DENVER, April 10, 2024 /PRNewswire/ -- Gates Industrial Corporation plc (NYSE: GTES) will issue its first-quarter earnings release before the market opens on Wednesday, May 1, 2024. 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 20 ...

Financial Performance - The company reported revenue of $3.57 billion, a 1% year-over-year increase [7] - Adjusted EBITDA reached $747 million, representing a 10% year-over-year growth [7] - Gross margin improved to 38.1%, a 290 basis points increase [7] - Adjusted EPS expanded by 19% to $1.36 compared to 2022 [7] - Free cash flow conversion was 110%, a 55% increase [7] Q4 2023 Highlights - Q4 2023 net sales were $863.3 million [86] - Adjusted EBITDA margin for Q4 2023 was 21.5%, a 290 basis points year-over-year expansion [21] - Free cash flow conversion for Q4 2023 was 158% [21] - Net leverage ratio declined by 0.5x to 2.3x [7] Segment Performance - Power Transmission segment net sales for the year were $2.19 billion with an adjusted EBITDA margin of 21.0% [28] - Fluid Power segment net sales for the year were $1.38 billion with an adjusted EBITDA margin of 20.8% [31]

Financial Data and Key Metrics Changes - Fourth quarter total revenues were $863 million, down nearly 5% year-over-year on a core basis, primarily due to prior year's Q4 seasonality anomaly [9][10] - Adjusted EBITDA was $186 million, with an adjusted EBITDA margin of 21.5%, representing a year-over-year expansion of 290 basis points [10][30] - Free cash flow conversion was 110% for the year, with a net leverage ratio reduction of 0.5 turns year-over-year [7][15] Business Line Data and Key Metrics Changes - The Automotive segment saw mid-single-digit growth, while On-Highway revenues expanded over 40% year-over-year [14][34] - The Fluid Power segment generated revenues of $331 million, with core revenues falling about 5% year-over-year [35][36] - Industrial replacement revenues declined low single digits, while industrial first-fit experienced a more significant decline [12][34] Market Data and Key Metrics Changes - In China, Industrial First Fit core revenue grew double digits year-over-year, while global industrial replacement channel core revenues declined low single digits [33][77] - North America and EMEA experienced mid-single-digit declines, with automotive growth in EMEA countered by a significant decrease in industrial [36][118] - South America grew mid-single digits, benefiting from strength in automotive, energy, and on-highway markets [138] Company Strategy and Development Direction - The company is focused on executing organically driven enterprise initiatives to enhance performance and shareholder returns over a multiyear horizon [7][19] - Investments are being made in innovation, material science, and process engineering to improve competitive positioning [19][40] - The company anticipates a gradual improvement in demand trends in the second half of 2024, despite a pragmatic view of the first half [16][143] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about midterm growth prospects in the Personal Mobility market, despite current inventory challenges [11][44] - The company expects about half of its end markets to decline year-over-year in 2024, with a focus on managing through a challenging environment [16][43] - Management highlighted strong cash generation capabilities and a commitment to debt reduction while considering capital deployment options [88][106] Other Important Information - The company authorized a new stock repurchase plan of up to $100 million, emphasizing a focus on debt reduction and profitability improvement [140][88] - The upcoming Capital Markets Day is scheduled for March 11, where further details on enterprise initiatives will be shared [41][130] Q&A Session Summary Question: Why are half of the end markets expected to be down in 2024? - Management indicated that the decline is driven by normalization in demand after a strong run in previous years, particularly in On-Highway markets [22][23] Question: What is the expected EBITDA contribution from the first half of the year? - Management expects a more balanced split between the first and second halves of the year, with gradual improvement anticipated [26][70] Question: How does the company view the capital deployment plan for this year? - The focus remains on debt reduction and profitability improvement, with stock buybacks also being a consideration [88][106] Question: What is the outlook for the China market? - Management expressed optimism about the long-term prospects in China, noting a steady recovery in On-Highway and construction equipment [77][78] Question: How is the company approaching M&A opportunities? - The company has a strong pipeline of opportunities but is currently prioritizing debt reduction and share buybacks due to undervalued stock [124][125]

Financial Performance - For Fiscal 2023, net sales were $3,570.2 million, a slight increase of 0.5% compared to $3,554.2 million in Fiscal 2022, primarily driven by a $200.4 million benefit from pricing[206]. - Gross profit for Fiscal 2023 increased by 8.7% to $1,358.9 million, with a gross profit margin of 38.1%, up 290 basis points from the prior year[210]. - Adjusted EBITDA for Fiscal 2023 was $747.0 million, with an adjusted EBITDA margin of 20.9%[206]. - For Fiscal 2023, the company reported an Adjusted EBITDA of $747.0 million, a 9.8% increase from $680.6 million in the prior year, with an Adjusted EBITDA margin of 20.9%, up 180 basis points[228]. - Power Transmission net sales for Fiscal 2023 were $2,191.2 million, a 0.8% increase from $2,173.7 million in Fiscal 2022, driven by a $116.3 million benefit from pricing[229]. - Fluid Power net sales decreased by 0.1% to $1,379.0 million in Fiscal 2023, primarily due to lower volumes, although pricing provided an $84.1 million benefit[232]. - Adjusted EBITDA for the year ended December 30, 2023, was $747.0 million, up from $680.6 million in the previous year[265]. - Core revenue for Power Transmission increased by $36.4 million (1.7%), while Fluid Power decreased by $11.5 million (-0.8%) on a core basis[269]. Sales Channels - Sales into replacement channels accounted for approximately 64% of total net sales in Fiscal 2023, while first-fit sales accounted for about 36%[200][201]. - Automotive replacement sales increased by 6.1%, and automotive first-fit sales rose by 7.5% during Fiscal 2023, with significant growth in EMEA, Greater China, and South America[208]. Expenses and Costs - Cost of sales decreased by 4.0% to $2,211.3 million in Fiscal 2023, attributed to lower volumes and improved inbound freight costs[209]. - Selling, general and administrative expenses rose to $882.2 million in Fiscal 2023, an increase of $28.5 million primarily due to higher labor and benefits expenses[211]. - Interest expense increased by $24.4 million to $163.2 million in Fiscal 2023, mainly due to higher interest rates on Dollar Term Loans[217]. Cash Flow and Debt - The company experienced a cash flow from operating activities of $481.0 million in Fiscal 2023, compared to $265.8 million in the prior year, driven by improved trade working capital movement[239]. - Long-term debt as of December 30, 2023, was $2,451.5 million, slightly down from $2,463.0 million as of December 31, 2022[242]. - As of December 30, 2023, net debt decreased by $161.7 million to $1,751.3 million, driven by cash provided by operating activities of $481.0 million[252]. - Total cash and cash equivalents increased to $720.6 million as of December 30, 2023, compared to $578.4 million as of December 31, 2022[257]. - The principal amount of debt was $2,471.9 million as of December 30, 2023, compared to $2,491.4 million as of December 31, 2022[273]. Tax and Liquidity - The effective tax rate for Fiscal 2023 was 9.9%, up from 5.8% in Fiscal 2022, influenced by various tax benefits and expenses[221]. - The company does not anticipate any material long-term deterioration in its overall liquidity position in the foreseeable future[238]. - The company had a total committed borrowing headroom of $470.3 million as of December 30, 2023, in addition to cash balances[253]. Market Outlook and Risks - The company anticipates a potential rebound in demand later in 2024, despite expected inventory de-stocking and slower demand in the first half of the year[205]. - The company continues to monitor macroeconomic and geopolitical conditions that may impact operations, particularly in light of global conflicts and supply chain challenges[203][204]. - The company is exposed to foreign currency exchange risk, particularly with earnings and cash balances denominated in euros and other currencies when translated to U.S. dollars[305]. Share Repurchase and Valuation - The company paid $251.7 million for share repurchases in Fiscal 2023, an increase from $175.9 million in the prior year[241]. - No goodwill impairments were recognized during Fiscal 2023, as the fair values exceeded carrying values for both reporting units[288]. - The company recorded a pre-tax charge of $11.4 million related to a customer's Chapter 11 bankruptcy proceedings during Fiscal 2023[267]. Financial Instruments - The company executed a USD to Chinese Yuan fixed-to-fixed cross currency swap with a notional principal amount of ¥1,784.0 million during Fiscal 2023[306]. - The company uses interest rate derivatives to manage exposure to interest rate movements, with notional principal amounts of $870.0 million and $385.0 million maturing in June 2025 and November 2027, respectively[309].

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission file number 001-38366 Gates Industrial Corporation plc (Exact Name of Registrant as Specified in its Charter) England and W ...

Financial Data and Key Metrics Changes - Total revenues for Q3 2023 were $873 million, reflecting a reported growth of 1.4% and a slight decline in core growth year-over-year [16][22] - Adjusted EBITDA was $189 million, with an adjusted EBITDA margin of 21.7%, which is approximately 110 basis points higher than the same quarter last year [17][127] - Free cash flow for Q3 was approximately $90 million, representing about 96% conversion of adjusted net income, setting the company on track to achieve over 100% free cash flow conversion for the year [5][132] - The net leverage ratio decreased to 2.6x, a 0.6 turn reduction compared to the prior year [21][30] Business Line Data and Key Metrics Changes - In the Power Transmission segment, revenues were $536 million with core growth of just over 1% year-over-year [7] - The Fluid Power segment generated revenues of $337 million, with core revenue declining about 3% year-over-year [8] - Automotive experienced mid-single-digit core growth across both replacement and first-fit channels, with replacement growing slightly stronger [6][7] Market Data and Key Metrics Changes - EMEA region led core revenue performance with an increase of about 4%, driven by double-digit growth in automotive and over 30% growth in energy [9] - Demand in China was softer than expected, with industrial replacement revenues declining more than 20% year-over-year on a core basis [4][131] - North America core revenues decreased approximately 2% year-over-year, with declines in Personal Mobility and Agriculture, both of which saw double-digit decreases [34] Company Strategy and Development Direction - The company is focused on enhancing service, productivity levels, and working capital efficiencies through enterprise-wide supply chain initiatives [39] - There is an ongoing evaluation of restructuring projects to optimize operational footprint and organizational structure, with plans to provide more details in 2024 [39] - The company aims to reduce its net leverage ratio below 2x and is committed to generating robust cash flows to support this goal [48][84] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for growth in the Personal Mobility sector once the inventory destocking issues are resolved [51] - The company anticipates that industrial markets may stabilize in the latter half of 2024, despite current weaknesses [55] - Management acknowledged the mixed performance in global industrial markets, with positive growth in energy and On-Highway sectors, but declines in Personal Mobility and Diversified Industrial [32][34] Other Important Information - The company raised its full-year adjusted EBITDA guidance to a midpoint of $730 million, reflecting a $5 million increase from prior guidance [22][128] - The adjusted earnings per share for the quarter was $0.35, up 13% year-over-year, primarily driven by higher operating income [122] Q&A Session Summary Question: Can you provide more color on Power Transmission margin and price versus cost outlook? - Management indicated that they expect a correction in gross margin headwinds as supply chain normalization continues, with a mix of tailwinds and headwinds affecting margins [44][45] Question: How do you view the impact of inventory destocking on your business? - Management noted substantial destocking in the Personal Mobility space, which is expected to continue into the first half of 2024 [64] Question: What is the outlook for the Fluid Power business given the mixed signals from large OEMs? - Management acknowledged weakness in agriculture and diversified industrials but expressed optimism about the aftermarket business, which is more resilient [74] Question: How do you see the impact of the auto strike on your business? - The company has seen some weakness in October due to the strike but anticipates recovery to pre-strike output levels [111] Question: What are the expectations for capital expenditures moving forward? - Management indicated that capital expenditures are expected to remain within historical ranges, with flexibility for new projects as needed [102]

Financial Performance - Net sales reached $936 million[34], with a core growth of approximately 4% year-over-year[6, 32, 34] - Adjusted EBITDA was $197 million[40], resulting in a 21.1% adjusted EBITDA margin[40] - Adjusted earnings per share (EPS) stood at $0.36[9, 40], an increase from $0.32 in Q2 2022[3, 9] - Free cash flow was $116 million[10, 57], representing a 114% conversion rate[16, 58] Segment Results - Power Transmission net sales were $573.9 million[65], while Fluid Power net sales amounted to $362.4 million[65] - Power Transmission adjusted EBITDA was $119 million with a 20.7% margin[65], and Fluid Power adjusted EBITDA was $78.3 million with a 21.6% margin[65] Regional Performance - Greater China experienced a revenue increase of 28%[52] - EMEA (Europe, Middle East, and Africa) saw a revenue increase of 9%[52] Capital Allocation and Balance Sheet - The company returned $250 million to shareholders through the repurchase of approximately 21.9 million shares[32] - Net leverage ratio decreased to 2.8x[39, 70]

Company Participants Conference Call Participants Operator I would now like to turn the call over to Vice President of Investor Relations, Rich Kwas. Good morning, and thank you for joining us on our first quarter 2023 earnings call. I'll briefly cover our nonGAAP and forward-looking language before passing the call over to our CEO, Ivo Jurek; who will be followed by Brooks Mallard, our CFO. On this call, we will refer to certain non-GAAP financial measures that we believe are useful in evaluating our perfo ...

The information in this presentation is as of December 31, 2022 unless otherwise noted. SEGMENT CHANNEL 20% 5% 9% 31% 8% 21% 6% EMEA 26% China 10% EA&I 10% SA 5% NA 49% Power Power $1.4B Transmission $2.2B First-Fit (OEM) 37% Replacement 63% GEOGRAPHY END MARKET Diversified Industrial Personal Mobility Auto Auto OEM Replacement On-Highway Off-Highway Energy & Resources Fluid ▪ Maintenance Free ▪ Geographic Expansion $0.96 $0.70 $1.14 2019 2020 2021 2022 $1.37 | --- | --- | |--------------------------------- ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______ Commission file number 001-38366 Gates Industrial Corporation plc (Exact Name of Registrant as Specified in its Charter) Indicate by chec ...