Turning to slide 3, we achieved solid results led by record quarterly sales and adjusted EPS performance while also navigating heightened operating complexity from geopolitics and evolving trade negotiations. We remained agile in addressing short-term dynamics while staying customer-focused, investing in long-term growth, and reimagining how work gets done. In the quarter, we held our adjusted operating income margin steady with prior year. While we targeted a slight margin improvement, our 10% higher price did not fully offset inflation in the quarter.
We continue to invest in long-term growth through CapEx and R&D and return cash to shareholders through both dividends and share repurchases. Turning to slide 4 to spend a few minutes on demand trends. These same end market drivers, along with an increase in capital spending from off-highway customers, supported modest automation growth in the Americas in the quarter as well. We have been encouraged by the continued acceleration in both equipment and automation order rates and backlog levels in the Americas through April.
This should support modest volume growth in the Americas Welding segment starting in the Q2, with further improvement in the back half of the year if conditions are sustained. Internationally, we also saw a broad improvement in sales from European customers, with organic sales pivoting to growth across Northern, Eastern, and Central Europe and in Turkey. Pivoting to end market performance, we continue to see 3 of our 5 end markets achieving flat to higher organic sales growth in the quarter. Most notable is the high 30% growth rate in general fabrication, which represented accelerated factory and fabrication activity in the Americas, as well as in data center and HVAC projects.
| Metric | Period | Current guidance |
|---|---|---|
| Full-year net sales growth | FY2026 | High single-digit % range, incorporating new price actions (Raised) |
| Organic sales mix | FY2026 | Three-quarters price (mid-single-digit %) and low-single-digit % volume (Revised) |
| Americas Welding new pricing actions | Starting Q3 2026 | 150 basis points per quarter run rate, effective early May (New) |
| Quarterly SG&A run rate | Balance of FY2026 | Approximately $250 million per quarter (New) |
| Middle East conflict sales impact | Per quarter while conflict persists | $8 million-$10 million, split evenly between Americas and International Welding (New) |
| Incremental operating margin, interest, tax, capex, cash conversion | FY2026 | Maintained at mid-20% incremental margin with other assumptions unchanged (Maintained) |
| Metric | YoY | Note |
|---|---|---|
| Total sales | +approximately 12% to $1.121 billion | ~10% higher price, 2% favorable FX, and 1.6% Alloy Steel benefit, offset by 2.6% lower volumes |
| Adjusted EPS | +16% to $2.50 | Higher sales and operating income plus $0.04 FX and $0.05 share-repurchase benefits |
| Americas Welding sales | +approximately 8% | Nearly 8% higher price and 1% favorable FX, with volume declines narrowing to 40 bps on accelerating orders |
| International Welding sales | +approximately 4% | Favorable FX and strong Alloy Steel sales offset by 10% lower volumes from automation and Middle East conflict |
| Harris Products Group sales | +42% | 41% higher price from actions to mitigate record-high silver and copper costs, with narrowing volume compression |
| Global automation sales | $210 million versus $215 million prior year | Compression from international markets on a challenging prior-year comparison, with modest Americas growth |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Americas demand recovery | Early signs of recovery, awaiting consistency | Improving sales and order momentum through April with consumables up low double digits, supporting cautious optimism | Improving |
| Automation | Strong Q4 orders/backlog expected to drive 2026 growth from Q2 | Modest Americas growth in Q1; expected to turn to modest growth exiting Q2 with broad second-half volume improvement | Improving |
| Price-cost position | Neutral target; price weighted to first half | Unfavorable 90 bps in Q1 on input cost inflation; new May price actions expected to restore neutral by Q3 | Temporarily unfavorable |
| European demand | Challenged; recovery not assumed | Broad uptick to organic growth, but concern it may reflect pre-buying ahead of pricing and carbon border regulations | Cautiously improving |
| Middle East conflict | Not a prior factor | New headwind suspending some customer activity, estimated $8M-$10M per quarter impact while it persists | New headwind |