What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-20 compared with 2024-02-29 · 374 added, 460 removed, 1118 unchanged (43% of the section changed)

5 unchanged sentences

Consolidated and Combined Statements of Operations 49

Consolidated and Combined Statements of Comprehensive Income (Loss) 57

Consolidated and Combined Statements of Comprehensive Income 50

Consolidated Balance Sheets 51

25 unchanged sentences

In our opinion, ESAB Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated and combined statements of operations, comprehensive (loss) income, equity and cash flows for each of the three years in the period ended December 31, 2023 and the related notes and schedule and our report dated February 29, 2024 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated and combined statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2024 and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated February 20, 2025 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

We are a public accounting firm registered with the PCAOB and are required to be

independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

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Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of ESAB Corporation (the Company) as of December 31, 2023 and 2022, the related consolidated and combined statements of operations, comprehensive income (loss), equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of ESAB Corporation (the Company) as of December 31, 2024 and 2023, the related consolidated and combined statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S.

46 unchanged sentences

Operating income 447,450 404,166 329,065

Pension settlement gain — ( 9,136 ) ( 11,208 )

Interest expense (income) and other, net 85,074 37,950 ( 1,666 )

Pension settlement loss (gain) 12,155 — ( 9,136 )

Interest expense and other, net 64,890 85,074 37,950

Income from continuing operations before income taxes 370,405 319,092 300,251

8 unchanged sentences

Loss on discontinued operations ( 0.37 ) ( 0.20 ) ( 0.05 )

Net income per share $ 3.39 $ 3.70 $ 3.92

Net income per share - basic $ 4.36 $ 3.39 $ 3.70

Earnings (loss) per share - diluted

4 unchanged sentences

ESAB CORPORATION

CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME

Dollars in thousands

2 unchanged sentences

Net income $ 270,748 $ 211,024 $ 228,013

Other comprehensive income (loss):

Other comprehensive (loss) income:

Foreign currency translation, net of tax expense (benefit) of $ 6,141 , $ 4,545 and $( 2,930 )

4 unchanged sentences

8,918 7,338 6,192

Other comprehensive income (loss) 50,864 ( 158,425 ) ( 65,741 )

Other comprehensive (loss) income ( 105,108 ) 50,864 ( 158,425 )

Comprehensive income 165,640 261,888 69,588

7 unchanged sentences

Cash and cash equivalents $ 249,358 $ 102,003

Trade receivables, less allowance for credit losses o f $ 25,477 and $ 23,471

Trade receivables, less allowance for credit losses of $ 23,850 and $ 25,477

370,321 385,198

11 unchanged sentences

CURRENT LIABILITIES:

Current portion of long-term debt $ 15,000 $ —

Accounts payable 318,493 306,593

23 unchanged sentences

Distributions to noncontrolling owners — — — — — — ( 3,420 ) ( 3,420 )

Dividends declared ($ 0.15 per share)

— — — ( 9,079 ) — — — ( 9,079 )

Former Parent Common stock-based award activity — — — — 1,728 — — 1,728

Net Transfers from Former Parent, including Separation Adjustments — — 4,346 — 70,643 ( 59,263 ) — 15,726

Net consideration paid to Former Parent, in connection with the Separation — — — — ( 1,200,000 ) — — ( 1,200,000 )

Issuance of common stock in connection with the Separation and reclassification of Net Investment from Former Parent 60,034,311 60 1,849,371 — ( 1,849,431 ) — — —

Other comprehensive loss, net of tax benefit of $ 1,530

1 unchanged sentence

Former Parent Common stock-based award activity 60,414 — 12,187 — — — — 12,187

Transfers to Former Parent, net — — — — ( 218,585 ) — 54 ( 218,531 )

Balance at December 31, 2022

3 unchanged sentences

— — — ( 13,959 ) — — — ( 13,959 )

Former Parent Common stock-based award activity — — — — 1,728 — — 1,728

Net Transfers from Former Parent, including Separation Adjustments — — 4,346 — 70,643 ( 59,263 ) — 15,726

Net consideration paid to Former Parent, in connection with the Separation — — — — ( 1,200,000 ) — — ( 1,200,000 )

Issuance of common stock in connection with the Separation and reclassification of Net Investment from Former Parent 60,034,311 60 1,849,371 — ( 1,849,431 ) — — —

Distributions to noncontrolling owners — — — — — — ( 3,880 ) ( 3,880 )

Other comprehensive loss, net of tax benefit of $ 1,530

Other comprehensive income, net of tax expense of $ 6,097

— — — — — 50,716 148 50,864

5 unchanged sentences

— — — ( 18,219 ) — — — ( 18,219 )

Distributions to noncontrolling owners — — — — — — ( 3,880 ) ( 3,880 )

Other comprehensive income, net of tax expense of $ 6,097

Distributions and purchases relating to noncontrolling interest — — 2,860 — — ( 1,706 ) ( 5,407 ) ( 4,253 )

Other comprehensive loss, net of tax expense of $ 6,988

— — — — — ( 103,596 ) ( 1,512 ) ( 105,108 )

15 unchanged sentences

Non-cash interest expense 2,886 1,195 1,972

Pension settlement gain — ( 9,136 ) ( 11,208 )

Pension settlement loss (gain) 12,155 — ( 9,136 )

Changes in operating assets and liabilities:

8 unchanged sentences

Acquisitions, net of cash received ( 153,664 ) ( 18,665 ) ( 149,029 )

Other investing ( 4,058 ) — —

Net cash used in investing activities ( 205,696 ) ( 62,243 ) ( 184,423 )

Cash flows from financing activities:

Proceeds from borrowings on term credit facility — 1,000,000 —

Repayments of borrowings on term credit facility ( 12,500 ) — —

Proceeds from borrowings on Senior Notes 700,000 — —

Proceeds from borrowings on Term Loans — — 1,000,000

Proceeds from borrowings on revolving credit facility and other 205,000 574,150 805,881

Repayments of borrowings on Term Loans ( 602,500 ) ( 12,500 ) —

Repayments of borrowings on revolving credit facility and other ( 237,005 ) ( 763,173 ) ( 585,491 )

Payment of deferred financing fees and other ( 972 ) ( 4,706 ) —

Payment of deferred consideration — ( 1,500 ) —

Payment of debt issuance costs and other ( 13,156 ) ( 972 ) ( 6,206 )

Payment of dividends ( 16,992 ) ( 13,342 ) ( 6,054 )

1 unchanged sentence

Distributions to noncontrolling interest holders ( 3,678 ) ( 3,880 ) ( 3,420 )

Transfers from (to) Former Parent, net — 2,847 ( 218,531 )

Transfers from Former Parent, net — — 2,847

Net cash provided by (used in) financing activities 31,669 ( 219,717 ) 7,557

Effect of foreign exchange rates on Cash and cash equivalents ( 34,017 ) ( 18,555 ) ( 6,677 )

Increase (decrease) in Cash and cash equivalents 29,979 30,815 ( 8,000 )

Increase in Cash and cash equivalents 147,355 29,979 30,815

Cash and cash equivalents, beginning of period 102,003 72,024 41,209

9 unchanged sentences

ESAB provides its partners with fabrication technology advanced equipment, consumables, gas control equipment, robotics and digital solutions.

The Company’s rich history of innovative products, workflow solutions and its business system, ESAB Business Excellence System (“EBX”), enables the Company’s purpose of Shaping the world we imagine TM .

The Company’s rich history of innovative products, workflow solutions and its business management system, ESAB Business Excellence (“EBX”), enables the Company’s purpose of Shaping the world we imagine TM .

The Company’s products are utilized to solve challenges in a wide range of industries, including cutting, joining and automated welding.

6 unchanged sentences

To effect the Separation, each Colfax stockholder of record as of close of business on March 23, 2022 received one share of ESAB common stock for every three shares of Colfax common stock held on the record date.

Upon completion of the Distribution, Colfax changed its name to Enovis Corporation and continued to hold 10 % of the outstanding common stock of ESAB.

In November 2022, Enovis sold a total of 6.0 million shares of the Company’s common stock as part of a secondary offering.

After the secondary offering, Enovis no longer owned any of the Company’s outstanding common stock.

In connection with the Separation, on April 4, 2022, ESAB and Enovis entered into a separation and distribution agreement as well as various other related agreements (collectively the “Separation Agreements”) that govern the Separation and the relationships between the parties going forward, including a transition services agreement, an employee matters agreement, a tax matters agreement, an intellectual property matters agreement and license agreement for the EBX.

As of the year ended December 31, 2022, Enovis no longer owned any of the Company’s outstanding common stock.

Refer to Note 21, “Related Party Transactions” for further details.

Russia and Ukraine Conflict

The invasion of Ukraine by Russia and the sanctions imposed in response have increased the level of economic and political uncertainty.

While ESAB continues to closely monitor the situation and evaluate options, t he Company is meeting current contractual obligations w hile addressing applicable laws and regulations.

While ESAB continues to closely monitor the situation and evaluate options, the Company is meeting current contractual obligations while addressing applicable laws and regulations.

For the year ended December 31, 2024, Russia represented approximately 5 % of the Company’s total revenue, and approximately $ 13 million of its Net income.

Russia also has approximatel y 4 % of the Company’s total net assets excluding any goodwill allocation as of December 31, 2023.

I n case of the disposition of the Russia business, a portion of goodwill would need to be allocated and disposed of at the relative fair value attributable to the Russia business.

Excluding any goodwill allocation, Russia has approximately 4 % of the Company’s total net assets as of December 31, 2024, including approximately $ 30 million of Cash and cash equivalents that may be subject to delays in withdrawing from Russia, based upon the current environment at that time.

In case of the disposition of the Russia business, a portion of goodwill would need to be allocated and disposed of at the relative fair value attributable to the Russia business.

Russia has a cumulative translation loss of approximately $ 130 million as of December 31, 2024, which could be realized upon a transition out.

The C ompany is closely monitoring developments in Ukraine and Russia.

Changes in laws and regulations or other factors impacting the Company’s ability to fulfill contractual obligations could have an adverse effect on the results of operations.

The Company is closely monitoring developments in Ukraine and Russia.

Changes in laws and regulations or other factors impacting the Company’s ability to fulfill contractual obligations could have an adverse effect on the results of operations and cash flows.

Basis of Presentation

The accompanying Consolidated and Combined Financial Statements present the Company’s historical financial position, results of operations, changes in equity and cash flows in accordance with generally accepted accounting principles in the United States of America (“GAAP”).

The combined financial statements for periods prior to the Separation were derived from Enovis’s consolidated financial statements and accounting records and prepared in accordance with GAAP for the preparation of carved-out combined financial statements.

Through the date of the Separation, all revenues and costs as well as assets and liabilities directly associated with ESAB have been included in the combined financial statements.

Prior to the Separation, the combined financial statements also included allocations of certain general, administrative, sales and marketing expenses from Enovis’s corporate office and from other Enovis businesses to the Company and allocations of related assets, liabilities and the Former Parent’s investment, as applicable.

The allocations were determined on a reasonable basis, however, the amounts are not necessarily representative of the amounts that would have been reflected in the financial statements had the Company been

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

an entity that operated independently of Enovis during the applicable periods.

Re lated party a llocations prior to the Separation, including the method for such allocation, are discussed further in Note 21, “Related Party Transactions.”

Following the Separation, the consolidated financial statements include ESAB and its wholly-owned subsidiaries and no longer include any allocations of expenses from Enovis.

• The Consolidated Balance Sheets as of December 31, 2023 and December 31, 2022 con sist of the consolidated balances of ESAB.

• The Consolidated Statement of Operations, Statement of Comprehensive Income (Loss), Statement of Changes in Equity and Statement of Cash Flows for the year ended December 31, 2023 consist of the consolidated results of ESAB.

• The Consolidated and Combined Statement of Operations, Statement of Comprehensive Income (Loss), Statement of Changes in Equity and Statement of Cash Flows for the year ended December 31, 2022 consist of the activities of ESAB for the nine months ended December 31, 2022 and the combined activity of the former Fabrication Technology business of Enovis for the three months ended April 1, 2022.

• The Consolidated and Combined Statement of Operations, Statement of Comprehensive Income (Loss), Statement of Changes in Equity and Statement of Cash Flows for the year ended December 31, 2021 consist of the combined activity of the former Fabrication Technology business of Enovis.

Our Consolidated and Combined Financial Statements may not be indicative of the Company's results had it been a separate stand-alone entity throughout the periods pre-separation presented, nor are the results stated herein indicative of what the Company's financial position, results of operations and cash flows may be in the future.

Prior to the Separation, the Company was dependent on the Former Parent for all of its working capital and financing requirements under Enovis’s centralized approach to cash management and financing of its operations.

With the exception of cash, cash equivalents and borrowings clearly associated with ESAB and related to the Separation, financing transactions relating to the Company during the period prior to the Separation were accounted for through the Former Parent’s investment account of the Company.

Accordingly, none of Enovis’s cash, cash equivalents or debt at the corporate level has been assigned to the Company in these financial statements.

Former Parent’s Investment, which included retained earnings, represented Enovis’s interest in the recorded net assets of the Company.

All significant transactions between the Company and the Former Parent prior to the Separation have been included in the accompanying Financial Statements.

Transactions with the Former Parent are reflected in the accompanying Consolidated and Combined Statements of Equity as “Transfers to Former Parent, net” for the year ended December 31, 2021, and “ Net Transfers from Former Parent, including Separation Adjustments” for the year ended December 31, 2022.

The accompanying Consolidated and Combined Financial Statements present the Company’s historical financial position, results of operations, changes in equity and cash flows in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) in conformity with generally accepted accounting principles in the United States (“GAAP”).

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

Intercompany transactions and accounts are eliminated in consolidation.

The Company makes certain estimates and assumptions in preparing its Consolidated and Combined Financial Statements in accordance with GAAP.

These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the Consolidated and Combined Financial Statements and the reported amounts of revenues and expenses for the periods presented.

Actual results may differ from those estimates.

These Consolidated and Combined Financial Statements included in this annual report have been prepared by the Company in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) in conformity with GAAP, for the preparation of the Consolidated and Combined Financial Statements.

The combined financial statements for the period prior to the Separation were derived from Enovis’s consolidated financial statements and accounting records and prepared in accordance with GAAP for the preparation of carved-out combined financial statements.

Through the date of the Separation, all revenues and costs as well as assets and liabilities directly associated with ESAB have been included in the combined financial statements.

Prior to the Separation, the combined financial statements also

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

included allocations of certain general, administrative, sales and marketing expenses from Enovis’s corporate office and from other Enovis businesses to the Company and allocations of related assets, liabilities and the Former Parent’s investment, as applicable.

Related party allocations prior to the Separation, including the method for such allocation, are discussed further in Note 21, “Related Party Transactions.” Transactions with the Former Parent are reflected in the accompanying Consolidated and Combined Statements of Equity as “Net Transfers from Former Parent, including Separation Adjustments” for the year ended December 31, 2022.

For the periods subsequent to April 4, 2022, the financial statements are presented on a consolidated basis and no longer include any allocations of expenses from Enovis, as the Company became a standalone public company.

Summary of Significant Accounting Policies

Principles of Consolidation

The Company’s Consolidated and Combined Financial Statements are prepared in accordance with GAAP and include all majority-owned subsidiaries over which the Company exercises control and, when applicable, entities or joint ventures for which the Company has a controlling financial interest or is the primary beneficiary.

When protective rights, substantive rights or other factors exist, further analysis is performed in order to determine whether or not there is a controlling financial interest.

The Company’s Consolidated and Combined Financial Statements include all majority-owned subsidiaries over which the Company exercises control and, when applicable, entities or joint ventures for which the Company has a controlling financial interest or is the primary beneficiary.

When protective rights, substantive rights or other factors exist, further analysis is performed to determine whether or not there is a controlling financial interest.

The Consolidated and Combined Financial Statements reflect the assets, liabilities, revenues and expenses of consolidated subsidiaries and the noncontrolling parties’ ownership share is presented as a noncontrolling interest.

17 unchanged sentences

As control typically transfers to the customer upon shipment of the product in these circumstances, revenue is generally recognized at that point in time.

Revenue recognition and billing typically occur simultaneously for contracts recognized at a point in time.

Revenue recognition and billing typically occur simultaneously for

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

contracts recognized at a point in time.

Therefore, we do not have material revenues in excess of customer billings or billings to customers in excess of recognized revenues.

2 unchanged sentences

therefore, the Company applies the practical expedient available and expenses costs to obtain a contract when incurred.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Taxes Collected from Customers and Remitted to Governmental Authorities

12 unchanged sentences

Fixed manufacturing overhead costs are allocated to inventory based on normal production capacity and abnormal manufacturing activities are recognized as period costs.

Cost for a substantial portion of United States inventories is determined using the last-in, first-out (“LIFO”) method.

The value of inventory stated on a LIFO basis as of December 31, 2023 and 2022 was $ 107.8 million and $ 131.1 million, respecti vely.

The valuation of LIFO inventories is made at the end of each year based on inventory levels and costs at that time.

Cost of other inventories is determined by costing methods that approximate a first-in, first-out basis.

As of December 31, 2023 , cost for a substantial portion of United States inventories was determined using the last-in, first-out (“LIFO”) method.

The value of inventory stated on a LIFO basis as of December 31, 2023 was $ 107.8 million and t he valuation of LIFO inventories was made at the end of the year based on inventory levels and costs at that time.

Cost of other inventories is determined by costing methods that approximate a first-in, first-out (“FIFO”) method.

During the fourth quarter of 2024 , the Company changed its inventory costing methodology from the previously disclosed LIFO method to the FIFO method for a portion of its inventory, as of the year ended December 31, 2024 all inventory is valued under FIFO.

The Company performed this change because it believes FIFO is preferable given it provides a more consistent method for valuing inventory across the Company, better matches costs with revenues, improves comparability with peers and better reflects the current value of inventory at the balance sheet date.

The LIFO expense for the years ended December 31, 2023 and 2022 were $ 2.1 million and $ 3.3 million, respectively which are not considered material to the Company’s financial statements.

The Company recorded the pre-tax cumulative benefit related to this change in accounting principle of $ 4.3 million as a reduction of Cost of sales for the year ended December 31, 2024.

Since these amounts are immaterial to all periods presented, the impact of this change was not retrospectively reflected in prior years.

For further information, refer to Note 11, “Inventories, Net.”

Reserves are maintained for estimated obsolescence or excess inventory equal to the difference between the cost of inventory and the net realizable value based upon assumptions about future demand and market conditions.

The reserve for excess and obsolete inventory was $ 41.2 million and $ 47.6 million as of December 31, 2024 and 2023, respectively.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Property, Plant and Equipment

9 unchanged sentences

In the evaluation of goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of a reporting entity is less than its carrying value.

If the Company determines that it is more likely than not for a reporting unit’s fair value to be greater than its carrying value, a calculation of the fair value is not

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

If the Company determines that it is more likely than not for a reporting unit’s fair value to be greater than its carrying value, a calculation of the fair value is not performed.

If the Company determines that it is more likely than not for a reporting unit’s fair value to be less than its carrying value, a calculation of the reporting unit’s fair value is performed and compared to the carrying value of that reporting unit.

4 unchanged sentences

Significant estimates in the discounted cash flow models include the weighted-average cost of capital, net sales and profitability of our business.

For the year ended December 31, 2023 and 2022, a qualitative Goodwill impairment assessment was performed for the three reporting units.

For the year ended December 31, 2021, a quantitative annual impairment test of Goodwill was performed for the GCE reporting unit while qualitative assessments were performed for the remaining two reporting units.

All of the above tests indicated no impairment existed.

Therefore, no impairment charges were recorded for the three years ended December 31, 2023.

For the years ended December 31, 2024, 2023 and 2022, a qualitative Goodwill impairment assessment was performed for the three reporting units, all of which indicated no impairment existed and therefore, no impairment charges were recorded for the respective periods.

No material events that would represent impairment indicators have occurred subsequent to the performance of the 2024 annual impairment test.

9 unchanged sentences

Definite-lived intangible assets primarily represent acquired trade names, customer relationships, acquired technology and software license agreements.

The Company uses accelerated and straight-line methods of amortization with lives ranging from ten to thirty years .

The Company uses accelerated and straight-line methods of amortization with lives ranging from five to thirty years .

The Company assesses its long-lived assets and definite-lived intangible assets for impairment whenever facts and circumstances indicate that the carrying amounts may not be fully recoverable.

To analyze recoverability, the Company projects undiscounted net future cash flows over the remaining lives of such assets.

To analyze recoverability, the Company projects

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

undiscounted net future cash flows over the remaining lives of such assets.

If these projected cash flows are less than the carrying amounts, an impairment loss equal to the difference between the carrying amount of the asset and its fair value would be recognized, resulting in a write-down of the assets with a corresponding charge to earnings.

7 unchanged sentences

If and when a derivative is determined not to be highly effective as a hedge, the underlying hedged transaction is no longer likely to occur, or the derivative is terminated, hedge accounting is discontinued.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

The Company is subject to the credit risk of the counterparties to derivative instruments.

2 unchanged sentences

Certain interest rate swap agreements are qualified and designated as cash flow hedges.

The effective portion of the fair value unrealized gain or loss on cash flow hedges are reported as a component of Accumulated other comprehensive income ("AOCI") with offsetting amounts recorded in the Company’s Consolidated Balance Sheet depending on the position and the duration of the contract.

The effective portion of the fair value unrealized gain or loss on cash flow hedges are reported as a component of Accumulated other comprehensive loss ("AOCL") with offsetting amounts recorded in the Company’s Consolidated Balance Sheets depending on the position and the duration of the contract.

The gain or loss on the derivative instrument due to the change in fair value is reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

If a derivative is deemed to be ineffective, the change in fair value of the derivative is recognized directly in earnings.

Certain cross-currency swap agreements are designated and qualify as a net investment hedge, the changes in the fair value of these instruments are recorded in AOCI in equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in AOCI.

Offsetting amounts are recorded in the Company’s Consolidated Balance Sheet depending on the position and the duration of the contract.

The Company has certain foreign currency contracts which are not designated as hedges.

Certain cross-currency swap agreements are designated and qualify as a net investment hedge.

The changes in the fair value of these instruments are recorded in AOCL in equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in AOCL.

Offsetting amounts are recorded in the Company’s Consolidated Balance Sheets depending on the position and the duration of the contract.

The Company has certain foreign currency contracts that are not designated as hedges.

These derivatives are held as offsets to certain balance sheet exposures.

The gains or losses on these contracts are recognized in Interest expense (income) and other, net, in the Company’s Consolidated and Combined Statement of Operations.

The gains or losses on these contracts are recognized in Interest expense and other, net, in the Company’s Consolidated and Combined Statement of Operations.

Warranty Costs

4 unchanged sentences

Under this approach, the Company determined its deferred tax assets and liabilities and related tax expense as if it were filing separate tax returns.

Prior to the Separation, all or a portion of the Company’s income tax payable or receivable computed under the separate return method was adjusted to equity as it did not represent a liability or asset with the relevant taxing authorities during this period, except for certain unrecognized tax benefits for which ESAB could have reasonably been considered to be the primary obligor.

The amounts were deemed settled with Enovis when they were due and therefore were included in Parent’s equity.

The Company accounts 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.

3 unchanged sentences

Global Intangible Low-Taxed Income is accounted for as a current tax expense in the year the tax is incurred.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Valuation allowances are recorded if it is more likely than not that some portion of the deferred income tax assets will not be realized.

3 unchanged sentences

An income tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

The Company establishes a liability for unrecognized income tax benefits for income tax positions for which it is more likely than not that a tax position will not be sustained upon examination by the respective taxing authority to the extent such tax positions reduce the Company’s income tax liability.

The Company recognizes interest and penalties related to unrecognized income tax benefits in Income tax expense in the Consolidated and Combined Statements of Operations.

Interest expense (income) and Other, Net

Interest expense (income) and other, net is comprised of interest-bearing deposits of certain foreign subsidiaries, interest costs for the Company’s debt, amortization of debt issuance costs and interest income or expense of derivatives designated in hedging relationships.

Interest Expense and Other, Net

Interest expense and other, net is comprised of interest-bearing deposits of certain foreign subsidiaries, interest costs for the Company’s debt, amortization of debt issuance costs and interest expense of derivatives designated in hedging relationships.

In addition, it is comprised of:

1 unchanged sentence

• foreign exchange exposure on cash and intercompany positions and interest income or expense on foreign currency contracts not designated in hedging relationships and

• Argentina highly inflationary accounting transaction foreign exchange loss on cash and cash equivalent remeasured into the Argentinian entity’s Brazilian real direct parent’s currency.

For the years ended December 31, 2023 and 2022, Argentina had a transaction exchange loss on cash and cash equivalent of $ 26.2 million , and $ 2.4 million, partially offset by interest income of $ 8.7 million and $ 0.7 million, respectively.

For the year ended December 31, 2021 , the impact was not material.

• Argentina highly inflationary accounting transaction exchange loss on cash and cash equivalent remeasured into the Brazilian real - the direct parent’s currency.

See “Foreign Currency Exchange Gains and Losses” and “Argentina Highly Inflationary Accounting” policies below for additional information.

Foreign Currency Exchange Gains and Losses

The Company’s financial statements are presented in U.S.

The Company’s Consolidated and Combined Financial Statements are presented in U.S.

The functional currencies of the Company’s operating subsidiaries are generally the local currencies of the countries in which each subsidiary is located.

Assets and liabilities denominated in foreign currencies are translated at rates of exchange in effect at the balance sheet date.

The amounts recorded in each year in Foreign currency translation are net of income taxes to the extent the unrealized foreign exchange is taxed currently or the underlying equity balances in the entities are not deemed to be permanently reinvested.

The amounts recorded in each year in Foreign currency translation in Equity are net of income taxes to the extent the underlying equity balances in the entities are not deemed to be permanently reinvested.

Revenues and expenses are translated at average rates of exchange in effect during the year.

Transactions in foreign currencies are translated at the exchange rate in effect at the date of each transaction.

Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated for inclusion in the Consolidated Balance Sheets are recognized in Selling, general and administrative expense or Interest expense (income) and other, net in the Consolidated and Combined Statements of Operations for that period.

Differences in exchange rates during the period between the date a transaction denominated in a foreign currency is consummated and the date on which it is either settled or translated for inclusion in the Consolidated Balance Sheets are recognized in Selling, general and administrative expense or Interest expense and other, net in the Consolidated and Combined Statements of Operations for that period.

The following table summarizes the Company’s net foreign transaction gains and losses included within the Consolidated and Combined Statements of Operations.

6 unchanged sentences

$ 6,978 $ 13,108 $ 2,706

(1) This table excludes the foreign exchange impacts of applying highly inflationary accounting for the Company’s Argentina operations for the years ended December 31, 2023 and 2022, as described in the “Argentina Highly Inflationary Accounting” paragraph below.

(2) During 2023, the weakening of the Ruble and certain other South American currencies drove the increase in the loss on transactions denominated in foreign currencies.

(1) This table excludes the foreign currency exchange impacts of applying highly inflationary accounting for the Company’s Argentina operations, as described in the “Argentina Highly Inflationary Accounting” paragraph below.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

(2) During 2023, the weakening of the Ruble and certain South American currencies drove the increase in the loss on transactions denominated in foreign currencies.

Argentina Highly Inflationary Accounting

Argentina is deemed to have a highly inflationary economy, resulting in the remeasurement of the Company’s Argentinian operations into Brazilian real, the functional currency of the Argentinian entity’s direct parent.

Gains and losses from the remeasurement are recorded in the Company’s Consolidated and Combined Statements of Operations each year.

In December 2023, the Argentine peso significantly devalued due to changes in their foreign exchange policy introduced by the Argentine government.

For the year ended December 31, 2023 the remeasurement of the financial statements of the Company’s subsidiary operating in a highly inflationary economy has resulted in a transaction foreign exchange loss to Cost of sales of $ 11.5 million, Selling, general and administrative gain of $ 6.7 million and Interest (income) expense and other, net loss of $ 26.2 million.

Despite the above transaction foreign exchange loss, the Argentine subsidiary has taken pricing and operational actions to remain profitable.

For the year ended December 31, 2022, the remeasurement of the financial statements of the Company’s subsidiary operating in a highly inflationary economy has resulted in a transaction foreign exchange loss to Cost of sales of $ 6.6 million, Selling, general and administrative expense of $ 3.3 million and Interest (income) expense and other, net loss of $ 2.4 million.

The impact to the Company’s Combined Statements of Operations for the year ended December 31, 2021 was not material.

Gains and losses from the remeasurement are recorded in the Company’s Consolidated and Combined Statements of Operations.

In December 2023, the Argentine peso significantly devalued due to changes in the foreign currency exchange policy introduced by the Argentine government.

For the year ended December 31, 2024 , the remeasurement of the financial statements of the Company’s subsidiary operating in a highly inflationary economy has resulted in a transaction foreign currency exchange loss to Cost of sales of $ 8.9 million , Selling, general and administrative benefit of $ 0.6 million and Interest expense and other, net loss of $ 0.3 million .

For the year ended December 31, 2023, the remeasurement of the financial statements of the Company’s subsidiary operating in a highly inflationary economy has resulted in a transaction foreign currency exchange loss to Cost of sales of $ 11.5 million, Selling, general and administrative benefit of $ 6.7 million and Interest expense and other, net loss of $ 26.2 million.

For the year ended December 31, 2022 , the remeasurement of the financial statements of the Company’s subsidiary operating in a highly inflationary economy has resulted in a transaction foreign currency exchange loss to Cost of sales of $ 6.6 million , Selling, general and administrative expense of $ 3.3 million and Interest expense and other, net loss of $ 2.4 million .

Use of Estimates

4 unchanged sentences

The Company assesses the adoption impacts of recently issued accounting pronouncements on the Company’s Consolidated and Combined Financial Statements as well as material updates to previous assessments.

There were no new material accounting standards adopted in the year ended December 31, 2023 that impacted the Company.

New Accounting Pronouncements Not Yet Adopted

Accounting Guidance Implemented in 2024

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires the disclosure of incremental information about significant segment expenses.

The guidance also requires disclosure of the Chief Operating Decision Maker’s (the “CODM”) position for each segment and detail of how the CODM uses financial reporting to assess their segment’s performance.

Improvements to Reportable Segment Disclosures, which enhances segment reporting by expanding the breadth and frequency of disclosures through incremental information about significant segment expenses.

The guidance also requires disclosure of the Chief Operating Decision Maker’s (the “CODM”) position and detail of how the CODM uses financial reporting to assess the segment’s performance.

The new guidance is effective for fiscal years beginning after December 15, 2023 and for interim periods beginning after December 15, 2024.

The Company is currently evaluating the effect the adoption of the ASU may have on its disclosures.

The Company has adopted this guidance for the year ending December 31, 2024, and as discussed above, the primary impact is increased disclosure of certain financial information by segment.

Refer to Note 20.

“Segment Information” for further information on the impact on the Company’s disclosures.

Recently Issued Accounting Guidance Not Yet Adopted

In December 2023, the FASB issued ASU No.

2 unchanged sentences

The Company is currently evaluating the effect the adoption of the ASU may have on its disclosures.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Discontinued Operations

The Company holds certain asbestos-related contingencies and insurance coverages from divested businesses that it does not have an interest in the ongoing operations.

The entities that hold these assets and liabilities became subsidiaries of the Company in connection with the Separation.

These contributions from the Former Parent wer e not previously included in the Company’s 2019 to 2021 historical carve-out financial statements.

The Company has classified asbestos-related activity included in its Consolidated and Combined Statements of Operations as part of Loss from discontinued operations, net of taxes.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Loss from discontinued operations, net of tax consisted of Selling, general and administrative expenses of $ 15.6 million net of a tax benefit of $ 3.3 million for the year ended December 31, 2023.

Loss from discontinued operations, net of tax consisted of Selling, general and administrative expenses of $ 7.5 million net of a tax benefit of $ 4.4 million for the year ended December 31, 2022.

This activity consists primarily of expected settlements, legal and administrative expenses associated with the above liabilities.

Discontinued operations consist primarily of Selling, general and administrative expense, with an associated tax impact that is considered immaterial.

See Note 19, “Commitments and Contingencies” for further information.

Cash used in operating activities related to discontinued operations for the year ended December 31, 2023 was $ 15.2 million and for the year ended December 31, 2022 was $ 23.1 million.

Cash used in operating activities related to discontinued operations was $ 15.0 million, $ 15.2 million and $ 23.1 million for the years ended December 31, 2024, 2023 and 2022 , respectively.

The Company continually evaluates potential acquisitions that either strategically fit with our existing portfolio or expand our portfolio into a new and attractive business area.

4 unchanged sentences

The Company makes appropriate adjustments to purchase price allocations prior to completion of the applicable measurement period, as required.

The following briefly describes our acquisition activity for the three years ended December 31, 2023.

On January 11, 2023, the Company completed the acquisition of Therapy Equipment Limited, a regional leader in oxygen regulators, for $ 19 million, net of cash received.

On October 31, 2022, the Company completed the acquisition of Swift Cut Automation Limited, a provider of light industrial cutting systems, for $ 22 million, net of cash received.

The following describes our acquisition activity for the three years ended December 31, 2024.

On October 31, 2024, the Company completed the acquisition of SUMIG Soluções para Solda e Corte Ltda., a South American light automation and equipment business for approximately $ 68 million, net of cash received, to open market opportunities and expand our portfolio in the Americas.

The Company recognized intangible assets and goodwill of approximately $ 23 million and $ 37 million, respectively.

On July 2, 2024, the Company completed the acquisition of ESAB Bangladesh Private Limited (formerly known as Linde Industries Private Limited), a leading welding company in Bangladesh, for approximately $ 69 million, net of cash received, to extend the Company’s position in this fast-growing region.

The Company recognized intangible assets and goodwill of approximately $ 15 million and $ 46 million, respectively.

On February 26, 2024, the Company completed the acquisition of Sager S.A., a welding repair and maintenance product and service leader in South America, for approximately $ 18 million, net of cash received, to expand our portfolio in the Company’s Americas region.

On January 11, 2023, the Company completed the acquisition of Therapy Equipment Limited, a regional leader in oxygen regulators, for approximately $ 19 million, net of cash received, to strengthen the Company’s leading global gas control equipment portfolio.

On October 31, 2022, the Company completed the acquisition of Swift Cut Automation Limited, a provider of light industrial cutting systems, for approximately $ 22 million, net of cash received.

This acquisition provides a market-leading automated cutting portfolio.

On October 14, 2022, the Company completed the acquisition of Ohio Medical, LLC, a United States based global leader in oxygen regulators and central gas systems, for $ 127 million, net of cash received.

On October 14, 2022, the Company completed the acquisition of Ohio Medical, LLC, a United States based global leader in oxygen regulators and central gas systems, for approximately $ 127 million, net of cash received.

This acquisition expands the Company’s presence in industrial specialty gas applications and products and broadens the Company’s United States presence.

The Company recognized intangible assets and goodwill of approximately $ 50 million and $ 60 million, respectively.

The Company provides fabrication technology advanced equipment, consumables, gas control equipment, robotics and digital solutions.

The Company’s products are utilized to solve challenges in a wide range of industries, including cutting, joining and automated welding.

Substantially all revenue is recognized at a point in time.

The Company disaggregates its revenue into the following product groups:

The Company disaggregates its revenue into the product groups included in the table below.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Year Ended December 31,

8 unchanged sentences

In some circumstances, customers are billed in advance of revenue recognition, resulting in contract liabilities.

As of December 31, 2023, 2022 and 2021, total contract liabilities were $ 31.2 million , $ 25.9 million and $ 22.3 million, respectively, and are included in Accrued liabilities on the Consolidated

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Balance Sheets.

As of December 31, 2024, 2023 and 2022, total contract liabilities were $ 26.4 million , $ 31.2 million and $ 25.9 million, respectively, and are included in Accrued liabilities on the Consolidated Balance Sheets.

During the years ended December 31, 2024 and 2023, substantially all amounts included in the contract liability balance at the beginning of the respective year were recognized as revenue in the following year.

Allowance for Credit Losses

A summary of the activity in the Company’s allowance for credit losses included within Trade receivables in the Consolidated Balance Sheets is as follows:

The table below summarizes the activity in the Company’s Allowance for credit losses included within Trade receivables in the Consolidated Balance Sheets.

Year Ended December 31, 2024

of Period Charged to Expense, net Write-Offs and Deductions Foreign

Translation Balance at

Balance at Beginning of Period Charged to Expense, net Write-Offs and Deductions Foreign Currency Translation Balance at

End of Period

(In thousands)

2 unchanged sentences

The Company has unvested share-based payment awards with a right to receive non-forfeitable dividends that are considered participating securities.

The Company allocates earnings to participating securities and computed earnings per share using the two-class method as follows:

The table below summarizes how the Company allocates earnings to participating securities and computed earnings per share using the two-class method.

Year Ended December 31,

21 unchanged sentences

(1) Net income from continuing operations attributable to ESAB Corporation for the respective periods is calculated using Net income from continuing operations, less Income attributable to noncontrolling interest, net of taxes, o f $ 5.9 million, $ 5.7 million and $ 4.3 million for the years ended December 31, 2024, 2023 and 2022, respectively.

(2) The total number of shares outstanding on April 4, 2022 was 60,034,311 , which is utilized for the calculation of both basic and diluted earnings per share for the year ended December 31, 2021 as no ESAB common stock equivalents were outstanding prior to the Separation.

(2) Potentially dilutive securities include stock options, performance-based restricted stock units and non performance-based restricted stock units.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Separation from Enovis

1 unchanged sentence

For periods prior to the Separation, our combined financial statements reflect Income tax expense and deferred tax balances as if we had filed tax returns on a standalone basis separate from the Former Parent.

The separate return method applies the accounting guidance for income taxes to the standalone financial statements as if we were a separate taxpayer and a standalone enterprise for the periods prior to the

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

For periods prior to the Separation, our pretax operating results include any transactions with the Former Parent as if it were an unrelated party.

6 unchanged sentences

The Company is also liable for fifty percent of all cash taxes paid as a result of any adjustment or redetermination or otherwise in connection with any tax contest relating to any joint return.

In connection with the Separation, the Company was required to enter into a transfer agreement under Section 965(h) and to become the primary obligor of the remaining installment payments associated with the Section 965 liability.

The Former Parent is obligated under the Tax Matters Agreement for fifty percent of the installment obligation.

Under the Separation Agreement, the Company is responsible for any tax indemnity related to the discontinued operations by the Former Parent.

Income from continuing operations before income taxes and Income tax expense consisted of the following:

Additionally, under the Separation Agreement, the Company is responsible for any tax indemnity related to the discontinued operations by the Former Parent.

Income from continuing operations before income taxes and Income tax expense consisted of the following per the table below.

Year Ended December 31,

17 unchanged sentences

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

The Company’s Income tax expense differs from the amount that would be computed by applying the United States federal statutory rate as follows:

The Company’s Income tax expense differs from the amount that would be computed by applying the United States federal statutory rate as follows in the table below.

Year Ended December 31,

5 unchanged sentences

Changes in tax reserves ( 4,206 ) 10,753 ( 350 )

Non-taxable dividends — — ( 46 )

Research and development tax credits ( 980 ) ( 714 ) ( 542 )

8 unchanged sentences

Income tax expense $ 77,348 $ 95,727 $ 69,170

For the year ended December 31, 2023, the Company’s effective rate differs from the United States federal statutory rate of 21% due to changes in tax reserves, permanent differences relating to foreign subsidiaries and withholding taxes, partially offset by the favorable impact from changes in valuation allowances.

The Company’s effective tax rate for years ending December 31, 2022 and December 31, 2021 differed from the United States federal statutory rate of 21% due to the impact of withholding taxes and permanent differences relating to foreign subsidiaries, partially offset by the favorable impact from the Company’s earnings outside the United States taxed at different rates than the United States federal statutory rate.

The change in tax reserves in 2023 is largely the result of an adverse court ruling in an unrelated taxpayer’s tax case in a foreign jurisdiction.

For the year ended December 31, 2024, the Company’s effective rate of 20.9 % differs from the United States federal statutory rate of 21% 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, partially offset by withholding taxes.

The Company’s effective tax rate of 30.0 % for the year ended December 31, 2023 differed from the United States federal statutory rate of 21% due to changes in tax reserves, permanent differences relating to foreign subsidiaries and withholding taxes, partially offset by the favorable impact from changes in valuation allowances.

The Company’s effective tax rate of 23.0 % for the year ended December 31, 2022 differed from the United States federal statutory rate of 21% due to the impact of withholding taxes and permanent differences relating to foreign subsidiaries, partially offset by the favorable impact of the jurisdictional mix of income.

Certain countries in which we operate have adopted Pillar Two legislation effective January 1, 2024.

Pillar Two did not have a material impact on our 2024 effective tax rate.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

All deferred tax assets and liabilities have been classified as noncurrent and are included in Other assets and Other liabilities in the accompanying Consolidated Balance Sheets.

The temporary differences that gave rise to the significant components of deferred tax assets and liabilities are presented below:

The table below shows the temporary differences that gave rise to the significant components of deferred tax assets and liabilities.

ESAB CORPORATION

19 unchanged sentences

Total deferred tax liabilities, net $ ( 90,025 ) $ ( 72,856 )

Deferred tax assets and liabilities have been classified as noncurrent and are included in Other assets and Other liabilities in the accompanying Consolidated Balance Sheets on a net jurisdictional basis as follows:

(In thousands)

4 unchanged sentences

To the extent a portion or all of the applicable deferred tax assets do not meet the more likely than not threshold, a valuation allowance is recorded.

During the year ended December 31, 2023, the valuation allowance decreased from $ 88.2 million to $ 79.4 million.

with a net decrease of $ 12.3 million recognized as a decrease to Income tax expense, and a $ 3.4 million increase related to changes in foreign currency rates.

The current year change primarily relates to the change in conclusion regarding the realizability of net operating loss carryforwards in a foreign jurisdiction.

During the year ended December 31, 2024, the valuation allowance decreased from $ 79.4 million to $ 65.0 million primarily due to a net decrease in the valuation allowance and underlying deferred tax balance of $ 12.5 million.

The decrease related to changes in the underlying deferred balances primarily relates to the reversal of the valuation allowance and the associated deferred balances in connection with a legal entity rationalization.

In determining how much of the relevant deferred tax asset could be realized on a more likely than not basis, consideration was given to tax planning strategies and, when applicable, future taxable income.

1 unchanged sentence

The Company’s ability to use these various carryforwards to offset any taxable income generated in future taxable periods may be limited under Section 382 and other federal tax provisions.

As of December 31, 2023 the Company also has $ 414.6 million foreign net operating loss carryforwards primarily in the United Kingdom, Germany, the Netherlands and Sweden that may be subject to local tax restriction limitations.

As of December 31, 2024 the Company also has $ 331.1 million foreign net operating loss carryforwards primarily in the United Kingdom, Germany and the Netherlands that may be subject to local tax restriction limitations.

The foreign net operating losses can be carried forward indefinitely, except in applicable jurisdictions that make up less than five percent of the available net operating losses.

As of December 31, 2023, the Company incurred $ 10.9 million of tax expense relating to a distribution of earnings for which it has changed its indefinite reinvestment assertion.

Other than this expense incurred in the year ended December 31, 2023, the Company has not made any other material changes to its indefinite reinvestment assertion with respect to earnings

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

reinvested in its foreign operations.

During the year ended December 31, 2024, the Company has not made any material changes to its indefinite reinvestment assertion with respect to earnings reinvested in its foreign operations.

The majority of our global unremitted foreign earnings have been taxed or would be exempt from United States tax upon repatriation.

The Company has made no provision for United States income taxes or additional non-United States taxes on certain undistributed earnings or outside basis differences of non-United States subsidiaries in which the Company remains indefinitely reinvested.

A portion of these undistributed earnings may be subject to foreign and United States tax consequences upon remittance.

A portion of these undistributed earnings may

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

be subject to foreign and United States tax consequences upon remittance.

The Company cannot practically estimate the amount of additional taxes that might be payable on those undistributed earnings.

2 unchanged sentences

The Company’s total unrecognized tax benefits were $ 17.1 million, $ 30.9 million and $ 20.2 million as of December 31, 2024, 2023 and 2022, respectively, inclusive of $ 4.7 million, $ 12.1 million and $ 5.6 million, respectively, of interest and penalties.

The Company records interest and penalties on uncertain tax positions as a component of Income tax expense, which was an expense of $ 7.9 million, benefit of $ 0.7 million and expense of $ 0.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The change in the balance for the year ended December 31, 2023 is primarily due to the increase in liability for an adverse court ruling in an unrelated taxpayer’s tax case in a foreign jurisdiction.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows (inclusive of associated interest and penalties):

The Company records interest and penalties on uncertain tax positions as a component of Income tax expense, which was a benefit of $ 6.2 million, an expense of $ 7.9 million and a benefit of $ 0.7 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The table below includes a reconciliation of the beginning and ending amount of gross unrecognized tax benefits (inclusive of associated interest and penalties).

(In thousands)

7 unchanged sentences

Addition for tax positions taken in prior periods 13,514

Addition for tax positions taken in the current period 1,171

Reductions related to settlements with taxing authorities ( 4,160 )

3 unchanged sentences

Addition for tax positions taken in prior periods 6,436

Addition for tax positions taken in the current period —

Reductions for tax positions taken in prior periods ( 7,825 )

Reductions related to settlements with taxing authorities ( 9,255 )

6 unchanged sentences

In accordance with the Tax Matters Agreement with Former Parent, the Company is the primary obligor for (i) ESAB separate company state returns for all periods;

(ii) unitary state returns that include only ESAB legal entities for all periods, and (iii) ESAB separate foreign returns for all periods.

(ii) unitary state returns that include only ESAB legal entities for all periods;

and (iii) ESAB separate foreign returns for all periods.

Pursuant to United States tax law, the Company filed its initial United States federal income tax return for the post-Separation period in October 2023.

1 unchanged sentence

The Company accrues or adjusts contingent tax liabilities based on these reviews, the results of discussions and resolutions of matters with certain tax authorities, tax rulings and court decisions and the expiration of the statutes of limitations.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Due to the difficulty in predicting with reasonable certainty when tax audits will be fully resolved and closed, the range of reasonably possible significant increases or decreases in the liability for unrecognized tax benefits that may occur within the next 12 months is difficult to ascertain.

The Company does not believe the total amount of unrecognized benefits will change by a material amount within the next 12 months due to the settlement of audits and expirations of statutes of limitations.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Goodwill and Intangible Assets

27 unchanged sentences

Amortization expense related to intangible assets of $ 36.0 million , $ 39.7 million and $ 35.6 million for the years ended December 31, 2024, 2023 and 2022, respectively, are included in the Selling, general and administrative expense in the Consolidated and Combined Statements of Operations.

Expected Amortization Expense

The Company’s expected annual amortization expense for acquired intangible assets for the next five years is as follows.

2 unchanged sentences

2025 $ 30,754

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Property, Plant and Equipment, Net

9 unchanged sentences

$ 298,347 $ 294,305

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Depreciation expense for the years ended December 31, 2024 , 2023 and 2022 was $ 30.6 million , $ 30.0 million and $ 29.5 million, respectively.

Inventories, Net

Inventories, net consisted of the following:

(In thousands)

6 unchanged sentences

$ 403,711 $ 392,858

At December 31, 2023 and 2022, approximately 27.4 % and 31.5 % of total inventories, respectively, were valued using the LIFO method.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

At December 31, 2023, approximately 27.4 % of total inventories were valued using the LIFO method.

During 2024, the Company changed its costing methodology to only using FIFO method, as the Company believes FIFO is preferable given it provides a more consistent method for valuing inventory across the Company, better matches costs with revenues, improves comparability with peers and better reflects the current value of inventory at the balance sheet date.

Therefore, the Company recorded the pre-tax cumulative benefit related to this change in accounting principle of $ 4.3 million as a reduction of Cost of sales for the year ended December 31, 2024.

Refer to Note 2, “Summary of Significant Accounting Policies” for further information regarding this change in accounting policy.

The Company leases certain office spaces, warehouses, production facilities, vehicles and equipment.

10 unchanged sentences

Thereafter 25,628

Total 111,448

present value discount ( 10,862 )

4 unchanged sentences

Operating leases 4.4 %

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Accrued and Other Liabilities

Accrued and Other liabilities in the Consolidated Balance Sheets consisted of the following:

The table below includes a summarized breakout of Accrued and Other liabilities in the Consolidated Balance Sheets.

December 31, 2024 December 31, 2023

9 unchanged sentences

Restructuring liability 4,732 374 5,345 354

Accrued interest 8,077 — 711 —

Other 40,135 13,241 46,433 33,823

$ 298,558 $ 532,936 $ 313,489 $ 542,833

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Accrued Warranty Liability

A summary of the activity in the Company’s warranty liability included in Accrued liabilities in the Company’s Consolidated Balance Sheets is as follows:

The table below summarizes the activity in the Company’s warranty liability included in Accrued liabilities in the Company’s Consolidated Balance Sheets.

Year Ended December 31,

4 unchanged sentences

Cost of warranty service work performed ( 11,426 ) ( 10,710 )

Acquisition-related liability 1,278 —

Foreign exchange translation effect 201 ( 471 )

Foreign exchange translation effect and other ( 580 ) 1,479

Warranty liability, end of period $ 12,794 $ 12,606

Accrued Restructuring Liability

The Company’s restructuring programs include a series of actions to reduce the structural costs of the Company.

A summary of the activity in the Company’s restructuring liability included in Accrued liabilities and Other liabilities in the Consolidated Balance Sheets is as follows:

The table below summarizes the activity in the Company’s restructuring liability included in Accrued liabilities and Other liabilities in the Consolidated Balance Sheets.

Year Ended December 31, 2024

6 unchanged sentences

1,104 5,689 ( 5,112 ) ( 420 ) 1,261

Subtotal $ 7,818 18,654 $ ( 20,706 ) $ ( 67 ) $ 5,699

Non-cash charges (3)

Total $ 24,110

$ 5,699 $ 10,227 $ ( 10,400 ) $ ( 420 ) $ 5,106

(1) Includes severance and other termination benefits, including outplacement services.

(2) Includes the cost of relocating associates, relocating equipment, lease termination expense and other costs in connection with the closure and optimization of facilities and product lines.

(3) Includes impairment of long-lived assets in connection with the closure and optimization of facilities and product lines.

(2) Includes the cost of relocating associates, relocating equipment and other costs in connection with the closure and optimization of facilities and product lines.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Year Ended December 31, 2023

8 unchanged sentences

Non-cash charges (3)

Total $ 23,096

(1) Includes severance and other termination benefits, including outplacement services.

(2) Includes the cost of relocating associates, relocating equipment, lease termination expense and other costs in connection with the closure and optimization of facilities and product lines.

(2) Includes the cost of relocating associates, relocating equipment, lease termination expenses and other costs in connection with the closure and optimization of facilities and product lines.

(3) Includes impairment of long-lived assets in connection with the closure and optimization of facilities and product lines.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Benefit Plans

The Company sponsors various defined benefit plans and other post-retirement benefits plans, including health and life insurance, for certain eligible employees or former employees.

The other post-retirement benefit plans are immaterial.

The Company uses December 31 st as the measurement date for all of its employee benefit plans.

Prior to the Separation, the Former Parent offered both funded and unfunded noncontributory defined benefit pension plans in t he United States that were share d amongst its businesses, including the Company prior to the Company becoming plan sponsor.

The participation of the Company’s employees and retirees in this plan was as though it participated in a multiemployer plan with the Former Parent.

As a result, prior to the Separation, a proportionate share of the cost associated with this defined benefit plan was allocated to the Company based on the Company’s share of total Former Parent headcount.

This allocation is reflected within Interest expense (income) and other, net, in the Consolidated and Combined Statements of Operations , while any assets and liabilities associated with this defined benefit plan were retained by the Former Parent and were not recorded on the Company’s historical Combined Financial Statements.

As part of the Separation, certain United States defined benefit and other post-retirement plans, formerly sponsored by the Former Parent were transferred to the Company as of March 21, 2022 (“Transfer Date”).

As of the Transfer Date, the transferred plans include a defined benefit pension plan with assets of $ 201.3 million and projected benefit liabilities of $ 200.7 million, one unfunded defined benefit plan with liabilities of less than $ 0.1 million and one other post-retirement benefit plan with liabilities of $ 11.7 million, all of which were recorded in the financial statements of the Former Parent at December 31, 2021.

During the year ended December 31, 2024, the Company recognized a non-cash pension settlement loss of $ 12.2 million related to the transfer of plan assets to a third party as part of externalizing the risk associated with a foreign defined benefit plan.

During the year ended December 31, 2022, the Company recognized a Pension settlement gain of $ 9.1 million related to a completed buy-out of a foreign defined benefit plan by a third party plus the merger of two Company pension plans resulting in one plan benefiting from the surplus assets in the other plan.

During the year ended December 31, 2021, the Company recognized a Pension settlement gain of $ 11.2 million when the trustees of a Company pension plan agreed to merge the plan with another Company pension plan and contribute the plan’s surplus assets.

These amounts are reflected in Pension settlement gain in the Consolidated and Combined Statements of Operations.

These amounts are reflected in the Pension settlement loss (gain) line item in the Consolidated and Combined Statements of Operations.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the total changes in the Company’s pension and accrued post-retirement benefits and plan assets and includes a statement of the plans’ funded status:

Pension Benefits Other Post-Retirement Benefits

Year Ended December 31,

The following table summarizes the total changes in the Company’s total and foreign pension benefits and plan assets and includes a statement of the plans’ funded status.

All Pension Benefits Foreign Pension Benefits

Year Ended December 31, Year Ended December 31,

2024 2023 2024 2023

2 unchanged sentences

Projected benefit obligation, beginning of year $ 242,743 $ 256,022 $ 99,215 $ 99,401

Transfer from Former Parent — 200,690 — 11,697

Service cost 1,429 1,439 1,429 1,439

1 unchanged sentence

Plan amendments ( 9 ) 175 ( 9 ) 175

Actuarial loss (gain) 802 ( 60,148 ) ( 514 ) ( 2,807 )

Actuarial (gain) loss ( 5,945 ) 802 1,178 335

Foreign exchange effect ( 5,386 ) 4,079 ( 5,386 ) 4,079

6 unchanged sentences

Fair value of plan assets, beginning of year $ 211,472 $ 219,050 $ 65,278 $ 70,821

Transfer from Former Parent — 201,259 — —

Actual return on plan assets 12,389 19,651 2,024 1,262

11 unchanged sentences

Non-current liabilities ( 42,083 ) ( 45,385 ) ( 41,097 ) ( 44,311 )

Total $ ( 31,271 ) $ ( 36,972 ) $ ( 8,190 ) $ ( 8,850 )

$ ( 27,968 ) $ ( 31,271 ) $ ( 42,004 ) $ ( 33,937 )

(1) The employer contribution amount for the year ended December 31, 2023 includes a refund of assets totaling $ 5.1 million to the Company arising from a completed wind up of a foreign defined benefit plan.

3 unchanged sentences

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the changes in the Company’s foreign pension benefit obligations and plan assets, included in the table above, and includes a statement of the plans’ funded status:

Foreign Pension Benefits

Year Ended December 31,

(In thousands)

Change in benefit obligation:

Projected benefit obligation, beginning of year $ 99,401 $ 141,278

Service cost 1,439 1,684

Interest cost 4,148 2,161

Plan amendments 175 862

Actuarial loss (gain) 335 ( 25,131 )

Foreign exchange effect 4,079 ( 12,452 )

Benefits paid ( 7,138 ) ( 8,984 )

Settlements ( 3,584 ) ( 283 )

Other 360 266

Projected benefit obligation, end of year $ 99,215 $ 99,401

Accumulated benefit obligation, end of year $ 96,049 $ 96,500

Change in plan assets:

Fair value of plan assets, beginning of year $ 70,821 $ 84,503

Actual return on plan assets 1,262 ( 12,494 )

Employer contributions ( 1,015 ) 5,170

Foreign exchange effect 3,162 ( 7,581 )

Benefits paid ( 7,138 ) ( 8,984 )

Settlements ( 2,505 ) 9,947

Other 691 260

Fair value of plan assets, end of year $ 65,278 $ 70,821

Funded status, end of year $ ( 33,937 ) $ ( 28,580 )

Expected contributions to the Company’s pension and other post-employment benefit plans for the year ending December 31, 2024 are $ 5.2 million.

The following benefit payments are expected to be paid during each respective fiscal year:

Pension Benefits Other Post-Retirement Benefits

Expected contributions to the Company’s pension benefit plans for the year ending December 31, 2025 are $ 4.5 million.

The table below includes the benefit payments that are expected to be paid during each respective fiscal year.

Pension Benefits

All Plans Foreign Plans

12 unchanged sentences

The target allocation for plan assets varies by plan and jurisdiction.

The actual allocation percentages as of December 31, 2023 and 2022 are consistent with the target allocation ranges of the plans.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

The following are the actual allocation percentages for the Company’s pension plan assets:

The table below shows the actual allocation percentages for the Company’s pension plan assets.

Actual Asset Allocation

12 unchanged sentences

(1) Represents various fixed income and equity securities.

A summary of the Company’s pension plan assets for each fair value hierarchy level for the periods presented follows (see Note 17, “Fai r Value Measurements” for further description of the levels within the fair value hierarchy):

December 31, 2023

Measured at Net Asset Value (1)

(In thousands)

United States Plans:

Cash and cash equivalents $ — $ 1,237 $ — $ — $ 1,237

Equity securities:

United States large cap 29,289 — — — 29,289

United States small/mid cap 10,130 16,033 — — 26,163

International 18,078 — — — 18,078

Fixed income mutual funds:

United States government and corporate 70,283 — — — 70,283

Other — 1,145 — — 1,145

Foreign Plans:

Cash and cash equivalents (2)

— 547 — — 547

Equity securities — 921 — — 921

Non-United States government and corporate bonds — 31,147 — — 31,147

Insurance contracts — — 24,592 — 24,592

Investment funds — — 8,050 — 8,050

Other — — 20 — 20

$ 127,780 $ 51,030 $ 32,662 $ — $ 211,472

(1) Certain investments that are measured at fair value using the net asset value per share (or its equivalent) practical expedient (the “NAV”) have not been classified in the fair value hierarchy.

These investments, consisting of common/collective trusts, are valued using the NAV provided by the Trustee.

The NAV is based on the underlying investments held by the fund, which are traded in an active market, less its liabilities.

These investments are able to be redeemed in the near-term.

(2) The weighted-average interest crediting rates received in Cash and cash equivalents of foreign plans are immaterial relative to total plan assets.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

December 31, 2022

The table below summarizes the Company’s pension plan assets for each fair value hierarchy level for the periods presented (see Note 17, “Fai r Value Measurements” for further description of the levels within the fair value hierarchy).

December 31, 2024 December 31, 2023

Measured at Net Asset Value (1)

(In thousands)

Total Measured at Net Asset Value (1)

(In thousands) (In thousands)

United States Plans:

16 unchanged sentences

$ 124,977 $ 19,375 $ 17,554 $ — $ 161,906 $ 127,780 $ 51,030 $ 32,662 $ — $ 211,472

(1) Certain investments that are measured at fair value using the NAV have not been classified in the fair value hierarchy.

These investments, consisting of common/collective trusts, are valued using the NAV provided by the Trustee.

4 unchanged sentences

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the components of net periodic benefit (income) cost and Other comprehensive income of the Company’s defined benefit pension plans and other post-retirement employee benefit plans:

Pension Benefits Other Post-Retirement Benefits

Year Ended December 31,

The following table sets forth the components of net periodic benefit (income) cost and Other comprehensive income of the Company’s total and foreign defined benefit pension plans.

All Pension Benefits Foreign Pension Benefits

Year Ended December 31, Year Ended December 31,

2024 2023 2022 2024 2023 2022

(In thousands)

Components of Net Periodic Benefit (Income) Cost:

Components of Net Periodic Benefit Cost (Income):

Service cost $ 1,429 $ 1,439 $ 1,684 $ 1,429 $ 1,439 $ 1,684

1 unchanged sentence

Amortization 1,634 1,206 4,313 130 40 687

Settlement (gain) loss — ( 9,114 ) ( 11,195 ) — — 8

Settlement loss (gain) 12,155 — ( 9,114 ) 12,155 — ( 9,114 )

Other ( 179 ) — 92 ( 179 ) ( 331 ) 92

3 unchanged sentences

Transfer from Former Parent (1)

$ — $ — $ 53,134 $ — $ — $ —

Current year net actuarial (gain) loss ( 9,598 ) ( 7,021 ) 949 ( 483 ) 1,984 ( 12,262 )

1 unchanged sentence

Less amounts included in net periodic benefit cost:

Amortization of net (loss) gain ( 1,575 ) ( 4,340 ) ( 1,228 ) 479 181 ( 8 )

Settlement/divestiture/other loss ( 1,079 ) ( 67 ) — — — —

Amortization of prior service cost 38 ( 1,067 ) ( 5 ) — — —

Total recognized in Other comprehensive (gain) loss $ ( 9,462 ) $ 49,471 $ ( 7,021 ) $ ( 35 ) $ ( 5,255 ) $ ( 35 )

Each component of net periodic benefit (income) cost is included in the Company’s Consolidated and Combined Statements of Operations for the years ended December 31, 2023, 2022 and 2021.

Service cost is included within Selling, general and administrative expense with the non-service costs net of expected return on plan assets and settlement gains included within Interest expense (income) and other, net.

Settlement gains of $ 9.1 million and $ 11.2 million are recorded within Pension settlement gain on the Company’s Consolidated and Combined Statement of Operations for the years ended December 31, 2022 and 2021, respectively.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

The following table sets forth the components of net periodic benefit (income) cost and Other comprehensive income of the foreign defined benefit pension plans, included in the table above:

Foreign Pension Benefits

Year Ended December 31,

2023 2022 2021

(In thousands)

Components of Net Periodic Benefit (Income) Cost:

Service cost $ 1,439 $ 1,684 $ 1,785

Interest cost 4,148 2,161 1,646

Amortization 40 687 1,118

Settlement gain — ( 9,114 ) ( 11,195 )

Other ( 331 ) 92 2

Expected return on plan assets ( 2,475 ) ( 2,063 ) ( 2,258 )

Net periodic benefit cost (income) $ 2,821 $ ( 6,553 ) $ ( 8,902 )

Change in Plan Assets and Benefit Obligations Recognized in Other Comprehensive (Gain) Loss:

Current year net actuarial loss (gain) $ 1,984 $ ( 12,262 ) $ ( 5,710 )

Current year prior service cost 175 862 —

Less amounts included in net periodic benefit (income) cost:

Amortization of net (loss) ( 1,676 ) ( 1,575 ) ( 4,340 ) ( 172 ) ( 78 ) ( 714 )

1 unchanged sentence

Amortization of prior service cost 42 38 ( 1,067 ) 42 38 ( 1,067 )

Total recognized in Other comprehensive loss (gain) $ 1,040 $ ( 13,248 ) $ ( 6,841 )

The components of net unrecognized pension and other post-retirement benefit cost included in Accumulated other comprehensive loss in the Consolidated Balance Sheets that have not been recognized as a component of net periodic benefit cost are as follows:

Pension Benefits Other Post-Retirement

2023 2022 2023 2022

Total recognized in Other comprehensive income $ ( 11,696 ) $ ( 9,462 ) $ 49,471 $ ( 1,076 ) $ 1,040 $ ( 13,248 )

(1) As part of the Separation, certain United States defined benefit plans, formerly sponsored by the Former Parent were transferred to the Company as of March 21, 2022 (“Transfer Date”).

Each component of net periodic benefit cost (income) is included in the Company’s Consolidated and Combined Statements of Operations for the years ended December 31, 2024, 2023 and 2022.

Service cost is included within Selling, general and administrative expense with the non-service costs net of expected return on plan assets and settlement loss (gain) included within Interest expense and other, net.

Settlement loss (gain) is recorded within Pension settlement loss (gain) on the Company’s Consolidated and Combined Statement of Operations.

The table below shows the components of net unrecognized pension benefit cost included in AOCL in the Consolidated Balance Sheets that have not been recognized as a component of net periodic benefit cost.

Pension Benefits

(In thousands)

Net actuarial loss (gain) $ 61,573 $ 71,066 $ ( 5,234 ) $ ( 5,199 )

Net actuarial loss $ 49,917 $ 61,573

Prior service income ( 122 ) ( 81 )

Total $ 61,492 $ 70,954 $ ( 5,234 ) $ ( 5,199 )

The key economic assumptions used in the measurement of the Company’s pension and other post-retirement benefit obligations are as follows:

Pension Benefits Other Post-Retirement

$ 49,795 $ 61,492

The key economic assumptions used in the measurement of the Company’s pension benefits are included in the table below.

Pension Benefits

Weighted-average discount rate:

2 unchanged sentences

Weighted-average rate of increase in compensation levels for active foreign plans (1)

3.1 % 3.2 % — % — %

(1) Weighted-average rate of increase is only applicable to plans with compensation increase assumptions.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

The key economic assumptions used in the computation of net periodic benefit cost are as follows:

Pension Benefits Other Post-Retirement Benefits

Year Ended December 31,

(1) Weighted-average rate of increase is only applicable to plans with compensation increase assumptions.

The key economic assumptions used in the computation of net periodic benefit cost are as included in the table below.

Pension Benefits

Year Ended December 31,

10 unchanged sentences

In determining discount rates, the Company utilizes the single discount rate equivalent to discounting the expected future cash flows from each plan using the yields at each duration from a published yield curve as of the measurement date.

For measurement purposes, a weighted-average annual rate of increase in the per capita cost of covered health care benefits of 7.5 % was assumed.

The rate was assumed to decrease gradually to 4.0 % by 2034 and remain at that level thereafter for benefits covered under the plans.

The expected long-term rate of return on plan assets is determined using the calculated value of plan assets, which is based on the Company’s investment policy target allocation of the asset portfolio between various asset classes and the expected real returns of each asset class over various periods of time that are consistent with the long-term nature of the underlying obligations of these plans.

1 unchanged sentence

The Company’s expense for the years ended December 31, 2024, 2023 and 2022 was $ 7.5 million, $ 7.6 million and $ 8.7 million, respectively.

Long-term debt consists of the following:

The table below shows the components of the Company’s debt.

(In thousands)

Term loans $ 385,000 $ 987,500

Revolving credit facilities 32,000 221,000

Senior unsecured notes 700,000 —

Revolving credit facility — 32,000

Total debt 1,085,000 1,019,500

Current portion of long-term debt ( 15,000 ) —

Unamortized deferred financing fees ( 9,261 ) ( 1,443 )

Long-term debt $ 1,060,739 $ 1,018,057

Term Loans and Revolving Credit Facility

Senior Notes, Term Loans and Revolving Credit Facility

On April 4, 2022, the Company entered into a credit agreement (as amended and restated from time-to-time, the “Credit Agreement”) in connection with the Separation.

The Credit Agreement initially consisted of the following facilities:

• a $ 750 million revolving credit facility (the “Revolving Facility”) with a maturity date of April 4, 2027;

• a Term A-1 loan with an initial aggregate principal amount of $ 400 million (the “Term Loan A-1 Facility”), with a maturity date of April 4, 2027;

• a $ 600 million 364 -day senior term loan facility (the “Term Loan A-2 Facility”) with a maturity date of April 3, 2023.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

The Credit Agreement initially consisted of a $ 750 million revolving credit facility (the “Revolving Facility”) with a maturity date of April 4, 2027, a Term A-1 loan with an initial aggregate principal amount of $ 400 million (the “Term Loan A-1 Facility”), with a maturity date of April 4, 2027 and a $ 600 million 364 -day senior term loan facility (the “Term Loan A-2 Facility”) with a maturity date of April 3, 2023.

The Revolving Facility contains a $ 300 million foreign currency sublimit and a $ 50 million swing line loan sub-facility.

1 unchanged sentence

The Company used these proceeds to make payments to Enovis of $ 1.2 billion, which was used as part of the consideration for the contribution of certain assets and liabilities to the Company by Enovis in connection with the Separation.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

On June 28, 2022, the Company amended and restated the Credit Agreement by entering into Amendment No.

2 to Credit Agreement (“Credit Agreement Amendment”).

The Credit Agreement Amendment provides for a $ 600 million term loan facility (the “Term Loan A-3 Facility” and, together with the Term Loan A-1 Facility, the “Term Facilities,” and, together with the Revolving Facility, the “Facilities”) with a maturity date of April 3, 2025 to refinance the Company’s existing Term Loan A-2 Facility.

2 to Credit Agreement (the “Credit Agreement Amendment”).

The Credit Agreement Amendment provides for a $ 600 million term loan facility (the “Term Loan A-3 Facility,” collectively the “Term Facilities” with the Term A-1 Facility and Term A-2 Facility) with a maturity date of April 3, 2025 to refinance the Company’s existing Term Loan A-2 Facility.

Also on June 28, 2022, the Company borrowed the entire $ 600 million under Term Loan A-3 Facility to fund the repayment of the Term Loan A-2 Facility.

As of December 31, 2023, the Credit Agreement consists of the following facilities:

• A $ 750 million revolving credit facility (the “Revolving Facility”) with a maturity date of April 4, 2027;

• A Term A-1 loan with an aggregate principal amount of $ 395 million (the “Term Loan A-1 Facility”), with a maturity date of April 4, 2027;

• A Term Loan A-3 loan with an aggregate principal amount of $ 593 million (the “Term Loan A-3 Facility”) with a maturity date of April 3, 2025.

The Credit Agreement contains customary covenants limiting the ability of the Company and its subsidiaries to, among other things, incur debt or liens, merge or consolidate with others, dispose of assets, make investments or pay dividends.

On April 9, 2024, the Company issued $ 700 million in aggregate principal amount of 6.25 % senior notes due 2029 (the “Senior Notes”) governed by an indenture (the “Indenture”).

The Senior Notes have a contractual maturity interest rate of 6.25 % and maturity date of April 15, 2029.

The Company used the net proceeds from the Senior Notes to pay off its Term Loan A-3 Facility and pay fees associated with the offering.

As of December 31, 2024, the Credit Agreement and the Indenture consist of the following facilities:

• A $ 750 million Revolving Facility with a maturity date of April 4, 2027 with zero dollars drawn;

• A Term A-1 Facility with an aggregate principal amount of $ 385 million, with maturity dates through April 4, 2027;

• Senior Notes with an aggregate principal amount of $ 700 million with a maturity date of April 15, 2029.

The Credit Agreement and the Indenture contain customary covenants.

These covenants limit the ability of the Company and its subsidiaries to, among other things, incur debt or liens, merge or consolidate with others, dispose of assets, make investments or pay dividends.

In addition, the Credit Agreement requires that the Company maintains certain financial covenants and the Company was in compliance with all of its debt covenants as of December 31, 2024.

The Credit Agreement contains various events of default (including failure to comply with the covenants under the Credit Agreement and related agreements) and upon an event of default the lenders may, subject to various customary cure rights, require the immediate payment of all amounts outstanding under the Term Facilities and the Revolving Facility.

Certain United States subsidiaries of the Company have agreed to guarantee the obligations of the Company under the Credit Agreement.

Loans made under the Term Facilities will bear interest, at the election of the Company, at either the base rate (as defined in the Credit Agreement) or at the term Secured Overnight Financing Rate (“SOFR”) plus an adjustment (as defined in the Credit Agreement), in each case, plus the applicable interest rate margin.

The Credit Agreement and the Indenture contain various events of default (including failure to comply with the covenants under the Credit Agreement and related agreements) and upon an event of default the lenders may, subject to various customary cure rights, require the immediate payment of all amounts outstanding under the Term A-1 Facility, Senior Notes and the Revolving Facility.

Certain United States subsidiaries of the Company have agreed to guarantee the obligations of the Company under the Credit Agreement and the Senior Notes.

Loans made under the Term A-1 Facility will bear interest, at the election of the Company, at either the base rate (as defined in the Credit Agreement) or at the term Secured Overnight Financing Rate (“SOFR”) plus an adjustment (as defined in the Credit Agreement), in each case, plus the applicable interest rate margin.

Loans made under the Revolving Facility will bear interest, at the election of the Company, at either the base rate or, (i) in the case of loans denominated in dollars, the term SOFR plus an adjustment or the daily simple SOFR plus an adjustment, (ii) in the case of loans denominated in Euros, the adjusted Euro Interbank Offered Rate (“EURIBOR”) and, (iii) in the case of loans denominated in sterling, Sterling Overnight Index Average (“SONIA”) plus an adjustment (as all such rates are defined in the Credit Agreement Amendment), in each case, plus the applicable interest rate margin.

1 unchanged sentence

Each swing line loan denominated in dollars will bear interest at the base rate plus the applicable interest rate margin.

To manage exposures to currency exchange rates and interest rates arising in Long term debt, the Company entered into interest rate and cross currency swap agreements during the year ended December 31, 2022.

To manage exposures to currency exchange rates and interest rates arising in Long-term debt, the Company entered into interest rate and cross-currency swap agreements.

Refer to Note 16, “Derivatives” for additional information.

As of December 31, 2023, the weighted-average interest rate of borrowings under the Credit Agreement was 5.223 %, including the net impact from the interest rate and cross currency swaps and excluding accretion of deferred financing fees, and there was $ 718 million of borrowing capacity available on the Revolving Facility.

As of December 31, 2024, the weighted-average interest rate of borrowings under the Credit Agreement and the Indenture was 5.24 %, including the net impact from the interest rate and cross-currency swaps and excluding accretion of deferred financing fees, and there was $ 750 million of borrowing capacity available on the Revolving Facility, subject to the Company meeting financial covenants and other requirements.

Other Indebtedness

In addition to the debt agreements discussed above, the Company has the ability to incur approximately $ 50 million of indebtedness pursuant to certain uncommitted credit lines, consisting of an uncommitted credit line that the Company currently has in place that the Company has used from time to time in the past for short-term working capital needs.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Other Indebtedness

In addition to the debt agreements discussed above, the Company also has the ability to inc ur approxi mately $ 78 million of indebtedness pursuant to certain uncommitted credit lines, consisting of an uncommitted credit line that the Company currently has in place that the Company has used from time to time in the past for short-term working capital needs.

The Company is party to letter of credit facilities with an aggregate capacity of $ 107.0 million.

1 unchanged sentence

Deferred Financing Fees

In total, the Company had deferred financing fees of $ 2.3 million included in its Consolidated Balance Sheet as of December 31, 2023, which will be charged to Interest expense (income) and other, net, using the straight-line method.

The costs associated with the Term Facilities will be amortized over the contractual term of the Term Facilities and the costs associated with the Revolving Facility will be amortized over the life of the Credit Agreement.

Of the $ 2.3 million, $ 0.9 million of deferred financing fees relating to the Revolving Facility are included in Other assets and $ 1.4 million of deferred financing fees relating to the Term Facilities are recorded as a contra-liability within Long-ter m debt.

The Company’s minimum principal payments for the next five years are as follows:

In total, the Company had deferred financing fees of $ 9.9 million included in its Consolidated Balance Sheets as of December 31, 2024, which will be charged to Interest expense and other, net, over the term of the related debt instruments.

The costs associated with the Term Facilities and Senior Notes noted above will be amortized over the contractual term of the related facility and the costs associated with these will be amortized over the life of the Credit Agreement or the Indenture, respectively.

Of the $ 9.9 million, $ 0.6 million of deferred financing fees relating to the Revolving Facility are included in Other assets and $ 9.3 million of deferred financing fees relating to the Term Facilities and Senior Notes are recorded as a contra-liability within Long-term debt.

The Company’s minimum principal payments for the next five years are broken out in the table below.

December 31, 2024

(in thousands)

2025 $ 15,000

Total debt (1)

10 unchanged sentences

On July 14, 2022, the Company entered into two interest rate swap agreements to manage interest rate risk exposure.

The aggregate notional amount of these contracts is $ 600 million and they mature in April 2025.

The aggregate notional amount of these contracts was $ 600 million, maturing in April 2025.

These interest rate swap agreements utilized by the Company effectively modify the Company’s exposure to interest rate risk by converting a portion of the Company’s floating-rate debt to a fixed rate of 3.293 %, plus a spread, thus reducing the impact of interest-rate changes on future interest expense.

The applicable spread may vary between 1.125 % to 1.750 %, depending on the total leverage ratio of the Company.

The spread is 1.250 % as of December 31, 2023.

These agreements involve the receipt of floating-rate amounts in exchange for fixed-rate interest payments over the life of the agreement without an exchange of the underlying principal amount.

In March 2024, the Company settled one of the interest rate swaps associated with the Company’s floating-rate debt and received $ 5.5 million in connection with that settlement.

The termination of the interest rate swap was related to the repayment of the Term A-3 Facility in April 2024.

Refer to Note 15, “Debt” for further information.

As this interest rate swap was designated as a cash flow hedge, $ 5.5 million was deferred in AOCL and is being recognized in earnings over the period the originally forecasted hedged transaction impacts earnings.

The remaining $ 300 million swap is expected to continue to be hedged against the remaining floating-rate debt.

For the remaining swap, the spread was 1.250 % as of December 31, 2024.

This agreement involves the receipt of floating-rate amounts in exchange for fixed-rate interest payments over the life of the agreement without an exchange of the underlying principal amount.

This interest rate swap agreement is designated and qualifies as a cash flow hedge and as such, the gain or

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

The above interest rate swap agreements are designated and qualify as a cash flow hedge, and as such the gain or loss on the derivative instrument due to the change in fair value is reported as a component of AOCI and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

loss on the derivative instrument due to the change in fair value is reported as a component of AOCL and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

If a derivative is deemed to be ineffective, the change in fair value of the derivative is recognized directly in earnings.

1 unchanged sentence

The cash inflows and outflows associated with the Company’s interest rate swap agreements designated as cash flow hedges are classified in cash flows from operating activities in the accompanying Consolidated and Combined Statements of Cash Flows.

The Company expects a gain o f $ 6.7 million, net of tax, related to interest rate swap agreements to be reclassified from AOCI to earnings over the next 12 months as the hedged transactions are realized.

The Company expects a gain o f $ 0.7 million, net of tax, related to interest rate swap agreements to be reclassified from AOCL to earnings through such agreement’s maturity in April 2025 as the hedged transactions are realized.

The expected gain to be reclassified is based on current forward rates in active markets as of December 31, 2024.

The effects of designated cash flow hedges on the Company’s Consolidated and Combined Statements of Operations consisted of the following:

The table below shows the effects of designated cash flow hedges on the Company’s Consolidated and Combined Statements of Operations.

Year Ended December 31,

Derivative type (Gain) loss recognized in the Consolidated and Combined Statements of Operations:

Derivative type (Gain) recognized in the Consolidated and Combined Statements of Operations 2024 2023

(In thousands)

Interest rate swap agreements Interest expense (income) and other, net $ ( 11,053 ) $ 413

Interest rate swap agreement(s) Interest expense and other, net $ ( 9,104 ) $ ( 11,053 )

Net Investment Hedges

On July 22, 2022, the Company entered into two cross-currency swap agreements to partially hedge its net investment in its Euro denominated subsidiaries against adverse movements in exchange rates between the U.S.

On July 22, 2022, the Company entered into two cross-currency swap agreements, set to mature in April 2025, to partially hedge its net investment in its Euro denominated subsidiaries against adverse movements in exchange rates between the U.S.

Dollar and the Euro.

In addition, the cross-currency swap agreements include provisions to exchange fixed-rate payments in U.S.

dollar for fixed-rate payments in Euro and are designated and qualify as a net investment hedge.

The cross-currency swap agreements included provisions to exchange fixed-rate payments in U.S.

Dollar for fixed-rate payments in Euro and were designated and qualify as a net investment hedge.

These contracts had a Euro aggregate notional amount of approximately € 270 million and a U.S.

Dollar aggregate notional amount of $ 275 million.

Prior to the maturity of these two cross-currency swaps, on June 25, 2024, the Company de-designated these swaps and entered into four new cross-currency swaps for the same above notional amounts that mature in October 2026.

On August 22, 2024, the Company entered into two additional cross-currency swap agreements, set to mature in October 2026.

These contracts have a Euro aggregate notional amount of approximately € 90 million and a U.S.

dollar aggregate notional amount of $ 275 million at December 31, 2023, and they mature in April 2025.

The changes in the spot rate of these instruments are recorded in AOCI in equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in AOCI.

The Company uses the spot method of assessing hedge effectiveness and as such, the initial value of the hedge components excluded from the assessment of effectiveness is recognized in the Interest expense (income) and other, net line item in the Consolidated and Combined Statement of Operations under a systematic and rational method over the life of the cross-currency swap agreements.

Any ineffective portions of net investment hedges are reclassified from AOCI into earnings during the period of change.

dollar aggregate notional amount of $ 100 million.

These swaps are designated and accounted for as a net investment hedge.

The changes in the spot rate of these instruments are recorded in AOCL in equity, partially offsetting the foreign currency translation adjustment of the Company’s related net investment that is also recorded in AOCL.

The Company uses the spot method of assessing hedge effectiveness and as such, the initial value of the hedge components excluded from the assessment of effectiveness is recognized in the Interest expense and other, net line item in the Consolidated and Combined Statement of Operations under a systematic and rational method over the life of the cross-currency swap agreements.

Any ineffective portions of net investment hedges are reclassified from AOCL into earnings during the period of change.

Due to the de-designation transaction above on June 25, 2024, the Company will keep the balance in AOCL related to the original derivative for the duration that the investment is held.

The Company did not have any ineffectiveness related to net investment hedges during the year ended December 31, 2024.

The cash inflows and outflows associated with the excluded components of the Company’s cross-currency swap agreements designated as net investment hedges are classified in operating activities in the accompanying Consolidated and Combined Statements of Cash Flows.

The effects of the excluded components of designated net investment hedges on the Company’s Consolidated and Combined Statements of Operations consisted of the following:

Year Ended December 31,

Derivative type Gain recognized in the Consolidated and Combined Statements of Operations:

Cross currency swap agreements Interest expense (income) and other, net $ ( 4,779 ) $ ( 2,181 )

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

The table below shows the effects of the excluded components of designated net investment hedges on the Company’s Consolidated and Combined Statements of Operations.

Year Ended December 31,

Derivative type (Gain) recognized in the Consolidated and Combined Statements of Operations 2024 2023

Cross currency-swap agreements Interest expense and other, net $ ( 4,687 ) $ ( 4,779 )

The table below shows the fair value of the derivatives recognized in the Company’s Consolidated Balance Sheets.

4 unchanged sentences

Cross-currency swap agreements $ 1,830 $ — $ 22,232 $ —

Interest rate swap agreements — 9,522 — 14,342

Interest rate swap agreement(s) — 842 — 9,522

Total $ 1,830 $ 842 $ 22,232 $ 9,522

3 unchanged sentences

The table below shows the fair value of derivative instruments not designated in a hedging relationship recognized in the Company’s Consolidated Balance Sheets.

December 31, 2023 December 31, 2022

December 31, 2024

December 31, 2023

Not designated as hedging instruments Accrued Liabilities Other Current Assets Accrued Liabilities Other Current Assets

8 unchanged sentences

Change in unrealized (loss) gain $ ( 616 ) $ ( 1,023 ) $ 1,338

Realized loss (1)

Realized gain (loss) (1)

$ 1,490 $ ( 2,928 ) $ ( 17,601 )

(1) The year ended December 31, 2022 includes realized losses relating to certain corporate entities contributed to ESAB Corporation which are reflected within Interest expense (income) and other, net, in the Consolidated and Combined Statements of Operations.

These realized losses are offset by unrealized gains which are also reflected within Interest expense (income) and other, net, in the Consolidated and Combined Statements of Operations .

(1) The year ended December 31, 2022 includes realized losses relating to certain corporate entities contributed to ESAB Corporation that are reflected within Interest expense and other, net, in the Consolidated and Combined Statements of Operations.

These realized losses are offset by unrealized gains which are also reflected within Interest expense and other, net, in the Consolidated and Combined Statements of Operations .

Fair Value Measurements

3 unchanged sentences

Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

A financial instrument’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

1 unchanged sentence

The estimated fair values may not represent actual values of the financial instruments that could be realized as of the balance sheet date or that will be realized in the future.

A summary of the Company’s assets and liabilities that are measured at fair value for each fair value hierarchy level for the periods presented is as follows (see Note 14, “Benefit Plan s” for classification of the assets of the Company’s benefit plans within the fair value hierarchy):

December 31, 2023

(In thousands)

Cash equivalents $ 6,027 $ — $ — $ 6,027

Foreign currency contracts - not designated as hedges — 2,261 — 2,261

Interest rate swap agreements — 9,522 — 9,522

Deferred compensation plans — 3,488 — 3,488

$ 6,027 $ 15,271 $ — $ 21,298

Foreign currency contracts - not designated as hedges $ — $ 1,769 $ — $ 1,769

Cross currency swap agreements — 22,232 — 22,232

Deferred compensation plans — 3,488 — 3,488

$ — $ 27,489 $ — $ 27,489

December 31, 2022

(In thousands)

A summary of the Company’s assets and liabilities that are measured at fair value for each fair value hierarchy level for the periods presented is in the table below (see Note 14, “Benefit Plan s” for classification of the assets of the Company’s benefit plans within the fair value hierarchy).

December 31, 2024 December 31, 2023

Three Total Level

(In thousands) (In thousands)

Cash equivalents $ 8,990 $ — $ — $ 8,990 $ 6,027 $ — $ — $ 6,027

Foreign currency contracts - not designated as hedges — 3,682 — 3,682

Interest rate swap agreements — 14,342 — 14,342

Foreign currency contracts — 657 — 657 — 2,261 — 2,261

Interest rate swap agreement — 842 — 842 — 9,522 — 9,522

Deferred compensation plans — 5,242 — 5,242 — 3,488 — 3,488

$ 8,990 $ 6,741 $ — $ 15,731 $ 6,027 $ 15,271 $ — $ 21,298

Foreign currency contracts - not designated as hedges $ — $ 2,166 $ — $ 2,166

Foreign currency contracts $ — $ 781 $ — $ 781 $ — $ 1,769 $ — $ 1,769

Cross-currency swap agreements — 1,830 — 1,830 — 22,232 — 22,232

3 unchanged sentences

The fair value of these investments approximate cost due to their short-term maturities and the high credit quality of the issuers of the underlying securities.

The Company measures the fair value of foreign currency contracts, cross currency swap agreements and interest rate swap agreements using Level Two inputs based on observable spot and forward rates in active markets.

The Company measures the fair value of foreign currency contracts, cross-currency swap agreements and interest rate swap agreement(s) using Level Two inputs based on observable spot and forward rates in active markets.

Additionally, the fair value of derivatives designated in hedging relationships includes a credit valuation adjustment to appropriately incorporate nonperformance risk for the Company and the respective counterparty.

1 unchanged sentence

Refer to Note 16, “Derivatives” for additional information.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

There were no transfers in or out of Level One, Two or Three during the years ended December 31, 2024 and 2023.

Concentration of Credit Risk

Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable.

Financial instruments potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable.

Concentrations of credit risk are considered to exist when there are amounts collectible from multiple counterparties with similar characteristics, which could cause their ability to meet contractual obligations to be similarly impacted by economic or other conditions.

1 unchanged sentence

Letters of credit are occasionally required when the Company deems n ecessary.

There are no customers which represent more than 10% of the Company’s Accounts receivable, net as of December 31, 2023 and 2022.

There are no customers that represent more than 10% of the Company’s Trade receivables, net as of December 31, 2024 and 2023.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Share Repurchase Program

On August 13, 2024, the Board of Directors 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.

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 repurchase authorization.

Accumulated Other Comprehensive Loss

The following table presents the changes in the balances of each component of Accumulated other comprehensive loss including reclassifications out of Accumulated other comprehensive loss for the years ended December 31, 2023, 2022 and 2021.

The following table presents the changes in the balances of each component of AOCL including reclassifications out of AOCL for the years ended December 31, 2024, 2023 and 2022.

All amounts are net of tax and noncontrolling interest, if any.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Accumulated Other Comprehensive Loss Components

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Balance at January 1, 2022

Other comprehensive income (loss) before reclassifications:

$ ( 21,196 ) $ ( 439,692 ) $ — $ — $ ( 460,888 )

Other comprehensive (loss) income before reclassifications:

Amounts contributed by Former Parent (2)

( 50,504 ) ( 8,759 ) — — ( 59,263 )

Net actuarial gain 113 — — — 113

Foreign currency translation adjustment 1,712 ( 82,351 ) ( 8,336 ) — ( 88,975 )

Loss on long-term intra-entity foreign currency transactions — ( 83,105 ) — — ( 83,105 )

Unrealized gain on cash flow hedges — — — 10,782 10,782

Other comprehensive (loss) income before reclassifications ( 48,679 ) ( 174,215 ) ( 8,336 ) 10,782 ( 220,448 )

3 unchanged sentences

Balance at December 31, 2022

Other comprehensive income (loss) before reclassifications:

Amounts contributed by Former Parent (2)

( 63,847 ) ( 613,907 ) ( 8,336 ) 11,102 ( 674,988 )

Other comprehensive income (loss) before reclassifications:

Net actuarial gain 8,969 — — — 8,969

Foreign currency translation adjustment ( 3,285 ) ( 11,143 ) ( 8,879 ) — ( 23,307 )

Loss on long-term intra-entity foreign currency transactions — ( 83,105 ) — — ( 83,105 )

Gain on long-term intra-entity foreign currency transactions — 70,428 — — 70,428

Unrealized gain on cash flow hedges — — — 4,834 4,834

Other comprehensive (loss) income before reclassifications ( 48,679 ) ( 174,215 ) ( 8,336 ) 10,782 ( 220,448 )

Other comprehensive income (loss) before reclassifications 5,684 59,285 ( 8,879 ) 4,834 60,924

Amounts reclassified from Accumulated other comprehensive loss (1)(3)

( 1,642 ) — — ( 8,566 ) ( 10,208 )

Net current period Other comprehensive (loss) income ( 42,651 ) ( 174,215 ) ( 8,336 ) 11,102 ( 214,100 )

Net current period Other comprehensive income (loss) 4,042 59,285 ( 8,879 ) ( 3,732 ) 50,716

Balance at December 31, 2023

( 59,805 ) ( 554,622 ) ( 17,215 ) 7,370 ( 624,272 )

Other comprehensive income (loss) before reclassifications:

3 unchanged sentences

Unrealized gain on cash flow hedges — — — 4,426 4,426

Other comprehensive (loss) income before reclassifications 5,684 59,285 ( 8,879 ) 4,834 60,924

Other comprehensive income (loss) before reclassifications 9,599 ( 123,463 ) 15,968 4,426 ( 93,470 )

Amounts reclassified from Accumulated other comprehensive loss (1)(3)

( 146 ) — — ( 9,980 ) ( 10,126 )

Net current period Other comprehensive (loss) income 4,042 59,285 ( 8,879 ) ( 3,732 ) 50,716

Purchase related to noncontrolling interest — ( 1,706 ) — — ( 1,706 )

Net current period Other comprehensive income (loss) 9,453 ( 125,169 ) 15,968 ( 5,554 ) ( 105,302 )

Balance at December 31, 2024

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

$ ( 50,352 ) $ ( 679,791 ) $ ( 1,247 ) $ 1,816 $ ( 729,574 )

(1) The amounts on this line within the Net Unrecognized Pension and Other Post-Retirement Benefit Cost column are included in the computation of net periodic benefit cost.

See Note 14, “Benefit Plans” for additional details.

(2) Includes unrecognized pension and other post-retirement costs and accumulated currency translation adjustments of certain entities which were part of the Corporate segment of the Former

Parent and were transferred to ESAB Corporation in anticipation of the Separation.

(3) During the years ended December 31, 2023 and 2022, the amount on this line within the Cash Flow Hedges column is a component of Interest expense (income) and other, net.

(2) Includes unrecognized pension and other post-retirement costs and accumulated currency translation adjustments of certain entities that were part of the Corporate segment of the Former Parent and were transferred to ESAB Corporation in anticipation of the Separation.

(3) The amounts on this line within the Cash Flow Hedges column are a component of Interest expense and other, net.

See Note 16, “Derivatives,” for additional details.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Share-Based Payments

Prior to the Separation, the Company had no stock-based compensation plans;

however, certain employees of the Company participated in the Former Parent’s stock-based compensation plans which provided for the grants of stock options and restricted stock units (“RSUs”).

Prior to the Separation, the Former Parent allocated stock-based compensation expense to the Company based on ESAB employees participating in Former Parent plans.

This is reflected in the accompanying Consolidated and Combined Statements of Operations and Comprehensive Income for the period prior to the Separation.

Prior to the Separation, in addition to stock compensation expense related to direct employees of the Company, stock compensation expense related to certain corporate employees of the Former Parent was allocated to the Company based on the Company’s proportional share of total Former Parent revenues.

For the three months ended April 1, 2022, $ 0.7 million of stock-based compensation expense was allocated to the Company.

For the year ended December 31, 2021, $ 2.6 million was allocated to the Company.

Following the Separation, the Company independently incurs stock compensation expenses as a stand-alone company.

In connection with the Separation, the Company adopted the 2022 Omnibus Incentive Plan (the “Stock Plan”) that became effective upon the Separation.

1 unchanged sentence

The terms of the equity awards period, exercisability and vesting schedule, as applicable, generally continued unchanged.

Other than converted or replacement equity awards of ESAB issued in replacement of the Former Parent’s RSUs and stock options, the terms of the converted or replacement equity awards of ESAB (e.g.

vesting date and expiration date) continued unchanged.

Other than converted or replacement equity awards of ESAB issued in replacement of the Former Parent’s RSUs and stock options, the terms of the converted or replacement equity awards of ESAB (e.g., vesting date and expiration date) continued unchanged.

For the three months ended April 1, 2022, $ 0.7 million of stock-based compensation expense was allocated to the Company.

Following the Separation, the Company independently incurs stock compensation expenses as a stand-alone company.

The Company measures and recognizes compensation expense related to share-based payments based on the fair value of the instruments issued.

11 unchanged sentences

The ultimate payout of PRSUs with a performance metric adjusts the cumulative expense based on its estimate and the percent of the requisite service period that has elapsed.

For the year ended December 31, 2023, the Stock-based compensation expense for the PRSU’s was $ 3.1 million.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

During the year ended December 31, 2024, the Company granted certain employees PRSUs, the calculation of the final achievement of which is based on Company-specific performance metrics as well as a modifier for the Company’s total shareholder return ranking among a peer group over a three-year performance period.

The awards also have a service requirement that equals the respective performance periods.

The related compensation expense for each of the awards is recognized on a straight-line basis over the vesting period.

For the year ended December 31, 2024, the Stock-based compensation expense for the PRSUs was $ 5.7 million.

Under the Stock Plan, the Compensation Committee may also award RSUs to select executives, employees and outside directors, which typically vest over three years after the date of grant.

1 unchanged sentence

The Compensation Committee determines the terms and conditions of each award, including any restriction period and other criteria applicable to the awards.

For the year ended December 31, 2023, the Stock-based compensation expense for the RSU’s was $ 9.8 million.

The activity of the Company’s PRSUs and RSUs is as follows:

of Units Weighted-

Fair Value Number

of Units Weighted-

For the year ended December 31, 2024, the Stock-based compensation expense for the RSUs was $ 11.4 million .

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

The activity of the Company’s PRSUs and RSUs is included in the table below.

Number of Units Weighted- Average

Grant-Date Fair Value Number of Units Weighted-Average

Grant-Date Fair Value

Balance at December 31, 2023

143,875 $ 55.86 464,730 $ 55.21

Granted 56,767 100.33 122,155 95.23

2 unchanged sentences

Balance at December 31, 2024

200,642 $ 68.44 373,620 $ 67.02

The fair value of shares vested during the year ended December 31, 2024 was $ 10.7 million .

10 unchanged sentences

The subs idiaries settle asbestos claims for amounts the Company considers reasonable given the facts and circumstances of each claim.

The annual average settlement payment per asbestos claimant has fluctuated during the past several years while the number of cases has steadily declined.

The Company expects such fluctuations to continue in the future based upon, among other things, the number and type of claims settled in a particular period and the jurisdictions in which such claims arise.

The annual average settlement payment per asbestos claimant has fluctuated during the past several years while the number of cases has steadily declined, except for 2024 when they have been substantially even versus prior year.

The Company expects fluctuations to continue in the future based upon, among other things, the number and type of claims settled in a particular period and the jurisdictions in which such claims arise.

To date, the majority of settled claims have been dismissed for no payment.

13 unchanged sentences

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Asbestos-related claims activity since December 31, 2022 and 2021, respectively, is as follows:

The table below summarizes the Asbestos-related claims activity since December 31, 2023 and 2022, respectively.

Year Ended December 31,

10 unchanged sentences

(3) Excludes claims settled in Mississippi for which the majority of claims have historically been resolved for no payment and insurance recoveries.

The Company’s Consolidated Balance Sheets include the following amounts related to asbestos-related litigation:

The Company’s Consolidated Balance Sheets include the amounts related to asbestos-related litigation shown in the table below.

(In thousands)

11 unchanged sentences

Management’s analyses are based on currently known facts and assumptions.

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

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

From time to time, other asbestos allegations related to former businesses of the Former Parent are brought against the Company.

Management currently believes no loss is probable or estimable for these other matters.

General Litigation

10 unchanged sentences

Segment Information

ESAB is a world leader in fabrication and gas control technology, providing our partners with fabrication technology advanced equipment, consumables, gas control equipment, robotics and digital solutions, which enable the everyday and extraordinary work that shapes our world.

The Company’s products are utilized to solve challenges in a wide range of industries, including cutting, joining and automated welding.

ESAB is a focused industrial compounder.

Our rich history of innovating products, workflow solutions and our business system, EBX, enables our purpose of Shaping the world we imagine TM.

Our products include fabrication technology advanced equipment, consumables, gas control equipment, robotics and digital solutions.

The Company conducts its 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, Middle East, India, Africa and Asia Pacific.

The Company’s management evaluates the operating results of each of its reportable segments based upon Net sales and Adjusted EBITDA, which represents Net income from continuing operations excluding the impact of Income tax expense, Interest expense and other, net Pension settlement gain, Restructuring and other related charges, Separation costs, Acquisition - amortization and other related charges and Depreciation and other amortization .

The Company’s segment results were as follows:

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.

The Company’s management considers its Chief Operating Decision Maker (“CODM”) as Shyam Kambeyanda, President, Chief Executive Officer and Director.

The Company’s management and CODM evaluate the operating results of each reportable segments, including assessment of profit or loss, performance and allocation of resources, based upon Net sales and Adjusted EBITDA, which represents Net income from continuing operations excluding the impact of Income tax expense, Interest expense and other, net, Pension settlement loss (gain), Restructuring and other related charges, Separation costs, Acquisition - amortization and other related charges and Depreciation and other amortization .

Segment results reflect the allocation of corporate overhead costs, which primarily consist of Selling, general and administrative expense.

The Company’s segment results are included in the table below.

Year Ended December 31,

5 unchanged sentences

$ 2,740,803 $ 2,774,766 $ 2,593,480

Cost of sales:

Americas $ 711,082 $ 760,134 $ 752,641

EMEA & APAC 992,266 998,881 955,309

$ 1,703,348 $ 1,759,015 $ 1,707,950

Allocated corporate overhead operating expense:

Americas $ 64,517 $ 64,668 $ 55,328

EMEA & APAC 97,807 103,984 85,527

$ 162,324 $ 168,652 $ 140,855

Other operating expense:

Americas $ 161,946 $ 165,454 $ 131,760

EMEA & APAC 184,411 180,543 176,161

$ 346,357 $ 345,997 $ 307,921

Adjusted EBITDA (2) :

10 unchanged sentences

$ 51,779 $ 48,178 $ 40,243

(1) For the years ended December 31, 2023, 2022 and 2021, the total Net sales originating from the United States were $ 619.1 million, $ 583.0 million and $ 533.5 million, respectively.

The remainder of the sales were derived from foreign countries.

(2) The following is a reconciliation of Net income from continuing operations to Adjusted EBITDA:

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

(1) For the years ended December 31, 2024, 2023 and 2022, the total Net sales originating from the United States were $ 595.6 million, $ 619.1 million and $ 583.0 million, respectively.

(2) The following is a reconciliation of Net income from continuing operations to Adjusted EBITDA:

Year Ended December 31,

3 unchanged sentences

Income tax expense 77,348 95,727 69,170

Interest expense (income) and other, net (1)

85,074 37,950 ( 29 )

Pension settlement gain — ( 9,136 ) ( 11,208 )

Interest expense and other, net 64,890 85,074 37,950

Pension settlement loss (gain) 12,155 — ( 9,136 )

Restructuring and other related charges (1)

1 unchanged sentence

Separation costs (2)

— 15,545 2,865

Acquisition - amortization and other related charges (3)

2 unchanged sentences

Adjusted EBITDA $ 528,774 $ 501,102 $ 436,754

(1) Relates to removal of interest expense, net included within the Interest expense (income) and other, net line within the Consolidated and Combined Statements of Operations.

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

(3) I ncludes non-recurrin g charges and employee costs related to the planning and execution of t he separation from Enovis within the Selling, general and administrative expense line within the Consolidated and Combined Statements of Operations.

(1) I ncludes 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) I ncludes non-recurrin g charges and employee costs related to the planning and execution of t he Separation within the Selling, general and administrative expense line within the Consolidated and Combined Statements of Operations.

(3) Includes transaction expenses, amortization of intangibles, fair value charges on acquired inventories and integration expenses.

13 unchanged sentences

India 31,506 31,258

Russia 15,550 19,111

Mexico 20,495 23,922

Poland 17,227 14,661

Russia 12,225 15,550

Other foreign countries 88,304 79,568

5 unchanged sentences

Related Party Agreements

On April 4, 2022, in connection with the Separation, the Company entered into several agreements with Enovis that govern the Separation and provide a framework for the relationship between the parties going forward including a separation and distribution agreement, a transition services agreement, tax matters agreement, employee matters agreements, a stockholders and registration rights agreement, an intellectual property matters agreement and a license agreement for EBX.

The Separation and Distribution Agreement

On April 4, 2022, in connection with the Separation, the Company entered into several agreements with Enovis that govern the Separation and provide a framework for the relationship between the parties going forward including a separation and distribution agreement, transition services agreement, tax matters agreement, employee matters agreements, stockholders and registration rights agreement, intellectual property matters agreement and license agreement for EBX.

Separation and Distribution Agreement

The Company entered into a separation and distribution agreement (the “Separation Agreement”) with Enovis immediately prior to the distribution of the Company’s common stock to Enovis stockholders.

3 unchanged sentences

The transition services agreement sets forth the terms and conditions pursuant to which the Company and its subsidiaries and Enovis and its subsidiaries will provide to each other various services.

The services to be provided include human resources, payroll, certain information technology services, treasury services and financial reporting services.

The charges for the transition services generally are expected to allow the providing company to fully recover all internal and external costs and expenses it actually incurs in connection with providing the service (including a reasonable allocation of overhead) provided in the manner and at a level substantially consistent with that provided by the respective providing company immediately preceding the Distribution Date.

As of the year ended December 31, 2023, the majority of the related obligations have been closed out.

As of the year ended December 31, 2024, the related obligations have been closed out.

Tax Matters Agreement

7 unchanged sentences

The Company and Enovis are able to sublicense their rights in connection with activities relating to their businesses, but not for independent use by third parties.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

EBX License Agreement

2 unchanged sentences

In addition, under the EBX license agreement, Enovis and the Company each license to each other improvements made by such party to EBX during the first two years of the term of the EBX license agreement.

ESAB CORPORATION

NOTES TO CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS — (Continued)

Allocated Expenses

2 unchanged sentences

These amounts included, but were not limited to, items such as general management and executive oversight, compliance, human resources, procurement and legal functions and financial management, including public company reporting, consolidated tax filings and tax planning.

Management considered the allocation methodologies used by the Former Parent to be reasonable and to appropriately reflect the related expenses attributable to the Company for purposes of the three months ended April 1, 2022 and the year ended December 31, 2021 combined financial statements;

however, the expenses reflected in these financial statements may not be indicative of the actual expenses that would have been incurred during the periods presented if the Company had operated as a separate stand-alone entity.

In addition, the expenses reflected in the financial statements are not indicative of expenses the Company will incur in the future.

Allocation methodologies utilized include the Company’s relative share of total Former Parent revenues and headcount.

The Company had no stock-based compensation plans prior to the Separation;

1 unchanged sentence

The expense associated with the Company's employees who participated in the plans of the Former Parent was allocated to the Company in the accompanying Consolidated and Combined Statements of Operations through the date of Separation.

The Company’s allocated expenses from the Former Parent were $ 6.0 million for the three months ended April 1, 2022, and $ 29.5 million for the year ended December 31, 2021 and are included in the Selling, general and administrative expense in the Consolidated and Combined Statements of Operations.

The Company’s allocated expenses from the Former Parent were $ 6.0 million for the three months ended April 1, 2022, and is included in the Selling, general and administrative expense in the Consolidated and Combined Statements of Operations.

Following the Separation, the Company independently incurs expenses as a stand-alone company.

1 unchanged sentence

Subsequent Events

The dividend of $ 3.6 million included in Accrued liabilities in the Consolidated Balance Sheet at December 31, 2023 was paid on January 12, 2024, to stockholders of record as of December 29, 2023.

In addition, on February 22, 2024, the Board of Directors declared a quarterly cash dividend of $ 0.06 per share of ESAB’s common stock payable on April 12, 2024, to stockholders of record as of March 29, 2024.

On February 26, 2024, the Company completed the acquisition of Sager S.A., a welding repair and maintenance product and service leader in South America for approximately $ 18.5 million of cash consideration.

The dividend of $ 4.9 million included in Accrued liabilities in the Consolidated Balance Sheets at December 31, 2024 was paid on January 17, 2025, to stockholders of record as of December 31, 2024.

On February 18, 2025, the Company entered into an agreement to acquire Bavaria Schweisstechnik, a European provider of submerged-arc welding applications, for approximately € 60 million of cash consideration.

This acquisition is expected to be completed during 2025, subject to the receipt of applicable regulatory approvals and customary closing conditions.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data