Company: Gates Industrial Corporation plc
Symbol: GTES
Description: They are a global manufacturer of innovative, highly engineered power transmission and fluid power solutions.
Shares: 38.5 million
Price Range: $18.00-$21.00
Trade Date: 1/25
Underwriter(s): Citigroup, Morgan Stanley, UBS Investment Bank, Barclays, Credit Suisse, Goldman Sachs & Co., RBC Capital Markets
Co-Manager(s): Blackstone Capital Markets, Deutsche Bank Securities, Wells Fargo Securities, Current Capital Securities, KeyBanc Capital Markets, Siebert Cisneros Shank & Co., SunTrust Robinson Humphrey, Academy Securities, BTIG, Guggenheim Securities
Terms Added: 1-12-18
Business: They offer a broad portfolio of products to diverse replacement channel customers, and to original equipment (“first-fit”) manufacturers as specified components, with the majority of their revenue coming from replacement channels. Their products are used in applications across numerous end markets, which include construction, agriculture, energy, automotive, transportation, general industrial, consumer products and many others. They sell their products globally under the Gates brand, which is recognized by distributors, equipment manufacturers, installers and end users as a premium brand for quality and technological innovation; this reputation has been built for over a century since Gates’ founding in 1911.
Sponsor Backed: Blackstone (NYSE: BX) is one of the world’s leading investment firms. Blackstone’s alternative asset management businesses include the management of corporate private equity funds, real estate funds, hedge fund solutions, credit-oriented funds and closed-end mutual funds. Through its different businesses, Blackstone had total assets under management of approximately $387.4 billion as of September 30, 2017. After the completion of this offering, their Sponsor will beneficially own approximately 85.9% of our ordinary shares (or 84.2% if the underwriters exercise their over-allotment option in full).
Financials: Their revenue has historically been highly correlated with industrial activity and utilization, and not with any single end market given the diversification of their business and high exposure to replacement markets. Key indicators of our performance include industrial production, industrial sales and manufacturer shipments.
During Fiscal 2016, they generated $2,747.0 million in net sales to over 8,000 customers in 128 countries, their net income was $84.3 million and their Adjusted EBITDA was $594.9 million, representing an Adjusted EBITDA margin of 21.7%, an increase of 180 basis points from Fiscal 2015. During Fiscal 2015, they generated $2,745.1 million in net sales, their net income was $50.9 million and their Adjusted EBITDA was $547.2 million, representing an Adjusted EBITDA margin of 19.9%. During the nine months ended September 30, 2017, their net sales increased 8.7% to $2,259.9 million compared to $2,079.3 million for the nine months ended October 1, 2016, their net income was $52.5 million for the nine months ended September 30, 2017, compared to $69.0 million in the prior year period, and their Adjusted EBITDA increased 11.0% to $496.1 million, compared to $447.0 million in the prior year period, resulting in an Adjusted EBITDA margin of 22.0%, a 50 basis point increase compared to the prior year period. As of September 30, 2017, their total indebtedness was approximately $3,916.1 million, or $3,236.3 million on a pro forma basis after giving effect to this offering and the use of proceeds therefrom.
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