Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by. My name is Kayla Baker and I will be your conference operator today. At this time, I would like to welcome everyone to the Gates Industrial Corporation First Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Instructions] [Operator

like Relations, call Rich now President to turn Investor of Kwas. to would over the Vice I

Rich Kwas

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

of our opened first quarter A investors.gates.com. copy our website today, on XXXX available published the we market is the Before release at results.

being and is is a morning presentation. by this slide call Our webcast accompanied

this to of is release On earnings useful certain financial in available website. measures measures Reconciliations call, our our of financial Relations which our evaluating in and are the Investor believe the non-GAAP are we will included non-GAAP historical slide refer that presentation, section in performance. of we each

refer slide Please cause are statements Private to a in materially forward-looking Act. presentation, reminder include which statements. be actual the These our the or Securities meaning expressed provides from of forward-looking that remarks different such could of to the forward-looking risks by will Reform within to that implied those results two Litigation subject now statements

among report filings the in have that matters most recent disclaim any in our We SEC. these annual These we statements. we update include, on risks forward-looking and others, XX-K with Form described other make to obligation

you. over next Industrial the with including Conference. month, KeyBanc of the conferences look Materials the Industrials investor and several Transportation Global to Wolfe Conference, We attending and and Basic meeting Sachs be Materials will Industrials many We and forward the Goldman Conference

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

Ivo Jurek

for morning, call everyone, our Thank you, today. joining Good thank and you Rich.

three presentation. start on of the Let's slide

we on that solid challenging the and through managing teams quarter, revenues environment guidance attack our while the posted global above Our a remains in an enterprise. operating another QX delivered of cybersecurity midpoint and

to incident in which in disclosed previously cybersecurity most of our a experienced led in a early of As February, temporary our globally. company February, an shutdown operations X-K filed

restart and the XX nearly corporate the operating to over our circumstances. and days. of such tirelessly resiliency proud and of to all Our I am of operations teams progressively worked response successful challenging diligently course

period incident, growth costs Brooks Our QX incurred XXX will rate the the approximately outline have and adjusted with more in detail in the been these for by during impacted call. event the the quarter. estimate associated revenue our in results basis points later cybersecurity We

to of America is do ship support incident demand, quarter. volume The the and the two-thirds which current recovery and North European of ability dislocation experienced book approximately and sales primarily in North this estimate We our replacement contemplate we disrupted American business. not

results. Moving onto our

regional region was China balanced recent healthy impact and from supported core OEM core COVID replacement another and demand. relatively to strong progressed our the recover as of Geographically, continued registered outpaced Our the quarter expectations. the channels. by our growth initial First-Fit across growth EMEA after quarter performance modestly most

continue both support We midterm. Vehicles age by saw disruptions increase dynamics and and security despite geographies to event. caused for output our steady demand which service the levels in major in operation the to car the automotive the demand our our should in solid business replacement cyber parc

satisfying slowly focused teams continue diligently chain to Supply customer remain ease headwinds our logistics and and on global demand.

in compared profitability year. meaningfully Our quarter the prior the to expanded

quarter. favorable and executed teams when year's to well Our cost more our price first business last position compared was

and our Overall, slowly benefiting operational chain improving supply is the performance.

impact estimated during margin QX ahead cybersecurity was EBITDA million including our quarter. incident midpoint, the expense adjusted from $X guidance slightly rate Our the of the

we positive Notably, flow free this produced cash quarter.

a inventory sizable made which a We experienced was year's Our position, below working progress capital year-over-year last our use on well quarter. decrease basis. first normalizing

service to initiatives We levels improvements our also while to inventory turns underway driving customers. our improve multiple to have our

impediments, we progress as chain supply will year be coupled believe easing the When made that evolves. further with

are We flow. cash strong our the seasonal to start encouraged by

Underscoring to authorization and we approved provides a added Directors today flexibility to us announced we shareholder authorization with use shareholder $XXX opportunistically. has The Board million enhance in of our that that intend driving value, returns it XXXX. expires our to October commitment share repurchase

Please turn four. slide to

First quarter core $XXX translated was total versus X% million growth to the and prior year. revenue of

Foreign a XXX year-over-year. currencies were basis headwind point

XXX represented outlined, As cybersecurity to incident estimate our growth headwind the we a approximately basis rate. point

and led high We Diversified growth recent double-digit realized trends. quarterly in our end off-highway. personal and of energy growth in by in industrial moderated single-digit markets solid from most growth expansion mobility

points increase Adjusted EBITDA an was $XXX XXX adjusted basis year-over-year. margin, EBITDA of which million, XX.X% yielded a

cost year due accelerated a price Ukraine when commodity by increased conflict. helped better year-over-year supply better a and position relative dynamics. to margins to the Russia, inflation quarter chain ago Our was energy Gross

per Adjusted $X.XX. earnings was share

was operating share materially tax a by rate contributed Our income and was earnings. and year-over-year up increased $X.XX year-over-year expense. The per a of affected effective higher comparison interest

we generated first revenue the growth in strongest basis markets On segment was energy, growth, in $XXX performance All Power approximately double-digit the slide review year-over-year XXX In five, X%. experienced headwind. quarter I'll of segment, level personal experienced construction line core segment which our core slightly offset helped and China. The demand Transmission mobility. above million FX highlights. resulting top point in the weaker in end these a

America, a the where impact incident. single-digits decreased mid basis on saw cybersecurity in from to we the most revenues Industrial North Diversified core high

our quarter, While exited expectations disruptions, we region our China strengthened and of as the pandemic primarily COVID a result of in quarter. the came as in weakest ahead was it the

Mobility, particularly continued above-market continues the availability supply to in obtaining a wins to and sufficient Personal are support we had on go-forward We basis. support growth supply Polymer should demand. in customer design which normalize quarter strong

margin showed cost supply price and helped nice year-over-year a balanced position EBITDA improving recovery chain. adjusted by Our

in of energy, negative XXXX. recorded pressure second market wins meaningful by segment the in X% revenues were approximately and quarter. We areas half best Power growth points begin offset of in of construction replacement agriculture partially Fluid currency. million and that with Our $XXX will the XXX other production The construction the from booked growth basis core year-over-year

Power segment operating points EBITDA prior improved XXX margin compared basis from environment year. the a year-over-year, to more benefiting Fluid stable

details for our call additional I to will now on turn the Brooks results. over

Brooks Mallard

Ivo. Thank you,

were to slide now the mobility Similar markets a strongest Personal was our the Off-Highway core was by to basis. the region, well growth our and both teens. overview EMEA XX% industrial an core of versus markets high constant fourth growing revenue currency region. mid-teens energy Overall, growing Moving end on a and standout quarter in pace. above revenues performance at XXXX, prior year XX%. end expanded six

the than Industrial last moderated the and single-digits Off-Highway growth activity initial basis. exceeded expectations. in declined strengthened year. experienced sales mid-single while compared growth low replacement First-Fit digits, in quarter modestly on stronger and quarter, an China Diversified North half to of year-over-year the organic generated revenues solid our in increased moderately America last EMEA. but Automotive

growth markets. dedication contributions it demonstrated South most increase generated a miles was country bright to an Overall, good driven start a the the and the resiliency year-over-year in end driving has East in garage with solid replacement high America Auto and was higher China, spot growing distinct both organization. restrictions demand. core the of Asia fueled The visits, COVID across double-digits. single-digit of in relaxation year and and

SG&A approximately walk The A $X.XX from slide provide includes cybersecurity little and earnings to per lost effective related back $X.XX higher drove rate contributed to reflects earnings manufacturing headwind addition incident. primarily to a was production $X.XX while interest per per adjustment costs. higher expense share share prior tax year. add expense incremental earnings the compared $X.XX year's the in per last per Operating we performance seven, over share On adjusted share share of quarter. first an a a drag

bucket minority a reduced includes interest the other benefit The share and count prior the of versus year. lower

a filing. our after charge EBITDA reconciliations. added The recorded pre-tax million we bankruptcy back adjusted or $XX.X to related adjusted customer $X.X and a per Lastly, in million earnings was share charge tax

sheet. on Slide performance cash eight our balance an has flow update and

million. Our prior free improved to was the flow was from outflow quarter benefiting for cash environment management. a operating $XX stabilizing working inventory and capital period, significantly the slowly lower year Relative

increased Our inventory modestly year-over-year. turns

Our sequentially. both net declined and leverage year-over-year

last incremental compared highly to first our We regards with X.X times net was the At ended the the driving leverage taking ratio net the balance quarter, a our publicly end be for with ratio to position. our We X.X we'll in our opportunistic first history sheet on of company. year. leverage strengthen and quarter to times lowest remain as traded actions a to improvements focused quarter

cash. As us enables Ivo new earlier, excess the mentioned to be $XXX our capital which a optimizing approved repurchase Board as million deploy we authorization, in allocation options efficient share

guidance XXXX slide on to nine. Shifting

XXX%. and million full not of potential adjusted that in EBITDA are Please range capital expenditures X% ranges $XXX revenue year $X.XX. to cash of still million to per guidance, XXXX $X.XX growth, adjusted core to guidance X% our anticipate flow repurchases. of of earnings reiterating and incorporate $XXX free includes Also, conversion our $XXX do which the share million approximately share any we note We

second quarter, expect the in million. million range the to of For we to be $XXX $XXX revenues

We We will that basis shutdown last of prior points comps occurred inclusive second during growth as expect to COVID-related adjusted points year-over-year, business year. basis low our to compared meaningful margin XXX in the XX growth core the EBITDA estimate against single-digit China year's expand the quarter. approximately

Ivo. that, back will I With over to turn it

Ivo Jurek

Brooks. of messages Thank On questions. couple taking a XX, slide you, I'll before your summarize key

am with pleased the year. start our I to First,

incident. through our Our the midpoint guidance a results of came in above navigating cybersecurity while

both traction, which and continues to to of year-over-year. environment expansion attractive initiatives gaining contributed are our operating The margin heal, operating

intensely are environment we metrics our as service the focused Additionally, operating normalizes. on customer

delivered improving first to when to in the make shareholders. normal We seasonality return outflow. results our usually flow balance our our an positive capital a very we enhancing and progress free cash strong to continue performance ability in good considering quarter, Second, sheet

XXXX highlights intently income cash focused cash free four midterm. conversion flow quarter to through are March, our our our flow of the and generation has free measured net XXX% on basis capabilities. in XXX% flow converting which cash trailing adjusted On in We

and leverage by X.X quarter decreased ratio slightly net turn fourth the from year-over-year fell level. Our

flow to provides authorization The shareholder return performance share with another deliver recently that will Based enable base. authorization on our business to and in attractive $XXX returns strong capital to sheet, repurchase cash to a our the balance us opportunistically tool of million Directors improving approved us Board shareholders. our

finish perseverance by I'll to their and associates extending global appreciation the dedication. deep for Gates XX,XXX my

call I'll the the turn over back Q&A. the to that, to begin now With operator

Operator

RBC with first Dray of Capital Instructions] from line Markets. question And our Deane [Operator the comes

Your line is open.

Deane Dray

Thank morning, Good everyone. you.

Ivo Jurek

morning. Good

Brooks Mallard

Good morning.

Deane Dray

that some you or you is volume, was put to share quarters? that future lost that during it don't just it there When recoup expectation to it back that -- closure in -- say get was the why just malware is going on you're Hey, not is just the why period, so incident.

Brooks Mallard

the through is take time where progressively lot and of was period ship better A Deane. as we couldn't and of went book that business we this orders Hi, incident. our there so and some got

time primarily going our that so orders. us to We going those orders take XX ship to hours. we piece get don't within, is view back book you I order the XX back And it that probably mean, to is, because that during it's aren't couldn't we come think business you just ship where it so to and book within take and

Deane Dray

Got it. right. All

question any So the And then that's on? can of second inventory would is, sense there are positioning us helpful. channel, in helpful. give Anything a destocking Thanks. the going be distributors you how

Ivo Jurek

that what at It's cautious are imagine, the point-of-sale and demand very underlying being data future. we -- you carefully with market consistent continue as very business But believe may the indicators, can also look inventories do the the Based channel. still in fairly near-term to related a and is we that on balanced. the the very, very of we in the mindful are

indicated, demand, say that would industrial that and we markets the see I'll general choppiness down. I to distribution end we But reasonably some positions as remarks started nice logistics chunks that take is as good in have a remain shape. also of our to in finished inventory kind the say we weakened prepared of and I my in And inventory somewhat. more stated isolated goods in did have

Deane Dray

Thanks. quarter. not it's a very just That's comment. helpful. lastly, a free That's on cash flow And impressive just this really question,

Ivo Jurek

Thank you.

Brooks Mallard

Thank you.

Operator

line next Andy Citigroup. of question from comes the Kaplowitz And the with

Your is open. line

Andrew Kaplowitz

morning, everyone. Good

Ivo Jurek

morning. Good

Brooks Mallard

morning. Good

Andrew Kaplowitz

presentation. earnings Transmission, mentioned the of like your today's you performance your last in call, availability seems sales. in improving you higher and help significantly It margin on that and it margin engineered Power did lower seems Ivo, highly polymers given the it like is said again

more are of maybe QX PT would the terms especially expectations? comparison easiest expect supply you of being that terms chain that chain with understanding to in just was continue your headwind, So performance supply your conservative you positive in in

Ivo Jurek

availability. about our polymer pretty supply very open Andy. Thank you, consistent and struggles mean, I and with I've the maybe been

we're so, And making look, good really progress.

We big a have year. resins last of secured in adequate that of particularly amount was headache, QX

some brought easiest of and probably that last that of all was inflation, Russia in seen year the conflict obviously driven predominantly in other by by the QX in was have while we that end particular of comp, but So in and issues 'XX.

the that based drive polymer in than we QX. comp should QX up. to and will we able our what was have need think be it I be margins We continue easier feel in we to that progressively

have guided prepared remarks. in our we As

Andrew Kaplowitz

would or Ivo a us then into about to impacting credit with you and your it expect this can tighter you time incident. to more And a Brooks, or just how give markets the good relatively are customers I be would customer happened ask you color and what be isolated bankruptcy, that little a think and conditions

Brooks Mallard

of to that end January on the more credit through information for the particular a a not it think it's there's process look, as customer. became the go towards we at point for go for customer mean isolated prudent I us so an we do And ahead to proceedings reserve learn some we book filed and incident. lot bankruptcy Yeah, say that

our terms methodology supplier. that. worthiness in how a particularly track credit bad at debt how of we have and different automotive look big we and of like was customers a We things good one This the

fairly And both and debt. in have our place good at receivables we happened manage our so looking our credit-worthiness process and it where managing But -- quickly. customers' was it bad we our, a

good about So we we pretty are. feel where

Andrew Kaplowitz

Appreciate guys. color, the

Operator

Mitchell from line comes with of question Barclays. Julian the next the And

is Your open. line

Julian Mitchell

of year? you of we Maybe quarterly Anything volumes are Good for of just within a basis sort to And the spread quarter into versus sales sort when price balance Hi. or I tailwind sort volume bit and of drill at just to year, more. points wondered the four to the price thinking of in seasonal growth. outlook the the think morning. the try first a points of three sales about basis. on volume call still out X-ish for and

Ivo Jurek

it in mean quarter morning. Yeah, restate, than comps, thinking about good in in in correctly. mean Julian, Look, this year. had obviously a of and I I we we right, full to of then the you're had impact think China QX Russia again I QX COVID

the outlook So, market, described pretty performance in prudent order we what the see, based as upon pricing intake, believe that underlying our have guidance. we and the remains of we our

Julian Mitchell

much. so Thanks

sort price the eases And price year. or tailwind through gradually Is of narrows to the gradually way in that the about think sales?

Brooks Mallard

of it. rate to down Yeah, I the through and think inflation will But over that price relationship that's the exact course -- deflation way to inflation that in think will year, -- inflation starts yet. the decrease, don't quarter-by-quarter. think It seeing certainly the of trickle starts go the then about I as to cost increase rate of the will slowly slow, we're

Julian Mitchell

it's in quarter. Thanks sheet a very first usage, the the improving encouraging cash free just to much. And balance lot then the on see

distribution on of sort the get of between of of about how or you're structure more to the kind here much have a the talk because return. M&A the of the just There like, as the much thinking optionality shareholder sort of degree done. a do that of jumping bit you the you just base versus cash buyback even that Gates, of has and a to to M&A try get Maybe aspiration just given are higher sure Maybe if sort at a of some two you So sort be valuation I'm the stock? change appeal to float, us or the at sort usage. the through looking free ahead

Brooks Mallard

our really pleased with think Hey, I QX. look first conversion in of all we're we're cash --

as improved chain amount continue to conversion to a the to perspective significant cash drive feel we give we a going about good that's the and our As cash perspective. supply optimizes, of deployment profitability for right or from deploy year cash optionality capital a us

getting paydown of evenly. come pretty X.X X mid-term probably That's debt of got a it's and to profitability we've And and combination so, improved going both through a leverage split look, down to target turns. our and gross

both drive to continue that leverage we'll So down ways.

to We want stock to up some so to optionality. to make in have an us, are that be remain We of mean nicely options. if I then of want want opportunity do us that repurchases going to for the And sure accretive we that for comes that's company. flexible, M&A we have all also good because front those

pipeline our We to M&A of look continue at opportunities.

front sure in becomes those to keep case something of we in actionable. us make continue We

But or say the on opportunities. going our deployment in let not sheet. cash we're both capital are stock I'll buyback, debt terms balance to of And great those further, pay sit down

the debt continue per interest, improve look we If to have down, in as earnings cash, at generate options. And we then reduce share we'll other run. pay so to that. short more And we'll opportunities do cash

Julian Mitchell

Great. Thank you.

Operator

question comes from with Pokrzywinski Joshua Morgan And your next Stanley. the of line

Your line open. is

Joshua Pokrzywinski

good Hey, morning guys.

Ivo Jurek

Josh. morning, Good

Joshua Pokrzywinski

as distribution across the some out access who further in CapEx OE folks guess business wondering, seeing. guys you new you orbit broader funnel there probably spending or to we're just for pretty the project I it Are look things Gates mega in Just an wins the trying industrial and big, I'll 'XX? folks that call get momentum or either out uptick are that anything, now are seeing in those that prep higher into design to would give or seeing

Ivo Jurek

the maybe we and nice think in with about that the out Josh of prepared year. point little that production half second wins equipment remarks this talked will Off-Highway I to in we've Yeah, some construction start to we bit I'll I mean believe

a in more the going would I stage. infrastructure of some build our be that participation say So as out biggest first participation, is to

a those to going actually facilities, products of industrial components are a ton products the the the you out of that as And we then is stage, more our second equipment into to. get automation, have start used equipment in-production looking that that as

a as we're So these projects we're stage a go from more stage latent early confident have that to to development. participation actually of good reasonably going an

could for that and beyond generation this nice timeframe. benefit of 'XX our kind so provide revenue And the in a

equipment So of say an definitely out something wouldn't we have those don't of participating on. participate early that -- we that forward the don't we of see stage I electrical build that like we look that to in Outside projects. mega so

Joshua Pokrzywinski

about debt? gave like I continue aggressive? feel sort you of urgency it. you more to the see That's to kind think inefficient sheet, what's helpful do where Got And you just of two it's at I the but color pay guess a down which level before sense more balance then guys helpful. if or Do of already, you get really we times lot to want land that at some

Brooks Mallard

in think variable that the in environment clearly environment, are. debt our I at we're fixed picture of look, of paybacks higher and a look rate versus much how right how it complete well, Yeah, in the now, what have mean terms of depends I terms to of is it much you interest on is

want a below the us before, be get and debt, to too And to ways billion so still what's we look But leaves want we've so that we we terms to to said want gross $X at shareholders. to that of for paying of down best go in down. balanced

side, improve stock bit the shareholders. Ivo? down maybe we back high our attractive buying the profitability, And get to closer debt, more goal, pay a down little debt then cost M&A more and on for of as Certainly the pay

Ivo Jurek

do of I to mean of we of a very We in portfolio deliver. to ahead margins we our start that look, and we set where at strong can participate. strong we really will continue enterprise have -- grow very type with opportunities like believe it nicely end our that participate markets us we Yeah, I the how and product

feel benefit pressure standby the of this primary But is are opportunities when that to We a we that that a be opportunity to of arise, opportunities would would And want an business we Gates don't frankly being has balance focus. out they proof continue we'll M&A. lots transactions. our or with strong have right said, there any when sheet some combination with there valuations. from a to look do arise bullet we that those the and demonstrate companies to benefit at a on believe potential and to

Joshua Pokrzywinski

luck Great. the in of Best meantime.

Ivo Jurek

Thank you.

Operator

line The question of with Halloran Mike from next comes Baird. the

open. is Your line

Michael Halloran

everyone. good Hey, morning,

Ivo Jurek

Good morning.

Michael Halloran

So thoughts again. maybe side some demand first the on,

the project by think at demand negative the Just cadence your to the backlog heard year? year? thinking the look as through trend I back of is from about larger and year certainly about question thinking wins market how you're -- of you're about or nuance any coming we there I backlog, Josh's And or projects that half where through perspective first underlying response these how normalization some an positive But from a perspective. end cadence

Ivo Jurek

think good I that's no, Mike. Yeah, very, very question,

frankly book mean I me Taking challenging here. that. with to what for we've start bill our incident, time period remain look very gone our into above account cyber teams let So was the with one, which through of

to Our and remains until that start meaningful a in able anticipate way our second to year. backlog it too age do the half and way of be elevated reducing we're frankly going backlog we not

that and Maybe lead We some additional normalizing already. it the a available more the remains think moments particularly And to industrial of expectations, I've choppiness the a of overall business in and chain going normalizes but our see little I it supply replacement believe see couple start with particularly bit ago. we said do is times if line in you're choppiness. that color

remain very solid one. the But inventory levels again level The demand. to channel of very, book present above the in with bill

particularly of business continue And do and viewed beginning around in that at year on have of year, in forth. the driven start of probably this how the the so the late and and constraints credit cycle which we the second think so -- is some half, some around should we evolve the slowdown so at to

more I'll what we you a mean we feel in here. with good give little see. I So pretty maybe color

Off-Highway very kind Personal of plus Obviously, very talked X%. market strong Our auto in Mobility we X%, demand up energy seeing auto teens. high underlying strong. about still was solid very global demand high solid, teens, very at up

of more of diversified was kind it And only choppiness only the so that level. and have we the seen digit in industrials mid-single the was down kind

all in mindful being that pretty good, and are we and but being pretty kind of So what underlying all the operating cautious we we very are of we're macroeconomics solid anticipate in.

Michael Halloran

about you up, that optimization couple then announced of on helpful are programs Very update you a progressing when quarters just think follow side. the back things an and on how

Ivo Jurek

look, incremental I good gross our Yeah, through nicely revenues. very on mean, quite flowing margin, leverage up margins obviously operating

So, And in that was I would supply situation. solid. pretty say quarter helped that chain first we were less the a negative predominantly by

And and described. is pumped think continue to so wheel, we our we that in place drive getting that have prime to good prime improvement pump up -- we a are we have

And that nicely really the underlying on through the next profitability of up we gross highlighted earnings the and certainly margins should improvement as couple that should believe we have years, the over last go filter the call.

Michael Halloran

appreciate Ivo, it. Thanks

Ivo Jurek

Thank you.

Operator

next Credit Suisse. from with Jamie line the comes of question Cook the And

open. is line Your

Jamie Cook

guess business the things business this downturn actions cycle performs your previous market in contemplating congrats or the I most through assuming some been mean nice talk and I the does guess can of just deteriorate, a quarter. asked. any Thank have either morning I a the your Good now that how event questions say ones? from side macro you a you in focus, potential on end right of just you. that in do I deteriorate. changes Hi. versus would And are model, cost

Ivo Jurek

you Look the that lot think macro. start of I question. the I more with we're that Good Thank cognizant morning, would Jamie. for

I We maybe too just have to the may think me conditions. pragmatic. market underlying been, negative I told have trying about we're that be But been somebody

And to so, our started as nicely. levels take inventories I quite said earlier down we

to in and be effectively. absolutely have more positioning situation customers ourselves are we our on we are we flexibility laser-focused servicing So want a a to where

also macro We up the don't be scenario want amount demand. inventory with of filtered a is the potential underlying where to through in caught significant

we some one change should portfolio have macroeconomic balanced our strong pretty from of the a more So say I end slow that of I think believe dynamics two, number where the would that's a maybe number down previous Change markets in even cycle. probably environment. have lot we

believe replacement us. very shape, provide automotive good nice is for So should in that cushion that, business and a we a

lots the down our portfolio. since we taken done with have exposure by of OEM nearly We mean, XX% automotive company. I of a have public we've work change obviously, our become

that to cyclical a So that effectively a maybe should capability And able be more downcycle. a have where flex less in past we we improved have there have to we footprint than our the muscle auto little market. do we fundamentally believe exposure to been

And said sometimes lastly, haven't we year in we still projects about really the lot we spoken restructuring we a on have since docket that last that a of ton are late position planning stages and update incremental to our of putting on breakeven out driving an mid-year to and we coming with providing executing those ourselves we be that point. will opportunities see

Jamie Cook

Great, thanks. I appreciate it.

Operator

with next Our Instructions] Revich Goldman [Operator Jerry question comes from of line the Sachs.

begin. may You

Clay Nelson

Clay Jerry. for is on This Hi.

me. one one Just quick for

EBITDA point our high typically at for the margins -- year. is EBITDA the quarter are Second

you this any just? second seasonality expect normal or the -- at from Thank Looking you. in deviation would half

Ivo Jurek

to back when terms Yeah. I think is some see in choppiness come impact Look, to do year. our be peak through. I started the overall we Russia-Ukraine think in QX look tends 'XX of you there when

remember expect the we the we you year. chain and supply had progressively chain supply QX If QX And disruptions better. then to last get

So when half. the and year you half a when we second we're you think of through the improvement pretty second even look bit at split from half pretty first a versus the our -- gross about expect kind to first even margin more thinking half,

comp of variable second XXXX. half the more have to expect do in We

it perspective you second versus -- in be think a at look half. to going year-over-year would going I half way terms from that a headwind of a to that's So the when that's But of comp first perspective.

Clay Nelson

Thanks.

Ivo Jurek

Yeah.

Operator

of line the from comes question next the And Hammond KeyBanc. Jeff with

open. is line Your

Jeffrey Hammond

the Hey all how to jumped thinking about you're on PT growth? security guys, within where on little hit? changes a Fluid late, confirm, I And cyber Power versus shortfall just I revenue guess just any

Ivo Jurek

think morning, more to the polymer We have Jeff. vis-a-vis the half. that we more opportunity in more the year continue of we and in nicely shortages the discussed, was believe that Yeah, power still last half we perform have recovering good to that so remains there second second for power impacted opportunity transmission transmission,

most highlighted your of impacted in replacement realized in on our business. we impact question, of have that our were and Europe. two-thirds And was America million cybersecurity in predominantly North business, about And the $XX of first side America North the

Jeffrey Hammond

Okay. And some replacement all weakness? there pockets real can choppiness, demand certain that kind chalk like up or industrial just some is end to feels we or then destock that markets of

Ivo Jurek

that impact Yeah, Europe cyber security pretty I equipment mean Jeff. that's I touched and Logistics said notable. North think earlier, weaker. America been I've and in think distribution I the also But would say it particular. has I

really So pretty side channel feel in robust. our warehousing equipment maybe at this of say and the that would that of outside good lot pretty in inventories time. the that remains business, We rest it we the I balanced destocking nicely don't about see of being a of point

Clay Nelson

Thanks Ivo. Okay. lot, a

Ivo Jurek

Thank you.

Operator

And there are no back this the turn Rich you. will Kwas, time. call over further I to questions at

Rich Kwas

our for right. quarter you, joining All first everyone Thank conference call.

any If a out again. have you Have day. myself. reach free follow-up Thanks questions, to feel great to

Operator

call. today's concludes conference this And

disconnect. You now may

Gates Industrial (GTES) 4 May 232023 Q1 Earnings call transcript