Gates(US:GTES)2025-10-29 12:04Financial Performance - Third-quarter net sales reached $855.7 million, an increase of 3.0% year-over-year, with core sales growth of 1.7%[5] - Net income attributable to shareholders was $81.6 million, translating to $0.31 per diluted share, compared to $47.6 million in the same quarter last year[17] - Adjusted EBITDA for the third quarter was $195.8 million, with a margin of 22.9%, reflecting a 90 basis point increase[5] - Net income for the nine months ended September 27, 2025, was $220.0 million, compared to $178.8 million for the same period in 2024, reflecting a year-over-year increase of 23.1%[21] - Net income from continuing operations for Q3 2025 was $88.7 million, up 60.5% from $55.2 million in Q3 2024[29] - Adjusted EBITDA for Q3 2025 reached $195.8 million, representing a margin of 22.9%, compared to $182.5 million and a margin of 22.0% in Q3 2024[29] - The company reported a net income margin from continuing operations of 10.4% for Q3 2025, up from 6.6% in Q3 2024[29] - Adjusted net income for Q3 2025 was $100.7 million, compared to $86.9 million in Q3 2024[34] - The diluted GAAP net income per share for Q3 2025 was $0.31, an increase from $0.18 in Q3 2024[34] Segment Performance - The Power Transmission segment reported net sales of $533.3 million, up 3.9% year-over-year, with an adjusted EBITDA margin of 22.9%[4] - The Fluid Power segment had net sales of $322.4 million, a 1.6% increase from the previous year, with an adjusted EBITDA margin of 22.9%[6] Future Guidance - Adjusted EPS guidance for 2025 has been raised to a range of $1.48 to $1.52[11] - The company anticipates full-year adjusted EBITDA between $770 million and $790 million for 2025[11] - Core sales growth is expected to be in the range of +0.5% to +1.5% year-over-year for 2025[11] - Capital expenditures for 2025 are projected to be approximately $120 million[11] Cash Flow and Assets - Net cash provided by operating activities was $208.3 million for the nine months ended September 27, 2025, compared to $188.7 million for the same period in 2024, indicating an increase of 10.4%[21] - Cash and cash equivalents at the end of the period were $692.3 million, up from $577.5 million at the end of the same period in 2024, marking a significant increase of 20%[21] - Total assets increased to $7,149.7 million as of September 27, 2025, up from $6,786.3 million on December 28, 2024, representing a growth of 5.4%[19] - Total liabilities decreased slightly to $3,434.6 million as of September 27, 2025, from $3,446.0 million on December 28, 2024[19] - Shareholders' equity increased to $3,715.1 million as of September 27, 2025, compared to $3,340.3 million on December 28, 2024, reflecting a growth of 11.2%[19] Inventory and Restructuring - The company reported a decrease in inventories to $718.1 million as of September 27, 2025, from $676.0 million on December 28, 2024, indicating a strategic inventory management approach[19] - The company incurred $6.5 million in restructuring expenses during Q3 2025, compared to $2.2 million in Q3 2024[34] Currency Impact - The impact of currency rate movements on net sales for Q3 2025 was a decrease of $11.2 million[39] Profitability Measures - Adjusted EBITDA is used as a key profitability measure, reflecting the company's focus on consistent performance comparison[23] - Core sales growth is emphasized to provide a meaningful year-over-year performance comparison, excluding currency fluctuations and acquisition impacts[25] - Free Cash Flow for the period is highlighted as a measure of cash generation, with a focus on converting Adjusted Net Income into cash[26]