Gates Industrial Corporation plc · Q3 2020 earnings

Briefing

Gates Industrial's third-quarter performance in 2020 reflected sequential improvement across geographies and end markets, driven by productivity and restructuring efforts.

Gates Industrial reported net sales of $712.2 million, a decrease of 4.6% compared to the prior-year period. Net income attributable to shareholders was $41.9 million, or $0.14 per diluted share, compared to $35.5 million, or $0.12 per diluted share in the prior-year period. Adjusted Net Income was $75.8 million, or $0.26 per diluted share. The company highlighted strong third-quarter results driven by momentum and focused execution, with demand trending positively and significant sequential improvement across all geographies and end markets.

• Net sales decreased by 4.6% year-over-year to $712.2 million.
• Net income attributable to shareholders increased to $41.9 million, or $0.14 per diluted share.
• Adjusted Net Income increased to $75.8 million, or $0.26 per diluted share.
• Adjusted EBITDA was $140.0 million with a margin of 19.7%.

Headline financials

Revenue & EPS history

Due to the continuing level of uncertainty related to the COVID-19 pandemic and the inability to predict the trajectory and sustainability of the demand recovery, the Company is not reinstating full-year 2020 core revenue or Adjusted EBITDA guidance at this time. The Company continues to expect total capital expenditures of approximately $70 million for the full year. Based on the significant rebound of the business from the second-quarter low, the Company expects that higher net working capital investment to support increased demand, as well as certain non-cash deferred tax impacts, will result in Free Cash Flow Conversion greater than 80% of Adjusted Net Income.