Exhibit 99.2
Unaudited Pro Forma Condensed Consolidated Financial Information
On April 4, 2022, Colfax Corporation (“Colfax”, the “Company”, “we”, “our”, and “us”), a Delaware corporation, completed the previously announced separation of its Fabrication Technology business, into a separate, independent publicly traded company, ESAB Corporation (“ESAB”). The separation was structured as a spin-off, which occurred by way of a pro rata distribution to Colfax stockholders of 90 percent of the outstanding shares of ESAB (the “Distribution”). Each of the Colfax stockholders received 1 share of ESAB common stock for every 3 shares of Colfax common stock held on record as of the close of business on the record date March 22, 2022. ESAB is now an independent public company under the symbol “ESAB” on the New York Stock Exchange. After the Distribution, Colfax will no longer consolidate ESAB into its financial results (the entire transaction being referred to as the “Separation”). Colfax is operating under the new name Enovis Corporation (“Enovis”) upon the completion of the transaction.
The unaudited pro forma condensed consolidated financial information has been derived from the Company’s historical consolidated financial statements and gives effect to the Separation. The following Unaudited Pro Forma Condensed Consolidated Statements of Operations for each of the years ended December 31, 2021, 2020 and 2019 reflect the Company’s results as if the Separation had occurred as of January 1, 2019 in that they reflect the reclassification of ESAB as discontinued operations for all periods presented. The following Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31, 2021 reflects the Company’s financial position as if the Separation had occurred on December 31, 2021. Beginning in the second quarter of 2022 after the date of the Separation, the historical financial results of ESAB will be reflected in our consolidated financial statements as discontinued operations under U.S. generally accepted accounting principles (“GAAP”) for all periods.
The unaudited pro forma condensed consolidated information has been prepared based upon the best available information and management estimates and is subject to assumptions and adjustments described below and in the accompanying notes. They are not intended to be a complete presentation of the Company’s financial position or results of operations had the Separation occurred as of and for the periods indicated. In addition, the unaudited pro forma condensed consolidated financial information is provided for illustrative and informational purposes only and is not necessarily indicative of the Company’s future results of operations or financial condition had the Separation and related transactions been completed on the dates assumed. Management believes these assumptions and adjustments are reasonable, given the information available at the filing date.
The unaudited pro forma condensed consolidated financial information should be read in conjunction with our historical consolidated financial statements and accompanying notes.
The pro forma adjustments are based on currently available information and assumptions management believes are, under the circumstances and given the information available at this time, reasonable, and best reflect the Separation on Colfax’s financial condition and results of operations. The Historical Colfax columns in the unaudited pro forma condensed consolidated financial information reflect the Company’s historical consolidated financial statements for the periods presented and do not reflect any adjustments related to the Separation and related events. The Separation of Historical FabTech Segment columns in the unaudited pro forma condensed consolidated financial information reflect the removal of Fabrication Technology segment financial information as presented in the Company’s historical consolidated financial statements along with GAAP adjustments to meet requirements of discontinued operations. The amounts were derived from the carve-out financial statements of the Fabrication Technology Business of Colfax Corporation. The Transaction Accounting Adjustment columns in the unaudited pro forma condensed consolidated financial information reflect adjustments related to the Separation and related events, including the removal of certain corporate entities and post-retirement plans related to ESAB and former industrial businesses of Colfax, and GAAP adjustments to meet requirements of discontinued operations. The Company’s current estimates on a discontinued operations basis are preliminary and could change as the Company finalizes discontinued operations accounting to be reported in future filings.
The unaudited pro forma condensed consolidated financial information has been prepared in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, Amendments to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the SEC on May 21, 2020.
ENOVIS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 2021
(Dollars in thousands)
Pro Forma Adjustments | ||||||||||||||||||
Historical Colfax | Separation of Historical FabTech Segment (a) | Transaction Accounting Adjustment | Notes | Pro Forma Enovis | ||||||||||||||
ASSETS | ||||||||||||||||||
CURRENT ASSETS: | ||||||||||||||||||
Cash and cash equivalents | $ | 719,370 | $ | (41,209 | ) | $ | — | $ | 678,161 | |||||||||
Trade receivables, net | 638,700 | (383,496 | ) | — | 255,204 | |||||||||||||
Inventories, net | 776,295 | (420,062 | ) | — | 356,233 | |||||||||||||
Prepaid expenses | 78,186 | (51,830 | ) | (310 | ) | (b) | 26,046 | |||||||||||
Other current assets | 90,728 | (59,025 | ) | (3,413 | ) | (b) | 28,290 | |||||||||||
Investment in ESAB Corporation | — | — | 120,126 | (d) | 120,126 | |||||||||||||
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Total current assets | 2,303,279 | (955,622 | ) | 116,403 | 1,464,060 | |||||||||||||
Property, plant and equipment, net | 521,391 | (286,278 | ) | — | 235,113 | |||||||||||||
Goodwill | 3,467,295 | (1,533,037 | ) | — | 1,934,258 | |||||||||||||
Intangible assets, net | 1,675,462 | (521,434 | ) | — | 1,154,028 | |||||||||||||
Lease asset - right of use | 184,429 | (107,944 | ) | — | 76,485 | |||||||||||||
Other assets | 363,489 | (33,458 | ) | (247,989 | ) | (b) | 82,042 | |||||||||||
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Total assets | $ | 8,515,345 | $ | (3,437,773 | ) | $ | (131,586 | ) | $ | 4,945,986 | ||||||||
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LIABILITIES AND EQUITY | ||||||||||||||||||
CURRENT LIABILITIES: | ||||||||||||||||||
Current portion of long-term debt | $ | 8,314 | $ | (613 | ) | $ | — | $ | 7,701 | |||||||||
Accounts payable | 504,173 | (345,480 | ) | (3,486 | ) | (b) | 155,207 | |||||||||||
Accrued liabilities | 511,097 | (247,937 | ) | 10,883 | (b, e, i) | 274,043 | ||||||||||||
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Total current liabilities | 1,023,584 | (594,030 | ) | 7,397 | 436,951 | |||||||||||||
Long-term debt, less current portion | 2,078,679 | (54 | ) | (1,200,000 | ) | (c) | 878,625 | |||||||||||
Non-current lease liability | 145,326 | (88,777 | ) | — | 56,549 | |||||||||||||
Other liabilities | 606,323 | (228,815 | ) | (294,757 | ) | (b, e, i) | 82,751 | |||||||||||
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Total liabilities | 3,853,912 | (911,676 | ) | (1,487,360 | ) | 1,454,876 | ||||||||||||
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EQUITY: | ||||||||||||||||||
Total Colfax Corporation equity | 4,617,378 | (2,485,105 | ) | 1,355,774 | (f) | 3,488,047 | ||||||||||||
Noncontrolling interest | 44,055 | (40,992 | ) | — | 3,063 | |||||||||||||
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Total equity | 4,661,433 | (2,526,097 | ) | 1,355,774 | 3,491,110 | |||||||||||||
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Total liabilities and equity | $ | 8,515,345 | $ | (3,437,773 | ) | $ | (131,586 | ) | $ | 4,945,986 | ||||||||
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See Notes to unaudited pro forma condensed consolidated financial information.
ENOVIS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2021
(Dollars in thousands, except per share amounts)
Pro Forma Adjustments | ||||||||||||||||||
Historical Colfax | Separation of Historical FabTech Segment (a) | Transaction Accounting Adjustment | Notes | Pro Forma Enovis | ||||||||||||||
Net sales | $ | 3,854,303 | $ | (2,428,115 | ) | $ | — | $ | 1,426,188 | |||||||||
Cost of sales | 2,240,645 | (1,592,132 | ) | — | 648,513 | |||||||||||||
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Gross profit | 1,613,658 | (835,983 | ) | — | 777,675 | |||||||||||||
Selling, general and administrative expense | 1,329,376 | (479,668 | ) | (33,346 | ) | (b, g) | 816,362 | |||||||||||
Restructuring and other related charges | 27,639 | (18,954 | ) | — | 8,685 | |||||||||||||
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Operating income (loss) | 256,643 | (337,361 | ) | 33,346 | (47,372 | ) | ||||||||||||
Pension settlement gain | (11,208 | ) | 11,208 | — | — | |||||||||||||
Interest expense, net | 72,593 | (40,298 | ) | — | 32,295 | |||||||||||||
Debt extinguishment charges | 29,870 | — | — | 29,870 | ||||||||||||||
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Income (loss) from continuing operations before income taxes | 165,388 | (308,271 | ) | 33,346 | (109,537 | ) | ||||||||||||
Income tax expense (benefit) | 66,695 | (72,933 | ) | 14,963 | (b, g, h) | 8,725 | ||||||||||||
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Net income (loss) from continuing operations | 98,693 | (235,338 | ) | 18,383 | (118,262 | ) | ||||||||||||
Income (loss) from discontinued operations, net of taxes | (22,415 | ) | 235,338 | (18,383 | ) | 194,540 | ||||||||||||
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Net income | 76,278 | — | — | 76,278 | ||||||||||||||
Less: income from continuing operations attributable to noncontrolling interest, net of taxes | 4,621 | (3,569 | ) | — | 1,052 | |||||||||||||
Less: income from discontinuing operations attributable to noncontrolling interest, net of taxes | — | 3,569 | — | 3,569 | ||||||||||||||
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Net income attributable to Enovis | $ | 71,657 | $ | — | $ | — | $ | 71,657 | ||||||||||
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Net income (loss) per share - basic * | ||||||||||||||||||
Continuing operations | $ | 0.61 | $ | (0.78 | ) | |||||||||||||
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Discontinued operations | $ | (0.15 | ) | $ | 1.24 | |||||||||||||
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Consolidated operations | $ | 0.47 | $ | 0.47 | ||||||||||||||
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Net income (loss) per share - diluted * | ||||||||||||||||||
Continuing operations | $ | 0.60 | $ | (0.78 | ) | |||||||||||||
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Discontinued operations | $ | (0.15 | ) | $ | 1.24 | |||||||||||||
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Consolidated operations | $ | 0.46 | $ | 0.47 | ||||||||||||||
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Weighted-average shares of common stock and common equivalent shares outstanding **: | ||||||||||||||||||
Basic | 153,423,632 | 153,423,632 | ||||||||||||||||
Diluted | 155,542,141 | 153,423,632 |
* | Net income per share may not foot due to rounding. |
** | Subsequent to the Separation, a one-for-three reverse stock split was effected which is not reflected in the historical period and pro forma share amounts. |
See Notes to unaudited pro forma condensed consolidated financial information.
ENOVIS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2020
(Dollars in thousands, except per share amounts)
Pro Forma Adjustments | ||||||||||||||||||
Historical Colfax | Separation of Historical FabTech Segment (a) | Transaction Accounting Adjustment | Notes | Pro Forma Enovis | ||||||||||||||
Net sales | $ | 3,070,769 | $ | (1,950,069 | ) | $ | — | $ | 1,120,700 | |||||||||
Cost of sales | 1,782,664 | (1,265,604 | ) | — | 517,060 | |||||||||||||
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Gross profit | 1,288,105 | (684,465 | ) | — | 603,640 | |||||||||||||
Selling, general and administrative expense | 1,087,401 | (438,454 | ) | 3,152 | (b) | 652,099 | ||||||||||||
Restructuring and other related charges | 38,413 | (21,632 | ) | — | 16,781 | |||||||||||||
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Operating income (loss) | 162,291 | (224,379 | ) | (3,152 | ) | (65,240 | ) | |||||||||||
Interest expense, net | 104,262 | (54,510 | ) | — | 49,752 | |||||||||||||
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Income (loss) from continuing operations before income taxes | 58,029 | (169,869 | ) | (3,152 | ) | (114,992 | ) | |||||||||||
Income tax (benefit) expense | (6,053 | ) | (43,267 | ) | 9,621 | (b, h) | (39,699 | ) | ||||||||||
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Net income (loss) from continuing operations | 64,082 | (126,602 | ) | (12,773 | ) | (75,293 | ) | |||||||||||
Income (loss) from discontinued operations, net of taxes | (18,311 | ) | 126,602 | 12,773 | 121,064 | |||||||||||||
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Net income | 45,771 | — | — | 45,771 | ||||||||||||||
Less: income from continuing operations attributable to noncontrolling interest, net of taxes | 3,146 | (2,454 | ) | — | 692 | |||||||||||||
Less: income from discontinuing operations attributable to noncontrolling interest, net of taxes | — | 2,454 | — | 2,454 | ||||||||||||||
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Net income attributable to Enovis | $ | 42,625 | $ | — | $ | — | $ | 42,625 | ||||||||||
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Net (loss) income per share - basic * | ||||||||||||||||||
Continuing operations | $ | 0.45 | $ | (0.56 | ) | |||||||||||||
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Discontinued operations | $ | (0.13 | ) | $ | 0.87 | |||||||||||||
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Consolidated operations | $ | 0.31 | $ | 0.31 | ||||||||||||||
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Net (loss) income per share - diluted * | ||||||||||||||||||
Continuing operations | $ | 0.44 | $ | (0.56 | ) | |||||||||||||
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Discontinued operations | $ | (0.13 | ) | $ | 0.87 | |||||||||||||
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Consolidated operations | $ | 0.31 | $ | 0.31 | ||||||||||||||
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Weighted-average shares of common stock and common equivalent shares outstanding **: | ||||||||||||||||||
Basic | 136,766,124 | 136,766,124 | ||||||||||||||||
Diluted | 138,910,428 | 136,766,124 |
* | Net income per share may not foot due to rounding. |
** | Subsequent to the Separation, a one-for-three reverse stock split was effected which is not reflected in the historical period and pro forma share amounts. |
See Notes to unaudited pro forma condensed consolidated financial information.
ENOVIS CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Year Ended December 31, 2019
(Dollars in thousands, except per share amounts)
Pro Forma Adjustments | ||||||||||||||||||
Historical Colfax | Separation of Historical FabTech Segment (a) | Transaction Accounting Adjustment | Notes | Pro Forma Enovis | ||||||||||||||
Net sales | $ | 3,327,458 | $ | (2,247,026 | ) | $ | — | $ | 1,080,432 | |||||||||
Cost of sales | 1,926,402 | (1,448,782 | ) | — | 477,620 | |||||||||||||
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Gross profit | 1,401,056 | (798,244 | ) | — | 602,812 | |||||||||||||
Selling, general and administrative expense | 1,132,149 | (495,643 | ) | 1,027 | (b) | 637,533 | ||||||||||||
Restructuring and other related charges | 65,295 | (23,027 | ) | — | 42,268 | |||||||||||||
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Operating income (loss) | 203,612 | (279,574 | ) | (1,027 | ) | (76,989 | ) | |||||||||||
Pension settlement loss | 33,616 | (33,616 | ) | — | — | |||||||||||||
Interest expense, net | 119,503 | (63,534 | ) | — | 55,969 | |||||||||||||
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Income (loss) from continuing operations before income taxes | 50,493 | (182,424 | ) | (1,027 | ) | (132,958 | ) | |||||||||||
Income tax expense (benefit) | 31,630 | (56,270 | ) | 1,374 | (b, h) | (23,266 | ) | |||||||||||
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Net income (loss) from continuing operations | 18,863 | (126,154 | ) | (2,401 | ) | (109,692 | ) | |||||||||||
Income (loss) from discontinued operations, net of taxes | (536,009 | ) | 126,154 | 2,401 | (407,454 | ) | ||||||||||||
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Net loss | (517,146 | ) | — | — | (517,146 | ) | ||||||||||||
Less: income from continuing operations attributable to noncontrolling interest, net of taxes | 4,618 | (3,823 | ) | — | 795 | |||||||||||||
Less: income from discontinuing operations attributable to noncontrolling interest, net of taxes | 5,882 | 3,823 | — | 9,705 | ||||||||||||||
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Net loss attributable to Enovis | $ | (527,646 | ) | $ | — | $ | — | $ | (527,646 | ) | ||||||||
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Net income (loss) per share - basic * | ||||||||||||||||||
Continuing operations | $ | 0.10 | $ | (0.81 | ) | |||||||||||||
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Discontinued operations | $ | (3.99 | ) | $ | (3.07 | ) | ||||||||||||
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Consolidated operations | $ | (3.89 | ) | $ | (3.89 | ) | ||||||||||||
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Net income (loss) per share - diluted * | ||||||||||||||||||
Continuing operations | $ | 0.10 | $ | (0.81 | ) | |||||||||||||
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Discontinued operations | $ | (3.99 | ) | $ | (3.07 | ) | ||||||||||||
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Consolidated operations | $ | (3.89 | ) | $ | (3.89 | ) | ||||||||||||
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Weighted-average shares of common stock and common equivalent shares outstanding **: | ||||||||||||||||||
Basic | 135,716,944 | 135,716,944 | ||||||||||||||||
Diluted | 136,666,886 | 135,716,944 |
* | Net income per share may not foot due to rounding. |
** | Subsequent to the Separation, a one-for-three reverse stock split was effected which is not reflected in the historical period and pro forma share amounts. |
See Notes to unaudited pro forma condensed consolidated financial information.
ENOVIS CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(a) | Adjustment reflects the discontinued operations, including associated assets, liabilities, equity and results of operations attributable to the Fabrication Technology segment of our business, which were included in the Company’s historical consolidated financial statements. In accordance with ASC 205-20, Presentation of Financial Statements - Discontinued Operations, the amounts exclude general corporate overhead costs which were historically allocated to the Fabrication Technology segment of their business that do not meet the requirements to be presented in discontinued operations. These costs include, but are not limited to, items such as allocated general management and executive oversight, compliance, human resources, procurement, and legal functions and financial management. |
(b) | Reflects the transfer of certain residual industrial and corporate assets and liabilities to ESAB in connection with the Separation. These assets and liabilities include amounts associated with asbestos obligations from the Company’s other legacy industrial businesses and certain corporate-sponsored retirement plans that benefit ESAB and other former employees. The Company has historically reported asbestos activity in Discontinued Operations so no pro forma adjustment is presented in the Unaudited Pro Forma Condensed Consolidated Statements of Operations. The following table provides the impact of these entities to the Unaudited Pro Forma Condensed Consolidated Balance Sheet: |
(in thousands) | As of December 31, 2021 | |||
Prepaid expenses | $ | (310 | ) | |
Other current assets | (3,413 | ) | ||
Other assets | (247,989 | ) | ||
Accounts payable | (3,486 | ) | ||
Accrued liabilities | (42,617 | ) | ||
Other liabilities | (272,857 | ) |
The following table provides the impact of these entities to the Unaudited Pro Forma Condensed Consolidated Statements of Operations for the applicable periods:
Years Ended December 31, | ||||||||||||
(in thousands) | 2021 | 2020 | 2019 | |||||||||
Selling, general and administrative expense | $ | (237 | ) | $ | 3,152 | $ | 1,027 | |||||
Income tax expense | 7,182 | 9,621 | 1,374 |
(c) | Reflects the use of net cash received from ESAB in connection with the Separation to pay down debt. |
(d) | Reflects the retention by Enovis of 10.0 % of the outstanding common stock of ESAB in connection with the Separation, recorded at 10.0 % of the net carrying value of ESAB as of the date of the Separation. |
(e) | Includes specific liabilities of $4.8 million and uncertain tax positions of $11.8 million which will be retained by legal entities of Enovis. However under the tax matters agreement these liabilities are to be assumed by ESAB and the respective liabilities have been reduced by the amount to be assumed by ESAB. The amounts recorded are an estimate, and the final settlement may be different. |
(f) | Reflects the effect on total stockholder’s equity of the adjustments described in notes (b) through (e) above and (i) below. |
(g) | Reflects the removal of transaction costs of $33.1 million and related tax benefit of $7.8 million for the year ended December 31, 2021 incurred to effect the Separation. These costs primarily related to investment banker fees, legal fees, third party consulting and contractor fees, and other costs directly related to the Separation. These costs are not expected to have a continuing impact on the Company’s results of operations following the Separation. |
(h) | Represents $15.0 million, $9.6 million, and $1.4 million of income tax pro forma adjustments for the years ended December 31, 2021, 2020 and 2019, respectively. This adjustment was determined by applying the relevant statutory tax rates to the jurisdictional mix of income including pre-tax pro forma adjustments described in notes (a), (b) and (g) above. The Company’s current estimates on a discontinued operations basis are preliminary and could change as the Company finalizes discontinued operations accounting to be reported in future filings. |
(i) | Includes approximately $55 million of estimated non-recurring costs to complete the Separation reflected as an increase to Accrued liabilities and related tax benefit of $6.8 million reflected as a reduction to Other liabilities. |