ESAB Corporation Announces Second Quarter 2024 Results

Rhea-AI Summary

ESAB reported Q2 2024 results with sales of $707 million, a 2% decrease on a reported basis but a 1% increase in core organic growth. The company achieved net income from continuing operations of $84 million or $1.37 diluted EPS. Core adjusted EBITDA rose 6% to $134 million, with margins expanding 150 basis points to 20.1%.

ESAB updated its full-year 2024 outlook, now expecting total core sales growth of -2.5% to -0.5%, flat core organic sales growth, and core adjusted EBITDA range of $495 to $515 million. The company completed the acquisition of Linde Bangladesh's welding business, strengthening its position in Asia.

Positive

• Core adjusted EBITDA increased 6% to $134 million
• Core adjusted EBITDA margins expanded 150 basis points to 20.1%
• Acquisition of Linde Bangladesh's welding business completed
• Core organic sales growth of 1% despite challenging business environment
• Strong performance in high-growth markets like India and the Middle East

Negative

• Overall sales decreased 2% on a reported basis to $707 million
• Lowered full-year 2024 total core sales growth outlook from 1.5%-3.5% to -2.5%-0.5%
• Reduced core adjusted EBITDA guidance range from $500-$520 million to $495-$515 million

Insights

Financial Analyst

ESAB 's Q2 2024 results present a mixed picture with some positive highlights amidst challenging market conditions. The company reported sales of $707 million, a 2% decrease year-over-year on a reported basis, but a 1% increase in core organic growth. This suggests that while overall revenue declined, the company's core business is still growing, albeit modestly.

Profitability metrics showed improvement, with core adjusted EBITDA rising 6% to $134 million and margins expanding by 150 basis points to 20.1%. This indicates that ESAB's cost management and operational efficiency initiatives, particularly its EBX (ESAB Business Excellence) program, are yielding positive results.

However, the company's updated full-year 2024 outlook suggests some caution. ESAB now expects total core sales growth between -2.5% and -0.5%, down from previous guidance of 1.5% to 3.5%. This downward revision implies that management anticipates continued headwinds in the coming quarters.

The acquisition of Linde Bangladesh's welding business is a strategic move that could strengthen ESAB's position in the fast-growing Asian market. This aligns with the company's focus on high-growth markets and less cyclical end markets, which could provide some insulation against broader economic challenges.

Overall, while ESAB is navigating a difficult business environment, its focus on operational efficiency, strategic acquisitions and exposure to high-growth markets could help mitigate some of the macroeconomic pressures it faces.

Market Research Analyst

ESAB's Q2 results and revised outlook offer insights into broader market trends affecting the industrial manufacturing sector. The company's exposure to high-growth markets like India and the Middle East is proving beneficial, offsetting weakness in other regions. This geographic diversification strategy appears to be a key strength in the current global economic landscape.

The focus on less cyclical end markets is another noteworthy aspect of ESAB's strategy. By reducing exposure to highly cyclical industries, the company aims to achieve more stable revenue streams. This approach could be particularly valuable given the uncertain economic outlook and potential recessionary fears in some markets.

The acquisition of Linde Bangladesh's welding business underscores the importance of the Asian market in the global industrial sector. As Western markets face economic headwinds, many companies are looking to Asia for growth opportunities. ESAB's move to cement its position as a leading Fabtech company in this region could pay dividends in the long term.

However, the downward revision of the full-year sales growth outlook is a concern. It suggests that the industrial sector may be facing broader challenges, possibly related to global economic slowdown, trade tensions, or supply chain issues. This could be an early indicator of potential headwinds for other companies in the industrial manufacturing space.

The emphasis on margin expansion and cash flow generation, even in a challenging sales environment, highlights a trend towards operational efficiency and cost management across the industry. Companies that can successfully implement such strategies may be better positioned to weather economic uncertainties.

• Positive core organic growth

• EBX driving record margin and free cash flow

• Completed the acquisition of the welding business of Linde Bangladesh

NORTH BETHESDA, MD--(BUSINESS WIRE)-- ESAB Corporation (“ESAB” or the “Company”) (NYSE: ESAB), a focused premier industrial compounder, today announced financial results for the second quarter of 2024.

ESAB reported second quarter sales of $707 million, a decrease of 2% on a reported basis or an increase of 1% on core organic growth before acquisitions and currency translation, as compared to the prior year. ESAB also reported second quarter net income from continuing operations attributable to ESAB of $84 million or $1.37 diluted earnings per share and core adjusted net income of $81 million or $1.32 diluted earnings per share. Core adjusted EBITDA of $134 million rose 6% and margins expanded 150 basis points to 20.1%, both as compared to the prior year quarter.

“The ESAB team continues to execute well in a challenging business environment. We are benefiting from our exposure to high-growth markets, such as India and the Middle East, as well as our strategy to improve our mix and focus on less cyclical end markets. Our recent acquisition of the welding business of Linde Bangladesh fills a gap for ESAB in Asia and cements our position as the leading Fabtech company in this fast-growing region,” stated Shyam P. Kambeyanda, President and CEO of ESAB. “We continue to raise the bar with EBX to drive record margins and cash flow, further strengthening our balance sheet, and remain well positioned to deliver on our long-term goals.”

Updated Full Year 2024 Outlook

ESAB now expects total core sales growth of (2.5)% to (0.5)%, flat core organic sales growth, M&A of 1.0% and FX of ~(2.5)% from prior guidance of total core sales growth of 1.5% to 3.5%, core organic sales growth of 2.5% to 4.5%, M&A of 0.5%, and FX of ~(1.5)%. ESAB updated its estimated core adjusted EBITDA range to $495 to $515 million, from prior guidance of core adjusted EBITDA range of $500 to $520 million and core adjusted EPS of $4.75 to $4.95 remains the same.

About ESAB Corporation

Founded in 1904, ESAB Corporation is a focused premier industrial compounder. The Company’s rich history of innovative products, workflow solutions and its business system ESAB Business Excellence (“EBX”), enables the Company’s purpose of Shaping the world we imagine^TM. ESAB Corporation is based in North Bethesda, Maryland and employs approximately 9,000 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 2024 results beginning at 8:00 a.m. Eastern on Friday, August 2, 2024, which will be open to the public by calling +1-888-550-5302 (U.S. callers) and +1-646-960-0685 (International callers) and referencing the conference ID number 4669992 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 June 28, 2024, filed August 2, 2024, 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 of America (“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 six months ended June 28, 2024 and June 30, 2023. 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, pension settlement losses, Restructuring and other related charges, acquisition-amortization and other related charges and depreciation and other amortization), Core adjusted EBITDA, organic sales growth, Core organic sales growth, 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-amortization and other related charges and pension settlement losses. 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 six months ended June 28, 2024 and June 30, 2023.

Adjusted EBITDA, excludes from Net income from continuing operations, the effect of Income tax expense, Interest expense (income) and other, net, Restructuring and other related charges, acquisition-amortization and other related charges, pension settlement losses and depreciation and other amortization. ESAB presents adjusted EBITDA margins, which are 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, separation costs, acquisition-amortization and other related charges, pension settlement losses and depreciation and other amortization from operating income. ESAB also presents Core adjusted EBITDA and Core adjusted EBITDA margins, which are subject to the same adjustments as Adjusted EBITDA and Adjusted EBITDA margins, respectively, further removing the impact of Russia for the six months ended June 28, 2024 and June 30, 2023.

ESAB presents organic sales growth, which excludes the impact of acquisitions and foreign exchange rate fluctuations and presents core organic sales growth, which further excludes the impact of the Russia business for the six months ended June 28, 2024 and June 30, 2023 from core organic sales growth.

Adjusted free cash flow represents cash flows from operating activities excluding cash outflows related to the Company’s separation from Enovis Corporation and discontinued operations, less Purchases of property, plant and equipment net of proceeds from sale of certain properties. Cash conversion represents Adjusted free cash flow divided by Adjusted net income from continuing operations.

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 wars in Ukraine and 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, 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, 2023 filed with the U.S. Securities and Exchange Commission (“SEC”) on February 29, 2024, 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.

ESAB CORPORATION CONSOLIDATED AND CONDENSED STATEMENTS OF OPERATIONS Dollars in thousands, except per share data (Unaudited)
	Three Months Ended								Six Months Ended
	June 28, 2024				June 30, 2023				June 28, 2024				June 30, 2023
Net sales	$	707,053			$	720,422			$	1,396,797			$	1,404,422
Cost of sales		436,738				456,499				871,455				893,110
Gross profit		270,315				263,923				525,342				511,312
Selling, general and administrative expense		146,187				150,115				288,637				297,397
Restructuring and other related charges		4,773				5,169				6,697				14,613
Operating income		119,355				108,639				230,008				199,302
Pension settlement loss		—				—				12,155				—
Interest expense and other, net		15,940				18,819				33,031				38,329
Income from continuing operations before income taxes		103,415				89,820				184,822				160,973
Income tax expense		17,885				20,974				36,389				57,998
Net income from continuing operations		85,530				68,846				148,433				102,975
Loss from discontinued operations, net of taxes		(1,161	)			(1,623	)			(2,470	)			(2,536	)
Net income		84,369				67,223				145,963				100,439
Income attributable to noncontrolling interest, net of taxes		(1,462	)			(1,650	)			(3,105	)			(2,963	)
Net income attributable to ESAB Corporation	$	82,907			$	65,573			$	142,858			$	97,476
Earnings (loss) per share – basic
Income from continuing operations	$	1.38			$	1.11			$	2.39			$	1.65
Loss on discontinued operations	$	(0.02	)		$	(0.03	)		$	(0.04	)		$	(0.04	)
Net income per share	$	1.36			$	1.08			$	2.35			$	1.61
Earnings (loss) per share – diluted
Income from continuing operations	$	1.37			$	1.10			$	2.37			$	1.64
Loss on discontinued operations	$	(0.02	)		$	(0.03	)		$	(0.04	)		$	(0.04	)
Net income per share – diluted	$	1.35			$	1.07			$	2.33			$	1.60

ESAB CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Dollars in millions, except per share data (Unaudited)
	Three Months Ended(1)								Six Months Ended(1)
	June 28, 2024				June 30, 2023				June 28, 2024				June 30, 2023
Adjusted Net Income
Net income from continuing operations (GAAP)	$	85.5			$	68.8			$	148.4			$	103.0
Less: Income attributable to noncontrolling interest, net of taxes		1.5				1.7				3.1				3.0
Net income from continuing operations attributable to ESAB Corporation (GAAP)	$	84.0			$	67.2				145.3				100.0
Restructuring and other related charges – pretax(2)		4.8				5.2				6.7				14.6
Acquisition-amortization and other related charges – pretax(3)		7.7				9.3				15.5				18.5
Pension settlement loss – pretax		—				—				12.2				—
Tax effect on above items(4)		(3.2	)			(3.6	)			(8.5	)			(7.8	)
Discrete tax adjustments(5)		(6.7	)			—				(6.7	)			19.6
Adjusted net income from continuing operations (non-GAAP)	$	86.6			$	78.1			$	164.5			$	144.9
Adjusted net income from continuing operations attributable to Russia (non-GAAP)(6)		5.2				3.9				9.5				7.5
Core adjusted net income from continuing operations (non-GAAP)	$	81.4			$	74.2			$	155.0			$	137.4
Adjusted net income margin from continuing operations		12.3	%			10.8	%			11.8	%			10.3	%
Adjusted Net Income Per Share
Net income per share – diluted from continuing operations (GAAP)	$	1.37			$	1.10			$	2.37			$	1.64
Restructuring and other related charges – pretax(2)		0.08				0.09				0.11				0.24
Acquisition-amortization and other related charges – pretax(3)		0.12				0.15				0.24				0.31
Pension settlement loss – pretax		—				—				0.20				—
Tax effect on above items(4)		(0.05	)			(0.06	)			(0.14	)			(0.13	)
Discrete tax adjustments(5)		(0.11	)			—				(0.11	)			0.32
Adjusted net income per share – diluted from continuing operations (non-GAAP)	$	1.41			$	1.28			$	2.67			$	2.38
Adjusted net income per share – diluted from continuing operations attributable to Russia (non-GAAP)(6)		0.09				0.06				0.16				0.12
Core adjusted net income per share – diluted from continuing operations (non-GAAP)	$	1.32			$	1.21			$	2.51			$	2.25

__________
(1)	Numbers may not sum due to rounding.
(2)	Includes severance and other termination benefits, including outplacement services as well as the cost of relocating associates, relocating equipment, lease termination expenses, impairment of long-lived assets and other costs in connection with the closure and optimization of facilities and product lines.
(3)	Includes transaction expenses, amortization of intangibles, fair value charges on acquired inventories and integration expenses.
(4)	This line item reflects the aggregate tax effect of all non-tax adjustments reflected in the proceeding line items of the table. ESAB estimates the tax effect of each adjustment item by applying ESAB’s overall estimated effective tax rate to the pretax amount, unless the nature of the item and/or tax jurisdiction in which the item has been recorded requires application of a specific tax rate or tax treatment, in which case the tax effect of such item is estimated by applying such specific tax rate or tax treatment.
(5)	For 2024, discrete adjustments relate to a favorable final ruling in the 2023 tax case in a foreign jurisdiction mentioned below. For 2023, discrete tax adjustments include the impact of net discrete tax expenses related to dividend withholding tax and the impact of an uncertain tax position due to an adverse court ruling in a foreign jurisdiction.
(6)	Represents Russia contribution for the three and six months ended June 28, 2024 and June 30, 2023.

ESAB CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Dollars in millions (Unaudited)
	Three Months Ended June 28, 2024(1)												Six Months Ended June 28, 2024(1)
	Americas				EMEA & APAC				Total				Americas				EMEA & APAC				Total
Net income from continuing operations (GAAP)									$	85.5											$	148.4
Income tax expense										17.9												36.4
Interest expense and other, net										15.9												33.0
Pension settlement loss										—												12.2
Operating income (GAAP)	$	55.9			$	63.4			$	119.4				101.9				128.1				230.0
Adjusted to add
Restructuring and other related charges(2)		0.8				4.0				4.8				1.1				5.6				6.7
Acquisition-amortization and other related charges(3)		4.3				3.3				7.7				8.7				6.8				15.5
Depreciation and other amortization		3.7				5.5				9.1				7.2				10.7				17.9
Adjusted EBITDA (non-GAAP)	$	64.7			$	76.2			$	141.0			$	118.8			$	151.2			$	270.0
Adjusted EBITDA attributable to Russia (non-GAAP)(4)		—				6.9				6.9				—				12.9				12.9
Core adjusted EBITDA (non-GAAP)	$	64.7			$	69.3			$	134.0			$	118.8			$	138.3			$	257.1
Adjusted EBITDA margin (non-GAAP)		20.9	%			19.2	%			19.9	%			19.6	%			19.1	%			19.3	%
Core adjusted EBITDA margin (non-GAAP)(5)		20.9	%			19.5	%			20.1	%			19.6	%			19.3	%			19.5	%

__________
(1)	Numbers may not sum due to rounding.
(2)	Includes severance and other termination benefits, including outplacement services as well as the cost of relocating associates, relocating equipment, lease termination expenses, impairment of long-lived assets and other costs in connection with the closure and optimization of facilities and product lines.
(3)	Includes transaction expenses, amortization of intangibles, fair value charges on acquired inventories and integration expenses.
(4)	Numbers calculated following the same definition as Adjusted EBITDA for total Company.
(5)	Net sales were $40.7 million and $74.4 million relating to Russia for the three and six months ended June 28, 2024, respectively.

ESAB CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Dollars in millions (Unaudited)
	Three Months Ended June 30, 2023(1)												Six Months Ended June 30, 2023(1)
	Americas				EMEA & APAC				Total				Americas				EMEA & APAC				Total
Net income from continuing operations (GAAP)									$	68.8											$	103.0
Income tax expense										21.0												58.0
Interest expense and other, net										18.8												38.3
Operating income (GAAP)	$	46.1			$	62.6			$	108.6			$	86.0			$	113.3			$	199.3
Adjusted to add
Restructuring and other related charges(2)		3.0				2.2				5.2				3.9				10.7				14.6
Acquisition-amortization and other related charges(1)(3)		5.4				3.8				9.3				10.7				7.8				18.5
Depreciation and other amortization		3.8				5.2				9.0				7.1				10.5				17.6
Adjusted EBITDA (non-GAAP)	$	58.3			$	73.8			$	132.1			$	107.7			$	142.3			$	250.0
Adjusted EBITDA attributable to Russia (non-GAAP)(4)		—				5.6				5.6				—				10.9				10.9
Core adjusted EBITDA (non-GAAP)	$	58.3			$	68.2			$	126.5			$	107.7			$	131.4			$	239.1
Adjusted EBITDA margin (non-GAAP)		18.8	%			18.0	%			18.3	%			17.9	%			17.7	%			17.8	%
Core adjusted EBITDA margin (non-GAAP)(5)		18.8	%			18.4	%			18.6	%			17.9	%			18.1	%			18.0	%

(1)	Numbers may not sum due to rounding.
(2)	Includes severance and other termination benefits, including outplacement services as well as the cost of relocating associates, relocating equipment, lease termination expenses, impairment of long-lived assets and other costs in connection with the closure and optimization of facilities and product lines.
(3)	Includes transaction expenses, amortization of intangibles, fair value charges on acquired inventories and integration expenses.
(4)	Numbers calculated following the same definition as Adjusted EBITDA for total Company.
(5)	Net sales were $40.3 million and $77.5 million relating to Russia for the three and six months ended June 30, 2023, respectively.

ESAB CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Change in Sales Dollars in millions (Unaudited)
	Sales Growth(1)
	Americas							EMEA & APAC							Total ESAB
	$				Change %			$				Change %			$				Change %
For the three months ended June 30, 2023	$	310.3						$	410.1						$	720.4
Components of Change:
Existing businesses (organic sales growth)(2)		12.5			4.0	%			(4.1	)		(1.0	)%			8.4			1.2	%
Acquisitions(3)		2.7			0.9	%			—			—	%			2.7			0.4	%
Foreign Currency translation(4)		(15.7	)		(5.1	)%			(8.8	)		(2.1	)%			(24.4	)		(3.4	)%
Total sales growth		(0.5	)		(0.2	)%			(12.9	)		(3.1	)%			(13.3	)		(1.8	)%
For the three months ended June 28, 2024	$	309.8						$	397.3						$	707.1

(1)	Numbers may not sum due to rounding.
(2)	Excludes the impact of acquisitions and foreign exchange rate fluctuations, thus providing a measure of change due to organic growth factors such as price, product mix and volume.
(3)	Represents the incremental sales in comparison to the portion of the prior period during which we did not own the business.
(4)	Represents the difference between prior year sales valued at the actual prior year foreign exchange rates and prior year sales valued at current year foreign exchange rates.

	Core Sales Growth(1)(5)
	Americas							EMEA & APAC							ESAB
	$				Change %			$				Change %			$				Change %
For the three months ended June 30, 2023	$	310.3						$	369.8						$	680.1
Components of Change:
Existing businesses (core organic sales growth)(2)		12.5			4.0	%			(8.6	)		(2.3	)%			3.9			0.6	%
Acquisitions(3)		2.7			0.9	%			—			—	%			2.7			0.4	%
Foreign Currency translation(4)		(15.7	)		(5.1	)%			(4.7	)		(1.3	)%			(20.4	)		(3.0	)%
Total core sales growth		(0.5	)		(0.2	)%			(13.3	)		(3.6	)%			(13.8	)		(2.0	)%
For the three months ended June 28, 2024	$	309.8						$	356.6						$	666.3

(1)	Numbers may not sum due to rounding.
(2)	Excludes the impact of acquisitions and foreign exchange rate fluctuations, thus providing a measure of change due to organic growth factors such as price, product mix and volume.
(3)	Represents the incremental sales in comparison to the portion of the prior period during which we did not own the business.
(4)	Represents the difference between prior year sales valued at the actual prior year foreign exchange rates and prior year sales valued at current year foreign exchange rates.
(5)	Represents sales excluding Russia for the three months ended June 28, 2024 and June 30, 2023.

ESAB CORPORATION RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES Change in Sales Dollars in millions (Unaudited)
	Sales Growth(1)
	Americas							EMEA & APAC							Total ESAB
	$				Change %			$				Change %			$				Change %
For the six months ended June 30, 2023		601.8						$	802.6						$	1,404.4
Components of Change:
Existing businesses (organic sales growth)(2)		21.4			3.6	%			3.6			0.4	%			25.0			1.8	%
Acquisitions(3)		3.6			0.6	%			0.1			—	%			3.7			0.3	%
Foreign Currency translation(4)		(21.0	)		(3.5	)%			(15.3	)		(1.9	)%			(36.3	)		(2.6	)%
Total sales growth		4.0			0.7	%			(11.6	)		(1.4	)%			(7.6	)		(0.5	)%
For the six months ended June 28, 2024		605.8						$	791.0						$	1,396.8

(1)	Numbers may not sum due to rounding.
(2)	Excludes the impact of acquisitions and foreign exchange rate fluctuations, thus providing a measure of change due to organic growth factors such as price, product mix and volume.
(3)	Represents the incremental sales in comparison to the portion of the prior period during which we did not own the business.
(4)	Represents the difference between prior year sales valued at the actual prior year foreign exchange rates and prior year sales valued at current year foreign exchange rates.

	Core Sales Growth(1)(5)
	Americas							EMEA & APAC							ESAB
	$				Change %			$				Change %			$				Change %
For the six months ended June 30, 2023	$	601.8						$	725.1						$	1,326.9
Components of Change:
Existing businesses (core organic sales growth)(2)		21.4			3.6	%			(4.5	)		(0.6	)%			16.9			1.3	%
Acquisitions(3)		3.6			0.6	%			0.1			—	%			3.7			0.3	%
Foreign Currency translation(4)		(21.0	)		(3.5	)%			(4.2	)		(0.6	)%			(25.1	)		(1.9	)%
Total core sales growth		4.0			0.7	%			(8.6	)		(1.2	)%			(4.5	)		(0.3	)%
For the six months ended June 28, 2024	$	605.8						$	716.6						$	1,322.4

(1)	Numbers may not sum due to rounding.
(2)	Excludes the impact of acquisitions and foreign exchange rate fluctuations, thus providing a measure of change due to organic growth factors such as price, product mix and volume.
(3)	Represents the incremental sales in comparison to the portion of the prior period during which we did not own the business.
(4)	Represents the difference between prior year sales valued at the actual prior year foreign exchange rates and prior year sales valued at current year foreign exchange rates.
(5)	Represents sales excluding Russia for the six months ended June 28, 2024 and June 30, 2023.

	Three Months Ended								Six Months Ended
	June 28, 2024				June 30, 2023				June 28, 2024				June 30, 2023
Net cash provided by operating activities (GAAP)	$	83.0			$	62.6			$	127.5			$	100.7
Purchases of property, plant and equipment (GAAP)		(9.0	)			(9.3	)			(16.4	)			(17.0	)
Proceeds from the sale of certain properties(1)		—				0.9				—				0.9
Payments related to the Separation(2)		—				—				—				4.4
Payments related to discontinued operations		4.8				4.4				8.5				9.7
Adjusted free cash flow (non-GAAP)	$	78.8			$	58.6			$	119.5			$	98.7

(1)	Includes proceeds from the sale of certain properties related to restructuring efforts for which previous cash outlays were included in Net cash provided by operating activities.
(2)	Separation payments relate to one-time non-recurring professional fees and employee costs incurred in the planning and execution of the Separation from Enovis.

ESAB CORPORATION 2024 Outlook Dollars in millions, except per share amounts (Unaudited)
ESAB 2024 Outlook
		Previous Guidance				New Guidance
2023 Core net sales		$2.62B				$2.62B
Organic growth		2.5%-4.5%				Flat
Acquisitions			0.5	%			1.0	%
Currency			(1.5	)%			(2.5	)%
2024 Core net sales growth range		1.5%-3.5%				(2.5)%-(0.5)%
2023 Core adjusted EBITDA		$	482.7			$	482.7
2024 Core adjusted EBITDA range		$500-$520				$495-$515
2023 Core adjusted EPS		$	4.46			$	4.46
2024 Core adjusted EPS range		$4.75-$4.95				$4.75-$4.95

ESAB CORPORATION CONSOLIDATED AND CONDENSED BALANCE SHEETS Dollars in thousands, except share and per share amounts (Unaudited)
	June 28, 2024				December 31, 2023
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	228,470			$	102,003
Trade receivables, less allowance for credit losses of $25,372 and $25,477		431,207				385,198
Inventories, net		426,520				392,858
Prepaid expenses		62,879				61,771
Other current assets		63,477				55,890
Total current assets		1,212,553				997,720
Property, plant and equipment, net		287,195				294,305
Goodwill		1,583,888				1,588,331
Intangible assets, net		476,510				499,535
Lease assets - right of use		89,743				95,607
Other assets		317,222				353,131
Total assets	$	3,967,111			$	3,828,629
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable	$	350,125			$	306,593
Accrued liabilities		300,971				313,489
Total current liabilities		651,096				620,082
Long-term debt		1,079,624				1,018,057
Other liabilities		486,966				542,833
Total liabilities		2,217,686				2,180,972
Equity:
Common stock - $0.001 par value - Authorized 600,000,000, 60,438,838 and 60,295,634 shares outstanding as of June 28, 2024 and December 31, 2023, respectively		60				60
Additional paid-in capital		1,886,367				1,881,054
Retained earnings		484,918				350,557
Accumulated other comprehensive loss		(663,373	)			(624,272	)
Total ESAB Corporation equity		1,707,972				1,607,399
Noncontrolling interest		41,453				40,258
Total equity		1,749,425				1,647,657
Total liabilities and equity	$	3,967,111			$	3,828,629

ESAB CORPORATION CONSOLIDATED AND CONDENSED STATEMENTS OF CASH FLOWS Dollars in thousands (Unaudited)
	Six Months Ended
	June 28, 2024				June 30, 2023
Cash flows from operating activities:
Net income	$	145,963			$	100,439
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization, and other impairment charges		32,930				39,561
Stock-based compensation expense		9,886				7,462
Deferred income tax		1,760				998
Non-cash interest expense		1,632				597
Pension settlement loss		12,155				—
Changes in operating assets and liabilities:
Trade receivables, net		(56,680	)			(28,942	)
Inventories, net		(42,144	)			(24,733	)
Accounts payable		53,574				3,267
Other operating assets and liabilities		(31,593	)			2,072
Net cash provided by operating activities		127,483				100,721
Cash flows from investing activities:
Purchases of property, plant and equipment		(16,437	)			(16,999	)
Proceeds from sale of property, plant and equipment		608				1,936
Acquisition, net of cash received		(18,050	)			(18,235	)
Other investing		(3,059	)			—
Net cash used in investing activities		(36,938	)			(33,298	)
Cash flows from financing activities:
Proceeds from borrowings on Senior Notes		700,000				—
Proceeds from borrowings on revolving credit facilities and other		205,000				280,000
Repayments of borrowings on Term Loans		(597,500	)			—
Repayments of borrowings on revolving credit facilities and other		(237,005	)			(340,537	)
Payment of debt issuance costs and other		(15,718	)			—
Payment of dividends		(7,278	)			(6,061	)
Distributions to noncontrolling interest holders		(1,218	)			(1,274	)
Net cash provided by (used in) financing activities		46,281				(67,872	)
Effect of foreign exchange rates on Cash and cash equivalents		(10,359	)			2,874
Increase in Cash and cash equivalents		126,467				2,425
Cash and cash equivalents, beginning of period		102,003				72,024
Cash and cash equivalents, end of period	$	228,470			$	74,449

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240802409815/en/

Investor Relations Contact:

Mark Barbalato

Vice President, Investor Relations

E-mail: investorrelations@esab.com

Phone: 1-301-323-9098

Media Contact:

Tilea Coleman

Vice President, Corporate Communications

E-mail: mediarelations@esab.com

Phone: 1-301-323-9092

Source: ESAB Corporation

FAQ

What were ESAB's Q2 2024 financial results?

ESAB reported Q2 2024 sales of $707 million, net income from continuing operations of $84 million or $1.37 diluted EPS, and core adjusted EBITDA of $134 million, up 6% year-over-year.

How did ESAB's core adjusted EBITDA margins change in Q2 2024?

ESAB's core adjusted EBITDA margins expanded 150 basis points to 20.1% compared to the prior year quarter.

What acquisition did ESAB complete in Q2 2024?

ESAB completed the acquisition of the welding business of Linde Bangladesh, strengthening its position in the Asian market.

How has ESAB updated its full-year 2024 outlook?

ESAB now expects total core sales growth of -2.5% to -0.5%, flat core organic sales growth, and a core adjusted EBITDA range of $495 to $515 million for 2024.

What is ESAB's core adjusted EPS guidance for 2024?

ESAB maintained its core adjusted EPS guidance of $4.75 to $4.95 for the full year 2024.