ESAB Corp Q2 FY2024 Earnings Call

Thank you for standing by. My name is Amy, and I will be your conference operator today. At this time, I would like to welcome everyone to the ESAB Second Quarter 2024 Earnings Conference Call. Please note that all lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. It is now my pleasure to turn the call over to Mark Barbalato, Vice President of Investor Relations. Please go ahead.

Thanks, operator. Welcome to ESAB's second quarter 2024 earnings call. This morning, I'm joined by our President and CEO, Shyam Kambeyanda, and CFO, Kevin Johnson. Please keep in mind that some of the statements we are making are forward-looking and are subject to risks, including those set forth in our SEC filings and today's earnings release. Actual results may differ, and we do not assume any obligation or intent to update these forward-looking statements, except as required by law. With respect to any non-GAAP financial measures mentioned during the call today, the accompanying reconciliation information related to those measures can be found in our earnings press release and today's slide presentation. With that, I'd like to turn the call over to our President and CEO, Shyam Kambeyanda.

Thank you, Mark, and good morning, everyone. Thank you all for joining us today. We delivered another strong quarter, highlighted by positive organic revenue growth while improving our product mix toward equipment. We utilized our EBX toolkit to achieve record margins and cash flow. As a result, we lowered our net leverage ratio to 1.7x, and we closed on another acquisition. It is important to highlight that we executed well and delivered strong results, benefiting from our high-growth markets exposure that was moderated by softness in developed markets. While I'm encouraged by our progress, we're far from satisfied. I'm confident that we'll continue to raise the bar, find new avenues for growth, expand our margins, and improve cash flow. Before diving into the numbers, just like last time, let me share the passion our team has towards our mission of shaping the world we imagine. Maybe some of you read an article where Gen-Z has been dubbed the Toolbelt Generation. Here on a more personal note, I have led ESAB for the last eight years, and I'm very proud of our team's contributions every day to train the next generation of welders. We see this as a way to engage and connect with the next generation. This year, we teamed up with the non-profit organization Welder Underground, an innovative apprenticeship program that trains the next generation of welders through large-scale public projects. Students here apply to the program through established non-profits focused on youth empowerment. They receive a stipend during their apprenticeship and are prepared for American Welding Society's certification upon completion. I've had a chance to meet the current apprentices who are upgrading their skills. They're part of creating Welder Underground's first public project, a metal structure celebrating hip hop, which is currently being featured around New York City. It has been truly heartwarming to see the impact of this initiative, and we're thrilled to be part of this collaboration as it provides unique and impactful pathways to employment in the trades. I will continue to share more stories that reflect our passion for the industry and reinforce our mission of shaping the world we imagine in upcoming calls. Moving to Slide 3 to discuss the specifics of the quarter and our performance. As I mentioned earlier, our teams continue to execute well. Over the past several years, we have been focused on designing and developing innovative products that provide our customers with comprehensive workflow solutions. We're leveraging our EBX processes, AI, and data analytic tools to improve service levels and on-time delivery, increasing customer retention and driving greater efficiency across our enterprise. While we cannot control the economic backdrop, we're focused as a business, we know what we are good at, and we intend to improve on all aspects of our business that are in our control. Talking about the second quarter in particular, we achieved positive organic growth of 1%, reflecting continued strength in our high-growth markets, offset by moderating conditions in developed markets. Notably, we experienced high single-digit growth in equipment and automation, and double-digit growth year-to-date in cobots. Adjusted EBITDA increased by 600 basis points, with adjusted EBITDA margins expanding by 150 basis points to a record 20.1%. This strong margin performance was driven by our team executing our strategy to drive a favorable mix with our best-in-class updated equipment portfolio and our focus on less cyclical automation and mission-critical gas control products. EBX, lean, and AI initiatives continue to improve cash flow generation, enabling our compounder journey and allowing us to strengthen our balance sheet. We're excited about the recent acquisition of Linde's welding business in Bangladesh, which I will discuss in more detail shortly. This acquisition builds on our recent acquisitions of Sager and SUMIG. Let me take this moment to thank our associates for their hard work, dedication, and commitment toward delivering our long-term goals. Moving to Slide 4, in spite of the challenging end markets, as we look back at the first half of 2024, I am proud of the progress we have made. It is a testament to our focus and our ability to execute, and I submit our results this quarter reflect that. We've reduced the cyclicality of our business through product line simplification and new product introductions, and focused our teams on less cyclical end markets. I've had a chance to speak to our channel partners and there continues to be significant positive feedback on our new equipment products. Over the past eight years, we've consistently demonstrated bifocal leadership, achieving both short-term and long-term goals. We have protected our R&D investment and capital associated with growth initiatives. In upcoming slides, you will see how our leadership in digital analytics solutions and monitoring is helping us grow faster. Our acquisition pipeline is strong, and with our demonstrated ability to generate strong cash flow, we believe we can continue to acquire less cyclical and margin-accretive businesses. Moving to Slide 5 to highlight our digital strategy. We are continuously strengthening our InduSuite digital solutions portfolio. This quarter, we're launching our new FloCloud product, which allows our customers to monitor gas consumption, set and track flow limits, and access upgraded analytics. FloCloud allows our customers to customize their digital gas monitoring needs while allowing us to provide a full workflow solution. Let me give you a bit more color. Our gas control business recently partnered with a gas manufacturer to help them secure a new OEM business. We partnered with the gas company to provide a fully integrated gas management and monitoring system to measure flow, pressure, and consumption and report on outages. This use case is expected to lead to further partnerships with key gas manufacturers. Digital solutions within Fabtech have also been gaining strength, which licenses up 50% year-over-year, creating over $25 million in pull-through sales for equipment and filler metal. InduSuite, with our digital solutions, allows ESAB to differentiate itself. Over the last eight years, we have built a formidable R&D capability around the globe, we have revamped our equipment portfolio, strengthened our gas control business, and entered faster-growing markets. So, we're excited about our future. And as I've said before, we're just getting started. Moving to Slide 6 to talk about the latest acquisition, our third one this year. We are particularly excited about the acquisition of Linde's welding business in Bangladesh. This acquisition fills the geographic gap in Asia and cements our position as a leading Fabtech company in this fast-growing region. Bangladesh, with a population of approximately 170 million and a projected GDP growth in the high single-digits over the next decade, offers ESAB significant growth opportunities. This addition builds on our leadership position in India and Southeast Asia. We expect to extract significant synergies by selling ESAB equipment into this attractive Bangladeshi market. Let me remind you, this is a $20 million business with accretive EBITDA margins and significant opportunities for additional growth. Turning to Slide 7, let's discuss the performance in the quarter. As previously mentioned, organic sales grew 100 basis points, driven by strong performance in equipment and automation businesses, which saw high single-digits growth. Adjusted EBITDA expanded 150 basis points year-over-year to a record 20.1%, driven by our EBX initiatives across the enterprise, and our AI initiatives are gaining traction for further efficiency. Moving to Slide 8, it was great to see our Americas sales team execute on our growth strategies for gas control, equipment, and automation in the quarter. In the Americas, organic sales grew 400 basis points, driven by a strong price performance of 3% and an additional 1% from volume. I am pleased with our ability to gain share and improve our mix towards equipment. We also benefited from having less exposure to highly cyclical end markets. Our focus and price discipline drove 210 basis points of expansion in adjusted EBITDA margin, which reached a record 20.9%. Moving to Slide 9, which highlights our performance in the EMEA and APAC regions. Our teams in Europe, Asia, and the Middle East delivered strong operating performance. Volume increased by 100 basis points while European filler metal demand softened. This was offset by sales execution of our equipment and automation workflow solutions. Let me mention again, we continue to see strength in high-growth markets. Our team's discipline in net pricing and operating efficiency enabled us to expand adjusted EBITDA margins by 110 basis points year-over-year to 19.5%. On that positive note, let me hand it to Kevin on Slide 10.

Thanks, Shyam, and good morning, everyone. We had another terrific quarter. EBX continues to successfully drive improvements in cash flow, which was up 21% in the first half of 2024. We are using this improved cash flow to support our 2028 strategy. Firstly, we're investing to support our organic growth, improving our equipment mix, and making investments that are taking share. Secondly, to fund bolt-on acquisitions that are fast-growing, margin-accretive, and delivering strong cash flow like Linde Bangladesh. And thirdly, we increased our dividend in the second quarter by 33% to $0.08 per share. ESAB's balance sheet is in the strongest position since we spun out of Colfax, with net leverage today of only 1.7 turns. We are well positioned to drive even higher cash flow and continue to successfully execute our 2028 compounder strategy. Moving now to Slide #11, we have updated our full-year guidance to reflect changes on the top-line, as Shyam discussed. Sales guidance of flat organic core growth reflects moderating developed markets and continued strength in our high-growth markets. We expect volume and price to be flat, with one additional point of FX headwind due to a stronger US dollar and half a point of M&A growth from the Linde Bangladesh acquisition. Our team is focused on controlling the controllable. Adjusted EBITDA margins at the midpoint of our guidance have increased by 50 basis points to 19.5%. This improvement is due to new EBX initiatives, improved product mix, and $5 million of additional benefits from restructuring projects. Adjusted EPS remains unchanged, benefiting from a lower interest expense, and cash flow conversion remains on track. With that, let me hand back to Shyam on Slide 12 to wrap up.

Thank you, Kevin. To summarize, we continue to execute well in a challenging environment as reflected in our strong second quarter operating performance. We continue to drive EBX across the business to deliver better margins and cash flow, strengthening our balance sheet while adding AI to our toolkit. Today, ESAB is a less cyclical, higher-margin, and stronger cash flow-generating enterprise, allowing us to execute our compounder strategy. We are confidently moving towards our 2028 goals of $4 billion in revenue, 22%-plus EBITDA margin, and 100% free cash flow conversion. We have a focused business and a focused team with a lot of runway ahead of us. With that, operator, let's open the line for questions.

Thank you. The floor is now open for questions. Our first question comes from the line of Mig Dobre with Baird. Your line is now open.

Thank you. Good morning, everyone, and congrats on a good quarter here. I guess my first question, Shyam, I'd love to hear more of your thoughts in terms of what kind of drove the adjustment in your growth guidance that you had to provide. Obviously, we know that the environment has gotten a little bit tougher, but from your perspective, are there some geographic callouts or maybe some end markets that you'd be able to highlight for us that are progressing maybe a little bit different than you thought three months ago? And as you look forward for the remainder of the year, what are some of the puts and takes to your thinking? Where are you seeing maybe potential for downside risk or at the same time maybe some offsets to that?

Yeah. Good morning, Mig. Thanks for the question. So, I agree with you, a really strong quarter from ESAB. We felt that posting positive volume growth both in the Americas and the rest of the world was an extraordinary performance for us, which gives us great confidence about the team's capability to execute. You're right, we sort of did a couple of things this quarter. One, we maintained our EPS guidance against the backdrop. We obviously improved our EBITDA percentage for the full year. And then, on the top line, what we found is that our developed markets moderated and slowed a little bit from the start that we had in Q1. And that's really what drove us to sort of think about the rest of the year and guide to a point that we felt confident about at this time. Now, it's also important to state that we have July behind us, and it started off very similar to where we ended the second quarter. So, it gives us confidence about the forecast. Yes, we did see some slowdowns in yellow goods to some extent, agribusiness, and in particular, automotive in Europe a little bit. But then we've also seen energy stay up, we've seen defense stay up. So, all in all, it's a mixed bag that sort of points us to this flat number that we're talking about.

Sure. Thank you for the color. And then, I guess, my follow-up, your balance sheet is increasingly in good shape here, and you've done three deals year-to-date. I'm curious as to how the pipeline is evolving here and whether or not we should be starting to think about larger deals given that your balance sheet and cash flows seem to be able to support it. Thank you.

Yeah, Mig, I think our view on that topic is solid and disciplined. We've talked about creating a less-cyclical, higher-margin business, so that's probably the first lens that we look at. The second one is, we'd like gross margins to be above 40% with great characteristics of cash flow. So, we're not going to be coming off of those two sets of lenses that we want to look at acquisitions for. That being said, the acquisition funnel looks good. Obviously, closing on some of these deals takes time, but we do have some prospects out there that have a chance of getting done in the back half of this year. But nothing that gets us past that number we've always put out there where we've got a two in front of our leverage ratio. And we think we've got plenty of things out there along with our cash flow to do both.

Your next question comes from Nathan Jones with Stifel. Your line is now open.

Good morning, everyone.

Hi, Nathan.

Good morning, Nathan.

Just a couple follow-ups on how the second quarter progressed, and where you saw the weakness coming from. I'm kind of interested in it a little bit more from a product perspective as well. Did you see consumables start to weaken first? It sounds like consumables were weaker than the equipment side of it was. But just how you saw that progress? And then, you talked about stabilization in July. Do you expect the rest of the year to kind of stay stable with where it is now, like we've taken a step down and we maintain stability, or do you think there's risk that we continue to see some downtrend here?

I mentioned earlier, Nathan, that we've seen some slowdown in filler metals, particularly in the automotive sector in Europe. However, we also noticed strong performance in our Flux core wire and Flux products related to wind energy. It’s a mixed picture; while some areas are declining, there are also positive aspects in the market that are balancing it out. From my nearly 30 years in the industry, it doesn’t feel like a complete downturn. Our approach has been balanced. Our strategy regarding standard equipment and our equipment business is beginning to pay off. Six years ago, we were limited to just our filler metal portfolio, but now we have a comprehensive portfolio that allows us to sell equipment to our existing customers and gain market share. The new equipment line is generating interest not only in developed markets but also in emerging ones. We believe this trend will continue. If we achieve the same market share in equipment as we do in filler metals, the business and sales dynamics for ESAB would be significantly different. We have invested considerable time with our teams on sales transformation, including a major assessment last year to improve our sales team's capabilities, adjust incentive plans, and train them on how to sell our new equipment portfolio, and we are already seeing positive results from these efforts.

I guess I'll ask a follow-up on the acquisition. With a population of 170 million people in high single-digit GDP growth, there should be a lot of opportunity in Bangladesh for ESAB. Can you talk about what you think your market share is there versus what it is in the rest of the world? And what the opportunity is to not just grow with the market but to really drive share gain through ESAB, to build that business into something that's more material for ESAB?

I believe this places us in a leading position, similar to our standing in India. While we haven't disclosed specific market share figures, we are very confident that our consumables business is significantly number one. Additionally, a substantial amount of equipment is sold in Bangladesh. We see ESAB equipment as an excellent way to penetrate that dedicated channel, allowing us to sell both consumables and equipment. The growth opportunities are considerable, as I mentioned earlier, particularly through the synergy of selling gas control equipment alongside ESAB consumables, and by upgrading to repair and maintenance and high alloy consumables. We are truly excited about this potential. As some may know, we have been supplying key ingredients to the filler metal business in Linde Bangladesh, giving us a solid understanding of that market. Our team, located close to Bangladesh in Calcutta, India, speaks the local language and is already mobilized, having made a positive start in July. We are very enthusiastic about this business.

Could you provide more details on pricing? It's flat in the Americas but down 3% in the rest of the world. What are the dynamics regarding net price versus inflation, and how is that impacting margin contribution? Are you still achieving positive margins in the EMEA and APAC segments despite the 3% price decline?

That's right. The short answer is that the net price metrics for ESAB is significant and important. If those of you who are familiar with our value drivers, that is a key driver for ESAB, and we measure that on a monthly basis. Net price is positive in both regions. We have seen steel prices move differently in the different geographies, and hence, you see the pricing position being slightly different in the Americas versus the rest of the world. But yes, net price is positive on both sides contributing to the margin expansion, but also other aspects. We continue to do our lean activities. We continue to shift mix. So, I would submit that all three contributed to the margin expansion in both geographies.

Thank you. The next question comes from Tami Zakaria with JPMorgan. Your line is now open.

Hi, good morning. Great to see the Linde acquisition and that slide on Bangladesh; should be exciting. So, a couple of questions. The first one is, the flattish organic growth guide, can you help us frame how to think about the third quarter and the fourth quarter? And within that flattish guide, price versus volume, where has expectation changed versus last quarter?

Yeah. So, Tami, as we said on today's call earlier, we're expecting flat volume and price for ESAB for the full year and also in the second half of the year. In terms of the segments, in the Americas, we're expecting flat volumes and we're expecting positive price very similar to what we saw in Q2, and in line with Shyam's comments about things expected to stay very similar to Q2 as we progress through the rest of the year. In EMEA and APAC, we do have negative price, but as you can see with the margins moving forward nicely, we've got that in good control with our net price toolkit, and we're expecting flat volumes in the EMEA and APAC as we step through the rest of the year. Key for us is really just staying disciplined, and like Shyam, continuing to use our net price toolkit, continuing to drive the growth aspects of EBX to make sure that we're gaining market share as we step through the second half. In terms of sequentials, as you normally would expect in the third quarter, we step down because of largely the European summer holidays. And as we go into Q4, we will step up.

Got it. That's very helpful color. So, the other question I have is, I think you announced the distribution agreement with INFRA in Mexico. Just wanted to get your thoughts on what the group potentially sees there. Who are the leading players in the Mexican market? So, any color there would be helpful.

Yeah, I think I'd mentioned before that our team has a strong position in Mexico. INFRA is actually one of the larger distributors of hard goods in the region and we were able to build a relationship with them to pull through ESAB products, both filler metal and equipment. The relationship is actually just getting started. The potential for us is significant. We've not given out any numbers, but we do have the start of a relationship, an executive partnership in some ways, to continue to drive in a positive direction in Mexico. We think Mexico benefits from reshoring. We think the infrastructure buildout in Mexico also benefits ESAB and this relationship. We've got a lot of positive momentum, and it's been a good start, but it's early days. So, maybe a better question sometime next year.

Your next question comes from David Raso with Evercore. Your line is now open.

Hi, thank you. I was curious, the channel inventory, can you give us an update around the globe on where the inventory is currently and how you're expecting that to end the year heading into 2025?

Yeah. Thanks, Dave. Always good to hear from you. We actually did our check. In fact, we did a check as early as the end of the second quarter, just to make sure that we were prepared to sort of answer that question in particular. The short answer is that there is no buildup of inventory in the channel, and we were particularly interested in that for Europe, specifically in Germany and the Nordics. The answer back was actually a good surprise that there was no inventory buildup that was preventing any growth prospects in those markets. We have a similar answer for us in North America, where there isn't a significant channel inventory buildup. The good news there is that if there's any uptick in the market, we should see an immediate pull-through. But that being said, our teams are out there with our EBX-proven methodology and growth bridges to drive share gain, to drive share of wallet, and to drive through our new equipment product line with the channel partners.

All right, thank you. And maybe I missed it, I apologize, but the EMEA, APAC declines, I'm just curious about the Europe drag within that, right? You mentioned the high-growth markets. Assuming India and the Middle East are still growing nicely, can you update us on what Europe is doing specifically?

Yeah. We haven't given that specific number out, but the way to kind of do the math is that we saw double-digit growth out of the markets in India and the Middle East. You could say sort of single-digit declines out of Europe, which is the largest part of our business, with filler metal being the one that performed on a relative basis down the most. The biggest piece for us in Europe really is around yellow goods and automotive, which took that part of the business down, but strengthening in renewable energy and strength in defense.

And sorry, just a clarification from an earlier comment about the second half of the year. I missed the aggregate. The organic sales decline for the second half of the year, kind of 1% to 1.5%. That's baked in, can you split that between EMEA, APAC, and Americas?

Yeah. So, David, I think, as I said, we're expecting in the Americas, the volumes to be flat and positive price similar to what we saw in the second quarter. In EMEA and APAC, what we expect is negative price, similar to what you saw in the second quarter, and then flattish volume as we step through the rest of the year. So, it's fairly similar in both businesses in terms of volume outlook within that sort of negative 1% to positive 1%, and price at similar levels to what you saw in the second quarter.

Your next question comes from Bryan Blair with Oppenheimer. Your line is now open.

Thank you. Good morning, everyone.

Hi, Bryan.

Very solid execution in the quarter. Apologies if I missed some color here, but wondering if you could offer a little more detail on the performance of your gas control business in the quarter and whether there are any notable callouts or differences in trend between industrial and specialty and medical.

Yeah. So, actually, solid performance out of our gas control business, benefiting from the energy transition and also HVAC. We saw some really good performance on the industrial side in the Americas. We saw really good performance on the specialty gas side, which is benefiting from semiconductors and also to the same extent in Europe with some of the life sciences and medical exposure. The second piece for us that I spent a little bit of time talking about is that we continue to improve our digital solutions proposition in that space, trying to create really strong value propositions for our customers as a result of managing their gas flow in their facility. That also benefited our business and the pull-through. So, all in all, strong position there for us in the gas control business, and we see that business building on its strength for the second half of the year.

And somewhat of a follow-up to Nathan's question on Linde Bangladesh. Just hoping you could elaborate a little more on synergy prospects, specifically what we should think about as near-term versus longer-term, given channel dynamics. Perhaps also offer a little detail on Sager and SUMIG integration and how those deals are performing out of the gate?

Yeah. Just to calibrate, the SUMIG acquisition we announced, but it hasn't closed yet. We expect it to close sometime in the latter part of the fourth quarter. We expect a good start from Sager. In fact, we have a team out in South America this week visiting. I just had the 100-day review for that particular business. We were looking at a lot of synergies associated with footprint and sales team consolidation. We've executed on those, so we're off to a great start there. On Linde, it was really the piece that I talked about. It fills out the geography that we are very interested in, and we wanted to be in a leadership position, we are. We're very thrilled about that business. The channel, and as you know, where ESAB has had a strong position in the past is when we picked up businesses that had a historic record in the region. In this case, Linde has been in Bangladesh for many decades and has established that business and channel over those decades. This is something we have done in Bangladesh or in India before, and we expect to rinse and repeat it in Bangladesh. Pulling through our broad set of gas control and equipment products in a market that was only selling consumables. So, we see significant synergies coming through on the growth side as well as operating synergies based on implementing EBX and lean initiatives at the manufacturing plant.

And Bryan, on SUMIG, we're still going through the process of closing that deal, and our current expectation is that we would close it at the end of the fourth quarter.

Thank you. And your next question comes from Chris Dankert with Loop Capital. Your line is now open.

Hey, good morning. Thanks for taking the questions. Maybe we could just start on the cost side a little bit. Encouraging to see the higher implied operating margin for the year here. Could you provide a little more detail? I know you called out some restructuring actions in the deck. Just any detail on what's going on there in the back half of the year?

Why don't I start it off, and then I'll hand it to Kevin. One of the things we've talked about is that we start every year with a set of actions within our business. Some of them associated with EBX, the lean activities we do at the facility. We've talked about our net pricing initiatives. We've talked briefly about improving the efficiency of our businesses using AI and data analytics. The idea for us is that we can be more efficient with a lot less SG&A as a result of some of these actions. What you see reading out in our performance this quarter is exactly the execution on those aspects. Kevin, did you want to add anything?

Yeah. Chris, there are three buckets where we see good positive momentum, and we're ahead of where we expected when we started the year. The first area is in EBX. We've got a strong funnel, and we've been able to execute on a number of projects, which has improved the margins. The commercial excellence program that Shyam talked about earlier is ahead of where we had expected, and we are seeing that mix improve significantly, which is also benefiting our margins. Finally, on restructuring, we had baked in around $10 million of benefits this year from restructuring projects. We've increased that by a further $5 million. That's accelerating a few projects, including one larger project in particular where we're looking at factory consolidation. We believe that we can drive an additional $5 million of benefit before we finish this year.

Got it. And that was actually the follow-up I had here. I was curious about just the factory consolidation. Is it, like, as you framed it, an acceleration of previous plans, or are we expanding to additional locations at this point?

No. We have a long-term strategy in terms of our factory consolidations, and we accelerated one of those projects that we were only planning to start at the end of this year. We're now starting it now, which is driving that additional benefit.

Thank you. And the next question comes from Mig Dobre with Baird again. Your line is now open.

Thank you for taking a follow-up here. Just a quick one for me. Looking at the equipment side of your portfolio, I'm wondering how progress is in North America, specifically as far as rolling out new products, maybe the Renegade VOLT. I remember you talking about having some tailwinds as some of your channel partners are starting to stock this product. So, a quick update there, and I'm wondering if this can still be a source of outgrowth in the back half of this year or maybe even going into '25.

Yeah, we are actually very pleased with how our teams have been performing with the new set of light industrial products that we've launched into the North American market, Mig. We haven't shared exact numbers on it, but what I can tell you is that we monitor it on a monthly basis, and we like what we see. The other aspect for us is that with the new HIP launches that are happening, with WeldCloud, and our digital portfolio in InduSuite, we've actually seen conversions of some of the OEMs to our products on their shop floor as a result of it. We've seen another customer come to us where we've introduced FloCloud, WeldCloud, and our new heavy industrial machinery along with the adaptive welding technology that we had for wind. So, all in all, a lot of excitement on the ESAB side, around process-focused automation, light industrial into the channel. We like our performance in the Americas. We're really proud of how that team has come together, the intensity that they've brought to their sales plans. What I can tell you is the growth bridges in North America look really good, with clear targets, clear customers, and clear plans for share of wallet, along with a great amount of discipline that continues to drive margins forward.

All right. Thank you again.

There are no further questions at this time. I'd like to turn the call back over to Mr. Barbalato. Please go ahead.

Thank you for joining us, and we look forward to speaking to you again next quarter.

This concludes today's conference call. You may now disconnect.