ESAB Raised Sales Outlook as Acquisitions Drove Growth
Second-quarter sales reached $807.6 million, rising 12.9% from a year earlier.
Industrial technology company ESAB Corporation (ESAB) returned to organic growth in the second quarter, with core organic sales rising 2.5% after declining 1% in the first quarter.
Reported growth accelerated to 12.9% from 10% in the prior quarter, though acquisitions contributed 8.2 percentage points and currency translation added 2.3 points. Existing businesses supplied 2.5 points of growth, leaving acquisitions and currency as the main drivers.
Sales rose to $807.6 million, up 12.9% from a year earlier and 8.3% from $746 million in the first quarter. Diluted earnings from continuing operations fell to $0.54 a share from $1.12, while core adjusted diluted earnings slipped to $1.33 a share from $1.36 and edged up from $1.31 sequentially.
Both regions generated organic growth. Americas core organic sales increased 4.9%, and core sales rose 11.7% to $315.9 million. EMEA and APAC organic sales grew 0.7%, while core sales climbed 13.8% to $450.4 million, aided by an 11.6-point acquisition contribution.
Core adjusted EBITDA rose 8% to $149.6 million from a year earlier and increased from $136 million in the first quarter. Its margin fell 90 basis points year over year to 19.5%, while recovering 50 basis points sequentially. The Americas margin expanded 20 basis points to 20.3%, while the EMEA and APAC margin contracted 160 basis points to 19%.
Gross margin expanded to about 38% from 37.2%, but GAAP operating income fell 27.8% to $78.7 million. Restructuring and related charges climbed to $18.3 million from $1.4 million, while acquisition-amortization and related charges rose to $41.3 million from $21.6 million.
ESAB now expects 2024 core sales growth of 11% to 14%, up from 6% to 9%, as its projected M&A contribution rises to about 9% from 4%. The company continues to expect organic growth of 2% to 4%. It raised its core adjusted EBITDA forecast to $615 million to $625 million from $575 million to $595 million, while lowering adjusted EPS guidance to $5.40 to $5.50 a share from $5.70 to $5.90.
The revised outlook included Eddyfi after ESAB completed the acquisition one month ahead of schedule. A new $175 million mandatory convertible preferred stock financing carries a 6.5% annual dividend and produced $1.4 million of preferred dividends in the quarter, adding pressure to the company’s earnings presentation and diluted share count.