Financial Data and Key Metrics Changes - First quarter sales reached $848 million, with core growth of 1.4%, slightly better than initial guidance [11][5] - Adjusted EBITDA was $187 million, representing a margin of 22.1%, a decrease of 60 basis points year-over-year [13] - Gross margin expanded to 40.7%, exceeding the 40% threshold for the fourth consecutive quarter [13] - Adjusted earnings per share increased by approximately 6% to $0.36 [14] - Free cash flow for the first quarter was an outflow of $19 million, consistent with normal seasonal performance [23] Business Line Data and Key Metrics Changes - In the Power Transmission segment, revenues were $527 million, translating to a core increase of approximately 2% [14] - Automotive replacement channel sales grew mid single digits, while industrial OEM sales experienced a slight decline [15] - Fluid Power segment sales were $320 million, with core sales approximately flat [15][16] - Personal mobility saw over 30% growth, contributing positively to overall performance [12] Market Data and Key Metrics Changes - North America returned to growth with low single-digit core sales growth, driven by mid-teens growth in automotive replacement [18] - EMEA and South America both experienced year-over-year declines [18] - China core sales expanded by 3.5%, with broad-based growth in industrial end markets [20] - Personal mobility growth was robust, particularly in Europe and Asia, with no observed pre-buy activity [62] Company Strategy and Development Direction - The company is focused on mitigating tariff impacts through price increases and operational initiatives [8][26] - Management emphasized the importance of maintaining a strong balance sheet and capital deployment capacity [30] - The company is committed to advancing enterprise initiatives aimed at improving cost structures and mitigating tariff headwinds [29] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing uncertainty in the market due to tariffs but expressed confidence in the team's ability to manage through economic cycles [10][29] - Customer demand in the second quarter has been consistent with initial guidance, though potential risks remain [28] - The company is prepared to implement action plans should demand soften relative to expectations [29] Other Important Information - The company repurchased $13 million of shares during the quarter, with over $100 million remaining under the existing authorization [23] - The net leverage ratio improved to 2.3 times, a slight decrease year-over-year [23] Q&A Session Summary Question: Can you discuss the tariff impact and competitive positioning? - Management expects to offset approximately 75% to 80% of the $50 million tariff impact with price increases, with the remainder offset through operational initiatives [36][38] - The company believes it has a competitive advantage due to its in-region, for-region manufacturing strategy [40] Question: What is the status of internal initiatives and their relation to current trends? - Management reported solid execution on internal initiatives, with progress ahead of schedule contributing to gross margin performance [44] Question: How is demand evolving in different end markets? - Management noted that while automotive builds are expected to decline, the automotive replacement market remains robust [56][58] - Personal mobility has shown strong growth, with no pre-buy activity observed [62] Question: What is the company's approach to pricing and tariff mitigation? - Price increases are expected to be implemented in Q2, with realization impacting Q3 [116] - The company plans to manage compressible costs to protect underlying operating margins [46] Question: Can you provide an update on channel partners and inventory? - Management indicated that channel partners have not shown significant changes in buying behavior, maintaining a balance between sales in and sales out [100]

Company Performance - Gates Industrial (GTES) reported quarterly earnings of $0.36 per share, exceeding the Zacks Consensus Estimate of $0.33 per share, and up from $0.31 per share a year ago, indicating a positive earnings surprise of 9.09% [1][2] - The company achieved revenues of $847.6 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 2.58%, although this represents a decline from year-ago revenues of $862.6 million [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.40, with expected revenues of $892.53 million, and for the current fiscal year, the consensus EPS estimate is $1.44 on revenues of $3.41 billion [8] - The estimate revisions trend for Gates Industrial is mixed, resulting in a Zacks Rank 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [7] Industry Context - Gates Industrial operates within the Zacks Manufacturing - General Industrial industry, which is currently ranked in the bottom 40% of over 250 Zacks industries, indicating potential challenges for stock performance [9] - The performance of Gates Industrial's stock may be influenced by the overall outlook for the industry, as research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [9]

Financial Data and Key Metrics Changes - The first quarter total sales were $848 million, translating to core growth of 1.4%, slightly better than initial guidance [11] - Adjusted EBITDA was $187 million, representing a margin rate of 22.1%, a decrease of 60 basis points year over year [13] - Gross margin expanded to 40.7%, exceeding the 40% threshold for the fourth consecutive quarter [13] - Adjusted earnings per share increased by approximately 6% to $0.36 [14] - Free cash flow for the first quarter was an outflow of $19 million, consistent with normal seasonal performance [23] Business Line Data and Key Metrics Changes - In the Power Transmission segment, revenues were $527 million, reflecting a core increase of approximately 2% [14] - The Fluid Power segment reported sales of $320 million, with core sales approximately flat [15] - Automotive replacement channel sales grew mid-single digits, driven by high single-digit growth in automotive replacement [5][14] - Personal mobility experienced over 30% growth, while agriculture and construction end markets decreased in the mid-single digits [12] Market Data and Key Metrics Changes - North America returned to growth with low single-digit core sales, driven by mid-teens growth in automotive replacement [18] - EMEA and South America both experienced year-over-year declines [18] - China core sales expanded by 3.5%, with industrial end markets growing mid-single digits [20] - East Asia and India posted approximately 5% growth in core sales, supported by automotive replacement and diversified industrial [21] Company Strategy and Development Direction - The company is maintaining its initial 2025 financial guidance, with core revenues expected to range from down 0.5% to up 3.5% relative to 2024 [24] - Actions have been implemented to mitigate tariff impacts, primarily through price increases and operational initiatives [8][26] - The management team is focused on optimizing sourcing and logistics networks to enhance competitiveness [10][29] Management's Comments on Operating Environment and Future Outlook - Management noted ongoing softness in agriculture and construction markets, but strong growth in personal mobility and automotive markets [6][12] - There is increased uncertainty in the market due to tariffs, but customer demand has remained consistent with initial guidance [9][28] - The management team expressed confidence in their ability to navigate economic uncertainties and manage costs effectively [10][29] Other Important Information - The company repurchased $13 million of its shares during the quarter, with over $100 million remaining under the existing authorization [8][23] - The net leverage ratio declined to 2.3 times, a slight improvement year over year [23] Q&A Session All Questions and Answers Question: Can you discuss the tariff impact and competitive positioning? - The company expects to offset the majority of the estimated $50 million tariff impact with price actions and operational initiatives [36][38] - Management believes they are competitively well-positioned due to their in-region, for-region manufacturing philosophy [40][88] Question: What is the status of internal initiatives and their relation to current trends? - The company is ahead of schedule on internal initiatives, which are contributing positively to gross margin performance [44][46] Question: How has demand changed in the end markets? - Demand has generally aligned with expectations, with personal mobility showing robust growth and automotive builds down more than initially anticipated [55][60] Question: What is the update on channel partners and inventory? - There has been no significant change in channel partner behavior, and inventory levels are balanced [99][101] Question: Can you provide insights on the liquid cooling business? - The company is experiencing significant interest in its liquid cooling products, with ongoing testing and validation with new customers [90][92]

Gates Industrial (GTES) Q1 2025 Earnings Call April 30, 2025 09:00 AM ET Speaker0 Thank you for standing by. My name is Greg, and I will be your conference operator today. At this time, I would like to welcome everyone to today's Gates Industrial Corporation Q1 twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. Thank you. I would now like to turn the call over to Rich Kwas, Vice Presi ...

Financial Performance - Net sales reached $848 million, with a core sales growth of 1.4% year-over-year[16, 17] - Adjusted EBITDA was $187 million, resulting in a 22.1% adjusted EBITDA margin[18, 19] - Adjusted earnings per share (EPS) grew by 5.9% year-over-year to $0.36[20, 21] - Free cash flow was negative $19 million due to normal seasonal performance[39] - Net leverage declined slightly year-over-year to 2.3x[41] - Return on invested capital (ROIC) was 22.5%, a decrease of approximately 60 bps year-over-year[42] Segment Performance - Power Transmission saw a core sales growth of 2.1% year-over-year, with adjusted EBITDA of $117 million and a 22.1% adjusted EBITDA margin, down 20 bps year-over-year[24] - Fluid Power had a core sales growth of 0.1% year-over-year, with adjusted EBITDA of $71 million and a 22.0% adjusted EBITDA margin, down 120 bps year-over-year[26] Regional Performance - Greater China experienced a core revenue growth of 3.5%[30] - East Asia & India saw a core revenue growth of 5.3%[30] - North America experienced a core revenue growth of 1.7%[30] Guidance - The company reiterated its 2025 guidance, including core revenue growth between -0.5% and +3.5%, adjusted EBITDA between $735 million and $795 million, and adjusted EPS between $1.36 and $1.52[47]

```markdown [First-Quarter 2025 Financial and Operational Highlights](index=1&type=section&id=First-Quarter%202025%20Financial%20Summary) Gates reported a slight decrease in Q1 2025 net sales to $847.6 million, yet achieved core revenue growth and increased net income, while reiterating full-year guidance Q1 2025 Financial Highlights | Metric | Q1 2025 | Change vs. Q1 2024 | | :--- | :--- | :--- | | Net Sales | $847.6 million | -1.7% | | Core Revenue Growth | +1.4% | N/A | | Net Income (attributable to shareholders) | $62.0 million | +55.0% | | Diluted EPS | $0.24 | +60.0% | | Adjusted Net Income per Diluted Share | $0.36 | +5.9% | | Adjusted EBITDA | $187.3 million | -4.2% | | Adjusted EBITDA Margin | 22.1% | -60 bps | - The CEO highlighted company-wide volume growth supported by **strong performance** in the Auto Replacement and Personal Mobility end markets, along with an **increase in year-over-year gross margin**[3](index=3&type=chunk) - Despite a more uncertain business environment, the company **reiterated its full-year guidance**, citing confidence in its competitive position and 'in-region, for-region' manufacturing strategy[3](index=3&type=chunk) [Segment Performance](index=1&type=section&id=Segment%20Results) In Q1 2025, the Power Transmission segment saw a slight sales decline but achieved positive core growth, while the Fluid Power segment experienced a larger sales decrease and flat core growth. Both segments saw a contraction in their Adjusted EBITDA margins compared to the prior year [Power Transmission Segment](index=1&type=section&id=Power%20Transmission%20Segment%20Results) The Power Transmission segment reported Q1 2025 net sales of $527.2 million, a 1.1% decrease from the prior year, but showed 2.1% core sales growth. Adjusted EBITDA was $116.7 million, with the margin slightly contracting by 20 basis points to 22.1% Power Transmission Q1 2025 Results (USD in millions) | Metric | Q1 2025 | Q1 2024 | % Change | % Core Change | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $527.2 | $532.8 | (1.1%) | 2.1% | | Adjusted EBITDA | $116.7 | $119.0 | (1.9%) | N/A | | Adjusted EBITDA Margin | 22.1% | 22.3% | (20 bps) | N/A | [Fluid Power Segment](index=1&type=section&id=Fluid%20Power%20Segment%20Results) The Fluid Power segment's Q1 2025 net sales were $320.4 million, down 2.9% YoY, with core sales remaining nearly flat at 0.1% growth. Adjusted EBITDA decreased by 7.8% to $70.6 million, and the margin compressed by 120 basis points to 22.0% Fluid Power Q1 2025 Results (USD in millions) | Metric | Q1 2025 | Q1 2024 | % Change | % Core Change | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $320.4 | $329.8 | (2.9%) | 0.1% | | Adjusted EBITDA | $70.6 | $76.6 | (7.8%) | N/A | | Adjusted EBITDA Margin | 22.0% | 23.2% | (120 bps) | N/A | [2025 Full-Year Guidance](index=2&type=section&id=2025%20Guidance) The company reiterated its full-year 2025 guidance, projecting core sales growth between -0.5% and +3.5%, Adjusted EBITDA of $735 million to $795 million, and Adjusted EPS of $1.36 to $1.52 - The company is **maintaining its full-year financial guidance** for 2025[7](index=7&type=chunk) Full-Year 2025 Guidance | Metric | Guidance Range/Value | | :--- | :--- | | Core Sales Growth (YoY) | (0.5%) to +3.5% | | Adjusted EBITDA | $735 million to $795 million | | Adjusted Earnings Per Share | $1.36 to $1.52 | | Capital Expenditures | Approx. $120 million | | Free Cash Flow Conversion | > 90% | [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The consolidated financial statements for Q1 2025 show a year-over-year decrease in net sales but an increase in gross profit and a significant rise in net income. The balance sheet indicates stable total liabilities and growth in total equity. Cash flow from operations turned positive compared to the prior year, though the overall cash position decreased due to investing and financing activities [Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q1 2025, net sales decreased to $847.6 million from $862.6 million YoY. Despite this, gross profit increased to $344.6 million from $330.0 million, and net income attributable to shareholders grew significantly to $62.0 million from $40.0 million in the prior-year period. Diluted EPS rose to $0.24 from $0.15 Q1 Statement of Operations Highlights (USD in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Sales | $847.6 | $862.6 | | Gross Profit | $344.6 | $330.0 | | Operating Income | $124.7 | $116.7 | | Net Income Attributable to Shareholders | $62.0 | $40.0 | | Diluted EPS | $0.24 | $0.15 | [Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 29, 2025, total assets were $6,885.8 million, a slight increase from $6,786.3 million at year-end 2024, with cash and cash equivalents at $640.2 million Balance Sheet Highlights (USD in millions) | Metric | March 29, 2025 | Dec 28, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $640.2 | $682.0 | | Total Current Assets | $2,368.0 | $2,306.0 | | Total Assets | $6,885.8 | $6,786.3 | | Total Liabilities | $3,457.9 | $3,446.0 | | Total Shareholders' Equity | $3,102.3 | $3,023.6 | [Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) In Q1 2025, net cash provided by operating activities was $7.3 million, a significant improvement from a $21.0 million use of cash in Q1 2024. Net cash used in investing activities was $31.0 million, and cash used in financing activities was $24.6 million, primarily due to share repurchases. The quarter ended with a cash balance of $643.1 million, a decrease of $41.7 million during the period Q1 Cash Flow Highlights (USD in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $7.3 | ($21.0) | | Net cash used in investing activities | ($31.0) | ($19.5) | | Net cash used in financing activities | ($24.6) | ($148.9) | | Net decrease in cash | ($41.7) | ($198.3) | | Cash at end of period | $643.1 | $525.7 | [Non-GAAP Financial Measures and Reconciliations](index=7&type=section&id=Non-GAAP%20Financial%20Measures) The company provides non-GAAP measures like Adjusted EBITDA, Adjusted Net Income, and Core Sales to offer a clearer view of underlying performance, with reconciliations showing core sales growth despite reported net sales decline [Reconciliation to Adjusted EBITDA](index=8&type=section&id=Reconciliation%20of%20Net%20Income%20from%20Continuing%20Operations%20to%20Adjusted%20EBITDA) For Q1 2025, Net Income from continuing operations of $68.6 million was reconciled to an Adjusted EBITDA of $187.3 million. Key positive adjustments included depreciation & amortization ($52.2M), net interest and other expenses ($30.9M), and income tax expense ($25.2M). The resulting Adjusted EBITDA margin was 22.1%, down from 22.7% in the prior year Reconciliation to Adjusted EBITDA (USD in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income from continuing operations | $68.6 | $46.2 | | Adjustments (Net) | $118.7 | $149.4 | | **Adjusted EBITDA** | **$187.3** | **$195.6** | | Net Sales | $847.6 | $862.6 | | **Adjusted EBITDA Margin** | **22.1%** | **22.7%** | [Reconciliation to Adjusted Net Income](index=9&type=section&id=Reconciliation%20of%20Net%20Income%20Attributable%20to%20Shareholders%20to%20Adjusted%20Net%20Income) Q1 2025 GAAP Net Income attributable to shareholders of $62.0 million was reconciled to an Adjusted Net Income of $93.9 million. Major positive adjustments included amortization of intangible assets ($28.3M) and share-based compensation ($6.1M). This resulted in an Adjusted Net Income per diluted share of $0.36, an increase from $0.34 in Q1 2024 Reconciliation to Adjusted Net Income (USD in millions) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income attributable to shareholders | $62.0 | $40.0 | | Adjustments (Net) | $31.9 | $51.8 | | **Adjusted Net Income** | **$93.9** | **$91.8** | | **Adjusted Net Income per diluted share** | **$0.36** | **$0.34** | [Reconciliation to Core Sales Growth](index=10&type=section&id=Reconciliation%20of%20Net%20Sales%20to%20Core%20Sales%20Growth) The company reconciled a reported total net sales decline of 1.7% to core sales growth of 1.4% for Q1 2025. The difference was primarily due to a negative impact from currency exchange rates totaling $26.7 million. The Power Transmission segment achieved 2.1% core growth, while the Fluid Power segment had 0.1% core growth Q1 2025 Net Sales vs. Core Sales Growth | Segment | Net Sales Decline | Core Sales Growth | | :--- | :--- | :--- | | Power Transmission | (1.1%) | 2.1% | | Fluid Power | (2.9%) | 0.1% | | **Total** | **(1.7%)** | **1.4%** | ```

Company Announcement - Gates Industrial Corporation plc has rescheduled its first-quarter 2025 webcast and conference call from 10 a.m. Eastern time to 9 a.m. Eastern time on April 30, 2025 [1] - The access information for the conference call remains unchanged, with an audio replay available from approximately 1:00 p.m. Eastern time on April 30, 2025, until 11:59 p.m. Eastern time on May 7, 2025 [1] Company Overview - Gates is a global manufacturer specializing in innovative, highly engineered power transmission and fluid power solutions [2] - The company offers a broad portfolio of products to diverse replacement channel customers and OEMs, participating in various sectors of industrial and consumer markets [2] - Gates' products are essential in a wide range of applications across different end markets, including harsh industries and everyday consumer applications, and are sold in over 130 countries [2]

Company Overview - Gates Industrial Corporation plc (GTES) shares increased by 15.3% to $17.94 in the last trading session, following a 20.2% loss over the previous four weeks [1] - The stock's rally is attributed to President Trump's announcement of a 90-day pause on tariffs for most countries, aimed at stabilizing markets and addressing global trade concerns [1] Earnings Expectations - Gates Industrial is expected to report quarterly earnings of $0.33 per share, reflecting a year-over-year increase of 6.5% [2] - Revenue projections for the upcoming report are $826.29 million, which is a decrease of 4.2% compared to the same quarter last year [2] Market Trends - Trends in earnings estimate revisions are strongly correlated with near-term stock price movements, indicating the importance of monitoring these changes [3] - The consensus EPS estimate for Gates Industrial has remained unchanged over the last 30 days, suggesting that the stock's price movement may not sustain without earnings estimate revisions [4] Industry Context - Gates Industrial is part of the Zacks Manufacturing - General Industrial industry, where another company, Nordson (NDSN), saw an 11.8% increase in its stock price, closing at $187.29, despite a -18.7% return over the past month [4] - Nordson's consensus EPS estimate has also remained unchanged at $2.36, with a year-over-year change of 0.9% [5]

DENVER, April 8, 2025 /PRNewswire/ -- Gates Industrial Corporation plc (NYSE:GTES) will issue its first-quarter earnings release before the market opens on Wednesday, April 30, 2025. Management will host a webcast and conference call on the same day at 10:00 a.m. Eastern time to discuss Gates Industrial's financial results. The conference call can be accessed as follows: By dialing (888) 414-4601 (domestic) or +1 (646) 960-0313 (international) and requesting the Gates Industrial Corporation First-Quarter 2 ...

Core Insights - Gates has launched the Data Master MegaFlex, a large-diameter cooling hose designed for high-density digital infrastructure, expanding its data center product portfolio [1][5] - The new hose is engineered for high-flow liquid cooling systems, addressing the thermal loads of high-density server environments [2][4] - The Data Master MegaFlex features a significantly tighter minimum bend radius, allowing for easier installations and greater design flexibility compared to traditional hoses [3] Product Features - The Data Master MegaFlex is available in sizes ranging from 1.25" to 2", facilitating higher-volume and faster coolant flow [4] - It is constructed with a peroxide-cured EPDM tube, ensuring compatibility with various coolant types and supporting system longevity [4] - The hose is designed to minimize performance degradation over time, which is crucial for liquid-cooled data centers [4] Company Commitment - Gates emphasizes its commitment to innovation in data center cooling solutions, positioning itself as a trusted partner for next-generation data center infrastructure [5] - The Data Master MegaFlex will be available starting April 2025, indicating the company's proactive approach to meet market demands [5]