S&P assigns BB+ to ESAB, notes

S&P said it assigned BB+ ratings to ESAB Corp. and its new $600 million of senior unsecured notes. The 3 recovery rating on the notes indicates meaningful (50%-70%; rounded estimate: 55%) recovery in default. The outlook is stable.

“Our BB+ issuer credit rating analysis incorporates ESAB's good brand reputation, competitive position in filler metals for welding equipment, solid profitability, and conservative leverage metrics. The ratings are limited, however, by its smaller scale of operations, narrow product focus, and exposure to cyclical end markets relative to higher-rated peers,” S&P said in a press release.

The agency said it expects low-single-digit percent core revenue growth to about $2.7 billion in 2024 and S&P Global Ratings-adjusted debt to EBITDA remaining in the low-2x area in 2024.

ESAB will use the notes to pay off its term loan due in April of 2025.

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