Gates Industrial reported higher third-quarter sales and earnings, with growth across both its Power Transmission and Fluid Power segments. The company also raised its 2026 guidance for profitability and adjusted earnings per share, though the announcement did not provide revised target figures.
For the quarter ended Sept. 26, sales were $903.6 million, up 5.6% from a year earlier. Gates said Industrial OEM sales grew at a high-teens rate and growth in its Industrial Aftermarket channel accelerated from the previous quarter.
Key details
- Earnings: Net income attributable to shareholders was $86.5 million, or 34 cents per diluted share. Net income from continuing operations was $91.6 million, equal to a 10.1% margin. Adjusted earnings were 47 cents per diluted share.
- Profitability: Adjusted EBITDA was $215.4 million, a 23.8% margin. The CEO cited a significant year-over-year increase in gross profit margin.
- Power Transmission: Third-quarter sales rose 5.0% to $560.1 million, with core sales up 5.2%. Adjusted EBITDA increased 12.3% to $137.1 million, and the segment’s margin expanded to 24.5% from 22.9%.
- Fluid Power: Sales climbed 6.5% to $343.5 million, including 6.1% core growth. Adjusted EBITDA rose 6.2% to $78.3 million, while the margin edged down to 22.8% from 22.9%.
- Nine-month Power Transmission results: Sales increased 4.4% to $1.68 billion, with core sales up 2.7%. Adjusted EBITDA grew 6.2% to $383.9 million, and the margin rose to 22.8% from 22.5%.
- Outlook: Gates raised its 2026 guidance for profitability and adjusted earnings per share. The CEO said the company remained on pace to meet its previously stated adjusted EBITDA margin target for the second half of 2026.
What changes for investors
The reported results show growth in both segments, with Power Transmission delivering the stronger third-quarter margin improvement. Fluid Power also increased sales and EBITDA, but its margin was slightly lower than a year earlier. The guidance increase signals a more favorable profitability and adjusted-EPS outlook, but the announcement provided no revised numerical targets.