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, 2024. 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.

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 is being recognized in earnings over the period the originally forecasted hedged transaction impacts earnings. The remaining $300 million swap is expected to continue to be hedged against the remaining floating-rate debt.

For the remaining swap, the spread was 1.250% as of December 31, 2024. This agreement involves the receipt of floating-rate amounts in exchange for fixed-rate interest payments over the life of the agreement without an exchange of the underlying principal amount. This interest rate swap agreement is designated and qualifies as a cash flow hedge and as such, the gain or

loss on the derivative instrument due to the change in fair value is reported as a component of AOCL and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. If a derivative is deemed to be ineffective, the change in fair value of the derivative is recognized directly in earnings. The Company did not have any ineffectiveness related to cash flow hedges during the year ended December 31, 2024.

The cash inflows and outflows associated with the Company’s interest rate swap agreements designated as cash flow hedges are classified in cash flows from operating activities in the accompanying Consolidated and Combined Statements of Cash Flows.

The Company expects a gain of $0.7 million, net of tax, related to interest rate swap agreements to be reclassified from AOCL to earnings through such agreement’s maturity in April 2025 as the hedged transactions are realized. The expected gain to be reclassified is based on current forward rates in active markets as of December 31, 2024.


		Year Ended December 31,
Derivative type	(Gain) recognized in the Consolidated and Combined Statements of Operations	2024		2023
		(In thousands)
Interest rate swap agreement(s)	Interest expense and other, net	$	(9,104)	$	(11,053)

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 qualify 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 above notional amounts that mature in October 2026.

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 and Combined 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, 2024.

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 and Combined Statements of Cash Flows.


		Year Ended December 31,
Derivative type	(Gain) recognized in the Consolidated and Combined Statements of Operations	2024		2023

Cross currency-swap agreements	Interest expense and other, net	$	(4,687)	$	(4,779)


		December 31, 2024				December 31, 2023
Designated as hedging instruments		Other Liabilities		Other Assets		Other Liabilities		Other Assets
	(In thousands)
Cross-currency swap agreements		$	1,830	$	—	$	22,232	$	—
Interest rate swap agreement(s)		—		842		—		9,522
Total		$	1,830	$	842	$	22,232	$	9,522

The Company has certain foreign currency contracts that are not designated as hedges. As of December 31, 2024 and December 31, 2023, the Company had foreign currency contracts related to purchases and sales with notional values of $178.7 million and $232.5 million, respectively.


	December 31, 2024				December 31, 2023
Not designated as hedging instruments	Accrued Liabilities		Other Current Assets		Accrued Liabilities		Other Current Assets
	(In thousands)
Foreign currency contracts	$	379	$	255	$	596	$	1,088

The amounts in the table above as of December 31, 2024 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 $0.4 million increase in Other current assets with a corresponding increase in Accrued liabilities.

(1) The year ended December 31, 2022 includes realized losses relating to certain corporate entities contributed to ESAB Corporation that are reflected within Interest expense and other, net, in the Consolidated and Combined Statements of Operations. These realized losses are offset by unrealized gains which are also reflected within Interest expense and other, net, in the Consolidated and Combined Statements of Operations.