Key Highlights

  • Sales were about USD 904 million, up 5.6% in total and 5.5% on a core basis in the third quarter.
  • Adjusted EBITDA rose 10% to USD 215 million, with a record Margin of 23.8%, up 90 basis points.
  • Adjusted EPS increased about 21% to a quarterly record of USD 0.47 on core growth and operating performance.
  • Full-year adjusted EPS guidance now spans USD 1.66 to USD 1.72, a USD 0.03 increase at the midpoint.

Record Margin on Industrial Strength

Gates Industrial Corporation plc (NYSE:GTES) reported third-quarter 2026 sales of about USD 904 million, up 5.6%, with core growth of 5.5%. Adjusted EBITDA was USD 215 million, up 10%, and the adjusted EBITDA margin reached a company record of 23.8%, with an incremental margin above 40%. Adjusted Earnings Per Share rose about 21% to a record USD 0.47.

Industrial core growth accelerated to high single digits from mid-single digits in the second quarter, the strongest growth in diversified industrial since the fourth quarter of 2022, with global book-to-bill above 1x.

Segment Detail

Commercial on-highway sales expanded more than 20% in total, global personal mobility sales increased about 35%, and North America growth accelerated exiting the quarter.

Power Transmission sales were about USD 560 million, up 5.2% on a core basis, with high-teens growth in industrial OEM, about 40% growth in personal mobility and over 20% growth in commercial on-highway. Segment adjusted EBITDA margin was 24.5%, up 160 basis points.

Fluid Power sales were about USD 343 million, up over 6% on a core basis, with commercial on-highway up more than 20% and construction up high single digits. Data Center Revenue rose about 2.5 times from a year earlier. Segment adjusted EBITDA margin was 22.8%, down about 10 basis points, although segment gross margin improved 130 basis points. Management said agriculture is gradually improving and described the end market as potentially recovering through 2027. Agriculture grew slightly in the quarter and mid-single digits sequentially.

Guidance and Capital

Full-year adjusted EBITDA is guided to USD 809 million to USD 823 million and adjusted EPS to USD 1.66 to USD 1.72, while core sales growth guidance at the midpoint is unchanged and total growth is about 5%. Fourth-quarter sales are guided to USD 905 million to USD 925 million, with core growth of about 6.5% at the midpoint. Second-half adjusted EBITDA margin guidance is about 23.5%, and second-half core sales growth of about 6% at the midpoint was reiterated. Full-year core sales growth guidance was narrowed to 3.2% to 3.8%, and Capital expenditure and free Cash Flow conversion guidance are unchanged.

The company repurchased about USD 57 million of shares, reported Leverage of 1.8x, an improvement of about 0.2 turns, and a trailing return on invested capital of 21.5%. Management said Business investments are beginning to pay dividends and anticipates higher returns on capital over the midterm.

Demand Indicators for 2027

Management also anticipates the full-year outlook includes total growth of about 5% at the midpoint. Items to watch include North American industrial demand, data center liquid cooling adoption, commercial on-highway volumes and the agriculture recovery.