Gates Industrial (GTES) investor relations material

Executive summary

• Q3 net sales were $903.6M, up 5.6% reported and 5.5% on a core basis; adjusted EBITDA was $215.4M with a record 23.8% margin, and adjusted EPS reached a record $0.47.

• Industrial demand strengthened, with high-teens Industrial OEM growth and enterprise book-to-bill above 1.0x.

• FY26 adjusted EBITDA and adjusted EPS guidance increased; core sales growth guidance narrowed while retaining its midpoint.

Financial highlights

• Adjusted EBITDA rose to $215.4M from $195.8M YoY; margin increased 90 bps to 23.8%, and incremental margin exceeded 40%.

• Adjusted net income was $119.5M and adjusted diluted EPS was $0.47, versus $100.7M and $0.39 in Q3 2025.

• Q3 adjusted gross margin rose to 43.2% from 40.5%; reported gross margin was 42.4% versus 39.9%.

• 9M net sales were $2,696.3M, up 4.2% reported and 2.5% core; net income benefited from tax items, while operating cash flow was $170.0M versus $208.3M.

Outlook and guidance

• FY26 core sales growth guidance narrowed to 3.2%–3.8%, with the midpoint unchanged; adjusted EBITDA guidance is $809M–$823M.

• FY26 adjusted EPS guidance rose by $0.03 at the midpoint to $1.66–$1.72; double-digit adjusted EPS growth is expected.

• H2 adjusted EBITDA margin guidance remains ~23.5%; Q4 margin is expected to increase 120 bps at the guidance midpoint.

• FY26 free cash flow conversion guidance remains 90%+ and capex guidance is ~$120M.