Gates Industrial Corporation plc (NYSE:GTES) Q2 2023 Earnings Conference Call August 4, 2023 10:00 AM ET

Company Participants

Rich Kwas – Vice President-Investor Relations

Ivo Jurek – Chief Executive Officer

Brooks Mallard – Chief Financial Officer

Conference Call Participants

Mike Halloran – Baird

Andy Kaplowitz – Citigroup

Julian Mitchell – Barclays

Josh Pokrzywinski – Morgan Stanley

Jeff Hammond – KeyBanc

David Raso – Evercore ISI

Deane Dray – RBC

Jerry Revich – Goldman Sachs

Jamie Cook – Credit Suisse

Operator

Hello, and welcome to the Gates Industrial Corporation Q2 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions]

I will now turn the conference over to Rich Kwas, Vice President of Investor Relations. Go ahead.

Rich Kwas

Good morning, and thank you for joining our second quarter 2023 earnings call. I’ll briefly cover our non-GAAP and forward-looking language before passing the call over to our CEO, Ivo Jurek, who will be followed by Brooks Mallard, our CFO.

Before the market opened today, we published our second quarter 2023 results. A copy of the release is available on our website at investors.gates.com. Our call this morning is being webcast and is accompanied by a slide presentation. On this call, we will refer to certain non-GAAP financial measures that we believe are useful in evaluating our performance. Reconciliations of historical non-GAAP financial measures are included in our earnings release and slide presentation, each of which is available in the Investor Relations section of our website.

Please refer now to Slide 2 of the presentation, which provides a reminder that our remarks will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are subject to risks that could cause actual results to be materially different from those expressed in or implied by such forward-looking statements. These risks include, among others, matters that we have described in our most recent annual report on Form 10-K and in other filings we make with the SEC. We disclaim any obligation to update these forward-looking statements.

We’ll be attending investor conferences later in the third quarter, including the RBC Global Industrials Conference and the Morgan Stanley Laguna Conference. We look forward to meeting with many of you.

With that out of the way, I’ll turn the call over to Ivo.

Ivo Jurek

Thank you, Rich. Good morning, everyone, and thank you for joining us today. Let’s begin on Slide 3 of the presentation. Our global teams achieved solid results. We delivered Q2 revenue and profitability above the midpoint of our guidance as well as strong free cash flow. Our nearly 4% core revenue growth was fueled by strength in our automotive vertical across both the first-fit and replacement channels. The EMEA region led growth geographically with organic growth of high single digits year-over-year. Our China business experienced a nice rebound year-over-year with core growth in the high 20s of a COVID impacted prior year period, however, fell a little short of our expectations.