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What factors drove the changes in ESAB's revenue and profit?

- **Revenue Growth**: Q3 sales up 8% to $687M, with 2% organic growth and 7% EBITDA expansion.
- **EWM Acquisition Success**: Completed early, contributing $1M EBITDA and 45%+ gross margins. Cross-selling driving 2026 growth.
- **Margin Expansion Plan**: 2026 Americas margin improvement via restructuring, regional manufacturing, and equipment mix shift.
- **Community Impact**: 'Remake This Town' initiative addressing skilled trades shortage with global expansion.
- **Financial Flexibility**: Free cash flow >100%, Q4 leverage reduction to enable M&A acceleration.

**【CEO Summary Section】**
- **Q3 2025 Financial Highlights**: Total sales rose 8% to $687 million, with 2% organic growth and adjusted EBITDA up 7% to $133 million. Equipment and automation growth in the Americas offset seasonal Q3 challenges.
- **EWM Acquisition Impact**: Completed ahead of schedule, contributing $1 million in Q3 EBITDA. EWM's 45%+ gross margins and React technology are driving cross-selling opportunities across regions.
- **Strategic Initiatives**: Shifting mix toward equipment (22%+ EBITDA target by 2028) and gas control; integrating AI into EBX for margin optimization. $15 million+ automation backlog partially cleared in Q3, with Q4 momentum expected.
- **Community Engagement**: 'Remake This Town' initiative in Chicago addresses skilled trades shortage, expanding globally with partners like Vilnius Tech.

**【CFO Financial Commentary】**
- **Americas Segment**: Organic sales growth driven by U.S. equipment, offset by 200bps margin drag from tariffs and investments. Q4 restructuring to support 2026 margin expansion.
- **EMEA/APAC Performance**: 14% total sales growth (3% organic), with EBITDA margin up 40bps to 19.3%. EWM's APAC presence boosted regional growth.
- **Cash Flow & Leverage**: Free cash flow >100% of net income; Q4 cash deployment to reduce leverage to 1-2x, enabling 2026 M&A acceleration.
- **Updated Guidance**: Full-year sales $2.71-2.73B (1% organic growth), EBITDA $535-540M, EPS $5.20-5.30, free cash flow ~95% of EBITDA.

**【Q&A Key Highlights】**
- **Tariff Mitigation**: Moving manufacturing to regions (e.g., Europe for EWM products) to eliminate $15M+ annual tariff impact by Q1 2026.
- **EWM Integration**: $3M profit contribution in 2025, targeting 10% ROIC by 2028. Cross-selling opportunities in North America and Middle East.
- **2026 Margin Outlook**: Americas EBITDA margin expansion driven by restructuring, pricing, and supply chain shifts. Global equipment growth to offset cyclical consumables.
- **M&A Strategy**: Agnostic to region, prioritizing accretive acquisitions (e.g., EWM's 45%+ gross margins). Pipeline remains robust with disciplined execution.

ESAB Corporation (ESAB) Q3 2025 Earnings Call Transcript

Revenue

Sales and Services Revenue

Financing Services Revenue

Other Revenue

Cost of Revenue

Cost of Goods and Services

Cost of Financing Services

Other Cost

Gross Profit

Other Operating Income

Operating Expenses

Selling, General and Administrative Expenses

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Loss on Disposal of Assets

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Net Income

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Other Comprehensive Income

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Total Comprehensive Income Attributable to Minority Interests

Total Comprehensive Income Attributable to Owners of the Company

Basic EPS

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Diluted EPS

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Diluted EPS from Discontinued Operations

ESAB

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