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Gates Industrial Corporation Reports Fourth-Quarter and Full Year 2024 Results

Gates Industrial Corporation plc reported its financial results for the fourth quarter and full year of 2024 on February 6, 2025, revealing a complex landscape of challenges and opportunities across its operating segments. In the fourth quarter, the company recorded net sales of $829.4 million, representing a 3.9% decrease from the previous year's quarter. The core sales decline was slightly less steep at 2.6%.

Fourth-Quarter Financial Summary

The fourth quarter net income attributable to shareholders totaled $36.6 million, translating to $0.14 per diluted share. Adjusted net income was reported at $93.5 million, or $0.36 per diluted share. The net income from continuing operations stood at $41.2 million, a net profit margin of 5.0%. Adjusted EBITDA reached $180.8 million, with a margin of 21.8%, indicating a slight increase from the prior-year quarter.

Full-Year 2024 Overview

Throughout 2024, Gates achieved net sales of $3.41 billion, a reduction of 4.5% compared to the previous year. Core sales for the year decreased by 3.5%. Net income for shareholders amounted to $194.9 million, equating to $0.74 per diluted share, supported by operational improvements and favorable tax adjustments.

Performance by Segment

Power Transmission

The Power Transmission segment witnessed a net sales drop of 2.4%, leading to total sales of $520 million in the fourth quarter. This decline was primarily due to softer demand in Agriculture and Commercial On-Road segments, offset by robust growth in Personal Mobility. On a full-year basis, the Power Transmission segment generated $2.1 billion; down 3.8% year-on-year but showing a promising 22.2% EBITDA margin.

Fluid Power

Meanwhile, the Fluid Power segment faced a more pronounced decline, with fourth-quarter sales sliding to $309.4 million, a 6.4% drop year-over-year due to significant decreases across key markets like Agriculture, Construction, and Energy. However, adjusted EBITDA for Fluid Power improved to $292.4 million for the year, reflecting operational enhancements that improved profitability amidst adversity.

Looking Ahead: 2025 Financial Guidance

In light of its current financial landscape, Gates Industrial has introduced its 2025 financial projections. Expectations for core sales growth range from a decrease of 0.5% to an increase of 3.5%. The anticipated adjusted EBITDA is forecasted between $735 million to $795 million, alongside an adjusted earnings per share estimate of $1.36 to $1.52. The strategic focus remains on capital expenditures of around $120 million aimed at fostering long-term growth.

Conclusion

Ivo Jurek, CEO of Gates Industrial, expressed optimism regarding the company’s strong balance sheet and the potential to drive profitability improvements despite market challenges. The initiatives aimed at enhancing operational efficiencies and investing for future growth underscore Gates Industrial’s strategy as it navigates the complexities of the current industrial landscape.

Gates Industrial Corporation continues to adapt and evolve in its approach to meet the expectations of the global market while maintaining a strong commitment to shareholder value and operational excellence.