Gates Industrial Corporation’s first quarter results were well received by investors, largely due to its ability to outpace consensus expectations for both revenue and non-GAAP earnings. Management attributed this outcome to strong performance in the automotive replacement channel and a robust recovery in personal mobility markets, which together offset ongoing softness in agriculture, construction, and energy end markets. CEO Ivo Jurek noted, “Our replacement channel sales grew mid-single digits, driven by high-single-digit growth in automotive replacement,” and highlighted that gross margins continued to expand, supported by ongoing enterprise initiatives focused on cost efficiency and operational improvements.
Is now the time to buy GTES? Find out in our full research report (it’s free).
Gates Industrial Corporation (GTES) Q1 CY2025 Highlights:
- Revenue: $847.6 million vs analyst estimates of $823.4 million (1.7% year-on-year decline, 2.9% beat)
- Adjusted EPS: $0.36 vs analyst estimates of $0.33 (8.9% beat)
- Adjusted EBITDA: $187.3 million vs analyst estimates of $180.9 million (22.1% margin, 3.5% beat)
- Management reiterated its full-year Adjusted EPS guidance of $1.44 at the midpoint
- EBITDA guidance for the full year is $765 million at the midpoint, in line with analyst expectations
- Operating Margin: 14.7%, up from 13.5% in the same quarter last year
- Organic Revenue rose 1.4% year on year (-3.6% in the same quarter last year)
- Market Capitalization: $5.87 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Gates Industrial Corporation’s Q1 Earnings Call
- Michael Halloran (Baird): Asked about the timing and effectiveness of tariff mitigation strategies. CFO Brooks Mallard clarified that the impact would be minimal in the second quarter, with price realization and cost offsets aligning by the third and fourth quarters.
- Julian Mitchell (Barclays): Inquired about demand trends in personal mobility and automotive OEM, as well as tariff classifications. CEO Ivo Jurek explained that personal mobility outperformed expectations and that most auto OEM operations are insulated from tariffs due to regional manufacturing.
- Jeffrey Hammond (KeyBanc Capital Markets): Requested details on the magnitude and implementation of price increases and the flexibility of U.S. and Mexico manufacturing. Management outlined that 75-80% of tariff exposure would be offset by price, with U.S. manufacturing providing a key lever for compliance.
- Nigel Coe (Wolfe Research): Asked about the competitive landscape and the rollout of price increases. Management emphasized their in-region manufacturing advantage and noted that pricing actions are being deployed globally based on sourcing and supply chain needs.
- Deane Dray (RBC Capital Markets): Questioned inventory trends and the likelihood of channel pre-buying ahead of tariffs. Jurek assured that sales-in and sales-out data from key partners showed no evidence of inventory build-up.
Catalysts in Upcoming Quarters
Going forward, the StockStory team will be monitoring (1) the pace and effectiveness of tariff mitigation through pricing and operational changes, (2) the resilience of replacement channel demand as OEM and industrial end markets remain soft, and (3) progress on enterprise cost initiatives and the 80-20 program, especially in Europe and back-end operations. Potential new customer wins and expansion in personal mobility will also be important markers.
Gates Industrial Corporation currently trades at $22.85, up from $17.92 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
Our Favorite Stocks Right Now
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
