ESAB Corporation

Hello everyone, thank you for joining us and welcome to the ESOB Corporation second quarter 2026 earnings release and conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Mark Barbalato, Vice President of Investor Relations. Mark, please go ahead.

Thanks, Operator. Welcome to ESOP'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.

Thank you, Mark, and good morning, everyone. Thank you for joining us today. Let me start by welcoming our Edify teammates to ESOP. I was in Quebec for day one, and the positive energy was palpable. The teams are working extremely well together, building plans for growth and innovation, Edify 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, Viralto, 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 three to discuss our second quarter highlights in particular. ESOP 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 Edify 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 Edify. 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 four, showcasing Edify. I want to take a moment to remind everyone why this asset is so important. Edify 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 Edify, where we showcased the power of our combined workflow solution across various end markets. This was the first time our teams from Edify, 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 Edify. 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 Edify's 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, Edify is a premier asset. The business delivers high single-digit growth, gross margins of approximately 65%, and EBITDA margins of roughly 30%. Edify 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 five. By combining ESAB and Edify, we've 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 six. This is Aesop'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 and 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 seven, 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've already discussed the merits of Edify. Active and Delta P 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 EBX AI, 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.