Moody’s gives ESAB, notes Ba1

Moody's Ratings said it assigned first-time ratings to ESAB Corp. including a Ba1 corporate family rating, a Ba1-PD probability of default rating and a Ba1 rating to the planned senior unsecured notes. The outlook is stable. At the same time, Moody's assigned an SGL-1 speculative grade liquidity rating.

The new ratings follow ESAB's plan to sell $600 million of senior unsecured notes to refinance its existing unsecured term loan with about $593 million outstanding that matures in April 2025.

“The rating assignments reflect Moody's expectation for annual organic revenue growth near mid-single digits, supported by new product introductions and expansion into higher margin applications such as medical and specialty gas. Strong secular trends within the welding industry, including onshoring, increasing infrastructure spending and regulatory and safety requirements, along with the rising importance of productivity and connectivity capabilities will help drive topline growth,” the agency said in a press release.

Moody's said it forecasts an EBITA margin of over 15% and annual free cash flow near $200 million with debt to EBITDA expected to hover within the 2x – 3x range even with occasional bolt-on acquisitions.

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