What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-08-06 compared with 2026-05-07 · 174 added, 94 removed, 277 unchanged (49% of the section changed)

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The following discussion of the financial condition and results of operations of ESAB Corporation (“ESAB,” the “Company,” “we,” “our” and “us”) should be read in conjunction with the Consolidated and Condensed Financial Statements and related footnotes included in Part I.

“Financial Statements” of this Quarterly Report on Form 10-Q for the quarterly period ended April 3, 2026 (this “Form 10-Q”) and the Consolidated Financial Statements and related footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “ 2025 Form 10-K ”).

“Financial Statements” of this Quarterly Report on Form 10-Q for the quarterly period ended July 3, 2026 (this “Form 10-Q”) and the Consolidated Financial Statements and related footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “ 2025 Form 10-K ”).

You should review the discussion titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements.

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Statements that could be deemed to be forward-looking statements, include statements regarding:

the pending acquisition of Eddyfi Technologies and its anticipated benefits, the impact of the war in Ukraine and conflicts in the Middle East and the resulting escalating geopolitical tensions on our business;

the acquisition of Eddyfi Holding Inc.

(“Eddyfi”) and its anticipated benefits, the impact of the war in Ukraine and conflicts in the Middle East and the resulting escalating geopolitical tensions on our business;

projections of revenue, profit margins, expenses, tax provisions and tax rates, earnings or losses from operations, impact of foreign exchange rates, cash flows, pension and benefit obligations and funding requirements, synergies or other financial items;

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

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 a purchase price of approximately $1.45 billion.

On June 1, 2026, we acquired Eddyfi, a global leader in advanced inspection and monitoring technologies headquartered in Québec, Canada, for consideration transferred of approximately $1.5 billion (such transaction, the “Acquisition”).

For the year ended December 31, 2025, Eddyfi’s revenues totaled approximately $240 million.

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In February 2026, the United States Supreme Court (the “Court”) ruled that the International Emergency Economic Powers Act (“IEEPA”), which the United States administration (the “administration”) relied on to impose certain tariffs, does not authorize the administration to impose

On March 4, 2026, the United States Court of International Trade ordered the United States Customs and Border Protection (“CBP”) to process refunds of the IEEPA tariffs, although the Court immediately suspended the order while the CBP determines a refund process.

On March 4, 2026, the United States Court of International Trade ordered the United States Customs and Border Protection (“CBP”) to process refunds of the IEEPA tariffs.

The IEEPA tariffs remain subject to ongoing litigation between the administration and other parties.

In response to the Court ruling mentioned above, the administration announced plans to implement new tariffs under alternative statutory authority.

The full impact of the Court’s ruling and the administration’s response remains uncertain.

In addition, the process for addressing requests for refunds of the IEEPA tariffs has recently begun, and the actual timing and extent of any such refunds remain uncertain at this time.

Accordingly, we have not recorded any anticipated recovery of IEEPA tariffs paid as of April 3, 2026.

The process for addressing requests for refunds of the IEEPA tariffs has recently begun.

We have received an insignificant amount of IEEPA tariff refunds during the three months ended July 3, 2026 .

The actual timing and extent of any future refunds remain uncertain at this time.

Accordingly, we have not recorded any IEEPA tariff refund receivables as of July 3, 2026.

We continue to actively monitor and evaluate these developments and the potential impacts of trade policy and tariffs on our business, supply chain and results of operations.

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The full impact of the matters noted above on the Company, our customers and suppliers, the overall economy and capital markets remains uncertain.

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

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

Results of Operations

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Items Affecting Comparability of Reported Results

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

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

Russia and Ukraine Conflict

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The conflict in the Middle East and the related impacts, such as logistics challenges from the closing of the Strait of Hormuz, have increased the level of economic and political uncertainty.

As reflected in the discussions that follow, these logistics challenges have had a variety of impacts on our results of operations during the three months ended April 3, 2026, including decreased sales levels and increased inventory costs.

As reflected in the discussions that follow, these challenges have had a variety of impacts on our results of operations during the six months ended July 3, 2026, including decreased sales levels and increased inventory costs.

Refer to Part I.

“Risk Factors” section of the 2025 Form 10-K for additional information.

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

As reflected in the discussions that follow, the United States policy regarding international trade and actions taken in response to it have had a variety of impacts on our results of operations during 2025 and the first quarter of 2026, including decreased sales levels and increased raw material costs.

As reflected in the discussions that follow, the United States policy regarding international trade and actions taken in response to it have had a variety of impacts on our results of operations during 2025 and the six months ended July 3, 2026, including decreased sales levels and increased raw material costs.

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

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Acquisitions can affect our reported results, and we report the change in our Net sales between periods both from existing and acquired businesses.

The change in Net sales due to acquisitions for the periods presented in this filing represents the incremental sales as a result of acquisitions.

additional information on our acquisitions, refer to Note 3, “Acquisitions” in the accompanying Notes contained elsewhere in this Form 10-Q and Note 5, “Acquisitions” in the Company’s 2025 Form 10-K.

The change in Net sales due to acquisitions for the periods presented in this filing represents the incremental sales as a result of acquisitions, including

the Acquisition that was completed on June 1, 2026.

For additional information on our acquisitions, refer to Note 3, “Acquisitions” in the accompanying Notes contained elsewhere in this Form 10-Q and Note 5, “Acquisitions” in the Company’s 2025 Form 10-K.

Foreign Currency Fluctuations

A significant portion of our Net sales, 79% for the three months ended April 3, 2026 are outside the United States, with the majority of those sales denominated in currencies other than the U.S.

A significant portion of our Net sales, 79% for the three and six months ended July 3, 2026, respectively, are outside the United States, with the majority of those sales denominated in currencies other than the U.S.

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

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

For the three months ended April 3, 2026 compared to the three months ended April 4, 2025 , fluctuations in foreign currencies increased Net sal es by 5.5% and Gross profit by 5.5% and increased Selling, general and administrative expenses by 6.1%.

For the three months ended July 3, 2026 compared to the three months ended July 4, 2025 , fluctuations in foreign currencies increased Net sal es by 2.6%, Gross profit by 2.3% and Selling, general and administrative expenses by 2.6%.

For the six months ended July 3, 2026 compared to the six months ended July 4, 2025 , fluctuations in foreign currencies increased Net sal es by 4.0%, Gross profit by 3.9% and Selling, general and administrative expenses by 4.3%.

Non-GAAP Measures

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

Adjusted EBITDA excludes from Net income from continuing operations the effect of Income tax expense, Interest expense and other, net, Restructuring and other related charges, acquisition transaction, due diligence and integration expenses, amortization of intangibles and fair value step up on acquired inventories, depreciation and other amortization and compensation expense related to the performance-based non-qualified stock option awards granted on June 10, 2026 and July 1, 2026 (the “Performance Option Awards”).

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

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

We also present Core adjusted EBITDA and Core adjusted EBITDA margin, which are subject to the same adjustments as Adjusted EBITDA and Adjusted EBITDA margin, respectively, and which removes the impact of Russia for the three months ended April 3, 2026 and April 4, 2025.

Adjusted EBITDA and Core adjusted EBITDA assist management in comparing our operating performance over time because certain items may obscure underlying business trends and make comparisons of long-term performance difficult, as they are of a nature and/or size that occur with inconsistent frequency or relate to unusual events or discrete restructuring plans and other initiatives that are fundamentally different from our ongoing productivity and core business.

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GAAP financial measures.

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

Three Months Ended April 3, 2026

Americas EMEA & APAC Total

Three Months Ended July 3, 2026 Six Months Ended July 3, 2026

Americas EMEA & APAC Total Americas EMEA & APAC Total

(Dollars in millions) (1)

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Restructuring and other related charges (2)

18.3 — 18.3 27.3 1.2 28.5

Acquisition-amortization and other related charges (3)

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Depreciation and other amortization 4.7 7.6 12.3 9.0 16.5 25.5

Performance option awards compensation expense (4)

0.3 0.4 0.7 0.3 0.4 0.7

Adjusted EBITDA (non-GAAP) 64.0 87.3 151.4 120.0 167.9 287.9

Adjusted EBITDA attributable to Russia (non-GAAP) (5)

— 1.8 1.8 — 2.5 2.5

Core adjusted EBITDA (non-GAAP) $ 64.0 $ 85.5 $ 149.6 $ 120.0 $ 165.4 $ 285.5

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(1) Numbers may not sum due to rounding.

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

(3) Includes transaction, diligence and integration expenses totaling $10.3 million for the three months ended April 3, 2026 and amortization of intangibles and fair value step up on acquired inventories totaling $12.5 million for the three months ended April 3, 2026.

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

(3) Includes transaction, diligence and integration expenses totaling $24.8 million and $35.1 million for the three and six months ended July 3, 2026, respectively, and amortization of intangibles and fair value step up on acquired inventories totaling $16.5 million and $29.0 million for the three and six months ended July 3, 2026, respectively.

(4) Represents the impact of the Performance Option Awards granted in June and July 2026.

These awards were non-cash, one-time, non-recurring grants with a different structure and size than the Company’s annual equity compensation program.

Refer to Note 12, “Equity” for further details on these awards.

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

(5) Net sales wer e $31.1 million relating to Russia for the three months ended April 3, 2026 .

Three Months Ended April 4, 2025

Americas EMEA & APAC Total

(6) Net sales wer e $41.4 million and $72.5 million relating to Russia for the three and six months ended July 3, 2026, respectively .

Three Months Ended July 4, 2025 Six Months Ended July 4, 2025

Americas EMEA & APAC Total Americas EMEA & APAC Total

(Dollars in millions) (1)

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Restructuring and other related charges (2)

0.5 0.9 1.4 2.2 3.7 5.9

Acquisition-amortization and other related charges (3)

10.0 11.5 21.6 15.7 15.5 31.2

Depreciation and other amortization 3.8 7.6 11.4 7.7 13.6 21.4

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Adjusted EBITDA attributable to Russia (non-GAAP) (4)

— 5.0 5.0 — 11.0 11.0

Core adjusted EBITDA (non-GAAP) $ 56.8 $ 81.7 $ 138.5 $ 111.3 $ 155.1 $ 266.4

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(3) Includes transaction, diligence and integration expenses totaling $1.4 million for the three months ended April 4, 2025 and amortization of intangibles and fair value step up on acquired inventories totaling $8.2 million for the three months ended April 4, 2025.

(3) Includes transaction, diligence and integration expenses totaling $12.8 million and $14.2 million for the three and six months ended July 4, 2025, respectively, and amortization of intangibles and fair value step up on acquired inventories totaling $8.8 million and $17.0 million for the three and six months ended July 4, 2025, respectively.

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

(5) Net sales were $31.3 million relating to Russia for the three months ended April 4, 2025.

(5) Net sales were $37.1 million and $68.4 million relating to Russia for the three and six months ended July 4, 2025, respectively.

Total Company

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

Three Months Ended

Net Sales Change %

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

Three Months Ended Six Months Ended

Net Sales Change % Net Sales Change %

(Dollars in millions)

For the three months ended April 4, 2025

For the three and six months ended July 4, 2025

$ 715.6 $ 1,393.7

Components of Change:

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Acquisitions (2)

55.5 7.8 % 98.3 7.1 %

Foreign currency translation (3)

18.6 2.6 % 55.9 4.0 %

Total Net sales growth 92.0 12.9 % 159.5 11.4 %

For the three months ended April 3, 2026

For the three and six months ended July 3, 2026

$ 807.6 $ 1,553.2

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

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

Net sales from existing businesses decreased by $12.6 million during the three months ended April 3, 2026, compared to the prior year period, due to a $21.7 million decrease in sales volume due to drivers such as tariffs in the Americas, logistics challenges in Middle East related to the war in Iran and lower volumes in Russia partially offset by customer pricing increases of $9.0 million.

The increase in net sales from acquisitions was attributable to Bavaria Schweisstechnik (“Bavaria”), DeltaP s.r.l.

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

Net sales from existing businesses increased by $17.9 million during the three months ended July 3, 2026, compared to the prior year period, driven by increases in both customer pricing and sales volume totaling $14.9 million and $3.1 million, respectively.

The $14.9 million increase in customer pricing was largely driven by the higher materials costs resulting from factors such as tariffs in the Americas and rising oil prices caused by the war in Iran.

Additionally, there was an increase in Net sales from acquisitions attributable to Bavaria Schweisstechnik (“Bavaria”), DeltaP s.r.l.

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

The changes in foreign exchange rates resulted in a $18.6 million favorable currency translation impact.

Net sales from existing businesses increased by $5.3 million during the six months ended July 3, 2026, compared to the prior year period, primarily driven by $23.9 million of customer pricing increases partially offset by a $18.6 million decrease in sales volume due to drivers such as tariffs in the Americas, challenges in the Middle East related to the war in Iran and lower volumes in Russia.

The $23.9 million increase in customer pricing was largely driven by the higher materials costs resulting from factors such as tariffs in the Americas and rising oil prices caused by the war in Iran.

The $18.6 million decrease in sales volume was primarily from the first quarter as the tariff impacts in the second quarter were comparable to prior year as increased tariffs were first imposed in April 2025.

Additionally, the increase in Net sales from acquisitions was attributable to Bavaria, DeltaP, Aktiv, EWM and Eddyfi.

The changes in foreign exchange rates resulted in a $55.9 million favorable currency translation impact.

Sales excluding Russia

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

Three Months Ended

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

Three Months Ended Six Months Ended

Core Sales (5)

Change % Core Sales (5)

(Dollars in millions) (1)

For the three months ended April 4, 2025

For the three and six months ended July 4, 2025

$ 678.5 $ 1,325.3

Components of Change:

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Acquisitions (3)

55.5 8.2 % 98.3 7.4 %

Foreign currency translation (4)

15.5 2.3 % 47.8 3.6 %

Total Core sales growth 87.8 12.9 % 155.4 11.7 %

For the three months ended April 3, 2026

For the three and six months ended July 3, 2026

$ 766.3 $ 1,480.8

(1) Numbers may not sum due to rounding.

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

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

(5) Net sales relating to Russia were $31.1 million and $31.3 million for the three months ended April 3, 2026 and April 4, 2025, respectively.

Core Sales from existing businesses decreased by $7.4 million during the three months ended April 3, 2026, compared to the prior year period, primarily due to a $17.0 million decrease in sales volume due to drivers such as tariffs in the Americas and logistics delays in Middle East related to the war in Iran partially offset by $9.5 million of customer pricing increases.

The increase in net sales from acquisitions was attributable to Bavaria, DeltaP, Aktiv and EWM.

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

Core sales from existing businesses increased by $16.8 million during the three months ended July 3, 2026, compared to the prior year period, driven by increases in both customer pricing and sales volume totaling $14.8 million and $2.0 million, respectively.

The $14.8 million increase in customer pricing was largely driven by the higher materials costs resulting from factors such as tariffs in the Americas and rising oil prices caused by the war in Iran.

Additionally, the increase in Net sales from acquisitions was attributable to Bavaria, DeltaP, Aktiv, EWM and Eddyfi.

The changes in foreign exchange rates resulted in a $15.5 million favorable currency translation impact.

Core sales from existing businesses increased by $9.3 million during the six months ended July 3, 2026, compared to the prior year period, primarily due to $24.3 million of customer pricing increases partially offset by a $15.0 million decrease in sales volume due to drivers such as tariffs in the Americas and challenges in Middle East related to the war in Iran.

The $24.3 million increase in customer pricing was largely driven by the higher materials costs resulting from factors such as tariffs in the Americas and rising oil prices caused by the war in Iran.

The $15.0 million decrease in sales volume was primarily from the first quarter as the tariff impacts in the second quarter were comparable to prior year as increased tariffs were first imposed in April 2025.

Additionally, the increase in Net sales from acquisitions was attributable to Bavaria, DeltaP, Aktiv, EWM and Eddyfi.

The changes in foreign exchange rates resulted in a $47.8 million favorable currency translation impact.

Operating Results

The following table summarizes our results for the comparable periods.

Three Months Ended

April 3, 2026 April 4, 2025

Three Months Ended Six Months Ended

July 3, 2026 July 4, 2025 July 3, 2026 July 4, 2025

(Dollars in millions)

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Restructuring and other related charges (1)

$ 18.3 $ 1.4 $ 28.5 $ 5.9

Acquisition-amortization and other related charges (2)

41.3 21.6 64.1 31.2

Interest expense and other, net 30.6 21.0 56.2 37.8

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Depreciation and other amortization 12.3 11.4 25.5 21.4

Performance option awards compensation expense (3)

Items excluded from Core adjusted EBITDA:

Adjusted EBITDA attributable to Russia (non-GAAP) (4)

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

(2) Includes transaction, diligence and integration expenses totaling $10.3 million for the three months ended April 3, 2026 and $1.4 million for the three months ended April 4, 2025.

Additionally, it includes amortization of intangibles and fair value step up on acquired inventories totaling $12.5 million for the three months ended April 3, 2026 and $8.2 million for the three months ended April 4, 2025.

$ 1.8 $ 5.0 $ 2.5 $ 11.0

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

(2) Includes transaction, diligence and integration expenses totaling $24.8 million and $35.1 million for the three and six months ended July 3, 2026, respectively, and $12.8 million and $14.2 million for the three and six months ended July 4, 2025, respectively.

Additionally, it includes amortization of intangibles and fair value step up on acquired inventories totaling $16.5 million and $29.0 million for the three and six months ended July 3, 2026, respectively, and $8.8 million and $17.0 million for the three and six months ended July 4, 2025, respectively.

(3) Represents the impact of the Performance Option Awards granted in June and July 2026.

These awards were non-cash, one-time, non-recurring grants with a different structure and size than the Company’s annual equity compensation program.

Refer to Note 12, “Equity” for further details on these awards.

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

Three Months Ended April 3, 2026 Compared to Three Months Ended April 4, 2025

Gross profit increased $19.9 million in the three months ended April 3, 2026 compared to the prior year period primarily attributable to acquisitions and foreign exchange partially offset by tariff-related cost increases, net of customer pricing, product mix and a decrease in sales volume.

The decline of gross profit margin was primarily due to the dilutive effect in the Americas segment caused by tariff-related price pass-through to customers as well as higher freight and material costs due to oil price increases from the war in Iran.

Selling, general and administrative expense increased $33.6 million in the three months ended April 3, 2026 compared to the prior year period primarily due to acquisitions and related transaction costs and foreign exchange impact.

Interest expense and other, net increased by $8.8 million due to $4.8 million of costs associated with the Bridge Loan that the Company entered into to fund the Eddyfi acquisition as well as a higher average outstanding debt balance.

The effective tax rate of 20.2% for the three months ended April 3, 2026 differed from the effective tax rate of 22.0% for the same period ended April 4, 2025 due to favorable provisions related to FDDEI under the One Big Beautiful Bill Act that were effective beginning with the 2026 tax year.

Net income from continuing operations decreased $20.8 million in the three months ended April 3, 2026 compared to the prior year period primarily due to the aforementioned factors as well as higher Restructuring and other related charges primarily driven by strategic initiatives to improve margins in the Americas and the integration of the recent EWM acquisition and higher Acquisition-amortization and other related charges related to the recent acquisition and integration activity .

Adjusted EBITDA

increased $2.7 million in the three months ended April 3, 2026 compared to the prior year period primarily due to the aforementioned.

Second Quarter of 2026 Compared to Second Quarter of 2025

Gross profit increased by $41.2 million in the second quarter of 2026 compared to the prior year period primarily attributable to acquisitions, favorable foreign exchange impact and price increases partially offset by higher material costs.

Selling, general and administrative expense increased by $54.6 million in the second quarter of 2026 compared to the prior year period primarily due to acquisitions and related transaction costs as well as higher overall costs from general inflation and annual merit increase impact.

Restructuring and other related charges increased by $16.9 million in the second quarter of 2026 compared to the prior year period primarily driven by strategic initiatives to improve margins in the Americas.

Acquisition-amortization and other related charges increased by $19.7 million in the second quarter of 2026 compared to the prior year period primarily driven by recent acquisition activity attributable to EWM and Eddyfi.

Interest expense and other, net increased by $9.6 million due to higher average outstanding debt balance as well as $4.8 million of costs associated with the Bridge Loan that the Company entered into to support the Acquisition.

The effective tax rate of 24.3% for the quarter ended July 3, 2026 differed from the effective tax rate of 20.8% for the same period ended July 4, 2025 primarily due to the tax effects related to the Eddyfi acquisition.

Net income from continuing operations decreased $33.4 million primarily due to the aforementioned factors.

Adjusted EBITDA increased $7.9 million compared to the same period in the prior year.

Core adjusted EBITDA increased $11.1 million compared to the same period in the prior year.

Six Months Ended July 3, 2026 Compared to Six Months Ended July 4, 2025

Gross profit increased $61.1 million in the six months ended July 3, 2026 compared to the prior year period primarily attributable to acquisitions and favorable foreign exchange impact partially offset by tariff-related cost increases, product mix and a decrease in sales volume.

Selling, general and administrative expense increased $88.2 million in the six months ended July 3, 2026 compared to the prior year period primarily due to acquisitions and related transaction costs and foreign exchange impact.

Restructuring and other related charges increased by $22.6 million in the six months ended July 3, 2026 compared to the prior year period primarily driven by strategic initiatives to improve margins in the Americas and the EWM acquisition.

Acquisition-amortization and other related charges increased by $32.9 million in the six months ended July 3, 2026 compared to the prior year period primarily driven by recent acquisition activity attributable to EWM and Eddyfi.

Interest expense and other, net increased by $18.4 million in the six months ended July 3, 2026 compared to the prior year period due to $4.8 million of fees associated with the Bridge Loan commitment that the Company entered into to fund the Acquisition as well as a higher average outstanding debt balance.

The effective tax rate of 22.0% for the six months ended July 3, 2026 differed from the effective tax rate of 21.4% for the same period ended July 4, 2025 primarily due to the tax effects related to the Acquisition.

Net income from continuing operations decreased $54.2 million in the six months ended July 3, 2026 compared to the prior year period primarily due to the aforementioned factors.

Adjusted EBITDA increased $10.5 million in the six months ended July 3, 2026 compared to the prior year period primarily due to the aforementioned factors.

Core adjusted EBITDA increased by $19.1 million compared to the same period in the prior year primarily due to the aforementioned factors.

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The following table summarizes selected financial data for our Americas segment:

Three Months Ended

April 3, 2026 April 4, 2025

Three Months Ended Six Months Ended

July 3, 2026 July 4, 2025 July 3, 2026 July 4, 2025

(Dollars in millions)

9 unchanged sentences

Depreciation and other amortization 4.7 3.8 9.0 7.7

Three Months Ended April 3, 2026 Compared to Three Months Ended April 4, 2025

Net sales in our Americas segment increased $7.7 million in the three months ended April 3, 2026 compared with the prior year period.

Net sales from existing business decreased $2.1 million due to reduced sales volumes primarily driven by tariffs and related impacts partially offset by pricing increases.

Performance option awards compensation expense $ 0.3 $ — $ 0.3 $ —

Second Quarter of 2026 Compared to Second Quarter of 2025

Net sales in our Americas segment increased $33.2 million in the second quarter of 2026 compared with the prior year period.

Net sales from existing business increased $13.9 million primarily due to pricing increases and new product initiatives.

The Acquisition contributed to a $9.6 million increase in Net sales from acquisitions.

In addition, there was $9.7 million of favorable currency translation.

Gross profit increased by $15.1 million attributable to accretion from acquisitions, customer pricing increases and favorable currency translation partially offset by higher material costs, including tariffs, and product mix.

Selling, general and administrative expense increased by $17.2 million compared with the prior year primarily due to acquisitions and related transaction costs.

Adjusted EBITDA increased $7.2 million primarily due to the aforementioned factors.

Six Months Ended July 3, 2026 Compared to Six Months Ended July 4, 2025

Net sales in our Americas segment increased $40.9 million in the six months ended July 3, 2026 compared with the prior year period.

Net sales from existing business increased $11.8 million due to customer pricing increases partially offset by reduced sales volumes primarily driven by tariffs and related impacts.

The Acquisition contributed to a $9.6 million increase in Net sales from acquisitions.

In addition, there was a $19.5 million favorable increase in currency translation.

Gross profit increased $1.4 million attributable to favorable foreign exchange impact and price increases partially offset by higher material costs and volume.

The decline of gross profit margin was primarily due to the dilutive effect in the Americas segment, which was caused by tariff-related price pass-through to customers.

Selling, general and administrative expense increased $2.3 million compared with the prior year period primarily due to foreign exchange impact.

Restructuring and other related charges increased $7.3 million in the three months ended April 3, 2026 compared with the prior year period primarily driven by strategic initiatives to improve margins in the Americas.

Gross profit increased $16.6 million attributable to favorable foreign exchange impact, accretion from acquisitions and price increases partially offset by higher material costs and lower volume.

Selling, general and administrative expense increased $19.5 million compared with the prior year period primarily due to accretion from acquisitions and higher overall costs from general inflation and annual merit increase impact.

Restructuring and other related charges increased $25.1 million in the six months ended July 3, 2026 compared with the prior year period primarily driven by strategic initiatives to improve margins in the Americas.

Adjusted EBITDA increased $8.7 million compared to the prior year period primarily due to the aforementioned factors.

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

Three Months Ended

April 3, 2026 April 4, 2025

Three Months Ended Six Months Ended

July 3, 2026 July 4, 2025 July 3, 2026 July 4, 2025

(Dollars in millions)

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Depreciation and other amortization 7.6 7.6 16.5 13.6

Performance option awards compensation expense 0.4 — 0.4 —

Items excluded from Core adjusted EBITDA:

Adjusted EBITDA attributable to Russia (non-GAAP) $ 1.8 $ 5.0 $ 2.5 $ 11.0

Three Months Ended April 3, 2026 Compared to Three Months Ended April 4, 2025

Net sales in our EMEA & APAC segment increased $59.8 million in the three months ended April 3, 2026 compared with the prior year period.

Net sales from existing business decreased $10.5 million primarily resulting from volume decreases from logistics challenges in the Middle East related to the war in Iran and lower volumes in Russia.

This decrease was more than offset by $42.8 million of Net sales from the Bavaria, DeltaP, Aktiv and EWM acquisitions and $27.5 million in favorable foreign currency impact.

Gross profit increased $18.5 million in the three months ended April 3, 2026 compared with the prior year period due to acquisitions and favorable foreign exchange impact partially offset by lower volumes and higher material costs.

The decline of gross profit margin was primarily attributable to higher freight and material costs due to oil price increases from the war in Iran as well as plant relocation costs and an unfavorable product mix in Russia in 2026.

S elling, general and administrative expense increased $31.3 million in the three months ended April 3, 2026 compared with the prior year period primarily due to acquisitions and related costs and foreign exchange impact.

Acquisition - amortization and other related charges increased $11.1 million in the three months ended April 3, 2026 compared with the prior year period primarily driven by the EWM acquisition.

Adjusted EBITDA increased $1.2 million and Core adjusted EBITDA increased $6.5 million in the three months ended April 3, 2026 compared with the prior year period primarily due to the aforementioned factors.

The decline of Core adjusted EBITDA margin was primarily due to dilution from the EWM acquisition as well as higher freight and material costs due to oil price increases from the war in Iran.

Second Quarter of 2026 Compared to Second Quarter of 2025

Net sales in our EMEA & APAC segment increased $58.9 million in the second quarter of 2026 compared with the prior year period.

Net sales from existing business increased $4.0 million primarily resulting from increases in customer pricing and new product initiatives partially offset by a decline in sales volume from challenges in the Middle East related to the war in Iran.

The Bavaria, DeltaP, Aktiv, EWM and Eddyfi acquisitions contributed $46.0 million to Net sales from acquisitions.

In addition, there was a $8.9 million favorable foreign currency impact.

Gross profit increased by $26.0 million in the second quarter of 2026 compared with the prior year period primarily due to accretion from acquisitions, customer pricing increases and foreign currency translation impacts partially offset by higher material costs and a decline in sales volume.

Selling, general

and administrative expense increased $37.5 million in the second quarter of 2026 compared with the prior year period largely due to acquisitions and related transaction costs as well as higher overall costs from general inflation and annual merit increase impact.

Adjusted EBITDA increased $0.6 million and Core adjusted EBITDA increased $3.8 million in the second quarter of 2026 compared with the prior year period primarily because of the aforementioned factors.

The decline of adjusted EBITDA margin and Core adjusted EBITDA margin was primarily due to dilution from the EWM acquisition as well as higher freight and material costs due to oil price increases related to the war in Iran.

Six Months Ended July 3, 2026 Compared to Six Months Ended July 4, 2025

Net sales in our EMEA & APAC segment increased $118.6 million in the six months ended July 3, 2026 compared with the prior year period.

Net sales from existing business decreased $6.5 million primarily resulting from volume decreases related to challenges in the Middle East related to the war in Iran and lower volumes in Russia partially offset by increases in customer pricing.

This decrease was more than offset by $88.8 million of Net sales from acquisitions from Bavaria, DeltaP, Aktiv, EWM and Eddyfi as well as $36.4 million in favorable foreign currency impact.

Gross profit increased $44.5 million in the six months ended July 3, 2026 compared with the prior year period due to accretion from acquisitions and favorable foreign exchange impact partially offset by lower volumes and higher material costs.

S elling, general and administrative expense increased $68.8 million in the six months ended July 3, 2026 compared with the prior year period primarily due to acquisitions and related costs and foreign exchange impact as well as higher overall costs from general inflation and annual merit increase impact.

Acquisition - amortization and other related charges increased $22.8 million in the six months ended July 3, 2026 compared with the prior year period primarily driven by the EWM and Eddyfi acquisitions.

Adjusted EBITDA increased $1.8 million and Core adjusted EBITDA increased $10.3 million in the six months ended July 3, 2026 compared with the prior year period primarily due to the aforementioned factors.

Liquidity and Capital Resources

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

As of April 3, 2026, we were in compliance with the covenants under the A&R Credit Agreement and the Indentures.

As of July 3, 2026, we were in compliance with the covenants under the A&R Credit Agreement and the Indentures.

The Company’s weighted average interest rate of borrowings under the Credit Agreement and the Indentures was 5.39%, excluding accretion of deferred financing fees.

As of the end of the first quarter, we had the capacity for additional indebtedness of up to $1,050 million available on the Revolving Facility.

Additionally, we have the ability to incur $73.1 million of indebtedness pursuant to certain uncommitted credit lines, consisting primarily of an uncommitted credit line that we currently have in place, which we have used from time to time in the past for short-term working capital needs.

As of the end of the second quarter, we had the capacity for additional indebtedness of up to $690 million available on the Revolving Facility.

Additionally, we had the ability to incur $72.9 million of indebtedness pursuant to certain uncommitted credit lines, consisting primarily of an uncommitted credit line that we currently have in place, which we have used from time to time in the past for short-term working capital needs.

Refer to Note 9, “Debt” and Note 10, “Derivatives” in the accompanying Notes contained elsewhere in this Form 10-Q for more information related to the Company’s debt and derivative instruments.

We believe that we could raise additional funds in the form of debt or equity if it were determined to be appropriate for strategic acquisitions or other corporate purposes.

We believe that we could raise additional funds in the form of debt or equity if it we determined it to be appropriate for strategic acquisitions or other corporate purposes.

We believe that our sources of liquidity between debt and cash flows from operating activities are adequate to fund our operations for the next twelve months and thereafter.

In connection with the pending Eddyfi acquisition, the Company has committed equity financing of approximately $318 million, consisting of the issuance of the Mandatory Convertible Preferred Stock for an aggregate liquidation preference of approximately $175 million and the concurrent issuance of common stock to institutional investors at a purchase price of approximately $143 million, both of which are expected to close concurrently with the Acquisition.

Refer to Note 3, “Acquisitions” for additional information.

Mandatory Convertible Preferred Stock (“MCPS”) and Common Stock Issuances

On June 1, 2026, substantially concurrently with the closing of the Acquisition, the Company completed the previously announced private placements of (i) 175,000 shares of its 6.50% Series A Mandatory Convertible Preferred Stock, par value $0.001 per share, pursuant to that certain Preferred Stock Purchase Agreement dated February 2, 2026, between the Company and certain institutional investors thereto for aggregate gross proceeds of approximately $175.0 million and (ii) 1,254,255 shares of its Common stock, par value $0.001 per share, in accordance with that certain Common Stock Purchase Agreement dated February 2, 2026 between the Company and certain institutional investors thereto for aggregate gross proceeds of approximately $143 million.

The MCPS shares accrue cumulative dividends at a rate of 6.50% per annum ($65.00 per share per annum), payable in cash quarterly when, as and if declared.

Refer to Note 12, “Equity” for additional information.

Stock Repurchase Program

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There is no term associated with the remaining repurchase authorization.

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

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

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

Three Months Ended

April 3, 2026 April 4, 2025

Six Months Ended

July 3, 2026 July 4, 2025

(In millions) (1)

2 unchanged sentences

Proceeds from sale of property, plant and equipment 0.4 4.7

Acquisitions, net of cash received (1,469.4) (86.3)

Other investing — (0.5)

Net cash used in investing activities (1,500.5) (98.5)

Proceeds from issuance of Preferred Stock, net 171.1 —

Proceeds from issuance of Common Stock, net 139.8 —

Proceeds from borrowings on Senior Notes 1,000.0 —

12 unchanged sentences

Changes in significant operating cash flow items are discussed below.

• Operating cash flow for the three months ended April 3, 2026 increased compared to the same period in the prior year primarily due to favorable working capital movements and higher non-cash expenses related to depreciation and amortization partially offset by the decline in net income.

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

• Restructuring initiative payments were $9.1 million and $3.3 million for the three months ended April 3, 2026 and April 4, 2025, respectively.

• Operating cash flow for the six months ended July 3, 2026 remained in line with the same period in the prior year.

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

• Restructuring initiative payments were $22.4 million and $5.9 million for the six months ended July 3, 2026 and July 4, 2025, respectively.

Refer to Note 8, “Accrued and Other liabilities” in the accompanying Notes contained elsewhere in this Form 10-Q for additional information.

Cash flows used in investing activities during the three months ended April 3, 2026 and April 4, 2025 are primarily comprised of purchases of property, plant and equipment.

Cash flows provided by financing activities during the three months ended April 3, 2026 are primarily comprised of the proceeds from borrowings on the 2031 Senior Notes partially offset by net repayments of borrowings on the revolving facilities and debt issuance costs.

Our Cash and cash equivalents as of April 3, 2026 included $193.8 million held in jurisdictions outside the United States.

Cash repatriation of non-United States cash into the United States may be subject to withholding taxes, other local statutory restrictions and minority owner distributions.

• Acquisition-related payments were $20.2 million and $4.0 million for the six months ended July 3, 2026 and July 4, 2025, respectively, which were related to due diligence, transaction and other related costs.

Cash flows used in investing activities during the six months ended July 3, 2026 and July 4, 2025 are primarily comprised of the Acquisition for $1.5 billion, net of cash received in addition to purchases of property, plant and equipment.

Cash flows provided by financing activities during the six months ended July 3, 2026 are primarily comprised of the proceeds from borrowings on the 2031 Senior Notes and the revolving facilities, partially offset by repayments of borrowings

on the revolving facilities and debt issuance costs in addition to the proceeds from the issuance of Common stock and MCPS in connection with the Acquisition.

Our Cash and cash equivalents as of July 3, 2026 included $194.9 million held in jurisdictions outside the United States.

Repatriation of cash into the United States may be subject to withholding taxes, other international and local statutory restrictions and regulations and minority owner distributions.

Critical Accounting Policies and Estimates

6 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis