A global maker of welding and cutting equipment, consumables, gas control systems, and robotics, ESAB supplies the tools that hold ships, buildings, and machinery together for customers in roughly 150 countries. Founded in 1904 in Gothenburg, Sweden, by ship engineer Oscar Kjellberg—who invented the world's first coated welding electrode—the name is short for Elektriska Svetsnings-Aktiebolaget, literally "Electric Welding Limited Company." After decades under other owners, it became its own publicly traded company in 2022.
Eddyfi acquisition closes, doubling long-term debt to $2.4B as restructuring charges and deal costs cut net income by half.
The Eddyfi Technologies acquisition closed, reshaping the balance sheet. rose 12.9% to $807.6 million and expanded 0.9 points to 38.0%, but fell 51.6% to $32.4 million as restructuring charges and more than doubled. The company is now larger and more indebted, with its earnings power obscured by one-time integration expenses.
Key takeaways
The $1.5 billion acquisition of Eddyfi Technologies closed on June 1, 2026, funded by $1.0 billion in Senior Notes, $175 million in mandatory convertible preferred stock, and $143 million in common stock, pushing to $2.39 billion.
fell 51.6% to $32.4 million, driven by a $16.9 million increase in restructuring charges and a $19.7 million rise in acquisition- and related costs tied to the Eddyfi deal.
rose 12.9% to $807.6 million, with of 2.5% from pricing and volume, acquisitions contributing 7.8%, and a 2.6% favorable currency .
Section summaries
Management's Discussion and Analysis
Q2 2026 net sales rose 12.9% to $807.6M driven by acquisitions and pricing, while GAAP net income fell 47.9% on higher restructuring and deal costs.
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Total grew 12.9% to $807.6M, with of 2.5% from pricing and volume, acquisitions contributing 7.8%, and a 2.6% favorable currency .
expanded 0.9 points to 38.0%, as pricing and new products in the Americas offset from the EWM acquisition and higher freight and material costs tied to the conflict in Iran.
was $33.4 million for the quarter, down 28.3% , while of $15.7 million was the lowest quarterly figure since Q1 2022.
Interest-rate sensitivity increased: a hypothetical 1% rate rise would now add $7.2 million in annual , up from $3.9 million a year ago, as the company holds no interest-rate hedges.
What changed
The Eddyfi acquisition, flagged in FY2025 and Q1 FY2026 as a pending event, closed on June 1, 2026, adding $1.45 billion in purchase price and transforming the capital structure with $1.0 billion in new Senior Notes and $318 million in equity.
, which had been watched for stabilization above 36%, expanded to 38.0% in Q2, up from 36.9% in Q1 and 37.2% a year ago, as pricing actions in the Americas offset tariff and freight cost headwinds.
Organic sales, which declined 1.9% in Q1, returned to growth at 2.5% in Q2, suggesting the volume weakness flagged in prior quarters may be easing, though the Americas still faces tariff uncertainty.
, already a concern at $33.2 million in Q1, fell further to $15.7 million in Q2, the lowest level since early 2022, as investment remained elevated.
What to watch
Whether the restructuring charges and , which totaled over $36 million in Q2, decline in the second half as Eddyfi integration progresses, or remain elevated and continue to depress .
Whether can hold at 38.0% as the benefits from pricing and new products in the Americas are tested by further tariff escalation and the Eddyfi business is consolidated at its own margin profile.
generation relative to the $2.39 billion debt load, given that Q2 free cash flow of $15.7 million is well below the level needed to service interest and begin de-levering.
The trajectory of organic growth now that the Eddyfi acquisition is closed, and whether the 2.5% in Q2 can be sustained or improved as tariff policy evolves.
expanded 80 to 38.0%, but from continuing operations dropped to $36.4M from $69.8M, pressured by a $16.9M increase in restructuring charges and a $19.7M rise in acquisition- costs.
The Americas saw a 20.3% margin, supported by pricing and new products, while EMEA & APAC's margin contracted to 19.0% due to from the EWM acquisition and higher freight and material costs tied to the war in Iran.
The $1.5B acquisition of Eddyfi closed on June 1, 2026, funded by $1B in Senior Notes, $175M in , and $143M in common stock, with integration costs weighing on current earnings.
was steady at $80.3M, but investing outflows surged to $1.5B for the Eddyfi deal, and financing activities provided $1.45B primarily from debt and equity issuances.
Quantitative and Qualitative Disclosures About Market Risk
Market risk arises from foreign exchange, interest rates, and commodities; the company uses normal operating and financing activities, not trading derivatives.
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A hypothetical 1% interest rate rise would have increased annual by $7.2 million for the six months ended July 3, 2026, up from $3.9 million a year earlier.
Approximately 79% of sales came from outside the U.S., with significant non-Eurozone European manufacturing, creating broad currency exposure.
A 10% in major currencies versus the U.S. dollar would reduce equity by about $262 million as of July 3, 2026, compared with $201 million a year earlier.
The company uses currency swaps and forward contracts to align and expenses and meet contractual obligations, and holds six fixed-to-fixed cross-currency swaps to hedge part of its European net asset position.
Commodity price risk is managed by periodically entering into fixed-price contracts directly with suppliers.
A discussion of legal proceedings is incorporated by reference to Note 13, “Commitments and Contingencies” in the Notes included in Part I. Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q.
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A discussion of legal proceedings is incorporated by reference to Note 13, “Commitments and Contingencies” in the Notes included in Part I. Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q.
Acquisition integration risks and updated asbestos liability estimates could materially impact financial results.
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Failure to realize anticipated operational synergies and market expansion from the Eddyfi acquisition may dilute and delay .
Unknown or assumed from Eddyfi could materially harm the business if they become probable and estimable.
Transaction costs from the acquisition continue to reduce expected benefits and income.
A South Carolina Supreme Court ruling allows a receiver to pursue asbestos claims against the company, potentially increasing defense costs and liability beyond prior estimates.
Asbestos-related liability and insurance recovery estimates remain subject to material adjustments from claim volumes, settlement costs, and insurer solvency.