What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-20 compared with 2025-02-20 · 120 added, 116 removed, 328 unchanged (42% of the section changed)

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The following MD&A should be read together with Part I, Item 1A.

“Risk Factors” and the accompanying Consolidated and Combined Financial Statements and Notes to Consolidated and Combined Financial Statements (the “Notes”) included in Item 8.

“Risk Factors” and the accompanying Consolidated Financial Statements and Notes to Consolidated Financial Statements (the “Notes”) included in Item 8.

of this Form 10-K.

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See Part I, Item 1.

“Business” in our Form 10-K for a discussion of ESAB’s objectives and methodologies for deliver ing stockholder va lue.

“Business” of this Form 10-K for a discussion of ESAB’s objectives and methodologies for deliver ing stockholder va lue.

We are a focused premier 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 rich history of innovating products, workflow solutions and our business system, EBXai, enables our purpose of Shaping the world we imagine TM.

We conduct our operations through two reportable segments.

These segments consist of the “Americas,” which includes operations in North America and South America, and “EMEA & APAC,” which includes Europe, Middle East, India, Africa and Asia Pacific.

These segments consist of the “Americas,” which includes operations in North America and South America, and “EMEA & APAC,” which includes Europe, the Middle East, India, Africa and Asia Pacific.

We serve a global customer base across multiple markets through a combination of direct sales and third-party distribution channels.

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We believe that our extensive experience of acquiring and effectively integrating acquisition targets should enable us to capitalize on future opportunities.

We believe our recent acquisitions of Therapy Equipment Limited (“Therapy Equipment”) in 2023 as well as Sager S.A.

(“Sager”), ESAB Bangladesh Private Limited (“ESAB Bangladesh”) (formerly known as Linde Industries Private Limited) and SUMIG Soluções para Solda e Corte Ltda.

(“SUMIG”) in 2024, are aligned with this strategic direction.

Refer to Note 5, “Acquisitions” in the accompanying Notes contained elsewhere in this Form 10-K for additional information.

We face a number of challenges and opportunities, including the successful integration of acquired businesses, the application and expansion of our EBX tools to improve business performance and the rationalization of assets and costs.

We believe our recent acquisitions are aligned with this strategic direction.

Refer to Note 5, “Acquisitions” and Note 21, “Subsequent Events” in the accompanying Notes contained elsewhere in this Form 10-K for additional information.

On January 31, 2026, the Company entered into an agreement to acquire Eddyfi, a global leader in advanced inspection and monitoring technologies headquartered in Quebec, Canada, for approximately $1.45 billion.

The acquisition is expected to be funded with a combination of cash on hand, debt and approximately $318 million of fully committed equity.

2026 Eddyfi projected annual revenue is approximately $270 million.

This acquisition is expected to be completed in mid-2026, subject to the receipt of applicable regulatory approvals and customary closing conditions.

We face a number of challenges and opportunities, including the successful integration of acquired businesses, the application and expansion of our EBXai tools to improve business performance and the rationalization of assets and costs.

We expect AI investment and infrastructure to contribute to supporting our margin expansion through initiatives such as operational

efficiencies.

For additional information about these challenges and opportunities, refer to Part I, Item 1A.

“Risk Factors” in our Form 10-K.

“Risk Factors” of this Form 10-K.

The discussion that follows includes a comparison of our results of operations and liquidity and capital resources for the years ended December 31, 2025 and 2024.

We have elected not to include a comparison of our results of operations and liquidity and capital resources for the years ended December 31, 2023 and 2022 in this report in reliance upon Instruction 1 to

Item 303(b) of Regulation S-K.

We have elected not to include a comparison of our results of operations and liquidity and capital resources for the years ended December 31, 2024 and 2023 in this report in reliance upon Instruction 1 to Item 303(b) of Regulation S-K.

This discussion can be found in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on February 20, 2025.

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Russia and Ukraine conflict

The invasion of Ukraine by Russia and the sanctions and other actions taken by governments in response to the crisis have increased the level of economic and political uncertainty.

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.

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.

For additional information of the associated risks, refer to the Part I, Item 1A.

“Risk Factors” section.

The invasion of Ukraine by Russia and the sanctions and other actions taken by governments in response to this crisis have increased the level of economic and political uncertainty.

Refer to Note 1, “Organization and Basis of Presentation” in the accompanying Notes contained elsewhere as well as in Part I, Item 1A.

“Risk Factors” section in this Form 10-K .

The Company continues to actively monitor changes in United States policy regarding international trade, including the recent progress in reaching or progressing international trade agreements with major counterparties.

As reflected in the discussions that follow, the United States policy regarding international trade and actions taken in response to it have had a variety of impacts on our results of operations during 2025, including decreased sales levels and increased raw material costs.

For additional information on risks to the Company’s operations related to United States policy regarding international trade, refer to the Part I, Item 1A.

“Risk Factors” section of this Form 10-K .

We complement our organic growth plans with acquisitions and other investments.

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Foreign Currency Fluctuations

During 2024 and 2023, a significant portion of our Net sales, 78% in each period, were derived from operations outside of the United States with th e majority of those sales denominated in currencies other than the U.S.

During 2025 and 2024, a significant portion of our Net sale s, 80% and 78%, respectively, were derived from operations outside of the United States with th e majority of those sales denominated in currencies other than the U.S.

Because much of our manufacturing and employee costs are outside the United States, a significant portion of our costs are also denominated in currencies other than the U.S.

Changes in foreign exchange rates can translationally impact our results of operations and are quantified when significant.

For the year ended December 31, 2024 compared to 2023, fluctuation s in foreign currencies reduced N et sales by 3.2%, Gross profit by 2.8% and Selling, general and administrative expenses by 1.2%.

For the year ended December 31, 2025 compared to 2024, fluctuation s in foreign currencies increased N et sales by 0.6%, Gross profit by 0.8% and Selling, general and administrative expense by 1.4%.

Our European operations typically experience a slowdown during the July and August vacation seasons.

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While we seek to take actions to manage this risk, future changes in component and raw material costs may adversely impact earnings.

During the year ended December 31, 2025, we experienced higher material costs primarily driven by the impact of tariffs.

Sales and Cost Mix

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ESAB presents this non-GAAP financial measure including and excluding Russia due to economic and political volatility caused by th e Russia and Ukraine conflict, which we believe results in enhanced investor interest in these alternate presentations.

Adjusted EBITDA excludes from Net income from continuing operations the effect of Income tax expense, Interest expense and other, net, Pension settlement loss, Restructuring and other related charges, acquisition-amortization and other related charges and depreciation and other amortization.

Adjusted EBITDA excludes from Net income from continuing operations the effect of Income tax expense, Interest expense and other, net, Pension settlement loss, Restructuring and other related charges, acquisition transaction, due diligence and integration expenses, amortization of intangibles and fair value charges on acquired inventories and depreciation and other amortization.

We also present Adjusted EBITDA margin, which is subject to the same adjustments as Adjusted EBITDA.

Further, we present these non-GAAP performance measures on a segment basis, where we exclude the impact of Restructuring and other related charges, acquisition-amortization and other related charges and depreciation and other amortization from operating income.

Further, we present these non-GAAP performance measures on a segment basis subject to the same adjustments described above.

We also present Core adjusted EBITDA and Core adjusted EBITDA margin, which are subject to the same adjustments as Adjusted EBITDA and Adjusted EBITDA margin, respectively, and which remove the impact of Russia for the years ended December 31, 2025 and 2024.

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Interest expense and other, net 83.9

Pension settlement loss 12.2

Operating income (GAAP) $ 167.8 $ 244.3 $ 412.2

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Restructuring and other related charges (2)

11.6 16.1 27.8

Acquisition-amortization and other related charges (3)

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(1) Numbers may not sum due to rounding.

(2) Includes severance and other termination benefits, including outplacement services, as well as 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 transaction expenses, amortization of acquired intangibles, fair value charges on acquired inventories and integration expenses.

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

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

(4) Numbers calculated following the same definition as Adjusted EBITDA for total Company.

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Interest expense and other, net 64.9

Pension settlement loss 12.2

Operating income (GAAP) $ 203.2 $ 244.2 $ 447.5

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Restructuring and other related charges (2)

6.5 17.6 24.1

Acquisition-amortization and other related charges (3)

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(1) Numbers may not sum due to rounding.

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

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

(3) I ncludes transaction, diligence and integration expenses totaling $4.2 million and amortization of intangibles and fair value charges on acquired inventories totaling $30.3 million for the year ended December 31, 2024, respectively.

(4) Numbers calculated following the same definition as Adjusted EBITDA for total Company.

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Total Company

Net sales decreased for the year ended December 31, 2024 as compared with the year ended December 31, 2023 .

Net sales increased for the year ended December 31, 2025 as compared with the year ended December 31, 2024 .

The following table presents the components of changes in our consolidated Net sales.

Net Sales (1)

(Dollars in millions)

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Components of change:

Existing businesses (organic sales growth) (2)

Existing businesses (organic sales) (1)

(31.4) (1.1) %

Acquisitions (2)

Foreign currency translation (3)

(89.7) (3.2) %

Total Net sales decline (34.0) (1.2) %

Total Net sales growth 101.8 3.7 %

For the year ended December 31, 2025

(1) Numbers may not sum due to rounding.

(1) Excludes the impact of acquisitions and foreign exchange rate fluctuations, thus providing a measure of change due to factors such as price, product mix and volume.

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(3) Represents the difference between prior year sales valued at the actual prior year foreign exchange rates and prior year sales valued at current year foreign exchange rates.

Net sales from existing businesses increased $32.3 million during the year ended December 31, 2024 compared to the prior year period, due to customer pricing increases of $19.9 million and increased sales volumes of $12.4 million .

The increase in Net sales from acquisitions of $23.5 million was primarily attributable to the Sager, ESAB Bangladesh and SUMIG acquisitions.

The changes in foreign exchange rates caused a $89.7 million unfavorable currency translation impact.

Sales excluding Russia

Sales excluding Russia (“Core sales”) for ESAB decreased fo r the year ended December 31, 2024 as compared with the year ended December 31, 2023.

Net sales from existing businesses decreased $31.4 million during the year ended December 31, 2025 compared to the prior year period, due to decreased sales volumes of $60.8 million driven primarily by lower volumes in Russia and the impact of tariffs in the Americas partially offset by $29.4 million of customer pricing increases .

The increase in Net sales from acquisitions of $115.9 million was attributable to the acquisitions of Sager S.A.

(“Sager”), ESAB Bangladesh Private Limited (“ESAB Bangladesh”), SUMIG Soluções para Solda e Corte Ltda.

(“SUMIG”), Bavaria Schweisstechnik (“Bavaria”), DeltaP s.r.l.

(“DeltaP”), Aktiv Technologies Private Limited (“Aktiv”) and EWM GmbH (“EWM”).

The changes in foreign exchange rates caused a $17.3 million favorable currency translation impact.

Net sales excluding Russia

Net sales excluding Russia (“Core sales”) for ESAB increased fo r the year ended December 31, 2025 as compared with the year ended December 31, 2024.

The following table presents the components of changes in our consolidated Core sales.

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Components of change:

Existing businesses (core organic sales growth) (2)

Existing businesses (core organic sales) (2)

(5.1) (0.2) %

Acquisitions (3)

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(1.5) (0.1) %

Total Core sales decline (5)

(29.8) (1.1) %

Total Core sales growth (5)

For the year ended December 31, 2025

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(4) Represents the difference between prior year sales valued at the actual prior year foreign exchange rates and prior year sales valued at current year foreign exchange rates.

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

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

(6) Represents sales excluding Russia for the year ended December 31, 2025 and 2024, respectively.

Core sales from existing businesses increased $24.6 million during the year ended December 31, 2024 , compared to the prior year period due to customer pricing increases of $15.4 million and increased sales volumes of $9.2 million.

The increase in Core sales from acquisitions of $23.5 million was primarily attributable to the Sager, ESAB Bangladesh and SUMIG acquisitions.

Core sales from existing businesses decreased $5.1 million during the year ended December 31, 2025 , compared to the prior year period due to decreased sales volumes of $33.6 million driven primarily by the impact of tariffs in the Americas partially offset by $28.5 million of customer pricing increases.

The increase in Core sales from acquisitions of $115.9 million was attributable to the acquisitions of the Sager, ESAB Bangladesh, SUMIG, Bavaria, DeltaP, Aktiv and EWM.

T he changes in foreign exchange rates caused a $1.5 million unfavorable currency translation impact .

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$ 19.7 $ 18.1

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

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

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

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

(3) Numbers calculated following the same definition as Adjusted EBITDA for total Company.

Gross profit increased $21.7 million during 2024 in comparison to 2023, which was attributable to benefits from price increases, lower material costs, productivity gains and accretion from acquisitions, partially offset by unfavorable foreign currency impacts.

Gross profit margin expanded 130 basis points to 37.9%, which was primarily due to aforementioned factors.

Selling, general and administrative expense decreased in comparison to 2023 primarily driven by savings from restructuring initiatives and favorable foreign currency impacts, partially offset by incremental costs from acquisitions and growth initiatives.

Gross profit increased $10.8 million during 2025 in comparison to 2024, which was primarily attributable to accretion from acquisitions, foreign currency impact and benefits from price increases partially offset by higher material costs, decreases in sales volume and tariff impacts.

Gross profit margin declined 100 basis points during the same period, primarily due to inflation and tariff-related cost increases partially offset by customer pricing increases, leading to margin compression .

Selling, general and administrative expense increased $28.6 million during 2025 in comparison to 2024 primarily driven by incremental costs from acquisitions partially offset by benefits from lower employee costs and EBXai driven savings.

Restructuring and other related charges increased $17.6 million during 2025 in comparison to 2024 primarily driven by strategic initiatives to improve margins in the Americas for future years and integrate the recent EWM acquisition.

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.

Interest expense and other, net, decreased in comparison to 2023, primarily driven by the hyperinflationary impact in Argentina recorded in 2023 , which resulted in a loss of $26.2 million in Interest expense and other, net.

The effective tax rate for 2024 and 2023 w as 20.9% and 30.0% , respectively.

The difference was primarily due to changes in tax reserves and withholding tax on dividends.

In 2024, the effective tax rate was lower than the United States federal statutory rate of 21.0% primarily due to favorable impacts from an agreement with a taxing authority on the treatment of subsidy income in a foreign jurisdiction, favorable changes in tax reserves primarily related to a final ruling in a tax case in a foreign jurisdiction, partially offset by withholding taxes and the impact of jurisdictional mix of income in 2023.

Net income from continuing operations increased in 2024 compared to 2023, due to changes discussed above.

Net income margin from continuing operations expanded primarily due to the items discussed above.

Adjusted EBITDA increased $27.7 million and Adjusted EBITDA margin expanded by 120 basis points in 2024 compared to 2023 due to the aforementioned factors.

No such settlement occurred during the year ended December 31, 2025.

Interest expense and other, net, increased in comparison to 2024, primarily driven by a higher Debt balance related to acquisitions.

The effective tax rate for 2025 and 2024 was 21.1% and 20.9%, respectively.

The difference was primarily due to changes in tax reserves and valuation allowances.

In 2025, the effective tax rate was higher than the United States federal statutory rate of 21.0% primarily due to the jurisdictional mix of earnings, including foreign withholding tax partially offset by the release of a valuation allowance.

In 2024, the rate was lower than the United States federal statutory rate of 21.0% 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.

Net income from continuing operations decreased in 2025 compared to 2024, due to the changes discussed above.

Adjusted EBITDA increased $30.9 million and Adjusted EBITDA margin expanded by 40 basis points in 2025 compared to 2024 due to

the aforementioned factors.

Core adjusted EBITDA increased $29.3 million and Core adjusted EBITDA margin expanded by 30 basis points primarily due to the aforementioned factors.

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Net sales in our Americas segment decreased by $46.4 million during 2025 compared to 2024.

Net sales from existing business increased by $23.0 million primarily due to customer price increases partially offset by lower sales volume.

Net sales from existing business decreased by $43.0 million primarily due to reduced sales volumes primarily driven by tariffs and related impacts partially offset by pricing increases .

Net sales from acquisitions contributed $27.9 million.

These increases were more than offset by $75.5 million of unfavorable currency translation.

Gross profit and related margin increased primarily due to benefit from price increases, productivity gains and acquisitions partially offset by unfavorable foreign currency impacts and decreased sales volumes.

Selling, general and administrative expense decreased primarily due to favorable foreign currency impacts and savings from restructuring initiatives partially offset by growth initiatives and acquisitions.

Adjusted EBITDA increased by $14.5 million and margin expanded 180 basis points primarily due to the aforementioned factors.

In addition, there was $31.3 million in unfavorable currency translation.

Gross profit decreased primarily due to a decrease in sales volumes and higher material costs, including tariffs, partially offset by acquisitions, price increases and foreign exchange impact.

Gross profit margin declined 90 basis points, primarily due to inflation and tariff-related cost increases partially offset by customer pricing increases, leading to margin compression.

Selling, general and administrative expense decreased compared with the prior year period primarily due to benefits from lower employee costs and EBXai driven savings partially offset by acquisitions.

Restructuring and other related charges increased $8.6 million during 2025 in comparison to 2024 primarily driven by strategic initiatives to improve margins in the Americas for future years.

Adjusted EBITDA decreased by $13.8 million and margin declined 40 basis points primarily due to the aforementioned factors.

The following table summarizes selected financial data for our EMEA & APAC segment.

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Net sales increased for our EMEA & APAC segment by $148.1 million during 2025 compared to 2024.

Net sales from existing business increased by $9.3 million driven by higher sales volume, partially offset by lower customer pricing.

Net sales from existing business increased by $11.6 million primarily resulting from increases in sales volume partially offset by lower customer pricing.

Net sales from acquisitions contributed $88.0 million.

These increases were partially offset by $14.2 million in unfavorable currency translation .

Gross profit and related margin increased primarily due to the benefit from increased sales volume, lower material costs and productivity gains partially offset by unfavorable foreign currency impact and lower customer pricing .

Selling, general and administrative expense decreased over the same period primarily d ue to savings from restructuring initiatives partially offset by spending on growth initiatives.

In addition, there was $48.5 million in favorable currency translation .

Gross profit increased primarily due to acquisitions, favorable foreign exchange impact and increased sales volumes partially offset by lower pricing and higher material costs .

Gross profit margin declined 90 basis points, primarily due to inflation and cost increases partially offset by customer pricing increases, leading to margin compression.

Selling, general and administrative expense increased over the same period primarily due to acquisitions and related costs partially offset by a gain on disposition of property.

Restructuring and other related charges increased $8.9 million during 2025 in comparison to 2024 primarily driven by the EWM acquisition.

Adjusted EBITDA increased by $44.7 million and margin expanded 100 basis points primarily due to the aforementioned factors.

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We expect to finance our liquidity requirements through cash flows from operating activities.

We expect that our primary ongoing requirements for cash will be for working capital, funding of acquisitions, capital expenditures and restructuring related cash outflows, asbestos-related cash outflows, debt service and required amortization of principal, stock repurchases and, pending approval from the Board of Directors, payment of cash dividends.

As of December 31, 2024, we were in compliance with the covenants under the Credit Agreement and the Indenture.

The Company’s weighted average interest rate of borrowings under the Credit Agreement and the Indenture was 5.24%, excluding accretion of deferred financing fees and net of interest rate hedge impacts .

As of end of the year, we had the capacity for additional indebtedness of up to $750 million a vailable on the revolving credit facility.

We expect that our primary ongoing requirements for cash will be for working capital, funding of acquisitions, capital expenditures, restructuring and asbestos-related cash outflows, debt service and required principal payments, stock repurchases and, subject to approval from the BOD, payment of cash dividends.

As of December 31, 2025, we were in compliance with the covenants under the A&R Credit Agreement and the Indenture.

The Company’s weighted average interest rate of borrowings under the A&R Credit Agreement and the Indenture was 5.40%, excluding accretion of deferred financing fees .

As of end of the year, we had the capacity for additional indebtedness of up to $865 million a vailable on the senior revolving credit facility (“Revolving Facility”).

Additionally, we have the ability to i ncur $50 million of indebtedness pursuant to certain uncommitted credit lines, consisting primarily of an uncommitted credit line that we currently have in place, whi ch we have used from time to time in the past for short-term working capital needs.

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Stock 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.

On August 13, 2024, the BOD 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, 2025 since program inception .

and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions, applicable legal requirements and other factors.

There is no term associated with the remaining repurchase authorization.

As of December 31, 2024, we had $249.4 million of Cash and cash equivalents, an increase of $147.4 million from $102.0 million as of December 31, 2023.

As of December 31, 2025, we had $185.9 million of Cash and cash equivalents, a decrease of $63.5 million from $249.4 million as of December 31, 2024.

The following table summarizes the change in Cash and cash equivalents during the periods indicated.

Year Ended December 31,

(Dollars in millions) (1)

(In millions) (1)

Net cash provided by operating activities $ 260.6 $ 355.4

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Proceeds from borrowings on Senior Notes — 700.0

Proceeds from borrowings on revolving credit facility and other 205.0 574.2

Repayments of borrowings on Term Loans (602.5) (12.5)

Repayments of borrowings on revolving credit facility and other (237.0) (763.2)

Payment of debt issuance costs and other (13.2) (1.0)

Proceeds from borrowings on Term Loan 350.0 —

Proceeds from borrowings on revolving credit facilities and other 410.7 205.0

Repayments of borrowings on Term Loan (385.0) (602.5)

Repayments of borrowings on revolving credit facilities and other (217.1) (237.0)

Payment of debt issuance costs (5.4) (10.4)

Payment of dividends (21.9) (17.0)

Distribution to noncontrolling interest holders (3.7) (3.9)

Net cash provided by (used in) financing activities 31.7 (219.7)

Distributions to noncontrolling interest holders (4.2) (3.7)

Other financing (13.4) (2.7)

Net cash provided by financing activities 113.7 31.7

Effect of foreign exchange rates on Cash and cash equivalents 42.1 (34.0)

Increase in Cash and cash equivalents $ 147.4 $ 30.0

(Decrease) increase in Cash and cash equivalents $ (63.5) $ 147.4

(1) Numbers may not sum due to rounding.

Cash flows from operating activities can fluctuate significantly from period to period due to changes in working capital and the timing of payments for items such as pension funding, asbestos-related costs and restructuring program funding.

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

Changes in significant operating cash flow items are discussed below.

• Operating cash flow was positively impacted by increased operating income and lower interest and income tax payments, partially offset by lower other operating cash flow for the year ended December 31, 2024.

• Discontinued operations outflows for the years ended December 31, 2024 and 2023 were $15.0 million and $15.2 million, respectively, which were primarily asbestos related.

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

Cash flows used in investing activities include $153.7 million of cash used for our Sager, ESAB Bangladesh and SUMIG acquisitions during the year ended December 31, 2024 and $18.7 million of cash used for our Therapy Equipment acquisition during the year ended December 31, 2023.

Refer to Note 5, “Acquisitions” in the accompanying Notes contained elsewhere in this Form 10-K for additional information.

Cash flows provided by financing activities of $31.7 million during the year ended December 31, 2024 was primarily driven by proceeds from borrowings on long-term debt of $905.0 million partially offset by net repayment of borrowings on the long-term debt of $839.5 million, payment of debt issuance costs of $10.4 million and payment of four cash dividends totaling $17.0 million.

• Operating cash flow for the year ended December 31, 2025 decreased compared to the prior year period due to higher working capital, higher interest expenses and transaction costs associated with acquisition activity .

• Discontinued operations outflows for the years ended December 31, 2025 and 2024 were $15.0 million, which were primarily asbestos related.

• Restructuring initiative payments of $14.9 million and $10.4 million for the years ended December 31, 2025 and 2024, respectively, which includes severance and other termination benefits, including outplacement services, as well as the cost of relocating associates, relocating equipment, lease termination expenses and other costs in connection with the closure and optimization of facilities and product lines.

Cash flows used in investing activities during the year ended December 31, 2025 was primarily comprised of approximately $438 million of cash used for our Bavaria, DeltaP, Aktiv and EWM acquisitions and during the year ended December 31, 2024 was primarily comprised of approximately $154 million for our Sager, ESAB Bangladesh and SUMIG acquisitions.

Cash flows provided by financing activities during the year ended December 31, 2025 were $113.7 million, primarily attributable to acquisition-related financing activities.

Proceeds from debt borrowings of $760.7 million were partially offset by net repayment of $602.1 million and cash dividend payments totaling $21.9 million.

Our Cash and cash equivalent s as of December 31, 2025 include $173.4 million h eld in jurisdictions outside the United States.

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Contractual Obligations

As of December 31, 2024, the Company’s Term A-1 loan and Senior Notes had principal amounts outstanding of $385.0 million and $700.0 million, respectively.

In addition to the outstanding principal on our debt, we are subject to contractual obligations and commitments to make future interest payments on the Term Loans and Senior Notes on various payment dates as provided in the Credit Agreement Amendment and the Indenture.

As of December 31, 2025, the Company’s senior term loan A facility and Senior Notes had principal amounts outstanding of $350.0 million and $700.0 million, respectively, as well as $185.0 million drawn on the Revolving Facility.

In addition to the outstanding principal on our debt, we are subject to contractual obligations and commitments to make future interest payments on the senior term loan A facility and Senior Notes on various payment dates as provided in the A&R Credit Agreement and the Indenture.

Refer to Note 15, “Debt” in the accompanying Notes contained elsewhere in this Form 10-K for expiration dates and maturity schedules on our outstanding debt obligations for the next five years.

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Purchase Obligations

As of December 31, 2024, the Company had other purchase obligation s of $143.3 million, with $132.8 million payable within 12 months.

As of December 31, 2025, the Company had other purchase obligations of $162.4 million, with $155.2 million payable within 12 months.

We have funding requirements associated with our pension benefit plans as of December 31, 2025, which are estimated to be $5.2 million for the year ending December 31, 2026.

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Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that provide liquidity, capital resources, market or credit risk support that expose us to any liability that is not reflected in our Consolidated and Combined Financial Statements at December 31, 2024 other than outstanding letters of credit of $27.2 million and unconditional purchase obligations with suppliers noted above.

We do not have any off-balance sheet arrangements that provide liquidity, capital resources, market or credit risk support that expose us to any liability that is not reflected in our Consolidated Financial Statements at December 31, 2025 other than outstanding letters of credit of $33.7 million and unconditional purchase obligations with suppliers noted above.

Critical Accounting Policies

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An evaluation of Goodwill for impairment was performed for the three reporting units for the years ended December 31, 2025 and 2024, which indicated no impairment existed.

For the year ended December 31, 2024, a qualitative assessment was performed for the three reporting units.

The carrying amount of Goodwill of the Americas, EMEA & APAC and Gas Control Equipment reporting units as of December 31, 2024 we re $629.7 million, $896.3 million and $126.0 million, respectively.

For the year ended December 31, 2025, a quantitative assessment was performed for the three reporting units.

The carrying amount of Goodwill of the Americas, EMEA & APAC and GCE reporting units as of December 31, 2025 we re $647.0 million, $1,137.9 million and $164.8 million, respectively.

Determining the fair value of a reporting unit requires the application of judgment and involves the use of significant estimates and assumptions that can be affected by changes in business climate, economic conditions, the competitive environment and other factors.

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Actual results could differ from our estimates and projections, which would also affect the assessment of impairment.

As of December 31, 2024, we have Goodwill of $1,652.0 million and indefinite-lived trade names of $173.9 million that are subject to at least annual review for impairment.

As of December 31, 2025, we have Goodwill of $1,949.7 million and indefinite-lived trade names of $197.1 million that are subject

to at least annual review for impairment.

See Note 9, “Goodwill and Intangible Assets” in the accompanying Notes for further information.

Prior to the Separation, our domestic and foreign operating results were included in the income tax returns of Enovis.

We accounted for income taxes under the separate return method.

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

We account for income taxes under ASC 740, Income Taxes (“ASC 740”), which requires recognition of deferred income tax assets and liabilities reflecting the tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the Consolidated and Combined Financial Statements and their respective tax basis.

We account for income taxes under ASC 740, Income Taxes (“ASC 740”), which requires recognition of deferred income tax assets and liabilities reflecting the tax consequences attributable to differences between the carrying amounts of existing assets and liabilities in the Consolidated Financial Statements and their respective tax basis.

Deferred income tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled.

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We establish 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 our income tax liability.

We recognize interest and penalties related to unrecognized income tax benefits in Income tax expense in the Consolidated and Combined Statements of Operations.

We recognize interest and penalties related to unrecognized income tax benefits in Income tax expense in the Consolidated Statements of Operations.

Net liabilities for unrecognized income tax benefits, including accrued interest and penalties, were $18.6 million and $17.1 million as of December 31, 2025 and 2024, respectively, and are included in Other liabilities or as a reduction to deferred tax assets in the accompanying Consolidated Balance Sheets.

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Asbestos Liabilities and Insurance Assets

Certain entities that became our subsidiaries in connection with the Separation are the legal obligor for certain asbestos obligations including long-term asbestos insurance assets, long-term asbestos insurance receivables, accrued asbestos liabilities, long-term asbestos liabilities, asbestos indemnity expenses, asbestos-related defense costs and asbestos insurance recoveries related to the asbestos obligations from our Former Parent’s other legacy industrial businesses.

Certain entities are the legal obligor for certain asbestos obligations including long-term asbestos insurance assets, long-term asbestos insurance receivables, accrued asbestos liabilities, long-term asbestos liabilities, asbestos indemnity expenses, asbestos-related defense costs and asbestos insurance recoveries related to the asbestos obligations of the Former Parent’s other legacy industrial businesses.

As a result, we hold certain asbestos-related contingencies and insurance coverages.

These subsidiaries are each one of many defendants in a large number of lawsuits that claim personal injury as a result of exposure to asbestos from products manufactured or used with components that are alleged to have contained asbestos.

Such components were acquired from third-party suppliers, and were not manufactured by any of our, or our Former Parent’s, subsidiaries nor were the subsidiaries, producers or direct suppliers of asbestos.

Such components were acquired from third-party suppliers, and were not manufactured by any of our subsidiaries nor were the subsidiaries producers or direct suppliers of asbestos.

The manufactured products that are alleged to have contained or used asbestos generally were provided to meet the specifications of the subsidiaries’ customers, including the United States Navy.

The subsidiaries settle asbestos claims for amounts we consider 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.

We expect 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.

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

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

The Company expects such settlement value 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 to plaintiffs.

We have projected future asbestos-related liability costs with regard to pending and future unasserted claims based upon the Nicholson methodology.

The Nicholson methodology is a standard approach used by experts and has been accepted by

numerous courts.

The Nicholson methodology is a standard approach used by experts and has been accepted by numerous courts.

This methodology is based upon risk equations, exposed population estimates, mortality rates and other demographic statistics.

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See Note 19, “Commitments and Contingencies” in the accompanying Notes for additional information regarding our asbestos liabilities and insurance assets.

Corporate Allocations

Prior to the Separation, we operated as part of Enovis Corporation and not as a stand-alone company.

Accordingly, certain shared costs have been allocated to us and are reflected as expenses in the accompanying financial statements.

We consider the allocation methodologies used to be reasonable and appropriate reflections of the related expenses attributable to us for purposes of the carve-out 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 we had operated as a separate stand-alone entity.

In addition, the expenses reflected in the financial statements may not be indicative of expenses that will be incurred in the future by us.

Refer to Note 21, “Related Party Transactions” in the accompanying Notes for a description of our corporate allocations and related-party transactions.

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 7. Management’s Discussion and Analysis