v3.24.3
Segment information (Tables)
 9 Months Ended
Sep. 28, 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 endedNine months ended
(dollars in millions)
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Power Transmission$513.4 $536.4 $1,588.1 $1,658.4 
Fluid Power317.3 336.5 990.7 1,048.5 
Continuing operations$830.7 $872.9 $2,578.8 $2,706.9 
Adjusted EBITDA by segment was as follows:
Three months endedNine months ended
(dollars in millions)
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Power Transmission$113.0 $116.5 $355.8 $343.2 
Fluid Power 69.5 72.9 224.5 218.0 
Continuing operations$182.5 $189.4 $580.3 $561.2 
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
September 28,
2024		September 30,
2023
(dollars in millions)
Power Transmission
Fluid Power
Power Transmission
Fluid Power
U.S.$140.9 $168.1 $150.3 $179.3 
North America, excluding U.S.
56.6 49.2 60.7 55.3 
United Kingdom (“U.K.”)9.1 16.0 10.0 14.8 
EMEA(1), excluding U.K.
137.5 46.1 145.4 50.9 
East Asia and India70.4 18.5 69.8 19.4 
Greater China72.6 8.8 72.0 5.8 
South America26.3 10.6 28.2 11.0 
Net sales$513.4 $317.3 $536.4 $336.5 
Nine months ended
September 28,
2024		September 30,
2023
(dollars in millions)
Power Transmission
Fluid Power
Power Transmission
Fluid Power
U.S.$425.8 $524.1 $450.7 $552.2 
North America, excluding U.S.
182.0 153.0 172.0163.0
U.K.29.6 50.7 34.354.9
EMEA(1), excluding U.K.
449.1 144.9 481.5158.9
East Asia and India205.6 58.3 214.559.4
Greater China214.7 30.3 222.427.6
South America81.3 29.4 83.032.5
Net sales$1,588.1 $990.7 $1,658.4 $1,048.5 
(1)    Europe, Middle East and Africa (“EMEA”).
The following table summarizes our net sales into emerging and developed markets:
Three months endedNine months ended
(dollars in millions)
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Developed$533.9 $570.0 $1,663.4 $1,784.1 
Emerging296.8302.9 915.4 922.8 
Net sales$830.7 $872.9 $2,578.8 $2,706.9 
Schedule of Reconciliation of Adjusted EBITDA to Net Income from Continuing Operations
Reconciliation of net income from continuing operations to Adjusted EBITDA:
Three months endedNine months ended
(dollars in millions)
September 28,
2024		September 30,
2023		September 28,
2024		September 30,
2023
Net income from continuing operations$55.2 $85.6 $179.3 $187.8 
Income tax expense14.0 1.0 60.8 25.9 
Income from continuing operations before taxes69.2 86.6 240.1 213.7 
Interest expense35.1 39.5 121.7 124.8 
Loss on deconsolidation of Russian subsidiary (1)
12.8 — 12.8 — 
Other (income) expenses(3.9)(0.2)(8.5)3.8 
Operating income from continuing operations113.2 125.9 366.1 342.3 
Depreciation and amortization53.7 54.0 162.8 162.5 
Transaction-related expenses (2)
0.5 1.3 2.1 2.1 
Asset impairments— 0.1 — 0.1 
Restructuring expenses2.2 2.6 5.0 10.3 
Share-based compensation expense6.4 3.3 20.2 19.6 
Inventory impairments and adjustments (3) (included in cost of sales)
4.4 2.2 21.7 6.3 
Severance expenses (included in cost of sales)0.9 (0.1)0.9 0.4 
Severance expenses (included in SG&A)1.4 — 1.5 0.9 
Credit (gain) loss related to customer bankruptcy (included in SG&A) (4)
(0.2)— (0.1)11.4 
Cybersecurity incident expenses (5)
— — — 5.1 
Other items not directly related to current operations (6)
— 0.1 0.1 0.2 
Adjusted EBITDA$182.5 $189.4 $580.3 $561.2 

(1)    In July 2022, as a result of the conflict between Russia and Ukraine, Gates suspended our operations in Russia. As of September 28 2024, we deconsolidated the Russian subsidiary upon loss of control and recognized a deconsolidation loss.
(2)    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.
(3)    Inventory impairments and adjustments include the reversal of the adjustment to remeasure certain inventories on a LIFO basis.
(4)    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. We continue to monitor the circumstances surrounding the bankruptcy and adjust our estimate as necessary.
(5)    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.
(6)    Other items not directly related to current operations include other charges.