ESAB's first quarter saw a positive market reaction, as the company delivered results that surpassed Wall Street’s expectations for both revenue and non-GAAP profit. Management cited robust performance in its global welding equipment and gas control segments, with both achieving mid-single-digit growth. CEO Shyam Kambeyanda highlighted the company's ability to navigate regional challenges, noting that strong execution in Europe, Asia-Pacific, and the Middle East helped offset weaker demand in the Americas. The quarter also benefited from recent acquisitions, which contributed to growth despite ongoing softness in North American volumes.
Is now the time to buy ESAB? Find out in our full research report (it’s free).
ESAB (ESAB) Q1 CY2025 Highlights:
- Revenue: $678.1 million vs analyst estimates of $663.7 million (1.7% year-on-year decline, 2.2% beat)
- Adjusted EPS: $1.31 vs analyst estimates of $1.21 (8.6% beat)
- Adjusted EBITDA: $133.9 million vs analyst estimates of $120.9 million (19.7% margin, 10.7% beat)
- Management reiterated its full-year Adjusted EPS guidance of $5.18 at the midpoint
- EBITDA guidance for the full year is $525 million at the midpoint, above analyst estimates of $520.4 million
- Operating Margin: 16.2%, in line with the same quarter last year
- Organic Revenue was flat year on year (2.2% in the same quarter last year)
- Market Capitalization: $7.19 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions ESAB’s Q1 Earnings Call
- Bryan Blair (Oppenheimer) asked about the impact of tariffs and pricing strategies. CEO Shyam Kambeyanda explained that 80% of production is regionally based, limiting exposure, and CFO Kevin Johnson detailed that pricing actions in North America will offset most tariff-related costs.
- Saree Boroditsky (Jefferies) inquired about the breakdown of price versus volume in organic growth guidance. Johnson clarified that price increases are primarily in North America, with flat pricing in EMEA and APAC.
- Mig Dobre (Baird) questioned margin progression in the Americas given ongoing tariff and volume pressures. Kambeyanda emphasized that margin expansion will be supported by product mix improvements and EBX initiatives, although the year’s cadence may differ from prior years.
- Sherif El-Sabbahy (Bank of America) probed the drivers behind margin expansion despite lower volumes in the Americas. Kambeyanda pointed to a combination of pricing, operational efficiencies, and the shift toward higher-margin gas control and equipment products.
- Nathan Jones (Stifel) sought detail on North America’s volume trends and timing for a European recovery. Kambeyanda described a “wait-and-see” environment in North America and expressed optimism about growth potential in Europe as stimulus measures ramp up later in the year.
Catalysts in Upcoming Quarters
In the coming quarters, StockStory analysts will watch closely for (1) continued progress in expanding the gas control segment, (2) successful integration and margin contributions from recent and pending acquisitions, and (3) signs of demand recovery in the Americas as the tariff environment stabilizes. Additional attention will be given to how European stimulus programs impact regional sales and profitability.
ESAB currently trades at $120.84, in line with $120.14 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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