On August 2, 2024, ESAB Corp (ESAB, Financial) released its 8-K filing for the second quarter of 2024. ESAB, spun off from Colfax in 2022, is a leading manufacturer of equipment and consumables used in welding, cutting, and joining applications. Alongside competitors Lincoln Electric and ITW's Miller brand, ESAB is one of the top three players in the welding space. ESAB generated roughly $2.8 billion in revenue in 2023.
Performance Overview
ESAB Corp (ESAB, Financial) reported second quarter sales of $707 million, a 2% decrease on a reported basis but a 1% increase in core organic growth before acquisitions and currency translation, compared to the prior year. The company also reported net income from continuing operations attributable to ESAB of $84 million, or $1.37 diluted earnings per share, surpassing the analyst estimate of $1.12 per share. Core adjusted net income was $81 million, or $1.32 diluted earnings per share.
Financial Achievements
ESAB's core adjusted EBITDA rose by 6% to $134 million, with margins expanding by 150 basis points to 20.1% compared to the prior year quarter. This performance underscores the company's strategic focus on high-growth markets such as India and the Middle East, and its efforts to improve its product mix and focus on less cyclical end markets.
"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," stated Shyam P. Kambeyanda, President and CEO of ESAB.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Net Sales | $707 million | $720 million |
| Gross Profit | $270 million | $264 million |
| Operating Income | $119 million | $109 million |
| Net Income | $84 million | $67 million |
| Diluted EPS | $1.37 | $1.10 |
Balance Sheet and Cash Flow
ESAB's balance sheet remains robust, with significant improvements in free cash flow driven by the ESAB Business Excellence (EBX) initiative. The company completed the acquisition of the welding business of Linde Bangladesh, which is expected to enhance its market position in Asia.
Updated Full Year 2024 Outlook
ESAB has updated its full-year 2024 outlook, now expecting total core sales growth of -2.5% to -0.5%, flat core organic sales growth, M&A of 1.0%, and FX of approximately -2.5%. The estimated core adjusted EBITDA range has been revised to $495 to $515 million, down from the prior guidance of $500 to $520 million. However, the core adjusted EPS guidance remains unchanged at $4.75 to $4.95.
Analysis
Despite a slight decline in reported sales, ESAB Corp (ESAB, Financial) has demonstrated resilience through its strategic focus on high-growth markets and less cyclical end markets. The company's ability to exceed earnings estimates and improve margins highlights its operational efficiency and strong market position. The acquisition of Linde Bangladesh's welding business further strengthens ESAB's footprint in Asia, positioning it well for future growth.
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Explore the complete 8-K earnings release (here) from ESAB Corp for further details.
