#United States #Denver #Gates Industrial #Fluid Power #Power Transmission

Gates Industrial Reports First-Quarter 2025 Financial Results

Gates Industrial Corporation plc (NYSE:GTES) has recently disclosed its financial outcomes for the first quarter of 2025, which concluded on March 29, 2025. The company, renowned for its specialized fluid power and power transmission solutions, experienced a slight decrease in net sales but managed to achieve modest growth in core revenue.

Financial Summary

In the first quarter, Gates reported net sales of $847.6 million, reflecting a 1.7% decline compared to the same period in the previous year. However, the core revenue growth was a positive highlight, showing an increase of 1.4%. The net income attributed to shareholders for the quarter was $62 million, translating to earnings of $0.24 per diluted share. In terms of adjusted metrics, the adjusted net income per diluted share stood at $0.36.

The company recorded net income from continuing operations at $68.6 million with an operating margin of 8.1%. Additionally, Gates reported adjusted EBITDA of $187.3 million for the quarter, which reflects a margin of 22.1%.

According to Ivo Jurek, Chief Executive Officer of Gates Industrial, the company witnessed growth in volume across its global operations, driven mainly by significant performance in the auto replacement and personal mobility markets. Jurek noted that the gross margin has also improved year-over-year, which bodes well for the company's financial health.

Segment Performance

Power Transmission

In the Power Transmission segment, net sales reached $527.2 million, slightly down by 1.1% compared to $532.8 million in the prior year. Adjusted EBITDA for this segment was $116.7 million, with a margin of 22.1%.

Fluid Power

The Fluid Power segment saw net sales of $320.4 million, which represented a more substantial decline of 2.9% from last year's figures of $329.8 million. The adjusted EBITDA for this segment was recorded at $70.6 million, bringing in a margin of 22.0%. Jurek indicated that despite the sales reduction in this segment, efforts are underway to streamline operations and enhance efficiency.

2025 Guidance Maintained

Gates maintains its full-year guidance for 2025, forecasting core sales growth between a slight downturn of 0.5% to a rise of 3.5% year-over-year. The anticipated adjusted EBITDA for the entire year is expected to fall between $735 million and $795 million, with adjusted earnings per share projected between $1.36 and $1.52. The company plans capital expenditures amounting to approximately $120 million and expects free cash flow conversion to surpass 90%.

Conclusion

Despite the challenges of a fluctuating macroeconomic environment, Gates Industrial remains steadfast in its commitment to quality and growth. Jurek expressed confidence in the company's competitive edge, emphasizing the importance of its 'in-region, for-region' manufacturing approach. By leveraging its strong global presence and broadening its product offerings, Gates aims to navigate these uncertainties effectively.

The company's commitment to innovation and excellence will be critical as it continues to adapt to market changes and strive for long-term success. A conference call is scheduled for today at 9:00 a.m. Eastern Time to further discuss these financial results and future strategies.

For more detailed financial insights, stakeholders are encouraged to visit Gates Industrial's investor relations website.