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Jun 29, 2024
Gates Industrial Q2 2024 Earnings Report
Gates Industrial's performance declined due to decreased net sales and core sales, but gross margin and adjusted EBITDA margin improved.
Key Takeaways
Gates Industrial reported a decrease in net sales by 5.4% to $885.5 million, with a core sales decline of 4.0%. Net income attributable to shareholders increased to $70.7 million, or $0.26 per diluted share, while adjusted net income per diluted share was $0.36. The company's gross margin and adjusted EBITDA margin improved, but full-year guidance was trimmed due to softer demand.
Net sales decreased by 5.4% to $885.5 million, with a 4.0% core sales decline.
Net income attributable to shareholders was $70.7 million, or $0.26 per diluted share.
Adjusted net income per diluted share was $0.36.
Adjusted EBITDA margin increased by 170 basis points to 22.8%.
Gates Industrial
Gates Industrial
Gates Industrial Revenue by Segment
Revenue by Segment
Power Transmission Revenue
CapyFin.comFluid Power Revenue
CapyFin.com Forward Guidance
The company is updating its full year 2024 guidance, anticipating core sales growth between -4% and -2%, adjusted EBITDA between $740 million and $770 million, and adjusted EPS between $1.29 and $1.35.
Positive Outlook
- Still expect to increase our adjusted EBITDA margin by over 100 basis points year-over-year.
- We are intently focused on driving our various enterprise initiatives and achieving our 2026 financial targets.
- We remain opportunistic about deploying excess capital.
- Capital Expenditures ~$100 Million
- Free Cash Flow Conversion 90%+
Challenges Ahead
- We have trimmed our full year 2024 guidance for core sales, adjusted EBITDA and adjusted earnings per share to reflect softer than expected demand in our First Fit markets during the second half of the year and our normal business seasonality.
- Core Sales Growth (4%) to (2%)
- Adjusted EBITDA $740 to $770 Million
- Adjusted EPS $1.29 to $1.35
- Share-based metrics in the Company’s guidance do not include the potential effect of incremental share repurchases.
Revenue & Expenses
Visualization of income flow from segment revenue to net income