Gates Industrial Corporation Plc · NYSE:GTES

Gates Industrial — Q1 2020 Earnings Presentation

18 slides from Gates Industrial's earnings presentation, May 5, 2020

  1. Slide 1: Q1 2020 Earnings Presentation

    Q1 2020 MAY 5, 2020 EARNINGS PRESENTATION

  2. Slide 2: Legal Disclaimers

    LEGAL DISCLAIMERS 2 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 1934, as amended. In some ca

  3. Slide 3: Response to COVID-19 Pandemic

    RESPONSE TO COVID-19 PANDEMIC 3  Response driven by three guiding principles • Keep our employees and communities safe • Comply with local and federal regulations • Support our customers, many of whom operate in “essential industries”  Mobilized a centralized crisis response team in February • Sen

  4. Slide 4: Q1 2020 Overview

    Q1 2020 OVERVIEW 4  Net sales of $710M, representing a 10% decline on a core basis • Exceeded our expectations excluding COVID-19, which we estimate negatively impacted core revenue by ~7%  Adjusted EBITDA of $121M and Adjusted EBITDA Margin of 17.0% • Absorbed COVID-19 impact and delivered improv

  5. Slide 5: Power Transmission

    POWER TRANSMISSION 5 Q1 Summary: Next-Generation Industrial V-Belt  Segment significantly impacted by COVID-19 in China and related temporary customer shut-downs before showing signs of recovery Gates’ recently launched Xtreme V-ForceTM  Modest growth in Europe, led by automotive end markets Mega

  6. Slide 6: Fluid Power

    FLUID POWER 6 Q1 Summary: Modular Hose  Notable sequential improvement from Q4 ‘19 in North America Gates’ growing portfolio of modular  Weakness in Europe led by industrial end markets, impacted by coolant hoses, already one of the broadest temporary customer shut-downs in March in the industry b

  7. Slide 7: Q1 Revenue by Region

    Q1 REVENUE BY REGION 7 China 8% EA&I N. America 12%  19 plants 50%  Govt. order has closed 1 plant in Mexico since Apr 24 27% North America EMEA  Industrial end markets down low- double-digits, driven by mobile Core Growth 3% hydraulics (9%) S. America  Automotive replacement channel down Europe

  8. Slide 8: Movement Restrictions Impacting Economies Globally

    MOVEMENT RESTRICTIONS IMPACTING ECONOMIES GLOBALLY 8  Extremely complex regulatory landscape with India constantly evolving country, Start: 3/25 state/province/prefecture and city-level orders End: 5/3 South America  Most locations (outside of China and India) have Start: Sao Paulo State 3/24, var

  9. Slide 9: Q1 2020 Financial Performance

    Q1 2020 FINANCIAL PERFORMANCE 9 USD in millions NET SALES ADJUSTED EBITDA ADJUSTED EPS (1) $805 $166 $0.28 $710 $121 $0.21 (10.1%) Core 20.6% 17.0% Margin Margin (1.7%) FX Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 11.8% decline, ahead of 360 bps decline, driven by Adjusted EPS decline driven b

  10. Slide 10: Balance Sheet and Cash Flow

    BALANCE SHEET AND CASH FLOW 10 USD in millions, except multiple data TRADE WORKING CAPITAL FREE CASH FLOW NET LEVERAGE $950 4.1x 136% $353 $819 Conversion 3.6x 57% $222 Conversion New Capacity Capex 28.8% 27.4% 38% Conversion $147 Q1 2019 LTM Q1 2020 LTM Q1 2019 LTM Q1 2020 LTM Q1 2019 Q1 2020 Signi

  11. Slide 11: Liquidity

    LIQUIDITY 11 USD in millions $1,056 FINANCIAL COVENANTS RCF $185  Revolving credit facility (RCF) • Can be drawn up to 30% with no financial covenants • >30% draw requires senior secured net leverage <7.15x credit facility EBITDA (3.1x as of Q1 2020) ABL $255 1  Asset-backed loan (ABL) • Can be dr

  12. Slide 12: 2020 Framework

    2020 FRAMEWORK 12  Full-year revenue expected to decline  Cost actions • Q2 likely most challenging, with core revenue • Previously initiated $40M restructuring program anticipated to be down 15%–25% sequentially progressing • Sequential improvement expected thereafter, • Compressible/discretionar

  13. Slide 13: Summary

    SUMMARY 13  COVID-19 has created a highly uncertain environment • Committed to safely supporting our employees, customers and the communities in which we operate • Focused on managing what we can control • Significant cost actions taken in H2 2019; proactively managing cost structure to current mar

  14. Slide 14: ©2018 Gates Inc. All rights reserved.

    14 ©2018 Gates Inc. All rights reserved.

  15. Slide 15: Appendix

    Gates) APPENDIX CLL

  16. Slide 16: Reconciliations – Adjusted EBITDA & Net Leverage

    RECONCILIATIONS – ADJUSTED EBITDA & NET LEVERAGE 16 (USD in millions) Q1 2020 Q1 2019 LTM Q1 2020 LTM Q1 2019 Reconciliation to Adjusted EBITDA Net income from continuing operations $ 39.9 $ 605.1 $ 129.5 $ 847.4 Adjusted for: Income tax (benefit) expense (16.1) (539.7) 27.7 (519.6) Net interest and

  17. Slide 17: Reconciliations – Adjusted Net Income

    RECONCILIATIONS – ADJUSTED NET INCOME 17 (USD in millions, except share numbers and per share amounts) Q1 2020 Q1 2019 LTM Q1 2020 LTM Q1 2019 Reconciliation to Adjusted Net Income Net Income Attributable to Shareholders $ 35.6 $ 613.7 $ 112.0 $ 834.8 Adjusted for: Loss on disposal of discontinued o

  18. Slide 18: Reconciliations – Free Cash Flow and Free Cash Flow Conversion

    RECONCILIATIONS – FREE CASH FLOW AND FREE CASH 18 FLOW CONVERSION (USD in millions) Q1 2020 Q1 2019 LTM Q1 2020 LTM Q1 2019 Reconciliation of Free Cash Flow Net Cash Provided by (used in) Operations $ 31.1 $ (47.7) $ 427.7 $ 292.3 Capital Expenditures (1) (14.9) (22.9) (75.1) (145.1) Free Cash Flow

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