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• Total Sales: $848 million, core growth of 1.4%.

• Adjusted EBITDA: $187 million, margin rate of 22.1%.

• Gross Margin: 40.7%.

• Net Leverage: 2.3 times.

• Share Repurchase: $13 million repurchased, over $100 million remaining under authorization.

• Adjusted Earnings Per Share: $0.36, an increase of approximately 6%.

• Power Transmission Segment Revenue: $527 million, approximately 2% increase on a core basis.

• Fluid Power Segment Sales: $320 million, approximately flat on a core basis.

• Free Cash Flow: Outflow of $19 million, in line with normal seasonal performance.

• Return on Invested Capital: 22.5%.

• 2025 Guidance: Core revenues down 0.5% to up 3.5%; Adjusted EBITDA $735 million to $795 million; Adjusted EPS $1.36 to $1.52.

• Warning! GuruFocus has detected 4 Warning Signs with NOG.

Release Date: April 30, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Gates Industrial Corp PLC (NYSE:GTES) reported first quarter sales that outpaced initial guidance, with core sales growth of 1.4%.

• The company's adjusted EBITDA margin exceeded 22%, and gross margin expanded to 40.7%.

• Gates Industrial Corp PLC (NYSE:GTES) maintained a solid balance sheet with a net leverage ratio of 2.3 times, slightly improved year over year.

• The company repurchased $13 million of shares during the quarter, with over $100 million remaining under the existing authorization.

• Gates Industrial Corp PLC (NYSE:GTES) is well-positioned to mitigate tariff impacts through price increases and operational initiatives, with a strong in-region manufacturing footprint.

Negative Points

• The company experienced ongoing softness in the agriculture and construction markets, as well as weakness in energy.

• Total revenues were down just under 2% due to unfavorable foreign currency effects.

• Adjusted EBITDA margin decreased by 60 basis points year over year, impacted by non-recurring profit benefits from the prior year.

• Industrial OEM sales declined low double digits on a core basis, with demand softness in agriculture and construction markets.

• The company faces increased uncertainty in the market due to tariff impacts and is managing costs closely to prepare for potential demand fluctuations.

Q & A Highlights

Q: On the tariff side, how does the cadence of offsetting the tariff impact play out through the year? A: (L. Brooks Mallard, CFO) We expect minimal impact in Q2, with the third and fourth quarters closely matched, resulting in no material dollar impact. We anticipate about a 25 basis point EBITDA margin dilution for the year due to tariffs. (Ivo Jurek, CEO) We plan to offset 75-80% of the $50 million tariff impact with price increases and the rest through operational initiatives.