Gates(US:GTES)2025-07-30 12:00Financial Performance - Second-quarter net sales were $883.7 million, a decrease of 0.2% year-over-year, with a core sales decline of 0.6%[5] - Net income attributable to shareholders was $56.5 million, or $0.22 per diluted share, compared to $70.7 million, or $0.27 per diluted share in the prior year[5][15] - Adjusted EBITDA for the second quarter was $199.2 million, representing a margin of 22.5%[5] - Net income for the six months ended June 28, 2025, was $131.4 million, compared to $123.7 million for the same period in 2024, reflecting a year-over-year increase of 5.6%[19] - Adjusted EBITDA for the six months ended June 28, 2025, was $386.5 million, down from $397.8 million for the same period in 2024, indicating a decrease of 3.3%[27] - For the three months ended June 28, 2025, net income attributable to shareholders was $56.5 million, a decrease from $70.7 million for the same period in 2024[32] - Adjusted net income for the six months ended June 28, 2025, was $195.0 million, compared to $187.3 million for the same period in 2024, reflecting a year-over-year increase of 9.1%[32] Sales and Segment Performance - The Power Transmission segment reported net sales of $550.1 million, a 1.5% increase year-over-year, while the Fluid Power segment saw net sales decline by 2.9% to $333.6 million[4][6] - Total net sales for the three months ended June 28, 2025, were $883.7 million, a slight decline of 0.2% compared to $885.5 million for the same period in 2024[36] - For the six months ended June 28, 2025, the company experienced a net sales growth of 0.2% in Power Transmission, while Fluid Power saw a decline of 2.9%[36] - Core sales for the six months ended June 28, 2025, increased to $1,754.2 million, up from $1,748.1 million in the same period in 2024, representing a growth of 0.3%[36] Guidance and Projections - The company raised its full-year 2025 guidance, expecting core sales growth between +0.5% to +2.5% year-over-year[9] - Adjusted EBITDA guidance for 2025 is projected to be between $765 million and $795 million[9] - Adjusted Earnings Per Share for 2025 is anticipated to be in the range of $1.44 to $1.52[9] - Capital expenditures for 2025 are estimated at approximately $120 million[9] - Free Cash Flow conversion is expected to exceed 90% for 2025[9] Assets and Liabilities - Total assets increased to $7,217.8 million as of June 28, 2025, up from $6,786.3 million as of December 28, 2024, representing a growth of 6.4%[17] - Total current liabilities slightly increased to $729.3 million as of June 28, 2025, from $721.5 million as of December 28, 2024[17] - Total shareholders' equity rose to $3,269.0 million as of June 28, 2025, up from $3,023.6 million as of December 28, 2024, reflecting an increase of 8.1%[17] Cash Flow and Working Capital - Cash and cash equivalents at the end of the period were $722.8 million, an increase from $582.9 million at the end of the previous period, marking a rise of 24%[19] - The company reported a net cash provided by operating activities of $110.3 million for the six months ended June 28, 2025, compared to $72.8 million for the same period in 2024, a significant increase of 51.5%[19] - The company experienced a decrease in inventories, with a reduction of $16.4 million during the six months ended June 28, 2025[19] - Free Cash Flow for the period was not explicitly stated but is a key measure for assessing cash generation[24] Other Financial Metrics - The Adjusted EBITDA margin for the six months ended June 28, 2025, was 22.3%, compared to 22.8% for the same period in 2024[27] - The effective tax rate for the six months ended June 28, 2025, was influenced by net discrete tax benefits of $7.1 million, primarily from excess tax benefits on stock option exercises[33] - Restructuring expenses for the three months ended June 28, 2025, amounted to $13.0 million, compared to $1.6 million for the same period in 2024[32] - The company reported a loss on extinguishment of debt of $14.8 million during the three months ended June 29, 2024, due to debt refinancing[34] - The impact of currency rate movements on net sales for the three months ended June 28, 2025, was a negative $3.7 million[36] - The diluted weighted-average number of shares outstanding for the three months ended June 28, 2025, was 260,469,532[32]