Gates Industrial (GTES) investor relations material

Business overview and market positioning

• Operates as a diversified material science company with strong margins and robust free cash flow, targeting 24% adjusted EBITDA margins in the next 12–24 months.

• Margin expansion driven by footprint optimization, 80/20 initiatives, and material cost reductions, with ongoing opportunities for further improvement.

• Holds top-three market positions in both Power Transmission and Fluid Power segments globally.

• Balance sheet is healthy, with leverage expected below 2x by year-end and strong optionality for buybacks, debt reduction, or M&A.

End market trends and growth initiatives

• Industrial PMIs have been unsupportive, with ag and heavy-duty truck markets challenged, but automotive replacement and personal mobility segments performing well.

• Personal mobility business grew ~20% in H1 and is expected to compound at 30% annually, targeting $300M revenue by 2028, driven by e-bike and scooter adoption.

• Industrial chain-to-belt conversion presents a multi-billion dollar TAM, with technology breakthroughs enabling cost-competitive solutions and significant carbon footprint reduction.

• Data center liquid cooling is an emerging opportunity, with supply agreements secured and $100–200M incremental revenue expected by 2028.

Financial performance and margin expansion

• Achieved 350 basis points of margin expansion through operational efficiency, supply chain optimization, and material reengineering.

• Further margin gains expected from ongoing initiatives, with incrementals projected at 45%+ during the first 12–18 months of volume recovery.

• Tariff headwinds (~$50M annualized) are being offset 80–90% through pricing and the remainder via operational actions.