Gates Raises 2026 Profit Guidance After Margin Expansion

The Tip Desk · October 30, 2026 · 3 min read

Third-quarter net sales were $903.6 million, up 5.6%, as the company lifted full-year Adjusted EPS to $1.66–$1.72.

Gates Industrial Corporation Ltd. (GTES) reported third-quarter net sales of $903.6 million, up 5.6% from a year earlier, including a 5.5% core increase, and raised its 2026 profitability and adjusted earnings outlook.

The global provider of fluid power and power transmission solutions posted net income attributable to shareholders of $86.5 million, or $0.34 a diluted share, and Adjusted Net Income of $0.47 a share. Net income from continuing operations was $91.6 million, a 10.1% margin. Adjusted EBITDA was $215.4 million, or 23.8% of sales.

Gross profit margin expanded to 42.4% from 39.9% a year earlier. Adjusted Gross Profit margin was 43.2%, versus 40.5% a year earlier. Chief Executive Officer Ivo Jurek said the team executed well, producing mid-single-digit sales growth and a significant gross profit margin increase versus the prior-year period.

Power Transmission, the larger of the two reportable segments, generated $560.1 million of sales, up 5.0%, with a 5.2% core increase. Adjusted EBITDA in the segment was $137.1 million, a 24.5% margin, up 160 basis points from 22.9% a year earlier. Fluid Power sales were $343.5 million, up 6.5%, with a 6.1% core increase. Fluid Power Adjusted EBITDA was $78.3 million, a 22.8% margin.

Jurek said sales in the Industrial OEM channel increased high-teens and that year-over-year growth in the Industrial Aftermarket channel accelerated relative to the prior quarter.

The company raised full-year 2026 Adjusted EBITDA guidance to $809 million to $823 million, a $1 million increase at the midpoint from the $800 million to $830 million range issued after the second quarter. Adjusted EPS guidance moved to $1.66 to $1.72, up $0.03 at the midpoint from $1.62 to $1.70. Core sales growth guidance was unchanged at 3.2% to 3.8%. Capital expenditures remain about $120 million, and free cash flow conversion remains 90% or more. Share-based guidance excludes any potential share repurchases.

Jurek said the company has raised 2026 guidance for profitability and adjusted earnings per share, that it is on pace to achieve its previously communicated adjusted EBITDA margin target for the second half of 2026, and that the balance sheet provides significant capital deployment optionality.

Cash and cash equivalents were $830.8 million as of September 26, 2026. Inventories were $812.9 million. Trade accounts receivable, net, were $885.8 million. Debt, less current portion, was $2,190.9 million, with a current portion of $30.0 million.

For the nine months ended September 26, 2026, net sales were $2.70 billion. Adjusted EBITDA was $604.2 million, a 22.4% margin. Net income attributable to shareholders was $317.1 million, or $1.24 a diluted share. Adjusted Net Income was $1.25 a share.

The company said it will host a conference call to discuss the results.