ESAB 10-K & 10-Q changes, risk factors and insider trading

An investment in our common stock involves a high degree of risk. The following discussion addresses material factors that make an investment in the Company speculative or risky. In determining whether to buy, hold or sell any of our securities you should carefully consider the risks and uncertainties described below, together with the information included elsewhere in this Form 10-K and other documents we file with the SEC. If any of the following risks were to occur, our business, financial condition, results of operations and liquidity could be materially adversely affected, the value of our common stock could decline and investors could lose all or part of the value of their investment in ESAB shares. The disclosures in this section reflect our beliefs and opinions as to factors that could materially and adversely affect us in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future. The occurrence of one of the events or risks discussed below may be material even when not initially recognized as such and does not preclude the possibility that a similar event or risk subsequently has a material adverse effect. Furthermore, the risks and uncertainties described below are those that we have identified as material but may not be the only risks to which ESAB might be exposed. Additional risks and uncertainties, which are currently unknown to us or that we do not currently consider to be material, could have material adverse effects on our business, financial condition and results of operations.operations, including our prospects, and thereby impact the value of our common stock.

The welding and cutting industry is generally a mature industry in developed markets such as North America and Western Europe and is cyclical in nature. Overall demand for welding and cutting products is largely determined by the level of capital spending in manufacturing and other industrial sectors, and the welding industry has historically experienced contraction during periods of slowing industrial activity. If economic, business and industry conditions deteriorate, capital spending in those sectors may be substantially decreased,decrease, which could reduce demand for our products and have an adverse impact on our revenues and results of operations.

Demand for our products and services depends significantly on the level of new capital investment and planned maintenance expenditures by certain of our customers. The level of new capital expenditures by our customers is dependent upon many factors, including general economic conditions, availability of credit, economic conditions and investment activities within their respective industries and expectations of future market behavior. In addition, volatility in commodity prices can negatively affect the level of these new activities and can postpone capital spending decisions or the delay or result in the cancellation of existing orders. A reduction in demand for our products and services has resulted in the past,past resulted, and in the future could result in, the delay or cancellation of existing orders or lead to excess manufacturing capacity, which unfavorably impacts our absorption of fixed manufacturing costs. Any reduced demand could have a material adverse effect on our business, financial condition and results of operations.

In the year ended December 31, 2024,2025, we derived 78%approximately 80% of our sales from operations outside of the United States and, as of that date, we had principal manufacturing facilities in 1416 countries in addition to the United States. For the year ended December 31, 2024,2025, 43%40% and 57%60% of our Net sales were derived from the Americas and EMEA & APAC, respectively. Sales from international operations, export sales and the use of manufacturing facilities outside of the United States by us are subject to risks inherent in doing business outside the United States, which could have a material adverse effect on our business, financial condition and results of operations. These risks include: economic or political instability; partial or total expropriation of international assets; limitations on ownership or participation in local enterprises; trade protection measures by the United States or other nations, including tariffs or import-export restrictions or licensing requirements and other changes in trade relations; currency exchange rate fluctuations and restrictions on currency repatriation; inflation; labor, employment and environmental, health and safety laws and regulations that may be more restrictive than in the United States; changes in laws and regulations, including taxation policies, or in how such provisions are interpreted or administered; difficulties in enforcing our rights outside the United States, including intellectual property rights; difficulties in hiring and maintaining qualified staff and managing geographically diverse operations; the disruption of operations from natural or man-made disasters or adverse weather conditions (including events that may be caused or exacerbated by climate change), world health events, labor or political disturbances, terrorist activities, insurrection or war; the imposition of additional foreign governmental controls or regulations on the sale of our products; increased costs of transportation or shipping; and uncertainties arising from local business practices and cultural considerations.

Additionally, changes in United States policy regarding international trade, including import and export regulation and international trade agreements, could also negatively impact our business. InFor 2018,example, in 2025, the United States imposedexpanded and increased existing tariffs on steel and aluminumaluminum, asimposing well50% astariffs on goodssteel, importedaluminum and products containing steel and aluminum from Chinaa andrange certainof United States trading partners. The United States has also announced other significant tariffs on imports from a wide range of countries, including China, which resultedwas infollowed by retaliatory tariffs by China and othera countries.number Inof addition,countries and a cycle of further retaliatory tariff announcements and trade actions. While certain of the newtariffs Trumphave administrationbeen hasand proposedmay be delayed, others have taken or may take effect. Further, tariffs onannounced importsor fromimposed by the United States could be altered or delayed through presidential actions, bilateral negotiations, judicial orders or congressional action, and tariffs announced or imposed by other countries can be affected by similar developments. These and otherfuture changes to United States policy regarding international trade. Additionalin tariffs imposedand trade policies by the United States on imports from China or other countries, or retaliatory trade measures in response, couldhave resulted and may continue to result in anadditional increasecosts inand pricing pressures, supply chain costsdisruptions, volatile or unpredictable customer spending patterns and increased economic or geopolitical risk that we may not be able to offset or otherwiseotherwise, any or all of which could adversely impact our business and relative competitive position, financial condition and results of operations.operations, perhaps materially or in ways that we cannot predict.

The Russian invasion of Ukraine and the sanctions imposed in response have increased the level of economic and political uncertainty in Russia. While we continue to closely monitor the situation and evaluate options, we are meeting current contractual obligations while addressing applicable laws and regulations. For the year ended December 31, 2024,2025, our operations in Russia represented approximately 5% of our totalNet revenue,sales, and approximately $13$9 million in Net income. Excluding any goodwill allocation, Russia has approximately 4%5% of our total net assets as of December 31, 2024,2025, including approximately $30$50 million of Cash and cash equivalents that may be subject to delays in withdrawing from Russia, based upon the current environment at that time. Our operations in Russia had a cumulative translation loss of approximately $130$110 million, which would be realized upon a transition out.

In addition, other wars and conflicts, turmoil in the geopolitical environment, terrorism and social unrest may put pressure on economic conditions, or international trade relations, which could lead to reduced demand for our products and services and have other adverse impacts including increased costs of raw materials and inputs, supply chain interruptions, delays in manufacturing or shipping delays. The impact of any war or conflict is unknown and could have a material adverse effect on our business.

As a global company with a large international footprint and a majority of our sales derived from international operations, including significant operations in high growth economies, we have and will continue to be subject to increased risk of damage or disruption to our operations, employees, facilities, partners, suppliers, distributors, resellers and customers due to, among other things, natural or man-made disasters, adverse weather events or conditions, epidemics, pandemics and other widespread health events, wherever located around the world. We may be unable or unsuccessful in our efforts to plan for, respond to, or mitigate the effects of such incidents, any of which could adversely impact our results of operations, financial condition and overall financial performance. We may be unable to insure against such events, and any insurance we purchase may not be sufficient to compensate us for or may not cover the full impact of such events. The potential for such future such events, the national and international response to such events and the perceived risk of such events, have created, and may continue to create economic and political uncertainties.

Acquisitions involve numerous risks, including difficulties in the assimilation of the operations, systems, compliance and reporting controls, including internal control over financial reporting, technologies, personnel, services and products of the acquired company,company; the potential loss of key employees, customers, suppliers and distributors of the acquired company; and the diversion of our management’s attention from other business concerns. The failure to successfully integrate acquired businesses in a timely manner, or at all, or the occurrence of significant unanticipated expenses associated with integration activities, including information technology integration fees, legal costs, compliance costs, facility closure costs and other restructuring expenses, could have an adverse effect on our business, financial condition and results of operation.

We may require additional capital to finance our acquisitions and operation needs, and such capital may not be available, impacting our ability to pursue our growth strategy.

Our growth strategy will require additional capital investment to complete acquisitions, integrate the completed acquisitions into our existing operations and expand into new markets. We intend to pay for future acquisitions using cash, capital stock, financing, assumption of indebtedness or any combination of the foregoing. For example, on January 31, 2026, the Company entered into an agreement to acquire Eddyfi Technologies (“Eddyfi”), a global leader in advanced inspection and monitoring technologies headquartered in Quebec, Canada, for approximately $1.45 billion. The acquisition is expected to be funded with a combination of cash on hand, debt and approximately $318 million of fully committed equity. To the extent that we do not generate sufficient cash internally to provide the capital we require to fund our growth strategy and future operations, we will require additional debt or equity financing. This additional financing may not be available or, if available, may not be on terms acceptable to us. Further, high volatility in the capital markets and in our stock price may make it difficult for us to access the capital markets at attractive prices, if at all. If we are unable to obtain sufficient additional capital in the future, it may limit our ability to fully implement our growth strategy. Even if future debt financing is available, it may result in (i) increased interest expense, (ii) increased term loan payments, (iii) increased leverage and (iv) decreased income available to fund further acquisitions and expansion. It may also limit our ability to withstand competitive pressures and make us more vulnerable to economic downturns. If future equity financing is available, issuances of our equity securities may significantly dilute our existing stockholders.

We have implemented, and plan to continue to implement, restructuring programs designed to facilitate key strategic initiatives and maintain long-term sustainable growth. As such, we have incurredincurred, and expect to continue to incurincur, expenses relating to restructuring activities. We may not achieve or sustain the anticipated benefits, including any anticipated savings, of these restructuring programs or initiatives. Further, restructuring efforts are inherently risky, and we may not be able to predict the cost and timing of such actions accurately or properly estimate their impact.

Our electronic information systems have beenbeen, and could in the future be, subject to service interruptions, data corruption, cyber-based attacks, network security breaches and other cybersecurity incidents. Significant disruptions in, or breaches in security of, our electronic information systems or data can adversely affect our business and financial statements.

In addition, our information systems and those of third parties upon which we rely are subject to security threats and sophisticated cyber-based attacks, including, but not limited to, denial-of-service attacks, hacking, “phishing” attacks, computer viruses, ransomware, malware, employee or insider error, malfeasance, social engineering, vulnerabilities, or physical breaches, that can cause deliberate or unintentional damage, destruction or misuse, manipulation, denial of access to or disclosure of confidential or important information, either directly or by our employees, suppliers or third-party service providers. Additionally, advanced persistent attempts to gain unauthorized access or deny access to, or otherwise disrupt, our systems and those of third-party service providers we rely on are increasing in sophistication and frequency.frequency, including through artificial intelligence technologies, and are increasingly more difficult to detect and defend against. We expect to continue to confront efforts by hackers and other thirdunauthorized partiesparties, including criminal threat actors, nation-states, or insiders (including associates or third-party contractors engaged in fraudulent or malicious activities), to gain unauthorized access or deny access to, or otherwise disrupt, our information systems and those of third parties upon which we rely. Any such attacks could have a material adverse effect on our business, financial condition, results of operations or liquidity. Furthermore, businesses that we have acquired, or may in the future acquire, may have cybersecurity weaknesses that could subject us to increased risks of cybersecurity incidents. While we are not aware of any material cybersecurity threats or incidents that have had or are reasonably likely to have a material effect on us, we can provide no assurance that our efforts to actively manage technology risks potentially affecting our systems have been or will be successful in deterring or mitigating risks to or intrusions into our systems, networks and data or in effectively detecting or resolving such risks or intrusions when they materialize. A failure of or breach in information technology security of our own systems, or those of our third-party vendors, could expose us and our employees, customers, dealers and suppliers to risks of unauthorized access, exfiltration, loss, disclosure or misuse of our, customer, employee or other third-party information or systems, the compromise of confidential information, denial of access to, manipulation or destruction of data, defective products, production downtimes and operations disruptions. Any of these events in turn could adversely affect our business or prospects, reputation and competitive position, including a material loss of customers and revenue, business, results of operations and liquidity. In addition, such breaches in security could result in litigation, regulatory action and potential liability, including liability under federal or state laws that protect the privacy of personal information, as well as the costs and operational consequences of implementing further data protection measures. Any of the foregoing may be exacerbated by a delay or failure to detect a cybersecurity incident, and it may take considerable time for us to investigate and evaluate the full impact of such incidents, particularly for sophisticated attacks, which may divert our management’s attention from other business concerns and inhibit our ability to provide prompt, full and reliable information about the incident to our customers, regulators and the public or the full extent of such incident. In addition, disclosure or media reports of actual or perceived security vulnerabilities to our systems or those of our third-party service providers, even if no breach has been attempted or occurred, could lead to reputational harm, loss of customers and revenue or increased regulatory actions oversight and scrutiny.

We have outstanding debt and other financial obligations and unused borrowing capacity and may incur or assume more debt in the future. As of December 31, 2024,2025, we have $1.1$1.2 billion of outstanding indebtedness. We also have the ability to incur an additional $50.0 million of indebtedness pursuant to certain uncommitted credit lines, access up to $750.0$865.0 million under our revolving credit facility under our A&R Credit Agreement (as defined below), and in the future we may incur additional indebtedness. See “Liquidity and Capital Resources.” Our existing and any future debt could have important, adverse consequences to us and our investors, including:

On April 4, 2022, the Company entered into a credit agreement (as amended and restated from time-to-time, the “Credit Agreement”). On October 16, 2025, the Company entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”). The A&R Credit Agreement, which governs our term loan and revolving credit facility, containcontains restrictive covenantscovenants, including for example, earnings before interest, taxes, depreciation and amortization (“EBITDA”) based leverage and interest coverage ratios, that limit our ability to engage in activities that may be in our long-term interest, including for example EBITDA-based leverage and interest coverage ratios.interest. If we breach any of these restrictions and cannotare unable to obtain a waiver from the lenders on favorable terms, subject to applicable cure periods, the outstanding indebtedness (and any other indebtedness with cross-default provisions) could be declared immediately due and payable, which would adversely affect our liquidity and financial statements. On April 9, 2024, the Company issued $700.0 million in aggregate principal amount of 6.25% senior notes due 2029 (the “Senior Notes”) governed by an indenture (the “Indenture”). The Indenture also includes certain restrictive covenants. In addition, any failure to obtain and maintain credit ratings from independent rating agencies would adversely affect our cost of funds and could adversely affect our liquidity and access to the capital markets. On April 9, 2024, the Company issued $700.0 million in aggregate principal amount of 6.25% senior notes due 2029 (the “Senior Notes”) governed by an indenture (the “Indenture”). In addition, the Indenture also includes certain restrictive covenants. See “Liquidity and Capital Resources.”

The market for many of our products is, in part, dependent upon patent, trademark, copyright and trade secret laws, agreements with employees, customers and other third parties including confidentiality agreements, invention assignment agreements and proprietary information agreements, to establish and maintain our intellectual property rights, and the Goodwill engendered by our trademarks and trade names.rights. The protection and enforcement of these intellectual property rights is therefore material to our business. The failure to protect these rights may have a material adverse effect on our business, financial condition and results of operations. Litigation may be required to enforce our intellectual property rights, protect our trade secrets or determine the validity and scope of proprietary rights of others. It may be particularly difficult to enforce our intellectual property rights in countries where such rights are not highly developed or protected. Any action we take to protect or enforce our intellectual property rights could be costly and could absorb significant management time and attention. As a result of any such litigation, we could lose our proprietary rights.

Additionally, changes in government regulations, including any trade protection measures or other actions by the United States or other nations, pandemics or other contagious outbreaks, or political and economic instability could affect our ability to continue to receive materials from suppliers in the impacted region. The loss of suppliers in these areas, any other interruption or delay in the supply of required materials or our inability to obtain these materials at acceptable prices and within a reasonable amount of time could impair our ability to meet scheduled product deliveries to our customers and could hurt our reputation and cause customers to cancel orders.

Some of our competitors may also have greater financial, marketing and research and development resources than we have or stronger name recognition. As a result, those competitors may be better able to withstand the effects of periodic economic downturns.downturns or other disruptions or challenges.

We may not be able to compete successfully with our existing competitors or with new competitors. If we fail to compete successfully, the failure may have a material adverse effect on our business, financial condition and results of operations. See Item 1. “Business—Industry and Competition” of this Form 10-K for additional information about the competitive markets in which we operate.

Our future effective income tax rates could be unfavorably affected by various factors, including, among others, changes in tax rates, changes in mix of earnings and losses and changes in rules and regulations in jurisdictions in which we generate income. A number of the countries where we operate have implemented, and are considering implementing, changes in relevant tax, accounting and other laws, regulations and interpretations. Additionally, longstanding international tax norms that determine each country’s jurisdiction to tax cross-border international trade are subject to potential evolution. For example, many countries have enacted, proposed, or are considering enacting changes to their legislation to implement the adoption of the Organization for Economic Co-operation and Development’s (“OECD”) model rules for the global minimum corporate tax of 15% for companies with global revenues and profits above certain thresholds (commonly referred to as Pillar Two). While the United States has not yet adopted Pillar Two, and the Group of Seven countries have proposed to exempt United States multinational companies from Pillar Two by adopting a “side-by-side” system between Pillar Two and the existing United States global minimum tax provisions, various other jurisdictions in which we operate around the world have enacted legislation and the OECD continues to release additional guidance. Based upon existing legislation and OECD guidance, Pillar Two could increase our future tax obligations in the countries in which we operate. As these and other tax laws, regulations and norms change or evolve, our financial results could be materially impacted. Given the unpredictability of these possible changes, we currently cannot assess whether the overall effect of such potential tax changes could adversely impact our financial results. We are continuing to evaluate and monitor the impacts of Pillar Two legislation or other tax initiatives in the jurisdictions where we operate.do business. On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was signed into law. The Act makes permanent key elements of the Tax Cuts and Jobs Act, including 100 percent bonus depreciation and domestic research cost expensing, and modifications to the international tax framework. The Act also makes modifications to the interest limitation rules that may result in a material increase in the amount of carryforward interest expense under Section 163(j) and our ability to utilize the carryforward would depend on the Company’s United States EBITDA in future years. The Act includes multiple effective dates, with certain provisions effective in 2025 and others phased-in through 2027. We continue to evaluate the impact of the Act's provisions that take effect in future years.

As of December 31, 2024,2025, approximately 36%37% of our associates were represented by a number of different trade unions and works councils. Further, as of that date, we had approximately 8,0009,200 associates, representing approximately 86%90% of our worldwide associate base, in foreign locations. In Canada, Mexico, Australia, various countries in Europe, Asia and Central and South America, by law, certain of our associates are represented by a number of different trade unions and works councils, which subject us to employment arrangements very similar to collective bargaining agreements. Further, the laws of certain foreign countries may place restrictions on our ability to take certain employee-related actions or require that we conduct additional negotiations with trade unions, works councils or other governmental authorities before we can take such actions.

Furthermore, since a significant proportion of the plans’ assets are invested in publicly traded debt and equity securities, they are, and will be, affected by market risks. Any detrimental change in any of the abovefactors factorsdescribed in the preceding paragraph is likely to worsen the funding position of each of the relevant plans, andwhich this wouldcould likely require the plans’ sponsoring employersemployers, including one or more of our subsidiaries, to increase the contributions currently made to the plans to satisfy our obligations.

Certain subsidiariesof our subsidiaries, which were contributed by the Former Parent, Colfax Corporation now known as Enovis Corporation (“Former Parent”), immediately prior to the consummation of the separation from the Former Parent (the “Separation”) and pursuant to the terms of the separation agreement entered into with the Former Parent in connection with the Separation are oneamong ofthe many defendants named in a large number of lawsuits that claim personal injury as a result of exposure to asbestos from products manufactured or used with components that are alleged to have contained asbestos. Such components were acquired from third-party suppliers and were not manufactured by any of these subsidiaries, nor were these subsidiaries producers or direct suppliers of asbestos. Additionally, pursuant to the definitive purchase agreements related to the sale of the Former Parent’s Fluid Handling (“FH”) and Air and Gas Handling (“AGH”) businesses, the Former Parent and its subsidiaries retained the asbestos-related contingencies and insurance coverage related to these businesses, even though the Former Parent sold the operating assets of its FH and AGH businesses. In connection with the Separation, we agreed to indemnify the Former Parent for, among other things, the retained asbestos-related contingencies and liabilities related to these businesses. See Item 3. “Legal Proceedings” and Part II, Item 8. Note 19, “Commitments and Contingencies.Contingencies” of this Form 10-K.

In addition, we incur defense, settlement and/or judgment costs related to those claims, a portion of which has historically been reimbursed by insurers. We also incur legal costs in connection with efforts to recover insurance from certain of the contributed subsidiaries’ insurers relating to insurance coverage. These costs may be significant, and we may not be able to predict the amount or duration of such costs. Additionally, we may experience delays in receiving reimbursement from insurers, during which time we may be required to pay cash for settlement or legal defense costs. Any increase in the actual number of future claims brought against us, the costs of defending or resolving these claims, the costs of pursuing claims against our insurers, the likelihood and timing of payment by, and the solvency of, insurers and the amount of remaining insurance available, could materially and adversely affect our business, financial condition and results of operations. See Item 3.”Legal Proceedings.Proceedings” of this Form 10-K.

Certain of our independent foreign subsidiaries have conducted and may continue to conduct business in countries subject to United States sanctions and other export controls. Failure to comply properly with various sanction laws to which we, our operations and certain of our independent foreign subsidiaries may be subject may result in enforcement or other regulatory actions. With the exception of the United StatesStates’ sanctions against Cuba and Iran, the applicable sanctions generally do not prohibit our foreign subsidiaries from selling non-United States-origin products and services to countries that are or have previously been subject to sanctions. However, our United States personnel, each of our domestic subsidiaries, as well as our employees of foreign subsidiaries who are United States citizens, are prohibited from participating in or otherwise facilitating any aspect of the business activities in those countries or with persons prohibited under United States sanctions. These constraints impose compliance costs and risks on our operations and may negatively affect the financial or operating performance of such business activities. In addition, the invasion of Ukraine by Russia and the sanctions imposed in response to this crisis have increased the level of economic and political uncertainty. For information about our business in Russia, see also “Our operations are exposed to risks related to the Russian invasion of Ukraine and could be impacted by other wars and geopolitical turmoil.”

To conduct our operations, we regularly move data across national borders, and consequently we are subject to a variety of continuously evolving and developing laws and regulations in the United States and foreign jurisdictions regarding privacy, data protection and data security. The scope of the laws that may be applicable to us is often uncertain and may be conflicting, particularly with respect to foreign laws. Foreign laws we are subject to include the European Union’s General Data Protection Regulation (the “GDPR”), the European Union’s Data Act and the domestic version of the GDPR adopted by the United Kingdom in January 2021. Other countries have enacted or are enacting data localization laws that require data to stay within their borders. The United States has also recently seen a significantly increased focus on the regulation of personal data, led by the passage of various comprehensive privacy and data protection laws at the state level. For example, the California Consumer Privacy Act (the “CCPA”) requires, among other things, covered companies to provide new disclosures to California consumers and affords such consumers certain rights, including the ability to opt out of certain types of data sharing and sales of their personal information. The California Privacy Rights Act, which went into effect in January 2023, amended the CCPA to provide for additional privacy protections. Similar legislation has been adopted and gone into effect in a number of states, and other states have proposed or adopted their own privacy bills that will come into effect over the coming years. The wave of similar legislative developments in other states in the United States creates the potential for a patchwork of overlapping but different state laws and could mark the beginning of a trend toward more stringent privacy legislation in the United States. All of these evolving compliance and operational requirements impose significant costs that are likely to increase over time. Moreover, if we fail to comply with these laws and regulations, we could be subject to litigation, fines and other penalties.

Continuing political and social attention to the issue of climate change has resulted in both existing and pending international agreements and national, regional or local legislation and regulatory measures to limit greenhouse gas emissions, such as cap and trade regimes, enhanced disclosure regimes, carbon taxes, restrictive permitting, increased fuel efficiency standards and incentives or mandates for renewable energy. Such measures could subject us to additional costs and restrictions and require significant operating and capital expenditures, which could impact our business, financial condition, results of operations and cash flows. Additionally, such measures may impact our customers, which could impact their ability or desire to continue to operate at similar levels in certain jurisdictions as historically seen or as currently anticipated, which could negatively impact their demand for our products and services. Conversely, changing political and regulatory perspectives, delays in regulatory initiatives and uncertainty about potential changes, could cause customers to cancel or delay projects or initiatives, which could negatively impact their demand for our products and services. Our inability to effectively addressmanage customerthe concernsrapidly evolving, varied and potentially confusing expectations with respect to products and services implicated by climate change and related sustainability mattersconsiderations could similarly impact customer demand for our products and services and adversely affect our business.

We declared and paid a quarterly cash dividend of $0.06 per share of ESAB’s common stock to our stockholders of record for the first quarter of 2024 and a quarterly cash dividend of $0.08 per share of ESAB’s common stock to our stockholders of record for the first quarter of 2025 and a quarterly cash dividend of $0.10 per share of ESAB’s common stock to our stockholders of record for the second, third and fourth quarters of 2024.2025. We cannot guarantee that we will continue to pay a dividend in the future. The payment of any dividends in the future, and the timing and amount thereof, to our stockholders will fall within the discretion of our Board.Board of Directors (“BOD”).

The Board’sBOD’s decisions regarding the payment of dividends will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in our then existing debt agreements, industry practice, legal requirements and other factors that the BoardBOD deems relevant. Our ability to pay dividends will depend on our ongoing ability to generate cash from operations and on our access to the capital markets.

In addition, our amended and restated certificate of incorporation (our “certificate of incorporation”) authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over our common stock respecting dividends and distributions, as the BoardBOD generally may determine. The terms of one or more classes or series of preferred stock could dilute the voting power or reduce the value of our common stock. Similarly, the repurchase or redemption rights or liquidation preferences that we could assign to holders of preferred stock could affect the residual value of the common stock.

Our certificate of incorporation and bylaws contain, and Delaware law contains, provisions that are intended to deter coercive takeover practices and inadequate takeover bids and to encourage prospective acquirers to negotiate with the BoardBOD rather than to attempt an unsolicited takeover not approved by the Board.BOD. These provisions include, among others, the inability of our stockholders to call a special meeting or to act by written consent, rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings, the right of the BoardBOD to issue preferred stock without stockholder approval, the division of the Board into three classes of directors, with each class serving a staggered three-year term, provision that stockholders may only remove directors with cause and the ability of our directors, and not stockholders, to fill vacancies (including those resulting from an enlargement of the BoardBOD) on the Board.BOD.

This forum selection clause may impose additional litigation costs on stockholders in pursuing any such claims, particularly if the stockholders do not reside in or near the State of Delaware. Our certificate of incorporation further provides that, unless we consent otherwise, the federal district courts of the United States shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. These forum selection provisions may limit the ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for disputes with us or our directors or officers, which may discourage such lawsuits against us and our directors, officers, employees and stockholders. It is possible that a court may find these provisions of our certificate of incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, in which case we may incur additional costs associated with resolving such matters in other jurisdictions. This could materially adversely affect our business, financial condition, or results of operations and result in a diversion of the time and resources of our management and Board of Directors.BOD.

The following MD&A should be read together with Part I, Item 1A. “Risk Factors” and the accompanying Consolidated and Combined Financial Statements and Notes to Consolidated and Combined Financial Statements (the “Notes”) included in Item 8. of this Form 10-K. The MD&A includes forward-looking statements. For a discussion of important factors that could cause actual results to differ materially from the results referred to in these forward-looking statements, see “Special Note Regarding Forward-Looking Statements.”

See Part I, Item 1. “Business” inof ourthis Form 10-K for a discussion of ESAB’s objectives and methodologies for delivering stockholder value.

We are a focused premier industrial compounder. Our rich history of innovating products, workflow solutions and our business system, EBX,EBXai, enables our purpose of Shaping the world we imagineTM.. We conduct our operations through two reportable segments. These segments consist of the “Americas,” which includes operations in North America and South America, and “EMEA & APAC,” which includes Europe, the Middle East, India, Africa and Asia Pacific. We serve a global customer base across multiple markets through a combination of direct sales and third-party distribution channels. Our customer base is highly diversified in the industrial end markets.

We expect strategic acquisitions to contribute to our growth. We believe that our extensive experience of acquiring and effectively integrating acquisition targets should enable us to capitalize on future opportunities. We believe our recent acquisitions of Therapy Equipment Limited (“Therapy Equipment”) in 2023 as well as Sager S.A. (“Sager”), ESAB Bangladesh Private Limited (“ESAB Bangladesh”) (formerly known as Linde Industries Private Limited) and SUMIG Soluções para Solda e Corte Ltda. (“SUMIG”) in 2024, are aligned with this strategic direction. Refer to Note 5, “Acquisitions” and Note 21, “Subsequent Events” in the accompanying Notes contained elsewhere in this Form 10-K for additional information.

We face a number of challenges and opportunities, including the successful integration of acquired businesses, the application and expansion of our EBXEBXai tools to improve business performance and the rationalization of assets and costs. We expect AI investment and infrastructure to contribute to supporting our margin expansion through initiatives such as operational efficiencies. For additional information about these challenges and opportunities, refer to Part I, Item 1A. “Risk Factors” inof ourthis Form 10-K.

During 20242025 and 2023,2024, a significant portion of our Net sales, 78%80% inand each78%, period,respectively, were derived from operations outside of the United States 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 United States, a significant portion of our costs are also denominated in currencies other than the U.S. Dollar. Changes in foreign exchange rates can translationally impact our results of operations and are quantified when significant.

For the year ended December 31, 20242025 compared to 2023,2024, fluctuations in foreign currencies reducedincreased Net sales by 3.2%,0.6%, Gross profit by 2.8%0.8% and Selling, general and administrative expensesexpense by 1.2%.1.4%.

Our results may be sensitive to cost changes in our raw materials. Our largest material purchases are for components and raw materials including steel, iron, copper and aluminum. Historically, we have been generally successful in passing raw material cost increases on to our customers in the form of higher prices. While we seek to take actions to manage this risk, future changes in component and raw material costs may adversely impact earnings. During the year ended December 31, 2025, we experienced higher material costs primarily driven by the impact of tariffs.

Adjusted EBITDA is a non-GAAP performance measure that we include in this report because it is a key metric used by our management to assess our operating performance. ESAB presents this non-GAAP financial measure including and excluding Russia due to economic and political volatility caused by the Russia and Ukraine conflict, which we believe results in enhanced investor interest in these alternate presentations. Adjusted EBITDA excludes from Net income from continuing operations the effect of Income tax expense, Interest expense and other, net, Pension settlement loss, Restructuring and other related charges, acquisition-amortizationacquisition transaction, due diligence and otherintegration relatedexpenses, amortization of intangibles and fair value charges on acquired inventories and depreciation and other amortization. We also present Adjusted EBITDA margin, which is subject to the same adjustments as Adjusted EBITDA. Further, we present these non-GAAP performance measures on a segment basis,basis wheresubject we excludeto the impactsame ofadjustments Restructuringdescribed and other related charges, acquisition-amortization and other related charges and depreciation and other amortization from operating income.above. We also present Core adjusted EBITDA and Core adjusted EBITDA margin, which are subject to the same adjustments as Adjusted EBITDA and Adjusted EBITDA margin, respectively, and which remove the impact of Russia for the years ended December 31, 20242025 and 2023.2024. Adjusted EBITDA, Adjusted EBITDA margin, Core adjusted EBITDA and Core adjusted EBITDA margin assist management in comparing our 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 unusual events or discrete restructuring plans and other initiatives that are fundamentally different from our ongoing productivity and core business. Management also believes that presenting these measures allows investors to view our performance using the same measures that we use in evaluating our financial and business performance and trends.

(2) Includes severance and other termination benefits, including outplacement services,services as well as the cost of relocating associates, relocating equipment, leaseimpairment terminationof expenseslong-lived assets and other costs in connection with the closure and optimization of facilities and product lines.

(3) Includes transactiontransaction, expenses,diligence and integration expenses totaling $31.5 million and amortization of acquiredintangibles intangibles,and fair value charges on acquired inventories andtotaling integration$40.5 expenses.million for the year ended December 31, 2025, respectively.

Net sales decreasedincreased for the year ended December 31, 20242025 as compared with the year ended December 31, 2023.2024. The following table presents the components of changes in our consolidated Net sales.

Net sales from existing businesses increaseddecreased $32.3$31.4 million during the year ended December 31, 20242025 compared to the prior year period, due to customer pricing increases of $19.9 million and increaseddecreased sales volumes of $12.4$60.8 million.million driven primarily by lower volumes in Russia and the impact of tariffs in the Americas partially offset by $29.4 million of customer pricing increases. The increase in Net sales from acquisitions of $23.5$115.9 million was primarily attributable to the Sager,acquisitions of Sager S.A. (“Sager”), ESAB Bangladesh andPrivate Limited (“ESAB Bangladesh”), SUMIG acquisitions.Soluções para Solda e Corte Ltda. (“SUMIG”), Bavaria Schweisstechnik (“Bavaria”), DeltaP s.r.l. (“DeltaP”), Aktiv Technologies Private Limited (“Aktiv”) and EWM GmbH (“EWM”). The changes in foreign exchange rates caused a $89.7$17.3 million unfavorablefavorable currency translation impact.

SalesNet sales excluding Russia

SalesNet sales excluding Russia (“Core sales”) for ESAB decreasedincreased for the year ended December 31, 20242025 as compared with the year ended December 31, 2023.2024. The following table presents the components of changes in our consolidated Core sales.

(5) Numbers calculated following the same definition as total sales declinegrowth for total Company.

Core sales from existing businesses increaseddecreased $24.6$5.1 million during the year ended December 31, 2024,2025, compared to the prior year period due to customer pricing increases of $15.4 million and increaseddecreased sales volumes of $9.2$33.6 million.million driven primarily by the impact of tariffs in the Americas partially offset by $28.5 million of customer pricing increases. The increase in Core sales from acquisitions of $23.5$115.9 million was primarily attributable to the acquisitions of the Sager, ESAB BangladeshBangladesh, SUMIG, Bavaria, DeltaP, Aktiv and SUMIG acquisitions.EWM. The changes in foreign exchange rates caused a $77.9$1.5 million unfavorable currency translation impact.

(1) Includes severance and other termination benefits, including outplacement services as well as the cost of relocating associates, relocating equipment, lease termination expenses, impairment of long-lived assets and other costs in connection with the closure and optimization of facilities and product lines.

(2) Includes transactiontransaction, expenses,diligence and integration expenses totaling $31.5 million and $4.2 million and amortization of acquiredintangibles intangibles,and fair value charges on acquired inventories totaling $40.5 million and integration$30.3 expenses.million for the years ended December 31, 2025 and 2024, respectively.

Gross profit increased $21.7$10.8 million during 20242025 in comparison to 2023,2024, which was primarily attributable to accretion from acquisitions, foreign currency impact and benefits from price increases, lower material costs, productivity gains and accretion from acquisitions,increases partially offset by unfavorablehigher foreignmaterial currencycosts, decreases in sales volume and tariff impacts. Gross profit margin expandeddeclined 130100 basis points toduring 37.9%,the whichsame wasperiod, primarily due to aforementionedinflation factors.and tariff-related cost increases partially offset by customer pricing increases, leading to margin compression.

The effective tax rate for 20242025 and 20232024 was 20.9%21.1% and 30.0%,20.9%, respectively. The difference was primarily due to changes in tax reserves and valuation allowances. In 2025, the effective tax rate was higher than the United States federal statutory rate of 21.0% primarily due to the jurisdictional mix of earnings, including foreign withholding tax onpartially dividends.offset by the release of a valuation allowance. In 2024, the effective tax rate was lower than the United States federal statutory rate of 21.0% primarily due to favorable impacts from an agreement with a taxing authority on the treatment of subsidy income in a foreign jurisdiction, favorable changes in tax reserves primarily related to a final ruling in a tax case in a foreign jurisdiction,jurisdiction partially offset by withholding taxes and the impact of jurisdictional mix of income in 2023.taxes.

Net income from continuing operations decreased in 2025 compared to 2024, due to the changes discussed above. Adjusted EBITDA increased $27.7$30.9 million and Adjusted EBITDA margin expanded by 12040 basis points in 20242025 compared to 20232024 due to the aforementioned factors. Core adjusted EBITDA increased $28.0$29.3 million and Core adjusted EBITDA margin expanded by 13030 basis points primarily due to the aforementioned factors.

Net sales in our Americas segment decreased by $38.3$46.4 million during 20242025 compared to 2023.2024. Net sales from existing business increaseddecreased by $23.0$43.0 million primarily due to customerreduced pricesales increasesvolumes primarily driven by tariffs and related impacts partially offset by lowerpricing sales volume.increases. Net sales from acquisitions contributed $14.3$27.9 million. TheseIn increasesaddition, werethere morewas than offset by $75.5$31.3 million ofin unfavorable currency translation. Gross profit and related margin increaseddecreased primarily due to benefita fromdecrease pricein increases,sales productivity gainsvolumes and acquisitionshigher material costs, including tariffs, partially offset by unfavorableacquisitions, price increases and foreign currencyexchange impactsimpact. Gross profit margin declined 90 basis points, primarily due to inflation and decreasedtariff-related salescost volumes.increases partially offset by customer pricing increases, leading to margin compression. Selling, general and administrative expense decreased compared with the prior year period primarily due to favorablebenefits foreignfrom currencylower impactsemployee costs and EBXai driven savings from restructuring initiatives partially offset by growthacquisitions. Restructuring and other related charges increased $8.6 million during 2025 in comparison to 2024 primarily driven by strategic initiatives andto acquisitions.improve margins in the Americas for future years. Adjusted EBITDA increaseddecreased by $14.5$13.8 million and margin expandeddeclined 18040 basis points primarily due to the aforementioned factors.

Net sales increased for our EMEA & APAC segment by $4.3$148.1 million during 20242025 compared to 2023.2024. Net sales from existing business increased by $9.3$11.6 million drivenprimarily byresulting higherfrom increases in sales volume,volume partially offset by lower customer pricing. Net sales from acquisitions contributed $9.2$88.0 million. TheseIn increasesaddition, werethere partiallywas offset by $14.2$48.5 million in unfavorablefavorable currency translation. Gross profit and related margin increased primarily due to theacquisitions, benefitfavorable fromforeign exchange impact and increased sales volume, lower material costs and productivity gainsvolumes partially offset by unfavorablelower foreign currency impactpricing and lowerhigher material costs. Gross profit margin declined 90 basis points, primarily due to inflation and cost increases partially offset by customer pricing.pricing increases, leading to margin compression. Selling, general and administrative expense decreasedincreased over the same period primarily due to savingsacquisitions fromand restructuringrelated initiativescosts partially offset by spendinga gain on growthdisposition initiatives.of property. Restructuring and other related charges increased $8.9 million during 2025 in comparison to 2024 primarily driven by the EWM acquisition. Adjusted EBITDA increased by $13.2$44.7 million and margin expanded 80100 basis points primarily due to the aforementioned factors. Core adjusted EBITDA increased by $13.5$43.2 million and margin expanded by 80 basis points due to the aforementioned factors.

We expect to finance our liquidity requirements through cash flows from operating activities. We expect that our primary ongoing requirements for cash will be for working capital, funding of acquisitions, capital expenditures andexpenditures, restructuring related cash outflows,and asbestos-related cash outflows, debt service and required amortizationprincipal of principal,payments, stock repurchases and, pendingsubject to approval from the Board of Directors,BOD, payment of cash dividends.

As of December 31, 2024,2025, we were in compliance with the covenants under the A&R Credit Agreement and the Indenture. The Company’s weighted average interest rate of borrowings under the A&R Credit Agreement and the Indenture was 5.24%,5.40%, excluding accretion of deferred financing fees and net of interest rate hedge impacts.fees. As of end of the year, we had the capacity for additional indebtedness of up to $750$865 million available on the senior revolving credit facility.facility (“Revolving Facility”). Additionally, we have the ability to incur $50 million of indebtedness pursuant to certain uncommitted credit lines, consisting primarily of an uncommitted credit line that we currently have in place, which we have used from time to time in the past for short-term working capital needs. Refer to Note 15, “Debt” and Note 16, “Derivatives” in the accompanying Notes contained elsewhere in this Form 10-K for more information related to the Company’s debt and derivative instruments. We believe that we could raise additional funds in the form of debt or equity if it were determined to be appropriate for strategic acquisitions or other corporate purposes. We believe that our sources of liquidity between debt and cash flows from operating activities are adequate to fund our operations for the next twelve months and thereafter.

On August 13, 2024, the Board of DirectorsBOD authorized and approved a stock repurchase program to repurchase up to five million shares of the Company’s common stock, par value $0.001 per share, from time-to-time on the open market, in privately negotiated transactions or as may otherwise be determined by the Company’s management in its discretion. No repurchases of the Company’s common stock have been made through the year ended December 31, 2024.2025 since program inception. The timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions, applicable legal requirements and other factors. There is no term associated with the remaining repurchase authorization.

As of December 31, 2024,2025, we had $249.4$185.9 million of Cash and cash equivalents, ana increasedecrease of $147.4$63.5 million from $102.0$249.4 million as of December 31, 2023.2024. The following table summarizes the change in Cash and cash equivalents during the periods indicated.

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

•Discontinued operations outflows for the years ended December 31, 20242025 and 20232024 were $15.0 million and $15.2 million, respectively, which were primarily asbestos related.

•Restructuring initiative payments of $10.4$14.9 million and $20.7$10.4 million for the years ended December 31, 20242025 and 2023,2024, respectively, which includes severance and other termination benefits, including outplacement services, as well as the cost of relocating associates, relocating equipment, lease termination expenses, impairment of long-lived assetsexpenses and other costs in connection with the closure and optimization of facilities and product lines.

Cash flows provided by financing activities of $31.7 million during the year ended December 31, 20242025 waswere $113.7 million, primarily drivenattributable byto proceedsacquisition-related financing activities. Proceeds from debt borrowings on long-term debt of $905.0$760.7 million were partially offset by net repayment of borrowings on the long-term debt of $839.5 million, payment of debt issuance costs of $10.4$602.1 million and payment of four cash dividendsdividend payments totaling $17.0$21.9 million.

As of December 31, 2024,2025, the Company’s Termsenior A-1term loan A facility and Senior Notes had principal amounts outstanding of $385.0$350.0 million and $700.0 million, respectively.respectively, as well as $185.0 million drawn on the Revolving Facility. In addition to the outstanding principal on our debt, we are subject to contractual obligations and commitments to make future interest payments on the Termsenior Loansterm loan A facility and Senior Notes on various payment dates as provided in the A&R Credit Agreement Amendment and the Indenture. Refer to Note 15, “Debt” in the accompanying Notes contained elsewhere in this Form 10-K for expiration dates and maturity schedules on our outstanding debt obligations for the next five years.

We do not have any off-balance sheet arrangements that provide liquidity, capital resources, market or credit risk support that expose us to any liability that is not reflected in our Consolidated and Combined Financial Statements at December 31, 20242025 other than outstanding letters of credit of $27.2$33.7 million and unconditional purchase obligations with suppliers noted above.

For the year ended December 31, 2024,2025, a qualitativequantitative assessment was performed for the three reporting units. The carrying amount of Goodwill of the Americas, EMEA & APAC and Gas Control EquipmentGCE reporting units as of December 31, 20242025 were $629.7$647.0 million, $896.3$1,137.9 million and $126.0$164.8 million, respectively. Determining the fair value of a reporting unit requires the application of judgment and involves the use of significant estimates and assumptions that can be affected by changes in business climate, economic conditions, the competitive environment and other factors. We base these fair value estimates on assumptions our management believes to be reasonable but are unpredictable and inherently uncertain. Future changes in the judgments, assumptions and estimates could result in significantly different estimates of fair value in the future. An increase in discount rates, a reduction in projected cash flows due to lower revenue growth rates or lower margins compared to our projections, or a combination of the two could lead to a reduction in the estimated fair values, which may result in impairment charges that could materially affect our financial statements in any given year.

In the evaluation of indefinite-lived intangible assets for impairment, we first assess qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying value. If we determine that it is more likely than not for the indefinite-lived intangible asset’s fair value to be greater than its carrying value, a calculation of the fair value is not performed. In certain instances, the Company may elect to forgo the qualitative assessment and proceed directly to the quantitative impairment test. If we determine that it is more likely than not that the indefinite-lived intangible asset’s fair value is less than its carrying value, a calculation is performed and compared to the carrying value of the asset. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. We measure the fair value of our indefinite-lived intangible assets using the “relief from royalty” method. Significant estimates in this approach include projected revenues and royalty and discount rates for each trade name evaluated.

We account for income taxes under ASC 740, Income Taxes (“ASC 740”), which requires recognition of deferred income tax assets and liabilities reflecting the tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the Consolidated and Combined Financial Statements and their respective tax basis. Deferred income tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred income tax assets and liabilities are reported in Other assets and Other liabilities in the Consolidated Balance Sheets, respectively. The effect on deferred income tax assets and liabilities of a change in tax rates is generally recognized in Income tax expense in the period that includes the enactment date. Global Intangible Low-Taxed Income is accounted for as a current tax expense in the year the tax is incurred.

In addition to the information set forth in this Quarterly Report on Form 10-Q, including under “Management Discussion and Analysis of Financial Condition and Results of Operations - Special Note Regarding Forward Looking Statements,” in Part I. Item 2, you should carefully consider the factors discussed in the “Risk Factors” section of the Company’s 2025 Form 10-K filed with the SEC on February 20, 2026, as supplemented belowand withupdated respect to the acquisition of Eddyfi Technologies (the “Acquisition” or “Eddyfi”).below.

We believe that there are significant operational and financial benefits resulting from the Acquisition. However, the efforts to realize these benefits could be a complex process and the failure to do so effectively or in a timely manner may negatively affect our earnings. The full benefits of the Acquisition, including the anticipated operational synergies and market expansion, may not be realized as expected or may not be achieved within the anticipated time frame, or at all. Failure to achieve the anticipated benefits of the Acquisition could adversely affect our results of operations or cash flows, cause dilution to our earnings per share and decrease or delay any accretive effect of the Acquisition. In addition, we have diverted, and will continue to divert, significant management resources towards the completion of the Acquisition, which could adversely affect our business and results of operations.

As a result of the Acquisition, we will effectively assume some or all of Eddyfi’s liabilities, whether or not currently known. There may be claims, assessments or liabilities that we did not discover or identify in the course of performing due diligence investigations of Eddyfi. In addition, there may be liabilities that are neither probable nor estimable at this time, which may become probable and estimable in the future. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business. We may uncover additional information about Eddyfi that adversely affects,affects our business, such as unknown, unasserted or contingent liabilities and issues relating to compliance with applicable laws.

The following discussion of the financial condition and results of operations of ESAB Corporation (“ESAB,” the “Company,” “we,” “our” and “us”) should be read in conjunction with the Consolidated and Condensed 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 3, 2026 (this “Form 10-Q”) and the Consolidated Financial Statements and related footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Form 10-K”). You should review the discussion titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements. Our actual results, outcomes or the timing of results or outcomes could differ materially from those discussed in the forward-looking statements.

All 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, as amended (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”). Statements that could be deemed to be forward-looking statements, include statements regarding: the pending acquisition of Eddyfi TechnologiesHolding Inc. (“Eddyfi”) and its anticipated benefits, the impact of the war in Ukraine and conflicts in the Middle East and the resulting escalating geopolitical tensions on our business; projections of revenue, profit margins, expenses, tax provisions and tax rates, earnings or losses from operations, impact of foreign exchange rates, cash flows, pension and benefit obligations and funding requirements, synergies or other financial items; plans, strategies and objectives of our 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, including the impact of inflationary pressures, tariffs and trade policies, foreign exchange fluctuations and commodity prices; the outcome of outstanding claims or legal proceedings, including asbestos-related liabilities and insurance coverage litigation; potential gains and recoveries of costs; assumptions underlying any of the foregoing; and any other statement that addresses activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. Forward-looking statements may be, but are not always, characterized by terminology such as “believe,” “anticipate,” “should,” “would,” “could,” “intend,” “plan,” “will,” “expect,” “estimate,” “project,” “positioned,” “strategy,” “targets,” “aims,” “seeks,” “sees” or similar expressions. These statements are based on assumptions and assessments made by our management as of the filing date of this Form 10-Q in light of their experience and perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate. These forward-looking statements are subject to a number of risks and uncertainties and actual results or outcomes, or the timing of results or outcomes, could differ materially due to numerous factors, including but not limited to the following:

Please see Part I. Item 1. “Business” in our 2025 Form 10-K,10-K for a discussion of ESAB’s objectives and methodologies for delivering stockholder value.

We expect strategic acquisitions to contribute to our growth. We believe that our extensive experience of acquiring and effectively integrating acquisition targets should enable us to capitalize on future opportunities. We believe our recent acquisitionsacquisitions, are aligned with this strategic direction. On JanuaryJune 31,1, 2026, thewe Companyacquired entered into an agreement to acquire Eddyfi Technologies (“Eddyfi”),Eddyfi, a global leader in advanced inspection and monitoring technologies headquartered in Quebec,Québec, Canada, for aconsideration purchase pricetransferred of approximately $1.45$1.5 billion.billion (such transaction, the “Acquisition”). For the year ended December 31, 2025, Eddyfi’s Revenuesrevenues totaled approximately $240 million. Refer to Note 3, “Acquisitions” in the accompanying Notes contained elsewhere in this Form 10-Q for additional information.

ESAB operates a diversified global supply chain and sources parts and materials globally. In February 2026, the United States Supreme Court (the “Court”) ruled that the International Emergency Economic Powers Act (“IEEPA”), which the United States administration (the “administration”) relied on to impose certain tariffs, does not authorize the administration to impose tariffs. On March 4, 2026, the United States Court of International Trade ordered the United States Customs and Border Protection (“CBP”) to process refunds of the IEEPA tariffs, although the Court immediately suspended the order while the CBP determines a refund process.tariffs. The IEEPA tariffs remain subject to ongoing litigation between the administration and other parties. In response to the Court ruling mentioned above, the administration announced plans to implement new tariffs under alternative statutory authority. The full impact of the Court’s ruling and the administration’s response remains uncertain. In addition, theThe process for addressing requests for refunds of the IEEPA tariffs has recently begun,begun. andWe have received an insignificant amount of IEEPA tariff refunds during the three months ended July 3, 2026. The actual timing and extent of any suchfuture refunds remain uncertain at this time. Accordingly, we have not recorded any anticipated recovery of IEEPA tariffstariff paidrefund receivables as of AprilJuly 3, 2026. We continue to actively monitor and evaluate these developments and the potential impacts of trade policy and tariffs on our business, supply chain and results of operations. We maintain operations worldwide, including in the jurisdictions impacted by the announced and contemplated tariffs. Refer to Part I. Item 1.A. “Risk Factors” in our 2025 Form 10-K for additional information. The full impact of the matters noted above on the Company, our customers and suppliers, the overall economy and capital markets remains uncertain.

The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the three and six months ended AprilJuly 3, 2026 and AprilJuly 4, 2025.

The comparability of our operating results for the three and six months ended AprilJuly 3, 2026 and AprilJuly 4, 2025 is affected by the following significant factors:

The conflict in the Middle East and the related impacts, such as logistics challenges from the closing of the Strait of Hormuz, have increased the level of economic and political uncertainty. As reflected in the discussions that follow, these logistics challenges have had a variety of impacts on our results of operations during the threesix months ended AprilJuly 3, 2026, including decreased sales levels and increased inventory costs. Refer to Part I. Item 1.A. “Risk Factors” section of the 2025 Form 10-K for additional information.

The Company continues to actively monitor the changes in United States policy regarding international trade, including the recent progress in reaching or progressing international trade agreements with major counterparties.counterparties and the IEEPA tariff refund discussed above. As reflected in the discussions that follow, the United States policy regarding international trade and actions taken in response to it have had a variety of impacts on our results of operations during 2025 and the firstsix quartermonths ofended July 3, 2026, including decreased sales levels and increased raw material costs. For additional information on the risks of United States policy regarding international trade to the Company’s operations, refer to Part I. Item 1.A. “Risk Factors” section of the 2025 Form 10-K for additional information.

We complement our organic growth with acquisitions and other investments. Acquisitions can affect our reported results, and we report the change in our Net sales between periods both from existing and acquired businesses. The change in Net sales due to acquisitions for the periods presented in this filing represents the incremental sales as a result of acquisitions.acquisitions, including the Acquisition that was completed on June 1, 2026. For additional information on our acquisitions, refer to Note 3, “Acquisitions” in the accompanying Notes contained elsewhere in this Form 10-Q and Note 5, “Acquisitions” in the Company’s 2025 Form 10-K.

A significant portion of our Net sales, 79% for the three and six months ended AprilJuly 3, 20262026, respectively, are outside the United States, 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 United States, a significant portion of our costs are also denominated in 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 three months ended AprilJuly 3, 2026 compared to the three months ended AprilJuly 4, 2025, fluctuations in foreign currencies increased Net sales by 5.5% and2.6%, Gross profit by 5.5%2.3% and increased Selling, general and administrative expenses by 6.1%.2.6%.

Adjusted EBITDA is a non-GAAP performance measure that we include in this Form 10-Q because it is a key metric used by our management to assess our operating performance. ESAB presents this non-GAAP financial measure including and excluding Russia due to economic and political volatility caused by the Russia and Ukraine conflict, which we believe results in enhanced investor interest in these alternative presentations. Adjusted EBITDA excludes from Net income from continuing operations the effect of Income tax expense, Interest expense and other, net, Restructuring and other related charges, acquisition transaction, due diligence and integration expenses, amortization of intangibles and fair value step up on acquired inventories andinventories, depreciation and other amortization.amortization and compensation expense related to the performance-based non-qualified stock option awards granted on June 10, 2026 and July 1, 2026 (the “Performance Option Awards”). We also present Adjusted EBITDA margin, which is subject to the same adjustments as Adjusted EBITDA. Further, we present these non-GAAP performance measures on a segment basis subject to the same adjustments described above. We also present Core adjusted EBITDA and Core adjusted EBITDA margin, which are subject to the same adjustments as Adjusted EBITDA and Adjusted EBITDA margin, respectively, and which removes the impact of Russia for the three and six months ended AprilJuly 3, 2026 and AprilJuly 4, 2025. Adjusted EBITDA and Core adjusted EBITDA assist management in comparing our 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 unusual events or discrete restructuring plans and other initiatives that are fundamentally different from our ongoing productivity and core business. Management also believes that presenting these measures allows investors to view our performance using the same measures that we use in evaluating our financial and business performance and trends.

The following tables set forth a reconciliation of Net income from continuing operations, the most directly comparable GAAP financial measure, to Adjusted EBITDA, Adjusted EBITDA margin, Core adjusted EBITDA and Core adjusted EBITDA margin by segment for the three and six months ended AprilJuly 3, 2026 and AprilJuly 4, 2025.

(3) Includes transaction, diligence and integration expenses totaling $10.3$12.8 million and $14.2 million for the three and six months ended AprilJuly 3,4, 20262025, respectively, and amortization of intangibles and fair value step up on acquired inventories totaling $12.5$8.8 million and $17.0 million for the three and six months ended AprilJuly 3,4, 2026.2025, respectively.

(5) Net sales were $31.3$37.1 million and $68.4 million relating to Russia for the three and six months ended AprilJuly 4, 2025.2025, respectively.

The following table presents the components of changes in our Net sales for the three and six months ended AprilJuly 3, 2026 compared to the prior year period.

Net sales from existing businesses decreasedincreased by $12.6$17.9 million during the three months ended AprilJuly 3, 2026, compared to the prior year period, duedriven toby a $21.7 million decreaseincreases in both customer pricing and sales volume duetotaling to$14.9 driversmillion and $3.1 million, respectively. The $14.9 million increase in customer pricing was largely driven by the higher materials costs resulting from factors such as tariffs in the Americas,Americas logisticsand challengesrising inoil Middleprices Eastcaused related toby the war in IranIran. andAdditionally, lowerthere volumeswas in Russia partially offset by customer pricing increases of $9.0 million. Thean increase in netNet sales from acquisitions was attributable to Bavaria Schweisstechnik (“Bavaria”), DeltaP s.r.l. (“DeltaP”), Aktiv Technologies Private Limited (“Aktiv”) and, EWM GmbH (“EWM”). and Eddyfi. The changes in foreign exchange rates resulted in a $37.3$18.6 million favorable currency translation impact.

The following table presents the components of changes in our Net sales excluding Russia (“Core sales”) for the three and six months ended AprilJuly 3, 2026 compared to the prior year period.

(5) Net sales relating to Russia were $31.1$41.4 million and $31.3$37.1 million for the three months ended AprilJuly 3, 2026 and AprilJuly 4, 2025, respectively, and $72.5 million and $68.4 million for the six months ended July 3, 2026 and July 4, 2025, respectively.

Core Salessales from existing businesses decreasedincreased by $7.4$16.8 million during the three months ended AprilJuly 3, 2026, compared to the prior year period, primarilydriven dueby to a $17.0 million decreaseincreases in both customer pricing and sales volume duetotaling to$14.8 driversmillion and $2.0 million, respectively. The $14.8 million increase in customer pricing was largely driven by the higher materials costs resulting from factors such as tariffs in the Americas and logisticsrising delaysoil inprices Middlecaused East related toby the war in IranIran. partiallyAdditionally, offset by $9.5 million of customer pricing increases. Thethe increase in netNet sales from acquisitions was attributable to Bavaria, DeltaP, AktivAktiv, EWM and EWM.Eddyfi. The changes in foreign exchange rates resulted in a $32.2$15.5 million favorable currency translation impact.

(1) Includes severance and other termination benefits, including outplacement services as well as the cost of relocating associates, relocating equipment, lease termination expenses, impairment of long-lived assetsassets, costs associated with disposing of discontinued products and other costs in connection with the closure and optimization of facilities and product lines.

(2) Includes transaction, diligence and integration expenses totaling $10.3$24.8 million and $35.1 million for the three and six months ended AprilJuly 3, 20262026, respectively, and $1.4$12.8 million and $14.2 million for the three and six months ended AprilJuly 4, 2025.2025, respectively. Additionally, it includes amortization of intangibles and fair value step up on acquired inventories totaling $12.5$16.5 million and $29.0 million for the three and six months ended AprilJuly 3, 20262026, respectively, and $8.2$8.8 million and $17.0 million for the three and six months ended AprilJuly 4, 2025.2025, respectively.

ThreeSix Months Ended AprilJuly 3, 2026 Compared to ThreeSix Months Ended AprilJuly 4, 2025 Gross profit increased $19.9$61.1 million in the threesix months ended AprilJuly 3, 2026 compared to the prior year period primarily attributable to acquisitions and favorable foreign exchange impact partially offset by tariff-related cost increases, net of customer pricing, product mix and a decrease in sales volume. The decline of gross profit margin was primarily due to the dilutive effect in the Americas segment caused by tariff-related price pass-through to customers as well as higher freight and material costs due to oil price increases from the war in Iran. Selling, general and administrative expense increased $33.6$88.2 million in the threesix months ended AprilJuly 3, 2026 compared to the prior year period primarily due to acquisitions and related transaction costs and foreign exchange impact. Interest expense and other, net increased by $8.8 million due to $4.8 million of costs associated with the Bridge Loan that the Company entered into to fund the Eddyfi acquisition as well as a higher average outstanding debt balance. The effective tax rate of 20.2% for the three months ended April 3, 2026 differed from the effective tax rate of 22.0% for the same period ended April 4, 2025 due to favorable provisions related to FDDEI under the One Big Beautiful Bill Act that were effective beginning with the 2026 tax year.

Net income from continuing operations decreased $20.8$54.2 million in the threesix months ended AprilJuly 3, 2026 compared to the prior year period primarily due to the aforementioned factors as well as higher Restructuring and other related charges primarily driven by strategic initiatives to improve margins in the Americas and the integration of the recent EWM acquisition and higher Acquisition-amortization and other related charges related to the recent acquisition and integration activity.factors. Adjusted EBITDA increased $2.7$10.5 million in the threesix months ended AprilJuly 3, 2026 compared to the prior year period primarily due to the aforementioned.aforementioned factors. Core adjusted EBITDA increased by $8.0$19.1 million compared to the same period in the prior year primarily due to the aforementioned factors. Adjusted EBITDA attributable to Russia decreased by $5.3$8.5 million largely due to relocating the Russia manufacturing plant from an owned property to a leased property and expenses associated with this relocation project as well as shifting of product mix from higher to lower margin products in response to shifts in demand and decreases in customer pricing while material costs continue to increase. The decline of Core adjusted EBITDA margin was primarily due to dilution from the EWM acquisition as well as higher freight and material costs due to oil price increases from the war in Iran.

Three Months Ended April 3, 2026 Compared to Three Months Ended April 4, 2025 Net sales in our Americas segment increased $7.7$33.2 million in the threesecond monthsquarter ended April 3,of 2026 compared with the prior year period. Net sales from existing business decreasedincreased $2.1$13.9 million primarily due to reducedpricing increases and new product initiatives. The Acquisition contributed to a $9.6 million increase in Net sales volumesfrom primarily driven by tariffs and related impacts partially offset by pricing increases.acquisitions. In addition, there was a $9.8$9.7 million of favorable increase in currency translation. Gross profit increased $1.4by $15.1 million attributable to favorableaccretion foreignfrom exchangeacquisitions, impactcustomer pricing increases and pricefavorable increasescurrency translation partially offset by higher material costscosts, including tariffs, and volume.product The decline of gross profit margin was primarily due to the dilutive effect in the Americas segment, which was caused by tariff-related price pass-through to customers.mix. Selling, general and administrative expense increased $2.3by $17.2 million compared with the prior year period primarily due to foreign exchange impact. Restructuringacquisitions and other related chargestransaction increased $7.3 million in the three months ended April 3, 2026 compared with the prior year period primarily driven by strategic initiatives to improve margins in the Americas.costs. Adjusted EBITDA increased $1.5$7.2 million compared to the prior year period primarily due to the aforementioned factors.

ThreeSix Months Ended AprilJuly 3, 2026 Compared to ThreeSix Months Ended AprilJuly 4, 2025 Net sales in our EMEA & APAC segment increased $59.8$118.6 million in the threesix months ended AprilJuly 3, 2026 compared with the prior year period. Net sales from existing business decreased $10.5$6.5 million primarily resulting from volume decreases fromrelated logisticsto challenges in the Middle East related to the war in Iran and lower volumes in Russia.Russia partially offset by increases in customer pricing. This decrease was more than offset by $42.8$88.8 million of Net sales from theacquisitions from Bavaria, DeltaP, AktivAktiv, EWM and EWMEddyfi acquisitionsas andwell $27.5as $36.4 million in favorable foreign currency impact. Gross profit increased $18.5$44.5 million in the threesix months ended AprilJuly 3, 2026 compared with the prior year period due to accretion from acquisitions and favorable foreign exchange impact partially offset by lower volumes and higher material costs. The decline of gross profit margin was primarily attributable to higher freight and material costs due to oil price increases from the war in Iran as well as plant relocation costs and an unfavorable product mix in Russia in 2026. Selling, general and administrative expense increased $31.3$68.8 million in the threesix months ended AprilJuly 3, 2026 compared with the prior year period primarily due to acquisitions and related costs and foreign exchange impact as well as higher overall costs from general inflation and annual merit increase impact. Acquisition - amortization and other related charges increased $11.1$22.8 million in the threesix months ended AprilJuly 3, 2026 compared with the prior year period primarily driven by the EWM acquisition.and Eddyfi acquisitions. Adjusted EBITDA increased $1.2$1.8 million and Core adjusted EBITDA increased $6.5$10.3 million in the threesix months ended AprilJuly 3, 2026 compared with the prior year period primarily due to the aforementioned factors. The decline of adjusted EBITDA margin and Core adjusted EBITDA margin was primarily due to dilution from the EWM acquisition as well as higher freight and material costs due to oil price increases fromrelated to the war in Iran.

As of AprilJuly 3, 2026, we were in compliance with the covenants under the A&R Credit Agreement and the Indentures. The Company’s weighted average interest rate of borrowings under the Credit Agreement and the Indentures was 5.45%,5.39%, excluding accretion of deferred financing fees. As of the end of the firstsecond quarter, we had the capacity for additional indebtedness of up to $1,050$690 million available on the Revolving Facility. Additionally, we havehad the ability to incur $73.1$72.9 million of indebtedness pursuant to certain uncommitted credit lines, consisting primarily of an uncommitted credit line that we currently have in place, which we have used from time to time in the past for short-term working capital needs. Refer to Note 9, “Debt” and Note 10, “Derivatives” in the accompanying Notes contained elsewhere in this Form 10-Q for more information related to the Company’s debt and derivative instruments. We believe that we could raise additional funds in the form of debt or equity if it werewe determined it to be appropriate for strategic acquisitions or other corporate purposes. We believe that our sources of liquidity between debt and cash flows from operating activities are adequate to fund our operations for the next twelve months and thereafter.

As of AprilJuly 3, 2026, the Company had $1.0$217.5 billionmillion of Cash and cash equivalents, an increase of $818.9$31.6 million from the balance of $185.9 million as of December 31, 2025.

•Discontinued operations for the threesix months ended AprilJuly 3, 2026 and AprilJuly 4, 2025 included outflows of $4.3$11.8 million and $2.3$7.2 million, respectively, which were primarily asbestos-related.