Financial Data and Key Metrics Changes - Total sales growth of 2% was achieved, with record adjusted EBITDA margins of 20.4% [7][26] - Adjusted EBITDA reached 20.1%, highlighting the company's resilience despite challenges [26] - Free cash flow generated in the quarter was $46 million, with expectations for improvement in cash flow during the second half of 2025 [30][31] Business Line Data and Key Metrics Changes - EMEA and APAC segments showed strong performance, with total sales rising 11% and EBITDA margins hitting a record 20.6% [28][29] - Organic sales in The Americas declined due to tariff-related delays, but strong pricing helped balance this [27][28] - Automation orders were delayed, impacting the Americas, but a robust automation funnel gives confidence for recovery in the second half [14][46] Market Data and Key Metrics Changes - The Middle East delivered double-digit growth, while India grew at high single digits [12][13] - China and Southeast Asia experienced mid-single-digit growth, supported by increased capital expenditure [13][62] - Europe remained steady, benefiting from EU stimulus measures, with expectations for stable growth [11][94] Company Strategy and Development Direction - The company is focused on disciplined cost control, enhancing customer experience, and sharpening market differentiation [5][8] - Recent acquisitions, including Delta P and Active, are expected to accelerate growth and expand product offerings [22][24] - The integration of EBX and AI initiatives aims to enhance operational excellence and innovation [16][17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of the automation business in North America and the overall health of the business [34][40] - The company raised its full-year guidance based on strong market conditions and successful acquisitions [8][32] - Management remains optimistic about the high growth markets and expects continued momentum in EMEA and APAC [34][94] Other Important Information - The Flame internship program aims to build a robust talent pipeline for the fabrication technology sector [10] - The company is committed to investing approximately $20 million in strategic growth initiatives in 2025 [17][80] Q&A Session Summary Question: Can you provide more details on the tariff impact? - Management noted that tariffs introduced unexpected volume headwinds, particularly in Mexico, but expects recovery in the second half [37][39] Question: What are the underlying order trends in The Americas? - Management indicated that automation orders are expected to recover, while Mexico's market is showing signs of life but will take longer to stabilize [46][48] Question: Can you elaborate on the EWM acquisition? - The EWM acquisition is expected to enhance the heavy industrial portfolio and is projected to have mid-single-digit growth potential with gross margins over 40% [49][52] Question: What is the outlook for Europe and the impact of EU stimulus measures? - Management expects stable growth in Europe, with stimulus measures beginning to show positive effects, although not at the anticipated rate [90][94] Question: How is the company addressing productivity improvements? - The company has increased its savings target and is investing back into the business to support long-term growth initiatives [78][80]

Second Quarter 2025 August 6, 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 statements that are ...

Financial Performance - ESAB reported second quarter sales of $716 million, a 1% increase on a reported basis, but a 1% decrease on a core organic growth basis compared to the prior year[3]. - Net income from continuing operations attributable to ESAB was $69 million, or $1.12 diluted earnings per share, with core adjusted net income of $84 million, or $1.36 diluted earnings per share[3]. - Core adjusted EBITDA rose 3% to $138 million, with a margin expansion of 30 basis points to 20.4% compared to the prior year quarter[3]. - Net income from continuing operations (GAAP) for the three months ended July 4, 2025, was $69.8 million, a decrease of 18.9% compared to $85.5 million for the same period in 2024[24]. - Adjusted net income from continuing operations (non-GAAP) for the three months ended July 4, 2025, was $86.2 million, slightly down from $86.6 million in the prior year[24]. - Adjusted EBITDA (non-GAAP) for the three months ended July 4, 2025, was $143.5 million, compared to $141.0 million for the same period in 2024, reflecting a 1.8% increase[27]. - Adjusted net income margin from continuing operations was 12.0% for the three months ended July 4, 2025, compared to 12.3% in the same period last year[24]. - The company reported a diluted net income per share from continuing operations (GAAP) of $1.12 for the three months ended July 4, 2025, down from $1.37 in the same period last year[24]. - Net income for the six months ended July 4, 2025, was $137.936 million, a decrease of 5.3% from $145.963 million for the same period in 2024[43]. Guidance and Projections - ESAB raised its full year 2025 guidance for total core sales growth to 1.5% to 3.5%, up from a prior outlook of (1.0)% to 1.5%[5]. - Core adjusted EBITDA outlook increased to $525 to $535 million, compared to prior guidance of $520 to $530 million[5]. - Core adjusted EPS guidance was raised to $5.15 to $5.30, up from $5.10 to $5.25[5]. - Core adjusted EBITDA for 2024 is projected to be $510.7 million, with a range of $520 million to $530 million for 2025[39]. - The company expects 2025 core net sales growth to be in the range of 1.5% to 3.5%[39]. Strategic Initiatives - The company completed two strategic acquisitions, DeltaP and Aktiv, and signed EWM, enhancing its medical gas control and Fabtech portfolios[4]. - Strong performance was noted in high-growth markets, particularly in EMEA and APAC regions[4]. - The Americas team successfully navigated tariff-related pressures using the EBX strategy[4]. Cash Flow and Assets - Cash and cash equivalents as of July 4, 2025, were $258.2 million, an increase from $249.4 million at the end of 2024[41]. - Total assets increased to $4,432.4 million as of July 4, 2025, compared to $4,034.0 million at the end of 2024[41]. - The company reported net cash provided by operating activities of $82.0 million for the six months ended July 4, 2025[37]. - Net cash provided by operating activities decreased to $82.037 million, down 35.5% from $127.483 million year-over-year[43]. - Net cash used in investing activities increased significantly to $98.494 million, compared to $36.938 million in the prior year[43]. - The company reported a cash increase of $8.865 million, contrasting with a substantial increase of $126.467 million in the previous year[43]. - Cash and cash equivalents at the end of the period rose to $258.223 million, up from $228.470 million year-over-year[43]. - The company experienced a foreign exchange gain of $44.969 million on cash and cash equivalents, compared to a loss of $10.359 million in the prior period[43]. Liabilities and Expenses - Current liabilities totaled $686.5 million as of July 4, 2025, compared to $632.1 million at the end of 2024[41]. - Restructuring and other related charges for the three months ended July 4, 2025, amounted to $1.4 million, down from $4.8 million in the same period last year[27]. - Acquisition-amortization and other related charges for the three months ended July 4, 2025, were $21.6 million, significantly higher than $7.7 million in the prior year[27]. - Depreciation, amortization, and other impairment charges rose to $36.846 million, up from $32.930 million year-over-year[43]. - Stock-based compensation expense remained stable at approximately $9.900 million, compared to $9.886 million in the prior year[43]. - Changes in trade receivables resulted in a cash outflow of $49.161 million, an improvement from the outflow of $56.680 million in the previous year[43].

Industry Overview - The Zacks Metal Products - Procurement and Fabrication industry is experiencing strong demand across various end markets, with improvements in order levels and strategic pricing expected to help maintain margins despite tariff impacts [1][4] - The industry primarily includes metal processing and fabrication service providers that transform metal into parts and components for sectors such as construction, aerospace, automotive, and more [3] Market Trends - Recent data shows signs of recovery in the manufacturing sector, with the Institute for Supply Management's manufacturing index slightly increasing to 49% in June from 48.5% in May, and the Production Index rising to 50.3% [4] - Industrial production increased by 0.3% in June, with an annual growth rate of 1.1% for the second quarter [4] Strategic Initiatives - Companies are implementing strategic pricing adjustments and cost-reduction initiatives to tackle rising labor, freight, and fuel costs, while also diversifying supplier bases to mitigate tariff impacts [5] - A strong focus on automation and innovation is expected to drive future growth, particularly in manufacturing, aerospace, and automotive sectors [6] Performance Metrics - The Zacks Metal Products - Procurement and Fabrication industry has outperformed both its sector and the Zacks S&P 500 composite over the past year, growing by 27.2% compared to the sector's 13.5% and the S&P 500's 16.8% [10] - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 17.38X, which is lower than the S&P 500's 17.93X and the Industrial Products sector's 19.57X [13] Company Highlights - Kaiser Aluminum reported better-than-expected second-quarter results, with expectations for a 10-15% year-over-year increase in adjusted EBITDA and a 5-10% rise in conversion revenues for 2025 [19][20] - ESAB Corporation is making growth investments and pursuing acquisitions to enhance its market presence, with a recent 25% increase in its quarterly dividend [24] - TriMas Corporation's packaging segment is benefiting from solid demand, with an anticipated consolidated sales growth of 8-10% for full-year 2025 [26]

Core Viewpoint - Esab (ESAB) is anticipated to report a year-over-year increase in earnings despite a decline in revenues for the quarter ending June 2025, with actual results being a significant factor influencing its near-term stock price [1][2]. Earnings Expectations - The upcoming earnings report is scheduled for August 6, and if the reported figures exceed expectations, the stock may experience an upward movement; conversely, a miss could lead to a decline [2]. - The consensus estimate for Esab's quarterly earnings is projected at $1.34 per share, reflecting a year-over-year increase of 1.5%, while revenues are expected to be $669.34 million, down 5.3% from the previous year [3]. Estimate Revisions - Over the last 30 days, the consensus EPS estimate has been revised 1.79% higher, indicating a collective reassessment by analysts regarding the company's earnings outlook [4]. - The Most Accurate Estimate for Esab is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +2.43%, suggesting a bullish sentiment among analysts [12]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive Earnings ESP reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [10]. - Esab currently holds a Zacks Rank of 2, which, along with the positive Earnings ESP, suggests a high likelihood of beating the consensus EPS estimate [12]. Historical Performance - In the last reported quarter, Esab was expected to post earnings of $1.18 per share but exceeded this with actual earnings of $1.25, resulting in a surprise of +5.93% [13]. - Over the past four quarters, Esab has consistently beaten consensus EPS estimates [14].

Group 1 - Esab is well-positioned to maintain its earnings-beat streak, with an average surprise of 8.62% over the past two quarters [1][5] - In the last reported quarter, Esab achieved earnings of $1.25 per share, exceeding the Zacks Consensus Estimate of $1.18 per share by 5.93% [2] - The previous quarter also saw Esab outperform expectations, reporting earnings of $1.28 per share against an estimate of $1.15 per share, resulting in a surprise of 11.30% [2] Group 2 - Estimates for Esab have been trending higher, supported by its history of earnings surprises [5] - The stock has a positive Zacks Earnings ESP of +2.43%, indicating bullish sentiment among analysts regarding its earnings prospects [8] - Esab's Zacks Rank is 2 (Buy), suggesting a strong potential for another earnings beat in the upcoming report [8] Group 3 - Stocks with a positive Earnings ESP and a Zacks Rank of 3 (Hold) or better have a nearly 70% chance of producing a positive surprise [6] - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, reflecting the latest analyst revisions [7] - The next earnings report for Esab is expected to be released on August 6, 2025 [8]

Company Performance - Esab (ESAB) has returned approximately 8.1% year-to-date, outperforming the average gain of 7.7% in the Industrial Products group [4] - The Zacks Consensus Estimate for ESAB's full-year earnings has increased by 0.1% over the past 90 days, indicating an improving earnings outlook [3] - Esab is currently ranked 2 (Buy) in the Zacks Rank system, reflecting strong analyst sentiment [3] Industry Comparison - Esab is part of the Metal Products - Procurement and Fabrication industry, which has gained an average of 11.2% this year, indicating that ESAB is slightly underperforming its industry [5] - Valmont Industries (VMI), another stock in the Industrial Products sector, has returned 9.6% year-to-date and also holds a Zacks Rank of 2 (Buy) [4][5] - The Steel - Pipe and Tube industry, to which Valmont Industries belongs, has seen a year-to-date increase of 1.9% [6]

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]