Gates(US:GTES)2025-02-06 13:06Financial Performance - Fourth-quarter net sales were $829.4 million, a decrease of 3.9% compared to $863.3 million in the prior-year quarter, primarily due to lower volume[5]. - Full-year 2024 net sales were $3,408.2 million, representing a 4.5% decline from $3,570.2 million in the prior year, driven by lower volume and unfavorable foreign currency[7]. - Fourth-quarter net income attributable to shareholders was $36.6 million, or $0.14 per diluted share, down from $62.9 million, or $0.24 per diluted share, in the prior-year quarter[8]. - Net income attributable to shareholders for the year ended December 28, 2024, was $194.9 million, down 16.3% from $232.9 million in 2023[30]. - Earnings per share from continuing operations for the year ended December 28, 2024, was $0.75, a decrease of 12.8% compared to $0.86 in 2023[30]. - For the three months ended December 28, 2024, net income from continuing operations was $41.2 million, compared to $69.2 million for the same period in 2023, reflecting a margin of 5.0%[42]. Adjusted EBITDA - Adjusted EBITDA for the fourth quarter was $180.8 million, with a margin of 21.8%, compared to $185.8 million in the prior-year quarter[11]. - Full-year 2024 adjusted EBITDA was $761.1 million, or 22.3% of net sales, an increase from $747.0 million, or 20.9% of net sales, in the prior year[12]. - Adjusted EBITDA for the three months ended December 28, 2024, was $180.8 million, with an Adjusted EBITDA margin of 21.8%, compared to $185.8 million and 21.5% in the prior year[42]. Cash Flow and Capital Expenditures - The company reported a net cash provided by operating activities of $379.6 million for the year ended December 28, 2024, down from $481.0 million in 2023[34]. - Capital expenditures for 2025 are projected to be approximately $120 million[24]. - Free Cash Flow is utilized to measure cash generation, representing net cash provided by operations less capital expenditures[39]. Debt and Stock Repurchase - The company repurchased $175 million of its stock and reduced debt levels during 2024[4]. - As of December 28, 2024, the company had total cash and cash equivalents of $682.0 million and total outstanding debt of $2.4 billion[22]. - Total liabilities decreased to $3,446.0 million as of December 28, 2024, from $3,710.6 million as of December 30, 2023[32]. Sales Growth and Projections - For 2025, the company anticipates core sales growth in the range of (0.5%) to +3.5% year-over-year[24]. - The company expects adjusted EBITDA for 2025 to be between $735 million and $795 million[24]. - Core sales for the three months ended December 28, 2024, were $841.1 million, reflecting a decline of $22.2 million or 2.6% on a core basis[50]. - Core sales for the year ended December 28, 2024, were $3,444.6 million, representing a decline of $125.6 million or 3.5% on a core basis[50]. Risks and Challenges - The company is facing risks related to international operations, supply chain challenges, and market acceptance of new products, which may impact future performance[27]. - The effective tax rate for the three months ended December 28, 2024, was impacted by net discrete tax expenses of $31.7 million, primarily due to changes in tax rates and law changes[48]. Other Financial Items - The company recognized a deconsolidation loss upon loss of control of the Russian subsidiary as of September 28, 2024[48]. - Transaction-related expenses included advisory fees and costs associated with major corporate transactions, impacting overall financial performance[48]. - The company recorded a pre-tax charge related to a customer's bankruptcy proceedings, reflecting estimated recovery from outstanding accounts receivable[48]. - Cybersecurity incident expenses incurred due to a malware attack included legal and consulting costs, with some potential offsets from insurance recoveries[48]. - Interest paid for the period was $132.6 million, while income taxes paid amounted to $122.3 million[35].