Market Overview - The Nasdaq Composite and the Dow Jones Industrial Average have lost 1.03% and 0.52% year-to-date, while the S&P 500 has gained 0.60% [1] - Investor hesitance is attributed to President Trump's announcement of sweeping tariffs on all U.S. trading partners, although a potential truce between the U.S. and China may lead to reduced import duties [1] Economic Indicators - The consumer price index (CPI) rose 0.2% sequentially in April and 2.3% year-over-year, marking the lowest increase since February 2021 [2] - Federal Reserve Chair Jerome Powell indicated that more clarity is needed before considering further interest rate cuts, with analysts expecting no cuts until at least September [2] - Ongoing trade conflicts raise fears of a potential recession, which could negatively impact inflation and key economic indicators [2] Investment Opportunities - In volatile market conditions, dividend-paying stocks are recommended for portfolio diversification [3] - Notable dividend-paying companies include Marriott International (MAR), HNI, Sun Life Financial, ESAB Corporation, and Victory Capital Holdings [3] - Companies that consistently pay dividends indicate a healthy business model, and those that have recently raised dividends show a sound financial structure [3] Company Spotlight: Marriott International - Marriott International is a leading global hospitality company involved in the operation, franchising, and licensing of various lodging properties [4] - The company has a Zacks Rank of 3 (Hold) [4] - On May 9, Marriott declared a dividend of 67 cents per share, with a dividend yield of 0.9% [5] - Over the past five years, Marriott has increased its dividend five times, with a current payout ratio of 26% of earnings [5]

Group 1: Earnings Performance - Esab reported quarterly earnings of $1.25 per share, exceeding the Zacks Consensus Estimate of $1.18 per share, and showing an increase from $1.20 per share a year ago, representing an earnings surprise of 5.93% [1] - The company has surpassed consensus EPS estimates in all four of the last quarters [2] - Esab's revenues for the quarter ended March 2025 were $646.9 million, surpassing the Zacks Consensus Estimate by 2.59%, although this is a decrease from year-ago revenues of $689.74 million [2] Group 2: Stock Performance and Outlook - Esab shares have increased by approximately 0.2% since the beginning of the year, contrasting with the S&P 500's decline of -5.3% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to these expectations [4] - The current consensus EPS estimate for the upcoming quarter is $1.36 on revenues of $654.18 million, and for the current fiscal year, it is $5.13 on revenues of $2.56 billion [7] Group 3: Industry Context - The Metal Products - Procurement and Fabrication industry, to which Esab belongs, is currently ranked in the top 18% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The current estimate revisions trend for Esab is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6]

Financial Data and Key Metrics Changes - The company achieved a record first quarter adjusted EBITDA margin of 19.8%, reflecting a 100 basis points margin expansion on slightly positive organic growth [6][8] - Adjusted EBITDA increased by 100 basis points due to strong price discipline and product mix improvements [17][23] - Free cash flow generated in the quarter was $30 million, including approximately $10 million in inventory pre-purchased ahead of tariffs [21] Business Line Data and Key Metrics Changes - Both global welding equipment and Gas Control Equipment businesses grew by mid-single digits, indicating strong channel acceptance of new offerings [7][12] - The Gas Control business has grown from 10% to 18% of total revenue and is on track to reach 25% by 2028, with gross margins in the mid-40s [12][14] Market Data and Key Metrics Changes - In the Americas, organic sales declined by 200 basis points, but this was offset by strong price performance [18] - High growth markets in India, Asia Pacific, and the Middle East performed strongly, offsetting softness in the Americas [17][20] Company Strategy and Development Direction - The company is focusing on building a long-term winner by investing in innovation and acquiring businesses to expand its serviceable market [4][5] - The strategy includes optimizing operational performance, investing in innovation, and enhancing local agility while maintaining a strong global presence [11][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, particularly in Europe and India, driven by stimulus and investment plans [5][20] - The company is well-positioned to navigate current market challenges and is confident in its outlook for 2025 [8][25] Other Important Information - The company completed the acquisition of Bavaria, which strengthens its proprietary consumables portfolio and positions it to gain market share in faster-growing segments [8][14] - The company has a robust acquisition pipeline and may close two more tuck-in gas control deals before the end of Q2 [15] Q&A Session Summary Question: Can you provide details on tariff headwinds and pricing strategy? - Management indicated that 80% of products are built in-region, minimizing tariff exposure, with an expected impact of $15 million to $20 million in North America [31][33] Question: What are the trends in the Gas Control equipment business? - The Gas Control business has shown strong momentum, with expectations for continued growth from upcoming acquisitions [35][37] Question: How is the company managing organic growth guidance? - The company maintained its organic growth guidance, expecting low to mid-single digit negative growth in the Americas, offset by growth in EMEA and APAC [23][49] Question: Can you elaborate on margin expansion in the Americas? - Margin expansion is attributed to net pricing, EBX initiatives, and a shift in product mix towards gas control and equipment [58][59] Question: What is the outlook for European market stimulus? - Management expects the German stimulus to activate by Q3 and Q4, which could positively impact the company [78][79]

Financial Performance - The company reported a record first quarter adjusted EBITDA margin of 19.8%, reflecting a 100 basis points margin expansion on slightly positive organic growth [8][10] - Adjusted EBITDA increased by 100 basis points due to strong price discipline, product mix improvements, and EBX initiatives, offset by continued growth investments [18][20] - Free cash flow generated in the quarter was $30 million, including approximately $10 million in inventory pre-purchased ahead of tariffs [22] Business Line Performance - The global welding equipment and Gas Control Equipment businesses grew by mid-single digits, indicating strong channel acceptance of new offerings [9][18] - The Gas Control business has grown from 10% to 18% of total revenue and is on track to reach 25% by 2028, with gross margins in the mid-40s [14] Market Performance - High growth markets in India, Asia Pacific, and the Middle East performed strongly, offsetting softness in The Americas [18][20] - In The Americas, organic sales declined by 200 basis points, but the Summit acquisition added 300 basis points of growth [19][20] - Total sales in Europe, the Middle East, and Asia rose by 200 basis points, with adjusted EBITDA margins at 20% [21] Company Strategy and Industry Competition - The company is focusing on building a long-term winner by investing in innovation, deepening partnerships, and pursuing high-impact acquisitions [6][7] - The recent acquisition of Bavaria strengthens the proprietary consumables portfolio and positions the company to benefit from EU and German stimulus programs [16][17] - The company aims to build a higher margin, less cyclical, and higher cash flow enterprise through disciplined capital allocation [15] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in navigating the current environment and highlighted optimism in Europe and India due to stimulus and investment plans [7][10] - The company raised its revenue assumptions by approximately $30 million mainly due to the Bavaria acquisition, while maintaining organic growth guidance at 0% to 2% [24] Other Important Information - The company has completed the Bavaria acquisition, which is expected to be EPS neutral in the first year but accretive in subsequent years [16][88] - The company is committed to a strong cash flow performance and a robust balance sheet to support its compounder strategy [24] Q&A Session Summary Question: Can you provide details on tariff headwinds and pricing strategy? - Management indicated that North America faces a tariff impact of approximately $15 million to $20 million, but they have taken pricing actions to offset this [32][35] Question: What are the trends in the Gas Control equipment business? - The Gas Control business has shown strong momentum, with expectations for continued growth from upcoming acquisitions [36][39] Question: How is the company managing organic growth guidance? - The company maintained its organic growth guidance, expecting low to mid-single digit negative core volume in North America, while EMEA and APAC remain stable [50][51] Question: What is the outlook for margins in the Americas? - Management noted that margin expansion is driven by net pricing, EBX initiatives, and a shift in product mix towards gas control and equipment [60][61] Question: How does the company view long-term margin targets? - Management is considering updating long-term margin targets but emphasizes the importance of achieving current targets first [68][70]

Financial Performance - ESAB reported first quarter sales of $678 million, a decrease of 2% year-over-year, with core organic growth flat[3]. - Net income from continuing operations attributable to ESAB was $70 million, or $1.14 diluted earnings per share, compared to $62.9 million and $1.00 in the prior year[3][22]. - Core adjusted EBITDA increased to $128 million, a 4% rise, with a margin expansion of 100 basis points to 19.8%[3]. - Core adjusted net income from continuing operations was $76.9 million, compared to $73.6 million in the prior year[24]. - Adjusted net income margin from continuing operations improved to 11.9% from 11.3% year-over-year[24]. - For the three months ended April 4, 2025, net income from continuing operations was $72.6 million, compared to $62.9 million for the same period in 2024, representing a year-over-year increase of 2.7%[27][30]. - Adjusted EBITDA for the three months ended April 4, 2025, was $133.9 million, with an adjusted EBITDA margin of 19.7%, compared to $129.1 million and 18.7% margin for the same period in 2024[27][30]. - Total sales for the three months ended April 4, 2025, were $678.1 million, a decline of 1.7% from $689.7 million in the same period in 2024[33]. - Core adjusted EBITDA for the three months ended April 4, 2025, was $127.9 million, compared to $123.2 million for the same period in 2024, reflecting a year-over-year increase of 3.8%[27][30]. - Net income for the three months ended April 4, 2025, was $69,832, an increase from $61,594 for the same period in 2024, representing a growth of approximately 3.99%[42]. Outlook and Guidance - The company raised its full year 2025 outlook for total core sales growth to a range of (1.0)% to 1.5%[5]. - The company anticipates M&A contributions to sales growth of 2.0% to 2.5% for the full year[5]. - ESAB's core adjusted EPS guidance remains at $5.10 to $5.25[5]. - The company expects 2025 core net sales growth range to be between (1.0)% and (1.5)%, with organic growth projected at 0.0%-2.0%[37]. - The company anticipates core adjusted EPS for 2025 to be in the range of $5.10 to $5.25, compared to $5.06 for 2024[37]. Acquisitions and Strategic Initiatives - ESAB completed the acquisition of Bavaria Schweisstechnik GmbH, enhancing its consumables portfolio[7]. - The company emphasized its strategy of leveraging global scale while maintaining local agility to drive growth[4]. Cash Flow and Assets - Adjusted free cash flow for the three months ended April 4, 2025, was $30.4 million, down from $40.8 million for the same period in 2024[34]. - Total assets as of April 4, 2025, were $4,217.5 million, an increase from $4,033.9 million as of December 31, 2024[39]. - The company reported a current portion of debt of $17.8 million as of April 4, 2025, compared to $15.0 million as of December 31, 2024[39]. - Goodwill increased to $1,684.8 million as of April 4, 2025, from $1,652.0 million as of December 31, 2024[39]. Dividends and Stockholder Returns - The company paid dividends totaling $4,861, compared to $3,635 in the prior year, marking an increase of approximately 33.8%[42]. Other Financial Metrics - Net cash provided by operating activities decreased to $35,410 from $44,467, a decline of about 20.4% year-over-year[42]. - Cash and cash equivalents at the end of the period increased to $291,348, up from $76,495, showing a significant rise of approximately 280.5%[42]. - Net cash used in investing activities was $2,689, a decrease from $26,614, indicating a reduction of about 89.9%[42]. - The company reported a gain on the sale of property, plant, and equipment amounting to $5,665, compared to a loss of $44 in the previous year[42]. - Total depreciation, amortization, and other impairment charges were $17,491, up from $16,387, reflecting an increase of about 6.7%[42]. - The effect of foreign exchange rates on cash and cash equivalents resulted in an increase of $22,388, contrasting with a decrease of $9,441 in the previous year[42]. - Trade receivables decreased by $32,026, compared to a decrease of $48,946 in the same period last year, indicating improved collection efficiency[42]. - The company reported stock-based compensation expense of $5,361, an increase from $4,133, representing a rise of about 29.8%[42].

Core Viewpoint - The market anticipates a year-over-year decline in Esab's earnings due to lower revenues, with a focus on how actual results compare to estimates to influence stock price [1][2]. Earnings Expectations - Esab is expected to report quarterly earnings of $1.18 per share, reflecting a -1.7% change year-over-year, with revenues projected at $630.56 million, down 8.6% from the previous year [3]. - The consensus EPS estimate has been revised 1.32% lower in the last 30 days, indicating a bearish sentiment among analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate for Esab is lower than the consensus estimate, resulting in an Earnings ESP of -2.54%, suggesting a challenging outlook for beating estimates [10][11]. - Esab currently holds a Zacks Rank of 3, complicating predictions for an earnings beat [11]. Historical Performance - In the last reported quarter, Esab exceeded expectations by delivering earnings of $1.28 per share against an estimate of $1.15, resulting in a surprise of +11.30% [12]. - Over the past four quarters, Esab has consistently beaten consensus EPS estimates [13]. Conclusion - While Esab does not appear to be a strong candidate for an earnings beat, investors should consider other factors influencing stock performance ahead of the earnings release [16].

Company Overview - ESAB Corp. shares increased by 12.5% to close at $117.58, following a significant trading volume compared to normal sessions, despite a prior 16.6% loss over the past four weeks [1] - The company derives 78% of its sales from international operations, with principal manufacturing facilities in 14 countries, indicating a strong global presence [2] Financial Performance - The upcoming quarterly earnings report is expected to show earnings of $1.19 per share, reflecting a year-over-year decrease of 0.8%, while revenues are projected at $630.3 million, down 8.6% from the same quarter last year [3] - The consensus EPS estimate for the quarter has remained unchanged over the last 30 days, suggesting stability in earnings expectations [4] Industry Context - ESAB belongs to the Zacks Metal Products - Procurement and Fabrication industry, which includes other companies like Northwest Pipe Co. (NWPX), which saw a 6.3% increase in its stock price recently [4] - Northwest Pipe Co. has a consensus EPS estimate of $0.53 for its upcoming report, representing a 1.9% increase from the previous year, and also holds a Zacks Rank of 3 (Hold) [5]

YEARS STRONG Fourth Quarter 2024 February 20, 2025 EARNINGS CONFERENCE CALL © 2024 Forward-Looking Statements & Non-GAAP Disclaimer Forward-Looking Statements This presentation includes forward-looking statements, including forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning the Company's plans, goals, objectives, outlook, expectations, and intentions, including stat ...

Financial Performance - The company achieved a record fourth quarter adjusted EBITDA margin of 20.3%, reflecting a 90 basis points margin expansion on flat organic growth [9][24] - Adjusted EBITDA for 2024 reached the top of the range with a margin of 19.7%, exceeding guidance for adjusted EPS and free cash flow conversion [12][29] - Free cash flow for the year was a record $321 million, with free cash flow conversion exceeding 100% [28][29] Business Line Performance - The welding equipment product line experienced high single-digit growth during the quarter, indicating strong demand and acceptance in the market [11] - The Americas saw organic sales decline by 200 basis points, but strong price performance of 400 basis points and acquisitions contributed positively [25] - In Europe, Middle East, and Asia, total sales increased by 300 basis points, with a 400 basis points volume increase driven by high-growth markets [26] Market Performance - High growth markets continue to offset softness in developed markets, with strength noted particularly in the Middle East, India, and Southeast Asia [10][72] - The company anticipates low to mid-single-digit positive volume growth in EMEA and APAC segments throughout the year [32] Company Strategy and Industry Competition - The company is focused on innovation, shifting its product mix, and pursuing bolt-on acquisitions to enhance financial results [8][20] - The company has invested over $100 million in growth initiatives, including enhancing customer experience through AI and expanding its product portfolio [18][122] - The company aims to reduce its manufacturing footprint by 15% over the next three years to improve efficiency and cost structure [130][135] Management Commentary on Operating Environment and Future Outlook - Management expressed optimism about the start of 2025, noting stable to slightly improving order patterns in both the Americas and globally [42][44] - The company expects organic growth of 0% to 2% in 2025, with a positive impact from M&A offset by FX headwinds [30][31] - Management acknowledged the choppy environment but remains confident in executing their plans to drive margin growth and cash flow [66][67] Other Important Information - The company launched over 100 new products in 2024 and closed three acquisitions, with plans for continued acquisition activity in 2025 [36][20] - The company is leveraging AI for productivity improvements and customer service enhancements [122][126] Q&A Session Summary Question: Order patterns in early 2025 - Management noted stable to slightly improving orders in both the Americas and globally, indicating a solid start to 2025 [42][43] Question: Accretion from 2024 acquisitions - The company expects the three closed deals to perform at or above fleet average in terms of EBITDA percentage, with integration ahead of expectations [45][46] Question: Improving optimism in the Americas - Management highlighted strong acceptance of their equipment line and stabilization in their FABTECH business as factors contributing to optimism [50][51] Question: Drivers of margin expansion - Margin expansion is driven by value-based pricing, continuous improvement initiatives, and back-office cost reductions using new technologies [55][56] Question: Organic growth outlook for gas business - The gas business is expected to grow slightly, while equipment is anticipated to see mid-single-digit growth [61] Question: Regional growth expectations - Management expects strong growth in high-growth markets like India and the Middle East, while developed markets are expected to remain stable [72][73] Question: FX headwinds impact on EBITDA - The company expects approximately $90 million of FX headwinds, with a typical 20% decrement on EBITDA from FX movements [108][109] Question: Potential opportunities in the Russia-Ukraine conflict - Management expressed hope for peace and potential reconstruction opportunities, but noted that such scenarios are not included in their forecasts [111] Question: Mix benefits in margin guidance - The shift towards equipment, which has higher margins, is expected to positively impact overall margins [114][118]

Group 1 - Esab reported quarterly earnings of $1.28 per share, exceeding the Zacks Consensus Estimate of $1.15 per share, and up from $1.13 per share a year ago, representing an earnings surprise of 11.30% [1] - The company posted revenues of $633.2 million for the quarter ended December 2024, missing the Zacks Consensus Estimate by 0.46%, and down from $689.35 million year-over-year [2] - Esab has surpassed consensus EPS estimates four times over the last four quarters and topped consensus revenue estimates three times during the same period [2] Group 2 - The stock's immediate price movement will depend on management's commentary during the earnings call and the sustainability of earnings expectations [3][4] - Esab shares have increased by approximately 4.3% since the beginning of the year, compared to a 4.5% gain in the S&P 500 [3] Group 3 - The current consensus EPS estimate for the upcoming quarter is $1.24 on revenues of $658.78 million, and for the current fiscal year, it is $5.35 on revenues of $2.65 billion [7] - The estimate revisions trend for Esab is currently unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Group 4 - The Metal Products - Procurement and Fabrication industry, to which Esab belongs, is currently ranked in the bottom 21% of over 250 Zacks industries, suggesting potential challenges ahead [8]