ESAB Corp 10-K

Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm - Internal Controls Over Financial Reporting (Ernst & Young LLP, Tysons, VA, Auditor Firm ID: 42 ) 45 Report of Independent Registered Public Accounting Firm - Consolidated Financial Statements (Ernst & Young LLP, Tysons, VA, Auditor Firm ID: 42 ) 47 Consolidated Statements of Operations 49 Consolidated Statements of Comprehensive Income 50 Consolidated Balance Sheets 51 Consolidated Statements of Equity 52 Consolidated Statements of Cash Flows 53 Notes to Consolidated Financial Statements 54 Note 1. Organization and Basis of Presentation 54 Note 2. Summary of Significant Accounting Policies 54 Note 3. Recently Issued Accounting Pronouncements 60 Note 4. Discontinued Operations 60 Note 5. Acquisitions 60 Note 6. Revenue 62 Note 7. Earnings per Share from Continuing Operations 63 Note 8. Income Taxes 63 Note 9. Goodwill and Intangible Assets 68 Note 10. Property, Plant and Equipment, Net 69 Note 11. Inventories, Net 69 Note 12. Leases 69 Note 13. Accrued and Other Liabilities 70 Note 14. Benefit Plans 71 Note 15. Debt 76 Note 16. Derivatives 78 Note 17. Fair Value Measurements 79 Note 18. Equity 81 Note 19. Commitments and Contingencies 85 Note 20. Segment Information 86 Note 21. Subsequent Events 88 44 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of ESAB Corporation Opinion on Internal Control Over Financial Reporting We have audited ESAB Corporation’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, ESAB Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria. As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of EWM GmbH (“EWM”) (acquired on August 22, 2025), which is included in the 2025 consolidated financial statements of the Company and constituted approximately 8% of total assets as of December 31, 2025 and approximately 2% of net sales for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of EWM. 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, 2025 and 2024, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2025 and the related notes and financial statement schedule listed in the Index at Item 15(a)(2) and our report dated February 20, 2026 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 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. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 45 Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Tysons, Virginia February 20, 2026 46 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of ESAB Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of ESAB Corporation (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income, equity and cash flows for each of the three years in the period ended December 31, 2025, 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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 20, 2026 expressed an unqualified opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. 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. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. 47 Asbestos Liability Description of the Matter At December 31, 2025, the Company’s asbestos liability balance was $312.1 million. As discussed in Note 19 of the consolidated financial statements, certain of the Company’s subsidiaries are defendants in a large number of lawsuits that claim personal injury as a result of exposure to asbestos from products manufactured with components that are alleged to have contained asbestos. The Company records an asbestos liability for probable pending and future claims over the period that the Company believes it can reasonably estimate such claims. Auditing the asbestos liability was complex and highly judgmental due to the significant estimation of numerous variables required in determining the asbestos obligation. In particular, the estimates were sensitive to significant assumptions such as the period of time over which claims activity can be reasonably predicted, the number of future asbestos-related claims that may be received, the type and severity of disease alleged by each claimant, dismissal rates, the latency period associated with asbestos exposure, and settlement values. These assumptions have a significant effect on the asbestos liability. How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process to estimate the asbestos liability, including controls related to estimates of expected future claims and other key assumptions underlying the calculation of the obligation. We also tested management’s controls over the completeness and accuracy of the data used in the calculation. To audit the asbestos liability recorded by management, we performed procedures that included, among others, evaluating the methodology applied and the significant assumptions used in the Company’s calculation. For example, we assessed management’s assumptions for the nature and rate of future claims, claims disposition and settlement patterns by comparing these assumptions to the Company’s historical experience and industry data. We considered the Company’s historical data and industry data in evaluating the adequacy of the Company’s projections. We developed, with the assistance of an internal actuarial specialist, an independent range of estimated asbestos liability. We tested the completeness and accuracy of the claims data used by management. We also performed analyses to determine the sensitivity of changes in certain assumptions, such as the period over which claims can be estimated, to the calculated liability. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2021. Tysons, Virginia February 20, 2026 48 ESAB CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS Dollars in thousands, except per share amounts Year Ended December 31, 2025 2024 2023 Net sales $ 2,842,555 $ 2,740,803 $ 2,774,766 Cost of sales 1,794,213 1,703,348 1,759,015 Gross profit 1,048,342 1,037,455 1,015,751 Selling, general and administrative expense 608,416 579,778 587,475 Restructuring and other related charges 27,756 10,227 24,110 Operating income 412,170 447,450 404,166 Pension settlement loss — 12,155 — Interest expense and other, net 83,910 64,890 85,074 Income from continuing operations before income taxes 328,260 370,405 319,092 Income tax expense 69,157 77,348 95,727 Net income from continuing operations 259,103 293,057 223,365 Loss from discontinued operations, net of taxes ( 25,871 ) ( 22,309 ) ( 12,341 ) Net income 233,232 270,748 211,024 Income attributable to noncontrolling interest, net of taxes ( 6,466 ) ( 5,906 ) ( 5,739 ) Net income attributable to ESAB Corporation $ 226,766 $ 264,842 $ 205,285 Earnings (loss) per share - basic Income from continuing operations $ 4.14 $ 4.73 $ 3.59 Loss on discontinued operations ( 0.43 ) ( 0.37 ) ( 0.20 ) Net income per share - basic $ 3.71 $ 4.36 $ 3.39 Earnings (loss) per share - diluted Income from continuing operations $ 4.10 $ 4.68 $ 3.56 Loss on discontinued operations ( 0.43 ) ( 0.37 ) ( 0.20 ) Net income per share - diluted $ 3.67 $ 4.31 $ 3.36 See Notes to Consolidated Financial Statements. 49 ESAB CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Dollars in thousands Year Ended December 31, 2025 2024 2023 Net income $ 233,232 $ 270,748 $ 211,024 Other comprehensive income (loss): Foreign currency translation, net of tax (benefit) expense of $( 12,865 ), $ 6,141 and $ 4,545 190,923 ( 108,472 ) 47,258 Unrealized loss on derivatives designated and qualifying as cash flow hedges, net of tax benefit of $( 497 ), $( 1,611 ) and $( 1,087 ) ( 1,816 ) ( 5,554 ) ( 3,732 ) Defined benefit pension and other post-retirement plan activity, net of tax (benefit) expense of $( 388 ) , $ 2,458 and $ 2,639 ( 771 ) 8,918 7,338 Other comprehensive income (loss) 188,336 ( 105,108 ) 50,864 Comprehensive income 421,568 165,640 261,888 Comprehensive income attributable to noncontrolling interest ( 4,944 ) ( 4,394 ) ( 5,887 ) Comprehensive income attributable to ESAB Corporation $ 416,624 $ 161,246 $ 256,001 See Notes to Consolidated Financial Statements. 50 ESAB CORPORATION CONSOLIDATED BALANCE SHEETS Dollars in thousands, except share and per share amounts December 31, 2025 2024 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 185,863 $ 249,358 Trade receivables, less allowance for credit losses of $ 21,765 and $ 23,850 451,298 370,321 Inventories, net 481,765 403,711 Prepaid expenses 66,103 55,665 Other current assets 76,876 69,327 Total current assets 1,261,905 1,148,382 Property, plant and equipment, net 381,876 298,347 Goodwill 1,949,702 1,651,993 Intangible assets, net 673,006 487,993 Lease asset - right of use 113,310 89,859 Other assets 386,295 357,401 Total assets $ 4,766,094 $ 4,033,975 LIABILITIES AND EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 2,412 $ 15,000 Accounts payable 360,391 318,493 Accrued liabilities 301,986 298,558 Total current liabilities 664,789 632,051 Long-term debt 1,232,540 1,060,739 Other liabilities 657,236 532,936 Total liabilities 2,554,565 2,225,726 Equity: Common stock - $ 0.001 par value - 600,000,000 shares authorized; 60,721,079 and 60,517,574 shares issued and outstanding as of December 31, 2025 and December 31, 2024, respectively 61 61 Additional paid-in capital 1,904,889 1,901,337 Retained earnings 800,806 597,180 Accumulated other comprehensive loss ( 539,716 ) ( 729,574 ) Total ESAB Corporation equity 2,166,040 1,769,004 Noncontrolling interest 45,489 39,245 Total equity 2,211,529 1,808,249 Total liabilities and equity $ 4,766,094 $ 4,033,975 See Notes to Consolidated Financial Statements. 51 ESAB CORPORATION CONSOLIDATED STATEMENTS OF EQUITY Dollars in thousands, except share and per share amounts Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive Loss Noncontrolling Interest Total Shares Amount Balance at January 1, 2023 60,094,725 $ 60 $ 1,865,904 $ 159,231 $ ( 674,988 ) $ 38,251 $ 1,388,458 Net income — — — 205,285 — 5,739 211,024 Dividends declared ($ 0.23 per share) — — — ( 13,959 ) — — ( 13,959 ) Distributions to noncontrolling owners — — — — — ( 3,880 ) ( 3,880 ) Other comprehensive loss, net of tax benefit of $ 6,097 — — — — 50,716 148 50,864 Common stock-based award activity 200,909 — 15,150 — — — 15,150 Balance at December 31, 2023 60,295,634 $ 60 $ 1,881,054 $ 350,557 $ ( 624,272 ) $ 40,258 $ 1,647,657 Net income — — — 264,842 — 5,906 270,748 Dividends declared ($ 0.30 per share) — — — ( 18,219 ) — — ( 18,219 ) Distributions and purchases relating to noncontrolling owners — — 2,860 — ( 1,706 ) ( 5,407 ) ( 4,253 ) Other comprehensive income, net of tax expense of $ 6,988 — — — — ( 103,596 ) ( 1,512 ) ( 105,108 ) Common stock-based award activity 221,940 1 17,423 — — — 17,424 Balance at December 31, 2024 60,517,574 $ 61 $ 1,901,337 $ 597,180 $ ( 729,574 ) $ 39,245 $ 1,808,249 Net income — — — 226,766 — 6,466 233,232 Dividends declared ($ 0.38 per share) — — — ( 23,140 ) — — ( 23,140 ) Distributions and purchases relating to noncontrolling owners — — — — — 1,300 1,300 Other comprehensive loss, net of tax benefit of $( 13,750 ) — — — — 189,858 ( 1,522 ) 188,336 Common stock-based award activity 203,505 — 3,552 — — — 3,552 Balance at December 31, 2025 60,721,079 $ 61 $ 1,904,889 $ 800,806 $ ( 539,716 ) $ 45,489 $ 2,211,529 See Notes to Consolidated Financial Statements. 52 ESAB CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Dollars in thousands Year Ended December 31, 2025 2024 2023 Cash flows from operating activities: Net income $ 233,232 $ 270,748 $ 211,024 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and other impairment charges 84,105 66,790 75,034 Net gain on sale of property, plant and equipment ( 5,645 ) ( 986 ) ( 1,570 ) Stock-based compensation expense 16,937 19,780 16,122 Deferred income tax benefit ( 35,664 ) ( 2,601 ) ( 25,408 ) Non-cash interest expense 2,864 2,886 1,195 Pension settlement loss — 12,155 — Changes in operating assets and liabilities: Trade receivables, net ( 40,014 ) ( 4,848 ) ( 6,006 ) Inventories, net ( 5,570 ) ( 22,495 ) 17,958 Accounts payable 6,687 31,861 ( 19,819 ) Other operating assets and liabilities 3,635 ( 17,891 ) 61,964 Net cash provided by operating activities 260,567 355,399 330,494 Cash flows from investing activities: Purchases of property, plant and equipment ( 47,287 ) ( 51,779 ) ( 48,178 ) Proceeds from sale of property, plant and equipment 6,535 3,805 4,600 Acquisitions, net of cash received ( 438,314 ) ( 153,664 ) ( 18,665 ) Other investing ( 816 ) ( 4,058 ) — Net cash used in investing activities ( 479,882 ) ( 205,696 ) ( 62,243 ) Cash flows from financing activities: Proceeds from borrowings on Senior Notes — 700,000 — Proceeds from borrowings on Term Loan 350,000 — — Proceeds from borrowings on revolving credit facilities and other 410,715 205,000 574,150 Repayments of borrowings on Term Loan ( 385,000 ) ( 602,500 ) ( 12,500 ) Repayments of borrowings on revolving credit facilities and other ( 217,149 ) ( 237,005 ) ( 763,173 ) Payment of debt issuance costs ( 5,396 ) ( 10,423 ) — Payment of dividends ( 21,913 ) ( 16,992 ) ( 13,342 ) Distributions to noncontrolling interest holders ( 4,171 ) ( 3,678 ) ( 3,880 ) Other financing ( 13,385 ) ( 2,733 ) ( 972 ) Net cash provided by (used in) financing activities 113,701 31,669 ( 219,717 ) Effect of foreign exchange rates on Cash and cash equivalents 42,119 ( 34,017 ) ( 18,555 ) (Decrease) increase in Cash and cash equivalents ( 63,495 ) 147,355 29,979 Cash and cash equivalents, beginning of period 249,358 102,003 72,024 Cash and cash equivalents, end of period $ 185,863 $ 249,358 $ 102,003 Supplemental disclosures: Interest payments, net $ 66,569 $ 62,280 $ 79,148 Income tax payments, net $ 92,690 $ 94,525 $ 132,902 See Notes to Consolidated Financial Statements. 53 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Basis of Presentation Founded in 1904, ESAB Corporation (“ESAB” or the “Company”) is a focused premier industrial compounder. 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 management system, ESAB Business Excellence (“EBXai”), 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, automated welding and gas control. 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, the Middle East, India, Africa and Asia Pacific. The Company’s fiscal year ends December 31. The Company’s first three quarters end on the last business day of the 13th complete week after the end of the prior quarter. Basis of Presentation The accompanying Consolidated 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 Financial Statements reflect, in the opinion of management, all adjustments necessary to present fairly the Company’s results of operations, financial position and cash flows as of and for the periods indicated. Intercompany transactions and accounts are eliminated in consolidation. The Company’s Consolidated 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 Financial Statements reflect the assets, liabilities, revenues and expenses of consolidated subsidiaries and the noncontrolling parties’ ownership share is presented as noncontrolling interest. 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, the Company is meeting current contractual obligations while addressing applicable laws and regulations. For the year ended December 31, 2025, Russia represented approximately 5 % of the Company’s Net sales, and approximately $ 9 million of its Net income. Russia has approximately 5 % of the Company’s total net assets as of December 31, 2025, including approximately $ 50 million of Cash and cash equivalents that may be subject to delays in withdrawing from Russia, based upon the current environment at that time. 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 $ 110 million as of December 31, 2025, which would be realized upon a transition out. 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. 2. Summary of Significant Accounting Policies Equity Method Investments Investments accounted for under the equity method are initially recorded at the amount of the Company’s initial investment and adjusted each period for the Company’s share of the investee’s income or loss and dividends paid. All equity investments are reviewed periodically for indications of other-than-temporary impairment, including, but not limited to, significant and sustained decreases in quoted market prices or a series of historic and projected operating losses by investees. If the decline in fair value is considered to be other-than-temporary, an impairment loss is recorded and the investment is written down to a new carrying value. 54 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Revenue Recognition The Company recognizes revenue when control of promised goods or services is transferred to the customer. The amount of revenue recognized reflects the consideration to which the Company expects to be entitled in exchange for transferring the goods or services. The Company provides a variety of products and services to its customers. Most of the Company’s contracts consist of a single, distinct performance obligation or promise to transfer goods or services to a customer. For contracts that include multiple performance obligations, we allocate the total transaction price to each performance obligation using our best estimate of the stand-alone selling price of each identified performance obligation. A significant majority of our revenue relates to the shipment of off-the-shelf products that is recognized when control is transferred to the customer. On a limited basis, we have agreements with customers that have multiple performance obligations. In determining whether there are multiple performance obligations, we first assess the goods or services promised in the customer arrangement and then consider the guidance in ASC 606, Revenue from Contracts with Customers , to evaluate whether goods and services are capable of being distinct and are considered distinct within the customer arrangement. To determine whether promised goods or services are separately identifiable (i.e., whether a promise to transfer a good or service is distinct in the context of the contract), we evaluate whether the contract is to deliver (1) multiple promised goods or services or (2) a combined item that comprises the individual goods or services promised in the contract. Substantially all revenue involving development and application engineering projects consists of a single performance obligation and is recognized at a point in time. As mentioned above, a majority of revenue recognized by the Company relates to contracts with customers for standard or off-the-shelf products. 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. Therefore, we do not have material revenues in excess of customer billings or billings to customers in excess of recognized revenues. Refer to Note 6, “Revenue” and Note 13, “Accrued and Other Liabilities” for additional information on the Company’s contract liability balances and related information. The period of benefit for the Company’s incremental costs of obtaining a contract generally have less than a one-year duration; therefore, the Company applies the practical expedient available and expenses costs to obtain a contract when incurred. Taxes Collected from Customers and Remitted to Governmental Authorities The Company collects various taxes and fees as an agent in connection with the sale of products and remits these amounts to the respective taxing authorities. These taxes and fees have been presented on a net basis within Net sales in the Consolidated Statements of Operations and are recorded as a component of Accrued liabilities in the Consolidated Balance Sheets until remitted to the respective taxing authority. Research and Development Expense Research and development costs of $ 44.0 million , $ 39.2 million and $ 38.8 million for the years ended December 31, 2025 , 2024 and 2023 , respectively, are expensed as incurred and are included in Selling, general and administrative expense in the Consolidated Statements of Operations. These amounts do not include development and application engineering costs incurred in conjunction with fulfilling customer orders and executing customer projects. Cash and Cash Equivalents Cash and cash equivalents include all financial instruments purchased with an initial maturity of three months or less. Trade Receivables Trade receivables are presented net of an allowance for credit losses. The estimate of current expected credit losses on trade receivables considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Estimated credit losses are reviewed periodically. 55 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Inventories Inventories are valued at the lower of cost or net realizable value. Fixed manufacturing overhead costs are allocated to inventory based on normal production capacity and abnormal manufacturing activities are recognized as period costs. Cost of 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 last-in, first-out (“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 year ended December 31, 2023 was $ 2.1 million, which is 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. 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 $ 39.2 million and $ 41.2 million as of December 31, 2025 and 2024, respectively. Property, Plant and Equipment Property, plant and equipment, net is stated at historical cost, which includes the fair values of such assets acquired through acquisitions and depreciated by the straight-line method over the estimated remaining useful lives of the related assets. Repair and maintenance expenditures are expensed as incurred unless the repair extends the useful life of the asset. Impairment of Goodwill and Indefinite-Lived Intangible Assets Goodwill represents the costs in excess of the fair value of net assets acquired through acquisitions by the Company. The Company evaluates the recoverability of Goodwill and indefinite-lived intangible assets annually or more frequently if an event occurs or circumstances change in the interim that would more likely than not reduce the fair value of the asset below its carrying amount. The annual impairment test date elected by the Company is the first day of its fourth quarter. Goodwill and indefinite-lived intangible assets are considered to be impaired when the carrying value of a reporting unit or asset exceeds its fair value. As of the annual impairment test date, the Company had three reporting units: Americas, EMEA & APAC and Gas Control Equipment (“GCE”). 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 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. In certain instances, the Company may elect to forgo the qualitative assessment and proceed directly to the quantitative impairment test. If the carrying value of a reporting unit exceeds its fair value, goodwill of that reporting unit is impaired and an impairment loss is recorded equal to the excess of the reporting unit’s carrying value over its fair value, not to exceed the amount of goodwill attributable to that reporting unit. When a quantitative impairment test is performed, the Company measures fair value of reporting units based on a combination of the income approach and market approach. Under the income approach, the Company uses a discounted cash flow model that calculates the fair value as the present value of the cash flows of the reporting units. Under the market approach, the fair value of the business based on comparison against certain market information. Determining the fair value of a reporting unit is judgmental in nature and involves the use of significant estimates and assumptions. These estimates and assumptions include revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, value of net operating losses, future economic and market conditions and determination of appropriate market comparables. Management bases fair value estimates on assumptions it believes to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from these estimates and the estimate is inherently sensitive to any material changes to the inputs noted above; these changes could potentially impact the fair value of reporting units. 56 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the year ended December 31, 2025, a quantitative goodwill impairment assessment was performed and for the years ended December 31, 2024 and 2023, 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 2025 annual impairment test. In the evaluation of indefinite-lived intangible assets for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying value. If the Company determines that it is more likely than not for the indefinite-lived intangible asset’s fair value to be greater than its carrying value, a calculation of the fair value is not performed. If the Company determines that it is more likely than not that the indefinite-lived intangible asset’s fair value is less than its carrying value, a fair value calculation is performed and compared to the carrying value of the asset. In certain instances, the Company may elect to forgo the qualitative assessment and proceed directly to the quantitative impairment test. If the carrying amount of the indefinite-lived intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. The Company measures the fair value of its indefinite-lived intangible assets using the “relief from royalty” method. Significant estimates in this approach include projected revenues and royalty and discount rates for each trade name evaluated. Any material deviation in actual results could affect the calculated fair value of the intangible asset. At the impairment testing date, the first day of the fourth quarter, quantitative impairment tests were performed for all the indefinite-lived trade names for the years ended December 31, 2025, 2024 and 2023, all of which indicated no impairment existed. Impairment of Long-Lived Assets Other than Goodwill and Indefinite-Lived Intangible Assets 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 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. 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. The Company determined that no significant impairment indicators were evident during the years ended December 31, 2025, 2024 and 2023. Derivatives The Company uses derivative instruments to manage exposures to interest rates and net investment exposures. The Company does not enter into derivatives for trading or speculative purposes. All derivatives are recognized at fair value on the Company’s Consolidated Balance Sheets. The accounting for gains and losses resulting from changes in fair value depends on the use of the derivative and whether it is designated and qualifies for hedge accounting. The Company formally documents the relationship of the hedge with the hedged item as well as the risk-management strategy for all designated hedges. Both at inception and on an ongoing basis, the hedging instrument is assessed as to its effectiveness, when applicable. 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. The Company is subject to the credit risk of the counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. The Company manages individual counterparty exposure by monitoring the credit rating of the counterparty and the size of financial commitments and exposures between the Company and the counterparty. The Company had certain interest rate swap agreements that were designated and qualified as cash flow hedges. The final swap matured on April 3, 2025. Therefore, the Company does not have any interest rate swaps outstanding as of the year ended December 31, 2025. The effective portion of the fair value of unrealized gain or loss on cash flow hedges was 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 was reclassified into earnings in the same period or periods during which the hedged 57 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) transaction affected earnings. If a derivative were deemed to be ineffective, the change in fair value of the derivative would be recognized directly in earnings. The Company has certain cross-currency swap agreements that 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 and other, net, in the Company’s Consolidated Statement of Operations. Warranty Costs Estimated expenses related to product warranties are accrued as the revenue is recognized on products sold to customers and included in Cost of sales in the Consolidated Statements of Operations. Estimates are established using historical information as to the nature, frequency and average costs of warranty claims. Income Taxes 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 Financial Statements and their respective tax basis. Deferred income tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred income tax assets and liabilities are reported in Other assets and Other liabilities in the Consolidated Balance Sheets, respectively. The effect on deferred income tax assets and liabilities of a change in tax rates is generally recognized in Income tax expense in the period that includes the enactment date. Global Intangible Low-Taxed Income is accounted for as a current tax expense in the year the tax is incurred. Valuation allowances are recorded if it is more likely than not that some portion of the deferred income tax assets will not be realized. In evaluating the need for a valuation allowance, the Company considers various factors, including the expected level of future taxable income and available tax planning strategies. Any changes in judgment about the valuation allowance are recorded through Income tax expense and are based on changes in facts and circumstances regarding realizability of deferred tax assets. The Company must presume that an income tax position taken in a tax return will be examined by the relevant tax authority and determine whether it is more likely than not that the tax position will be sustained upon examination based upon the technical merits of the position. 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. 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 Statements of Operations. 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: • other non-operating expense (income) items, including certain pension-related activities, • 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 exchange loss on cash and cash equivalents remeasured into the Brazilian real - the direct parent’s currency. 58 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 Consolidated Financial Statements are presented in U.S. Dollars. 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 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 and other, net in the Consolidated Statements of Operations for that period. The following table summarizes the Company’s net foreign transaction gains and losses included within the Consolidated Statements of Operations. Year Ended December 31, 2025 2024 2023 (In thousands) (1) Selling, general and administrative expense $ ( 425 ) $ 7,136 $ 11,389 Interest expense and other, net 2,777 ( 158 ) 1,719 Foreign currency transaction loss, net (2) $ 2,352 $ 6,978 $ 13,108 (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. (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 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, 2025 , 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 $ 5.2 million , Selling, general and administrative expense of $ 4.6 million and Interest expense and other, net loss of $ 1.0 million . 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 expense of $ 6.7 million and Interest expense and other, net loss of $ 26.2 million . Use of Estimates The Company makes certain estimates and assumptions in preparing its Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses for the period presented. Actual results may differ from those estimates. 59 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 3. Recently Issued Accounting Pronouncements The Company assesses the adoption impacts of recently issued accounting pronouncements on the Company’s Consolidated Financial Statements as well as material updates to previous assessments. Accounting Guidance Implemented in 2025 In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which expands disclosure requirements for income taxes, specifically related to the rate reconciliation and income taxes paid. The ASU is effective for fiscal years beginning after December 15, 2024 . The Company has adopted this guidance for the year ended December 31, 2025, refer to Note 8. “Income Taxes” for further information on the impact on the Company’s disclosures. Recently Issued Accounting Guidance Not Yet Adopted In November 2024, the FASB issued ASU No. 2024-03, Disaggregation of Income Statement Expenses , which expands disclosure requirements for more detailed information about the types of expenses in commonly presented expense captions. The ASU is effective for fiscal years beginning after December 15, 2026. The Company is currently evaluating the effect the adoption of the ASU may have on its disclosures. 4. 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 Company has classified asbestos-related activity included in its Consolidated Statements of Operations as part of Loss from discontinued operations, net of taxes. 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 was $ 15.0 million, $ 15.0 million and $ 15.2 million for the years ended December 31, 2025, 2024 and 2023 , respectively. 5. Acquisitions The Company continually evaluates potential acquisitions that either strategically fit with its existing portfolio or expand its portfolio into a new and attractive business area. The Company has completed a number of acquisitions that have been accounted for using the acquisition method and have resulted in the recognition of goodwill in the Company’s financial statements. This goodwill arises because the purchase prices for these businesses exceeded the fair value of acquired identifiable net assets. This excess is attributable to a variety of factors, including, but not limited to, the anticipated future earnings and cash flow potential of the acquired businesses; prevailing market multiples applied to earnings and cash flows in comparable transactions; the competitive nature of the acquisition processes; the strategic benefits of accelerating market entry or enhancing existing product offerings without incurring the time, cost and risk associated with internal development; and the complementary fit and expected synergies these businesses contribute to the Company’s existing operations. Under the acquisition method of accounting, the Company makes an initial allocation of the purchase price at the date of acquisition based upon its understanding of the fair value of the acquired assets and assumed liabilities from information obtained during due diligence and through other sources. As the Company obtains additional information about these assets and liabilities, including through tangible and intangible asset appraisals, and learns more about the newly acquired business, the Company is able to refine the estimates of fair value and more accurately allocate the purchase price. The fair values of acquired intangibles are determined based on estimates and assumptions that form the basis of the forecasted results of the acquired business including earnings before interest, taxes, depreciation and amortization (“EBITDA”), revenue, revenue growth rates, royalty rates and customer attrition rates. These assumptions are forward-looking and could be affected by future economic and market conditions. The Company engages third-party valuation specialists who provide guidance on the Company’s critical assumptions and calculations of the fair value of acquired intangible assets in connection with significant acquisitions. The Company makes appropriate adjustments to purchase price allocations prior to completion of the applicable measurement period, as required. Only facts and circumstances that existed as of the acquisition date are considered for subsequent adjustment. 60 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following describes our acquisition activity for the three years ended December 31, 2025, for which the Company acquired 100% of the equity and voting interest of each acquired entity. None of the goodwill is expected to be deductible for tax purposes. 2025 Acquisitions Acquisition Date Company Description Segment April 30, 2025 Bavaria Schweisstechnik (“Bavaria”) A European provider of submerged-arc welding applications EMEA & APAC June 4, 2025 DeltaP s.r.l. (“DeltaP”) A European provider of medical central gas systems and aftermarket services EMEA & APAC July 9, 2025 Aktiv Technologies Private Limited (“Aktiv”) An industrial gas equipment manufacturer based in India EMEA & APAC August 22, 2025 EWM GmbH (“EWM”) A Global leader in heavy industrial welding equipment and advanced automation EMEA & APAC The following table summarizes the preliminary allocation of the purchase price to the assets acquired and liabilities assumed for the year ended December 31, 2025. These amounts, including inventory, property, plant and equipment, intangible assets and deferred taxes are determined based upon certain valuations and studies that have yet to be finalized. Accordingly, the assets acquired and liabilities assumed, as detailed below, are subject to adjustment once the detailed analyses are completed. EWM All Others Total (In thousands) Cash and cash equivalents $ 10,360 $ 6,803 $ 17,163 Inventories, net 40,081 7,662 47,743 Property, plant and equipment, net 51,481 6,284 57,765 Goodwill (1) 153,567 63,562 217,129 Intangible assets 129,746 46,656 176,402 Deferred tax liability ( 38,224 ) ( 12,443 ) ( 50,667 ) Other, net (2) ( 12,271 ) ( 890 ) ( 13,161 ) Purchase price consideration $ 334,740 $ 117,634 $ 452,374 (1) Goodwill for “All Others” includes approximately $ 39 million for Bavaria and $ 16 million for Aktiv. (2) Includes current and non-current amounts and non-controlling interest. The following table summarizes the values of the significant identifiable intangible assets acquired, excluding Goodwill, for the year ended December 31, 2025: EWM All Others Intangible Asset Amortization Period Intangible Asset Weighted-Average Amortization Period (In thousands) (In years) (In thousands) (In years) Customer relationships (1) $ 89,095 20 $ 37,984 17 Trade names 20,536 10 6,484 10 Technology and other 20,115 10 2,188 5 $ 129,746 $ 46,656 (1) Customer relationships for “All Others” includes approximately $ 23 million for Bavaria with an amortization period of 18 years. The fair value of the customer relationships was preliminarily estimated based on the multiple excess earnings approach and the fair value of the trade names was preliminarily estimated based on the relief from royalty method. Other preliminary fair value adjustments were made to inventories and property and equipment to reflect the fair value of certain assets upon acquisition. Deferred taxes were preliminarily adjusted to record the book-tax basis difference of acquisition accounting adjustments primarily related to amounts allocated to intangible assets, certain property and equipment, inventories and other liabilities. The fair value of the cash and cash equivalents and other liabilities were estimated to approximate their book values. 61 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) For the year ended December 31, 2025, the above acquisitions added approximately $ 79 million to Net sales and contributed an immaterial amount related to Net income. The Company incurred approximately $ 11 million of acquisition-related transaction costs for the acquisitions completed in 2025 in the year ended December 31, 2025. These costs were expensed in Selling, general and administrative expense in the Consolidated Statements of Operations. 2024 Acquisitions 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 its portfolio in the Americas segment. The Company recognized intangible assets and goodwill of approximately $ 29 million and $ 39 million, respectively. On July 2, 2024, the Company completed the acquisition of ESAB Bangladesh Private Limited, a leading welding company in Bangladesh, for approximately $ 69 million, net of cash received, to extend its position in this fast-growing region in the EMEA & APAC segment. 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 its portfolio in the Americas segment. 2023 Acquisitions 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 in the EMEA & APAC segment. 6. Revenue The Company provides fabrication technology advanced equipment, consumables, gas control equipment, related robotics and digital solutions. Substantially all revenue is recognized at a point in time. The Company disaggregates its revenue into the product groups: Year Ended December 31, 2025 2024 2023 (In thousands) Equipment $ 971,994 $ 893,313 $ 854,949 Consumables 1,870,561 1,847,490 1,919,817 $ 2,842,555 $ 2,740,803 $ 2,774,766 The sales mix in the above table is relatively consistent across both reportable segments. The consumables product grouping generally has less production complexity and shorter production cycles than equipment products. Given the nature of the business, the total amount of unsatisfied performance obligations with an original contract duration of greater than one year as of December 31, 2025 is immaterial. In some circumstances, customers are billed in advance of revenue recognition, resulting in contract liabilities. As of December 31, 2025, 2024 and 2023, total contract liabilities were $ 19.7 million , $ 26.4 million and $ 31.2 million, respectively, and are included in Accrued liabilities on the Consolidated Balance Sheets. During the years ended December 31, 2025 and 2024, substantially all amounts included in the contract liability balance at the beginning of the respective year were recognized as revenue in the following year. 62 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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, 2025 Balance at Beginning of Period Charged to Expense, net Write-Offs and Deductions Foreign Currency Translation Balance at End of Period (In thousands) Allowance for credit losses $ 23,850 $ ( 173 ) $ ( 3,307 ) $ 1,395 $ 21,765 7. Earnings per Share from Continuing Operations 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: Year Ended December 31, 2025 2024 2023 (In thousands, except share and per share data) Computation of earnings per share from continuing operations – basic: Income from continuing operations attributable to ESAB Corporation (1) $ 252,637 $ 287,151 $ 217,626 Distributed and undistributed earnings allocated to nonvested shares ( 1,218 ) ( 1,370 ) ( 1,555 ) Income from continuing operations attributable to common stockholders $ 251,419 $ 285,781 $ 216,071 Weighted-average shares of Common stock outstanding – basic 60,680,448 60,427,743 60,233,623 Income per share from continuing operations – basic $ 4.14 $ 4.73 $ 3.59 Computation of earnings per share from continuing operations – diluted: Income from continuing operations attributable to common stockholders $ 251,419 $ 285,781 $ 216,071 Weighted-average shares of Common stock outstanding – basic 60,680,448 60,427,743 60,233,623 Net effect of potentially dilutive securities (2) 585,846 674,320 422,123 Weighted-average shares of Common stock outstanding – dilution 61,266,294 61,102,063 60,655,746 Net income per share from continuing operations – diluted $ 4.10 $ 4.68 $ 3.56 (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 $ 6.5 million, $ 5.9 million and $ 5.7 million for the years ended December 31, 2025, 2024 and 2023, respectively. (2) Potentially dilutive securities include stock options, performance-based restricted stock units and nonperformance-based restricted stock units. 8. Income Taxes Income from continuing operations before income taxes and Income tax expense consisted of the following per the table below. The classification of tax expense between federal, state and foreign has been recast for prior years to make all years comparable after the adoption of ASU 2023-09. 63 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Year Ended December 31, 2025 2024 2023 (In thousands) Income from continuing operations before income taxes: Domestic operations $ 36,517 $ 50,212 $ 37,364 Foreign operations 291,743 320,193 281,728 328,260 370,405 319,092 Income tax expense: Current: Federal 7,566 8,983 12,548 State 1,929 2,635 3,760 Foreign 91,188 65,495 104,522 100,683 77,113 120,830 Deferred: Federal ( 4,381 ) 4,043 ( 11,897 ) State ( 14 ) ( 126 ) ( 1,341 ) Foreign ( 27,131 ) ( 3,682 ) ( 11,865 ) ( 31,526 ) 235 ( 25,103 ) $ 69,157 $ 77,348 $ 95,727 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, 2025 (Dollars in thousands) United States federal statutory tax $ 68,950 21.0 % State and local income tax, net of federal income tax effect (1) 1,510 0.5 % Foreign tax effects: United Kingdom: Valuation allowance ( 11,965 ) ( 3.7 ) % Other 1,147 0.4 % Switzerland: Statutory tax rate difference between Switzerland and United States ( 5,913 ) ( 1.8 ) % Other ( 2,286 ) ( 0.7 ) % Peru 5,248 1.6 % Other foreign jurisdictions 19,651 6.0 % Effect of changes in tax laws or rates enacted in the current period — — % Effect of cross-border tax laws: Global Intangible Low-Taxed Income inclusion 24,828 7.6 % Subpart F income inclusion 9,663 2.9 % Foreign-Derived Intangible Income deduction ( 5,563 ) ( 1.7 ) % Foreign tax credit ( 33,516 ) ( 10.2 ) % Other ( 93 ) — % Tax credits ( 916 ) ( 0.3 ) % Changes in valuation allowances ( 1,555 ) ( 0.5 ) % Nontaxable or nondeductible items: Nondeductible officer compensation 4,762 1.5 % Other ( 1,250 ) ( 0.4 ) % Changes in unrecognized tax benefits ( 2,897 ) ( 0.9 ) % Other adjustments ( 646 ) ( 0.2 ) % $ 69,157 21.1 % (1) State taxes in California, Illinois, Kentucky, Louisiana, Minnesota, New York and Pennsylvania made up the majority (greater than 50 percent) of the tax effect in this category. 64 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following table presents the required disclosures prior to our adoption of ASU 2023-09 and reconciles the taxes calculated at the United States federal statutory tax rate to the total income tax expense for the years ended December 31, 2024 and 2023. Year Ended December 31, 2024 2023 (In thousands) Taxes calculated at the United States federal statutory rate $ 77,785 $ 67,010 State taxes 1,956 1,630 Effect of tax rates on international operations 1,823 1,548 Changes in tax reserves ( 4,206 ) 10,753 Research and development tax credits ( 980 ) ( 714 ) Effect of United States taxation on international operations 5,239 1,527 Permanent differences, net ( 4,061 ) 10,077 Provision to return ( 8,350 ) 703 Withholding taxes 6,634 11,172 Valuation Allowance ( 761 ) ( 12,308 ) Other 2,269 4,329 Income tax expense $ 77,348 $ 95,727 For the year ended December 31, 2025, the Company’s effective rate of 21.1% differs from the United States federal statutory rate of 21.0% due to the jurisdictional mix of earnings, including foreign withholding tax, partially offset by the release of a valuation allowance. F or the year ended December 31, 2024, the Company’s effective tax rate of 20.9% differed from 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. For the year ended December 31, 2023, the Company’s effective tax rate of 30.0 % differed from the United States federal statutory rate of 21.0% 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. 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 table below shows the temporary differences that gave rise to the significant components of deferred tax assets and liabilities. 65 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) December 31, 2025 2024 (In thousands) Deferred tax assets: Post-retirement benefit obligation $ 1,894 $ 1,229 Expenses currently not deductible 73,063 59,518 Net operating loss carryforward 90,458 86,716 Tax credit carryforward 8,323 5,137 Depreciation and amortization 6,544 4,286 Inventory 12,892 10,795 Capitalized R&D costs 22,035 20,556 Leases 27,831 21,490 Net investment hedge 10,859 — Valuation allowance ( 54,883 ) ( 65,007 ) Deferred tax assets, net 199,016 144,720 Deferred tax liabilities: Depreciation and amortization ( 183,201 ) ( 125,227 ) Leases ( 28,418 ) ( 22,084 ) Outside basis differences and other ( 87,959 ) ( 87,434 ) Total deferred tax liabilities ( 299,578 ) ( 234,745 ) Total deferred tax liabilities, net $ ( 100,562 ) $ ( 90,025 ) 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 broken out in the table below. December 31, 2025 2024 (In thousands) Other assets $ 58,217 $ 44,816 Other liabilities ( 158,779 ) ( 134,841 ) Deferred tax liability, net $ ( 100,562 ) $ ( 90,025 ) The Company evaluates the recoverability of its deferred tax assets on a jurisdictional basis by considering whether deferred tax assets will be realized on a more likely than not basis. 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, 2025, the valuation allo wance decreased from $ 65.0 million to $ 54.9 million primarily due to the release of a valuation allowance in a foreign jurisdiction for which the benefit of the deferred tax asset is now considered more likely than not to be realized. 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. The Company has United States federal net operating loss carryforwards of $ 2.2 million as of December 31, 2025 expiring in years 2029 through 2036. 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, 2025 the Company also has $ 357.0 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. During the year ended December 31, 2025, 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. The Company cannot practically estimate the amount of additional taxes that might be payable on those undistributed earnings. 66 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company records a liability for certain unrecognized income tax benefits for which it is more likely than not that a tax position will not be sustained upon examination by the respective taxing authority (“uncertain tax positions”). This liability for such uncertain tax positions includes the amount of benefit included in (i) its previously filed income tax returns and (ii) its financial results expected to be included in income tax returns to be filed for periods through the date of its Consolidated Financial Statements. The Company’s total unrecognized tax benefits were $ 18.6 million, $ 17.1 million and $ 30.9 million as of December 31, 2025, 2024 and 2023, respectively, inclusive of $ 5.3 million, $ 4.7 million and $ 12.1 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 $ 0.2 million, a benefit of $ 6.2 million and an expense of $ 7.9 million for the years ended December 31, 2025, 2024 and 2023, 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) Balance, January 1, 2023 $ 20,203 Addition for tax positions taken in prior periods 13,514 Reductions related to settlements with taxing authorities ( 4,160 ) Other, including the impact of foreign currency translation 1,314 Balance, December 31, 2023 30,871 Addition for tax positions taken in prior periods 6,436 Reductions for tax positions taken in prior periods ( 7,825 ) Reductions related to settlements with taxing authorities ( 9,255 ) Reductions resulting from a lapse of applicable statute of limitations ( 51 ) Other, including the impact of foreign currency translation ( 3,092 ) Balance, December 31, 2024 17,084 Addition for tax positions taken in prior periods 7,300 Reductions for tax positions taken in prior periods ( 2,201 ) Reductions related to settlements with taxing authorities ( 3,624 ) Reductions resulting from a lapse of applicable statute of limitations ( 1,484 ) Other, including the impact of foreign currency translation 1,513 Balance, December 31, 2025 $ 18,588 The Company files numerous group and separate tax returns in Unites States federal and state jurisdictions, as well as international jurisdictions. The Company is routinely examined by various United States and non-United States taxing authorities. The Company is subject to audit by the United States, various states and foreign jurisdictions. The Company reviews its global tax provisions on a quarterly basis. 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. 67 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The table below includes a breakout of income taxes paid for the year ended December 31, 2025. Year Ended December 31, 2025 (In thousands) Federal $ 872 State 1,439 Foreign 90,379 $ 92,690 Income taxes paid (net of refunds) exceeded 5 percent of total income taxes paid (net of refunds) in the following jurisdictions: Foreign: India $ 11,833 Brazil 11,537 Switzerland 8,724 China 8,572 United Kingdom 6,765 Peru 6,003 Czech Republic 5,798 Mexico 5,039 9. Goodwill and Intangible Assets The following table summarizes Goodwill activity by segment for the years ended December 31, 2025 and 2024. Americas EMEA & APAC Total (In thousands) Balance, January 1, 2024 $ 589,875 $ 998,456 $ 1,588,331 Goodwill attributable to acquisition (1) 44,505 46,691 91,196 Impact of foreign currency translation ( 4,675 ) ( 22,859 ) ( 27,534 ) Balance, December 31, 2024 629,705 1,022,288 1,651,993 Goodwill attributable to acquisitions (1) 2,500 217,128 219,628 Impact of foreign currency translation 14,812 63,269 78,081 Balance, December 31, 2025 $ 647,017 $ 1,302,685 $ 1,949,702 (1) Includes purchase accounting adjustments associated with acquisitions discussed in Note 5, “Acquisitions.” The following table summarizes the Company’s Intangible assets, excluding Goodwill. December 31, 2025 2024 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization (In thousands) Indefinite-Lived Intangible Assets: Trade names $ 197,120 $ — $ 173,912 $ — Definite-Lived Intangible Assets: Customer relationships 661,002 ( 288,727 ) 506,226 ( 248,920 ) Technology 101,214 ( 64,631 ) 71,912 ( 55,539 ) Trade names 58,553 ( 16,428 ) 28,878 ( 11,832 ) Software 91,802 ( 73,731 ) 78,122 ( 62,391 ) Other intangible assets 31,219 ( 24,387 ) 30,424 ( 22,799 ) $ 1,140,910 $ ( 467,904 ) $ 889,474 $ ( 401,481 ) 68 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Amortization expense related to intangible assets of $ 43.3 million , $ 36.0 million and $ 39.7 million for the years ended December 31, 2025, 2024 and 2023, respectively, is included in Selling, general and administrative expense in the Consolidated Statements of Operations. The Company’s expected annual amortization expense for intangible assets for the next five years is as follows. December 31, 2025 (In thousands) 2026 $ 43,037 2027 38,989 2028 36,106 2029 34,794 2030 32,888 10. Property, Plant and Equipment, Net December 31, Depreciable Life 2025 2024 (In years) (In thousands) Land n/a $ 23,481 $ 14,484 Buildings and improvements 5 - 40 233,850 176,077 Machinery and equipment 3 - 15 486,676 409,045 744,007 599,606 Accumulated depreciation ( 362,131 ) ( 301,259 ) $ 381,876 $ 298,347 Depreciation expense for the years ended December 31, 2025 , 2024 and 2023 was $ 40.7 million , $ 30.6 million and $ 30.0 million, respectively. 11. Inventories, Net December 31, 2025 2024 (In thousands) Raw materials $ 173,458 $ 151,248 Work in process 40,033 41,698 Finished goods 307,517 251,994 521,008 444,940 Less: allowance for excess, slow-moving and obsolete inventory ( 39,243 ) ( 41,229 ) $ 481,765 $ 403,711 12. Leases The Company leases certain office spaces, warehouses, production facilities, vehicles and equipment. Leases with an initial term of twelve months or less are not recorded on the balance sheet. Most leases include renewal options, which can extend the lease term into the future. The Company determines the lease term by assuming options that are reasonably certain of being renewed will be exercised. Certain of the Company’s leases include rental payments adjusted for inflation. The right-of-use lease asset is recorded on the Consolidated Balance Sheets, with the current lease liability being included in Accrued liabilities and noncurrent lease liability being included in Other liabilities. During the year ended December 31, 2025, the Company recognized a non-cash transaction for a new material operating lease in the EMEA & APAC segment totaling approximately $ 29 million in Right-of-use lease asset and related lease liability. Operating lease expense was $ 28.7 million, $ 24.9 million and $ 25.4 million for the years ended December 31, 2025, 2024 and 2023, respectively. 69 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) December 31, 2025 (In thousands) Future lease payments by year: 2026 $ 28,379 2027 26,093 2028 19,582 2029 14,418 2030 12,754 Thereafter 50,245 151,471 Less: present value discount ( 41,249 ) Present value of lease liabilities $ 110,222 Weighted-average remaining lease term (in years): Operating leases 7.1 Weighted-average discount rate: Operating leases 8.5 % 13. Accrued Liabilities and Other Liabilities The table below includes a summarized breakout of Accrued liabilities and Other liabilities in the Consolidated Balance Sheets. December 31, 2025 December 31, 2024 Current Noncurrent Current Noncurrent (In thousands) Accrued taxes and deferred tax liabilities $ 53,728 $ 182,898 $ 46,395 $ 151,642 Compensation and related benefits 68,535 52,706 80,451 48,350 Asbestos liability 42,242 269,829 40,779 253,287 Contract liability 19,663 — 26,390 — Lease liability 22,081 88,141 21,459 66,042 Warranty liability 12,573 — 12,794 — Third-party commissions 19,371 — 17,346 — Restructuring liability 17,297 319 4,732 374 Accrued interest 8,570 — 8,077 — Other 37,926 63,343 40,135 13,241 $ 301,986 $ 657,236 $ 298,558 $ 532,936 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, 2025 2024 (In thousands) Warranty liability, beginning of period $ 12,794 $ 12,606 Accrued warranty expense 8,926 10,570 Changes in estimates related to pre-existing warranties 762 1,624 Cost of warranty service work performed ( 12,146 ) ( 11,426 ) Foreign exchange translation effect and other 2,237 ( 580 ) Warranty liability, end of period $ 12,573 $ 12,794 70 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company’s restructuring programs include a series of actions to reduce the structural costs of the Company. 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, 2025 Balance at Beginning of Period Charges Payments Foreign Currency Translation and Other Balance at End of Period (In thousands) Termination benefits (1) $ 3,845 $ 19,174 $ ( 8,678 ) $ 709 $ 15,050 Facility closure costs and other (2) 1,261 8,582 ( 6,245 ) ( 1,032 ) 2,566 $ 5,106 $ 27,756 $ ( 14,923 ) $ ( 323 ) $ 17,616 (1) Includes severance and other termination benefits, including outplacement services. (2) Includes the cost of relocating associates, relocating equipment and other costs in connection with the closure and optimization of facilities and product lines. Year Ended December 31, 2024 Balance at Beginning of Period Charges Payments Foreign Currency Translation Balance at End of Period (In thousands) Termination benefits (1) $ 4,595 $ 4,538 $ ( 5,288 ) $ — $ 3,845 Facility closure costs (2) 1,104 5,689 ( 5,112 ) ( 420 ) 1,261 $ 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 expenses and other costs in connection with the closure and optimization of facilities and product lines. 14. 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. 71 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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, 2025 2024 2025 2024 (In thousands) Change in benefit obligation: Projected benefit obligation, beginning of year $ 189,874 $ 242,743 $ 63,898 $ 99,215 Service cost 1,466 1,429 1,466 1,429 Interest cost 8,475 8,828 2,513 2,576 Plan amendments 1,671 ( 9 ) 1,671 ( 9 ) Actuarial loss (gain) 1,109 ( 5,945 ) ( 1,721 ) 1,178 Foreign exchange effect 8,112 ( 5,386 ) 8,112 ( 5,386 ) Benefits paid ( 17,533 ) ( 21,242 ) ( 4,760 ) ( 4,561 ) Settlements ( 1,314 ) ( 31,583 ) ( 1,314 ) ( 31,583 ) Other 4,759 1,039 4,759 1,039 Projected benefit obligation, end of year 196,619 189,874 74,624 63,898 Accumulated benefit obligation, end of year 192,972 186,689 70,977 60,713 Change in plan assets: Fair value of plan assets, beginning of year 161,906 211,472 21,894 65,278 Actual return on plan assets 8,657 12,389 1,068 2,024 Employer contributions 4,874 4,309 4,750 4,175 Foreign exchange effect 1,930 ( 2,028 ) 1,930 ( 2,028 ) Benefits paid ( 17,533 ) ( 21,242 ) ( 4,760 ) ( 4,561 ) Settlements ( 1,314 ) ( 43,283 ) ( 1,314 ) ( 43,283 ) Other 3,809 289 3,809 289 Fair value of plan assets, end of year 162,329 161,906 27,377 21,894 Funded status, end of year ( 34,290 ) ( 27,968 ) ( 47,247 ) ( 42,004 ) Amounts recognized on the Consolidated Balance Sheets as of December 31: Non-current assets 16,194 17,228 2,164 2,072 Current liabilities ( 4,039 ) ( 3,113 ) ( 3,914 ) ( 2,979 ) Non-current liabilities ( 46,445 ) ( 42,083 ) ( 45,497 ) ( 41,097 ) $ ( 34,290 ) $ ( 27,968 ) $ ( 47,247 ) $ ( 42,004 ) For pension plans with accumulated benefit obligations in excess of plan assets, the accumulated benefit obligation and fair value of plan assets were $ 56.3 million and $ 8.8 million, respectively, as of December 31, 2025 and $ 49.3 million and $ 6.3 million, respectively, as of December 31, 2024. For pension plans with projected benefit obligations in excess of plan assets, the projected benefit obligation and fair value of plan assets were $ 62.3 million and $ 11.8 million, respectively, as of December 31, 2025 and $ 52.4 million and $ 7.2 million, respectively, as of December 31, 2024. Expected contributions to the Company’s pension benefit plans for the year ending December 31, 2026 are $ 5.2 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 (In thousands) 2026 $ 20,672 $ 7,685 2027 19,078 6,525 2028 18,208 6,063 2029 17,878 6,229 2030 17,812 6,666 2031 – 2035 77,553 29,705 72 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The Company’s primary investment objective for its pension plan assets is to provide a source of retirement income for the plans’ participants and beneficiaries. The assets are invested with the goal of preserving principal while providing a reasonable rate of return over the long term. Diversification of assets is achieved through strategic allocations to various asset classes. Actual allocations to each asset class vary due to periodic investment strategy changes, market value fluctuations, the length of time it takes to fully implement investment allocation positions and the timing of benefit payments and contributions. The asset allocation is monitored and rebalanced as required, as frequently as on a quarterly basis in some instances. The target allocation for plan assets varies by plan and jurisdiction, and in various locations (including the United States) has been adjusted to reduce investment risk during the year ended December 31, 2025. The table below shows the actual allocation percentages for the Company’s pension plan assets. Actual Asset Allocation December 31, 2025 2024 United States Plans: Equity securities: United States — % 37 % International — % 13 % Fixed income 90 % 50 % Cash and cash equivalents 10 % — % Foreign Plans: Equity securities — % 4 % Fixed income 14 % 15 % Cash and cash equivalents 1 % 1 % Insurance contracts 51 % 44 % Investment funds (1) 34 % 36 % (1) Represents various fixed income and equity securities. 73 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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, 2025 December 31, 2024 Measured at Net Asset Value (1) Level One Level Two Level Three Total Measured at Net Asset Value (1) Level One Level Two Level Three Total (In thousands) United States Plans: Cash and cash equivalents $ — $ 13,097 $ — $ — $ 13,097 $ — $ 379 $ — $ — $ 379 Equity securities: United States large cap — — — — — 28,803 — — — 28,803 United States small/mid cap — — — — — 9,456 13,481 — — 22,937 International — — — — — 17,566 — — — 17,566 Fixed income mutual funds: United States government and corporate 121,856 — — — 121,856 69,152 — — — 69,152 Other — — — — — — 1,175 — — 1,175 Foreign Plans: Cash and cash equivalents (2) — 237 — — 237 — 238 — — 238 Equity securities — 95 — — 95 — 904 — — 904 Non-United States government and corporate bonds — 3,679 — — 3,679 — 3,198 — — 3,198 Insurance contracts — — 14,040 — 14,040 — — 9,608 — 9,608 Investment funds — — 9,298 — 9,298 — — 7,919 — 7,919 Other — — 27 — 27 — — 27 — 27 $ 121,856 $ 17,108 $ 23,365 $ — $ 162,329 $ 124,977 $ 19,375 $ 17,554 $ — $ 161,906 (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. 74 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The following table sets forth the components of net periodic benefit cost and Other comprehensive income (loss) 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, 2025 2024 2023 2025 2024 2023 (In thousands) Components of Net Periodic Benefit Cost: Service cost $ 1,466 $ 1,429 $ 1,439 $ 1,466 $ 1,429 $ 1,439 Interest cost 8,475 8,828 11,170 2,513 2,576 4,148 Amortization 1,500 1,634 1,206 155 130 40 Settlement loss (1) — 12,155 — — 12,155 — Other 122 ( 179 ) — 122 ( 179 ) ( 331 ) Expected return on plan assets ( 7,917 ) ( 9,410 ) ( 11,391 ) ( 881 ) ( 1,038 ) ( 2,475 ) Net periodic benefit cost 3,646 14,457 2,424 3,375 15,073 2,821 Change in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Loss): Current year net actuarial loss (gain) 1,501 ( 9,598 ) ( 7,021 ) ( 777 ) ( 483 ) 1,984 Current year prior service cost (income) 1,620 ( 9 ) 175 1,620 ( 9 ) 175 Less amounts included in net periodic benefit cost: Amortization of net loss ( 1,506 ) ( 1,676 ) ( 1,575 ) ( 161 ) ( 172 ) ( 78 ) Settlement / divestiture / other loss ( 114 ) ( 455 ) ( 1,079 ) ( 114 ) ( 454 ) ( 1,079 ) Amortization of prior service cost (income) 6 42 38 6 42 38 Total recognized in Other comprehensive income (loss) $ 1,507 $ ( 11,696 ) $ ( 9,462 ) $ 574 $ ( 1,076 ) $ 1,040 (1) 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. Each component of net periodic benefit cost is included in the Company’s Consolidated Statements of Operations for the years ended December 31, 2025, 2024 and 2023. 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 included within Interest expense and other, net. Settlement loss is recorded within Pension settlement loss on the Company’s Consolidated 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. December 31, 2025 2024 (In thousands) Net actuarial loss $ 49,797 $ 49,917 Prior service cost (income) 1,505 ( 122 ) $ 51,302 $ 49,795 The key economic assumptions used in the measurement of the Company’s pension benefit obligations are included in the table below. December 31, 2025 2024 Weighted-average discount rate: All plans 4.7 % 4.8 % Foreign plans 4.3 % 3.7 % Weighted-average rate of increase in compensation levels for active foreign plans (1) 3.5 % 3.1 % (1) Weighted-average rate of increase is only applicable to plans with compensation increase assumptions. 75 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The key economic assumptions used in the computation of net periodic benefit cost are as included in the table below. Year Ended December 31, 2025 2024 2023 Weighted-average discount rate: All plans 4.8 % 4.4 % 4.6 % Foreign plans 3.7 % 3.9 % 4.3 % Weighted-average expected return on plan assets: All plans 4.8 % 5.1 % 5.0 % Foreign plans 4.1 % 4.4 % 4.1 % Weighted-average rate of increase in compensation levels for active foreign plans (1) 3.1 % 3.1 % 3.2 % (1) Weighted-average rate of increase is only applicable to plans with compensation increase assumptions. 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. 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. The Company maintains defined contribution plans covering certain union and non-union employees. The Company’s expense for the years ended December 31, 2025, 2024 and 2023 was $ 7.7 million, $ 7.5 million and $ 7.6 million, respectively. 15. Debt The table below shows the components of the Company’s debt. December 31, 2025 2024 (In thousands) Term loan $ 350,000 $ 385,000 Senior unsecured notes 700,000 700,000 Revolving credit facility 185,000 — Other debt 8,215 — Total debt 1,243,215 1,085,000 Current portion of debt ( 2,412 ) ( 15,000 ) Unamortized deferred financing fees ( 8,263 ) ( 9,261 ) Long-term debt $ 1,232,540 $ 1,060,739 Senior Notes, Term Loan and Revolving Credit Facility On April 4, 2022, the Company entered into a credit agreement that initially consisted of (i) a $ 750 million revolving credit facility with a maturity date of April 4, 2027, (ii) a senior term loan A-1 facility with an initial aggregate principal amount of $ 400 million, with a maturity date of April 4, 2027 and (iii) a $ 600 million 364 -day senior term loan A-2 facility with a maturity date of April 3, 2023. The senior term loan A-2 facility was subsequently refinanced in June 2022 extending its maturity date to April 3, 2025 to become senior term loan A-3 facility. 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 senior term loan A-3 facility and pay fees associated with the offering. On October 16, 2025, the Company entered into an Amended and Restated Credit Agreement (the “A&R Credit Agreement”) that, among other things, provides for (i) a senior term loan A facility (the “Term Loan A Facility”) in an 76 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) aggregate principal amount of $ 350 million, and (ii) a senior revolving credit facility (the “Revolving Facility”) in the amount of $ 1.05 billion to replace the Company’s existing $ 400 million senior term loan A-1 facility and $ 750 million revolving credit facility and pay off the outstanding principal and interest thereunder. Both facilities mature on October 16, 2030, subject to a springing maturity date under certain circumstances. The Revolving Facility contains a $ 300 million foreign currency sublimit and a $ 50 million swing line loan sub-facility. As of December 31, 2025, the A&R Credit Agreement and the Indenture consist of the following facilities: • A $ 1.05 billion Revolving Facility with a maturity date of October 16, 2030, with $ 185 million drawn; • A Term Loan A Facility with an aggregate principal amount of $ 350 million, with maturity dates through October 16, 2030; and • Senior Notes with an aggregate principal amount of $ 700 million with a maturity date of April 15, 2029. The A&R 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 A&R 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, 2025. The A&R Credit Agreement and the Indenture contain various events of default (including failure to comply with the covenants under the A&R 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 Loan A 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 A&R Credit Agreement and the Senior Notes. Loans made under the Term Loan A Facility will bear interest, at the election of the Company, at either the base rate (as defined in the A&R Credit Agreement) or at the term Secured Overnight Financing Rate (“SOFR”) plus an adjustment (as defined in the A&R 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 A&R Credit Agreement), in each case, plus the applicable interest rate margin. The applicable interest rate margin changes based upon the Company’s total leverage ratio (ranging from 1.125 % to 1.750 % or in the case of the base rate margin, 0.125 % to 0.750 %). Each swing line loan denominated in dollars will bear interest at the base rate plus the applicable interest rate margin. To manage exposures to currency exchange rates and interest rates arising in Long-term debt, the Company has interest rate swap agreements. Refer to Note 16, “Derivatives” for additional information. As of December 31, 2025, the weighted-average interest rate of borrowings under the A&R Credit Agreement and the Indenture was 5.40 %, excluding accretion of deferred financing fees. There was approximately $ 865 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 also 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 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 $ 113.3 million. Total letters of credit of $ 33.7 million were outstanding as of December 31, 2025. Deferred Financing Fees The Company had total deferred financing fees of $ 12.5 million included in its Consolidated Balance Sheets as of December 31, 2025, which will be charged to Interest expense and other, net, over the term of the related debt instruments. The costs associated with the Term Loan A Facility and Senior Notes noted above will be amortized over the contractual term of the related facility. Of the $ 12.5 million, $ 4.2 million of deferred financing fees relating to the Revolving Facility are included in Other assets and $ 8.3 million of deferred financing fees relating to the Term Loan A Facility and Senior Notes are recorded as a contra-liability within Long-term debt. 77 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Other The Company’s minimum principal payments for the next five years are broken out in the table below. December 31, 2025 (In thousands) 2026 $ 2,412 2027 10,408 2028 10,408 2029 719,158 2030 500,829 Total debt (1) $ 1,243,215 (1) Total debt excludes $ 8.3 million of related unamortized deferred financing fees. 16. Derivatives The Company uses derivative instruments to manage exposures to currency exchange rates and interest rates arising in connection with Long-term debt and the normal course of business. The Company has established policies and procedures that govern the risk management of these exposures. Both at inception and on an ongoing basis, the derivative instruments that qualify for hedge accounting are assessed as to their effectiveness, when applicable. The Company is subject to the credit risk of counterparties to derivative instruments. Counterparties include a number of major banks and financial institutions. None of the concentrations of risk with an individual counterparty was considered significant as of December 31, 2025. The Company does not expect any counterparties to fail to meet their obligations. The Company records derivatives in the Consolidated Balance Sheets at fair value. Cash Flow Hedges 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 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. 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 was recognized in earnings over the period the originally forecasted hedged transaction impacts earnings. The remaining $ 300 million swap was hedged against the remaining floating-rate debt through its maturity on April 3, 2025. Therefore, the Company does not have any interest rate swaps outstanding as of the year ended December 31, 2025. The cash inflows and outflows associated with the Company’s interest rate swap agreements designated as cash flow hedges were classified in cash flows from operating activities in the accompanying Consolidated Statements of Cash Flows. Net Investment Hedges 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. 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 qualified 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 notional amounts that mature in October 2026. 78 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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 $ 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 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, 2025. 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 Statements of Cash Flows. The table below shows the fair value of the derivatives recognized in the Company’s Consolidated Balance Sheets. December 31, 2025 December 31, 2024 Designated as hedging instruments Other Liabilities Other Assets Other Liabilities Other Assets (In thousands) Cross-currency swap agreements $ 48,778 $ — $ 1,830 $ — Interest rate swap agreement — — — 842 $ 48,778 $ — $ 1,830 $ 842 Derivatives Not Designated as Hedging Instruments The Company has certain foreign currency contracts that are not designated as hedges. As of December 31, 2025 and December 31, 2024, the Company had foreign currency contracts related to purchases and sales with notional values of $ 105.2 million and $ 178.7 million, respectively. 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, 2025 December 31, 2024 Not designated as hedging instruments Accrued Liabilities Other Current Assets Accrued Liabilities Other Current Assets (In thousands) Foreign currency contracts $ 183 $ 780 $ 379 $ 255 The amounts in the table above as of December 31, 2025 reflect the fair value of the Company’s foreign currency contracts on a net basis where allowable under master netting agreements. Had these amounts been recognized on a gross basis, the impact would have been a $ 0.1 million increase in Other current assets with a corresponding increase in Accrued liabilities. 17. Fair Value Measurements The Company utilizes fair value measurement guidance prescribed by accounting standards to value its financial instruments. The guidance establishes a fair value hierarchy based on the inputs used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows: Level One: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets. 79 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Level Two: 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. Level Three: 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. The carrying values of financial instruments, including Trade receivables and Accounts payable, approximate their fair values due to their short-term maturities. 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 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, 2025 December 31, 2024 Level One Level Two Level Three Total Level One Level Two Level Three Total (In thousands) Assets: Cash equivalents $ 11,965 $ — $ — $ 11,965 $ 8,990 $ — $ — $ 8,990 Foreign currency contracts — 857 — 857 — 657 — 657 Interest rate swap agreement — — — — — 842 — 842 Deferred compensation plans — 7,214 — 7,214 — 5,242 — 5,242 11,965 8,071 — 20,036 8,990 6,741 — 15,731 Liabilities: Foreign currency contracts — 260 — 260 — 781 — 781 Cross-currency swap agreements — 48,778 — 48,778 — 1,830 — 1,830 Deferred compensation plans — 7,214 — 7,214 — 5,242 — 5,242 $ — $ 56,252 $ — $ 56,252 $ — $ 7,853 $ — $ 7,853 The Company’s cash equivalents consist of investments in foreign interest-bearing deposit accounts and foreign money market mutual funds that are valued based on quoted market prices. 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 agreement 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. For the year ended December 31, 2025, the impact of the credit valuation adjustment on the Company’s derivatives is immaterial. Refer to Note 16, “Derivatives” for additional information. There were no transfers in or out of Level One, Two or Three during the years ended December 31, 2025 and 2024. Concentration of Credit Risk Financial instruments that are 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. The Company performs credit evaluations of its customers prior to delivery or commencement of services and normally does not require collateral. Letters of credit are occasionally required when the Company deems n ecessary. There are no customers that represent more than 10% of the Company’s Trade receivables, net as of December 31, 2025 and 2024. 80 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 18. Equity 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, 2025 since program inception. The timing and amount of any shares repurchased will be determined by the Company’s management based on its evaluation of market conditions, applicable legal requirements and other factors. There is no term associated with the repurchase authorization. Accumulated Other Comprehensive Loss 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, 2025, 2024 and 2023. All amounts are net of tax and noncontrolling interest, if any. 81 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Accumulated Other Comprehensive Loss Components Net Unrecognized Pension and Other Post-Retirement Benefit Cost Foreign Currency Translation Adjustment Net Investment Hedges Cash Flow Hedges Total (In thousands) Balance at January 1, 2023 $ ( 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 ) 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 income (loss) before reclassifications 5,684 59,285 ( 8,879 ) 4,834 60,924 Amounts reclassified from Accumulated other comprehensive loss (1)(2) ( 1,642 ) — — ( 8,566 ) ( 10,208 ) 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: Net actuarial gain 9,069 — — — 9,069 Foreign currency translation adjustment 530 ( 137,599 ) 15,968 — ( 121,101 ) Gain on long-term intra-entity foreign currency transactions — 14,136 — — 14,136 Unrealized gain on cash flow hedges — — — 4,426 4,426 Other comprehensive income (loss) before reclassifications 9,599 ( 123,463 ) 15,968 4,426 ( 93,470 ) Amounts reclassified from Accumulated other comprehensive loss (1)(2) ( 146 ) — — ( 9,980 ) ( 10,126 ) 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 ( 50,352 ) ( 679,791 ) ( 1,247 ) 1,816 ( 729,574 ) Other comprehensive (loss) income before reclassifications: Net actuarial loss ( 1,811 ) — — — ( 1,811 ) Foreign currency translation adjustment ( 899 ) 224,018 ( 36,467 ) — 186,652 Gain on long-term intra-entity foreign currency transactions — 5,448 — — 5,448 Unrealized gain on cash flow hedges — — — 16 16 Other comprehensive (loss) income before reclassifications ( 2,710 ) 229,466 ( 36,467 ) 16 190,305 Amounts reclassified from Accumulated other comprehensive loss (1)(2) 1,385 — — ( 1,832 ) ( 447 ) Net current period Other comprehensive (loss) income ( 1,325 ) 229,466 ( 36,467 ) ( 1,816 ) 189,858 Balance at December 31, 2025 $ ( 51,677 ) $ ( 450,325 ) $ ( 37,714 ) $ — $ ( 539,716 ) (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) 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. 82 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Share-Based Payments The Company adopted the 2022 Omnibus Incentive Plan on April 4, 2022 (as subsequently amended and restated, effective as of May 8, 2025, the “Stock Plan”). The Company measures and recognizes compensation expense related to share-based payments based on the fair value of the instruments issued. Stock-based compensation expense is generally recognized as a component of Selling, general and administrative expense in the Consolidated Statements of Operations. Stock Options Under the Stock Plan, the Company may grant options to purchase common stock, with a maximum term of 10 years at a purchase price equal to the market value of the Company’s common stock on the date of grant. Stock-based compensation expense for stock option awards is based upon the grant-date fair value using the Black-Scholes option pricing model. The Company recognizes compensation expense for stock option awards on a straight-line basis over the requisite service period of the entire award. With limited exceptions, the employee must remain in service until the vesting date. For the year ended December 31, 2025, the Stock-based compensation expense for the stock option awards was $ 3.0 million. As of December 31, 2025 , the Company had $ 2.9 million of unrecognized compensation expense related to stock option awards that will be recognized over a weighted-average period of 1.8 years. Restricted Stock Units During the year ended December 31, 2023, the Company granted certain employees performance-based restricted stock units (“PRSUs”), the vesting of which is fully based on company specific performance metrics over a three-year performance period. The awards also have a service requirement that equals the respective performance periods. These PRSUs are valued at the market value of a share of common stock on the date of grant taking into consideration the probability of achieving the specified performance goal. 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. During the year ended December 31, 2024 and December 31, 2025, 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, 2025, the Stock-based compensation expense for the PRSUs was $ 2.7 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. With limited exceptions, the employee must remain in service until the vesting date. 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, 2025, the Stock-based compensation expense for the RSUs was $ 11.2 million . 83 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) The activity of the Company’s PRSUs and RSUs is included in the table below. PRSUs RSUs Number of Units Weighted- Average Grant-Date Fair Value Number of Units Weighted-Average Grant-Date Fair Value Balance at December 31, 2024 200,642 $ 68.44 373,620 $ 67.02 Granted 100,947 131.81 129,729 123.38 Vested 93,799 49.43 173,517 62.38 Forfeited and expired 20,231 90.83 31,235 87.65 Balance at December 31, 2025 187,559 $ 97.48 298,597 $ 92.20 The fair value of shares vested during the year ended December 31, 2025 was $ 15.5 million . As of December 31, 2025 , the Company had $ 24.7 million of unrecognized compensation expense related to PRSU and RSU awards that will be recognized over a weighted-average period of 2.4 years. 84 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 19. Commitments and Contingencies Asbestos Contingencies Certain subsidiaries of the Company are the legal obligor, or owner, 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 Company’s other legacy industrial businesses. As a result, the Company holds 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 the Company’s 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 subs idiaries settle asbestos claims for amounts the Company considers reasonable given the facts and circumstances of each claim . 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. The Company has classified asbestos-related activity in Loss from discontinued operations, net of taxes in the Consolidated Statements of Operations. The Company has projected each subsidiary’s 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. It is ESAB’s policy to record a liability for asbestos-related liability costs for the longest period of time that ESAB management can reasonably estimate. The Company believes that it can reasonably estimate the asbestos-related liability for pending and future claims that will be resolved in the next 15 years and has recorded that liability at its best estimate. While it is reasonably possible that the subsidiaries will incur costs after this period, the Company does not believe the reasonably possible loss or a range of reasonably possible losses is estimable at the current time. Accordingly, no accrual has been recorded for any costs that may be paid after the next 15 years. Defense costs associated with asbestos-related liabilities as well as costs incurred related to efforts to recover insurance from the subsidiaries’ insurers are expensed as incurred. Each subsidiary has separate insurance coverage that was acquired prior to Company ownership. The Company estimates the insurance assets for each subsidiary based upon the applicable policy language, expected recoveries and allocation methodologies and law pertaining to the affected subsidiary’s insurance policies. The table below summarizes the Asbestos-related claims activity for the years ended December 31, 2025 and 2024, respectively. Year Ended December 31, 2025 2024 (Number of claims) Claims unresolved, beginning of period 13,758 13,648 Claims filed (1) 5,279 5,005 Claims resolved (2) ( 4,201 ) ( 4,895 ) Claims unresolved, end of period 14,836 13,758 (In dollars) Average cost of resolved claims (3) $ 12,018 $ 10,574 (1) Claims filed include all asbestos claims for which notification has been received or a file has been opened. (2) Claims resolved include all asbestos claims that have been settled, dismissed or that are in the process of being settled or dismissed based upon agreements or understandings in place with counsel for the claimants. 85 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (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 amounts related to asbestos-related litigation shown in the table below. December 31, 2025 2024 (In thousands) Long-term asbestos insurance asset (1) $ 235,361 $ 234,951 Long-term asbestos insurance receivable (1) 16,811 16,961 Accrued asbestos liability (2) 42,242 40,779 Long-term asbestos liability (3) 269,829 253,287 (1) Included in Other assets in the Consolidated Balance Sheets. (2) Represents current accruals for probable and reasonably estimable asbestos-related liability costs that the Company believes the subsidiaries will pay and unpaid legal costs related to defending themselves against asbestos-related liability claims and legal action against the Company’s insurers, which is included in Accrued liabilities in the Consolidated Balance Sheets. (3) Included in Other liabilities in the Consolidated Balance Sheets. Management’s analyses are based on currently known facts and assumptions. Projecting future events, such as new claims to be filed each year, the average cost of resolving each claim, coverage issues among layers of insurers, the method in which losses will be allocated to the various insurance policies, interpretation of the effect on coverage of various policy terms and limits and their interrelationships, the continuing solvency of various insurance companies, the amount of remaining insurance available, as well as the numerous uncertainties inherent in asbestos litigation could cause the actual liabilities and insurance recoveries to be higher or lower than those projected or recorded that could materially affect the Company’s financial condition, results of operations or cash flow. From time to time, other asbestos allegations related to the Company’s legacy industrial businesses are brought against the Company. Management currently believes no loss is probable or estimable for these other matters. General Litigation The Company is involved in various pending legal proceedings arising out of the ordinary course of the Company’s business. None of these legal proceedings are expected to have a material adverse effect on the financial condition, results of operations or cash flow of the Company. With respect to these proceedings, and the litigation and claims described in the preceding paragraphs, management of the Company believes that it will either prevail, has adequate insurance coverage or has established appropriate accruals to cover potential liabilities. Legal costs related to proceedings or claims are recorded when incurred. Other costs that management estimates may be paid related to the claims are accrued when the liability is considered probable and the amount can be reasonably estimated. There can be no assurance, however, as to the ultimate outcome of any of these matters, and if all or substantially all of these legal proceedings were to be determined adverse to the Company, there could be a material adverse effect on the financial condition, results of operations or cash flow of the Company. Off-Balance Sheet Arrangements As of December 31, 2025, the Company had $ 162.4 million of unconditional purchase obligations with suppliers, the majority of which is expected to be paid by December 31, 2026. 20. Segment Information 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, the Middle East, India, Africa and Asia Pacific. The Company’s management considers its Chief Operating Decision Maker (“CODM”) to be Shyam Kambeyanda, President, Chief Executive Officer and Director. The Company’s management and CODM evaluate the operating results of each reportable segment, 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, Restructuring and other related charges, acquisition transaction, due 86 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) diligence and integration expenses, amortization of intangibles and fair value charges on acquired inventories and depreciation and other amortization . Segment results reflect the allocation of 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, 2025 2024 2023 (In thousands) Net sales (1) : Americas $ 1,130,338 $ 1,176,745 $ 1,214,998 EMEA & APAC 1,712,217 1,564,058 1,559,768 2,842,555 2,740,803 2,774,766 Cost of sales: Americas 693,108 711,082 760,134 EMEA & APAC 1,101,105 992,266 998,881 1,794,213 1,703,348 1,759,015 Allocated operating expense: Americas 51,057 64,517 64,668 EMEA & APAC 93,724 97,807 103,984 144,781 162,324 168,652 Other operating expense: Americas 160,805 161,946 165,454 EMEA & APAC 183,046 184,411 180,543 343,851 346,357 345,997 Adjusted EBITDA (2) : Americas 225,368 239,200 224,742 EMEA & APAC 334,342 289,574 276,360 559,710 528,774 501,102 Depreciation, amortization and other impairment charges: Americas 34,050 30,813 34,589 EMEA & APAC 50,055 35,977 40,445 84,105 66,790 75,034 Capital expenditures: Americas 18,791 22,645 21,576 EMEA & APAC 28,496 29,134 26,602 $ 47,287 $ 51,779 $ 48,178 (1) For the years ended December 31, 2025, 2024 and 2023, the total Net sales originating from the United States were $ 579.3 million, $ 595.6 million and $ 619.1 million, respectively. (2) The following is a reconciliation of Net income from continuing operations to Adjusted EBITDA on a consolidated basis: Year Ended December 31, 2025 2024 2023 (In thousands) Net income from continuing operations $ 259,103 $ 293,057 $ 223,365 Income tax expense 69,157 77,348 95,727 Interest expense and other, net 83,910 64,890 85,074 Pension settlement loss — 12,155 — Restructuring and other related charges (1) 27,756 10,227 24,110 Acquisition - amortization and other related charges (2) 72,063 34,479 36,851 Depreciation and other amortization 47,721 36,618 35,975 Adjusted EBITDA $ 559,710 $ 528,774 $ 501,102 87 ESAB CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (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) Includes transaction, diligence and integration expenses totaling $ 31.5 million, $ 4.2 million and $ 2.6 million for the years ended December 31, 2025, 2024 and 2023, respectively, and amortization of intangibles and fair value charges on acquired inventories totaling $ 40.5 million, $ 30.3 million and $ 34.2 million for the years ended December 31, 2025, 2024 and 2023, respectively. The Company’s investments in equity method investees and total assets by segment are included in the table below. December 31, 2025 2024 (In thousands) Investments in equity method investees: Americas $ — $ — EMEA & APAC 29,558 28,885 29,558 28,885 Total assets: Americas 1,717,390 1,796,167 EMEA & APAC 3,048,704 2,237,808 $ 4,766,094 $ 4,033,975 The detail of the Company’s property, plant and equipment, net by geography are included in the table below. December 31, 2025 2024 (In thousands) Property, plant and equipment, net (1) : Czech Republic $ 75,028 $ 55,554 United States 72,617 73,036 Germany 48,245 11,191 India 31,437 31,506 Mexico 23,464 20,495 Other foreign countries 131,085 106,565 $ 381,876 $ 298,347 (1) As the Company does not allocate all long-lived assets, specifically intangible assets, to each individual country, evaluation of long-lived assets in total is impracticable. 21. Subsequent Events The dividend of $ 6.1 million included in Accrued liabilities in the Consolidated Balance Sheets at December 31, 2025 was paid on January 16, 2026, to stockholders of record as of December 31, 2025. On January 31, 2026, the Company entered into an agreement to acquire Eddyfi Technologies (“Eddyfi”), a global leader in advanced inspection and monitoring technologies headquartered in Quebec, Canada, for approximately $ 1.45 billion. The acquisition is expected to be funded with a combination of cash on hand, debt and approximately $ 318 million of fully committed equity. The Company obtained a commitment for a $1.0 billion 364-day senior unsecured bridge term loan credit facility from JPMorgan Chase Bank, N.A., which will be available to fund the cash consideration for the acquisition and related fees and expenses. This acquisition is expected to be completed in mid-2026, subject to the receipt of applicable regulatory approvals and customary closing conditions. 88 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.