Gates Industrial Corporation plc (GTES) Tops Q1 EPS by 2c, Revenues Beat

Gates Industrial Corporation plc (NYSE: GTES) reported Q1 EPS of $0.33, $0.02 better than the analyst estimate of $0.31. Revenue for the quarter came in at $881.3 million versus the consensus estimate of $863.64 million.

First-Quarter 2021 Financial Summary

• Net sales up 24.1%, including core revenue growth of 21.0%, compared to the prior-year period.
• Net income attributable to shareholders of $67.3 million, or $0.23 per diluted share, a year-over-year increase of 89.0%.
• Adjusted Net Income per diluted share of $0.33, a year-over-year increase of 57.1%.
• Adjusted EBITDA of $196.3 million, a year-over-year increase of 62.5% and Adjusted EBITDA margin of 22.3%, or year-over-year expansion of 530 basis points.
• Raising 2021 guidance to core revenue growth of 19.5% with Adjusted EBITDA margin expansion of 430 basis points at the midpoints.

Ivo Jurek, Gates Industrial's Chief Executive Officer, commented, "Our business is off to an excellent start to the year, building on the momentum we experienced exiting 2020 and significantly exceeding our original guidance. Our substantial above-market growth is evidence of the accelerating success our innovation investments and growth initiatives continue to have in driving share gains, as well as the secular trends in several of our end markets on which we're capitalizing. We saw strength across the business, as well as strong momentum in orders throughout the quarter."

Jurek continued, "Operationally, we were agile and proactive, successfully managing the significant increase in volumes while driving productivity initiatives and delivering excellent incremental margins. Looking ahead, we believe the encouraging trends we see with respect to order rates, end market activity and the traction of our growth initiatives support our demand expectations. Uncertainties remain in certain regions, particularly with respect to raw material and labor availability, as well as lingering COVID inefficiencies, but our performance to-date gives us confidence that we are well positioned to both seize on our growth opportunities and successfully navigate these complexities."

2021 Outlook

The Company is increasing its full-year 2021 outlook. Core revenue growth is now expected to be in the range of 18% to 21%, increased from the previous range of 9% to 14%. Adjusted EBITDA margin is now expected to be in the range of 22.0% to 22.8%, compared to the previous range of 21.0% to 22.0%. The Company continues to expect capital expenditures to range between $90 million and $110 million and free cash flow conversion to be greater than 80%.

For earnings history and earnings-related data on Gates Industrial Corporation plc (GTES) click here.

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