Gates Industrial Reports Second-Quarter 2026 Results

Rhea-AI Summary

Gates Industrial (NYSE:GTES) reported second-quarter 2026 net sales of $941.6 million, up 6.6% year over year, with core sales up 4.9%. Net income attributable to shareholders was $170.9 million, or $0.67 per diluted share, and net income from continuing operations was $178.2 million, a margin of 18.9%. Adjusted EBITDA reached $211.4 million, giving a 22.5% margin.

Power Transmission segment Q2 net sales were $588.5 million (7.0% growth) with 22.9% adjusted EBITDA margin, while Fluid Power net sales were $353.1 million (5.8% growth) with a 21.7% margin. The company raised full‑year 2026 guidance to 2.5%–4.5% core sales growth, $800–$830 million adjusted EBITDA, and $1.62–$1.70 adjusted EPS. As of June 27, 2026, cash and cash equivalents were $823.5 million and total debt was about $2.23 billion, with operating cash flow of $108.8 million and six‑month share repurchases of $38.7 million.

Positive

• Net sales $941.6 million, up 6.6% year over year in Q2 2026
• Net income attributable to shareholders $170.9 million and diluted EPS $0.67
• Adjusted EBITDA $211.4 million with a 22.5% margin in Q2 2026
• Power Transmission Q2 net sales $588.5 million, 7.0% growth and 22.9% margin
• Raised 2026 guidance: core sales growth 2.5%–4.5%, adjusted EPS $1.62–$1.70
• Strong liquidity with $823.5 million cash and cash equivalents at June 27, 2026

Negative

• Fluid Power Q2 adjusted EBITDA margin 21.7%, down 120 bps year over year
• Fluid Power six‑month adjusted EBITDA $142.0 million, down 3.4% year over year
• Fluid Power six‑month margin 21.2%, down 130 bps from prior year
• Operating cash flow $108.8 million for six months, slightly below prior year $110.3 million

Market Context

The platform record lists five recent GTES news events, while current data classifies short position...

Analysis

The platform record lists five recent GTES news events, while current data classifies short positioning as low. This earnings report warrants focus on guidance delivery and segment margins; industrial-demand variability remains a risk.

Key Figures

Net Sales: $941.6 million, up 6.6% Net Income: $170.9 million Diluted EPS: $0.67 +5 more

8 metrics

Net Sales $941.6 million, up 6.6% Second quarter 2026; core sales increased 4.9%

Net Income $170.9 million Net income attributable to shareholders, second quarter 2026

Diluted EPS $0.67 Second quarter 2026

Adjusted EPS $0.44 Second quarter 2026

Adjusted EBITDA $211.4 million Second quarter 2026; 22.5% margin

Core Sales Growth Guidance 2.5% to 4.5% Updated full-year 2026 guidance

Adjusted EBITDA Guidance $800 million to $830 million Updated full-year 2026 guidance

Adjusted EPS Guidance $1.62 to $1.70 Updated full-year 2026 guidance

Historical Context

5 past events · Latest: Jul 06 (Neutral)

Pattern 5 events

Date	Event	Sentiment	24h Move	Catalyst
Jul 06	Earnings date	Neutral	-3.8%	Company announced the second-quarter earnings release date and conference call schedule.
Jun 25	Redomiciliation approval	Positive	-0.8%	Shareholders approved moving the company’s incorporation from England and Wales to Bermuda.
Jun 23	Product portfolio expansion	Positive	+0.0%	Gates introduced three thermoplastic sprocket families for bicycles and urban eBikes.
May 06	Conference participation	Neutral	-1.0%	The CEO was scheduled to present at the Wolfe Research transportation conference.
May 01	Acquisition agreement	Positive	-6.0%	Gates agreed to acquire Timken’s belts business, with closing expected in Q3 2026.

24h Move is the share-price change in the day after each event; other market factors may also have contributed.

Pattern Detected

GTES's five recent news events produced negative or zero 24-hour reactions, including on favorable corporate and product announcements.

Key Terms

adjusted ebitda, core sales, free cash flow conversion, lifo

4 terms

adjusted ebitda financial

"Adjusted EBITDA of $211.4 million, or a margin of 22.5%."

Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.

core sales financial

"including a core sales increase of 4.9%."

Core sales are the revenue generated by a company's main, ongoing business activities after removing one-time or unusual items such as proceeds from asset sales, discontinued operations, or temporary boosts. Investors care because core sales show the steady, repeatable demand for a company’s products or services—like judging a store by its regular weekly receipts rather than a single big clearance sale—to better assess growth trends and future earnings potential.

free cash flow conversion financial

"Free Cash Flow Conversion | 90%+ | 90%+"

Free cash flow conversion measures how effectively a company turns its reported profits into actual cash that can be used for growth, debt repayment, or dividends. It compares the cash generated after expenses to the company's net income, similar to how a person might compare their savings to their paycheck. High conversion indicates the company is efficient at translating profits into cash, which is important for investors assessing its financial health and flexibility.

lifo financial

"remeasure certain inventories on a Last-in-First-out ("LIFO") basis."

An accounting method that assumes the most recently acquired inventory items are sold first, so the newest costs flow into cost of goods sold while older costs stay on the balance sheet. Imagine a stack of boxes where you take from the top; when prices are rising, that top-first approach produces higher reported costs and lower reported profits, which can reduce taxes and change profit margins. Investors watch LIFO because it affects reported earnings, tax liabilities, and how comparable a company’s performance is to peers.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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DENVER, July 31, 2026 /PRNewswire/ --

Second-Quarter 2026 Financial Summary

• Second-quarter net sales of $941.6 million, up 6.6% compared to the prior-year period, including a core sales increase of 4.9%.
• Net income attributable to shareholders of $170.9 million, or $0.67 per diluted share.
• Adjusted Net Income per diluted share of $0.44.
• Net income from continuing operations of $178.2 million, or a margin of 18.9%. 
• Adjusted EBITDA of $211.4 million, or a margin of 22.5%.
• Increasing 2026 guidance.

Gates Industrial Corporation Ltd. (NYSE:GTES), a leading global provider of application-specific fluid power and power transmission solutions, today reported results for the second quarter ended June 27, 2026.

Ivo Jurek, Gates Industrial's Chief Executive Officer, commented, "We delivered a strong second quarter, exceeding expectations. We generated record sales and EPS and experienced improving order momentum globally. We believe we are in solid position to capitalize on strengthening industrial demand."

Jurek continued, "We have raised our 2026 guidance for sales, profitability and adjusted earnings per share. We anticipate higher sales growth in the second half of 2026 relative to our initial guidance. Our balance sheet is strong and our capital allocation optionality is significant. I am grateful to our global Gates teams for their dedication and commitment to delivering on our strategic priorities."

Power Transmission Segment Results

	Three months ended
(USD in millions)	June 27, 2026		June 28, 2025		% Change		% Core Change
Net sales	$588.5		$550.1		7.0 %		5.3 %
Adjusted EBITDA	$134.8		$122.8		9.8 %
Adjusted EBITDA margin	22.9 %		22.3 %		60 bps

	Six months ended
(USD in millions)	June 27, 2026		June 28, 2025		% Change		% Core Change
Net sales	$1,121.7		$1,077.3		4.1 %		1.5 %
Adjusted EBITDA	$246.8		$239.5		3.0 %
Adjusted EBITDA margin	22.0 %		22.2 %		(20 bps)

Fluid Power Segment Results

	Three months ended
(USD in millions)	June 27, 2026		June 28, 2025		% Change		% Core Change
Net sales	$353.1		$333.6		5.8 %		4.2 %
Adjusted EBITDA	$76.6		$76.4		0.3 %
Adjusted EBITDA margin	21.7 %		22.9 %		(120 bps)

	Six months ended
(USD in millions)	June 27, 2026		June 28, 2025		% Change		% Core Change
Net sales	$671.0		$654.0		2.6 %		0.4 %
Adjusted EBITDA	$142.0		$147.0		(3.4 %)
Adjusted EBITDA margin	21.2 %		22.5 %		(130 bps)

2026 Guidance

The Company is raising its full year 2026 financial guidance. The table below reflects our updated full year 2026 financial guidance.

	Prior 2026	Updated 2026	Change (At Midpoint)
Core Sales Growth	1% to 4%	2.5% to 4.5%	+ 100 bps
Adjusted EBITDA	$775 to $835 Million	$800 to $830 Million	+ $10 Million
Adjusted EPS	$1.52 to $1.68	$1.62 to $1.70	+ $0.06
Capital Expenditures	~$120 Million	~$120 Million	No Change
Free Cash Flow Conversion	90%+	90%+	No Change

Share-based metrics in the Company's guidance do not include the effect of any potential share repurchases.

Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non-GAAP measures, including expected Core Sales Growth, Adjusted EBITDA, Adjusted Earnings per Share and Free Cash Flow conversion for 2026. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.

Conference Call and Webcast

Gates Industrial Corporation Ltd. will host a conference call today at 10:00 a.m. Eastern Time to discuss the Company's financial results. The live webcast of the conference call and accompanying presentation materials can be accessed through Gates Industrial's website at investors.gates.com. For those unable to access the webcast, the conference call can be accessed by dialing (888) 414-4601 (domestic) or +1 (646) 960-0313 (international) and requesting the Gates Industrial Corporation Second-Quarter 2026 Earnings Conference Call or providing the Conference ID of 5772067. An audio replay of the conference call can be accessed by dialing (800) 770-2030 (domestic) or +1 (647) 362-9199 (international), and providing the passcode 5772067, or by accessing Gates Industrial's website at investors.gates.com.

About Gates Industrial Corporation Ltd.

Gates is a global manufacturer of innovative, highly engineered power transmission and fluid power solutions. Gates offers a broad portfolio of products to diverse aftermarket channel customers, and to original equipment manufacturers as specified components. Gates participates in many sectors of the industrial and consumer markets. Our products play essential roles in a diverse range of applications across a wide variety of end markets ranging from harsh and hazardous industries such as agriculture, construction, manufacturing and energy, to everyday consumer applications such as printers, power washers, automatic doors and vacuum cleaners and virtually every form of transportation. Our products are sold in more than 130 countries across our three commercial regions: the Americas; Europe, Middle East & Africa; and Asia Pacific.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "predicts," "intends," "trends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. These statements include, but are not limited to, statements related to expectations regarding the performance of the Company's business and financial results, our ability to capitalize on demand, anticipated sales growth, our capital allocation optionality and statements regarding our outlook for 2026. Such forward-looking statements are subject to various risks and uncertainties, including, among others, U.S. policies, actions or legislation (including the imposition of tariffs), economic, political and other risks associated with international operations (including as a result of the ongoing conflicts in the Middle East and their impact on supply chains, such as reduced availability of certain of our production materials and increased supply costs, and economic conditions), availability of raw materials or other manufacturing inputs at favorable prices in sufficient quantities, or at a given time,  changes in our relationships with, or the financial condition, performance, purchasing power or inventory levels of, of key channel partners, dependence on the continued operation of our manufacturing facilities, supply chains, distribution systems and information technology systems,  our ability to forecast demand or meet significant increases in demand and market acceptance of new product introductions and innovations. Additional factors that could cause the Company's results to differ materially from those described in the forward-looking statements can be found under the section entitled "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the Securities and Exchange Commission (the "SEC"), and Quarterly Report on Form 10-Q for the quarter ended June 27, 2026, which is expected to be filed with the SEC on or about the date of this press release, as such factors may be updated from time to time in the Company's periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the Company's filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Gates Industrial Corporation Ltd. Condensed Consolidated Statements of Operations (Unaudited)
	Three months ended				Six months ended
(USD in millions, except per share amounts)	June 27, 2026		June 28, 2025		June 27, 2026		June 28, 2025
Net sales	$          941.6		$          883.7		$        1,792.7		$        1,731.3
Cost of sales	555.5		523.5		1,068.6		1,026.5
Gross profit	386.1		360.2		724.1		704.8
Selling, general and administrative expenses	250.7		231.2		477.6		447.4
Transaction-related expenses	3.1		—		3.6		0.4
Asset impairments	—		0.2		—		0.8
Restructuring expenses	0.7		13.0		1.4		14.6
Operating income from continuing operations	131.6		115.8		241.5		241.6
Interest expense	30.0		28.8		59.9		58.4
Other expense	1.4		6.8		3.5		9.2
Income from continuing operations before taxes	100.2		80.2		178.1		174.0
Income tax expense	(78.0)		16.8		(66.5)		42.0
Net income from continuing operations	178.2		63.4		244.6		132.0
Loss on disposal of discontinued operations	0.2		0.3		0.4		0.6
Net income	178.0		63.1		244.2		131.4
Less: non-controlling interests	7.1		6.6		13.6		12.9
Net income attributable to shareholders	$          170.9		$           56.5		$          230.6		$          118.5
Earnings per share
Basic
Earnings per share from continuing operations	$           0.67		$           0.22		$           0.91		$           0.46
Earnings per share from discontinued operations	—		—		—		—
Earnings per share	$           0.67		$           0.22		$           0.91		$           0.46
Diluted
Earnings per share from continuing operations	$           0.67		$           0.22		$           0.90		$           0.45
Earnings per share from discontinued operations	—		—		—		—
Earnings per share	$           0.67		$           0.22		$           0.90		$           0.45

 

Gates Industrial Corporation Ltd. Condensed Consolidated Balance Sheets (Unaudited)
(USD in millions, except share numbers and per share amounts)	As of June 27, 2026		As of December 31, 2025
Assets
Current assets
Cash and cash equivalents	$          823.5		$          812.1
Trade accounts receivable, net	900.3		744.2
Inventories	740.6		700.0
Taxes receivable	40.5		43.4
Prepaid expenses and other assets	204.4		181.8
Total current assets	2,709.3		2,481.5
Non-current assets
Property, plant and equipment, net	599.4		609.0
Goodwill	2,022.4		2,035.2
Pension surplus	6.7		7.6
Intangible assets, net	1,122.9		1,192.4
Right-of-use assets	146.2		137.1
Taxes receivable	2.6		5.4
Deferred income taxes	729.4		640.0
Other non-current assets	53.9		43.2
Total assets	$       7,392.8		$       7,151.4
Liabilities and equity
Current liabilities
Debt, current portion	$            39.2		$           36.2
Trade accounts payable	482.4		433.7
Taxes payable	31.2		27.0
Accrued expenses and other current liabilities	282.3		238.5
Total current liabilities	835.1		735.4
Non-current liabilities
Debt, less current portion	2,194.3		2,196.3
Post-retirement benefit obligations	60.9		68.8
Lease liabilities	129.3		124.5
Taxes payable	56.3		62.1
Deferred income taxes	40.5		49.3
Other non-current liabilities	182.2		225.8
Total liabilities	3,498.6		3,462.2
Shareholders' equity
—Shares, par value of $0.01 each - authorized shares: 3,000,000,000; outstanding shares: 253,151,170 (December 31, 2025: authorized shares: 3,000,000,000; outstanding shares: 253,543,540)	2.5		2.6
—Additional paid-in capital	2,641.3		2,633.3
—Accumulated other comprehensive loss	(929.2)		(917.1)
—Treasury shares	—		(37.5)
—Retained earnings	1,807.3		1,652.7
Total shareholders' equity	3,521.9		3,334.0
Non-controlling interests	372.3		355.2
Total equity	3,894.2		3,689.2
Total liabilities and equity	$       7,392.8		$       7,151.4

 

Gates Industrial Corporation Ltd. Condensed Consolidated Statements of Cash Flows (Unaudited)
	Six months ended
(dollars in millions)	June 27, 2026		June 28, 2025
Cash flows from operating activities
Net income	$          244.2		$          131.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	112.8		105.5
Foreign exchange and other non-cash financing income	(13.0)		(12.6)
Share-based compensation expense	15.7		15.7
Decrease in post-employment benefit obligations, net	(1.7)		(4.4)
Deferred income taxes	(113.8)		(11.0)
Asset impairments	—		0.8
Other operating activities	2.8		5.8
Changes in operating assets and liabilities:
—Accounts receivable	(161.6)		(63.5)
—Inventories	(46.3)		(16.4)
—Accounts payable	50.9		(16.7)
—Prepaid expenses and other assets	(11.4)		(13.0)
—Taxes payable	4.5		(1.6)
—Other liabilities	25.7		(9.7)
Net cash provided by operating activities	108.8		110.3
Cash flows from investing activities
Purchases of property, plant and equipment	(35.0)		(36.9)
Purchases of intangible assets	(5.2)		(18.7)
Cash paid under company-owned life insurance policies	(10.8)		(10.4)
Cash received under company-owned life insurance policies	8.1		2.4
Proceeds from the sale of property, plant and equipment	1.5		2.1
Other investing activities	(0.4)		(0.5)
Net cash used in investing activities	(41.8)		(62.0)
Cash flows from financing activities
Issuance of shares	2.5		4.7
Repurchase of shares	(38.7)		(13.0)
Payments of long-term debt	(4.7)		(9.4)
Employee taxes paid from shares withheld	(8.7)		(16.9)
Dividends paid to non-controlling interests	—		(3.5)
Other financing activities	(1.2)		4.7
Net cash used in financing activities	(50.8)		(33.4)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(4.7)		23.1
Net increase in cash and cash equivalents and restricted cash	11.5		38.0
Cash and cash equivalents and restricted cash at the beginning of the period	815.0		684.8
Cash and cash equivalents and restricted cash at the end of the period	$          826.5		$          722.8
Supplemental schedule of cash flow information
Interest paid	$            52.0		$            56.8
Income taxes paid	$            39.3		$            54.7
Accrued capital expenditures	$              1.8		$              0.9

Non-GAAP Financial Measures

This press release includes certain non-GAAP financial measures, which management believes are useful to investors, securities analysts and other interested parties. Management uses Adjusted EBITDA as its key profitability measure. This is a non-GAAP measure that represents EBITDA before certain items that impact comparison of the performance of our business either period-over-period or with other businesses. We use Adjusted EBITDA as our measure of segment profitability to assess the performance of our businesses, and it is used for consolidated Gates as well because we believe it is important to consider our total profitability on a basis that is consistent with that of our operating segments. Adjusted EBITDA margin is Adjusted EBITDA for a particular period expressed as a percentage of net sales for that period.

Management uses Adjusted Net Income as an additional measure of profitability. Adjusted Net Income is a non-GAAP measure that represents net income attributable to shareholders before certain items that impact comparison of the performance of our business, either period-over-period or with other businesses. Beginning with the three months ended June 29, 2024, we revised our definition of Adjusted Net Income to adjust for discrete tax items, which are significant, unusual or infrequently occurring tax items. We have revised the prior period amounts to conform to our current period presentation.

Management uses Adjusted Gross Profit as an additional measure of operating performance. Adjusted Gross Profit is a non-GAAP measure that represents gross profit before certain items that impact the comparability of our results, such as restructuring costs and inventory adjustments, specific to the remeasurement of certain inventories on a Last-in-First-out ("LIFO") basis. Adjusted Gross Profit margin is Adjusted Gross Profit expressed as a percentage of sales. We use Adjusted Gross Profit and Adjusted Gross Profit margin because it provides insight into the underlying profitability of our core operations by excluding items that are not indicative of ongoing business performance.

Core sales is a non-GAAP measure that represents net sales for the period excluding the impacts of movements in average currency exchange rates and the first-year impacts of acquisitions and disposals, when applicable. Core sales growth is the change in core sales expressed as a percentage of prior period net sales. We present core sales growth because it allows for a meaningful comparison of year-over-year performance without the volatility caused by foreign currency gains or losses, or the incomparability that would be caused by the impact of an acquisition or disposal.

Management uses Free Cash Flow to measure cash generation. Free Cash Flow is a non-GAAP measure that represents net cash provided by operations less capital expenditures. Free Cash Flow Conversion is a measure of Free Cash Flow expressed as a percentage of Adjusted Net Income. We use this metric as a measure of the success of our business in converting Adjusted Net Income into cash.

These non-GAAP financial measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP. Please see below for a reconciliation of historical non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP.

Gates Industrial Corporation Ltd. Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA (Unaudited)
	Three months ended				Six months ended
(USD in millions)	June 27, 2026		June 28, 2025		June 27, 2026		June 28, 2025
Net income from continuing operations before taxes	$       178.2		$         63.4		$       244.6		$       132.0
Adjusted for:
Income tax (benefit) expense	(78.0)		16.8		(66.5)		42.0
Interest expense	30.0		28.8		59.9		58.4
Depreciation and amortization	57.1		53.3		112.8		105.5
Transaction-related expenses (1)	3.1		—		3.6		0.4
Asset impairments	—		0.2		—		0.8
Restructuring expenses	0.7		13.0		1.4		14.6
Share-based compensation expense	9.4		9.6		15.7		15.7
Inventory adjustments (2) (included in cost of sales)	3.6		4.0		7.6		3.0
Restructuring related expenses (included in cost of sales)	4.0		1.2		6.5		2.4
Restructuring related expenses (included in SG&A)	5.3		3.1		6.6		4.6
Other (income) expenses, excluding foreign currency  transaction gain or loss and insurance recoveries(3)	(2.0)		5.8		(3.4)		7.1
Adjusted EBITDA	$       211.4		$       199.2		$       388.8		$       386.5
Net Sales	$       941.6		$       883.7		$    1,792.7		$    1,731.3
Net income from continuing operations margin	18.9 %		7.2 %		13.6 %		7.6 %
Adjusted EBITDA margin	22.5 %		22.5 %		21.7 %		22.3 %

(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 adjustments include the reversal of the adjustment to remeasure certain inventories on a Last-in-First-out ("LIFO") basis.
(3)	Other(income) expenses excludes foreign currency transaction losses of $1.5 million and $4.3 million and insurance losses of $1.8 million and $2.5 million during the three and six months ended June 27, 2026, respectively, and foreign currency transaction losses of $1.0 million and $2.1 million during the three and six months ended June 28, 2025, respectively.

 

Gates Industrial Corporation Ltd. Reconciliation of Net Income Attributable to Shareholders to Adjusted Net Income (Unaudited)
	Three months ended				Six months ended
(USD in millions, except share numbers and per share amounts)	June 27, 2026		June 28, 2025		June 27, 2026		June 28, 2025
Net income attributable to shareholders	$          170.9		$           56.5		$         230.6		$         118.5
Adjusted for:
Loss on disposal of discontinued operations	0.2		0.3		0.4		0.6
Amortization of intangible assets arising from the 2014 acquisition of Gates	29.6		29.0		58.9		57.3
Transaction-related expenses (1)	3.1		—		3.6		0.4
Asset impairments	—		0.2		—		0.8
Restructuring expenses	0.7		13.0		1.4		14.6
Restructuring related expenses (included in cost of sales)	4.0		1.2		6.5		2.4
Restructuring related expenses (included in SG&A)	5.3		3.1		6.6		4.6
Share-based compensation expense	9.4		9.6		15.7		15.7
Inventory adjustments (2) (included in cost of sales)	3.6		4.0		7.6		3.0
Adjustments relating to post-retirement benefits	0.1		0.5		5.5		0.9
Financing and other FX related losses	1.3		7.8		(3.3)		11.0
Discrete tax items (3)	(100.7)		(7.2)		(107.0)		(7.1)
Other adjustments	(1.7)		(1.5)		(3.1)		(2.8)
Estimated tax effect of the above adjustments	(13.3)		(15.4)		(22.2)		(24.9)
Adjusted Net Income	$          112.5		$          101.1		$         201.2		$         195.0
Diluted weighted-average number of shares outstanding	256,135,551		260,469,532		256,417,931		261,005,482
Adjusted Net Income per diluted share	$           0.44		$           0.39		$           0.78		$           0.75

(1)	Transaction-related expenses related 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 adjustments include the reversal of the adjustment to remeasure certain inventories on a Last-in-First-out ("LIFO") basis.
(3)	Discrete tax items include changes in uncertain tax positions relating to prior years, changes in tax laws or rates, changes in valuation allowances, excess tax benefits on stock option exercises, and prior year adjustments in various foreign jurisdictions in which returns were filed.

 

Gates Industrial Corporation Ltd. Reconciliation of Gross Profit to Adjusted Gross Profit (Unaudited)
		Three months ended				Six months ended
(USD in millions)		June 27, 2026		June 28, 2025		June 27, 2026		June 28, 2025
Net sales		$          941.6		$          883.7		$        1,792.7		$        1,731.3
Cost of sales		555.5		523.5		1,068.6		1,026.5
Gross Profit		386.1		360.2		724.1		704.8
Inventory adjustments (1) (included in cost of sales)
Restructuring related expenses (included in cost of sales)		3.6		4.0		7.6		3.0
Adjusted Gross Profit		4.0		1.2		6.5		2.4
		$          393.7		$          365.4		$          738.2		$          710.2
Gross Profit margin
Adjusted Gross Profit margin		41.0 %		40.8 %		40.4 %		40.7 %
		41.8 %		41.3 %		41.2 %		41.0 %

(1)	Inventory adjustments include the reversal of the adjustment to remeasure certain inventories on a Last-in-First-out ("LIFO") basis.

 

Gates Industrial Corporation Ltd. Reconciliation of Net Sales to Core Sales Growth (Unaudited)
	Three months ended June 27, 2026
(dollars in millions)	Power Transmission		Fluid Power		Total
Net sales for the three months ended June 27, 2026	$        588.5		$        353.1		$       941.6
Impact on net sales of movements in currency rates	(9.5)		(5.5)		(15.0)
Core sales for the three months ended June 27, 2026	$        579.0		$        347.6		$       926.6
Net sales for the three months ended June 28, 2025	550.1		333.6		883.7
Increase in net sales	$         38.4		$         19.5		$         57.9
Increase in net sales on a core basis (core sales)	$         28.9		$         14.0		$         42.9
Net sales increase	7.0 %		5.8 %		6.6 %
Core sales increase	5.3 %		4.2 %		4.9 %

	Six months ended June 27, 2026
(dollars in millions)	Power Transmission		Fluid Power		Total
Net sales for the six months ended June 27, 2026	$     1,121.7		$        671.0		$     1,792.7
Impact on net sales of movements in currency rates	(28.7)		(14.2)		(42.9)
Core sales for the six months ended June 27, 2026	$     1,093.0		$        656.8		$     1,749.8
Net sales for the nine months ended
Net sales for the six months ended June 28, 2025	1,077.3		654.0		1,731.3
Increase in net sales	$         44.4		$         17.0		$         61.4
Increase in net sales on a core basis (core sales)	$         15.7		$           2.8		$         18.5
Net sales increase	4.1 %		2.6 %		3.5 %
Core sales increase	1.5 %		0.4 %		1.1 %

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SOURCE Gates Industrial Corporation Ltd.

FAQ

How did Gates Industrial (GTES) perform in Q2 2026?

Gates Industrial reported Q2 2026 net sales of $941.6 million, up 6.6% year over year. According to Gates Industrial, net income attributable to shareholders was $170.9 million with diluted EPS of $0.67, and adjusted EBITDA reached $211.4 million, a 22.5% margin.

What were Gates Industrial’s segment results in Q2 2026 for GTES?

In Q2 2026, Power Transmission net sales were $588.5 million, up 7.0%, with a 22.9% adjusted EBITDA margin. According to Gates Industrial, Fluid Power net sales were $353.1 million, up 5.8%, with a 21.7% adjusted EBITDA margin, 120 basis points lower year over year.

What is Gates Industrial’s updated full-year 2026 guidance for GTES?

Gates Industrial raised 2026 guidance to 2.5%–4.5% core sales growth, adjusted EBITDA of $800–$830 million, and adjusted EPS of $1.62–$1.70. According to Gates Industrial, capital expenditures are expected at about $120 million and free cash flow conversion of 90%+ remains unchanged.

How strong is Gates Industrial’s balance sheet as of June 27, 2026 (GTES)?

As of June 27, 2026, Gates Industrial reported $823.5 million of cash and cash equivalents and total debt of about $2.23 billion. According to Gates Industrial, total assets were $7.39 billion and total shareholders’ equity reached $3.52 billion, indicating substantial balance sheet resources.

What were Gates Industrial’s cash flow trends in the first half of 2026 for GTES?

Net cash provided by operating activities was $108.8 million in the first half of 2026, slightly below $110.3 million a year earlier. According to Gates Industrial, net cash used in investing was $41.8 million, while financing activities used $50.8 million, including share repurchases of $38.7 million.

Did Gates Industrial repurchase shares in the first half of 2026 (GTES)?

Yes. Gates Industrial used $38.7 million for share repurchases in the first six months of 2026. According to Gates Industrial, this buyback activity contributed to net cash used in financing of $50.8 million over the period, alongside debt payments and employee tax withholdings.

Is there an earnings conference call for Gates Industrial’s Q2 2026 results (GTES)?

Gates Industrial scheduled a Q2 2026 earnings conference call for 10:00 a.m. Eastern Time on July 31, 2026. According to Gates Industrial, investors can access a live webcast and replay via investors.gates.com, or join by dialing the published domestic and international phone numbers with conference ID 5772067.