ESAB

ESAB is a global leader in welding and cutting equipment and consumables, with a high-quality, recurring revenue profile — consumables were 66% of FY2025 sales, which tend to repeat with customer production activity. Margins are solid for a fabrication-technology company: a 36.9% gross margin and 14.5% operating margin, and the business carries reasonable leverage at 1.18x liabilities/equity with equity up 22.4%. The model is durable, and management complements organic growth with bolt-on acquisitions.

FY2025 was a softer year, however. Revenue grew only 3.7% to $2.84B, while net income fell 14.4% to $227M, operating income declined 7.9%, and EPS dropped 14.8% to $3.67. Part of the earnings pressure is acquisition-driven amortization — D&A rose 25.9% and total assets jumped 18.1% as long-term debt increased 16.2% to fund deals — but the operating decline and a 26.7% drop in operating cash flow to $261M show genuine softness. The 10-K flags higher material costs in 2025 driven primarily by tariffs, plus the heavy 80% international exposure (FX and the discrete drag from its Russia operations) and a consumables-vs-equipment mix that pressures margins.