Gates Industrial Corporation plc

Good morning and welcome to the Gates Industrial Corporation second quarter 2026 earnings conference call. All participants are in a listen only mode. After the speaker's remarks, we'll conduct a question and answer session. To ask a question at this time, you'll need to press star followed by the number one on your telephone keypad. 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 included in our earnings release and the slide presentation, each of which is available in the investor relations section of our website. Please refer now to slide two of the presentation, which provides a reminder that our remarks will include forward-looking statements within the meaning of the private securities litigation reform act. These forward-looking statements are subject to risks that could cause actual results to be materially different from those expressed in or implied by such forward-looking statements. These risks include, among others, matters that we've described in our most recent annual report on Form 10-K, and in other filings we make with the SEC including our Q2 quarterly report on Form 10-Q that is expected to be filed later today. We disclaim any obligation to update these forward-looking statements. This quarter we will be attending the Jeffries Industrial Conference and the Morgan Stanley Laguna Conference both in September and look forward to meeting with many of you. Before we start, please note all comparisons are against the prior year period unless stated otherwise. And with that out of the way, I will turn it over to Ivo.

Thank you, Rich. In the second quarter, we delivered strong performance as sales came in near the high end of our guidance supported by incrementally constructive industrial and markets and contributions from our strategic growth initiatives. Sales grew approximately 7% with core revenue growth of 4.9% which enabled us to achieve record quarterly sales and adjusted earnings per share. Our adjusted EBITDA margin was above expectations led by solid improvement in our adjusted gross margin. Importantly, we believe that we are in a good position to achieve our second half adjusted EBITDA margin target outlined earlier this year. Core growth in our industrial channels was up nicely, led by double digit growth in industrial OEM with strength building as we exited the quarter. Broadly speaking, we generated year over year growth in most of our end markets during the second quarter. and book to bill remained above one. Given our solid second quarter financial results and the favorable shift in demand trends, we observed exiting the quarter. We have raised our 2026 four year guidance for core sales growth and profitability. Our updated guidance implies incrementally better performance for second half of the year relative to our initial expectations. We believe we are also on track to deliver adjusted EBITDA margin of 23.5% or higher in the second half of 2026. Brooks will provide more details on guidance later in the presentation. Please turn to slide four. Our second quarter sales were $942 million. which represented record quarterly sales for Gates. Total sales expanded 6.6% inclusive of foreign currency benefits. Core sales grew 4.9%. The underlying demand continued to improve with year-over-year growth strengthening during the second half of the quarter. We saw momentum across most of the portfolio highlighted by approximately 25% growth in personal mobility and 20% plus growth in commercial on highway. Industrial OEM sales expanded low double digits and our industrial aftermarket saw improved demand trends, which resulted in mid single digit growth. In general, the bulk of our end markets have begun to inflect positively and we are in a strong position to capitalize on the building and market momentum. Adjusted EBITDA was approximately $211 million and represented an adjusted EBITDA margin of 22.5%, modestly better than expectations. Adjusted gross margin increased by 50 basis points while we continue to make targeted investments to support our enterprise initiatives. Adjusted earnings per share increased 13% to a quarterly record of 44 cents. The growth was driven by improved operating performance and other items. On slide five, we will review our segment highlights. In the power transmission segment, Sales were $589 million and translated to over 5% core growth. The expansion was led by high single digit growth in our industrial end markets, which was driven by mid-teens growth in the industrial OEM channel globally. Power transmission industrial aftermarket increased mid single digits and supported by double digit growth in EMEA and Asia Pacific. Automotive aftermarket grew high single digits with solid growth achieved across all geographies. At the end market level, personal mobility grew in the mid 20s and commercial on highway increased similarly. Segment adjusted EBITDA margin increased 60 basis points. In the fluid power segment, sales were $353 million and increased 4.2% on a core basis. Similar to power transmission, industrial OEM sales were strong, growing double digits. Industrial aftermarket increased low single digits. Fluid power's strongest end markets were commercial on highway, which increased high teens, and Construction, which grew mid-single digits. Of note, Diversified Industrial grew mid-single digits and represented a good contributor to the segment's growth, given its relative size within the segment. We continue to grow our data center business, which expanded more than 2x versus the prior year quarter. and we anticipate sales contribution to step up in the second half as certain high value project launches occur. Adjusted EBITDA margin in the fluid power segment decreased 120 basis points primarily due to footprint realignment costs as well as targeted investments into our enterprise initiatives. I will now turn the call over to Brooks for additional comments on our results.