Company Overview - Gates Industrial Corporation plc is a global manufacturer specializing in innovative, highly engineered power transmission and fluid power solutions [2] - The company offers a broad portfolio of products catering 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] Upcoming Earnings Release - Gates Industrial will issue its second-quarter earnings release before the market opens on July 30, 2025 [1] - Management will host a webcast and conference call on the same day at 11:30 a.m. Eastern time to discuss the financial results [1] - An audio replay of the conference call will be available from approximately 2:30 p.m. Eastern time on July 30, 2025, until 11:59 p.m. Eastern time on August 6, 2025 [1][3]

Company Overview & Strategy - The company aims for a core revenue growth of 3-5% through the cycle, targeting twice the rate of industrial production in the mid-term[11] - The company expects to achieve an Adjusted EBITDA margin of 24.5% by 2026 through various enterprise initiatives[11] - In 2024, the company's revenue was $3.4 billion, with an Adjusted EBITDA of $761 million and Free Cash Flow of $273 million[16] Segment Breakdown - Power Transmission accounted for $2.1 billion (62%) of sales in 2024, while Fluid Power accounted for $1.3 billion (38%) of sales[21, 30] - In Power Transmission, 34% of sales are First Fit and 66% are Replacement[23] - In Fluid Power, 30% of sales are First Fit and 70% are Replacement[32] Financial Targets & Capital Allocation - The company is targeting approximately 100% Free Cash Flow conversion during the 2024-2026 period[89] - Since mid-2020, the company has executed approximately $1.2 billion in share repurchases and debt paydown[91] - The company's Net Leverage Ratio was 2.2x as of the end of 2024[91, 96] - The company targets Net Leverage between 10x to 20x by 2026[94] - The company projects Adjusted EPS to be between $1.90 and $2.30 by 2026[110]

Gates Industrial (GTES) FY Conference Summary Company Overview - **Company**: Gates Industrial Corporation (GTES) - **Conference Date**: May 21, 2025 Key Industry Insights - **Automotive Replacement**: Strong performance noted, particularly in North America and China, driven by new customer acquisitions and high used car sales prices [2][9] - **Mobility Sector**: Experienced double-digit growth, especially in e-bikes, with a positive outlook for continued strength [3][4] - **Industrial Recovery**: Gradual recovery observed, particularly in Asia, but tempered expectations for growth due to global trade uncertainties [6][12] - **Geographical Performance**: - **North America**: Positive trends in automotive replacement; industrial side expected to be challenging [11] - **EMEA**: Slight decline of 1% in Q1, but mobility business expected to provide tailwinds [3][11] - **Asia**: Positive core growth in China and India, with signs of industrial recovery [12][14] Financial Performance and Guidance - **Q1 Performance**: Exceeded expectations with a 1.5% organic growth; Q2 guidance remains flattish [1][5] - **Full Year Guidance**: Targeting approximately 1.5% organic growth for the year, with expectations for acceleration in the second half [17][21] - **Pricing Strategy**: Implemented $40 million in price increases to offset tariffs, anticipating some demand headwinds [20][27] Operational Challenges and Strategies - **Inventory Levels**: Destocking in agriculture and construction sectors is nearing completion, with confidence in distribution inventory levels [22][23] - **Tariff Impact**: Ongoing adjustments to pricing strategies in response to tariffs, with a focus on maintaining margin neutrality [29][34] - **Debt Management**: Aiming to reduce gross debt below $2 billion while balancing stock buybacks and potential M&A opportunities [46][48] M&A and Growth Opportunities - **M&A Strategy**: Open to strategic acquisitions that align with growth objectives, particularly in underrepresented segments or geographies [49][52] - **Data Center Market**: Targeting $100 to $200 million in incremental revenue by 2027, focusing on organic growth through existing product lines [41][42] Conclusion - **Outlook**: Gates Industrial remains optimistic about its growth trajectory, particularly in automotive replacement and mobility sectors, while navigating challenges in industrial recovery and global trade dynamics. The company is committed to strategic pricing, operational efficiencies, and exploring M&A opportunities to enhance its market position [35][54]

Core Insights - Gates Industrial (GTES) reported revenue of $847.6 million for Q1 2025, a year-over-year decline of 1.7%, with an EPS of $0.36 compared to $0.31 a year ago [1] - The revenue exceeded the Zacks Consensus Estimate of $826.29 million, resulting in a surprise of +2.58%, while the EPS also surpassed the consensus estimate of $0.33 by +9.09% [1] Financial Performance - Net Sales in Fluid Power amounted to $320.40 million, slightly below the two-analyst average estimate of $321.85 million, reflecting a year-over-year change of -2.9% [4] - Net Sales in Power Transmission reached $527.20 million, exceeding the two-analyst average estimate of $504.44 million, with a year-over-year change of -1.1% [4] - Adjusted EBITDA for Fluid Power was reported at $70.60 million, below the average estimate of $72.10 million [4] - Adjusted EBITDA for Power Transmission was $116.70 million, surpassing the average estimate of $109.91 million [4] Stock Performance - Gates Industrial shares have returned -3.2% over the past month, compared to a -0.2% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

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]

Financial Data and Key Metrics Changes - First quarter total sales were $848 million, with core growth of 1.4%, slightly better than guidance. Total revenues were down just under 2% due to unfavorable foreign currency effects [10][12] - Adjusted EBITDA was $187 million, representing a margin rate of 22.1%, a decrease of 60 basis points year over year. Gross margin expanded to 40.7%, exceeding the 40% threshold for the fourth consecutive quarter [12][30] - Adjusted earnings per share increased by approximately 6% to $0.36, driven by lower interest expense and a lower share count [13][22] Business Line Data and Key Metrics Changes - In the Power Transmission segment, revenues were $527 million, translating to a core increase of approximately 2%. Automotive replacement sales grew mid single digits, while industrial OEM sales experienced a slight decline [13][15] - The Fluid Power segment generated sales of $320 million, with core sales approximately flat. Automotive replacement demand grew mid-teens, but industrial OEM sales declined low double digits [14][15] 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. EMEA and South America both saw declines year over year [17][19] - China experienced core sales growth of 3.5%, with broad-based growth in industrial end markets. East Asia and India posted approximately 5% growth in core sales [20][21] Company Strategy and Development Direction - The company is maintaining its initial 2025 financial guidance, anticipating core revenues to range from down 0.5% to up 3.5% relative to 2024. Adjusted EBITDA is forecasted to be between $735 million and $795 million [24][25] - The company is focused on mitigating tariff impacts through price increases and operational initiatives, with an estimated exposure of $50 million for 2025 [26][27] 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 end markets. They are prepared to manage costs closely and take additional actions as needed [6][9][30] - There is increased uncertainty in the market compared to the start of the year, but customer demand has remained consistent with initial guidance [8][30] Other Important Information - The company repurchased $13 million of its shares during the quarter, with over $100 million remaining under the existing authorization [7][23] - Free cash flow for the first quarter was an outflow of $19 million, consistent with normal seasonal performance [23] Q&A Session Summary Question: Can you discuss the tariff impact and competitive positioning? - Management expects to offset the tariff impact dollar for dollar, with minimal impact in Q2 and a close match in Q3 and Q4. They feel competitively positioned due to their in-region, for-region manufacturing strategy [35][39] Question: What is the status of internal initiatives and their relation to tariffs? - Internal initiatives are progressing well, with solid execution in the eightytwenty activities. Management is focused on managing compressible costs to protect operating margins [42][44] Question: How is demand evolving in various end markets? - Demand in personal mobility has been strong, while automotive builds are expected to decline. The company anticipates a robust replacement market despite challenges in energy and construction sectors [55][61] Question: What is the company's approach to pricing and manufacturing footprint? - Pricing increases are being implemented globally, with a focus on offsetting tariff impacts. The company has a substantial manufacturing footprint in the U.S. and Mexico, allowing flexibility in sourcing [86][88]

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%** | ```