ESAB Corporation reported record total sales of $766 million for the second quarter of fiscal year 2026, marking a 13% year-over-year increase. The industrial technology company also returned to organic growth in both segments, driven by double-digit expansion in automation and equipment divisions.

Adjusted EBITDA grew 8% to $150 million, reflecting a 19.5% margin. This represents a 90 basis point decline compared to the prior year, attributed to transitory price-cost neutrality from higher logistics and commodity costs. Management expects these pressures to correct over the coming quarters through pricing actions and cost-out initiatives.

Segment Performance and Regional Trends

The Americas segment delivered strong results with total sales rising 12% to $316 million, including 5% organic growth. North America saw double-digit organic growth, particularly in gas equipment and automation. Conversely, the EMEA and APAC segment sales increased 14% to $450 million, with only 1% organic growth. Performance in this region was impacted by geopolitical headwinds in the Middle East, where volumes fell double digits despite better-than-expected resilience in Europe.

Strategic Acquisitions and Portfolio Shift

The company completed the acquisition of Edify ahead of schedule, a move intended to accelerate organic growth and improve margins. Edify contributes high single-digit growth with approximately 65% gross margins and 30% EBITDA margins. This acquisition, along with previous deals like EWM and Aktiv, has shifted ESAB’s revenue mix toward equipment, which now represents over 50% of total revenue on a pro forma basis. This strategic pivot has improved gross margins by approximately 500 basis points over the last decade.

Updated Full-Year Outlook

ESAB raised its full-year FY26 guidance to reflect the inclusion of Edify and continued execution of its strategic plan. The company now expects total core sales between $3.0 billion and $3.1 billion, assuming organic growth of 2% to 4%. Adjusted EBITDA guidance was increased to $615 million to $625 million, incorporating seven months of Edify contributions. Adjusted EPS is projected at $5.40 to $5.50.

What the Numbers Show

A divergence exists between top-line momentum and margin stability. While total sales surged 13%, organic growth remained modest at 2.5%, indicating that 8% of the growth was acquisition-driven. Furthermore, the 90 bps margin compression occurred despite strong volume growth in high-margin segments like automation. This suggests that transitory cost inflation and deliberate investments in equipment infrastructure are currently offsetting the benefits of mix shift, though management projects these factors to normalize in the second half of the fiscal year.

A South Carolina trial court has ruled that ESAB Corp. (NYSE: ESAB) and France-based Altrad Group are responsible for the historical asbestos operations of Cape Asbestos Co. Ltd., establishing their liability for related legal judgments.

The ruling, announced on Sept. 14 by former South Carolina Chief Justice Jean H. Toal, confirms that ESAB and Altrad are accountable for cancer-causing asbestos imported and distributed throughout the United States for decades.

Corporate Successor Liability

The case, Tibbs v. 3M Company, et al. (Case No. 2023-CP-40-01759), was filed by John A. Tibbs and his wife. They seek to hold the companies responsible for raw asbestos sales that caused Mr. Tibbs’ cancer.

ESAB, an American-Swedish industrial company, is identified as the ultimate corporate parent of Charter Consolidated and Central Mining. The court found these entities participated in controlling Cape’s asbestos business and its distribution into the United States.

Altrad Group, a multinational industrial services provider, acquired Cape in 2017. The court determined that Altrad Investment Authority S.A.S. and its chairman, Mohed Altrad, are responsible for Cape’s conduct and liabilities.

Historical Context and Legal Impact

Cape was the largest supplier of asbestos to the United States during the 20th century. Historical corporate records cited in the litigation indicate Cape supplied more than 95% of commonly used industrial asbestos imported into the U.S. Its products were used extensively in industrial facilities, manufacturing operations, and naval vessels.

Trey Branham of Dean Omar Branham Shirley, LLP, represented the plaintiffs. He stated that Cape engaged in moral fraud in the United States for more than 50 years.

"This ruling opens the door for thousands of claimants to recover against one of the largest corporate conglomerates in the world," Branham said. "We have already obtained separate judgments against Cape, including one for $38 million for our client Jerry Ross and his family, and we intend to immediately begin the enforcement process against those the Court found responsible."

What the Numbers Show

The court’s finding establishes a direct legal link between current corporate entities and historical liabilities dating back over five decades. With Cape supplying more than 95% of industrial asbestos imports to the U.S., the ruling exposes ESAB and Altrad to potential enforcement actions for existing judgments, such as the $38 million award cited by plaintiffs' counsel.