ESAB Corporation · NYSE:ESAB
ESAB — Investor Presentation (2022)
34 slides from ESAB's investor presentation, Sep 14, 2022
Slide 1: ESAB – A Fabrication Technology Leader
1 ESAB – A Fabrication Technology Leader
Slide 2: Forward Looking Statement & Non-GAAP Disclaimer
Forward Looking Statement & Non-GAAP Disclaimer DISCLAIMER This document has been prepared by ESAB Corporation, a Delaware corporation (the “Company” or “ESAB”), solely for informational purposes. Upon completion of the intended separation of Colfax Corporation’s (“Colfax”) fabrication technology an
Slide 3: Today's Key Themes and Presenters
TODAY’S KEY THEMES TODAY’S PRESENTERS About ESAB Our Competitive Advantage Shyam P. Kevin Olivier Kambeyanda Johnson Biebuyck Delivering for Our President and Chief Financial Officer President, Shareholders Chief Executive Officer EMEA and Global Products 3 ESAB – A Fabrication Technology Leader
Slide 4: Global Leader in Fabrication Technology
Global Leader in Fabrication Technology ESAB Snapshot Leading Brands and Full Solutions Product Sales Mix Consumables Equipment Founded1: 1904 2021 Revenue: $2.4B 31% 2021 Segment aEBITDA: $434M Headquarters: Bethesda, MD 2021 Countries Served: 147 69% Employees: ~9,000 NYSE Ticker: ESAB Rich Histor
Slide 5: Market-Leading Positions Globally
Market-Leading Positions Globally Differentiated Comparable 1 Market Position by Geography Footprint EBITDA Margin Developed Markets #1 #3 Europe North #1 #1 49% 2021 51% America China Middle #1 (global player) East India #1 South America #1 Emerging Developed Emerging Australia Markets Markets Mark
Slide 6: Successful Emerging Market Franchises and Playbook
Successful Emerging Market Franchises and Playbook How We Win in South America How We Win in India Heritage ▪ Entered in 1955 (first global player) ▪ Entered in 1987, bought India Oxygen in 1991 1 Brand ▪ Most recognized brands with ESAB, ▪ Most recognized brands with ESAB and EWAC advantage Westarc
Slide 7: Secular Trends Driving Attractive Growth Opportunities
Secular Trends Driving Attractive Growth Opportunities Healthcare, Other General Infrastructure Automotive Mobile Renewable Oil & Gas Laboratory, (Defense, Fabrication & Constr. & Vehicles Machinery Energy & Process Ship, Rail) Secular Growth Drivers $25B Market ▪ Welder shortage driving robotics Es
Slide 8: Increasing Exposure to High-Growth Segments
Increasing Exposure to High-Growth Segments Medical and Specialty Attractive 1 Gas Control Digital Solutions Robotics Growth Vectors2 ▪ $3B+ Market ▪ $1B+ Market opportunity ▪ $1B+ Market opportunity ▪ Mid-single-digit growth ▪ Estimated double-digit ▪ Estimated mid-teens $5B+ 6-8%+ Growth growth Ma
Slide 9: Strong Financial Performance
Strong Financial Performance 6.2% +300bps Sales CAGR (‘16-’21) aEBITDA Margin Improvement (‘16-’21) Sales, $B Segment aEBITDA % 17.9% 2.42 2.19 2.25 16.9% 16.4% 1.94 1.95 1.80 15.3% 14.9% 15.0% 2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021 Track Record of Growing Revenue and Expanding
Slide 10: Shaping ESAB to Deliver Long-Term Value
Shaping ESAB to Deliver Long-Term Value Margin Cash Flow Long-Term Growth Expansion Generation Strategic Goals ▪ Strong secular trends ▪ Product-line streamlining ▪ Increase working capital turns $3.0-$3.5B ▪ Global footprint ▪ Footprint reduction Revenue ▪ Leading position across ▪ Improve cash con
Slide 11: Innovation
Innovation ESAB *
Slide 12: Pace of Innovation Accelerating Since 2016
Pace of Innovation Accelerating Since 2016 New Product Introductions Have Quadrupled Innovation Anchored into Customer Needs Proven Innovation Playbook +317% 100 ~110 ▪ Anchored into Voice of Customers and rapid prototyping 84 80 ▪ Clear technical roadmaps 58 ▪ Open innovation with strategic partner
Slide 13: Leading Digital Capabilities Driving Growth
Leading Digital Capabilities Driving Growth Robotics/Digital Products Position ESAB as Productivity Partner Offerings Drive Long-Term Benefits for ESAB Purus Robotic Filler Metal Programming ▪ Simplifies complex programming Robotics Software ▪ Works with any robot Recurring Software Sales OEM Pull-T
Slide 14: Organic Growth Outpacing Peers
Organic Growth Outpacing Peers Leading Organic Sales CAGR Drivers of Historical Organic Growth (2018 - 2021) ▪ Value selling + 290BPS ▪ Robust new product development 4.5% ▪ Product portfolio Multiple Vectors of Future Growth Opportunities 1.6% ▪ Innovation pipeline ▪ Attractive secular tailwinds ▪
Slide 15: M&A Strategy and ESAB Business Excellence (EBX)
M&A Strategy and ESAB Business Excellence (EBX)
Slide 16: Successful Acquisition Process
Successful Acquisition Process Digital Robotic and Specialty Industrial Growth Automation Overarching Goals Solutions Alloys Diversification Impact on ESAB 2019-2021 Accretive Growth MSD Acquisition 9.8% Growth Sales 3.2% Accretive CAGR % to GM Core Acquisitions Accretive Margins Low Cyclicality 39.
Slide 17: ESAB Business Excellence (EBX) Driving Results
ESAB Business Excellence (EBX) Driving Results EBX – Our Values, Processes, and Tools EBX Results Manufacturing Footprint Reduction (# of Facilities)1 45 43 Legacy Acquired 28 26 28 21 17 17 7 2016 2017 2021 Future New Product Introductions Have Quadrupled 100 48 24 2016 2017 2021 Future EBX Drives
Slide 18: aEBITDA Margin
History of Margin Expansion With Additional Opportunities Drivers of Historical Margin Improvement 20%+ ▪ Delivered ~$20 million in footprint savings since 2018 +290BPS Includes Pub Co Exp ▪ SG&A transformation 17.9% ▪ Dynamic price/cost management aEBITDA Margin Ex Pub Co Exp ▪ Kaizen-driven improv
Slide 19: Financial Performance
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Slide 20: Proven Track Record of Delivering Working Capital Improvement
Proven Track Record of Delivering Working Capital Improvement Working Capital Turns Improvement Working Capital Improved by > 1 Turn 5.5x ▪ Improved O2C processes ▪ Enhanced inventory management 5.1x ▪ Vendor term renegotiations 4.4x Additional Opportunities Remain to Drive Even More Cash Flow ▪ Sup
Slide 21: Financial Targets: Growing Revenue and Expanding Margins
Financial Targets: ESAB Growing Revenue and Expanding Margins Sales Growth Bridge, $B MSD Sales Growth $3.0-3.5B LSD CAGR ▪ Leverage EBX growth tools LSD CAGR ▪ Launch innovative new product introductions ~$2.4B 2021 Market Innovation & M&A Long-term ▪ Execute attractive acquisitions Accelerators St
Slide 22: Capital Allocation to Create Long-Term Value to Investors
Capital Allocation to Create Long-Term Value to Investors Manage Leverage Organic Investment ▪ Cash flow supports both deleveraging and ▪ Reinvest in identified accelerators investments ▪ Exciting new funnel of products and expect ▪ Target leverage ratio from 2x to 3x 110+ in 2022 Acquisitions Retur
Slide 23: ESAB 2022 Full Year Outlook
ESAB 2022 Full Year Outlook Prior Revised ▪ Guidance updated to reflect impact from Russia Sales $2.55-2.60B $2.45-2.50B Total Growth 5%-7% 2%-4% ▪ Business excluding Russia expected to Organic Growth 7%-10% 4%-7% outgrow our markets Organic Growth Ex Russia 9%-12% ▪ Manufacturing consolidation and
Slide 24: Environmental, Social & Governance (ESG)
Environmental, Social & Governance (ESG)
Slide 25: ESAB Committed to ESG
ESAB Committed to ESG Environmental Safety ▪ Committed to reducing ESAB’s ▪ Focused on creating a safe place to work impact on climate change ▪ Reduced TRIR from 0.97 in 2016 to 0.33 in 2021 Social Responsibility Greenhouse Gas/Waste Management ▪ Creating an inclusive culture for ▪ ~35% reduction of
Slide 26: Talent & Summary
Talent & Summary
Slide 27: Strong Experienced Leadership Team
Strong Experienced Leadership Team Shyam P. Mitch Kevin Kambeyanda Rales Johnson President, Chairman Chief Financial Officer Chief Executive Officer Executive Officers Olivier Biebuyck Michele Vusa Mlingo President, EMEA and Campion Senior Vice President, Global Products Strategy and Business Chief
Slide 28: ESAB: A Premier Fabrication Technology Company
ESAB: A Premier Fabrication Technology Company Long-Term Strategic Goals Secular tailwinds driving $30B total addressable market $3.0-$3.5B Innovative portfolio winning with customers Revenue Track record of margin expansion and revenue growth 20%+ aEBITDA Margin Public Company Expense1 Strong balan
Slide 29: ESAB – A Fabrication Technology Leader
29 ESAB – A Fabrication Technology Leader
Slide 30: Appendix
Appendix
Slide 31: Best Team Wins: ESAB Presenters
Best Team Wins: ESAB Presenters Shyam Kambeyanda Kevin Johnson Olivier Biebuyck Chief Executive Officer Chief Financial Officer President EMEA, Equipment, and Digital Solutions Joined ESAB in 2016 Joined ESAB in 2019 Joined ESAB in 2017 Previously worked at Eaton Corporation for 21 years, Previously
Slide 32: Strong Experienced Board
Strong Experienced Board Board of Directors Mitch Rales Shyam Patrick Allender Didier Teirlinck Rhonda L Jordan Chairman, Kambeyanda Colfax Director, Former Colfax Director, Former Colfax Director, Former ESAB CEO EVP & CFO of EVP Ingersoll Rand President Kraft Danaher Stephanie M Chris Hix Rajiv Vi
Slide 33: 2022 Outlook – Supplemental Detail
2022 Outlook – Supplemental Detail Prior Revised Sales ($B) 2.55-2.60 2.45-2.50 Total Growth 5%-7% 2%-4% Organic Growth 7%-10% 4%-7% Segment aEBITDA ($M) 455-475 435-455 1 Corporate Expense ($M) ~35 ~35 1 aEBITDA ($M) 420-440 400-420 Interest Expense ($M)1 35-40 Tax Rate1 25%-27% NCI ($M) 4-5 2 Dilu
Slide 34: Non-GAAP Reconciliation
Non-GAAP Reconciliation Fabrication Technology1 2016 % of NSV 2017 % of NSV 2018 % of NSV 2019 % of NSV 2020 % of NSV 2021 % of NSV Net Sales $ 1,800.5 $ 1,937.3 $2,193.1 $ 2,247.0 $ 1,950.1 $ 2,428.1 Operating Income $ 163.7 9.1% $ 208.2 10.7% $220.9 10.1% $ 279.6 12.4% $ 224.4 11.5% $ 337.3 13.9%