v3.24.2
Segment information (Tables)
 6 Months Ended
Jun. 29, 2024
Segment Reporting [Abstract]  
Schedule of Net Sales by Operating Segment
Sales between reporting segments and the impact of such sales on Adjusted EBITDA for each segment are not included in internal reports presented to the CEO and have therefore not been included below.
Three months endedSix months ended
(dollars in millions)
June 29,
2024		July 1,
2023		June 29,
2024		July 1,
2023
Power Transmission$541.9 $573.9 $1,074.7 $1,122.0 
Fluid Power343.6 362.4 673.4 712.0 
Continuing operations$885.5 $936.3 $1,748.1 $1,834.0 
Adjusted EBITDA by segment was as follows:
Three months endedSix months ended
(dollars in millions)
June 29,
2024		July 1,
2023		June 29,
2024		July 1,
2023
Power Transmission$123.8 $119.0 $242.8 $226.7 
Fluid Power 78.4 78.3 155.0 145.1 
Continuing operations$202.2 $197.3 $397.8 $371.8 
Schedule of Net sales by Key Geographic Regions and Markets
The following table summarizes our net sales by key geographic region of origin:
Three months ended
June 29,
2024		July 1,
2023
(dollars in millions)
Power Transmission
Fluid Power
Power Transmission
Fluid Power
U.S.$143.9 $184.0 $155.6 $191.1 
North America, excluding U.S.
62.3 53.3 56.5 55.9 
United Kingdom (“U.K.”)9.9 18.9 13.8 19.7 
EMEA(1), excluding U.K.
158.6 46.8 168.4 54.1 
East Asia and India66.6 19.9 70.7 20.2 
Greater China73.4 11.1 80.4 10.5 
South America27.2 9.6 28.5 10.9 
Net sales$541.9 $343.6 $573.9 $362.4 
Six months ended
June 29,
2024		July 1,
2023
(dollars in millions)
Power Transmission
Fluid Power
Power Transmission
Fluid Power
U.S.$284.9 $356.0 $300.4 $372.9 
North America, excluding U.S.
125.4 103.8 111.3107.7
U.K.20.5 34.7 24.340.1
EMEA(1), excluding U.K.
311.6 98.8 336.1108.0
East Asia and India135.2 39.8 144.740.0
Greater China142.1 21.5 150.421.8
South America55.0 18.8 54.821.5
Net sales$1,074.7 $673.4 $1,122.0 $712.0 
(1)    Europe, Middle East and Africa (“EMEA”).
The following table summarizes our net sales into emerging and developed markets:
Three months endedSix months ended
(dollars in millions)
June 29,
2024		July 1,
2023		June 29,
2024		July 1,
2023
Developed$572.5 $632.9 $1,129.5 $1,214.1 
Emerging313.0303.4 618.6 619.9 
Net sales$885.5 $936.3 $1,748.1 $1,834.0 
Schedule of Reconciliation of Adjusted EBITDA to Net Income from Continuing Operations
Reconciliation of net income from continuing operations to Adjusted EBITDA:
Three months endedSix months ended
(dollars in millions)
June 29,
2024		July 1,
2023		June 29,
2024		July 1,
2023
Net income from continuing operations$77.9 $71.3 $124.1 $102.2 
Income tax expense12.3 9.6 46.8 24.9 
Income from continuing operations before taxes90.2 80.9 170.9 127.1 
Interest expense49.1 44.5 86.6 85.3 
Other (income) expenses(3.1)3.7 (4.6)4.0 
Operating income from continuing operations136.2 129.1 252.9 216.4 
Depreciation and amortization54.5 54.0 109.1 108.5 
Transaction-related expenses (1)
1.2 0.6 1.6 0.8 
Restructuring expenses1.6 2.2 2.8 7.7 
Share-based compensation expense5.2 6.8 13.8 16.3 
Inventory impairments and adjustments (2) (included in cost of sales)
3.4 3.5 17.3 4.1 
Severance expenses (included in cost of sales)— — — 0.5 
Severance expenses (included in SG&A)— 0.3 0.1 0.9 
Credit loss related to customer bankruptcy (included in SG&A) (3)
— 0.7 0.1 11.4 
Cybersecurity incident expenses (4)
— — — 5.1 
Other items not directly related to current operations (5)
0.1 0.1 0.1 0.1 
Adjusted EBITDA$202.2 $197.3 $397.8 $371.8 
(1)    Transaction-related expenses relate primarily to advisory fees and other costs recognized in respect of major corporate transactions, including the acquisition of businesses, and equity and debt transactions.
(2)    Inventory impairments and adjustments include the reversal of the adjustment to remeasure certain inventories on a LIFO basis.
(3)    On January 31, 2023, one of our customers filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In connection with the bankruptcy proceedings, we preliminarily evaluated our potential risk and exposure relating to our outstanding pre-petition accounts receivable balance from the customer and recorded an initial pre-tax charge to reflect our estimated recovery. Based on further developments in the bankruptcy proceedings, we recorded an additional $0.1 million pre-tax charge during the six months ended June 29, 2024. We will continue to monitor the circumstances surrounding the bankruptcy in determining whether adjustments to this recovery estimate are necessary.
(4)    On February 11, 2023, Gates determined that it was the target of a malware attack. Cybersecurity incident expenses include legal, consulting, and other costs incurred as a direct result of this incident, some of which may be partially offset by insurance recoveries.
(5)    Other items not directly related to current operations include asset impairment and other charges.