Q2 2026 Gates Industrial Corporation PLC Earnings Call Transcript
Key Points
- Record quarterly sales and adjusted EPS, with total sales up 6.6% and core sales up 4.9%.
- Strong growth in key end markets, including ~25% growth in personal mobility and 20%+ growth in commercial on-highway.
- Raised full-year 2026 guidance for core sales growth, adjusted EBITDA, and adjusted EPS, reflecting confidence in continued momentum.
- Adjusted EBITDA margin of 22.5% in Q2, with expectations to achieve at least 23.5% in the second half of 2026.
- Net leverage declined to 1.8x, and free cash flow conversion was strong at 94% of adjusted net income.
- Fluid Power segment adjusted EBITDA margin decreased 120 basis points due to footprint realignment costs and targeted investments.
- South America saw a decrease in sales, primarily driven by soft agricultural demand.
- Pricing actions to offset oil-related cost increases are expected to cause slight dilution to incremental margins in Q3.
- North America growth was relatively muted at 1.5% core, with softness in agriculture and automotive OEM production.
- The company expects continued cost inflation from oil-related products, with no immediate relief anticipated.
Good morning, and welcome to the Gates Industrial Corporation Second Quarter 2026 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to turn the call over to Rich Kwas. Senior Vice President, Investor Relations. Thank you. Please go ahead.
Greetings, and thank you for joining us on our second quarter 2026 earnings call. I'll briefly cover our non-GAAP and forward-looking language before passing the call over to our CEO, Ivo Jurek, who will be followed by Brooks Mallard, our CFO. Before the market opened today, we published our second quarter 2026 results. A copy of the release is available on our website at investors.gates.com.
Our call this morning is being webcast and is accompanied by a slide presentation. On this call, we will refer to certain non-GAAP financial measures that we believe are useful in evaluating our performance. Reconciliations of historical non-GAAP financial measures are
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