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Jul 03, 2021
Gates Industrial Q2 2021 Earnings Report
Gates Industrial's financial performance significantly improved, marked by substantial revenue growth and margin expansion.
Key Takeaways
Gates Industrial reported a strong second quarter with net sales up 58.7% and core revenue growth of 51.0%. Net income attributable to shareholders was $96.9 million, or $0.33 per diluted share. Adjusted EBITDA increased by 159.6% to $216.0 million, with a margin of 23.6%. The company raised its full-year 2021 guidance.
Net sales increased by 58.7%, driven by a 51.0% core revenue growth.
Net income attributable to shareholders reached $96.9 million, or $0.33 per diluted share.
Adjusted EBITDA surged by 159.6% to $216.0 million, with a margin expansion of 920 basis points.
Full-year 2021 guidance was raised, reflecting confidence in continued performance.
Gates Industrial
Gates Industrial
Forward Guidance
The company is increasing its full-year 2021 outlook. Core revenue growth is now expected to be in the range of 20.0% to 22.0% compared to the previous range of 18.0% to 21.0%. Adjusted EBITDA margin is now expected to be in the range of 22.2% to 22.8% compared to the previous range of 22.0% to 22.8%. The company continues to expect total capital expenditures in the range of $90 million to $110 million and Free Cash Flow Conversion to be greater than 80% of Adjusted Net Income.
Positive Outlook
- Core revenue growth is now expected to be in the range of 20.0% to 22.0%.
- Adjusted EBITDA margin is now expected to be in the range of 22.2% to 22.8%.
- Total capital expenditures are expected to be in the range of $90 million to $110 million.
- Free Cash Flow Conversion to be greater than 80% of Adjusted Net Income.
- Business continues to recover broadly across both product segments.
Challenges Ahead
- Operating environment in the quarter was quite challenging.
- Navigated raw material and labor shortages.
- Limited freight availability.
- Significant inflation throughout the supply chain expected to continue for the balance of the year.
- Complexities and the significant increase in production volumes.