ESAB (ESAB -17.08%), a leading global provider of fabrication technology and gas control solutions, reported Q2 2025 results on August 6, 2025. The most notable headline: GAAP revenue for Q2 2025 was $715.6 million, Q2 2025 GAAP revenue of $716 million exceeded analysts’ estimates by $41.48 million, or 6.15%, while non-GAAP EPS of $1.36 matched consensus, while core adjusted earnings per share (non-GAAP) for Q2 2025 was $1.36, matching expectations. Management further raised its full-year 2025 guidance for core adjusted EBITDA and core adjusted EPS, boosted by contributions from recent acquisitions and robust business in EMEA (Europe, Middle East, Africa) and Asia-Pacific. Despite these positives, underlying organic growth was subdued in Q1 2025 and volumes in the Americas segment declined, offset only partly by price increases and product mix improvements. The period highlighted successful execution on margin expansion and strategic M&A, supporting a solid quarter for the company.
| Metric | Q2 2025 | Q2 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $1.36 | $1.36 | $1.32 | 3.0% |
| Revenue (GAAP) | $715.6 million | $674.5 million | $707.1 million | 1.2% |
| Core Adjusted EBITDA Margin | 20.4% | 20.1% | 0.3 pp | |
| Adjusted Free Cash Flow (Non-GAAP) | $46.4 million | $78.8 million | (41.1%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
ESAB’s Business and Current Focus Areas
ESAB operates in the global fabrication technology market, supplying products like welding equipment, gas control equipment, consumables, and related automation solutions. Its gas control business serves medical, industrial, and specialty sectors. The company has established a presence in roughly 150 countries, giving it broad geographic reach and exposure to diverse end markets.
The business focuses on several key strategies: capturing share in high-growth regions such as India and Asia-Pacific, shifting its sales mix toward gas control and advanced welding equipment, and growing through acquisitions. It also invests heavily in research and development to produce new equipment and improve digital capabilities, and it implements the ESAB Business Excellence (EBX) system for operational improvement. Success factors include maintaining profitability as the portfolio shifts to higher-margin categories, integrating new acquisitions quickly, and managing global supply chains efficiently.
Quarter Highlights: Performance, Strategy, and Developments
During Q2 2025, ESAB delivered GAAP revenue above expectations, supported mainly by the contribution from newly acquired businesses. On an organic basis—excluding the impacts from acquisitions and currency—revenue declined by 2.2% in Q2 FY2025. This softness was most pronounced in the Americas, where Core sales (non-GAAP) fell 8.7% in Q2 2024. In the Americas, core sales fell 8.7%, with distribution channels showing caution due to tariff uncertainty and other factors. For example, Core sales in the Americas declined from $309.8 million in Q2 2024 to $282.7 million in Q2 2025 (core, excludes Russia), with Adjusted EBITDA (non-GAAP) for the Americas was $56.8 million in Q2 2025.
In contrast, EMEA and Asia-Pacific stood out as sources of strength. Core sales in EMEA and APAC climbed 11.0% in Q2 2025, supported by continued robust demand in high-growth markets like India and the Middle East. Core sales in EMEA and APAC rose to $395.7 million in Q2 2025, with Core adjusted EBITDA margin (non-GAAP) expanded to 20.6% in Q2 2025, up from 19.5% in Q2 2024. The company credited both new product uptake and the positive contribution of recent acquisitions for the result. Notably, ESAB completed the purchases of DeltaP and Aktiv, which expand its medical gas control business, and signed an agreement to acquire EWM, a European specialist in heavy industrial and robotic welding equipment.
Product innovation continued to be a focus. The company rolled out new welding equipment and gas control solutions, with management reporting “strong traction” in sales channels. Gas control now represents 18% of total revenue, up from 10% just a few years ago (as stated by management in Q1 2025). Gas control products, which support precise delivery and regulation of gases in medical and industrial environments, are both faster-growing and higher-margin than the company average. Strategic acquisitions in this space, especially in Europe and India, are expected to increase gas control to 25% of total revenue by 2028. Management noted that EBITDA margins in this segment are already ahead of the 2028 target.
This drop reflected higher inventory in the Americas, a move to protect the supply chain against possible tariff disruptions. Cash and equivalents (GAAP) totaled $258 million as of Q2 2025. Ongoing acquisition activity and proactive inventory builds did impact cash conversion for the quarter.
Looking Ahead: Guidance and Investor Watchpoints
Management raised its full-year 2025 outlook. It now expects total core net sales growth of 1.5–3.5% for 2025, with the midpoint of that range above its prior view of (1.0)–1.5%. The projected core adjusted EBITDA range is now $525–$535 million for FY2025, and Core adjusted EPS guidance was raised to $5.15–$5.30 for 2025. These improvements reflect the contribution from acquisitions and some relief from negative currency exchange, but Expectations for core organic growth remain unchanged at 0.0% to 2.0% for the full year 2025. The impact from recent deals—especially DeltaP, Aktiv, and the imminent EWM acquisition—is a key factor in the increased full-year 2025 guidance.
Looking ahead, ESAB will need to deliver more tangible organic growth, particularly in the Americas, which continues to experience volume weakness and a cautious channel environment. Management expects negative mid-single-digit core volume growth in the Americas for FY2025. Investors should keep an eye on the pace of integration of new acquisitions and the progress of the gas control segment as it moves toward its 2028 target. Any prolonged softness in free cash flow, persistent tariff uncertainty in North America, or shortfalls in organic growth could become areas of concern.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
