ESAB Corporation (NYSE:ESAB) Q4 2022 Earnings Call Transcript

Mig Dobre: I want to follow up on this price discussion. One of the things that we’re consistently hearing is that lower steel costs are starting to impact many of our corporate company P&L. So I guess I’m curious how you see that dynamic playing through to the consumable portion of your business? If there’s any difference between first half and second half of ’23 and the way you kind of framed your pricing outlook? And if you are able to hold price positive, what gives you that ability in an environment in which steel prices that retrench with it ?

Shyam Kambeyanda: Yes. Mig, great to hear from you. So let me start by saying, so we have seen steel prices abate a bit but they are, for the most part, been stable. And in some regions, there’s still some amount of volatility and inflation on steel prices. So it’s not a broad-based retreat on steel prices across the globe. And to answer the second part of your question which was, hey, in the past, what we’ve had is the ability to be able to hold on to price as commodities have abated. And that is, again, our intention this year. So far, the market continues to be rational. And obviously, our intention is to hold on to as much of that price on the way down as we possibly can. On the point around whether we see the second half, let me hand it over to Kevin and he can sort of talk to you how we’ve sort of planned our pricing, at least in the guidance for the second half.

Kevin Johnson: Yes. I mean in terms of comps in the first quarter in the first half of the year, you’ll expect higher price year-over-year. The second half of the year, we are expecting to go for some price but there will be less price in the second half of the year. I think the thing that we’ve proven out over the last few years is no matter what happens on the inflation side, we’ll respond to that with price. We have extremely strong processes today within the business. And regardless if we do see more inflation, we’ll go for more price. If we do see inflation abate , we’ll try to hold on to as much price as we can on the way down.

Shyam Kambeyanda: And then to answer a bigger piece of your question when you talked about how is it specifically impacting our consumer business. What we find is that there’s other inflation that’s out there, some of it associated with energy, some of it associated with the indirect pieces of it that allows us to continue to hold on to some of the price in spite of some of the steel or raw material costs, as you talked about going down. We see — we’ve always liked the neighborhood that we’re in on that front, Mig and I know you and I have talked about that in the past. And so we continue to see the opportunity to be able to hold on and continue to push price into the market in case there’s inflation-related activity out there.

Mig Dobre: Okay. Understood. If I may follow up then with a question on volume in your EMEA and APAC segment, 7% and frankly, this was a lot better than what I was guessing. Can we get a little more color here on — you talked about Middle East and India being strong, maybe what those regions contributed to this number? And maybe how Europe has progressed?