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Segment information
 6 Months Ended
Jun. 28, 2025
Segment Reporting [Abstract]  
Segment information Segment information
A. Background
The segment information provided in these condensed consolidated financial statements reflects the information that is used by the chief operating decision maker for the purposes of making decisions about allocating resources and in assessing the performance of each segment. The chief executive officer (“CEO”) of Gates serves as the chief operating decision maker. These decisions are based on net sales and Adjusted EBITDA (defined below).
B. Operating segments and segment assets
Gates manufactures a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and first-fit channels, throughout the world.
Our reportable segments are identified on the basis of our primary product lines, as this is the basis on which information is provided to the CEO for the purposes of allocating resources and assessing the performance of Gates’ businesses. Our operating and reportable segments are therefore Power Transmission and Fluid Power.
Segment asset information is not provided to the chief operating decision maker and therefore segment asset information has not been presented. Due to the nature of Gates’ operations, cash generation and profitability are viewed as the key measures rather than an asset-based measure.
C. Segment net sales and disaggregated net sales
Sales between reportable segments and the impact of such sales on Adjusted EBITDA for each segment are not included in internal reports presented to the CEO and have therefore not been included below.
Three months endedSix months ended
(dollars in millions)
June 28,
2025		June 29,
2024		June 28,
2025		June 29,
2024
Power Transmission$550.1 $541.9 $1,077.3 $1,074.7 
Fluid Power333.6 343.6 654.0 673.4 
Net sales$883.7 $885.5 $1,731.3 $1,748.1 
Our commercial function is organized by region and therefore, in addition to reviewing net sales by our reportable segments, the CEO also reviews net sales information disaggregated by region and by channels.
The following tables summarize our net sales by key geographic region:
Three months ended
June 28,
2025		June 29,
2024
(dollars in millions)
Power Transmission
Fluid Power
Power Transmission
Fluid Power
U.S.$154.6 $183.8 $143.9 $184.0 
North America, excluding the U.S.51.9 42.1 62.3 53.3 
South America22.3 10.5 27.2 9.6 
United Kingdom ("U.K.")12.1 16.9 9.9 18.9 
Luxembourg77.0 23.4 65.8 20.9 
EMEA(1), excluding the U.K. and Luxembourg
86.8 25.4 92.8 25.9 
East Asia and India70.6 21.2 66.6 19.9 
Greater China74.8 10.3 73.4 11.1 
Net sales$550.1 $333.6 $541.9 $343.6 
Six months ended
June 28,
2025		June 29,
2024
(dollars in millions)
Power Transmission
Fluid Power
Power Transmission
Fluid Power
U.S.$308.9 $351.8 $284.9 $356.0 
North America, excluding the U.S.106.4 86.4 125.4103.8
South America44.1 20.5 55.018.8
U.K.22.4 32.3 20.534.7
Luxembourg139.8 46.2 127.5 43.8 
EMEA(1), excluding the U.K. and Luxembourg
172.0 53.1 184.155.0
East Asia and India139.8 41.6 135.239.8
Greater China143.9 22.1 142.121.5
Net Sales$1,077.3 $654.0 $1,074.7 $673.4 
(1)    Europe, Middle East and Africa (“EMEA”).
The following tables summarize our segment net sales into original equipment manufacturer (“OEM”) and Replacement channels:
For the three months ended
June 28, 2025June 29, 2024
(dollars in millions)Power TransmissionFluid PowerPower TransmissionFluid Power
Replacement$366.5 $240.9 $361.2 $236.8 
OEM183.6 92.7 180.7 106.8 
Net sales$550.1 $333.6 $541.9 $343.6 
For the six months ended
June 28, 2025June 29, 2024
(dollars in millions)Power TransmissionFluid PowerPower TransmissionFluid Power
Replacement$716.4 $467.0 $709.8 $458.7 
OEM360.9 187.0 364.9 214.7 
Net sales$1,077.3 $654.0 $1,074.7 $673.4 
D. Measure of segment profit or loss
The CEO uses Adjusted EBITDA, as defined below, to measure the profitability of each segment. Adjusted EBITDA is, therefore, the measure of segment profit or loss presented in Gates’ segment disclosures.
“EBITDA” represents net income from continuing operations for the period before net interest and other expense, income taxes, depreciation and amortization. “Adjusted EBITDA” represents EBITDA before certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. During the periods presented, the items excluded from EBITDA in computing Adjusted EBITDA primarily included:
•non-cash charges in relation to share-based compensation;
•inventory adjustments related to certain inventories accounted for on a LIFO basis;
•transaction-related expenses incurred in relation to major corporate transactions, including the acquisition of businesses and related integration activities, and equity and debt transactions;
•asset impairments;
•restructuring expenses, including severance and restructuring-related expenses;
•credit loss related to a customer bankruptcy; and
•other expenses (income), excluding foreign currency transaction gain or loss.
Adjusted EBITDA by segment was as follows:
Three months endedSix months ended
(dollars in millions)
June 28,
2025		June 29,
2024		June 28,
2025		June 29,
2024
Power Transmission$122.8 $123.8 $239.5 $242.8 
Fluid Power 76.4 78.4 147.0 155.0 
Adjusted EBITDA$199.2 $202.2 $386.5 $397.8 
The table below represents the segment profit or loss provided to the CEO on a quarterly basis:
Three months ended
June 28, 2025June 29, 2024
Power TransmissionFluid PowerTotalPower TransmissionFluid PowerTotal
Net sales$550.1 $333.6 $883.7 $541.9 $343.6 $885.5 
Adjusted cost of sales (1)
(319.9)(198.4)(518.3)(316.1)(208.6)(524.7)
Adjusted selling, general and administrative expenses ("SG&A") (2)
(119.8)(69.3)(189.1)(116.7)(69.8)(186.5)
Depreciation and software amortization13.0 10.9 23.9 12.9 12.1 25.0 
Other adjustments(3)
(0.6)(0.4)(1.0)1.8 1.1 2.9 
Adjusted EBITDA$122.8 $76.4 $199.2 $123.8 $78.4 $202.2 

Six months ended
June 28, 2025June 29, 2024
Power TransmissionFluid PowerTotalPower TransmissionFluid PowerTotal
Net sales$1,077.3 $654.0 $1,731.3 $1,074.7 $673.4 $1,748.1 
Adjusted cost of sales (1)
(628.7)(392.4)(1,021.1)(634.6)(408.9)(1,043.5)
Adjusted selling, general and administrative expenses (2)
(233.5)(135.5)(369.0)(227.0)(136.1)(363.1)
Depreciation and software amortization25.7 21.7 47.4 25.8 24.1 49.9 
Other adjustments (3)
(1.3)(0.8)(2.1)3.9 2.5 6.4 
Adjusted EBITDA$239.5 $147.0 $386.5 $242.8 $155.0 $397.8 

(1)    Adjusted cost of sales excluded inventory impairments and adjustments primarily related to the reversal of the adjustment to remeasure certain inventories on a LIFO basis, and restructuring-related expenses (included in cost of sales).
(2)    Adjusted selling, general and administrative expenses excluded acquired intangible assets amortization, share-based compensation expense, and restructuring-related expenses (included in SG&A).
(3)    Other adjustments primarily related to net foreign currency transaction (loss) gain.
Reconciliation of net income from continuing operations before taxes to Adjusted EBITDA:
Three months endedSix months ended
(dollars in millions)
June 28,
2025		June 29,
2024		June 28,
2025		June 29,
2024
Net income from continuing operations before taxes$80.2 $90.2 $174.0 $170.9 
Interest expense28.8 49.1 58.4 86.6 
Depreciation and amortization53.3 54.5 105.5 109.1 
Share-based compensation expense9.6 5.2 15.7 13.8 
Transaction-related expense (1)
— 1.2 0.4 1.6 
Inventory impairments and adjustments (2) (included in cost of sales)
4.0 3.4 3.0 17.3 
Restructuring expenses13.0 1.6 14.6 2.8 
Restructuring-related expenses (included in cost of sales)1.2 — 2.4 — 
Restructuring-related expenses (included in SG&A)3.1 — 4.6 0.1 
Asset impairments0.2 — 0.8 — 
Credit loss related to customer bankruptcy (included in SG&A)— — — 0.1 
Other expenses (income), excluding foreign currency transaction gain or loss (3)
5.8 (3.1)7.1 (4.6)
Other items not directly related to current operations— 0.1 — 0.1 
Adjusted EBITDA
$199.2 $202.2 $386.5 $397.8 
(1)    Transaction-related expenses relate primarily to advisory fees and other costs recognized in respect of major corporate transactions, including the acquisition of businesses, and equity and debt transactions.
(2)    Inventory impairments and adjustments include the reversal of the adjustment to remeasure certain inventories on a LIFO basis.
(3)    Other expenses (income) excludes foreign currency transaction losses of $1.0 million and $2.1 million during the three and six months ended June 28, 2025, respectively, and foreign currency transaction gains of $2.9 million and $6.3 million during the three and six months ended June 29, 2024, respectively.