ESAB Q1 Earnings Call Highlights

Key Points

• ESAB posted a strong first quarter, with record sales of $715 million, core sales up 10% year over year, and adjusted EBITDA rising 6% to $136 million. Management also reaffirmed full-year guidance despite higher costs tied to the Iran conflict.
• Acquisitions and new products are driving growth. ESAB said recent deals like EWM and Aktiv are boosting higher-growth, higher-margin exposure, and the pending Eddyfi acquisition should further expand margins and reduce cyclicality.
• Regional performance was mixed but generally positive, with sales up 16% in EMEA and APAC and up 3% in the Americas. ESAB said it is offsetting Middle East-related cost pressure with pricing actions and expects margin pressure to ease later in the year.

ESAB NYSE: ESAB reported what management described as a strong start to 2026, with record first-quarter sales and reaffirmed full-year guidance despite higher costs tied to the conflict in Iran.

President and CEO Shyam Kambeyanda said total core sales grew 10% year over year in the quarter, with sales reaching $715 million. Adjusted EBITDA rose 6% to $136 million, and adjusted EBITDA margin was 19%.

“We delivered this performance while continuing to invest in the long-term drivers for the business,” Kambeyanda said, pointing to recent acquisitions, new product launches and artificial intelligence initiatives as key parts of the company’s strategy.

Acquisitions Continue to Shape ESAB’s Portfolio

Kambeyanda said ESAB’s acquisition strategy has reshaped the company over the past year and a half, moving it toward higher-growth and higher-margin businesses. He highlighted EWM and Aktiv, both of which grew double digits year over year in the first quarter.

ESAB has added businesses including EWM, Bavaria, DeltaP and Aktiv, and is preparing to close its previously announced acquisition of Eddyfi around mid-year. Kambeyanda said Eddyfi expands ESAB’s workflow solutions into inspection and monitoring and provides exposure to aerospace, defense, nuclear and energy infrastructure markets.

Management described Eddyfi as a business with high-single-digit growth, gross margins of about 65% and EBITDA margins around 30%. Kambeyanda said the acquisition should help expand ESAB’s margins, reduce cyclicality and improve earnings predictability.

He also said ESAB now has more than 40 AI projects underway, aimed at both productivity and long-term growth. The company refers to its operating system for productivity and operational excellence as EBXai.

Product Launches Add to Addressable Market

ESAB highlighted two equipment launches: the Ruffian 270 engine-powered welder and the Aristo Edge. Kambeyanda said the Ruffian fills a gap in the company’s offering, while the Aristo Edge is designed for advanced manual and robotic welding applications.

Management said the two product families add roughly $250 million to ESAB’s servable market. Kambeyanda also discussed EWM’s additive manufacturing capabilities and the Tetrix 350 power source for TIG applications, saying those products give ESAB access to an additional $900 million of servable market across additive manufacturing, TIG and orbital TIG welding.

The company also pointed to its friction stir welding technology, which Kambeyanda said was selected by Boeing for the Space Launch System’s fuel tank as part of NASA’s Artemis program.

Segment Results Show Growth in EMEA and APAC

In the Americas, ESAB reported sales of $288 million, up 3% year over year. Adjusted EBITDA was $56 million, also up 3%, while margins were flat at 19.4%. Kambeyanda said North America, excluding Mexico, grew mid-single digits, while Mexico was stable.

In EMEA and APAC, sales increased 16% to $426 million, while adjusted EBITDA rose 9% to $80 million. Margins declined 130 basis points, including a 50-basis-point impact from the conflict in Iran and a 70-basis-point impact from EWM.

Kambeyanda said ESAB continued to gain share in EMEA and APAC, with Europe and India performing in line with expectations and the Middle East seeing limited disruption. He said the company rerouted inventory through ports in Jeddah and Salalah, Oman, and implemented surcharges to offset higher costs.

The Middle East represents roughly 7% of ESAB’s sales, according to management. Kambeyanda said the company’s local presence, including investments in Saudi Arabia, positions it well to support rebuilding efforts if conditions stabilize.

Guidance Reaffirmed Despite Cost Pressures

ESAB reiterated its full-year outlook. On a core basis, the company expects total sales growth of 6% to 9%, including organic growth of 2% to 4%, 400 basis points from mergers and acquisitions, and about 1% from foreign exchange.

The company maintained its adjusted EBITDA guidance of $575 million to $595 million and adjusted earnings per share guidance of $5.70 to $5.90.

Kambeyanda said the company’s outlook is supported by first-quarter performance, booked orders and additional pricing actions. He also said the second quarter is tracking to plan, with stable sales and orders.

Adjusted free cash flow was $40 million in the quarter, and cash conversion improved to 49% from 40% in the prior quarter. ESAB ended the quarter with net leverage of 1.9 times. Management said leverage will temporarily rise after the Eddyfi acquisition closes, but the company expects to be back below 3 times by year-end.

Analysts Focus on Volumes, Margins and Regional Trends

During the question-and-answer session, Stifel analyst Nathan Jones asked about first-quarter volume, which he cited as down 3%, and the path to achieving ESAB’s full-year organic growth outlook. Kambeyanda said the company faced a difficult comparison because of tariff-related pull-forward activity in the prior year. He said volumes should move from “down slightly” to neutral, then improve in the second half as acquisitions become part of the organic base.

Asked about the Middle East impact, Kambeyanda said the margin headwind should improve as pricing actions offset freight and material cost pressures. He said ESAB expects to be price-cost neutral in the second quarter and aims to become price-cost positive later in the year.

JPMorgan analyst Tami Zakaria asked whether acquisition growth reflected easy comparisons. Kambeyanda said the growth at EWM and Aktiv was driven primarily by volume rather than price, with new customers and orders contributing to momentum.

Baird analyst Mig Dobre asked about the Americas, where Kambeyanda said the U.S. and Canada performed well and April was stronger than the first-quarter exit rate. He said Mexico is expected to improve as comparisons ease, while South America should also turn slightly volume positive.

Jefferies analyst Steve Volkmann asked about strength in Europe. Kambeyanda cited ESAB’s local footprint, defense-related orders, momentum in equipment and possible benefits from European policy actions, including expected carbon taxes and tariffs or quotas.

Management also noted a leadership transition on the call. Kambeyanda thanked Kevin Johnson for his contributions and welcomed Brent Jones as ESAB’s new CFO.

About ESAB NYSE: ESAB

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.

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