DENVER, Feb. 6, 2025 /PRNewswire/ —

Fourth-Quarter 2024 Financial Summary

• Fourth-quarter net sales of $829.4 million, down 3.9% compared to the prior-year period, including a core sales decline of 2.6%.
• Net income attributable to shareholders of $36.6 million, or $0.14 per diluted share.
• Adjusted Net Income per diluted share of $0.36.
• Net income from continuing operations of $41.2 million, or a margin of 5.0%.
• Adjusted EBITDA of $180.8 million, or a margin of 21.8%.

Full-Year 2024 Financial Summary

• Net sales of $3,408.2 million, representing a 4.5% decline, including a core sales decline of 3.5%.
• Net income attributable to shareholders of $194.9 million, or $0.74 per diluted share.
• Adjusted Net Income per diluted share of $1.39.
• Net income from continuing operations of $220.5 million, or a margin of 6.5%.
• Adjusted EBITDA of $761.1 million, or a margin of 22.3%.
• Generated $379.6 million of operating cash flow.
• Introducing 2025 financial guidance.

Gates Industrial Corporation plc (NYSE: GTES), a leading global provider of application-specific power transmission and fluid power solutions, today reported results for the fourth-quarter and full year ended December 28, 2024.

Ivo Jurek, Gates Industrial’s Chief Executive Officer, commented, “In 2024, we generated a 180 basis point increase in our gross margin while encountering softer demand trends in many of our end markets. Our enterprise initiatives continue to gain traction. Furthermore, we also reduced our debt levels and repurchased $175 million of our stock.”

Jurek continued, “We believe we are well positioned to continue to drive further improvements to our profitability. Our balance sheet is strong and our capital deployment optionality continues to expand. We are making investments in our business that we believe will generate significant dividends for our growth and profitability over the mid-term. I thank the global Gates team for their hard work and support.”

Fourth-Quarter Financial Results

Fourth-quarter net sales were $829.4 million, a decrease of 3.9% compared to the prior-year quarter net sales of $863.3 million primarily due to lower volume. Core sales decreased 2.6% year-over-year. The decline in core sales was primarily driven by soft demand in Agriculture and Construction, partially mitigated by growth in Automotive. At the channel level, OEM revenues fell double-digits while Replacement revenues expanded low single-digits compared to the prior year period.

Full-year 2024 net sales were $3,408.2 million, a decrease of 4.5% over prior-year net sales of $3,570.2 million primarily due to lower volume and unfavorable foreign currency partially offset by pricing. Core sales decreased 3.5%. At the end market level, Agriculture and Construction were the primary drivers of the decline with Automotive representing a partial offset. For the year, OEM sales decreased double-digits and Replacement sales expanded at a low single-digit rate.

Fourth-quarter net income attributable to shareholders was $36.6 million, or $0.14 per diluted share, compared to net income attributable to shareholders of $62.9 million, or $0.24 per diluted share, in the prior-year quarter. Higher tax expense impacted the year-over-year decrease. Adjusted net income was $93.5 million, or $0.36 per diluted share, compared to $98.6 million, or $0.37 per diluted share in the prior-year period. The year-over-year change in adjusted net income per diluted share was influenced by lower operating income, partially offset by a lower share count. The diluted weighted-average number of shares outstanding in the fourth quarter of 2024 was 261,090,036 compared to 267,523,754 in the fourth quarter of 2023.

Full-year 2024 net income attributable to shareholders was $194.9 million or $0.74 per diluted share, compared to net income attributable to shareholders of $232.9 million, or $0.84 per diluted share, in the prior year. A higher tax rate was partially offset by favorable other income, stronger operating income, and lower interest expense. Adjusted net income was $367.7 million, or $1.39 per diluted share, compared to $368.9 million, or $1.34 per diluted share, in the prior year. The increase in adjusted net income per diluted share was fueled by higher operating income, lower interest expense and a lower share count, partially offset by lower contribution from other items and a higher effective tax rate. The diluted weighted-average number of shares outstanding in 2024 was 264,675,566 compared to 275,648,328 in 2023.

Fourth-quarter net income from continuing operations was $41.2 million, or 5.0% of net sales, compared to $69.2 million or 8.0% of net sales in the prior-year quarter representing a decline of 300 basis points year-over-year impacted by an increase in income tax expense relative to the year-ago period. Full-year 2024 net income from continuing operations was $220.5 million, or 6.5% of net sales, compared to $257.0 million or 7.2% of net sales in the prior year. The 70 basis point decrease in margin year-over-year was driven by higher tax expense.

Fourth-quarter adjusted EBITDA was $180.8 million compared to $185.8 million in the prior-year quarter. Fourth-quarter adjusted EBITDA margin of 21.8% represented an expansion of 30 basis points compared to the prior-year quarter. The increase in adjusted EBITDA margin was supported by ongoing benefits from our enterprise initiatives that favorably impacted manufacturing performance and pricing as well as improved mix, partially offset by lower volumes.

Full-year 2024 adjusted EBITDA was $761.1 million, or 22.3% of net sales, compared to $747.0 million, or 20.9% of net sales, in the prior-year. The improvement in adjusted EBITDA was driven by our enterprise initiatives which benefited manufacturing performance and pricing as well as favorable mix, partly mitigated by the impact of lower volume.

Power Transmission Segment Results

Fourth-quarter Power Transmission net sales decreased 2.4% to $520.0 million compared to the prior-year quarter, reflecting a core sales decline of 0.9%. Declines in the Agriculture and Commercial On-Road end markets more than offset growth in Personal Mobility. From a channel perspective, OEM sales decreased high single-digits and was partially mitigated by modest growth in Replacement market.

Full-year 2024 Power Transmission net sales decreased 3.8% to $2,108.1 million compared to the prior year, including a core sales decrease of 2.3%. The full year net and core sales decrease was largely fueled by a decrease in the Personal Mobility, Construction and Agriculture markets. OEM sales decreased high single-digits year-over-year on a core basis and outweighed modest growth in the Replacement markets.

Fourth-quarter Power Transmission adjusted EBITDA was $112.9 million compared to $117.4 million in the prior-year quarter. The year-over-year decrease in adjusted EBITDA was impacted by lower volume partially offset by benefits from our enterprise initiatives. Adjusted EBITDA margin of 21.7% represented a decline of 30 basis points compared to the prior-year quarter.

Full-year 2024 Power Transmission adjusted EBITDA was $468.7 million compared to $460.6 million in the prior year. Adjusted EBITDA margin of 22.2% expanded 120 basis points relative to the prior year largely due to benefits from our enterprise initiatives that favorably impacted manufacturing performance and pricing as well as improved mix, partially offset by lower volumes. 

Fluid Power Segment Results

Fourth-quarter Fluid Power net sales decreased 6.4% to $309.4 million compared to the prior-year quarter. Core sales declined 5.3%. The segment experienced net and core sales declines in most end markets with Agriculture, Construction and Energy most impacted. Automotive core sales grew mid-teens.  At the channel level, OEM sales experienced a double-digit decline in core sales partially offset by low single-digit core growth in Replacement.

Full-year 2024 Fluid Power net sales decreased 5.7% to $1,300.1 million compared to the prior year, including a core sales decrease of 5.4%. Net and core sales declined in most end markets with Agriculture, Construction and Energy realizing the largest headwinds. Automotive increased low-teens. OEM sales decreased high-teens while Replacement core sales were slightly positive.

Fourth-quarter Fluid Power adjusted EBITDA was $67.9 million compared to $68.4 million in the prior-year quarter, resulting in an adjusted EBITDA margin of 21.9% and expansion of 120 basis points compared to the prior-year quarter. The increase in adjusted EBITDA was supported by ongoing benefits from our enterprise initiatives that contributed to improved manufacturing performance and price as well as favorable mix, partly offset by lower volume.

Full-year 2024 Fluid Power adjusted EBITDA was $292.4 million compared to $286.4 million in the prior year, resulting in an adjusted EBITDA margin of 22.5% and expansion of 170 basis points compared to the prior-year. The margin expansion was primarily driven by benefits from our enterprise initiatives that supported improved manufacturing performance and price as well as positive mix partly offset by lower volume.

Liquidity and Capital Resources

During the fourth quarter of 2024, the Company generated $190.9 million of cash from operations. Fourth-quarter capital expenditures increased to $33.4 million from $24.2 million in the prior-year quarter.

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, as well as committed borrowing headroom of $471.8 million.

2025 Guidance

The Company is introducing full year financial guidance for 2025. Specifically, the company anticipates the following:

• Core sales growth in the range of (0.5%) to +3.5% year-over-year
• Adjusted EBITDA of $735 million to $795 million
• Adjusted Earnings Per Share of $1.36 to $1.52
• Capital Expenditures of approximately $120 million
• Free Cash Flow conversion exceeding 90%

Share-based metrics in the Company’s guidance do not include the effect of any potential share repurchases.

Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures, including expected Core Sales Growth, Adjusted EBITDA, Adjusted Earnings per Share and Free Cash Flow conversion for 2025. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.

Conference Call and Webcast

Gates Industrial Corporation plc will host a conference call today at 11:00 a.m. Eastern Time to discuss the Company’s financial results. The live webcast of the conference call and accompanying presentation materials can be accessed through Gates Industrial’s website at investors.gates.com. For those unable to access the webcast, the conference call can be accessed by dialing (888) 414-4601 (domestic) or +1 (646) 960-0313 (international) and requesting the Gates Industrial Corporation Fourth-Quarter 2024 Earnings Conference Call or providing the Conference ID of 5772067. An audio replay of the conference call can be accessed by dialing (800) 770-2030 (domestic) or +1 (647) 362-9199 (international), and providing the passcode 5772067, or by accessing Gates Industrial’s website at investors.gates.com.

About Gates Industrial Corporation plc

Gates is a global manufacturer of innovative, highly engineered power transmission and fluid power solutions. Gates offers a broad portfolio of products to diverse replacement channel customers, and to original equipment (“OEM”) manufacturers as specified components. Gates participates in many sectors of the industrial and consumer markets. Our products play essential roles in a diverse range of applications across a wide variety of end markets ranging from harsh and hazardous industries such as agriculture, construction, manufacturing and energy, to everyday consumer applications such as printers, power washers, automatic doors and vacuum cleaners and virtually every form of transportation. Our products are sold in more than 130 countries across our four commercial regions: the Americas; Europe, Middle East & Africa; Greater China; and East Asia & India.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “predicts,” “intends,” “trends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. These statements include, but are not limited to, statements related to expectations regarding the performance of the Company’s business and financial results (including our ability to drive margin improvements, our capital deployment optionality, and the impact from investments in our business), and statements regarding our outlook for 2025. Such forward-looking statements are subject to various risks and uncertainties, including, among others, economic, political and other risks associated with international operations (including the imposition of tariffs), risks inherent to the manufacturing industry, macroeconomic factors beyond the Company’s control (including material and logistics availability, inflation, supply chain and labor challenges and end-market recovery), risks related to catastrophic events, continued operation of our manufacturing facilities, including as a result of cybersecurity attacks, our ability to forecast and meet demand and market acceptance of new products. Additional factors that could cause the Company’s results to differ materially from those described in the forward-looking statements can be found under the section entitled “Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 28, 2024, which is expected to be filed with the Securities and Exchange Commission on or about the date of this presentation, as such factors may be updated from time to time in the Company’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the Company’s filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.