Gates Industrial Reports Third-Quarter 2024 Results

Core Viewpoint - Gates Industrial Corporation reported a decline in net sales and net income for the third quarter of 2024, but improved gross margins and adjusted EBITDA margins, leading to an increase in full-year adjusted EPS guidance [2][4][19]. Financial Performance Summary - Third-quarter net sales were $830.7 million, down 4.8% from $872.9 million in the prior year, with a core sales decline of 3.8% [5][6]. - Net income attributable to shareholders was $47.6 million, or $0.18 per diluted share, compared to $78.7 million, or $0.29 per diluted share, in the prior-year quarter [6][26]. - Adjusted net income was $86.9 million, or $0.33 per diluted share, down from $95.9 million, or $0.36 per diluted share, in the prior-year period [6][32]. - Adjusted EBITDA for the third quarter was $182.5 million, with a margin of 22.0%, reflecting a 30 basis point improvement year-over-year [8][14]. Segment Performance - Power Transmission segment net sales decreased 4.3% to $513.4 million, with a core sales decline of 3.3% [13][14]. - Fluid Power segment net sales fell 5.7% to $317.3 million, with a core sales decline of 4.7% [15][16]. Liquidity and Capital Resources - The company generated $115.9 million in cash from operations during the third quarter, with capital expenditures increasing to $28.0 million from $17.4 million in the prior-year quarter [17]. - As of September 28, 2024, total cash and cash equivalents were $574.4 million, with total outstanding debt of $2.4 billion [18]. Updated Guidance - The company updated its full-year 2024 guidance, projecting core sales growth of approximately 4% to 3%, and adjusted EPS guidance increased to $1.33 to $1.37 [19][20].