Gates Industrial Corporation plc

Hello everyone, thank you for joining us and welcome to the Gates Industrial Corporation third quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Rich Kwas, Investor Relations. Rich, please go ahead.

Greetings and thank you for joining us on our third 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 to be followed by Brooks Mallard our CFO. Before the market opened today we published our third 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 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 Q3 quarterly report on Form 10-Q that is expected to be filed later today. We disclaim any obligation to update these forward-looking statements. As a reminder, we are hosting our Capital Markets Day at the New York Stock Exchange on Thursday, November 19th. This is our first Capital Markets Day in over two and a half years, and we're excited to share with you our strategic vision for the company we look forward to hosting you. Before we start, please note all comparisons are against the prior year period unless stated otherwise. And now I'll turn the call over to Ivo.

Thank you, Rich, and good morning all. In the third quarter, we generated mid-single-digit core sales growth. consistent with our guidance and delivered strong adjusted EBITDA margin which approached 24%. Our core growth performance was fueled by high single digit growth in our industrial end markets globally. Importantly, growth was broad based with the majority of our end markets growing. Our performance resulted in quarterly record results for adjusted EBITDA margin and adjusted EPS. We are on pace to deliver on our financial commitments for 2026, which we have increased progressively over the course of the year. The company is in good position to capitalize on the industrial upcycle that is presently taking hold and broadening. On that topic, the industrial demand recovery continued to evolve favorably in a third quarter. Relative to the second quarter, our industrial core growth accelerated to high single digits from mid single digits. While this was led by OEM channel strength, we also realized a nice uptake in industrial aftermarket growth relative to the last quarter. Furthermore, we were highly encouraged by the strengthening industrial demand in our North American business. Importantly, our global book to bill remained above one time for the quarter. Given our performance year to date and current demand trends, we are raising our full year adjusted earnings per share guidance. We now anticipate double digit growth in adjusted earnings per share at the midpoint for the year. We are reiterating our expectation for second half core sales growth to approximately 6% at the midpoint, as well as second half adjusted EBITDA margin to measure approximately 23.5%. Please turn to slide four. Third quarter sales were approximately $904 million, representing total growth of 5.6% and core growth of 5.5%. Growth was driven by continued strength in our industrial markets. Diversified industrial sales increased high single digits. These end markets and many others. In addition, commercial on-highway sales expanded more than 20% and our sales into the global personal mobility markets increased approximately 35%. On a regional basis, North America growth accelerated exiting the quarter, an incremental positive sign for the enterprise. Adjusted EBITDA was $215 million and represented a 10% increase. Adjusted EBITDA margin increased 90 basis points to a company record of 23.8%, translating to an incremental adjusted EBITDA margin that exceeded 40% relative to the prior year period. The margin expansion was primarily driven by volume growth, manufacturing performance, and enterprise initiative improvements, slightly offset by investments in our strategic growth areas. Adjusted earnings per share increased approximately 21% with a quarterly record of 47 cents. The increase was predominantly driven by core growth and stronger operating performance. Brooks will address in more detail later in a call. On slide five, we'll review our segment highlights. In power transmission, sales were approximately $560 million, increasing 5.2% on a core basis. Industrial demand remains strong throughout the quarter. led by high teams growth in industrial OEM. Personal mobility delivered approximately 40% growth driven by meaningful contributions from all major regions. Commercial on highway was also a significant growth contributor expanding over 20%. Our transmission delivered adjusted EBITDA margin of 24.5%. and increase of 160 basis points. Margin performance was driven by solid operating leverage on volume growth and strong operating performance. In fluid power, sales were approximately $343 million and grew over 6% on a core basis. Industrial OEM demand continued to strengthen during the quarter. Commercial on Highway increased more than 20%. Construction was also a nice contributor to the overall segment growth, growing high single digits. Agriculture grew slightly and increased mid single digits on sequential basis. We are encouraged by the gradual improvement in our customers' activities across the agriculture space and are optimistic about the end market experiencing a potential steady recovery during 2027. Our data center revenues increased about two and a half times compared to the last year's third quarter. In data center applications, we continue to expand our product offering and customer base. We anticipate to deliver material growth in this end market as liquid cooling application adoption continues to accelerate. Adjusted EBITDA margin was 22.8%, down approximately 10 basis points. Importantly, segment gross margins improved 130 basis points year over year, driven by volume growth and execution on enterprise initiatives, offset by investments into our data center growth vertical. I will now turn the call over to Brooks.