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Gates Industrial Corporation Reports Second Quarter 2025 Results

Gates Industrial Corporation plc (NYSE: GTES), a prominent supplier of tailored fluid power and power transmission solutions worldwide, has unveiled its financial performance for the second quarter ending June 28, 2025. This report reveals mixed results, reflecting the current market scenario.

Financial Summary

In the second quarter, Gates reported net sales of $883.7 million, slightly down by 0.2% from the previous year, including a core sales decline of 0.6%. While this indicates a slight dip in sales, it's noteworthy that the company achieved a net income attributed to shareholders of $56.5 million, or $0.22 per diluted share. The adjusted net income per diluted share stood at $0.39, reflecting the company’s resilience in the face of challenges.

Moreover, Gates reported an income from continuing operations of $63.4 million, with a margin of 7.2%, and an adjusted EBITDA of $199.2 million, marking a margin of 22.5%. In light of these results, the company has revised its full-year guidance upwards, signaling optimism for the remainder of 2025.

Key Performance Highlights

Gates’ CEO, Ivo Jurek, commented on the results, emphasizing strong performance from the Replacement channels, which saw positive core growth, and noted a significant uptick in the Mobility sector, achieving double-digit growth. Furthermore, agriculture markets experienced growth for the first time since Q4 2022. Notably, Gates mentioned an improvement in gross margins and reinforced balance sheet health.

The performance of the Power Transmission segment showed resilience with:

• - Net sales of $550.1 million, a 1.5% increase compared to $541.9 million from the previous year's quarter.
• - Adjusted EBITDA reported at $122.8 million.

Conversely, the Fluid Power segment faced challenges with:

• - Net sales at $333.6 million, down by 2.9% compared to the same period last year.
• - The adjusted EBITDA for this segment fell to $76.4 million, a decline of 2.6%.

Future Outlook

For the entirety of 2025, Gates has updated its outlook, forecasting core sales growth between +0.5% to +2.5%, and adjusted EBITDA expected to range between $765 million and $795 million. Projected adjusted earnings per share (EPS) is anticipated to be between $1.44 and $1.52. Furthermore, capital expenditures are estimated at approximately $120 million, with free cash flow conversion exceeding 90%.

Conference Call and Further Engagement

Gates Industrial Corporation will conduct a conference call today at 11:30 a.m. Eastern Time to delve deeper into the financial results. The public can access the live webcast via the company's investor relations website, or join by phone using the provided conference ID.

As a leading manufacturer of engineered power transmission and fluid power solutions, Gates continues to innovate across various sectors, from agriculture and construction to consumer applications. Despite present hurdles, the company remains focused on long-term growth strategies, showcasing commitment to operational improvements and increased cash flows.

In conclusion, while the second quarter shows a slight sales decline, the upward adjustment of the company's annual guidance and the positive growth in essential sectors signify potential for recovery and growth in the near future.