ESAB - Earnings call 1 2022 | ESAB Corporation

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Operator

Good morning, ladies and gentlemen. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the ESAB Corporation's First Quarter 2022 Earnings Conference Call. Today's conference is being recorded. [Operator Instructions] Thank you.

I Barbalato, to Relations. Vice time, over the this Mark to President at would turn like conference And of Investor Mr. you conference. your may Barbalato begin

Mark Barbalato

today, forth differ, Thanks, mind press release. Actual forward CEO, are to are relating we results release Shyam required Earnings our and to and CFO, during earnings are any assume can Quarter in am ESAB's making Please the forward by of obligation measures except those presentation. Kambeyanda; operator. call financial subject keep statements intend might by the today's found Johnson. including morning, we in in these company joined and and and This update those some reconciliation filings non-GAAP to I in XXXX President do our With slide Kevin our Welcome respect made to that any not information looking to law. set today's Call. be SEC risks, as earnings First or measures looking the statements

our would I to call over Kambeyanda. and CEO, turn Shyam the that, like to With president

Shyam Kambeyanda

Thank us and today. for you, you joining good morning, everyone. Mark, Thank

by being Exchange of a X bit. a day for for all York fantastic pride profound associates. ESAB Let April was global start listed me New reminiscing the source on was Stock a our of

solid have in confidence direction and forward. we've progress Over the X made years, last our strategic moving

to innovation, ESAB margin deliver strategies focused value. our notch call on business we're flow continue up As taking cash shareholder term and expansion, to growth, that team, drive system a a long EBX better to breakthrough we

focus We strong I restrictions growth on our volume year COVID Ukraine. navigated and our proud team's to Turning in and year. report to pleased outperformance determination I as Slide the successfully another war extended to headwinds very we our China over due quarter in margins of improved and of am X. results. am

record broad and a climb million, which year. in XX% we innovative in realization first EBITDA for sales, a organic financials, demand the of of terms year increase a $XXX over based quarter, $XXX delivered XX% price year over In growth, strong to solutions. year, million reflected

Our to margins expanded basis XX.X%. points XX

products We our taken and I more efforts on will have I exciting before, we new notch, mentioned up introduce continue as EBX X both next in topics and slides. to a share the these

X. launched QX in new Now in and We investment Slide prioritize moving products continue the XX R&D. to

Our accelerate open innovation of the process innovation. to ESAB has allowed pace

new product margins market helping I mentioned technology our our and simplifies and has product. The us offering rough year target it a is that used product source, provides XXX feeder launch some expand For in we fabricator we SKUs line of highlight going rationalization this power to the during the rationalize our past. our efforts This unit the a customers. on take them. to so bit that of to redesigned RobustFeed, time quarter, applications. heavy are can industrial that approximately have full to products. the forward. accelerates line this in competitive we and is And for connect improve the upgraded any new award-winning an to

the Our the geographies. examples High new druvaPUR, into gas in and control also new exciting expanding and MediVital, launch these us bus are products the first Purity of business some designing technology quarter, in great class best

up our and These share million square also of later by example we phase in our to productivity Kaizens reducing productivity At is tenant next minimal the while did I and first month the sharing Slide manufacturing our Denton first in Kaizen freed I'm quarter, productivity productivity over gain improve safety. in major the space XX our some capital completed exactly celebrate with and quarter, our excited that's key in improve and wanted X. America, improved footprint. one assembly And which resulted what In safety we facility, Kaizen quality, feet North savings. X,XXX you to by XX% investments. increased lines, main with we completed really you. examples safety journey of visiting And to per product and we of space. The Moving will month in this our we be of manufacturing $X over Denton with improved EBX Kaizen sales to EBX. I'm I with the team. XX% facility continue as of to about the

Moving X. Slide to

year-over-year, sales XXX volume XX XXXX basis quarter This a a of XX% impact. X%, a price of First to reflected rose increase currency million, points increase increase organically. XX% of a a $XXX record and

to We COVID lockdowns. most sales highlight this across equipment due we quarter The experienced regions sales geographies. as China continue were at demand to was expected Russia to record experience ESA. lower real and A where healthy

on to performance expansion, margin fantastic continue XX% our price up a year unit. million to a With with teams from margins, over basis year inflation. do of XX offset and increased Our EBITDA points job XX.X% the managing America's to expanded strong focus to $XXX our impact

X% segments. slight XX% a Slide well a This sales performed price increases to growth to talking as America and headwind. with and specifically Moving climbed currency X reflected $XXX XX% million, organically. The about our of America in volume a segments of

our through XXX increased make progress, chain EBITDA successfully to constraints. channel. managed inflation product improved our supply reflecting margins our in team XX% points, and as basis execution offering by growth strong the expanded We are and driving good new continuing by

together. I lean Earlier, activities are proud I am our of and team and shared our building we very what

will products under And We share time. and expansion. due have in drive future lots new development, more I'll growth margin which of exciting

X. Slide to On

about and our talking APAC EMEA Now segments.

COVID well in segments headwinds in the the in perform China from and quarter EMEA despite Our APAC Ukraine. and war

of points and XX% headwind. organically. reflected basis of X% increased XXX sales quarter region increase record First currency of and saw XX% sales. price equipment This XX also a a of volume This climbed

points building and backlog. our increased EBITDA are momentum in the was in was included approximately we X% XX the This over and great provision very in XX.X%. robotics well extraordinarily during have quarter. margins basis million momentum. they to performed built of growth have both well related Asia East I'm Russia times, teams driving year Another which Middle solutions, have highlight and and these our Europe, auto challenging in funnel EBITDA X without increased year. cloud would the in quarter proud

Slide to X. Moving

Let me turn it over to Kevin.

Kevin Johnson

confirming On Shyam. are call, Thanks, we today's XXXX our guidance.

Russian any have this sales further sales for quarter, the of our As been the we from X% Russia. the our the as guidance day, to expected updated first has profit at investor our Russia In and on contributed impact rest and of discussed around had reflect we business. removed year, we guidance

open. in our approximately in excluding lockdowns. organic well. in now a mentioned, Russia the points Shyam the hundred growth business things performing quarter, improve China manufacturing we down basis as that X% due But We is have main continue first wave China Our to quarter. to are we of is And second facility really expect the to did of sales to COVID some pressure expect And recent in XX%.

We inflationary are highly still monitoring operating closely in environment this. are a and

inflation, we with we respond any quickly will If price increases. experience further

year. $XX is to of million of our Around the company first deliver made during manufacturing has public in this EBITDA $XXX to consolidation We target incurred additional million, which expenses. transformation guided million of project savings first team the on $XXX quarter. $X around remain we on includes good $XX approximately million quarter. to million and Our progress which

Our adjusted at to remains line $X.XX our in guidance EPS with $X.XX. previous

due $XX be at million. first In was to working million to quarter flow with Lower additional deliver to continue have of line capital the We greater risk. on we and target free mitigate chain cash than expectations. made support cash prior growth free investments flow year supply to than the $XXX in in

a through rest near cash guidance of term, focused appendix, detailed this assist additional We additional more financials we with modeling, as debt historical an modest quarterly To we priorities segment. included dividend. and on slide, progress we expect slides paying to our in year. the the improve considering quarterly have see are down the a by some are free flow In initiating

me Shyam wrap hand back to ten on slide Let up. now to

Shyam Kambeyanda

as process in public supply DNA. planned great to activities a manage company, off successfully team is in with clear and improvements margin We're The in provide and is risks. inflation offset our deliver our Kevin. mitigate improved team place you, strategic The manufacturing, business our to long a term expansion path cash we our to continues goals. to start Thank target chain to growth, EBX flow. lean coupled price on a are

line With for thank that, you please can questions? us. want the for open Operator, I again we joining to

Operator

take [Operator our Capital. Loop we Chris will Instructions] first with Dankert from And question

Christopher Dankert

congrats work the guess all here. I guys on off, you got that first hard

you're kind us seeing specifically, of demand. of question at looking the everything, the So terms land, lay, what first you I order guess maybe of kind tell just can rates speaking to in Europe here,

you're an of kind in context seeing of there kind what and economic there. kind update conflict Just concerns us give of of the the on of,

Shyam Kambeyanda

thank the Chris, question. you for

So you quarter press of seeing already what that in anything closely presentation. are anything say we to we our the second sales in the release forecast into And rates. our changes I would rates, momentum have our first we that said, the that now, that continues order we is as That are in issued our or not had view monitoring and the quarter. being to the daily

Christopher Dankert

Got it.

hear. Okay. to Glad

and kind ESAB have what may bigger I sales mix be that today maybe with mean, think about backdrop, half You where comfortable guess, a are markets automation that's market. kind of kind of cost historically question. roughly within headed? do that portfolio lower been the is labor kind That of the of the and I how on, we regions, thinking of on automation solutions kind picture of

Shyam Kambeyanda

think the looking do but for especially sorts, a see the specific we to you offline you in market of basis. seeing, percent in emerging many as is robots that out portfolio what and we our have what we are automation related welders as we're numbers today minimized, acquisition see within of or the markets sales would on of and adoption hours our I adaptation that at. to labor Yes. with times don't Chris, I given terms we is even an talked to within automation what I've say before about this program ability octopus the solution have

the in developed say and see for we particular strong front, would growth the to I emerging that what this. on so you business, a markets And within for markets our both trajectory

Brazil foray an allows Now and technology. accelerated like that significant think this remember of into particular have already adoption made I India automation. And countries just for a

Operator

comes from Instructions] [Operator question with our Seaport. next Walter And Liptak

Walter Liptak

be? might seeing too. you And And think this feeling rates And the that your about and about inflation work get of margins and congratulations increases. the now Mike, do all about year you're what here. ask gross half to where the Want margins selling to and hard right how the you're price later

Operator

And just gentlemen, ladies we our please, while one speakers. and moment, reconnect

Walter Liptak

you me? hear Can

Shyam Kambeyanda

We're on. back

Operator

We can you. hear

Walter Liptak

raising don't be and a that a yes, know up understand question, you looked margin you were like the gross little to is the gross my a yes, if I can I but that bit you're Yes. margin prices heard but there basically year-over-year down which the, offset on inflation, at point think basis? they

Shyam Kambeyanda

Yes.

answer to one I'd we have that innovative cycle life, say the deal to with full, think two, of third one confident of and line, to things I new that very so strong value so before pricing about deal in terms pricing product is products X in to with very management. the you processes, we're is being one mentioned that inflation, What And that we've our question the process.

about. executing of that due second And to those we more on sort the and continue on do going of feel so then all processes, prices inflation we're we that confident based processes can move forward kind across talked and I X

that as this because gross off got XXX feel as In margins, well we inflation we've price about basis cost and compression what of compression terms of call points piece we based a of happening price.

with say to into opportunities our footprint next third we're see additional But being EBX inflationary going we you headwinds bit. a quarter, that of to into a out lot said, as continue I'd that year, second. and at what the leaning go we we is forward, see doing looking work that factories, little And ease Going forward. some may

And when it we confident journey gross so comes margins. about to remain our upwards

Walter Liptak

have cost SG&A and corporate the public more quarter how Okay. the company, Great. I adds people maybe SG&A overhead about company? your the are And guess have a you the more feeling to costs, And kind that your of that to on of leads and this to you expense right into as there are run we're yes. do side,

ahead. Go Okay.

Shyam Kambeyanda

and need full is have XX you No, company. mentioned more team any out basis all in our to do a on answer made so, of assumption part the public which Kevin was so of full of as I earlier we place. I We million the year already million X our a think think, not results. the, to that we've run resources given short QX that that that to

you remaining portion of being operating That it look quarters. So kind remaining going at I looking come terms our digitize, to how improvements continue you could EBX out the of to to the entire processes at to business figure in expect of and process expense in forward. said, to through that about structure we improve talked

optimal a and, continue for XX that is but on to to possible work continue and we said, million improvement there, from to we're that business. number So start have ready. get to the a the we're most we perspective, set, find OpEx place opportunities it being out

Operator

next Vlad our from take will question Citigroup. we And with Instructions] Bystricky [Operator

Vladimir Bystricky

think about up did of the that your And $XXX you million that I but little the give us in hear just, quarter So one, now. to I can a Kevin, facility's moreâ€¦ back you headwind yes, mentioned related right? in lockdowns, I guess China online two,

Kevin Johnson

It wasn't. Yes.

to XXX Not Yes. million. just hundred basis points, points. So hundred basis

Vladimir Bystricky

great. That sense. That's Okay. more makes

basis XXX So points.

you chain sort know you're back broader what more impacts of actually but you the is seeing ground supply of the how quarter. in said unfold sort facility on and just just on your color over to give China? expect I up, So here recovery can us you

Shyam Kambeyanda

Yes.

Shanghai to sort we that, kind that and it. of the shut think May along take particular are with quarter, of seeing other saw several Vlad, saw I continuing function. cities to in the down me but ports April stayed you what, of business kind Let into end realm, back so is now opening was coming back, up, of opening we things factories up, what

the some China. sort quarter, is throughout to a will move amount be of normalcy what of So we that see back within there

to normal COVID policy And as you forward. of part the their kind back the have or probably as get can, you zero to they in later heard, with May of middle expect of sometime going sort

So that's the assumption that we're making.

the I figure front of that The particular out going are that continue to you to economy that sort is already second COVID. to of they many thing say announced crisis they've that ways they come as would with China's this on out stimulate to had

to come the them into next of out that QX, is would then out towards back continue QX really and of of and normal expect would in strong I we strength probably QX, levels what So end QX sometime that go year.

Vladimir Bystricky

And environment -- separated, Okay. sheet you're you've about how That's terms just really follow then leverage that current in helpful of a now color. you've thinking going that the I Appreciate update in now any it. guess, color balance up, or forward.

Shyam Kambeyanda

Yes.

goal are as within is what that want X off X. you said we our that we've So say stay start publicly, to to we to and about the -- between X.XX know, and, at always going is stay I'd to to you

would is if summary statements opportunities in I things debt any said that our and right is now, or cash generation, acquisitions that, strong on up we my go that into debt as we of we strongly as But setting with something of out really the our up consider focus reduction is set like One come move and it. XXXX. our on focus reducing

Operator

Chris a question from Capital take follow Markets. will We Dankert with up Loop

Christopher Dankert

Russia on here. of guess back did circle to want kind I

hey, on matter but strategic how out forward back Is again, are to on So comments a give you we're going we're go of, exploring of that we basis any it options? a can just the guidance, at more the here, us hopefully the just maybe and, ride looking we're year. kind operating thinking kind and and running just can get just point this into of this at some how guide, beyond Russia, out about they brought things and keep business of

Shyam Kambeyanda

What we think to thoughts think website figuring back, Yes, what our that, way transition a the I out how our few support. I'd out not we about best is to Chris way about already stopped weeks capital out on put at look to have that to the more is is investments made that no you announced best Russia it. of we've say we've

and is now in associates, appropriate right the safety focus primary the exit of our security way an figuring region the and our then so to right out And way.

best expect So, saying it. guidance, going region not we so reflected way what's think about forward, profits where And we're that that know, changes, the in to any we're that's really from if anything that's, you do our let more today. but that's we'll set where

Christopher Dankert

we customer purchasing I just comments me, think as to data and on and I in change, there. last And the that. of is control about understand the just data appreciate you the the to whether then about inventory, capabilities, guess, opportunity kind habits ability the, from ability analytics And the on it's how Okay. to or kind state the today any of one what data sourcing company and feel of

Shyam Kambeyanda

something strongly that very about. It's Yes. personally I feel

I know think you or data, as separate opco. a we've brand had great systems, within great Colfax in ESAB

our capability perspective mining since then, we get at the data, both data where from look kind company engaged strong, our as opportunity we've we customer of to with with real-time material along forward. expansion capability but story our continue So really to margin sort were data actually a data gathering going material purchasing business. within was understanding And were to that exactly where the of to strong in see momentum gain aspects a data flow

as front, it's expansions as to game. better margin particular more I look crosshairs. ESAB a see opportunity So large at the continue change our that to flow, And that generating absolutely in for and but come on to we cash

Operator

a with question take Seaport. Walt Liptak follow weâ€™ll from And up

Walter Liptak

X%. ask growth wanted X% the guidance the to and about revenue to of I organic

in implies, into going some What volume Are of positive year that so half. you expecting I the quarter, first the the assumptions the of the throughout difficult X? that in stay are organic guess, across X to regions? second XX% comps at to You're some

Shyam Kambeyanda

Yes.

we day. been the it's at few think best we investor that is just give I guidance think to way And gave one that a since about earlier did that our guidance. the weeks

into So that said, see the say next in see that around particular being end we are prudent felt reaffirm the and going is was of sort rather if would QX. it given. guidance was I out. of cautiously But at things put it the start this at piece how play to for forward. time. to is, we'll sort sort look needed more but to a and our our couple we up, months where guidance the guidance is What We're We'll important read anything to more see at year the else time to else hold that going you in forward. of of looking us of good than to are we've we update that the off confident same an appropriate that everybody things rest We

Operator

further no And at and now there call are closing ladies questions to Barbalato Mark time. back this will gentlemen, turn for I the remarks.

Mark Barbalato

you us Thank look and Have call. speaking next you good for joining day. our forward on to today a we to

Operator

today's now may participation your this disconnect. for and gentlemen, you and Ladies call. you We thank concludes

ESAB (ESAB) 10 May 222022 Q1 Earnings call transcript