Gates Industrial Q2 Earnings Call Highlights

Record Q2 performance: Gates Industrial’s sales rose 6.6% to $942 million, while adjusted EPS increased 13% to a quarterly record of $0.44. Industrial OEM demand strengthened across most regions and end markets, and data-center revenue more than doubled year over year. 2026 outlook raised: The company now expects 2.5%–4.5% core sales growth, adjusted EBITDA of $800 million–$830 million and adjusted EPS of $1.62–$1.70. Management anticipates approximately 6% core sales growth and EBITDA margins of at least 23.5% in the second half. Margins and balance sheet improving: Footprint optimization, restructuring and cost initiatives are expected to drive stronger incremental margins, while net leverage fell to 1.8 times and the company repurchased approximately $22 million of stock. Gates also implemented pricing actions to offset higher oil-related input costs.

Gates Industrial NYSE: GTES reported record quarterly sales and adjusted earnings per share for the second quarter of 2026, citing improving industrial demand, growth in strategic initiatives and stronger performance across most end markets. Chief Executive Officer Ivo Jurek said sales of $942 million rose 6.6% from the prior-year period, including foreign-exchange benefits, while core sales increased 4.9%. Adjusted EBITDA totaled approximately $211 million, representing a 22.5% margin, and adjusted earnings per share increased 13% to a quarterly record of $0.44. “The underlying demand continued to improve with year-over-year growth strengthening during the second half of the quarter,” Jurek said. He added that book-to-bill remained above one and that the company believes it has entered the early stages of an industrial recovery.

Industrial channels and regional markets gain momentum Industrial OEM channels led the quarter, with companywide industrial OEM sales growing at a double-digit rate. Industrial aftermarket demand also improved, producing mid-single-digit growth. Gates said most of its end markets grew year over year during the quarter. Power Transmission: Sales were $589 million, with core growth exceeding 5%. Industrial end markets increased at a high-single-digit rate, supported by mid-teens global industrial OEM growth. Automotive aftermarket sales rose at a high-single-digit rate, while personal mobility grew in the mid-20% range and commercial on-highway increased by a similar rate. Segment adjusted EBITDA margin rose 60 basis points. Fluid Power: Sales were $353 million and core sales increased 4.2%. Industrial OEM sales increased by double digits, commercial on-highway rose by the high teens, and construction grew in the mid-single digits. Segment adjusted EBITDA margin declined 120 basis points, primarily due to footprint realignment costs and investments in enterprise initiatives. Gates’ data-center business more than doubled from the prior-year quarter. Jurek said revenue contribution is expected to increase in the second half as certain high-value projects launch. He also said the company is ramping an industrial water-pump program with a major U.S.-based server manufacturer. By region, core sales in the Americas increased 1.5%, as low-double-digit North American growth more than offset weaker South American demand tied primarily to agriculture. North America exited the quarter at a mid-single-digit growth rate, according to Chief Financial Officer Brooks Mallard. EMEA core sales rose 6.4%, led by double-digit industrial-channel growth. APAC growth accelerated to 11.5%, with China, East Asia and India posting comparable growth rates amid strong industrial demand.

Guidance raised as management expects stronger second half The company raised its full-year 2026 outlook for core sales growth, adjusted EBITDA and ...