ESAB Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Reported record third quarter sales of $825 million, a 13.3% increase on a reported basis and a 2.3% increase on a core organic growth basis compared to the prior year quarter.
• Net income from continuing operations attributable to ESAB was $41 million ($0.61 diluted EPS), compared to $54.8 million ($1.05 diluted EPS) in the prior year quarter.
• Core adjusted net income was $83 million ($1.30 diluted EPS), compared to $80.5 million ($1.32 diluted EPS) in the prior year quarter.
• Core adjusted EBITDA rose 17.0% year-over-year to $156 million, with the core adjusted EBITDA margin expanding 40 basis points to 19.8%.
• For the nine months ended October 2, 2026, net sales were $2,377.7 million, compared to $2,121.6 million in the prior year period.
• Core adjusted EBITDA for the nine months ended October 2, 2026, was $441.5 million, compared to $399.8 million in the prior year period.
• Adjusted free cash flow for the three months ended October 2, 2026, was $60.0 million, down from $86.4 million in the prior year quarter.
• Adjusted free cash flow for the nine months ended October 2, 2026, was $140.9 million, down from $163.2 million in the prior year period.
• Total debt increased to $2,329.1 million ($9.4 million current portion and $2,319.7 million long-term) as of October 2, 2026, from $1,235.0 million ($2.4 million current and $1,232.5 million long-term) as of December 31, 2025.
• Cash and cash equivalents were $188.6 million as of October 2, 2026, compared to $185.9 million as of December 31, 2025.

Guidance and Future Outlook:

• Updated full-year 2026 total core sales growth guidance to 13.1% to 13.3%, up from the previous range of 11.0% to 14.0%.
• Revised full-year 2026 core organic sales growth guidance to 1.6% to 2.0%, down from the previous range of 2.0% to 4.0%.
• Increased the expected contribution from M&A to approximately 9.5% from the previous 9.0%.
• Increased the anticipated foreign exchange impact to approximately 2.0% from the previous range of 0.0% to 1.0%.
• Adjusted full-year 2026 core adjusted EBITDA forecast to a range of $603 million to $607 million, down from the previous $615 million to $625 million.
• Adjusted full-year 2026 core adjusted EPS forecast to a range of $5.28 to $5.33, down from the previous $5.40 to $5.50.

Business Segments and Product Lines:

• Achieved core organic growth in both the Americas and EMEA & APAC segments during the third quarter.
• The EBXai operating system is driving margin expansion.
• Acquisitions of EWM and Eddyfi have expanded the company's portfolio to serve customers across the entire lifecycle of critical assets, from cutting and welding to inspection, monitoring, and repair.
• New products and cross-selling opportunities between ESAB and Eddyfi are beginning to convert into new growth.
• Positive customer response was noted at the Fabtech event regarding the company's complete workflow solutions.

Market and Competitive Landscape:

• Operating in a dynamic global environment with continued inflationary pressure.
• The company aims to capture opportunities ahead through disciplined execution and investment in growth.
• ESAB positions itself as a focused premier industrial compounder serving customers in approximately 150 countries.

Risks and Challenges:

• Exposure to geopolitical events, including the war in Ukraine and conflict in the Middle East, which impact the Russia business and general market conditions.
• Ongoing inflationary pressures affecting costs.
• Supply chain disruptions and fluctuations in commodity prices.
• Foreign exchange rate fluctuations impacting reported results.
• Risks related to the creditworthiness and financial viability of customers.

Management Commentary and Tone:

• Shyam P. Kambeyanda, President and CEO, stated the company delivered record core sales and adjusted EBITDA despite a dynamic global environment.
• Management emphasized improved sales, margins, and cash generation on a sequential basis.
• The tone reflected confidence in the enterprise's ability to win in any market and a focus on turning an unrivaled market position into lasting shareholder value.
• Management highlighted the urgency of execution to capture future opportunities.

Other Key Points:

• Issued $175.0 million in aggregate liquidation preference of 6.50% Series A Mandatory Convertible Preferred Stock (MCPS) in June 2026.
• MCPS dividends are cumulative at an annual rate of 6.50% and will automatically convert into common stock in approximately June 2029.
• The company introduced "Adjusted Gross Profit" as a new non-GAAP measure for the first time in 2026, excluding inventory fair value step-up.
• Restructuring and other related charges were $11.3 million for the quarter and $39.8 million for the nine months ended October 2, 2026.
• Acquisition-related transaction, diligence, and integration expenses were $8.8 million for the quarter and $43.9 million for the nine months ended October 2, 2026.
• Goodwill increased to $2,738.1 million as of October 2, 2026, from $1,949.7 million as of December 31, 2025.
• Intangible assets increased to $1,352.7 million as of October 2, 2026, from $673.0 million as of December 31, 2025.