ESAB

ESAB’s second quarter saw a positive market response, with sales growth driven primarily by robust demand for equipment and automation, especially in North America and Asia. Management highlighted double-digit growth in these segments, while Europe showed resilience despite ongoing geopolitical headwinds in the Middle East. CEO Shyam Kambeyanda emphasized that recent acquisitions—most notably Eddyfi—have expanded ESAB’s capabilities in inspection and monitoring, helping the company return to organic growth across both segments. Higher logistics and commodity costs pressured margins, but management cited successful navigation of these challenges. Is now the time to buy ESAB? Find out in our full research report (it’s free). Revenue: $807.6 million vs analyst estimates of $787.2 million (12.9% year-on-year growth, 2.6% beat) Adjusted EPS: $1.33 vs analyst expectations of $1.37 (3% miss) Adjusted EBITDA: $151.4 million vs analyst estimates of $150.2 million (18.7% margin, 0.8% beat) Adjusted EPS guidance for the full year is $5.45 at the midpoint, missing analyst estimates by 4.4% EBITDA guidance for the full year is $620 million at the midpoint, below analyst estimates of $624.8 million Operating Margin: 9.7%, down from 15.2% in the same quarter last year Organic Revenue rose 2.5% year on year (beat) Market Capitalization: $5.35 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Bryan Blair (Oppenheimer) asked about the cadence of organic growth in the back half of the year. CEO Shyam Kambeyanda explained that sequential improvement is expected, with confidence in equipment and automation orders supporting organic growth. Tami Zakaria (JPMorgan) questioned the impact of price/cost neutrality on guidance. Kambeyanda clarified that pricing is expected to improve slightly, while organic volume should remain flat or slightly better as cost pressures ease. Nathan Jones (Stifel) inquired about Eddyfi’s higher SG&A and synergy potential. Kambeyanda outlined that the commercial model requires more engagement but expects operational leverage as the business scales, citing $20 million in targeted synergies. Mircea Dobre (Baird) asked how ESAB and Eddyfi’s combined offerings benefit customers. Kambeyanda detailed the end-to-end workflow, enabling traceability from material joining to ongoing monitoring, citing examples in nuclear and rail. Christopher Dankert (D.A. Davidson) sought updates on European defense spending and pricing trends. Kambeyanda pointed to broad-based strength in Eastern Europe and Germany, with modest sequential pricing improvements anticipated. As we move forward, the StockStory team will be monitoring (1) the pace of integration and synergy realization from the Eddyfi acquisition, (2) the effectiveness of pricing actions in offsetting ongoing logistics and commodity cost pressures, and (3) the stability and recovery prospects in the Middle East, particularly regarding infrastructure rebuilds. Progress in expanding equipment and automation sales will also be a key signpost. ESAB currently trades at $86.07, down from $92.47 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members). WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses. But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+1,154% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Thursday, Aug. 6, 2026 at 8 a.m. ET Vice President of Investor Relations - Mark Barbalato President and Chief Executive Officer - Shyam Kambeyanda Chief Financial Officer - Brent Jones Operator: Hello, everyone. Thank you for joining us, and welcome to the ESAB Corporation Second Quarter 2026 Earnings Release and Conference Call. [Operator Instructions] I will now hand the conference over to Mark Barbalato, Vice President of Investor Relations. Mark, please go ahead. Mark Barbalato: Thanks, operator. Welcome to ESAB's Second Quarter 2026 Earnings Call. This morning, I'm joined by our President and CEO, Shyam Kambeyanda; and CFO, Brent Jones. Please keep in mind that some of the statements we are making today are forward-looking and are subject to risks, including those set forth in today's SEC filings and earnings release. Actual results may differ, and we do not assume any obligation or intend to update these forward-looking statements, except as required by law. With respect to any non-GAAP financial measures mentioned during the call today, the accompanying reconciliation information can be found in our earnings press release and today's slide presentation, which is available on our website. With that, I'd like to turn the call over to our President and CEO, Shyam Kambeyanda. Shyam Kambeyanda: Thank you, Mark, and good morning, everyone. Thank you for joining us today. Let me start by welcoming our Eddyfi teammates to ESAB. I was in Quebec for day 1, and the positive energy was palpable. The teams are working extremely well together, building plans for growth and innovation. Eddyfi adds talented leaders to our organization. To add, Brent has been with us now for 90 days, and he's done a great job jumping right in and raising the bar for ESAB. In addition, we've scored a real win, bringing RJ to ESAB as an Executive Vice President. RJ brings over 30 years of experience with Danaher, Veralto and GE HealthCare. At each of those companies, she built process-driven organizations at scale and delivered outstanding results. She's also an expert practitioner of our business system. I believe the combination of Brent, RJ, EBXai and our current leadership team is exactly what ESAB needs to drive organic growth, margin expansion and strong cash flow generation. We've been busy in the first half. Our teams have kept their heads down, focused on executing their plans and controlling the controllable, and it shows. Turning to Slide 3 to discuss our second quarter highlights in particular. ESAB delivered a strong second quarter, headlined by record total core sales and adjusted EBITDA and a return to organic growth in both segments. Demand in North America and Asia remained robust. Europe continues to be resilient and the Middle East performed in line with expectations in a tough environment. These results reflect the strength of our team and the power of our global enterprise, showcasing the value of our unrivaled workflow solution that addresses our customers' most complex issues. Total sales for the quarter were $766 million, up 13% year-over-year with core organic growth of 2.5%. Driven by double-digit growth in automation and equipment, adjusted EBITDA grew 8% to $150 million. Margins reflected transitory price/cost neutrality driven by increased logistic costs and commodity costs, which we expect to correct over the next few quarters with price and cost-out activities. Our teams did a fantastic job thoughtfully navigating this transitionary inflation, all while protecting our investments in equipment growth initiatives. We closed the acquisition of Eddyfi ahead of schedule, a defining step that positions ESAB for faster organic growth and higher margins. Brent will walk you through the financial details and our updated outlook, which now incorporates Eddyfi. The ESAB you see today is a transformed enterprise with equipment now representing over 50% of our revenue and powering our ability to accelerate organic growth. Before we move on, I want to thank our teammates around the world for their passion and commitment to our shared vision. Together, we're raising the bar of performance at ESAB. Moving to Slide 4, showcasing Eddyfi. I want to take a moment to remind everyone why this asset is so important. Eddyfi powers the next phase of ESAB's workflow and is a global leader in inspection and monitoring technologies for mission-critical applications with clear leadership in electromagnetic testing, ultrasonic testing and automated inspection. It serves attractive end markets with strong secular tailwinds across aerospace and defense, nuclear, infrastructure, and oil and gas. These tailwinds are driven by aging infrastructure, rising inspection requirements, growing power generation demand and industry-wide skilled labor shortage. Let me bring this to life for all of you. In early July, we hosted several customers at Eddyfi, where we showcased the power of our combined workflow solution across various end markets. This was the first time our teams from Eddyfi, EWM, GCE and ESAB worked together to demonstrate the full power of our enterprise. The event showcased our unrivaled workflow solutions and our customers walked away with a clear understanding of the connection between ESAB and Eddyfi and the value it creates for their operations. That excitement is already converting into an active funnel of commercial opportunities, and our teams are energized to capture them. Just this week, I visited Eddyfi site in State College, Pennsylvania and got a firsthand view of this talented team. Their ability to partner with large aerospace customers to quickly build prototypes to solve the toughest problems, it reinforced what I believed all along. We've picked up a team that is maniacally focused on the customer, capable of innovating at the speed of our customers' problems and carries an entrepreneurial spirit that will serve ESAB well over the long term. For our shareholders, this translates directly into a stronger ESAB, faster organic growth, higher margins, reduced cyclicality, a more predictable and resilient earnings profile that compounds value over time. Financially, Eddyfi is a premier asset. The business delivers high single-digit growth, gross margins of approximately 65% and EBITDA margins of roughly 30%. Eddyfi also brings meaningful North American exposure that pairs naturally with ESAB's global footprint, creating immediate geographic expansion opportunities for both companies. Turning to Slide 5. By combining ESAB and Eddyfi, we have created an unrivaled end-to-end workflow solution that supports our customers from initial preparation and joining all the way through real-time asset management, data-driven insights and full traceability. Our teams are focused and our growth funnels have never been stronger, and we're very optimistic about the opportunities that lie ahead. Together, we're uniquely positioned to accelerate the industry shift towards connected and digital workflow solutions. Moving to Slide 6. This is ESAB's transformation in one picture. Over the past decade, we have deliberately shifted our mix towards faster-growing, higher-margin portfolio of equipment and gas control products, which has become the foundation of our complete end-to-end workflow solution. From our leadership in gas control to our advanced equipment portfolio, every step we have taken, including our recent acquisitions has been accretive to our growth and gross margin profile, and has significantly strengthened our offering and geographic reach. The execution of our strategy has moved our equipment mix from 38% to 50% plus on a 2026 pro forma basis. At that same period, we have improved our gross margins by approximately 500 basis points. Turning to Slide 7. This slide is the proof point of our capital allocation strategy. Over the last 18 months, we've deliberately deployed capital into high-quality assets that have fundamentally reshaped ESAB. Every one of these acquisitions is delivering. We have already discussed the merits of Eddyfi. Aktiv and DeltaP strengthen our gas control leadership with unique products in fast-growing geographies. EWM establishes ESAB as the technology leader in equipment, bringing cold metal transfer technology, which we call React, along with additive manufacturing capabilities. And Bavaria extends our proprietary filler metal product line while deepening our presence in Germany. Each asset improves our growth profile, enhances our margin and extends our workflow solution, exactly what we set out to do. The results validate our playbook and the runway ahead is long. We have reinvigorated EBXai, sharpening our focus and driving out cost. ESAB is on a new trajectory. On that positive note, let me hand it over to Brent to walk you through the financial details. Brent Jones: Thank you, Shyam, and good morning, everyone. It is a pleasure to be on the call today. I have been spending my first few months diving into the business and getting to know the team. Based upon everything I've seen, I believe we have a strong foundation in place to drive long-term shareholder value. Let's turn to Slide 8 to review our financial summary. As Shyam noted, we delivered $766 million in total sales, a 13% increase over the second quarter of 2025. We delivered 2.5% organic sales growth, reflecting double-digit growth in automation and equipment as well as an 8% contribution from acquisitions. Adjusted EBITDA was $150 million, up 8% year-over-year at 19.5% adjusted EBITDA margin. We experienced a 90 basis point year-over-year margin decline because of transitory price/cost neutrality and deliberate targeted commercial investments to accelerate growth in our equipment product line. We view these investments as essential to driving future growth and margin expansion as equipment becomes a larger slice of the pie. Moving to Slide 9. Excluding the impact of 1 month of Eddyfi and the related financing transactions, core adjusted EPS was $1.41. Given the number of moving pieces related to this transaction, we have provided a simple walk. As you may recall, we prefunded a large portion of the debt financing with an exceptionally well-timed bond offering in March, where we raised $1 billion at a very attractive cost of capital. This financing is even more attractive in retrospect given current market volatility and interest rate trends. The total debt financing impacted EPS by $0.13 in the quarter, of which $0.03 was attributable to the prefunding. Our committed equity financing consisting of common shares and mandatorily convertible preferred stock, which helped fortify our balance sheet led to a $0.03 headwind. We are extremely excited to have Eddyfi as part of the ESAB team. The teams are already working together exceptionally well, and we are making targeted commercial investments to accelerate our long-term growth and margin expansion. Turning to our Americas segment on Slide 10. The Americas delivered a strong Q2. Total sales grew 12% to $316 million with 5% organic growth. North America had double-digit organic growth on the back of particularly strong performance in equipment, one of our key growth priorities. Gas equipment and automation rose double digits. Finally, Mexico continues to stabilize, and we are working to mitigate expected headwinds in South America. Moving to Slide 11. Our EMEA and APAC segment sales grew 14% to $450 million, representing 1% organic growth. We were able to drive organic growth despite the meaningful geopolitical headwinds in the Middle East, which impacted volumes. Margins in the segment were pressured by these disruptions as well as continued equipment growth investments. However, better-than-expected performance in Europe helped partially offset these headwinds. We continue to be excited about what EWM is doing for our business, both in Europe and globally, and the EWM integration and associated margin expansion plans remain solidly on track. Turning to Slide 12. Regarding cash generation, our first half adjusted free cash flow was in line with the first half of 2025 despite the meaningful increase in interest expense. Our cash flow was impacted by costs associated with restructuring and acquisition integration activities that are enabling future growth and margin expansion and a strategic decision to carry higher equipment inventory levels to serve our customers. We are focused on leveraging EBXai structurally to improve our working capital turns, and we expect strong second half cash generation. In terms of capital allocation, we continue to focus on investing in organic growth, debt reduction and accretive tuck-in and bolt-on acquisitions. Moving to Slide 13 to update our full year 2026 outlook. With Eddyfi now closed, we are raising our full year 2026 outlook. We expect total core sales of approximately $3 billion to $3.1 billion. This assumes organic growth of 2% to 4%. Acquisitions are now expected to contribute approximately 9 points of growth and foreign currency remains unchanged. We have increased adjusted EBITDA to $615 million to $625 million, which includes 7 months of Eddyfi. We have assumed about $15 million of drag from transitory price/cost neutrality driven by logistics costs and commodity inflation while protecting investment in equipment growth initiatives. The adjusted EPS range of $5.40 to $5.50 reflects these changes as well as the contribution and funding of the Eddyfi acquisition. Our free cash flow conversion should be approximately 90%. We have the right strategy and are executing it with discipline and focus and are on track to deliver another year of strong results. Thank you for your time, and I will now turn it back to Shyam. Shyam Kambeyanda: Thank you, Brent. To summarize, we delivered a record second quarter with positive organic growth in both segments, and we closed Eddyfi ahead of schedule. We're building momentum in our business. We transformed ESAB. We're continuing to reduce rooftop and optimize our manufacturing footprint. We are simplifying EBXai so that every team member is fully engaged with our tools. Our teams are driving 4 powerful funnels, a funnel for new customers, a funnel for synergy sales, a funnel for cost out and a funnel for Kaizen. We have renewed focus on Gemba, starting with me. Our priorities are clear: driving organic growth, margin expansion and deleveraging the balance sheet. We have reshaped ESAB into a faster-growing, higher-margin enterprise. True to our values, we will keep helping each other win, valuing every voice as we deliver long-term shareholder value. With that, operator, please open the line for questions. Operator: [Operator Instructions] Your first question comes from Bryan Blair with Oppenheimer. Bryan Blair: I was hoping you could offer a little more color on how orders progressed through Q2 and into Q3 and how your team is thinking about organic growth in the back half, both in terms of Q3, Q4 cadence and segment contribution? Shyam Kambeyanda: Yes. Thanks for that question, Bryan. Obviously, we were very happy with how things progressed for us from Q1 to Q2. We've seen that trend continue into Q3. As you've always known, we felt that the back half of the year, we had a lot of initiatives in play. We felt that sequentially, our growth profile and our performance improves. And you've seen that from Q1 to Q2, our performance improved both from a margin perspective and a performance perspective on sales. We expect to continue that core growth trend into Q3 and Q4. The other piece that I would add there, Brent, is that we have -- as I'd mentioned before, there were a couple of things that we were very comfortable with. One was EWM and the initiatives that we're working on for equipment in the second half of the year. And then we also had some really nice automation -- standard automation orders that ship in the second half of the year, giving us confidence about the organic growth guide that we've given. Bryan Blair: Okay. Understood. And you mentioned that the Middle East performed in line with expectations given the well-known circumstances at hand. To level set, what was the Q2 revenue and profit headwinds for Middle East operations? How are you thinking about the back half? And then looking forward, is there any way that you can quantify or dimensionalize the prospective catalysts from rebuild efforts and incremental investment in energy infrastructure? Shyam Kambeyanda: Yes. A couple of things there, Bryan. First, obviously, very proud of our team in the Middle East. I think I may have mentioned it to you before, our teams are actually in the office and working. Our sales teams are out there finding new accounts, continuing to deliver, protecting our customer, protecting our share and in some cases, gaining share in the region. As we mentioned before, the region is about 7% to 8% of ESAB's business, and it was down double digits. So really in that 10%, 11% range. The margins are good for us in the region. So we haven't given out any guidance on that particular piece, but you can make an assumption there. But we did see logistics costs sort of triple in the region as a result of the conflict, which we think are transitory. Depending on what happens today and tomorrow, things could sort of really shift very favorably in our direction. From a rebuild perspective, we've said this before, most of the assets that will need rework and rebuild have ESAB products spec-ed in. And so when those rebuild activities come in, we expect to get a larger share of it. We -- as you are aware, prior to the conflict, that region was growing high double digits for us, closer to 20%. We would expect that for a period of time as they rebuild and reconstruct that the numbers would be equivalent to that or maybe slightly better. Operator: Your next question comes from Tami Zakaria with JPMorgan. Tami Zakaria: A question on your organic growth outlook. I think it remains unchanged. You spoke about some price/cost neutrality impacts that you expect to cover in the next few quarters. Has your pricing outlook changed versus the last time we spoke? And in lieu of that, does that mean your volume outlook is now weaker? And so on the net, your organic growth expectation remains the same? Shyam Kambeyanda: Yes. I think the way to think about it is there's just a little bit of uncertainty out there, Tami. So the view for us is sequentially, our pricing does get slightly better. And then things have to sort of improve for us globally, Middle East being one of them. And I think the view for us is that we feel confident about where we are and where we've guided. The view for us is that pricing gets slightly better. We're sort of flat to slightly better on organic volume as we go through the second half of the year. Tami Zakaria: Understood. And then the second question, would you be able to parse out the components of the $0.35 EPS guidance reduction at the midpoint? How much of that is Eddyfi sales, EBITDA, higher interest expense, how much from price/cost impact? If you could bucket those, that would be helpful. Brent Jones: Yes, certainly. It's Brent. Good to speak with you. So when you look at that at the midpoint, most of the dilution associated with Eddyfi, we absorbed in Q2. Now Eddyfi, as the year progresses will be -- will improve sequentially each quarter, and then it will be kind of just modestly dilutive in Q4, but you'll see most of that. So that's kind of 40% or more of the impact. So that's both the contribution of the business net of the interest expense and the share and preferred stock issuance. Then the balance of it is the comment on the trimming the EBITDA there, and that's probably about 60% of it. Shyam Kambeyanda: Well, it's really the investments in growth that we're doing and then the price/cost neutrality. Tami Zakaria: Understood. Shyam Kambeyanda: Yes. So the way to think about that also, Tami, is that we think that we'll be slightly dilutive to neutral in Q4 and then confidently positive as we get into '27 with Eddyfi. Operator: Your next question comes from Nathan Jones with Stifel. Nathan Jones: I'm going to start with a couple of high-level questions on Eddyfi. Obviously, 65% gross margins and 30% EBITDA margins are very good. But that does imply 35% SG&A. So I wanted to talk about that a little bit. Is that something that's a result of a different commercial model that requires more SG&A to support it? It's built for a higher revenue base? Or is it something that you think you can outright shrink or grow into? And what's kind of a normalized optimized level of SG&A that Eddyfi should run at? Shyam Kambeyanda: A couple of things that we're beginning to observe. One, it's an extremely innovative culture. The way that the business grows is that they're able to develop solutions in a short period of time. I just mentioned the comment about State College, Pennsylvania, where a customer comes in, discusses an issue and within a week, the team has developed the probes needed and provide the solution for the customer. And these were for some large aerospace customers. So there's fundamentally a way that this business works that requires a level of engagement, especially from the R&D and the development team that creates both growth and innovative products. Now the level of what is the optimal level, we're working through our plans. We're just getting past our 60-day plan. We -- as you know, Brent, we have an EBX process of a 100-day plan that we will be sitting with the team. But we do expect, as the business grows, we don't need to increase OpEx as much. So there will be some natural leverage there. And then there's obviously things that we do, whether it be the shared service center or other things where -- and supply chain where the team can leverage the base ESAB business continuing to improve that category. So when we went in, as you remember, we had talked about a $20 million synergy between us and them. We feel that, that is real, and there may be more in it. but we're going to gradually do it. Our focus will be to capture growth rather than focus on the cost out side initially. But rest assured, we'll be doing both. Nathan Jones: That leads to my second question, which was going to be the opportunities for revenue synergies and growth from Eddyfi and ESAB together. Maybe you can talk a little bit more about where you see those opportunities and what kind of revenue synergies you might target in 2027, 2028? I know those take a little bit longer to materialize. Shyam Kambeyanda: Yes. Well, first is we talked about the session that we had with the combined teams at Eddyfi. And I have to tell you, I talked about it about day 1, but even that session that we had in the parking lot of Eddyfi in Quebec City was amazing. It was phenomenal to see our teams, EWM gas control, our traditional FabTech team sit with the Eddyfi team and work out the workflow solutions. And we looked at segments when it came to nuclear, oil and gas, wind, pipelines. And fundamentally, the team sat in and looked at synergies across all of those customers. And what I can tell you is that the funnel at Eddyfi is close to about $450 million. Now we got to convert on that funnel. The view for us on that particular front is that it's going to take a bit of time. We've introduced the concept to our customers. We're seeing great feedback. We're seeing the Department of Defense engage very differently with us as a result of both the additive manufacturing technology that we picked up with EWM and now Eddyfi, so the opportunities exist. We expect to get a few orders and those then become the base case for us to continue to drive organic growth across several other segments for both ESAB and Eddyfi. Operator: Your next question comes from Mig Dobre with Baird. Mircea Dobre: I just kind of want to follow up on this discussion with Nathan here. Just conceptually, if I'm a customer and I'm buying product -- testing product from Eddyfi, what would be the benefit for me from buying ESAB equipment or ESAB consumables in conjunction with the testing equipment that I'm getting from Eddyfi. Like how do you go to market and you package these things together? Shyam Kambeyanda: Yes. We actually spent a significant amount of time discussing exactly that with the teams up in Quebec City, the short piece is full traceability to when the material was joined together. And so fundamentally, you look at -- we actually showcased one nuclear example for some of our customers where you're basically disposing of nuclear waste or product that comes off of a nuclear plant and sealing it in a container. What you need for that particular aspect is, first, a full workflow analysis of what went into sealing that container. And then after that, what you need is to ensure that there's no deterioration in that container over a period of time. That was one of the simplest examples that I can give you. The second aspect was on pipeline, where you join some pipes, you put them out into the field and then you monitor degradation of that particular aspect of the product line. And what we noticed with the customers is that's exactly what they want to know is that what was the original product looking like when it was placed where it was and how has it moved over time. And that combination today only ESAB can provide. We did something similar on rail, where, as you may know, in India today, we actually supply product for all the rail repair. And one of the big aspects is visual inspection of the rails to sort of monitor where the wear has occurred on the railway tracks. And today, what you can do with ESAB and Eddyfi product is actually monitor where the wear is occurring, apply where ESAB filler metal and equipment need to go in and monitor it over a period of time for better serviceability to our customers. I can give you another example associated wind, but you get it. The view for us is -- and that applies in spades when it comes to the defense sector. And it's been actually quite exciting for us in the initial days, the response from our customers, the way that we're thinking about combining the data capturing, the data monitoring ability between both of the companies and combining those workflows. So excited, early days. We've got a few early bites that have got us sort of really focused on developing that, which is why the earlier comment that we made is that we want to continue to invest in the front end to make sure that we capture all of this for 2027 and beyond. Mircea Dobre: That's very interesting. My follow-up, a clarification here on the adjusted EBITDA increase. Can you tell us exactly what the contribution from Eddyfi is in your updated guidance? Brent Jones: So Mig, the -- when you look at the increase there, the contribution is primarily Eddyfi netted by the other investments that Shyam noted when we had the previous answer. Mircea Dobre: Right. But the numbers are what -- I mean, you increased it by $35 million. So Eddyfi... Brent Jones: Yes, we increased it by $35 million. We said we had $15 million of price cost headwinds and investments. So it's approaching $50 million, the Eddyfi contribution. Operator: Your next question comes from Neal Burk with UBS. Neal Burk: Shyam, I just wanted to go back to your comment earlier on -- you said sequentially pricing getting a bit better to offset the cost inflation, but you also said flat to slightly better on organic volumes in the second half. Can you just clarify, is that comment relative to previous volume expectations? Or like, I guess, another way, how do you [indiscernible] Shyam Kambeyanda: Yes, just sequentially, Neal. We're looking at this now sequentially as to where we are and the current environment. So what this assumes -- our guide assumes is that the Middle East stays where it is. We get a little bit more price. We continue to invest in our business on equipment growth and the strategies that we have to grow our equipment business along with sort of pulling Eddyfi through a little bit. And then obviously, we've got some really nice commercial opportunities that could -- that we had planned on in the second half of the year related to automation as well. Neal Burk: Okay. That's helpful. And then a lot of strength in equipment and automation. I mean, we've seen that from some other peers this earnings season. But can you just maybe elaborate a bit on how -- or what end markets are driving that growth in equipment? And also any update on how consumables is trending? Shyam Kambeyanda: I'm sorry, what was the last part, Neal? Neal Burk: Consumables. Shyam Kambeyanda: Oh, consumables. Consumables continue to be steady. There are pockets of weakness, obviously, specifically in the Middle East. But overall, it continues to trend positively, although not as positive as equipment. So what I'll basically say there is that sort of in the low single digits is what we see global consumables doing with equipment and gas control doing quite well along with automation. To sort of specifically talk about... Mark Barbalato: Can you repeat the first part of your question? Neal Burk: Yes. Just kind of give us a sense of like how broad by end market was the strength in equipment and automation? Shyam Kambeyanda: Yes. Just talking about the end market pieces. What we found was general fabrication is where we found significant uptick in our portfolio. We also saw some uptick in defense, which we've always said has been a tailwind for us. And so those were really the 2 things that stood out. Our distribution segment did really well across the globe on both equipment and to some extent, standard automation. Operator: The next question comes from Chris Dankert with D.A. Davidson. Christopher Dankert: Hoping to dig in a little bit on Europe. I think you called out some improvement in defense spending. Again, is that strictly Germany? Maybe any kind of quantification in terms of uptick? Any sort of update in terms of what we're seeing in Europe more broadly? Shyam Kambeyanda: For Europe, we obviously have a phenomenal presence and a great position of strength in general, Chris. What we are seeing is Eastern Europe, Scandinavia and Germany sort of making some moves, especially in the segment that you mentioned earlier in defense. We're also seeing some investments come in, in those particular markets for energy that's helping us out as well. And then the second piece here is that we play from a position of strength. So our teams continue to gain market share, both in consumables and in equipment. We do get some data publicly in the space that sort of validates that piece for us. Christopher Dankert: Got it. And I guess, forgive me if I missed it, but did you quantify kind of what the sequential pricing improvement is expected to be into the back half of the year here? Shyam Kambeyanda: We have not quantified that, but it's modest sort of moving. I think we had 2% this quarter, sort of moving up into the 3% and then sort of exiting at a better rate in Q4. Operator: This concludes the question-and-answer session. I will now turn the call back to Mark Barbalato for closing remarks. Mark Barbalato: Thank you for joining us today, and we look forward to speaking to you next quarter. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in ESAB, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and ESAB wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $400,209!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,375,393!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 13, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. ESAB (ESAB) Q2 2026 Earnings Call Transcript was originally published by The Motley Fool

Interested in ESAB Corporation? Here are five stocks we like better. Record Q2 performance: ESAB’s sales rose 13% year over year to $766 million, while adjusted EBITDA increased 8% to $150 million, supported by organic growth, acquisitions and strong demand for equipment and automation. Eddyfi acquisition expands growth opportunities: The deal closed ahead of schedule and adds inspection, monitoring and data-traceability capabilities, with a nearly $450 million commercial funnel and expected synergies of approximately $20 million. 2026 outlook raised: ESAB now expects $3.0 billion–$3.1 billion in core sales, $615 million–$625 million in adjusted EBITDA, adjusted EPS of $5.40–$5.50 and free-cash-flow conversion of about 90%, despite temporary logistics, commodity and price-cost pressures. ESAB (NYSE:ESAB) reported record total core sales and adjusted EBITDA for the second quarter of 2026, supported by organic growth in both operating segments, double-digit growth in automation and equipment, and contributions from acquisitions. Total sales rose 13% from a year earlier to $766 million, including 2.5% organic growth and an 8% contribution from acquisitions. Adjusted EBITDA increased 8% to $150 million, while adjusted EBITDA margin was 19.5%, down 90 basis points year over year. → Meta’s Earnings Drop Shows Wall Street Wants More Than Ad Growth President and CEO Shyam Kambeyanda said the quarter reflected robust demand in North America and Asia, resilient conditions in Europe, and performance in the Middle East that was in line with the company’s expectations amid a difficult operating environment. ESAB said it completed its acquisition of Eddyfi ahead of schedule. Eddyfi provides inspection and monitoring technologies used in mission-critical applications, including electromagnetic testing, ultrasonic testing and automated inspection. → Sandisk Just Delivered a Blowout Quarter—Here's Why the Stock Is Falling Kambeyanda said the acquisition expands ESAB’s end-to-end workflow capabilities, combining welding, joining, gas-control and automation offerings with inspection, monitoring and data-traceability technologies. He said the combined businesses are pursuing commercial opportunities across aerospace and defense, nuclear, infrastructure, oil and gas, pipelines, rail and wind-energy applications. “The ESAB you see today is a transformed enterprise with equipment now representing over 50% of our revenue and powering our ability to accelerate organic growth,” Kambeyanda said. → 4 Oil and Gas ETF Plays as Prices Stay Sky-High The company said Eddyfi serves markets supported by aging infrastructure, higher inspection requirements, power-generation demand and shortages of skilled labor. Kambeyanda said Eddyfi has high-single-digit growth, gross margins of approximately 65% and EBITDA margins of roughly 30%. During the question-and-answer session, Kambeyanda said Eddyfi’s commercial funnel is close to $450 million, though he cautioned that converting opportunities will take time. He said the company expects to secure some initial orders that could support further growth in 2027 and beyond. ESAB also reiterated that it expects approximately $20 million in synergies from the transaction, with potential for more over time. The company said its initial priority is capturing commercial growth opportunities while also pursuing operational benefits through areas such as supply chain and shared services. Sales in the Americas segment increased 12% to $316 million, including 5% organic growth. ESAB said North America posted double-digit organic growth, led by equipment, while gas equipment and automation also rose by double digits. Mexico continued to stabilize, while the company said it is working to mitigate expected headwinds in South America. EMEA and APAC sales rose 14% to $450 million, including 1% organic growth. The company said geopolitical disruptions in the Middle East affected volumes and pressured segment margins, though better-than-expected European performance partly offset those effects. Kambeyanda said the Middle East represents roughly 7% to 8% of ESAB’s business and was down by about 10% to 11% during the quarter. Logistics costs in the region tripled because of the conflict, according to the company. He said ESAB expects those costs to be temporary and noted that many assets expected to require rebuilding work are specified with ESAB products. Before the conflict, the Middle East had been growing close to 20% for the company, Kambeyanda said. He added that reconstruction activity could eventually support growth at similar or potentially higher levels, though ESAB did not provide specific guidance for the region. In Europe, Kambeyanda cited improving activity in Eastern Europe, Scandinavia and Germany, particularly in defense-related markets. He also pointed to investment in energy markets and said ESAB continues to gain share in consumables and equipment. Equipment and automation demand was broadest in general fabrication, defense and distribution channels, management said. Consumables continued to grow in the low-single digits globally, though at a slower pace than equipment, gas control and automation. CFO Brent Jones said quarterly margins were affected by temporary price-cost neutrality tied to higher logistics and commodity costs, as well as targeted commercial investments intended to accelerate equipment growth. ESAB expects to address the cost pressure through pricing and cost-reduction actions over the next several quarters. The company said pricing was approximately 2% in the second quarter and is expected to improve modestly during the second half, moving toward 3% and exiting the fourth quarter at a better rate. Management said it expects volumes to be flat to slightly improved sequentially in the second half. Core adjusted earnings per share, excluding one month of Eddyfi and related financing transactions, was $1.41. Jones said debt financing affected quarterly EPS by $0.13, including $0.03 related to pre-funding. Equity financing, including common shares and mandatorily convertible preferred stock, created an additional $0.03 headwind. First-half adjusted free cash flow was in line with the prior-year period despite higher interest expense. Cash flow was affected by restructuring and acquisition-integration costs, along with higher equipment inventory intended to support customer demand. ESAB expects strong cash generation in the second half. The company raised its full-year 2026 outlook following the Eddyfi closing. ESAB now expects: Total core sales of approximately $3 billion to $3.1 billion; Organic growth of 2% to 4%; Approximately nine percentage points of growth from acquisitions; Adjusted EBITDA of $615 million to $625 million, including seven months of Eddyfi; Adjusted EPS of $5.40 to $5.50; and Free-cash-flow conversion of about 90%. Jones said the updated EBITDA outlook includes roughly $15 million of pressure from temporary price-cost neutrality, logistics and commodity inflation, while preserving investments in equipment-growth initiatives. He said Eddyfi’s contribution to the higher EBITDA outlook is approaching $50 million, offset by those investments and cost pressures. Management said its priorities remain organic growth, margin expansion and balance-sheet deleveraging, alongside continued investment in tuck-in and bolt-on acquisitions. ESAB Corporation is a global leader in welding, cutting and gas control technologies, offering a comprehensive portfolio of equipment, consumables and automation solutions. The company's products include welding power sources, cutting machines, torches, electrodes, filler metals and gas regulating equipment designed to meet the needs of diverse industries. ESAB serves sectors such as construction, shipbuilding, automotive, energy, infrastructure and manufacturing, providing both standard and customized solutions to enhance productivity and quality in metal fabrication and processing. Founded in 1904 by Swedish inventor Oscar Kjellberg, ESAB pioneered the development of coated welding electrodes, laying the groundwork for modern welding practices. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "ESAB Q2 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Find your next quality investment with Simply Wall St's easy and powerful screener, trusted by over 7 million individual investors worldwide. ESAB (ESAB) just reported second quarter and first half 2026 results, providing new information on revenue, margins and the impact of recent acquisitions on the stock’s risk reward profile. See our latest analysis for ESAB. Despite record core sales and the Eddyfi acquisition closing ahead of schedule, ESAB's recent earnings miss on profit has weighed on sentiment, with the 1 day share price return down 2.8% and the year to date share price return down 18.4%. However, the 3 year total shareholder return is 30%, suggesting longer term holders have still seen gains. If this kind of mixed reaction to earnings has you thinking about where else growth stories might be forming, it could be a good time to scan 36 robotics and automation stocks for potential opportunities beyond ESAB. ESAB now trades at a sizable discount to both analyst targets and one intrinsic value estimate after the earnings miss and recent share price pullback. Is the market being sensibly cautious, or is it being overly punitive on the stock’s prospects? At a last close of $91.86 compared with a narrative fair value of $135.40, ESAB is framed as meaningfully undervalued, with that gap tied to detailed assumptions on growth, margins and required return. Read the complete narrative. Read the complete narrative. Want to understand why this fair value sits well above today’s share price? The narrative leans on compounded revenue growth, a higher profit margin profile and a future earnings multiple that still steps down from today’s industry benchmark. Curious which of those pillars does the heavy lifting in the model and how the 9.3% discount rate shapes the result? The full narrative joins those pieces into one valuation story. Result: Fair Value of $135.40 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, ESAB’s story also hinges on trade policy and industrial demand. Prolonged tariff uncertainty or a weaker capex cycle could quickly challenge the current undervalued narrative. Find out about the key risks to this ESAB narrative. The mix of optimism and concern around ESAB is clear, so this is a moment to act quickly and weigh the trade offs yourself. To see both sides of the story in one place, review the 3 key rewards and 2 important warning signs. If ESAB has sharpened your focus on where to put fresh capital next, do not stop here. The right watchlist today could shape your portfolio tomorrow. Start hunting for underappreciated quality by scanning 51 high quality undervalued stocks before prices shift away from you. Strengthen the core of your portfolio with companies that carry less balance sheet risk by checking out the solid balance sheet and fundamentals stocks screener (49 results). Get ahead of the crowd by reviewing the screener containing 19 high quality undiscovered gems and spotting strong businesses before they hit everyone else's radar. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ESAB. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Achieved record total core sales and adjusted EBITDA, driven by double-digit growth in automation and equipment product lines. Successfully transformed the portfolio mix, with equipment now representing over 50% of revenue, up from 38% historically, which has expanded gross margins by approximately 500 basis points. Closed the Eddyfi acquisition ahead of schedule, positioning the company as a global leader in inspection and monitoring technologies for mission-critical applications. Experienced transitory margin pressure due to price/cost neutrality from increased logistics and commodity costs, which management expects to correct via upcoming price and cost-out activities. Reported resilient performance in Europe and robust demand in North America and Asia, helping offset double-digit declines in the Middle East due to regional conflict. Strengthened the leadership team with the addition of a new CFO and an Executive Vice President with deep business system expertise to drive operational excellence. Raised full-year 2026 outlook to reflect 7 months of Eddyfi contribution, targeting total core sales of $3 billion to $3.1 billion. Assumes organic growth of 2% to 4% for the full year, supported by a strong funnel of automation orders and equipment initiatives in the second half. Anticipates approximately $15 million of drag from transitory price/cost neutrality while prioritizing investments in equipment growth initiatives. Expects Eddyfi to be slightly dilutive to neutral in Q4 2026 before becoming confidently accretive to earnings in 2027. Focusing capital allocation on debt reduction and deleveraging the balance sheet following the recent acquisition activity. Middle East operations, representing 7% to 8% of total business, saw volumes decline in the 10% to 11% range due to ongoing conflict. Logistics costs in the Middle East tripled as a result of regional instability, though management views these as transitory impacts. Strategic decision to carry higher equipment inventory levels impacted first-half cash flow to ensure customer service levels during the portfolio transition. Identified a $450 million commercial funnel at Eddyfi, representing significant long-term revenue synergy potential across nuclear, aerospace, and defense sectors. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management expects core growth trends to continue improving sequentially into Q3 and Q4. Confidence is driven by specific EWM equipment initiatives and standard automation orders scheduled for shipment in the latter half of the year. Eddyfi operates with high gross margins (65%) but high SG&A due to an R&D-intensive, rapid-prototyping commercial model. Management confirmed a $20 million synergy target but will prioritize capturing growth over immediate cost-cutting to preserve the innovative culture. The combined offering provides customers with full traceability from initial material joining through long-term asset monitoring. Specific opportunities identified in nuclear waste containment, pipeline degradation monitoring, and defense sector additive manufacturing. Pricing is expected to improve from 2% in Q2 to approximately 3% in the second half to offset commodity and logistics inflation. Volume expectations remain flat to slightly better sequentially, assuming the Middle East environment remains stable at current levels.

Esab (ESAB) came out with quarterly earnings of $1.33 per share, missing the Zacks Consensus Estimate of $1.37 per share. This compares to earnings of $1.36 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -2.92%. A quarter ago, it was expected that this maker of welding and cutting equipment would post earnings of $1.32 per share when it actually produced earnings of $1.31, delivering a surprise of -0.76%. Over the last four quarters, the company has surpassed consensus EPS estimates two times. Esab, which belongs to the Zacks Metal Products - Procurement and Fabrication industry, posted revenues of $766.3 million for the quarter ended June 2026, surpassing the Zacks Consensus Estimate by 2.16%. This compares to year-ago revenues of $678.5 million. The company has topped consensus revenue estimates three times over the last four quarters. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Esab shares have lost about 17.2% since the beginning of the year versus the S&P 500's gain of 12.8%. While Esab has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock? There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately. Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions. Ahead of this earnings release, the estimate revisions trend for Esab was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $1.47 on $797.05 million in revenues for the coming quarter and $5.72 on $3.07 billion in revenues for the current fiscal year. Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Metal Products - Procurement and Fabrication is currently in the bottom 28% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Another stock from the broader Zacks Industrial Products sector, Unifi (UFI), has yet to report results for the quarter ended June 2026. This polyester and nylon yarn maker is expected to post quarterly loss of $0.06 per share in its upcoming report, which represents a year-over-year change of +89.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. Unifi's revenues are expected to be $139.75 million, up 0.9% from the year-ago quarter. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ESAB Corporation (ESAB) : Free Stock Analysis Report Unifi, Inc. (UFI) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Record total sales increased 12.9%, with core organic sales up 2.5% Core organic growth in both segments Closed Eddyfi ahead of schedule Updating 2026 outlook NORTH BETHESDA, Md., August 06, 2026--(BUSINESS WIRE)--ESAB Corporation ("ESAB" or the "Company") (NYSE: ESAB), a focused premier industrial compounder, today announced financial results for the second quarter of 2026. ESAB reported record second quarter sales of $808 million, an increase of 12.9% on a reported basis or an increase of 2.5% on a core organic growth basis before acquisitions and currency translation, as compared to the prior year quarter. ESAB also reported second quarter net income from continuing operations attributable to ESAB of $35 million or $0.54 diluted earnings per share and core adjusted net income of $83 million or $1.33 diluted earnings per share, down 1% on a year-over-year basis. Core adjusted EBITDA of $150 million rose 8.0% and core adjusted EBITDA margin decreased by 90 basis points on a year-over-year basis to 19.5%, reflecting transitory price/cost neutrality, and targeted commercial investments for equipment growth. "ESAB delivered a record second quarter, with a solid return to organic growth in both regions, underscoring the strength of our platform even in a challenging macro environment. These results reflect the strength of our teams and the value of our unrivaled workflow solution that addresses our customers' most complex issues. Despite a challenging environment in the Middle East, our performance exceeded expectations, with particular strength in North America and Asia and a resilient Europe. We expect to mitigate the transitory cost inflation related to logistics and commodity price increases over the next few quarters," said Shyam P. Kambeyanda, ESAB President and CEO. "We are also pleased to have closed our acquisition of Eddyfi one month ahead of schedule," Kambeyanda added. "This is a defining step in our strategy to extend our workflow solutions into compelling new adjacencies that shape ESAB into a higher-growth, higher-margin enterprise. Our performance this quarter reaffirms my full confidence in achieving our long-term financial targets as we continue to focus on organic growth, margin expansion, and deleveraging the business to create sustainable, long-term shareholder value." Updating Full Year 2026 Outlook ESAB has updated its full-year 2026 outlook, which now projects total core sales growth of 11.0% to 14.0%, an increase from the previous guidance of 6.0% to 9.0%. Within this growth, core organic sales remains 2.0% to 4.0%, while the contribution from M&A has been revised upward to approximately 9.0% from 4.0%, and the anticipated FX impact has remained the same with the prior range of 0.0% to 1.0%. Consequently, the company has raised its core adjusted EBITDA forecast to a range of $615 million to $625 million, up from the previous $575 million to $595 million, while the outlook for core adjusted EPS has been adjusted to a range of $5.40 to $5.50. About ESAB Corporation Founded in 1904, ESAB Corporation is a focused industrial compounder. The Company’s rich history of innovative products, workflow solutions and its business system ESAB Business Excellence ("EBXai"), enables the Company’s purpose of Shaping the world we imagineTM. ESAB Corporation is based in North Bethesda, Maryland and employs approximately 11,300 associates and serves customers in approximately 150 countries. To learn more, visit www.ESABcorporation.com. Conference Call and Webcast The Company will hold a conference call to discuss its second quarter 2026 results beginning at 8:00 a.m. Eastern on Thursday, August 6, 2026, which will be open to the public by calling +1-833-461-5787 (U.S. callers) and +1-585-542-9983 (International callers) and referencing the conference ID number 503859747 and through webcast via ESAB’s website www.ESABcorporation.com under the "Investors" section. Access to a supplemental slide presentation can also be found on ESAB's website under the same heading. Both the audio of this call and the slide presentation will be archived on the website later today and will be available until the next quarterly call. The Company’s quarterly report on Form 10-Q for the fiscal quarter ended July 3, 2026, filed August 6, 2026, is also available on ESAB’s website under the "Investors" section. Non-GAAP Financial Measures and Other Adjustments ESAB has provided in this press release financial information that has not been prepared in accordance with accounting principles generally accepted in the United States ("non-GAAP"). ESAB presents some of these non-GAAP financial measures including and excluding Russia due to economic and political volatility caused by the war in Ukraine, which results in enhanced investor interest in this information. Core non-GAAP financial measures exclude Russia for the three and six months ended July 3, 2026 and July 4, 2025. These non-GAAP financial measures may include one or more of the following: adjusted net income from continuing operations, Core adjusted net income from continuing operations, adjusted EBITDA (earnings before interest, taxes, Restructuring and other related charges, acquisition transaction, due diligence and integration expenses, amortization of intangibles and fair value step up on acquired inventories, depreciation and other amortization and compensation expense related to the Performance Option Awards), Core adjusted EBITDA, organic sales, Core organic sales, adjusted free cash flow and ratios based on the foregoing measures. ESAB also provides adjusted EBITDA and adjusted EBITDA margin on a segment basis, as well as Core adjusted EBITDA and Core adjusted EBITDA margin on a segment basis. Adjusted net income from continuing operations represents Net income from continuing operations attributable to ESAB Corporation, excluding Restructuring and other related charges, acquisition transaction, due diligence and integration expenses, amortization of intangibles and fair value step up on acquired inventories and compensation expense related to the Performance Option Awards. Adjusted net income, includes the tax effect of non-GAAP adjusting items at applicable tax rates and excludes the impact of discrete tax charges or gains in each period. ESAB also presents adjusted net income margin from continuing operations, which is subject to the same adjustments as adjusted net income from continuing operations. Adjusted net income per diluted share from continuing operations is a calculation of adjusted net income from continuing operations over the weighted-average diluted shares outstanding. ESAB also presents Core adjusted net income from continuing operations and Core adjusted net income per share - diluted from continuing operations, which are subject to the same adjustments as Adjusted net income from continuing operations and Adjusted net income per diluted share from continuing operations, further removing the impact of Russia for the three and six months ended July 3, 2026 and July 4, 2025. We present the earnings per share-related non-GAAP measures on a basis that assumes the MCPS had already been converted as of the beginning of the applicable period (and accordingly also exclude the dividends accrued on the MCPS during such period, since such dividends would no longer be paid once the MCPS convert). We believe this presentation provides useful information to investors by helping them understand what the net impact will be on ESAB’s earnings per share - related measures once the MCPS convert into ESAB’s common stock. Adjusted EBITDA excludes from Net income from continuing operations the effect of Income tax expense, Interest expense and other, net, Restructuring and other related charges, acquisition transaction, due diligence and integration expenses, amortization of intangibles and fair value step up on acquired inventories, depreciation and other amortization and compensation expense related to the Performance Option Awards. ESAB presents adjusted EBITDA margin, which is subject to the same adjustments as adjusted EBITDA. Further, ESAB presents these non-GAAP performance measures on a segment basis, which excludes the impact of Restructuring and other related charges, acquisition transaction, due diligence and integration expenses, amortization of intangibles and fair value step up on acquired inventories, depreciation and other amortization and compensation expense related to the Performance Option Awards from operating income. ESAB also presents Core adjusted EBITDA and Core adjusted EBITDA margin, which are subject to the same adjustments as Adjusted EBITDA and Adjusted EBITDA margin, respectively, further removing the impact of Russia for the three and six months ended July 3, 2026 and July 4, 2025. ESAB presents organic sales, which excludes the impact of acquisitions and foreign exchange rate fluctuations and presents core organic sales, which further excludes the impact of the Russia business for the three and six months ended July 3, 2026 and July 4, 2025. Adjusted free cash flow represents cash flows from operating activities excluding cash outflows related to discontinued operations and acquisition-related payments less purchases of property, plant and equipment. These non-GAAP financial measures assist ESAB management in comparing its operating performance over time because certain items may obscure underlying business trends and make comparisons of long-term performance difficult, as they are of a nature and/or size that occur with inconsistent frequency or relate to unusual events or discrete restructuring plans and other initiatives that are fundamentally different from the ongoing productivity and core business of the Company. ESAB management also believes that presenting these measures allows investors to view its performance using the same measures that the Company uses in evaluating its financial and business performance and trends. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information calculated in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of non-GAAP financial measures presented above to GAAP results has been provided in the financial tables included in this press release. Forward-Looking Statements This press release 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, and other statements that are not historical or current fact. Forward-looking statements are based on the Company’s current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements, including general risks and uncertainties such as market conditions, economic conditions, geopolitical events, changes in laws, regulations or accounting rules, fluctuations in interest rates, terrorism, wars or conflicts, major health concerns, natural disasters or other disruptions of expected business conditions. Factors that could cause the Company’s results to differ materially from current expectations include, but are not limited to, risks related to the impact of the war in Ukraine and the conflict in the Middle East and the resulting escalating geopolitical tensions; impact of supply chain disruptions; the impact of creditworthiness and financial viability of customers; impact of inflationary pressures, tariffs and trade policies, foreign exchange fluctuations and commodity prices; other impacts on the Company’s business and ability to execute business continuity plans; and the other factors detailed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025 filed with the U.S. Securities and Exchange Commission ("SEC") on February 20, 2026, and the Form 10-Q for the quarterly period ended April 3, 2026 filed with the SEC on May 7, 2026, as well as other risks discussed in the Company’s filings with the SEC. In addition, these statements are based on assumptions that are subject to change. This press release speaks only as of the date hereof. The Company disclaims any duty to update the information herein. View source version on businesswire.com: https://www.businesswire.com/news/home/20260806842830/en/ Contacts Investor Relations Contact: Mark BarbalatoVice President, Investor RelationsE-mail: [email protected] Phone: 1-301-323-9098 Media Contact: Tilea ColemanVice President, Corporate CommunicationsE-mail: [email protected] Phone: 1-301-323-9092

This article first appeared on GuruFocus. Release Date: August 06, 2026 For the complete transcript of the earnings call, please refer to the full earnings call transcript. ESAB Corp (NYSE:ESAB) delivered a record second quarter with total core sales of $766 million, up 13% year-over-year, and returned to organic growth in both segments. The company closed the acquisition of Edify ahead of schedule, which is expected to drive faster organic growth, higher margins, and reduced cyclicality. Adjusted EBITDA reached a record $150 million, up 8% year-over-year, despite transitory price cost headwinds. The Americas segment posted strong results with 5% organic growth, driven by double-digit growth in equipment, gas equipment, and automation. Management raised the full-year 2026 outlook, expecting total core sales of approximately $3 to $3.1 billion and adjusted EBITDA of $615 to $625 million, including seven months of Edify. The company has a strong pipeline of commercial opportunities, with Edify's funnel close to $450 million, and is seeing early success in cross-selling combined workflow solutions. Adjusted EBITDA margin declined 90 basis points year-over-year due to transitory price cost neutrality from increased logistics and commodity costs. The Middle East region experienced double-digit sales declines (approximately 10-11%) due to geopolitical conflicts, with logistics costs tripling in the region. The company faces a $15 million drag from transitory price cost neutrality in 2026, which is expected to pressure margins in the near term. Adjusted EPS guidance was reduced by $0.35 at the midpoint, primarily due to Edify dilution and investments in growth initiatives. First-half adjusted free cash flow was flat year-over-year, impacted by restructuring costs, acquisition integration activities, and a strategic decision to carry higher equipment inventory levels. The EMEA and APAC segment saw only 1% organic growth, with margins pressured by Middle East disruptions and continued equipment growth investments. Warning! GuruFocus has detected 3 Warning Sign with ESAB. Is ESAB fairly valued? Test your thesis with our free DCF calculator. Q: Can you provide more color on how orders progressed through Q2 and into Q3, and how the team is thinking about organic growth in the back half of the year? A: Shyam Kambianda (President and CEO): We were very happy with the progression from Q1 to Q2, and that trend has continued into Q3. We expect to continue the core growth trend into Q3 and Q4, driven by initiatives at EWM, equipment growth plans, and strong standard automation orders scheduled to ship in the second half, which gives us confidence in our organic growth guidance. Q: Can you quantify the Q2 revenue and profit headwinds from the Middle East operations, and how are you thinking about the back half and the potential catalyst from rebuild efforts? A: Shyam Kambianda (President and CEO): The Middle East represents about 7% to 8% of ESAB's business and was down double-digits (10%-11% range). Logistics costs in the region tripled due to the conflict, which we view as transitory. Prior to the conflict, the region was growing close to 20%, and we expect that as rebuild and reconstruction activities begin, growth could return to that level or slightly better, given that most assets requiring rework have ESAB products in them. Q: Has your pricing outlook changed versus the last time we spoke, and does that mean your volume outlook is now weaker given the unchanged organic growth expectation? A: Shyam Kambianda (President and CEO): There is a little bit of uncertainty out there. Our view is that pricing sequentially gets slightly better, and we are flat to slightly better on organic volume as we go through the second half of the year. We feel confident about where we are and where we have guided. Q: Can you parse out the components of the $0.35 EPS guidance reduction at the midpoint, specifically how much is from Edify, sales, EBITDA, interest expense, and price cost impact? A: Brent Jones (CFO): Most of the dilution associated with Edify was absorbed in Q2. Edify will improve sequentially each quarter and will be modestly dilutive in Q4, representing about 40% or more of the impact (net of interest expense and share/preferred stock issuance). The balance, about 60%, is from trimming EBITDA due to investments in growth and price cost neutrality. Shyam added that they expect to be slightly dilutive to neutral in Q4 and confidently positive entering 2027 with Edify. Q: Edify has 65% gross margins and 30% EBITDA margins, implying 35% SG&A. Is that a result of a different commercial model, and what is a normalized, optimized level of SG&A for Edify? A: Shyam Kambianda (President and CEO): Edify has an extremely innovative culture that requires a high level of engagement, especially from R&D and development teams. We are working through our 100-day plan to determine the optimal level. We expect natural leverage as the business grows without needing to increase OpEx proportionally, and we can leverage ESAB's shared service center and supply chain. We previously identified $20 million in synergies, which we believe is real and potentially more, but our initial focus is on capturing growth rather than cost out. Q: What are the opportunities for revenue synergies and growth from Edify and ESAB together, and what might you target in 2027-2028? A: Shyam Kambianda (President and CEO): The combined funnel at Edify is close to $450 million. We have showcased the combined workflow solution to customers across nuclear, oil and gas, wind, and pipelines. The Department of Defense is engaged differently with us due to the combination of additive manufacturing from EWM and Edify's inspection technology. We expect to convert on this funnel over time, with a few initial orders serving as the base case to drive organic growth across multiple segments. Q: If I'm a customer buying testing product from Edify, what would be the benefit of buying ESAB equipment or consumables in conjunction with it? How do you package these together? A: Shyam Kambianda (President and CEO): The key value proposition is full traceability from when material is joined together. For example, in nuclear waste sealing, we provide a full workflow analysis of the sealing process and then monitor for deterioration over time. In pipelines, we join pipes, deploy them, and monitor degradation. In rail, we can monitor wear, apply filler metal and equipment where needed, and monitor serviceability over time. This combination of data capture and monitoring is unique to ESAB and Edify, and early customer response has been exciting. Q: Can you tell us exactly what the contribution from Edify is in your updated guidance? A: Brent Jones (CFO): We increased adjusted EBITDA by $35 million. We noted $15 million of price cost headwinds and investments, so the Edify contribution is approaching $50 million. Q: You said sequentially pricing is getting a bit better to offset cost inflation, but also flat to slightly better on organic volumes in the second half. Is that relative to previous volume expectations? A: Shyam Kambianda (President and CEO): We are looking at this sequentially based on the current environment. Our guide assumes the Middle East stays where it is, we get a little more price, we continue to invest in equipment growth, and we have strong commercial opportunities in automation planned for the second half. Q: What end markets are driving the strength in equipment and automation, and how is consumables trending? A: Shyam Kambianda (President and CEO): General fabrication saw a significant uptick, and defense continues to be a tailwind. Distribution performed really well globally on both equipment and standard automation. Consumables continue to be steady with low single-digit growth globally, with pockets of weakness specifically in the Middle East, while equipment and gas control are doing quite well along with automation. Q: Can you dig into Europe, specifically the improvement in defense spending, and provide an update on Europe more broadly? A: Shyam Kambianda (President and CEO): Eastern Europe, Scandinavia, and Germany are making moves, especially in defense. We are also seeing investments in energy in those markets. We play from a position of strength in Europe and continue to gain market share in both consumables and equipment, which is validated by public data.For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Wall Street expects a year-over-year increase in earnings on higher revenues when Esab (ESAB) reports results for the quarter ended June 2026. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates. The earnings report, which is expected to be released on August 6, might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower. While management's discussion of business conditions on the earnings call will mostly determine the sustainability of the immediate price change and future earnings expectations, it's worth having a handicapping insight into the odds of a positive EPS surprise. This maker of welding and cutting equipment is expected to post quarterly earnings of $1.37 per share in its upcoming report, which represents a year-over-year change of +0.7%. Revenues are expected to be $750.09 million, up 10.6% from the year-ago quarter. The consensus EPS estimate for the quarter has been revised 1.51% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period. Investors should keep in mind that an aggregate change may not always reflect the direction of estimate revisions by each of the covering analysts. Price, Consensus and EPS Surprise Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. This insight is at the core of our proprietary surprise prediction model -- the Zacks Earnings ESP (Expected Surprise Prediction). The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier. Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only. A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP. Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell). For Esab, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -1.52%. On the other hand, the stock currently carries a Zacks Rank of #3. So, this combination makes it difficult to conclusively predict that Esab will beat the consensus EPS estimate. While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number. For the last reported quarter, it was expected that Esab would post earnings of $1.32 per share when it actually produced earnings of $1.31, delivering a surprise of -0.76%. Over the last four quarters, the company has beaten consensus EPS estimates three times. An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss. That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported. Esab doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ESAB Corporation (ESAB) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research