months ended AprilJuly 1, 2022 include $7.4 millionincluded $1.6 billion repayment of borrowings.borrowings, which included the outstanding debt on our existing credit facility, 2026 Notes and Euro Senior Notes, partially offset by borrowings on a term loan under the new credit facility. The repayments were primarily funded by a $1.2 billion cash distribution from ESAB to us upon Separation. Cash flows provided by financing activities for the threesix months ended AprilJuly 2, 2021 included the $711.3 million net proceeds from the public offering of our Common stock on March 19, 2021. The net proceeds were used for the $600 million full redemption of our 2024 Notes and the $100 million partial redemption of our 2026 Notes in the second quarter of 2021.

Our Cash and cash equivalents as of April 1, 2022 include $59.9 million held in jurisdictions outside the U.S. Cash repatriation of non-U.S. cash into the U.S. may be subject to taxes, other local statutory restrictions and minority owner distributions. The majority of the cash and cash equivalents held in jurisdictions outside the U.S. relate to central banking entities and operations of ESAB Corp which was spun-off with the Fabrication Technology business on April 4, 2022.

Critical Accounting Policies

The methods, estimates and judgments that we use in applying our critical accounting policies have a significant impact on our results of operations and financial position. We evaluate our estimates and judgments on an ongoing basis. Our estimates are based upon our historical experience, our evaluation of business and macroeconomic trends and information from other outside sources, as appropriate. Our experience and assumptions form the basis for our judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may vary from what our management anticipates, and different assumptions or estimates about the future could have a material impact on our results of operations and financial position.

There have been no other significant additions or changes to the methods, estimates and judgments included in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies” in our 2021 Form 10-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk from changes in short-term interest rates, foreign currency exchange rates and commodity prices that could impact our results of operations and financial condition. We address our exposure to these risks through our normal operating and financing activities. We do not enter into derivative contracts for tradingspeculative purposes.

Interest Rate Risk

We are subject to exposure from changes in short-term interest rates related to interest payments on our borrowing arrangements. A significant amount of our borrowings as of AprilJuly 1, 2022 are variable-rate facilities based on LIBOR.SOFR. In order to mitigate our interest rate risk, we may enter into interest rate swap or collar agreements. A hypothetical increase in interest rates of 1% during the three and six months ended AprilJuly 1, 2022 and April 2, 2021 would have increased Interest expense for our variable rate-based debt by approximately $3.5$1.5 million and $2.0$4.9 million, respectively.
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Exchange Rate Risk

We have manufacturing sites throughout the world and sell our products globally. As a result, we are exposed to movements in the exchange rates of various currencies against the U.S. dollar and against the currencies of other countries in which we manufacture and sell products and services. During both the three months ended AprilJuly 1, 2022 and AprilJuly 2, 2021, approximately 61%30% and 25% of our sales were derived from operations outside the U.S. We have significant manufacturing operations in Europeancertain foreign countries that are not part of the Eurozone.including Mexico, Switzerland, Germany, Tunisia, and China. Sales are more highly weighted toward the Euro and U.S. dollar. We also have significant contractual obligations in U.S. dollars that are met with
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cash flows in other currencies as well as U.S. dollars. To better match revenue and expense, as well as cash needs from contractual liabilities, we regularlymay enter into currency swaps and forward contracts.

We also face exchange rate risk from our investments in subsidiaries owned and operated in foreign countries. Euro denominated borrowings under the Euro Senior Notes provide a natural hedge to a portion of our European net asset position. The effect of a change in currency exchange rates on our net investment in international subsidiaries, net of the translation effect of our Euro denominated borrowings, is reflected in the Accumulated other comprehensive loss component of Equity. A 10% depreciation in major currencies relative to the U.S. dollar as of April 1, 2022 (net of the translation effect of our Euro denominated borrowings) would result in a reduction in Equity of approximately $186 million.

We also face exchange rate risk from intercompany transactions between affiliates. Although we use the U.S. dollar as our functional currency for reporting purposes, we have manufacturing sites throughout the world, and a substantial portion of our costs are incurred and sales are generated in foreign currencies. Costs incurred and sales recorded by subsidiaries operating outside of the U.S. are translated into U.S. dollars using exchange rates effective during the respective period. As a result, we are exposed to movements in the exchange rates of various currencies against the U.S. dollar. Similarly, tax costs may increase or decrease as local currencies strengthen or weaken against the U.S. dollar.

Commodity Price Risk

We are exposed to changes in the prices of raw materials used in our production processes. In order to manage commodity price risk, we periodically enter into fixed price contracts directly with suppliers.

See Note 12, “Financial Instruments and Fair Value Measurements” in our Notes to Condensed Consolidated Financial Statements included in this Form 10-Q for additional information regarding our derivative instruments.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of AprilJuly 1, 2022. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report on Form 10-Q, our disclosure controls and procedures were effective in providing reasonable assurance that the information required to be disclosed by us in this report on Form 10-Q has beenthe reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as of the end of the period covered by this report on Form 10-Q.appropriate, to allow timely decisions regarding required disclosures.
Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f)) identified in connection with the evaluation required by Rule 13a-15(d) of the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART II - OTHER INFORMATION
Item 1. Legal Proceedings

Discussion of legal proceedings is incorporated by reference to Note 13, “Commitments and Contingencies,” in the Notes to Condensed Consolidated Financial Statements included in Part I. Item 1. “Financial Statements” of this Form 10-Q.

Item 1A. Risk Factors

An investment in our common stock involves a high degree of risk. In additionThere have been no material changes to the risk factors included in “Part I. Item 1A. Risk Factors” in our 2021 Form 10-K we face the following risks:

We may not achieve some or all of the expected benefits of the Separation, and the Separation may adversely affect our businesses.

We may not be able to achieve the full strategic and financial benefits expected to result from the Separation, or such benefits may be delayed or not occur at all. The Separation is expected to provide the following benefits, among others:

the Separation will allow investors to value the Company based on its distinct investment identity, and enable investors to evaluate the merits, performance and future prospects of the Company’s businesses based on the distinct characteristics;
the Separation will facilitate incentive compensation structures for employees more directly tied to the performance of the Company’s businesses, and may enhance employee hiring and retention by, among other things, improving the alignment of management and employee incentives with performance and growth objectives; and
the Separation will allow us to more effectively pursue our operating priorities and strategies, and enable management to focus on unique opportunities for long-term growth and profitability.

We may not achieve these and other anticipated benefits for a variety of reasons, including, among others:

certain costs and liabilities that were otherwise less significant to the Company prior to the Separation will be more significant for us as a separate company after the Separation; and
we may not achieve the anticipated benefits of the Separation for a variety of reasons, including, among others, (i) we may be more susceptible to market fluctuations and other adverse events than we were prior to the Separation and (ii) following the Separation, our businesses are less diversified than they were prior to the Separation.

If we fail to achieve some or all of the benefits expected to result from the Separation, or if such benefits are delayed, our businesses, operating results and financial condition could be adversely affected.

We could incur significant liability if the separation and distribution of ESAB Corp is determined to be a taxable transaction.

We have received an opinion from outside tax counsel to the effect that the separation and distribution of ESAB Corp qualifies as a transaction that is described in Sections 355(a) and 368(a)(1)(D) of the Internal Revenue Code. The opinion relies on certain facts, assumptions, representations and undertakings from ESAB and us regarding the past and future conduct of the companies’ respective businesses and other matters. If any of these facts, assumptions, representations or undertakings are incorrect or not satisfied, our stockholders and we may not be able to rely on the opinion of tax counsel and could be subject to significant tax liabilities. Notwithstanding the opinion of tax counsel we have received, the IRS could determine on audit that the separation and distribution are taxable if it determines that any of these facts, assumptions, representations or undertakings are not correct or have been violated or if it disagrees with the conclusions in the opinion. If the separation and distribution of ESAB are determined to be taxable for U.S. federal income tax purposes, our stockholders that are subject to U.S. federal income tax and we could incur significant U.S. federal income tax liabilities.

Potential indemnification liabilities to ESAB Corp pursuant to the separation agreement could materially and adversely affect our businesses, financial condition, results of operations and cash flows.

We entered into a separation and distribution agreement and related agreements with ESAB Corp to govern the separation and distribution of ESAB Corp and the relationship between the two companies going forward. These agreements provide for specific indemnity and liability obligations of each party and could lead to disputes between us. If we are required to indemnify ESAB Corp under the circumstances set forth in these agreements, we may be subject to substantial liabilities. In addition, with
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respect to the liabilities for which ESAB Corp has agreed to indemnify us under these agreements, there can be no assurance that the indemnity rights we have against ESAB Corp will be sufficient to protect us against the full amount of the liabilities, or that ESAB Corp will be able to fully satisfy its indemnification obligations. Each of these risks could negatively affect our businesses, financial condition, results of operations and cash flows.

Our business, financial condition and results of operations could be adversely affected by disruptions in the global economy caused by the ongoing conflict between Russia and Ukraine.

The global economy has been negatively impacted by the military conflict between Russia and Ukraine. Furthermore, governments in the United States, United Kingdom and European Union have each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia and Russia has imposed counter-sanctions in response. Although we have no direct operations in Russia or Ukraine or government-imposed sanctions on our products currently, we could experience sanctions in the future and/or shortages in materials, increased costs for raw material and other supply chain issues due in part to the negative impact of the Russia-Ukraine military conflict on the global economy. Further escalation of geopolitical tensions related to the military conflict, including increased trade barriers or restrictions on global trade, could result in, among other things, cyberattacks, additional supply disruptions, lower consumer demand and changes to foreign exchange rates and financial markets, any of which may adversely affect our business and supply chain. In addition, the effects of the ongoing conflict could heighten many of our known risks described in Part I,“Part II. Item 1A, "Risk Factors"1A. Risk Factors” in our AnnualQuarterly Report on Form 10-K10-Q for the yearquarterly period ended December 31, 2021, filed with the SEC on February 22,April 1, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.
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Item 6. Exhibits
Exhibit No.Exhibit Description
Certificate of Amendment to Amended and Restated Certificate of Incorporation
Amended and Restated Bylaws of Enovis Corporation.
Transition Services, dated April 4, 2022, between Enovis Corporation and ESAB Corporation (incorporated by reference to Exhibit 10.1 to Enovis Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on April 8, 2022)
Tax Matters Agreement, dated April 4, 2022, between Enovis Corporation and ESAB Corporation (incorporated by reference to Exhibit 10.2 to Enovis Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on April 8, 2022)
Employee Matters Agreement, dated April 4, 2022, between Enovis Corporation and ESAB Corporation (incorporated by reference to Exhibit 10.3 to Enovis Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on April 8, 2022)
Intellectual Property Matters Agreement, dated April 4, 2022, between Enovis Corporation and ESAB Corporation (incorporated by reference to Exhibit 10.4 to Enovis Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on April 8, 2022)
EBS License Agreement, dated April 4, 2022, between Enovis Corporation and ESAB Corporation (incorporated by reference to Exhibit 10.5 to Enovis Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on April 8, 2022)
Stockholder’s and Registration Rights Agreement, dated April 4, 2022, between Enovis Corporation and ESAB Corporation (incorporated by reference to Exhibit 10.6 to Enovis Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on April 8, 2022)
Credit Agreement, dated April 4, 2022, by and among Enovis Corporation, as the lead borrower, certain subsidiaries of the Enovis Corporation identified therein as guarantors, each of the lenders from time to time party thereto, Bank of America, N.A., as administrative agent, JPMorgan Chase Bank, N.A., Goldman Sachs Bank USA, Citizens Bank, N.A., BNP Paribas, Bank of Montreal and Wells Fargo Bank, National Association, as co-syndication agents, and joint bookrunners and joint lead arrangers named therein (incorporated by reference to Exhibit 10.7 to Enovis Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on April 8, 2022)
First Amendment to Enovis Corporation 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to Enovis Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on June 13, 2022)
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INSInline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document.
101.CALInline XBRL Extension Calculation Linkbase Document.
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.
104Cover Page Interactive Data File - The cover page from this Quarterly Report on Form 10-Q for the quarter ended AprilJuly 1, 2022 is formatted in Inline XBRL (included as Exhibit 101).
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*Incorporated by reference to Exhibit 3.01 to Enovis (formerly Colfax) Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on January 30, 2012.
**Incorporated by reference to Exhibit 3.1 to Enovis Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on April 8, 2022.
***Incorporated by reference to Exhibit 3.2 to Enovis Corporation’s Form 8-K (File No. 001-34045) as filed with the SEC on April 8, 2022.








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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Registrant: Enovis Corporation


By:

/s/ Matthew L. TrerotolaPresident and Chief Executive Officer
Matthew L. Trerotola(Principal Executive Officer)May 10,August 4, 2022
/s/ Christopher M. HixExecutive Vice President, Finance
Christopher M. HixChief Financial OfficerMay 10,August 4, 2022
(Principal Financial Officer)
/s/ Douglas J. PittsJohn KlecknerVice President
Douglas J. PittsJohn KlecknerController and Chief Accounting OfficerMay 10,August 4, 2022
(Principal Accounting Officer)
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