ESAB Corporation

Thank you for standing by and welcome to the ESAB Corporation first quarter 2026 earnings release and conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. And if you'd like to withdraw your question, again, press star one. Thank you. I'd now like to turn the call over to Mark Barbalato, Vice President of Investor Relations. Mark, you may begin.

Thanks, Operator. Welcome to ESOP's first quarter 2026 earnings call. This morning, I'm joined by our President and CEO, Shyam Kambyanda, and CFO, Brent Jones. Please keep in mind that some of the statements we are making are forward-looking and are subject to risks, including those set forth in our SEC filings and today's 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 related to those measures can be found in our earnings press release and today's slide presentation. With that, I'd like to turn the call over to our president and CEO, Shyam Kambhyanda.

Thank you, Mark, and good morning, everyone. Thank you for joining us today. Turning to slide three to discuss our first quarter highlights. We're pleased to report a strong start to the year, headlined by record first quarter sales. Total core sales grew 10% year over year, a result that reflects both the effectiveness of our compounded strategy and the resilience of our diversified global footprint. Despite a more challenging environment, which included higher costs as a result of the conflict in Iran, We generated sales of 715 million and adjusted EBITDA of 136 million, an increase of 6% year-over-year. We delivered this performance while continuing to invest in the long-term drivers for the business. I am especially encouraged with the performance of our acquisitions. EWM and ACTIV both grew double digits year-over-year, and our sales synergy funnel across the portfolio improved meaningfully, reinforcing our confidence in the strategic value these businesses bring to ESAB and their potential to drive organic growth in the years to come. Looking ahead, we are accelerating our compounded journey through the previously announced acquisition of Edify, which we expect to close mid-year. This transaction strengthens our portfolio and extends our runway into profitable growth. Given our first quarter performance and our visibility into the remainder of the year in book orders and additional price, we are reiterating our previously announced guidance. We are confident in the trajectory of the business while remaining mindful of the dynamic environment in which we operate. Moving to slide four. Before we turn to the quarter, I want to put the past year and a half into context. Throughout 2025 and into the start of 26, we have deliberately been reshaping ESAB, sharpening the portfolio and building new capabilities across the company. The ESAB you see today is meaningfully stronger. Our capital allocation strategy is the clearest place to see it. We have continued to build a premier industrial compounder by adding strength across every layer of the value chain. We have strengthened our position in gas control with Delta P and active. We've created a best-in-class equipment portfolio with EWM and filled out every gap in our equipment product lineup. We added to our leadership position in proprietary filler metal with Bavaria and Edify, which is expected to close mid-year, extends our workflow solution into inspection and monitoring. Complementing these acquisitions, we now have more than 40 AI projects actively underway, contributing both to near-term productivity and long-term growth. The new acquisitions coupled with AI initiatives will drive growth, reduce cyclicality, expand our gross margins profile, making ESOP more durable through the cycle than it has ever been. Turning to slide five, this slide brings the story to life. Over the past decade, we have reshaped ESAB into a faster-growing, higher-margin enterprise, and the shift is now plainly evident in both our mix and our margins. Three levers have driven the work. First, sustained R&D investment to refresh our product portfolio and fuel growth. Second, EBX AI, our operating system for productivity and operational excellence. a disciplined M&A program that has added growth and margin. Let's start with our mix. In 2016, equipment represented roughly 38% of our sales, a fully refreshed product portfolio, and an optimized manufacturing footprint, and 18 successful acquisitions have changed that picture. With the recent additions of EWM and Bavaria in fabrication technology and Delta P and Active in gas control, Equipment now accounts for roughly 44% of revenue. Upon closing Edify mid-year, that mix will rise to approximately 52%. The margin trajectory tells the same story. Our gross margin has moved from approximately 35% in 2016 to nearly 38% today. Edify accelerates the next step, as I've shared with you before, Our equipment product carries gross margins closer to 45%, and Edify, as we shared before, is close to 65%. Together, these dynamics will push our consolidated gross margins to greater than 40% for 2027 and beyond. Moving to slide six. Momentum is building globally across our welding equipment portfolio, and two launches are leading the way. the Ruffian 270 engine-powered welder, and the Aristo Edge. The Ruffian fills a critical gap in our offering and stands out as the most productive operator-friendly unit in its class. It is the only welder in its category to deliver full power simultaneously. 270 amps of welding output and 11,000 watts of generator power at the same time at 100% duty cycle and independent generator arc ensures that running power tools never causes a spike or drop in the welding arc. The Aristo Edge sets a new performance benchmark on both the advanced manual and robotic sides. Its ultra-fast arc control manages the arc 10 to 20 times faster than traditional equipment, clearing short circuits instantly and preventing defects, and the advanced waveforms reduce spatter by up to 85%. producing a stable puddle that virtually eliminates post-well cleanup. With 500 amps at a 60% duty cycle, the plug-and-play compatibility with all major robot and cobot brands, it is built for continuous industrial-scale production. Customer response has been strong. We have secured preferred status with the Yellow Goods OEM on the Aristo Edge, and we're gaining channel share with the Ruffians. Together, these two product families add roughly 250 million to our servable market. Turning to slide seven, when we acquired EWM, additive manufacturing was one of the capabilities we were most excited about. It is an advanced 3D metal printing process that uses electric arc as the heat source and metal wire as the feedstock to build large, high-strength components layer by layer. And EWM is a clear leader in this space. EWM's REACT technology is now opening doors for the broader ESOP portfolio. We are gaining real traction with a major U.S. distributor and with defense OEMs. We have secured orders with integrators, engineering and construction firms, and two German OEMs manufacturing in the U.S. today. In parallel, our teams are building a healthy cross-cell funnel, bringing ESOP filament to EWM customers and EWM equipment to ESOP customers. There is still work ahead, but Q1 was an encouraging start. The next product, Tetrix 350, adds a second growth lane. It is the best-in-class power source for TIG applications, including precision welding requirements needed for semiconductor wafer manufacturing. And it pairs naturally with our AMI product, where order activity continues to rise. Together, these two products give ESAB access to an additional 900 million of servable market across additive manufacturing and TIG and orbital TIG welding. They have our sales teams energized by the new workflow solutions we can now deliver to our most discerning customers. Moving to slide eight, let me reiterate what I shared when we announced the Edify acquisition. This transaction extends VSAAP workflow solutions into faster growing, higher margin inspection and monitoring space. A bit more detail on the asset itself, Edify is a clear market leader in electromagnetic testing, ultrasonic testing, and automated inspection. It serves mission critical end markets with attractive secular tailwinds across aerospace, defense, nuclear, and energy infrastructure. The business also brings meaningful North American exposure that pairs naturally with ESAB's global footprint, opening immediate geographic expansion opportunities for both companies. Financially, Edify is a premier asset, high single-digit growth, gross margins about 65%, and EBITDA margins around 30%. Strategically, the deal accelerates our shift towards equipment, strengthens our ability to deliver differentiated workflow solutions, expand margins reduce cyclicality and ultimately improves the predictability and resilience of our earnings profile although the transaction is expected to close mid-year we're already in motion our integration team is in place sharpening the combined workflow solutions value proposition and beginning to share edify's capability with esop customers turning to slide 9 What I love about this industry is that we enable extraordinary engineering every day. A few moments capture that better than what is happening right now with NASA's Artemis program. For the first time in more than 50 years, humanity returned to the moon, and ESOP technology helped make that possible. A decade ago, we would not have been at the table. Today, we are a key contributor, and that is a source of enormous pride across our company. You can see one example on this slide. Our friction-store welding technology delivers the exact combination of strength, precision, reliability, and weight optimization that the most demanding aerospace environments require. ESAB's technology enables aluminum alloy structures to be extraordinarily strong and remarkably light. Boeing's selection of our technology for the Space Launch Systems fuel tank reinforces the thesis behind our portfolio. Differentiated innovation, applied to mission critical manufacturing in the world's most demanding end markets. This is what we mean when we talk about being the fabrication technology provider of choice, and it is what gets our teams out of bed every morning. Before I go into more detail about the quarter, I'd like to take this opportunity to thank Kevin Johnson for his contributions to ESAB and wish him well in his new role. At the same time, I'm very excited to welcome Brent Jones to the ESAB family. Brent brings diverse and highly valuable expertise as we move into the next phase of our compounded journey. With that, let me hand it over to Brent to say a few words.