Gates Industrial raises 2026 profit forecast, but Q3 sales miss estimates

Gates Industrial (GTES) topped profit estimates for the third quarter of 2026 and raised its full-year forecast, but missed on revenue, the company said in its results release on Oct. 30, 2026.

Gates is a global manufacturer of power transmission and fluid power products, sold in more than 130 countries.

Adjusted earnings per share came to 47 cents per diluted share for the quarter ended Sept. 26, against the 45-cent consensus estimate compiled by Finnhub.

Net sales were $903.6 million, up 5.6% from a year earlier, including a core sales increase of 5.5%. That missed the $923.03 million consensus estimate compiled by Finnhub.

Here's how the company did:

• Adjusted EPS: 47 cents per diluted share vs. 45 cents expected, according to Finnhub
• Net sales: $903.6 million vs. $855.7 million a year earlier, against $923.03 million expected, according to Finnhub
• Net income attributable to shareholders: $86.5 million, or 34 cents per diluted share, vs. $81.6 million, or 31 cents, a year earlier
• Adjusted EBITDA: $215.4 million, a margin of 23.8%, vs. $195.8 million a year earlier

2026 guidance

The company raised its 2026 adjusted EPS forecast to $1.66 to $1.72, from the $1.62 to $1.70 range it gave on July 31.

Adjusted EBITDA guidance is now $809 million to $823 million, from $800 million to $830 million. Core sales growth is now expected at 3.2% to 3.8%, compared with 2.5% to 4.5% before.

Capital expenditures are still expected at about $120 million, and free cash flow conversion at 90% or more.

“We have raised our 2026 guidance for profitability and adjusted earnings per share,” Chief Executive Officer Ivo Jurek said. He added that the company is on pace to reach its previously communicated adjusted EBITDA margin target for the second half of 2026.

Segment results

Power Transmission net sales rose 5.0% to $560.1 million. Its adjusted EBITDA rose 12.3% to $137.1 million, a margin of 24.5%.

Fluid Power net sales rose 6.5% to $343.5 million. Its adjusted EBITDA was $78.3 million, up 6.2%, at a margin of 22.8%.

Industrial OEM sales rose by high-teens, the company said, and growth in its Industrial Aftermarket channel accelerated from the prior quarter.

Cash and share repurchases

The company repurchased $96.1 million of shares in the first nine months of 2026, compared with $13.0 million a year earlier.

Net cash provided by operating activities was $170.0 million for the nine months, against $208.3 million a year earlier. Cash and cash equivalents were $830.8 million at Sept. 26.

Restructuring expenses fell to $0.6 million in the quarter from $6.5 million a year earlier.