Gates Industrial Corporation Plc · NYSE:GTES
Gates Industrial — Q1 2025 Earnings Presentation
21 slides from Gates Industrial's earnings presentation, Apr 30, 2025
Slide 1: Q1 2025 Earnings Presentation
Q1 2025 APRIL 30, 2025 EARNINGS PRESENTATION
Slide 2: Legal Disclaimers
LEGAL DISCLAIMERS 2 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This presentation contains, and management may make on our call today, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 19
Slide 3: Q1 2025 Key Highlights & Metrics
Q1 2025 KEY HIGHLIGHTS & METRICS 3 ▪ Revenue came in ahead of February guidance • Replacement channel grew, supported by HSD growth in Auto Replacement • Off-Highway fell MSD; Mobility grew 30%+ ▪ Strong operating performance resulted in Adjusted EBITDA margin of 22%+ • Gross margin expanded to 40.7
Slide 4: Q1 2025 – Financial Performance
Q1 2025 – FINANCIAL PERFORMANCE 4 $848M 1.4% Core Sales Growth YoY ▪ ▪ Solid Auto Replacement demand Industrial Replacement demand stabilized; about flat YoY Net Sales ▪ Strong Personal Mobility growth $187M 22.1% Adjusted EBITDA margin ▪ ▪ YoY margin performance consistent with expectations Non-rec
Slide 5: Q1 2025 – Segment Results
Q1 2025 – SEGMENT RESULTS 5 PERFORMANCE HIGHLIGHTS POWER TRANSMISSION NET SALES $527M ▪ Replacement growth led by strong auto replacement demand; OEM down slightly 2.1% Core YoY ▪ Growth in Personal Mobility and Automotive ADJUSTED EBITDA $117M Replacement end markets; Industrial end markets perform
Slide 6: Q1 2025 – Regional Core Revenue Performance
Q1 2025 – REGIONAL CORE REVENUE PERFORMANCE 6 Total Gates Greater China 10% +1.4% 11% EA&I North America 49% REVENUE 26% EMEA 4% +1.7% (0.9%) +3.5% South North EMEA America Greater America China • NA: Automotive Replacement and Personal Mobility grew double-digits (2.3%) South +5.3% • EMEA: Recovery
Slide 7: Adjusted EPS Walk
Q1 2025 ADJUSTED EPS WALK 7 $0.04 $0.02 $0.36 $0.34 $0.02 ($0.04) ($0.02) Q1 2024 Adj. EPS Operating Performance F/X Non-Recurring Favorable Net Interest Expense Share Count & Other Q1 2025 Adj. EPS Items in Q1 2024 SOLID OPERATING PERFORMANCE DROVE EPS IMPROVEMENT © 2025 Gates Corporation. All righ
Slide 8: Q1 2025 – Capital Efficiency & Cash Flow
Q1 2025 – CAPITAL EFFICIENCY & CASH FLOW 8 ($19M) Free Cash Flow Normal seasonal performance ▪ ▪ Generated positive cash flow from operations Capex increased YoY to support key projects 2.3x Net Leverage Improved slightly YoY ▪ ▪ Gross debt continued to decline Repurchased $13 million of shares 22.5
Slide 9: Reiterating 2025 Guidance
REITERATING 2025 GUIDANCE 9 PRIOR 2025 CURRENT 2025 B/W (Midpoint) CORE REVENUE GROWTH (0.5%) to +3.5% (0.5%) to +3.5% No Change ADJUSTED EBITDA $735M – $795M $735M – $795M No Change ADJUSTED EPS $1.36 – $1.52 $1.36 – $1.52 No Change CAPITAL EXPENDITURES ~$120M ~$120M No Change FREE CASH FLOW CONVER
Slide 10: Tariff Impacts & Mitigation Actions
TARIFF IMPACTS & MITIGATION ACTIONS 10 ESTIMATED ENACTED 2025 TARIFF IMPACT MITIGATION STRATEGY AS OF APRIL 29, 2025 ▪ Plan to mitigate majority of tariff impact with pricing actions Gates Regional Tariff Exposure: ▪ Communicated price increases to channel partners in early ▪ China: April • ~$15 mil
Slide 11: Summary Thoughts
SUMMARY THOUGHTS 11 ▪ Solid start to 2025 • Core sales growth was slightly better than expected • Gross margins continue to improve ▪ Demand trends in line with initial expectations • Near-term uncertainty • Prepared to implement additional efficiency actions ▪ Well equipped to manage business uncer
Slide 12: © 2025 Gates Corporation. All rights reserved.
12 © 2025 Gates Corporation. All rights reserved.
Slide 13: Appendix
APPENDIX © 2025 Gates Corporation. All rights reserved.
Slide 14: Adjusted EPS – Summary Walk
Q1 2025 ADJUSTED EPS – SUMMARY WALK 14 Q1 2024 $0.34 OPERATING PERFORMANCE 0.04 Core sales growth vs prior year period FOREIGN EXCHANGE (0.04) Unfavorable foreign currency NET INTEREST EXPENSE 0.02 Lower interest rate LOWER SHARE COUNT & NON-OPERATIONAL ITEMS 0.02 Share repurchases executed over the
Slide 15: Reconciliations – Core Sales Growth
RECONCILIATIONS – CORE SALES GROWTH 15 (USD in millions) Power Transmission Fluid Power Q1 2025 Reconciliation of Core Sales Growth Net sales for the quarter ended March 29, 2025 (1) $ 527.2 $ 320.4 $ 847.6 Impact on net sales of movements in currency rates 16.9 9.8 26.7 Core sales for the quarter e
Slide 16: Reconciliations – Adjusted EBITDA & Net Leverage
RECONCILIATIONS – ADJUSTED EBITDA & NET LEVERAGE 16 (USD in millions) Q1 2025 Q1 2024 LTM Q1 2025 LTM Q1 2024 (1) In July 2022, Gates suspended our operations in Russia. In Reconciliation to Adjusted EBITDA September, 2024, we deconsolidated the Russian subsidiary Net Income from Continuing Operatio
Slide 17: Reconciliations – Segment Adjusted EBITDA
RECONCILIATIONS – SEGMENT ADJUSTED EBITDA 17 (USD in millions) Q1 2025 Q1 2024 Change Reconciliation to Segment Adjusted EBITDA Margin Power Transmission Net Sales $ 527.2 $ 532.8 $ (5.6) Power Transmission Adjusted EBITDA $ 116.7 $ 119.0 $ (2.3) Adjusted EBITDA Margin 22.1% 22.3% -20 bps Fluid Powe
Slide 18: Reconciliations – Adjusted Net Income
RECONCILIATIONS – ADJUSTED NET INCOME 18 (USD in millions, except share numbers and per share amounts) Q1 2025 Q1 2024 LTM Q1 2025 LTM Q1 2024 Reconciliation to Adjusted Net Income Net Income Attributable to Shareholders $ 62.0 $ 40.0 $ 216.9 $ 246.5 Adjusted for: Loss on the disposal of discontinue
Slide 19: Reconciliations – Adjusted Net Income (Cont.)
RECONCILIATIONS – ADJUSTED NET INCOME (CONT.) 19 (1) In July 2022, Gates suspended our operations in Russia. During the three months ended September 28, 2024, we deconsolidated the Russian subsidiary upon loss of control and recognized a deconsolidation loss. (2) Inventory write-offs and adjustments
Slide 20: Reconciliations – Free Cash Flow & Free Cash Flow Conversion
RECONCILIATIONS – FREE CASH FLOW & FREE CASH FLOW 20 CONVERSION (USD in millions) Q1 2025 Q1 2024 LTM Q1 2025 LTM Q1 2024 Reconciliation of Free Cash Flow Net Cash Provided By Operating Activities $ 7.3 $ (21.0) $ 407.9 $ 407.5 Capital Expenditures (1) (26.2) (18.1) (114.8) (74.9) Free Cash Flow $ (
Slide 21: Reconciliations – Return on Invested Capital (ROIC)
RECONCILIATIONS – RETURN ON INVESTED CAPITAL (ROIC) 21 (USD in millions) LTM Q1 2025 LTM Q1 2024 Return On Invested Capital (ROIC) LTM Adjusted EBITDA $ 752.8 $ 768.1 LTM Total depreciation and amortization (214.5) (217.6) LTM Amortization of intangible assets arising from the 2014 acquisition of Ga