Gates Industrial Corporation plc · Q1 2020 earnings

Briefing

Gates Industrial reported first quarter results, experiencing a decline in net sales and net income due to the COVID-19 pandemic and industrial end market weakness.

Gates Industrial's first-quarter net sales decreased by 11.8% year-over-year to $710.1 million, with a core revenue decline of 10.1%. Net income attributable to shareholders was $35.6 million, or $0.12 per diluted share, compared to $613.7 million, or $2.08 per diluted share in the prior year. Adjusted EBITDA was $120.8 million, representing 17.0% of net sales. The company withdrew its full-year 2020 core revenue and Adjusted EBITDA guidance due to the uncertain impact of the COVID-19 pandemic.

• Net sales decreased by 11.8% year-over-year to $710.1 million, with core revenue declining by 10.1%.
• Net income attributable to shareholders was $35.6 million, or $0.12 per diluted share, significantly lower than the prior year.
• Adjusted EBITDA was $120.8 million, with an Adjusted EBITDA margin of 17.0%.
• The company withdrew its full-year 2020 core revenue and Adjusted EBITDA guidance due to the COVID-19 pandemic.

Headline financials

Revenue & EPS history

The Company is withdrawing its full-year 2020 core revenue and Adjusted EBITDA guidance due to an inability to predict the extent and duration of the unprecedented actions taken globally to limit the spread of the COVID-19 pandemic, which are likely to have a material impact. The Company currently expects total capital expenditures of approximately $70 million and Free Cash Flow Conversion to be greater than 100% of Adjusted Net Income.