Gates Industrial Raises 2026 Adjusted EPS Outlook to $1.66–$1.72
Key Facts
Gates Industrial raised its 2026 adjusted earnings per share outlook to $1.66–$1.72 from $1.62–$1.70 after reporting third-quarter sales of $903.6 million, up 5.6% year over year, according to the company’s statement. The midpoint of its EPS outlook increased by $0.03, while the midpoint of its adjusted EBITDA outlook rose by $1 million. At the same time, the company narrowed its organic sales growth range to 3.2–3.8% from 2.5–4.5%, with no change to the midpoint. The company said third-quarter organic sales growth was 5.5%. Its shares closed at $26.25 on October 29, according to EL7 data.
Net income attributable to shareholders was $86.5 million, or $0.34 per diluted share, while adjusted diluted EPS was $0.47, according to the statement. The company reported adjusted EBITDA of $215.4 million, a margin of 23.8%. Sales were up from $855.7 million in the third quarter of 2025, when sales growth was 3.0% and organic growth was 1.7%. The adjusted EBITDA margin was 22.9% a year earlier. The comparison shows faster organic sales growth in the current quarter, with a higher gross margin than previously, based on company figures.
The two segments had mixed performances in the third quarter. Motion control sales rose 5.0% to $560.1 million, and its adjusted margin increased to 24.5% from 22.9% a year earlier. In fluid power, sales grew 6.5% to $343.5 million, but the adjusted margin edged down to 22.8% from 22.9%. Margin improvement was therefore concentrated in motion control, while fluid power sales growth was not matched by a similar improvement in its margin. The quarterly figures show sales growth across both segments, but their operating profitability followed different paths. The company’s statement did not link the annual outlook revision to a specific factor beyond these reported results and guidance.
Chief Executive Officer Ivo Jurek said sales through the original equipment manufacturer channel grew “at a high-teens rate,” while growth in the industrial aftermarket channel accelerated from the previous quarter. In July, after its second-quarter results, the company said it had raised its 2026 outlook and expected higher sales growth in the second half than in its initial forecast, citing improving global demand momentum. Second-quarter sales were $941.6 million, up 6.6% year over year, with organic growth of 4.9%; adjusted EPS was $0.44 and the adjusted margin was 22.5%. Compared with that quarter, sales declined in the third quarter, while organic growth, adjusted EPS and the adjusted margin increased. These figures provide context for the new guidance after the company indicated in July that it expected stronger growth in the second half of the year.
Gates completed its acquisition of Timken’s belts business in September, including selected manufacturing assets, and said the deal expands its motion control business in North America by adding manufacturing capabilities and customer relationships. The company did not disclose the financial terms of the acquisition. Gates is scheduled to host a Capital Markets Day at the New York Stock Exchange on November 19, 2026, from 9:00 a.m. to 12:30 p.m. Eastern Time. Chief Executive Officer Ivo Jurek and Chief Financial Officer Brooks Mallard will take part in the presentations. The event follows the earnings announcement and revised annual guidance, and will focus on presenting the company’s strategy to investors.