DENVER - Gates Industrial (NYSE:GTES) Corporation plc (NYSE:GTES), a global manufacturer of power transmission and fluid power solutions, disclosed today that selling stockholders affiliated with Blackstone (NYSE:BX) Inc. have launched a secondary offering of 20 million ordinary shares. The company will not offer any shares or receive proceeds from this offering.
The selling stockholders, in relation to the offering, also plan to provide underwriters a 30-day option to buy up to an additional 3 million ordinary shares. Citigroup, Goldman Sachs & Co. LLC, and Jefferies are acting as the lead book-running managers for the offering.
Concurrently, Gates has announced a share repurchase agreement with Citigroup Global Markets Inc. to buy back $125 million worth of its ordinary shares at the same price the underwriters will pay in the secondary offering. This repurchase is contingent upon the completion of the offering.
The offering and subsequent share repurchase are part of Gates' ongoing capital management strategies. A Gates director has expressed interest in purchasing shares during this offering. The timing for the closing of the offering and the share repurchase has not been disclosed, but the repurchase is expected to follow promptly after the offering's completion.
Investors can access the offering's prospectus and related documents filed with the Securities and Exchange Commission, which provide more detailed information about Gates and the offering. These documents are available for free on the SEC's website.
This press release does not constitute an offer to sell or a solicitation of an offer to buy the securities, and there will be no sale of these securities in any state or jurisdiction where such an offer, solicitation, or sale would be unlawful before registration or qualification under the securities laws of any such state or jurisdiction.
The information in this article is based on a press release statement from Gates Industrial Corporation plc .
In other recent news, Gates Industrial Corporation has seen a slight decrease in its second-quarter revenues for 2024, primarily due to softer demand in industrial end markets, notably within the On-Highway segment. Despite this, the company reported an increase in its adjusted EBITDA margin, largely due to gross margin expansion. Gates Industrial also announced a new $250 million share repurchase program and refinanced its debt, extending maturities to the end of the decade.
RBC Capital adjusted its outlook for Gates Industrial, raising the price target from $19.00 to $20.00, while maintaining a Sector Perform rating. This adjustment follows the company's announcement of a smaller-than-expected guidance cut and a modest second-quarter operating performance that exceeded expectations by 4%.
Furthermore, Gates Industrial is accelerating its restructuring efforts, expected to yield cost savings in 2024 and 2025. The company's proactive measures to address these challenges and capitalize on new opportunities have been well-received by the market, as reflected in the updated price target from RBC Capital. These are some of the recent developments in the company's business operations.
InvestingPro Insights
In light of Gates Industrial Corporation plc's (NYSE:GTES) recent announcement regarding the secondary offering and share repurchase plan, key financial metrics and insights from InvestingPro can provide investors with a deeper understanding of the company's current market position. Gates Industrial, with a market capitalization of approximately $4.47 billion, is trading at a P/E ratio of 20.52, which suggests a premium pricing relative to its near-term earnings growth. This is further substantiated by an adjusted P/E ratio over the last twelve months as of Q2 2024, which stands slightly lower at 19.64.
Despite a decline in revenue growth of 3.19% over the last twelve months as of Q2 2024, Gates Industrial has maintained a robust gross profit margin of 39.62%, underlining the company's ability to manage its cost of goods sold effectively. The company's operating income margin for the same period is noteworthy at 30.11%, indicating strong operational efficiency. Additionally, Gates Industrial has demonstrated a positive return on assets of 3.46% in the same timeframe, reflecting the company's ability to generate earnings from its asset base.
InvestingPro Tips for Gates Industrial highlight that the company has a perfect Piotroski Score of 9, which is an indicator of strong financial health. Furthermore, analysts predict the company will be profitable this year, which aligns with the company's performance over the last twelve months. For investors seeking a comprehensive analysis, InvestingPro offers additional tips, including insights on earnings revisions and dividend policies. Interested readers can find a total of 7 additional InvestingPro Tips for Gates Industrial at InvestingPro.
These financial insights and InvestingPro Tips should be considered by investors who are evaluating the potential impact of the secondary offering and share repurchase on Gates Industrial's market valuation and future performance.
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