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What changed in Gates Industrial Corp plc's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Gates Industrial Corp plc's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+311 added−319 removedSource: 10-K (2026-02-12) vs 10-K (2025-02-06)

Top changes in Gates Industrial Corp plc's 2025 10-K

311 paragraphs added · 319 removed · 254 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeOur Diverse End Markets Our products play essential roles in a diverse range of applications across a wide variety of end markets including the following: • automotive replacement and OEM end markets; • diversified industrial applications from automated manufacturing and logistics systems to everyday consumer applications such as printers, power washers, automatic doors and vacuum cleaners; • industrial off-highway applications such as agriculture and construction; • industrial on-highway commercial vehicles such as heavy-duty trucks and buses; 9 Table of Contents • energy and resources markets such as oil, gas and mining; and • personal mobility such as scooters, motorcycles, bicycles, all-terrain vehicles (ATVs) and snowmobiles.
Biggest changeOur Diverse End Markets Our products play essential roles in a diverse range of applications across a wide variety of end markets including the following: • automotive aftermarket and OEM end markets; • diversified industrial applications from automated manufacturing, logistics systems and data centers to everyday consumer applications such as printers, power washers, automatic doors and vacuum cleaners; • industrial off-highway applications such as agriculture and construction; • industrial on-highway commercial vehicles such as heavy-duty trucks and buses; • energy and resources markets such as oil, gas and mining; and • personal mobility such as scooters, motorcycles, bicycles, all-terrain vehicles (ATVs) and snowmobiles. 9 Table of Content s Our net sales have historically been, and remain, highly correlated with industrial activity and utilization, and not with any single end market given the diversification of our business and high exposure to the aftermarket channel.
Within our Power Transmission segment, we offer solutions across the following key application platforms: • Stationary drives: fixed drive systems such as those used in a factory driving a machine or pump, on a grain elevator driving the lift auger or in a distribution center driving automated equipment such as conveyor lines or robotic picking machines; • Mobile drives: drives on a piece of mobile machinery such as the threshing and separation drives on a combine harvester; • Engine systems: synchronous drives and related components for cam shaft drives, auxiliary drives and asynchronous accessory drives for air conditioning (“A/C”) compressors, power steering, alternators and starter/generator systems; and • Personal mobility: drives on motorcycles, scooters, bicycles, both traditional and electric, as well as on snowmobiles and other power sports vehicles that are used to transfer power between the power source and the drive wheel(s) or track. 6 Table of Contents Customers choose power transmission solutions based on a number of factors, including application requirements such as load, speed, gear ratio, temperature, operating environment, ease of maintenance, noise, efficiency and reliability, as well as the support they receive from their suppliers, including application-specific engineering services.
Within our Power Transmission segment, we offer solutions across the following key application platforms: • Stationary drives: fixed drive systems such as those used in a factory driving a machine or pump, on a grain elevator driving the lift auger or in a distribution center driving automated equipment such as conveyor lines or robotic picking machines; • Mobile drives: drives on a piece of mobile machinery such as the threshing and separation drives on a combine harvester; • Engine systems: synchronous drives and related components for cam shaft drives, auxiliary drives and asynchronous accessory drives for air conditioning (“A/C”) compressors, power steering, alternators and starter/generator systems; and • Personal mobility: drives on motorcycles, scooters, bicycles, both traditional and electric, as well as on snowmobiles and other power sports vehicles that are used to transfer power between the power source and the drive wheel(s) or track. 6 Table of Content s Customers choose power transmission solutions based on a number of factors, including application requirements such as load, speed, gear ratio, temperature, operating environment, ease of maintenance, noise, efficiency and reliability, as well as the support they receive from their suppliers, including application-specific engineering services.
Government Regulation Our operations, products and properties are subject to extensive U.S. and foreign federal, state, local, and provincial laws, regulations and executive actions, including those related to health, safety and environment (“HSE”) protection, such as laws and regulations governing air emissions, wastewater discharges, waste management and disposal, substances in products and workplace health and safety as well as the investigation and clean-up of contaminated sites, laws, regulations and executive actions governing trade control laws, anti-corruption laws, data protection and privacy laws.
Government Regulation Our operations, products and properties are subject to extensive U.S. and foreign federal, state, and local laws, regulations and executive actions, including those related to health, safety and environment (“HSE”) protection, such as laws and regulations governing air emissions, wastewater discharges, waste management and disposal, substances in products and workplace health and safety as well as the investigation and clean-up of contaminated sites, laws, regulations and executive actions governing trade control laws, anti-corruption laws, data protection and privacy laws.
Gates was acquired by certain investment funds affiliated with Blackstone Inc. (“Blackstone”) in July 2014 and in 2015 established a new executive leadership team with Ivo Jurek as Chief Executive Officer. In January 2018, Gates completed an initial public offering (“IPO”), listing on the New York Stock Exchange (“NYSE”).
Gates was acquired by certain investment funds affiliated with Blackstone Inc. in July 2014 and in 2015 established a new executive leadership team with Ivo Jurek as Chief Executive Officer. In January 2018, Gates completed an initial public offering (“IPO”), listing on the New York Stock Exchange (“NYSE”).
These applications subject our products to normal wear and tear, resulting in natural, and often preventative, replacement cycles that drive high-margin, recurring revenue. Our product portfolio represents one of the broadest ranges of power transmission and fluid power products in the markets we serve, and we maintain long-standing relationships with a diversified group of well-known customers throughout the world.
These applications subject our products to normal wear and tear, resulting in natural, and often preventative, aftermarket cycles that drive high-margin, recurring revenue. Our product portfolio represents one of the broadest ranges of power transmission and fluid power products in the markets we serve, and we maintain long-standing relationships with a diversified group of well-known customers throughout the world.
We selectively participate in OEM projects, focusing on opportunities where we are able to differentiate with technology and innovative solutions. Customers We maintain long-standing relationships with many customers, who range from regional or local distributors to large, global multinational distributors and OEMs. No single customer accounted for more than 10% of our Fiscal 2024 net sales.
We selectively participate in OEM projects, focusing on opportunities where we are able to differentiate with technology and innovative solutions. Customers We maintain long-standing relationships with many customers, who range from regional or local distributors to large, global multinational distributors and OEMs. No single customer accounted for more than 10% of our Fiscal 2025 net sales.
In addition to our power transmission replacement business, we also serve a wide variety of well-known OEM customers across all of our end markets. Fluid Power. Our fluid power solutions are used in applications in which hoses and rigid tubing assemblies either transfer power hydraulically or convey fluids, gases or granular materials from one location to another.
In addition to our power transmission aftermarket business, we also serve a wide variety of well-known OEM customers across all of our end markets. Fluid Power. Our fluid power solutions are used in applications in which hoses and rigid tubing assemblies either transfer power hydraulically or convey fluids, gases or granular materials from one location to another.
Item 1. Business We are a global manufacturer of innovative, highly engineered power transmission and fluid power solutions. We offer a broad portfolio of products to diverse replacement channel customers, and to original equipment manufacturers (“OEM”) as specified components, with the majority of our revenue coming from replacement channels.
Item 1. Business We are a global manufacturer of innovative, highly engineered power transmission and fluid power solutions. We offer a broad portfolio of products to diverse aftermarket channel customers, and to original equipment manufacturers (“OEM”) as specified components, with the majority of our revenue coming from aftermarket channels.
The majority of our sales are generated from customers in replacement channels, who primarily serve a large base of end users with installed equipment that follows a natural maintenance cycle. Our ability to help replacement channel partners maximize revenue is an important part of our value proposition.
The majority of our sales are generated from customers in aftermarket channels, who primarily serve a large base of end users with installed equipment that follows a natural maintenance cycle. Our ability to help aftermarket channel partners maximize revenue is an important part of our value proposition.
A smaller portion of our power transmission replacement business is generated in emerging markets, which generally have a smaller base of installed equipment and relatively nascent distribution channels. As they continue to develop, these replacement channels in emerging markets represent a significant long-term opportunity for growth.
A smaller portion of our power transmission aftermarket business is generated in emerging markets, which generally have a smaller base of installed equipment and relatively nascent distribution channels. As they continue to develop, these aftermarket channels in emerging markets represent a significant long-term opportunity for growth.
We have power transmission and fluid power operations in each commercial region and typically manufacture products for both OEM customers and replacement customers in the same factory, which provides for sharing of raw material inputs, improved factory loading and demand leveling, as well as optimization of capital expenditures.
We have power transmission and fluid power operations in each commercial region and typically manufacture products for both OEM customers and aftermarket customers in the same factory, which provides for sharing of raw material inputs, improved factory loading and demand leveling, as well as optimization of capital expenditures.
Power transmission products represented approximately 62% of our total net sales for Fiscal 2024. Our Fluid Power segment includes hoses, tubing and fittings designed to convey hydraulic fluid at high pressures in both mobile and stationary applications, and other high-pressure and fluid transfer hoses. Our fluid power products represented approximately 38% of our net sales for Fiscal 2024.
Power transmission products represented approximately 62% of our total net sales for Fiscal 2025. Our Fluid Power segment includes hoses, tubing and fittings designed to convey hydraulic fluid at high pressures in both mobile and stationary applications, and other high-pressure and fluid transfer hoses. Our fluid power products represented approximately 38% of our net sales for Fiscal 2025.
For example, a combine harvester can have over 25 high-performance belts that are typically replaced at regular intervals, depending on wear and tear, with end users having access to replacement parts through a large network of distributors.
For example, a combine harvester can have over 25 high-performance belts that are typically replaced at regular intervals, depending on wear and tear, with end users having access to aftermarket parts through a large network of distributors.
Our in-country deployment of 10 Table of Contents manufacturing and technical resources gives us the capability to meet customer needs rapidly and satisfy regional variations in product preference, while our scale allows us to service global customers on a world-wide basis. Competition We operate in competitive markets and industries that are very fragmented.
Our in-country deployment of manufacturing and technical resources gives us the capability to meet customer needs rapidly and satisfy regional variations in product preference, while our scale allows us to service global customers on a world-wide basis. 10 Table of Content s Competition We operate in competitive markets and industries that are very fragmented.
We believe that enhancing our brand visibility, including through our OEM presence in these emerging markets will allow us to better develop the replacement channels as they mature over time.
We believe that enhancing our brand visibility, including through our OEM presence in these emerging markets will allow us to better develop the aftermarket channels as they mature over time.
Our products are used in applications across numerous end markets, including automotive replacement, automotive OEM, diversified industrial, industrial off-highway, industrial on-highway, energy and resources, and personal mobility.
Our products are used in applications across numerous end markets, including automotive aftermarket, automotive OEM, diversified industrial, industrial off-highway, industrial on-highway, energy and resources, and personal mobility.
Our kits for the automotive replacement channel include all of the parts needed by an automotive service shop to perform a replacement of one or more of our products.
Our kits for the automotive aftermarket include all of the parts needed by an automotive service shop to perform a replacement of one or more of our products.
Gates employs a small number of part-time associates across the globe. 11 Table of Contents Oversight and Governance Our Board, with support from its compensation committee, actively oversees the Company’s human capital management.
Gates employs a small number of part-time associates across the globe. 11 Table of Content s Oversight and Governance Our Board, with support from its compensation committee, actively oversees the Company’s human capital management.
Gates’ business is well-balanced and diversified across products, channels and geographies, as highlighted in the following charts showing breakdowns of our Fiscal 2024 net sales of $3,408.2 million. 5 Table of Contents Our History In 1911, Charles Gates, Sr. purchased the Colorado Tire and Leather Company, a manufacturer of steel-studded bands of leather that attached to wheels to extend their life.
Gates’ business is well-balanced and diversified across products, channels and geographies, as highlighted in the following charts showing breakdowns of our Fiscal 2025 net sales of $3,443.2 million. 5 Table of Content s Our History In 1911, Charles Gates, Sr. purchased the Colorado Tire and Leather Company, a manufacturer of steel-studded bands of leather that attached to wheels to extend their life.
Our website and the information contained on or connected to that site are not incorporated into this report. 13 Table of Contents
Our website and the information contained on or connected to that site are not incorporated into this report. 13 Table of Content s
Our net sales have historically been, and remain, highly correlated with industrial activity and utilization, and not with any single end market given the diversification of our business and high exposure to replacement markets.
Our net sales have historically been, and remain, highly correlated with industrial activity and utilization, and not with any single end market given the diversification of our business and high exposure to the aftermarket channel.
Similarly, in the mature automotive aftermarkets such as North America and Europe, maintenance intervals are well defined, and miles (or kilometers) driven per vehicle and the average vehicle age have generally been increasing, leading to more wear and tear on vehicles.
Similarly, in the mature automotive aftermarkets such as North America and Europe, maintenance intervals are well defined, and miles (or kilometers) driven per vehicle and the average vehicle age have generally been increasing, leading to more wear and tear on vehicles and the replacement of products that we supply.
Our fluid power products are used in numerous applications in end markets including automotive replacement and OEM, diversified industrial, industrial off-highway, industrial on-highway, and energy and resources. The largest portion of our Fiscal 2024 fluid power revenue came from replacement markets. Within these replacement markets, the majority of our revenue came from industrial applications.
Our fluid power products are used in numerous applications in end markets including automotive aftermarket and OEM, diversified industrial, industrial off-highway, industrial on-highway, and energy and resources. The largest portion of our Fiscal 2025 fluid power revenue came from the aftermarket channel. Within the aftermarket channel, the majority of our revenue came from industrial applications.
As of December 28, 2024, we held more than 2,200 patents and patent applications and 3,500 trademarks in various jurisdictions, and have elected to protect a variety of technologies and processes as trade secrets.
As of December 31, 2025, we held more than 2,300 patents and patent applications and 3,500 trademarks in various jurisdictions, and have elected to protect a variety of technologies and processes as trade secrets.
In 1986, we acquired the Uniroyal Power Transmission Company, which included a controlling interest in a joint venture that laid the groundwork for Gates’ growth in the Asia-Pacific region.
In 1986, we acquired the Uniroyal Power Transmission Company, which included a controlling interest in a joint venture that laid the groundwork for Gates’ growth in the Asia-Pacific region in select product and end-market categories.
Our mix of replacement channel sales to OEM sales varies by region based on our market strategy and the maturity of the equipment fleet and channel. For example, in emerging markets such as China and India, replacement channels are developing.
Our mix of aftermarket channel sales to OEM sales varies by region based on our market strategy and the maturity of the equipment fleet and channel. For example, in emerging markets such as areas of southeast Asia and eastern Europe, aftermarket channels are developing.
Human Capital As of December 28, 2024, we employed approximately 14,100 full time employees worldwide. Approximately 6,200 of our employees are in North America, 4,300 in EMEA, 2,900 in Greater China and East Asia & India, and 700 in South America.
Human Capital As of December 31, 2025, we employed approximately 13,000 full time employees worldwide. Approximately 5,300 of our employees are in North America, 4,100 in EMEA, 2,900 in Greater China and East Asia & India, and 700 in South America.
Synchronous belts experience no slippage and are often used to transfer high levels of power or to control motion for indexing or timing purposes, as well as for linear positioning and positive drive conveying.
Synchronous belts, also known as timing belts, have molded teeth and run over matching toothed pulleys or sprockets. Synchronous belts experience no slippage and are often used to transfer high levels of power or to control motion for indexing or timing purposes, as well as for linear positioning and positive drive conveying.
By contrast, in North America and EMEA, where there are long-established replacement markets, approximately 71% and 74% of our Fiscal 2024 net sales, respectively, were derived from these higher-margin replacement channels. Replacement.
By contrast, in North America and EMEA, where there are long-established aftermarket channels, approximately 73% of our Fiscal 2025 net sales, for both markets, were derived from these higher-margin aftermarket channels. Aftermarket.
Our Channels We sell our power transmission and fluid power products both as replacement components and as specified components on original equipment to customers worldwide. During Fiscal 2024, approximately 68% of our net sales were generated from replacement channels and 32% from OEM channels globally.
We have a long-standing presence in each of these regions. Our Channels We sell our power transmission and fluid power products both as aftermarket components and as specified components on original equipment to customers worldwide. During Fiscal 2025, approximately 68% of our net sales were generated from aftermarket channels and 32% from OEM channels globally.
Belt-based power transmission drives typically consist of either a synchronous belt (such as a timing belt) or an asynchronous belt (such as a V-belt, continuously-variable transmission (“CVT”) belt or Micro-V® belt) and related components (sprockets, pulleys, mechanical water pumps, tensioners or other accessories).
Belt-based power transmission drives typically consist of either a synchronous belt (such as a timing belt) or an asynchronous belt (such as a V-belt, continuously-variable transmission (“CVT”) belt or Micro-V® belt) and related components (sprockets, pulleys, mechanical water pumps, tensioners or other accessories). In addition, we also manufacture metal drive components and assemble certain product kits for the automotive aftermarket.
Approximately 66% of our work force consists of production employees, while approximately 25% of our global workforce was female and 75% male. Of approximately 1,500 managerial employees, 21% were female, and 40% of our executive officers were female.
Approximately 65% of our work force consists of production employees, while approximately 25% of our global workforce was female and 75% male. Of approximately 1,400 managerial employees, 21% were female, and 25% of our executive officers were female. Some of our global employees are represented by labor unions.
This ensures the Board possesses the necessary expertise and includes members with diverse and independent backgrounds. 12 Table of Contents Where You Can Find More Information We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the internet at the SEC’s website at http://www.sec.gov.
This ensures the Board possesses the mix of skills and experience that is necessary to perform its oversight function effectively. Where You Can Find More Information We file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the internet at the SEC’s website at http://www.sec.gov.
Idlers, which sometimes also perform as tensioners, are used to take up extra belt length. Gates’ pulleys and sprockets are designed to optimize the performance and working service life of the belt drive system. Kits .
Tensioners typically employ a spring-loaded arm and a damping mechanism to help control tension in a belt drive system. Idlers, which sometimes also perform as tensioners, are used to take up extra belt length. Gates’ pulleys and sprockets are designed to optimize the performance and working service life of the belt drive system. 7 Table of Content s Kits .
These products are designed and engineered to work efficiently with our belts. Tensioners are devices that maintain a constant tension in the belt drive system, thereby ensuring proper function and preventing loss of power or system failure. Tensioners typically employ a spring-loaded arm and a damping mechanism to help control tension in a belt drive system.
We source, manufacture and sell tensioners, idlers, pulleys, sprockets and other components used in belt drive systems. These products are designed and engineered to work efficiently with our belts. Tensioners are devices that maintain a constant tension in the belt drive system, thereby ensuring proper function and preventing loss of power or system failure.
The bulk of our power transmission replacement business resides in developed regions, in which a large, aging installed base of equipment follows a natural maintenance cycle and is served by well-established distribution channels.
The majority of our Fiscal 2025 power transmission revenue came from aftermarket channels, which provide high-margin, recurring revenue streams and are driven by attractive market trends. The bulk of our power transmission aftermarket business resides in developed regions, in which a large, aging installed base of equipment follows a natural maintenance cycle and is served by well-established distribution channels.
The high-pressure nature of hydraulic systems requires that these products have high levels of performance similar to those found in our hydraulic hoses. The ultimate performance of a hydraulic assembly, in which our products function as part of a hydraulic circuit, depends not only on how well the components are made, but also on how well they complement each other.
The ultimate performance of a hydraulic assembly, in which our products function as part of a hydraulic circuit, 8 Table of Content s depends not only on how well the components are made, but also on how well they complement each other.
In addition, we also manufacture metal drive components and assemble certain product kits for the automotive replacement channel. Asynchronous Belts . Asynchronous belts are our highest-volume products and are used in a broad range of applications. We were a pioneer in the design and manufacturing of V-belts, which draw their name from the shape of their profile.
Asynchronous Belts . Asynchronous belts are our highest-volume products and are used in a broad range of applications. We were a pioneer in the design and manufacturing of V-belts, which draw their name from the shape of their profile. We also manufacture “ribbed” V-belts, which are belts with lengthwise V-shaped grooves, which we market under the Micro-V® name.
In Fiscal 2024, we launched the PRO™ Series ProFlex™ hydraulic hose, which can be applied in a variety of applications while offering lighter weight and more flexibility relative to the key competition. 8 Table of Contents Our hydraulic couplings, fittings and tubing are engineered to match the product performance of our hydraulic hoses.
These products are designed for applications that require high levels of quality and durability. In Fiscal 2024, we launched the PRO™ Series ProFlex™ hydraulic hose, which can be applied in a variety of applications while offering lighter weight and more flexibility relative to the key competition.
Our products are sold in over 130 countries across our four commercial regions: (1) the Americas; (2) Europe, Middle East & Africa (“EMEA”); (3) Greater China; and (4) East Asia & India. We have a long-standing presence in each of these regions.
Key indicators of our performance include manufacturing Purchasing Managers' Index, industrial production, industrial sales and manufacturer shipments. In 2025, our products were sold in over 130 countries across our four commercial regions: (1) the Americas; (2) Europe, Middle East & Africa (“EMEA”); (3) Greater China; and (4) East Asia & India.
In industrial end markets, asynchronous belts have a wide variety of applications, including use in pump drives, manufacturing lines, HVAC systems, industrial, truck, bus and marine engines, forestry and mining equipment and many other applications. CVT systems often found in scooters, power sports vehicles and a variety of industrial applications use a specialized V-belt known as a CVT belt.
This design results in a thinner and narrower belt for the same drive performance, making it more flexible and offering improved efficiency. In industrial end markets, asynchronous belts have a wide variety of applications, including use in pump drives, manufacturing lines, HVAC systems, industrial, truck, bus and marine engines, forestry and mining equipment and many other applications.
Gates supports a culture of continuous learning and encourages employees to pursue internal and external educational opportunities as part of their professional development path. In 2024, we streamlined our Performance & Talent process and launched a new year-end review process that includes evaluating employee annual performance, assessing learning agility and potential to grow their career.
Gates supports a culture of continuous learning and encourages employees to pursue internal and external educational opportunities as part of their professional development path. In 2025, we advanced our approach to assessing employee performance and learning agility, enabling leaders to more effectively identify individuals who both aspire to grow and demonstrate the capacity to do so.
Our kits are convenient for service technicians as they eliminate the need for more complicated product sourcing and provide a more efficient replacement job. On a comparable quantity basis, kits typically sell at a premium to a loose belt and the individual related components.
Our kits are convenient for service technicians as they eliminate the need for more complicated product sourcing and provide a more efficient replacement job. In 2025, Gates significantly expanded our Timing Chain Kits program to broaden and provide a more complete kit coverage for service technicians.
Some of our employees are members of labor unions, and over many years we have been able to maintain successful relationships with the unions and employment organizations. To date, employee relations have been flexible and constructive as we continue to pursue lean manufacturing improvements in our plants.
As a global manufacturing company that operates in a continually evolving labor environment, we continue to engage with unions and employee organizations in a constructive and responsible manner. To date, employee relations have been flexible and constructive as we continue to pursue lean manufacturing improvements in our plants.
The G-Force Workhorse belt offers more longevity and increased compatibility for end users relative to its predecessor. In 2024, we launched our Quad Power 4 in North America. Quad Power 4 is a maintenance-free, bandless V-belt that utilizes minimal stretch cord technology and is designed to extend product life and eliminate downtime.
In 2024, we launched our Quad-Power™ 4 belt in North America and continue to expand adoption of this maintenance-free, bandless V-Belt which combines cord and material technology to extend product life, limit maintenance, and eliminate downtime.
Our power transmission products are used in a broad range of applications in end markets including: automotive replacement and OEM, diversified industrial, industrial off-highway, industrial on-highway, energy and resources, and personal mobility. The majority of our Fiscal 2024 net sales came from replacement channels, which provide high-margin, recurring revenue streams and are driven by attractive market trends.
Leveraging our expertise in Timing Belt Kits, this was a natural extension that will significantly contribute to our future automotive aftermarket growth initiative. Our power transmission products are used in a broad range of applications in end markets including: automotive aftermarket and OEM, diversified industrial, industrial off-highway, industrial on-highway, energy and resources, and personal mobility.
Our three Business Resource groups participated in a variety of events throughout 2024, where they shared ideas, experiences, and insights to strengthen our community and elevate a diverse and inclusive workforce. Additionally, the charter for our Board's Nominating and Governance Committee mandates the committee review and recommend the Board's composition and size.
These activities helped deepen our understanding of diverse communities and supported our efforts to foster an inclusive workforce. 12 Table of Content s Additionally, the charter for our Board's Nominating and Governance Committee mandates the committee review and recommend the Board's composition and size.
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We also manufacture “ribbed” V-belts, which are belts with lengthwise V-shaped grooves, which we market under the Micro-V® name. This design results in a thinner and narrower belt for the same drive performance, making it more flexible and offering improved efficiency.
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CVT systems often found in scooters, power sports vehicles and a variety of industrial applications use a specialized V-belt known as a CVT belt.
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Recently, Gates introduced a new Micro-V ® platform for engine accessory drive systems. The combination of newly developed material compounds and product design utilizes less material, reduces belt weight and results in lower bending stiffness.
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Similarly, we expanded our G-Force™ CVT belts in EMEA and APAC taking advantage of materials advancements that better withstand the increasingly demanding power sports applications. In 2025, Gates also introduced CoolRunner™ belts that are engineered to be exact replacements for the original belts in mobile refrigeration units. Synchronous Belts .
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These improvements enable tighter pulley configurations and reduced drive bending losses as compared to previous belt technologies; lower losses result in benefits such as reduced energy consumption, CO 2 emissions and heat generation. Additionally, Gates expanded its G-Force product portfolio by introducing the G-Force Workhorse CVT belt for specialty and recreation vehicles.
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We focus our innovation for this product line on solutions that displace chain drives with cleaner, more sustainable drives in industrial and personal mobility applications. We also continued our conversion of chloroprene-based belts to ethylene elastomer-based compounds, which also drive further longevity and performance benefits.
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We also launched timing chain component kits in the United States and India supporting a wide array of vehicles in operation, enhancing value and convenience for both service technicians and consumers. Synchronous Belts . Synchronous belts, also known as timing belts, have molded teeth and run over matching toothed pulleys or sprockets.
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In addition to product innovation, we drove further improvement in 2025 to our Design Power™ platform used to apply our belts by introducing a new and industry-leading Thermoplastic Polyurethane module along with major upgrades in our bike module and chain conversion module. Metal Drive Components.
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In recent years, Gates launched the Carbon Drive CDC ® synchronous belt designed for commuter bicycle applications, and in Fiscal 2022 Gates launched the Carbon Drive Moto X5 synchronous belt designed specifically for mid-motor, sit-down electric scooters and motorcycles typically found in commuting applications in the rapidly evolving Asian market.
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Our hydraulic couplings, fittings and tubing are engineered to match the product performance of our hydraulic hoses. The high-pressure nature of hydraulic systems requires that these products have high levels of performance similar to those found in our hydraulic hoses.
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In Fiscal 2022, Gates launched an updated version of Gates Design Power, an award-wining new digital toolkit consisting of six modules, including four all-new applications and substantially upgraded versions of well-known Gates digital tools, Design IQ™ and Design Flex Pro™.
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Gates continues to introduce lighter-weight and more flexible hydraulic hoses for the industry’s most demanding applications. Recent examples of global innovations include our Pro™ Series ProFlex™ and MegaSys™ MXG™ hydraulic hose lines. ProFlex provides a reliable, fit-for-purpose solution in a lower force to bend, compact construction. MXG is an innovative product for high pressure, mission-critical applications on heavy equipment.
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Among the all-new programs is the industry-first Mobility Drive Analysis tool aimed at making it easier for engineers from bicycle, scooter, motorcycle, and power sports OEMs to design Gates’ clean, quiet, durable and low-maintenance Carbon Drive belt systems into their next-generation vehicles to further accelerating conversion from chain and other technologies.
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In 2025, we expanded our portfolio to include higher pressure thermal management hoses in larger internal combustion engines aligning with future requirements for demanding heavy duty applications. Industrial Hose .
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In Fiscal 2023, Gates launched the mobile version of Gates Design Power, putting advanced digital design tools to support the engineering of belt drive systems on customers’ mobile devices. 7 Table of Contents Metal Drive Components. We source, manufacture and sell tensioners, idlers, pulleys, sprockets and other components used in belt drive systems.
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In 2025, Gates made significant additions to our portfolio of hoses and couplings targeting data center liquid cooling applications. In 2025, Data Master™ MegaFlex™ and Data Master Eco™ were added to our existing Data Master hose portfolio to address the evolving needs in data center applications.
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These products are designed for applications that require high levels of quality and durability.
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Data Master MegaFlex is a larger diameter yet highly flexible hose used for high flow supply lines while Data Master Eco provides an innovative and sustainable materials solution for racks and servers. In addition, we continued to introduce other coupling solutions in 2025 that pair with these hoses and are specifically designed for data center applications.
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In recent years, Gates introduced a new premium product family consisting of hydraulic hoses that are lighter weight and more flexible. Made with a high-performance reinforcement and robust, abrasion-resistant cover, the MXT line of hydraulic hose is comprised of universally applicable, high-performance products that meet the needs of a wide range of applications.
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We offer fully integrated hose and coupling solutions, delivering certified assemblies that meet the stringent cleanliness and performance requirements of data center customers. Our Data Center Pumps are a complement to our hose and coupling portfolios, providing compact and energy efficient products leveraging our axial flux technology to provide customized and innovative solutions used in data center Coolant Distribution Units.
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Subsequently, we launched the MXG line of hydraulic hose, a flexible, light-weight solution with increased durability and temperature performance, designed to replace conventional spiral hoses typically used in the most demanding applications. We continue to broaden the MXT and MXG product lines. We also launched a smart e-crimper, which is a machine used to attach fittings to hydraulic hoses.
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This refinement allows us to place greater focus on developing these employees as successor candidates, thereby strengthening our leadership pipeline. Our leadership development program continued to expand, introducing new cohorts in regions that previously had not participated. Additionally, our global mentoring program fostered knowledge transfer between mentors and mentees, reinforcing a diverse and inclusive culture.
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In addition to convenient, web-enabled access to training content and product crimp specs, this new crimper can be used with Gates’ intuitive mobile eCrimp app. In Fiscal 2022, we launched the ProV hose family in Europe, which is an addition to our Pro Series product portfolio that leverages technologies developed and first launched in our MXT and MXG product lines.
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In 2025, our strategic partnerships with schools and community organizations continued to strengthen as we increased our participation in a range of talent‑focused activities. These included networking events, career fairs, an experiential learning luncheon, career‑exploration programming, and mock career‑fair engagements. This expanded involvement helped deepen our community relationships and broaden our career talent pipelines.
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In Fiscal 2021, we launched a new line of ThermalPro electric water pumps for OEM and aftermarket applications, broadening Gates presence in hybrid and battery electric vehicle as well as other thermal management applications like data center cooling. Industrial Hose .
Added
Our three Business Resource Groups participated in a variety of events throughout 2025, providing forums for employees to share ideas, experiences, and perspectives.
Removed
In Fiscal 2024, we introduced our Data Master™ line of hoses designed to support liquid-cooled data centers. During the year, we also launched our Clean Master™ Plus line of pressure washer hoses, which is meaningfully more flexible and lighter relative to traditional 6,000 psi hoses. We also offer a wide range of couplings to provide complete assembly solutions.
Removed
Our net sales have historically been, and remain, highly correlated with industrial activity and utilization, and not with any single end market given the diversification of our business and high exposure to replacement markets. Key indicators of our performance include manufacturing Purchasing Managers' Index, industrial production, industrial sales and manufacturer shipments.
Removed
We reduced our annual processes and aligned compensation to recognize the potential of our employees as well as their performance. Additionally, this streamlined process provides greater focus on succession and development plans to help employees achieve their career goals. Our global mentoring program facilitates knowledge transfer between mentors and mentees and fosters a diverse and inclusive culture.
Removed
In 2024, as part of our ongoing efforts to raise awareness of the importance of diversity, equity and inclusion, each region developed action plans and strategies to improve gender diversity.
Removed
Key highlights of these plans include promoting inclusive hiring practices, offering training on unconscious bias, forming strategic partnerships with schools and organizations, participating in networking events, implementing blind resume reviews, and ensuring diverse interview panels.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

105 edited+25 added−24 removed121 unchanged
Biggest changeBased upon our management and organizational structure, we believe that we should be regarded solely as resident in the U.K. from our incorporation for tax purposes. However, because this analysis is highly factual and may depend on future changes in our management and organizational structure, there can be no assurance regarding the final determination of our tax residence.
Biggest changeHowever, because this analysis is 24 Table of Content s highly factual and may depend on future changes in our management and organizational structure, there can be no assurance regarding the final determination of our tax residence. Not being treated exclusively as a resident of the U.K. for tax purposes could result in adverse tax consequences to us.
In addition, customers, investors, employees and other stakeholders are increasingly focused on these matters and related disclosures and marketing claims. At the same time, regulators have increasingly expressed or pursued opposing views, legislation and investment expectations with respect to sustainability and ESG initiatives, including the proposal or enactment of “anti-ESG” legislation or policies.
In addition, certain customers, investors, employees and other stakeholders are increasingly focused on these matters and related disclosures and marketing claims. At the same time, regulators have increasingly expressed or pursued opposing views, legislation and investment expectations with respect to sustainability and ESG initiatives, including the proposal or enactment of “anti-ESG” legislation or policies.
Maintaining, promoting and enhancing our brand may require us to make substantial investments in areas such as product innovation, product quality, intellectual property protection, marketing and employee training, and these investments may not have the desired impact on our brand image and reputation.
Maintaining, promoting and enhancing our brand may require us to make substantial investments in areas such as product innovation, product quality, intellectual property (“IP”) protection, marketing and employee training, and these investments may not have the desired impact on our brand image and reputation.
Our level of debt could have important consequences, including the following: • making it more difficult for us to satisfy our obligations with respect to our debt; 24 Table of Contents • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; • requiring a significant portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes; • increasing our vulnerability to general adverse economic and industry conditions; • exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest; • limiting our flexibility in planning for and reacting to changes in the industry in which we compete; • placing us at a disadvantage compared to other, less leveraged competitors; and • increasing our cost of borrowing.
Our level of debt could have important consequences, including the following: • making it more difficult for us to satisfy our obligations with respect to our debt; • limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements; • requiring a significant portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash flows available for working capital, capital expenditures, acquisitions and other general corporate purposes; • increasing our vulnerability to general adverse economic and industry conditions; • exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest; • limiting our flexibility in planning for and reacting to changes in the industry in which we compete; • placing us at a disadvantage compared to other, less leveraged competitors; and • increasing our cost of borrowing.
Concerns over sustainability and ESG issues, including the impacts of climate change, have led and will continue to lead to governmental, private, and consumer efforts around the world to reduce or mitigate those issues.
Concerns over sustainability issues, including the impacts of climate change, have led and will continue to lead to governmental, private, and consumer efforts around the world to reduce or mitigate those issues.
Any such duty must be paid and the relevant transfer document, if any, stamped by HM Revenue & Customs (“HMRC”) before the transfer can be registered in our company books.
Any such duty must be paid and the relevant transfer document, if any, stamped by HM Revenue & Customs before the transfer can be registered in our company books.
If these information technology systems suffer severe damage or disruption and the issues are not resolved in a timely manner, our business, financial condition and operations could be materially adversely affected. Global data privacy, data protection and data security requirements are highly complex, evolving rapidly, and may increase our costs to comply.
If these information technology systems suffer severe damage or disruption and the issues are not resolved in a timely manner, our business, financial condition and operations could be materially adversely affected. Global data privacy, data protection and data security requirements are complex, evolving, and may increase our costs to comply.
These laws vary by jurisdiction but generally govern air emissions, wastewater discharges, material handling and transportation, waste management and disposal, product stewardship and packaging requirements, toxicity and hazardous substances, supplier due diligence and standards, and workplace health and safety, as well as the investigation and clean-up of contaminated sites.
These laws vary by jurisdiction but generally govern emissions, wastewater discharges, material handling and transportation, waste management and disposal, product stewardship, biodiversity and packaging requirements, toxicity and hazardous substances, supplier due diligence and standards, and workplace health and safety, as well as the investigation and clean-up of contaminated sites.
Such shares may be issued with, or have attached to them, such powers, designations, preferences, voting rights, rights and terms of redemption, and relative participating, optional or other special rights and qualifications, limitations and restrictions as the Board may determine, including rights to (a) receive dividends (which may include rights to receive preferential or cumulative dividends), (b) distributions made on a winding up of the Company, and (c) be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of shares, at such price or prices (subject to the Companies Act 2006 (“Companies Act”)) or at such rates of exchange and with such adjustments as may be determined by our Board.
Such shares may be issued with, or have attached to them, such powers, designations, preferences, voting rights, rights and terms of redemption, and relative participating, optional or other special rights and 26 Table of Content s qualifications, limitations and restrictions as the Board may determine, including rights to (a) receive dividends (which may include rights to receive preferential or cumulative dividends), (b) distributions made on a winding up of the Company, and (c) be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of shares, at such price or prices (subject to the Companies Act 2006 (“Companies Act”)) or at such rates of exchange and with such adjustments as may be determined by our Board.
Accordingly, our business and results of operations, as well as the business and results of operations of our vendors and customers, are subject to risks associated with doing business internationally, including: • changing economic conditions in the global and regional end markets we serve, which could impact the level of demand for our products, as a portion of our revenues are derived from customers in cyclical industries that typically are adversely affected by downward economic cycles; • macroeconomic factors beyond the Company’s control, such as recent significant volatility around inflation, material and logistics availability, supply chain and labor challenges; • political, social or economic instability, civil unrest, terrorist attacks, conflicts or war (such as the ongoing conflicts in Eastern Europe and the Middle East), public health crises (including pandemics), natural disasters (including as a result of climate change), widespread cybersecurity incidents, and other catastrophic events may disrupt economic activities (including demand for and production and distribution of our products) and our workforce in affected countries or globally; • trade wars and the imposition of additional sanctions, tariffs or other trade restrictions or embargoes, as well as import and export licensing and control requirements; • volatility of global financial markets, including interest rate fluctuations and hyperinflation or deflation in the countries in which we operate; • exchange rate fluctuations, as well as currency restructurings, the imposition of currency restrictions, and limitations on repatriation of earnings, that could affect our ability to realize a profit or our ability to readily access global cash balances; • partial or total expropriation by local, state or national governments; • compliance with or effect of complying with complex and changing laws, regulations and policies of foreign governments, including differing and, in some cases, more stringent labor, sustainability, environmental, social, and governance (“ESG”) and HSE-related regulations as well as limitations on our ability to enforce our legal rights and remedies; 14 Table of Contents • differing local product preferences and product requirements; and • difficulties involved in staffing and managing widespread operations, including challenges in enforcing corporate policies, which may be different than the normal business practices of local cultures.
Accordingly, our business and results of operations, as well as the business and results of operations of our vendors and customers, are subject to risks associated with doing business internationally, including, without limitation: • changing economic conditions in the global and regional end markets we serve, which could impact the level of demand for our products, as a portion of our revenues are derived from customers in cyclical industries that typically are adversely affected by downward economic cycles; • macroeconomic factors beyond the Company’s control, such as recent significant volatility around inflation, material and logistics availability, supply chain, labor challenges, and our customers’ ability to access credit and ability to pay amounts due to us; • political, social or economic instability, civil unrest, terrorist attacks, conflicts or war (such as the ongoing conflicts in Eastern Europe and the Middle East), public health crises (including pandemics), natural disasters (including as a result of climate change), widespread cybersecurity incidents, and other catastrophic events may disrupt economic activities (including demand for and production and distribution of our products) and our workforce in affected countries or globally; • trade wars and the imposition of additional sanctions, tariffs or other trade restrictions or embargoes, as well as import and export licensing and control requirements; • volatility of global financial markets, including interest rate fluctuations and hyperinflation or deflation in the countries in which we operate; • exchange rate fluctuations, as well as currency restructurings, the imposition of currency restrictions, and limitations on repatriation of earnings, that could affect our ability to realize a profit or our ability to readily access global cash balances; • partial or total expropriation by local, state or national governments; • compliance with or effect of complying with complex and changing laws, regulations and policies of foreign governments, including differing and, in some cases, more stringent labor, sustainability, environmental, social, and governance (“ESG”) and HSE-related regulations as well as limitations on our ability to enforce our legal rights and remedies; • differing local product preferences and product requirements; and • difficulties involved in staffing and managing widespread operations, including challenges in enforcing corporate policies, which may be different than the normal business practices of local cultures.
The loss of the services of senior management and other key personnel or the failure to attract additional personnel and implement succession plans as required could have a material adverse effect on our business, financial condition and results of operations. 22 Table of Contents We may be materially adversely impacted by work stoppages and other labor matters, including labor shortages and turnover.
The loss of the services of senior management and other key personnel or the failure to attract additional personnel and implement succession plans as required could have a material adverse effect on our business, financial condition and results of operations. We may be materially adversely impacted by work stoppages and other labor matters, including labor shortages and turnover.
We attempt to mitigate these risks by employing a number of measures, including employee training, monitoring and testing, and maintenance of protective systems and contingency plans, but we remain potentially 18 Table of Contents vulnerable to additional known or unknown threats. There is no assurance the financial or operational impact from such threats will not be material.
We attempt to mitigate these risks by employing a number of measures, including employee training, monitoring and testing, and maintenance of protective systems and contingency plans, but we remain potentially vulnerable to additional known or unknown threats. There is no assurance the financial or operational impact from such threats will not be material.
Any claim relating to intellectual property infringement, misappropriation or other violation that is successfully asserted against us may require us to pay substantial damages, including treble damages (if we are found to be willfully infringing another party’s patents) for past use of the asserted intellectual property, and royalties and other consideration going forward if we are forced to take a license.
Any claim relating to IP infringement, misappropriation or other violation that is successfully asserted against us may require us to pay substantial damages, including treble damages (if we are found to be willfully infringing another party’s patents) for past use of the asserted IP, and royalties and other consideration going forward if we are forced to take a license.
In this regard, we rely on U.S. and foreign patent, trademark, copyright, and trade secret laws, as well as license agreements, nondisclosure agreements, and confidentiality and other contractual provisions; however, procuring, enforcing, and defending patents on our products in all jurisdictions throughout the world would be prohibitively expensive, and the laws of certain foreign countries may not protect or allow enforcement of intellectual property rights to the same extent as the laws of the U.S.
In this regard, we rely on U.S. and foreign patent, trademark, copyright, and trade secret laws, as well as license agreements, nondisclosure agreements, and confidentiality and other contractual provisions; however, procuring, enforcing, and defending IP rights on our products in all jurisdictions throughout the world would be prohibitively expensive, and the laws of certain foreign countries may not protect or allow enforcement of IP rights to the same extent as the laws of the U.S.
These opposing views may also be adopted by our investors. Conflicting regulations and expectations across the jurisdictions in which we operate may create enhanced compliance risks and costs.
These opposing views may also be adopted by certain of our investors. Conflicting regulations and expectations across the jurisdictions in which we operate may create enhanced compliance risks and costs.
For example, although we routinely conduct anti-counterfeiting activities in multiple jurisdictions, we have encountered counterfeit reproductions of our products that infringe on our intellectual property rights. We expect pirates to continue counterfeiting certain of our products using our trademarks, which has led to, and will likely continue to cause, loss of sales.
For example, although we routinely conduct anti-counterfeiting activities in multiple jurisdictions, we have encountered counterfeit reproductions of our products that infringe on our IP rights. We expect pirates to continue counterfeiting certain of our products using our trademarks, which has led to, and will likely continue to cause, loss of sales.
Changes to tax laws may require the Company to make significant judgment in determining the appropriate provision and related accruals for these taxes; and, as a result, such changes could result in substantially higher taxes and a significant adverse effect on our results of operations, financial conditions and liquidity.
Changes in tax laws can and do occur. Changes to tax laws may require the Company to make significant judgment in determining the appropriate provision and related accruals for these taxes; and, as a result, such changes could result in substantially higher taxes and a significant adverse effect on our results of operations, financial conditions and liquidity.
There are numerous risks inherent in this process, including the risks that we will be unable to anticipate the direction of technological change (including those related to the utilization of artificial intelligence) or that we will be unable to develop and market new products and applications in a timely fashion to satisfy customer demands.
There are numerous risks inherent in this process, including the risks that we will be unable to anticipate the direction of technological change (including those related to the utilization of AI) or that we will be unable to develop and market new products and applications in a timely fashion to satisfy customer demands.
We have incurred, and will continue to incur, both operating and capital costs to comply with HSE, sustainability, and ESG related and other laws and regulations, including costs associated with the investigation and clean-up of some of our current and former properties and offsite disposal locations.
We have incurred, and will continue to incur, both operating and capital costs to comply with HSE, sustainability and product compliance related and other laws and regulations, including costs associated with the investigation and clean-up of some of our current and former properties and offsite disposal locations.
In 2024, our shareholders adopted a resolution authorizing our Board to allot up to approximately 20% of our issued share capital as of April 22, 2024 and to grant rights to subscribe for or convert any security into such shares for the consideration and on the terms and conditions established by our Board in its sole discretion, whether in connection with acquisitions or otherwise.
In 2025, our shareholders adopted a resolution authorizing our Board to allot up to approximately 20% of our issued share capital as of April 8, 2025 and to grant rights to subscribe for or convert any security into such shares for the consideration and on the terms and conditions established by our Board in its sole discretion, whether in connection with acquisitions or otherwise.
In some cases, these claims could have a material adverse effect on our business. Failure to develop, obtain, adequately protect or enforce our intellectual property rights could adversely affect our business, and third parties could allege that our products infringe on their intellectual property rights, adversely affecting our business.
In some cases, these claims could have a material adverse effect on our business. Failure to develop, obtain, adequately protect or enforce our IP rights could adversely affect our business, and third parties could allege that our products infringe on their IP rights, adversely affecting our business.
Failure to successfully identify, consummate or integrate strategic transactions in a timely and cost-effective manner could have a material adverse effect on our business, financial condition and results of operation. We have investments in joint ventures that limit our ability to manage third-party risks associated with these ventures.
Failure to successfully identify, consummate or integrate strategic transactions in a timely and cost-effective manner could have a material adverse effect on our business, financial condition and results of operation. 17 Table of Content s We have investments in joint ventures that limit our ability to manage third-party risks associated with these ventures.
To conduct our operations, we regularly move data across national borders, and consequently we are subject to a variety of continuously evolving and developing laws and regulations in the U.S. and abroad regarding data privacy, data protection and data security.
To conduct our operations, we regularly move data across national borders, and consequently we are subject to a variety of continuously evolving and developing laws and regulations in the U.S. (including new state laws) and abroad regarding data privacy, data protection and data security.
Successful assertion of our intellectual property rights depends on the judicial strength and willingness of the issuing jurisdictions to enact and enforce sufficient intellectual property laws. To the extent we assert our intellectual property rights against third parties, adequate remedies may not be available.
Successful assertion of our IP rights depends on the judicial strength and willingness of the issuing jurisdictions to enact and enforce sufficient IP laws. To the extent we assert our IP rights against third parties, adequate remedies may not be available.
The laws and regulations in these jurisdictions are inherently complex and the Company and its subsidiaries are obliged to make judgments and interpretations about the application of these laws and regulations to the Company and its subsidiaries and their operations and businesses, including those related to any restructuring of intercompany operations, holdings or financings; the valuation of intercompany services; cross-border payments between affiliated companies; and the related effects on income tax, value added tax (“VAT”) and transfer tax.
The laws and regulations in these jurisdictions are inherently complex and the Company and its subsidiaries are obliged to make judgments and interpretations about the application of these laws and regulations to the Company and its subsidiaries and their 23 Table of Content s operations and businesses, including those related to any restructuring of intercompany operations, holdings or financings; the valuation of intercompany services; cross-border payments between affiliated companies; and the related effects on income tax, value added tax and transfer tax.
In addition, if any such claim were successfully asserted against us, we could be restricted or prohibited from manufacturing, selling or otherwise commercializing certain of our products, product candidates or other technology.
Further, if any such claim were successfully asserted against us, we could be restricted or prohibited from manufacturing, selling or otherwise commercializing certain of our products, product candidates or other technology.
In these markets, we have focused on establishing brand visibility, including by building a OEM presence in the end markets we serve.
In these markets, we have focused on establishing brand visibility, including by building an OEM presence in the end markets we serve.
Although certain of the agreements governing our existing indebtedness contain restrictions on the incurrence of additional indebtedness and entering into certain types of other transactions, these restrictions are subject to a number of qualifications and exceptions. Additional indebtedness incurred in compliance with these restrictions could be substantial.
Although certain of the agreements governing our existing indebtedness contain restrictions on the incurrence of additional indebtedness and entering into certain types of other transactions, these restrictions are 25 Table of Content s subject to a number of qualifications and exceptions. Additional indebtedness incurred in compliance with these restrictions could be substantial.
Our Board may take into account general economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements, contractual, legal, tax and regulatory restrictions and implications on the payment of dividends by us to our shareholders or by our subsidiaries to us, and such other factors as our Board may deem relevant.
Our Board may take into account general economic conditions, our financial condition and results of operations, our available cash and current and anticipated cash needs, capital requirements and implications on the payment of dividends by us to our shareholders or by our subsidiaries to us, and such other factors as our Board may deem relevant.
In addition, the technologies and inventions developed by our engineers in the future may not prove to be as valuable as those of competitors, or competitors may develop similar or identical technologies and inventions independently of us and before we do.
In addition, the technologies and inventions developed by our 21 Table of Content s engineers in the future may not prove to be as valuable as those of competitors, or competitors may develop similar or identical technologies and inventions independently of us and before we do.
Our success depends on our ability to develop technologies and inventions used in our products and to brand such products to obtain intellectual property rights and to protect and enforce such intellectual property rights worldwide.
Our success depends on our ability to develop technologies and inventions used in our products and to brand such products to obtain IP rights and to protect and enforce such IP rights worldwide.
The amount of our contributions to our underfunded plans will depend upon asset returns, funding assumptions, regulatory requirements and a number of other factors and, as a result, the amount we may be required to contribute to such plans in the future may vary.
The amount of our contributions to our underfunded plans will depend upon asset returns, funding assumptions, regulatory requirements and a number of other factors and, as a result, the amount we may be required to contribute to such plans in the future may vary. Such cash contributions to the plans will reduce the cash available for our business.
The evolution of laws to restrict specific chemical substances in our products or impose labeling and other requirements, such as the EU’s Registration, Evaluation, Authorization, and Restriction of Chemical Substances (“REACH”) Regulation, and rising global concerns around microplastics, extended producer responsibility, plastic packaging or hazardous chemicals such as per-and polyfluoroalkyl substances (“PFAS”) could result in significant costs to us or limit our access to certain markets.
In addition, many of our products are subject to evolving laws to restrict specific chemical substances in our products or impose labeling and other requirements, such as the EU’s Registration, Evaluation, Authorization, and Restriction of Chemical Substances (“REACH”) Regulation, and rising global concerns around microplastics, extended producer responsibility, plastic packaging or hazardous chemicals such as per-and polyfluoroalkyl substances, which could result in significant costs to us or limit our access to certain markets.
This includes increasing legal requirements and global efforts to control emissions of carbon dioxide, methane, fluorinated and other GHGs in an effort to minimize the effect on climate change, which have the potential to influence the price of the energy and raw materials we purchase.
For example, we are subject to increasing legal requirements and global efforts to control emissions of carbon dioxide, methane, fluorinated and other GHGs in an effort to minimize the effect on climate change, which have the potential to influence the price of the energy and raw materials we purchase.
If we are unsuccessful in challenging such products on the basis of patent, trademark or other intellectual property misappropriation, continued sales of such imitating products may adversely affect 21 Table of Contents our market share and impact customer perceptions and demand for our products.
If we are unsuccessful in challenging such products on the basis of patent, trademark or other IP misappropriation, continued sales of such imitating products may adversely affect our market share and impact customer perceptions and demand for our products.
Our contracted backlog is comprised of future orders for our products from a broad number of customers. Defaults by any of the customers that have placed significant orders with us could have a significant adverse effect on our net sales, profitability and cash 17 Table of Contents flow.
Our contracted backlog is comprised of future orders for our products from a broad number of customers. Defaults by any of the customers that have placed or may in the future place significant orders with us could have a significant adverse effect on our net sales, profitability and cash flow.
Failure to comply with such laws and regulations could have significant consequences on our business and operations, including the imposition of substantial fines and sanctions for violations, injunctive relief (including requirements that we limit or cease operations at affected facilities), and negative publicity.
Failure to comply with such laws and regulations could have significant consequences on our business and operations, including the imposition of substantial fines and sanctions for violations, injunctive relief (including requirements that we limit or cease the manufacture or sale of certain products) and negative publicity.
The success of our business is largely dependent on our senior management team, as well as on our ability to attract and retain other qualified key personnel. In addition, there continues to be significant demand in our industry for skilled workers.
The success of our business is largely dependent on our senior management team, as well as on our ability to attract and retain other qualified key personnel. In addition, there continues to be significant demand in our industry for skilled workers, the availability of which is limited in some of the locations in which we operate.
Even if we obtain patents or other intellectual property rights in our new technologies and inventions, the scope of such rights may not be sufficiently broad to afford us any significant commercial advantage over our competitors.
Even if we obtain IP rights in our new technologies and inventions, the scope of such rights may not be sufficiently broad to afford us any significant commercial advantage over our competitors.
Competitors may also use our technologies in jurisdictions where we do not pursue and obtain patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but where the ability to enforce our patent rights is not as strong as in the U.S.
Competitors may also use our technologies in jurisdictions where we do not pursue and obtain patent or other IP protection to develop their own products and further, may export otherwise infringing products to territories where we have patent or other IP protection, but where the ability to enforce our patent or other IP rights is limited.
Labor is a primary component of operating our business. As of December 28, 2024, we had approximately 14,100 full time employees worldwide. Certain of our employees are represented by various unions under collective bargaining agreements, or by various regional works councils.
Labor is a primary component of operating our business. As of December 31, 2025, we had approximately 13,000 full time employees worldwide. Certain of our employees are represented by various unions under collective bargaining agreements, or by various regional works councils.
For example, measuring and reporting information and metrics in compliance with the EU’s recently enacted Corporate Sustainability Reporting Directive has been, and we expect will continue to be, costly, difficult and time consuming.
For example, measuring and reporting information and metrics in compliance with the EU’s Corporate Sustainability Reporting Directive, and monitoring updates to its implementation and effectiveness, has been, and we expect will continue to be, costly, difficult and time consuming.
Increased global cybersecurity vulnerabilities, threats, computer viruses and more sophisticated and targeted cyber-related attacks (such as the recent increasing use of ransomware, social engineering, and phishing attacks), as well as cybersecurity failures resulting from human error, catastrophic events (such as fires, floods, hurricanes and tornadoes), and technological errors, pose a risk to our systems (including third-party systems utilized by us), products and data as well as potentially to our employees’, customers', partners', suppliers' and third-party service providers' systems and data.
Increased global cybersecurity vulnerabilities, threats, computer viruses and more sophisticated and targeted cyber-related attacks (such as the use of ransomware and social engineering, and the misuse or malicious use of AI), as well as cybersecurity failures resulting from human actions, catastrophic events, and technological errors, pose a risk to our systems (including third-party systems, such as cloud services, utilized by us), products and data as well as potentially to our employees’, customers', partners', suppliers' and third-party service providers' systems and data.
While we have no reason to believe that we will be impacted by work stoppages and other labor matters, we cannot ensure that future issues with our labor unions or works councils, or with the labor unions of our customers and vendors will be resolved favorably or that we will not encounter future strikes, work stoppages, or other types of labor conflicts.
We cannot ensure that future issues with our labor unions or works councils, or with the labor unions of our customers and vendors will be resolved favorably or that we will not encounter future strikes, work stoppages, or other types of labor conflicts.
During Fiscal 2024, our top ten customers accounted for approximately 22% of our consolidated net sales and accounted for approximately 29% of our trade accounts receivable balance as of December 28, 2024, and our largest customer accounted for approximately 9% and 6% of our Fiscal 2024 consolidated net sales and trade accounts receivable balance as of December 28, 2024, respectively.
During Fiscal 2025, our top ten customers accounted for approximately 24% of our consolidated net sales and accounted for approximately 29% of our trade accounts receivable balance as of December 31, 2025, and our largest customer accounted for approximately 9.6% and 13.7% of our Fiscal 2025 consolidated net sales and trade accounts receivable balance as of December 31, 2025, respectively.
In December 2021, the OECD published its Pillar Two model rules and, in December 2022, the EU Commission adopted a Directive to implement Pillar Two in the EU and required all 27 EU member states to adopt local legislation during 2023 to implement Pillar Two rules, which are to apply in respect of the fiscal years beginning from December 31, 2023.
In December 2022, the EU Commission adopted a Directive to implement Pillar Two in the EU and required all 27 EU member states to adopt local legislation during 2023 to implement Pillar Two rules, with effect in respect of the fiscal years beginning from December 31, 2023.
We are subject to anti-corruption laws in various jurisdictions, as well as other laws governing our international operations. If we fail to comply with these laws we could be subject to civil or criminal penalties, other remedial measures, and legal expenses. Our operations are subject to one or more anti-corruption laws in various jurisdictions, such as the U.S.
If we fail to comply with these laws we could be subject to civil or criminal penalties, other remedial measures, and legal expenses. Our operations are subject to one or more anti-corruption laws in various jurisdictions, such as the U.S. Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”) and the U.K.
BEFIT aims to introduce a common set of rules for EU companies to calculate their taxable base while ensuring a more effective allocation of profits between EU countries. Following adoption by the European Council, the proposals are intended to come into force on July 1, 2028 (for BEFIT) and January 1, 2026 (for the transfer pricing proposals).
BEFIT aims to introduce a common set of rules for EU companies to calculate their taxable base while ensuring a more effective allocation of profits between EU countries. If adopted by the European Council, BEFIT is intended to come into force on July 1, 2028.
Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”) and the U.K. Bribery Act of 2010 that generally prohibit employees and intermediaries from making improper payments for the purpose of obtaining or retaining business or gaining some other business advantage.
Bribery Act of 2010 that generally prohibit employees and intermediaries from making improper payments for the purpose of obtaining or retaining business or gaining some other business advantage.
Additionally, we have reserved 19.0 million ordinary shares for issuance under our Omnibus Incentive Plan, including 7.3 million shares available for grant as of December 28, 2024.
Additionally, we have reserved 19.0 million ordinary shares for issuance under our Omnibus Incentive Plan, including 6.5 million shares available for grant as of December 31, 2025.
The declaration, amount and payment of any future dividends on our ordinary shares will be at the sole discretion of our Board.
The declaration, amount and payment of any future dividends on our ordinary shares will, subject to contractual, legal, tax and regulatory restrictions, be at the sole discretion of our Board.
If we are subject to an investigation of a potential violation or are found not in compliance with anti-corruption laws, Trade Control Laws or the Criminal Finances Act, we may incur legal expenses and experience reputational harm, and could be subject to criminal and civil penalties and sanctions that could have a material adverse impact on our business, financial condition, and results of operations.
If we are subject to an investigation of a potential violation or are found not in compliance with anti-corruption laws, Trade Control Laws or the Criminal Finances Act, we may incur legal expenses and experience reputational harm, and could be subject to criminal and civil penalties and sanctions that could have a material adverse impact on our business, financial condition, and results of operations. 22 Table of Content s We are subject to risks from litigation, legal and regulatory proceedings and obligations, and our insurance may not provide coverage or may not fully cover future losses we may incur related to these proceedings and obligations or otherwise.
We have been, and may in the future be, involved in tax, intellectual property, product liability, product warranty, environmental and antitrust claims and lawsuits, and other legal, antitrust and regulatory proceedings arising in the ordinary course of our business.
We face an inherent business risk of exposure to various types of claims, lawsuits and proceedings. We have been, and may in the future be, involved in tax, IP, product liability, product warranty, environmental and antitrust claims and lawsuits, and other legal, antitrust and regulatory proceedings arising in the ordinary course of our business.
We and our customers and suppliers will need to respond to new laws and regulations as well as changes in consumer and customer behaviors, which have added costs and could add substantial costs to our operations and those of our customers and partners. We may also experience a drop in demand for our products and services, particularly in certain sectors.
We and our customers and suppliers will need to respond to new laws and regulations as well as changes in consumer and customer behaviors, which have added costs and could add substantial costs to our operations and those of our customers and partners.
Although we believe our tax estimates are reasonable, including our estimates of reserves for unrecognized tax benefits related to the implementation of our European corporate center in 2019, any changes in our judgments and interpretation of tax laws or any material differences as a result of the audits could result in unfavorable tax adjustments that have an adverse effect on our overall tax liability.
Although we believe our tax estimates are reasonable, any changes in our judgments and interpretation of tax laws or any material differences as a result of the audits could result in unfavorable tax adjustments that have an adverse effect on our overall tax liability. Changes in tax laws could result in additional tax liabilities.
These products may compete with our products, and our intellectual property rights may not be effective or sufficient to prevent such competition. Further, our efforts to enforce our intellectual property rights against infringers may not prove successful and will generally be time consuming and expensive.
These products may compete with our products, and our IP rights may not be effective or sufficient to prevent such competition. Further, our efforts to enforce our IP rights and prevent misappropriation, infringement or other violation of our IP rights may prove unsuccessful and will generally be time consuming and expensive.
However, as the replacement markets in these regions grow, our products may not be selected as the replacement product based on local market requirements and other competitive factors, and there may be a material adverse effect on our replacement end market growth potential in these emerging markets.
However, as the aftermarket channels in these regions grow, our products may not be selected as the aftermarket product based on local market requirements and other competitive factors, and there may be a material adverse effect on our aftermarket sales growth potential in these emerging markets. In addition, we generate strong margins by selling premium products at premium prices.
Moreover, there has been a rise in “anti-ESG” activism, which could impact our efforts. In addition, our efforts to mitigate these risks, including by investing in sustainability initiatives, may not be successful in achieving their desired outcomes, which may include cost savings. We may not be able to maintain and enhance our strong brand on which we depend.
In addition, our efforts to mitigate these risks, including by investing in sustainability initiatives, may not be successful in achieving their desired outcomes, which may include cost savings. 18 Table of Content s We may not be able to maintain and enhance our strong brand on which we depend.
First, a package of tax reforms was adopted by the European Commission on September 12, 2023, comprising the “Proposal for a Council Directive on Business in Europe: Framework for Income Taxation” (“BEFIT”) (which seeks to produce a comprehensive solution for business taxation in the EU) and the “Proposal for a Council Directive on transfer pricing” (which seeks to harmonize transfer pricing rules within the EU and ensure a common approach to transfer pricing).
First, the “Proposal for a Council Directive on Business in Europe: Framework for Income Taxation” (“BEFIT”) (which seeks to produce a comprehensive solution for business taxation in the EU). was adopted by the European Commission on September 12, 2023.
It is difficult to police such counterfeiting, particularly on a worldwide basis, and the actions we take to stop such counterfeiting and to establish trademarks and other intellectual property rights may not be adequate to prevent such counterfeiting activities by others.
It is difficult to police such counterfeiting, particularly on a worldwide basis, and the actions we take to stop such counterfeiting and to establish trademarks and other IP rights may not be adequate to prevent such counterfeiting activities by others. Conversely, third parties may assert infringement or other misappropriation claims against us based on their IP rights.
Even if infringement claims against us are without merit, we will likely incur significant expenses investigating and defending such claims and, even if we prevail, may divert management attention from other business concerns.
Even if infringement claims against us are without merit, we will likely incur significant expenses investigating and defending such claims and, even if we prevail, may divert management attention from other business concerns. We are subject to anti-corruption laws in various jurisdictions, as well as other laws governing our international operations.
Any ordinary shares that we issue, including under our Omnibus Incentive Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by the holders of our ordinary shares. 26 Table of Contents We may issue a new class or classes of shares whose terms could adversely affect the voting power or value of our ordinary shares.
Any ordinary shares that we issue, including under our Omnibus Incentive Plan or other equity incentive plans that we may adopt in the future, would dilute the percentage ownership held by the holders of our ordinary shares.
Any person or entity purchasing or otherwise acquiring or holding any interest in our ordinary shares shall be deemed to have notice of and to have consented to the provisions of our governing documents described above, as they may be amended from time to time.
Any person or entity purchasing or otherwise acquiring or holding any interest in our ordinary shares shall be deemed to have notice of and to have consented to the provisions of our governing documents described above, as they may be amended from time to time. 27 Table of Content s Transfers of our shares outside DTC may be subject to stamp duty or stamp duty reserve tax in the U.K., which would increase the cost of dealing in our shares.
These evolving compliance and operational requirements impose significant costs that are likely to increase over time as the breadth and complexity of regulations continues to evolve internationally. We continue to monitor these developments and adjust our data processing practice in accordance with applicable law.
These evolving compliance and operational requirements impose significant costs that are likely to increase over time as the breadth and complexity of regulations continues to evolve internationally.
Our efforts to integrate acquired businesses or assets could be affected by a number of factors beyond our control, such as general economic conditions and increased competition.
We also encounter risks in the selection of appropriate investment and disposal targets, negotiation and execution of transactions, and integration of acquired businesses or assets. Our efforts to integrate acquired businesses or assets could be affected by a number of factors beyond our control, such as general economic conditions and increased competition.
Conversely, third parties may assert infringement or other misappropriation claims against us based on their patents, trademarks or other intellectual property rights. For example, OEM manufacturers continue to seek and obtain utility and design patents to support claims of intellectual property infringement against manufacturers and distributors of aftermarket products in efforts to restrict or eliminate the sale of aftermarket products.
For example, OEM manufacturers continue to seek and obtain utility and design patents to support claims of IP infringement against manufacturers and distributors of aftermarket products in efforts to restrict or eliminate the sale of aftermarket products.
Risks Related to Legal and Regulatory Matters Existing or new laws and regulations, including but not limited to those relating to HSE, sustainability, and ESG matters, may prohibit, burden, restrict or make significantly more costly the sale of our products and the operation of our business.
We continue to monitor these developments and adjust our data processing practice in accordance with applicable law. 19 Table of Content s Risks Related to Legal and Regulatory Matters Existing or new laws and regulations, including but not limited to those relating to HSE, sustainability and product compliance matters, may prohibit, burden, restrict or make significantly more costly the sale of our products and the operation of our business.
Our long-term operating results depend upon our ability to continually develop, introduce, and market new and innovative products, to modify existing products, to respond to technological change, and to customize certain products to meet customer requirements and evolving sustainability and industry standards. The development of new product introductions and product innovations may require significant investment by us.
Our long-term operating results depend upon our ability to continually develop, introduce, and market new and innovative products, to modify existing products, to respond to technological change (such as artificial intelligence (“AI”) and machine learning), and to customize certain products to meet customer requirements and evolving sustainability and industry standards.
We are also subject to U.K. corporate criminal laws governing the failure to prevent the facilitation of tax evasion pursuant to the Criminal Finances Act 2017 (“Criminal Finances Act”). 20 Table of Contents We have instituted policies, procedures and ongoing training of employees designed to ensure that we and our employees engage in ethical business conduct and comply with anti-corruption laws, Trade Control Laws and the Criminal Finances Act.
We have instituted policies, procedures and ongoing training of employees designed to ensure that we and our employees engage in ethical business conduct and comply with anti-corruption laws, Trade Control Laws and the Criminal Finances Act.
If we are not able to offset price reductions through improved operating efficiencies, reduced expenditures, or new product introductions, those price reductions may have a material adverse effect on our results of operations.
If we are not able to offset price reductions through improved operating efficiencies, reduced expenditures, or new product introductions, those price reductions may have a material adverse effect on our results of operations. We may pursue strategic transactions, including acquisitions, divestitures, joint ventures, strategic alliances or investments, which could create risks and present unforeseen integration obstacles or costs.
Moreover, if our products are subject to tariffs, we may be impacted to a greater degree than our competitors who operate in countries that are not subject to tariffs, placing us at a disadvantage. We have significant manufacturing operations in Mexico and, to a lesser degree in Canada, China and other countries, that supply products to U.S. customers.
Moreover, we may be impacted by tariffs to a greater degree than our competitors who operate in countries that are not subject to tariffs or are subject to lesser tariffs, placing us at a disadvantage.
The levels of inventory maintained by our distributors and other channel partners, and changes in those levels, such as destocking, can also significantly impact our results of operations in any given period. 15 Table of Contents Risks Related to Our Business and Industry We are dependent on the continued operation of our manufacturing facilities, supply chains, distribution systems and information technology systems, and a major disruption or closure, including as a result of a catastrophic event, could have a material adverse effect on our business.
Risks Related to Our Business and Industry We are dependent on the continued operation of our manufacturing facilities, supply chains, distribution systems and information technology systems, and a major disruption or closure, including as a result of a catastrophic event, could have a material adverse effect on our business.
Failure to accurately forecast demand or meet significant increases in demand could have a material adverse impact on our business, financial condition and operating results.
Failure to accurately forecast demand or meet significant increases in demand could have a material adverse impact on our business, financial condition and operating results. 16 Table of Content s Our revenue growth may be dependent on market acceptance of new product introductions and product innovations.
As the present and former operator of industrial properties that use and generate 19 Table of Contents hazardous materials, we could be subject to additional liability for environmental contamination in the future, regardless of whether we caused such contamination.
As the present and former operator of industrial properties that use and generate hazardous materials, we could be subject to additional liability for environmental contamination in the future, regardless of whether we caused such contamination. Additionally, most U.S. states have passed laws that regulate or limit the use of aftermarket products in certain types of repair work.
Moreover, a number of further proposals from the European Commission have been issued or adopted that further enhance and move beyond the work on the BEPS project.
These legislative changes did not have a material impact in fiscal year 2025 and we do not expect a material impact in future years. Moreover, a number of further proposals from the European Commission have been issued or adopted that further enhance and move beyond the work on the BEPS project.
As of December 28, 2024, the total principal amount of our debt was $2,363.5 million.
As of December 31, 2025, the total principal amount of our debt was $2,240.1 million.
If we are forced to refinance these borrowings on less favorable terms or are unable to refinance these borrowings, our results of operations and financial condition could be adversely affected.
If we are forced to refinance these borrowings on less favorable terms or are unable to refinance these borrowings, our results of operations and financial condition could be adversely affected. We may be able to incur substantially more debt and enter into other transactions which could further exacerbate the risks to our financial condition described above.
Certain of our employees in the U.S., the U.K., Canada, Mexico, Germany and Japan are participants in defined benefit pension plans which we sponsor and/or to which we have contribution obligations. As of December 28, 2024, the net pension obligation of our underfunded defined benefit pension plans globally was $58.5 million on a Topic 715 “Compensation-Retirement Benefits” basis.
Certain of our employees in the U.S., the U.K., Canada, Mexico, Germany and Japan are participants in defined benefit pension plans which we sponsor and/or to which we have contribution obligations.
We are subject to income taxes as well as non-income based taxes in the U.K., the U.S. and various other jurisdictions in which we operate.
Risks Related to Tax Matters Changes in our effective tax rate or additional tax liabilities could adversely impact our net income. We are subject to income taxes as well as non-income based taxes in the U.K., the U.S. and various other jurisdictions in which we operate.
For Fiscal 2024, approximately 63% of our net sales originated from outside of the U.S. We have manufacturing, sales and service facilities spanning six continents and sell to customers in over 130 countries. Moreover, a significant amount of our manufacturing functions and sources of our raw materials and components are from emerging markets such as China, India and Eastern Europe.
A substantial portion of our operations are conducted and located outside the U.S. For Fiscal 2025, approximately 63% of our net sales originated from outside of the U.S. We have manufacturing, sales and service facilities spanning six continents and sell to customers in over 130 countries.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Company conducts reputational analysis and security reviews for certain of its vendors to manage cybersecurity threats from the use of third-party services. We continue to make investments to enhance the protection of our information technology systems and our business from cybersecurity incidents, including maintaining a cybersecurity insurance policy.
Biggest changeThe Company conducts reputational analysis and security reviews for certain of its vendors to manage cybersecurity threats from the use of third-party services. 28 Table of Content s We continue to make investments to enhance the protection of our information technology systems and our business from cybersecurity incidents, including maintaining a cybersecurity insurance policy.
To identify, assess, and manage cybersecurity threat risks, the Company: • maintains a 24-hour cybersecurity team to continuously monitor its technology systems and emerging threat types and to respond to identified vulnerabilities; • deploys a variety of defenses, including automatic blocking of potential cybersecurity threats; 28 Table of Contents • utilizes third-party system scanning tools, cybersecurity threat intelligence reports as well as cybersecurity threat reports from its business partners, each of which assists our monitoring efforts; • utilizes a scoring system to prioritize non-urgent mitigation activities; • completes annual third-party testing, the results of which are discussed with the Company’s Audit Committee, and periodic third-party table-top exercises and gap assessments; • maintains a mandatory internal educational program for employees, including phishing simulations, required courses at the time of hire, and microlearning courses throughout the year, to ensure continual awareness of new and emerging threats; • has adopted information technology policies applicable to its employees, including the Company’s Acceptable Use Policy, Dual Use Device Policy, Information Security Policy, Password Policy and Security Incident Response Plan (“SIRP”).
To identify, assess, and manage cybersecurity threat risks, the Company: • maintains a 24-hour cybersecurity team to continuously monitor its technology systems and emerging threat types and to respond to identified vulnerabilities; • deploys a variety of defenses, including automatic blocking of potential cybersecurity threats; • utilizes third-party system scanning tools, cybersecurity threat intelligence reports as well as cybersecurity threat reports from its business partners, each of which assists our monitoring efforts; • utilizes a scoring system to prioritize non-urgent mitigation activities; • completes annual third-party testing, the results of which are discussed with the Company’s Audit Committee, and periodic third-party table-top exercises and gap assessments; • maintains a mandatory internal educational program for employees, including phishing simulations, required courses at the time of hire, and microlearning courses throughout the year, to ensure continual awareness of new and emerging threats; • has adopted information technology policies applicable to its employees, including the Company’s Acceptable Use Policy, Dual Use Device Policy, Information Security Policy, Password Policy and Security Incident Response Plan (“SIRP”).
He founded and built Internet start-ups and Internet Service Providers, protecting them from threats, and responding to cybersecurity events. He has rebuilt and directed cybersecurity departments in global public companies for the last seven years. He is an advisory board member for various cybersecurity and technology companies and holds a B.S. in Computer Science and an MBA.
He founded and built Internet start-ups and Internet Service Providers, protecting them from threats, and responding to cybersecurity events. He has rebuilt and directed cybersecurity departments in global public companies for the last eight years. He is an advisory board member for various cybersecurity and technology companies and holds a B.S. in Computer Science and an MBA.
In addition, to ensure cybersecurity risks are considered within the Company’s ERM process, our CIO serves on our Enterprise Risk Committee which directs the ERM process. Our CISO has over 12 years of experience assisting organizations in responding to cybersecurity incidents, serving as a chief information security officer for the past six years.
In addition, to ensure cybersecurity risks are considered within the Company’s ERM process, our CIO serves on our Enterprise Risk Committee which directs the ERM process. Our CISO has over 13 years of experience assisting organizations in responding to cybersecurity incidents, serving as a chief information security officer for the past six years.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIncluded in our property, plant and equipment are land and buildings with a net carrying amount of $192.9 million as of December 28, 2024, compared to $212.4 million as of December 30, 2023, representing manufacturing facilities, service centers, 29 Table of Contents distribution centers and offices located throughout the world, but predominantly in North America.
Biggest changeIncluded in our property, plant and equipment are land and buildings with a net carrying amount of $196.9 million as of December 31, 2025, compared to $192.9 million as of December 28, 2024, representing manufacturing facilities, service centers, distribution centers and offices located throughout the world, but predominantly in North America.
Item 2. Properties We operate from over 100 locations in 31 countries across the Americas , Europe, Asia, Australia and Africa. Our corporate headquarters is located in Denver, Colorado, and we also maintain regional headquarters in Denver, Luxembourg, Shanghai, and Singapore.
Item 2. Properties We operate from over 125 locations in 31 countries across the Americas , Europe, Asia, Australia and Africa. Our corporate headquarters is located in Denver, Colorado, and we also maintain regional headquarters in Denver, Luxembourg, Shanghai, and Singapore.
As of December 28, 2024, Gates owned 29 of these facilities, including 23 manufacturing or service centers. We also lease a number of locations around the world, primarily distribution centers and offices, none of which is individually material to our operations.
As of December 31, 2025, Gates owned 31 of these facilities, including 23 manufacturing or service centers. We also lease a number of locations around the world, primarily distribution centers and offices, none of which is individually material to our operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWhile it is not possible to quantify the financial impact or predict the outcome of all pending claims and litigation, management does not anticipate that the outcome of any current proceedings or known claims, either individually or in aggregate, will have a material adverse effect upon our financial position, results of operations or cash flows. Item 4.
Biggest changeGates is also, from time to time, party to legal proceedings and claims in respect of environmental obligations, product liability, intellectual property and other matters which arise in the ordinary course of business and against which management believes meritorious defenses are available. 29 Table of Content s While it is not possible to quantify the financial impact or predict the outcome of all pending claims and litigation, management does not anticipate that the outcome of any current proceedings or known claims, either individually or in aggregate, will have a material adverse effect upon our financial position, results of operations or cash flows.
Mine Safety Disclosures Not applicable. 30 Table of Contents PART II
Item 4. Mine Safety Disclosures Not applicable. 30 Table of Content s PART II
Removed
Gates is also, from time to time, party to legal proceedings and claims in respect of environmental obligations, product liability, intellectual property and other matters which arise in the ordinary course of business and against which management believes meritorious defenses are available.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our ordinary shares are traded on the NYSE under the symbol “GTES”. As of February 3, 2025, there were three holders of record of our ordinary shares.
Biggest changeItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities Market Information Our ordinary shares are traded on the NYSE under the symbol “GTES”. As of February 10, 2026, there w ere two holders of record of our ordinary shares.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table reconciles net income from continuing operations, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA: For the year ended (dollars in millions) December 28, 2024 December 30, 2023 December 31, 2022 Net income $ 219.9 $ 256.4 $ 242.5 Loss on disposal of discontinued operations 0.6 0.6 0.4 Net income from continuing operations 220.5 257.0 242.9 Income tax expense 107.5 28.3 14.9 Net interest and other expenses 138.0 177.3 126.2 Depreciation and amortization 216.9 217.5 217.2 EBITDA 682.9 680.1 601.2 Loss on deconsolidation of Russian subsidiary (1) 12.7 — — Transaction-related expenses (2) 3.3 2.2 2.1 Asset impairments — 0.1 1.1 Restructuring expenses 6.5 11.6 9.5 Share-based compensation expense 28.8 27.4 44.3 Inventory impairments and adjustments (3) (included in cost of sales) 22.3 7.4 20.9 Restructuring related expenses (included in cost of sales) 1.8 0.4 0.8 Restructuring related expenses (included in SG&A) 2.9 1.0 0.5 Credit (gain) loss related to customer bankruptcy (included in SG&A) (4) (0.1) 11.4 — Cybersecurity incident expenses (5) — 5.2 — Other items not directly related to current operations — 0.2 0.2 Adjusted EBITDA $ 761.1 $ 747.0 $ 680.6 42 Table of Contents (1) In July 2022, Gates suspended our operations in Russia.
Biggest changeManagement compensates for these limitations by separately monitoring net income from continuing operations for the period. 41 Table of Contents The following table reconciles net income, the most directly comparable GAAP measure, to Adjusted EBITDA: For the year ended (dollars in millions) December 31, 2025 December 28, 2024 December 30, 2023 Net income $ 276.3 $ 219.9 $ 256.4 Loss on disposal of discontinued operations 0.8 0.6 0.6 Income tax expense 63.1 107.5 28.3 Interest expense 125.9 155.8 163.2 Loss on deconsolidation of Russian Subsidiary (1) — 12.7 — Depreciation and amortization 213.8 216.9 217.5 Transaction-related expenses (2) 0.5 3.3 2.2 Asset impairments 3.5 — 0.1 Restructuring expenses 26.3 6.5 11.6 Share-based compensation expense 27.2 28.8 27.4 Inventory adjustments (3) (included in cost of sales) 15.6 22.3 7.4 Restructuring related expenses (included in cost of sales) 6.9 1.8 0.4 Restructuring related expenses (included in SG&A) 11.4 2.9 1.0 Credit (gain) loss related to customer bankruptcy (included in SG&A) — (0.1) 11.4 Other expenses (income), excluding foreign currency transaction gain or loss and insurance recoveries (4) 4.0 (17.8) 14.1 Cybersecurity incident insurance recovery and expenses (5) (5.2) — 5.2 Other items not directly related to current operations — — 0.2 Adjusted EBITDA $ 770.1 $ 761.1 $ 747.0 (1) In July 2022, as a result of the conflict between Russia and Ukraine, Gates suspended our operations in Russia.
Similarly, we determined in Fiscal 2024 that it is more likely than not that deferred income tax assets in the U.S. related to foreign tax credits totaling $3.2 million are realizable as a result of changes in estimates of taxable profits against which these credits can be utilized.
Similarly, we determined in Fiscal 2024 that it is more likely than not that deferred income tax assets in the U.S. related to foreign tax credits totaling $3.2 million are realizable as a result of changes in estimates of taxable profits against which these credits can be utilized.
The reduction in the transaction price for variable consideration requires that we make estimates of the expected total qualifying sales to the relevant customers. These estimates, including an analysis for potential constraint on variable consideration, take into account factors such as the nature of the rebate program, historical information and expectations of customer and consumer behavior.
The reduction in the transaction price for variable consideration requires that we make estimations of the expected total qualifying sales to the relevant customers. These estimates, including an analysis for potential constraint on variable consideration, take into account factors such as the nature of the rebate program, historical information and expectations of customer and consumer behavior.
These applications subject our products to normal wear and tear, resulting in natural, and often preventative, replacement cycles that drive high-margin, recurring revenue. Our product portfolio represents one of the broadest ranges of power transmission and fluid power products in the markets we serve, and we maintain long-standing relationships with a diversified group of well-known customers throughout the world.
These applications subject our products to normal wear and tear, resulting in natural, and often preventative, aftermarket cycles that drive high-margin, recurring revenue. Our product portfolio represents one of the broadest ranges of power transmission and fluid power products in the markets we serve, and we maintain long-standing relationships with a diversified group of well-known customers throughout the world.
We offer a broad portfolio of products to diverse replacement channel customers, and to original equipment manufacturers (“OEM”) as specified components, with the majority of our revenue coming from replacement channels. Our products are used in applications across numerous end markets, including automotive replacement, automotive OEM, diversified industrial, industrial off-highway, industrial on-highway, energy and resources, and personal mobility.
We offer a broad portfolio of products to diverse aftermarket channel customers, and to original equipment manufacturers (“OEM”) as specified components, with the majority of our revenue coming from aftermarket channels. Our products are used in applications across numerous end markets, including automotive aftermarket, automotive OEM, diversified industrial, industrial off-highway, industrial on-highway, energy and resources, and personal mobility.
The new tranche of dollar term loans that were issued on June 4, 2024 and repriced on December 10, 2024 are referred to as the “2024 Dollar Term Loans”, and the Dollar Term Loans that were issued on November 16, 2022 and repriced on June 4, 2024 and December 10, 2024 are referred to as the “2022 Dollar Term Loans.” Details of our long-term debt are presented in Note 15 to the consolidated financial statements included elsewhere in this annual report.
The Dollar Term Loans that were issued on June 4, 2024 and repriced on December 10, 2024 are referred to as the “2024 Dollar Term Loans”, and the Dollar Term Loans that were issued on November 16, 2022 and repriced on June 4, 2024 and December 10, 2024 are referred to as the “2022 Dollar Term Loans.” Details of our long-term debt are presented in Note 15 to the consolidated financial statements included elsewhere in this annual report.
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and related notes thereto included elsewhere in this annual report. This discussion and analysis addresses Fiscal 2024 compared to Fiscal 2023.
Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and related notes thereto included elsewhere in this annual report. This discussion and analysis addresses Fiscal 2025 compared to Fiscal 2024.
In addition, a majority of our sales are generated from customers in replacement channels, who serve primarily a large base of installed equipment that follows a natural maintenance cycle that is somewhat less susceptible to various trends that affect our end markets.
In addition, a majority of our sales are generated from customers in aftermarket channels, who serve primarily a large base of installed equipment that follows a natural maintenance cycle that is somewhat less susceptible to various trends that affect our end markets.
For discussion and analysis of our financial condition and results of operations for Fiscal 2023 compared to Fiscal 2022, see Management's Discussion and Analysis of Financial Condition and Results of Operations, in Part II, Item 7 of our Annual Report on Form 10-K for Fiscal 2023, which is incorporated herein by reference.
For discussion and analysis of our financial condition and results of operations for Fiscal 2024 compared to Fiscal 2023, see Management's Discussion and Analysis of Financial Condition and Results of Operations, in Part II, Item 7 of our Annual Report on Form 10-K for Fiscal 2024, which is incorporated herein by reference.
Amortization of deferred issuance costs during Fiscal 2024 increased by $14.0 million, primarily due to the accelerated amortization of $14.8 million of deferred issuance costs related to the debt refinancing that occurred in June 2024 and the accelerated amortization of $1.0 million due to the $100.0 million repayment against our 2021 Dollar Term Loans (as defined below) in February 2024.
Amortization of deferred issuance costs during Fiscal 2025 decreased by $14.1 million, primarily due to the accelerated amortization of $14.8 million of deferred issuance costs related to the debt refinancing that occurred in June 2024 and the accelerated amortization of $1.0 million due to the $100.0 million repayment against our 2021 Dollar Term Loans (as defined below) in February 2024.
On June 4, 2024, we also issued new Dollar Senior Notes due 2029 of $500.0 million, and fully redeemed our existing Dollar Senior Notes due 2026 of $568.0 million aggregate principal amount, which included the payment of $13.7 million of accrued interest thereon.
On June 4, 2024, we also issued new Dollar Senior Notes due 2029 of $500.0 million (the “Dollar Senior Notes due 2029”), and fully redeemed our existing Dollar Senior Notes due 2026 of $568.0 million aggregate principal amount (the “Dollar Senior Notes due 2026”), which included the payment of $13.7 million of accrued interest thereon.
We issued the new Dollar Senior Notes with no discount and incurred third party costs of approximately $7.6 million, which have been deferred and will be amortized to interest expense over the remaining term of the new Dollar Senior Notes using the effective interest method.
We issued the Dollar Senior Notes due 2029 with no discount and incurred third party costs of approximately $7.6 million, which have been deferred and will be amortized to interest expense over the remaining term of the Dollar Senior Notes due 2029 using the effective interest method.
Restructuring expenses Restructuring and other restructuring related initiatives during Fiscal 2024 included $4.1 million of costs related to the relocation of certain production activities and reorganization of our operations in Mexico. Additionally, we incurred $1.6 million in severance and other costs related to the consolidation of production activities across certain North American plants.
Restructuring expenses during Fiscal 2024 included $2.1 million of costs related to the relocation of certain production activities and reorganization of our operations in Mexico. Additionally, we incurred $1.6 million in severance and other costs in Fiscal 2024 related to the consolidation of production activities across certain North American plants.
Replacement products are principally sold through distribution partners that may carry a very broad line of products or may specialize in products associated with a smaller set of end market applications. During Fiscal 2024, sales into OEM channels accounted for approximately 32% of our total net sales. OEM sales are to a variety of industrial and automotive customers.
Aftermarket products are principally sold through distribution partners that may carry a very broad line of products or may specialize in products associated with a smaller set of end market applications. During Fiscal 2025, sales into OEM channels accounted for approximately 32% of our total net sales. OEM sales are to a variety of industrial and automotive customers.
Transaction-related expenses Transaction-related expenses of $3.3 million were incurred during Fiscal 2024, related primarily to the debt agreement amendments and refinancings that occurred in June 2024 and December 2024, the four secondary offerings completed in 2024, and certain other corporate transactions.
Transaction-related expenses of $3.3 million were incurred during the prior year, related primarily to the debt agreement amendments and refinancings that occurred in June 2024 and December 2024, the four secondary offerings completed in 2024, and certain other corporate transactions.
Tabular Disclosure of Contractual Obligations Our consolidated contractual obligations and commercial commitments are summarized in the following table which includes aggregate information about our contractual obligations as of December 28, 2024 and the periods in which payments are due, based on the earliest date on which we could be required to settle the liabilities.
Tabular Disclosure of Contractual Obligations Our consolidated contractual obligations and commercial commitments are summarized in the following table which includes aggregate information about our contractual obligations as of December 31, 2025 and the periods in which payments are due, based on the earliest date on which we could be required to settle the liabilities.
During Fiscal 2024, sales into replacement channels accounted for approximately 68% of our total net sales. Our replacement sales cover a very broad range of applications and industries and, accordingly, are highly correlated with industrial activity and utilization and not a single end market.
During Fiscal 2025, sales into aftermarket channels accounted for approximately 68% of our total net sales. Our aftermarket sales cover a very broad range of applications and industries and, accordingly, are highly correlated with industrial activity and utilization and not a single end market.
The only significant differences between the results of operations and net assets that would be shown in the consolidated financial statements of Gates Industrial Holdco Limited and those for the Company that are included elsewhere in this report are (i) additional net intercompany loan payable due to Gates Industrial Holdco Limited and its subsidiaries from the Company, which was $258.4 million and $333.6 million as of December 28, 2024 and December 30, 2023, respectively, (ii) additional intercompany payables due to Gates Industrial Holdco Limited and its subsidiaries from the Company attributable to UK tax group relief of $6.6 million and $26.6 million as of December 28, 2024 and December 30, 2023, respectively, and (iii) additional cash and cash equivalents held by the Company, which was $10.6 million and $3.5 million as of December 28, 2024 and December 30, 2023, respectively.
The only significant differences between the results of operations and net assets that would be shown in the consolidated financial statements of Gates Industrial Holdco Limited and those for the Company that are included elsewhere in this report are (i) additional net intercompany loan payable due to Gates Industrial Holdco Limited and its subsidiaries from the Company, which was $226.4 million and $258.4 million as of December 31, 2025 and December 28, 2024, respectively, (ii) additional intercompany payables due to Gates Industrial Holdco Limited and its subsidiaries from the Company attributable to UK tax group relief of $7.5 million and $6.6 million as of December 31, 2025 and December 28, 2024, respectively, and (iii) additional cash and cash equivalents held by the Company, which was $7.4 million and $10.6 million as of December 31, 2025 and December 28, 2024, respectively.
The table below excludes our gross liability for uncertain tax positions of $82.2 million because the timing of cash settlement, if any, is unknown at this time. 40 Table of Contents Floating interest payments and payments and receipts on interest rate derivatives are estimated based on market interest rates prevailing at the balance sheet date.
The table below excludes our gross liability for uncertain tax positions of $62.1 million because the timing of cash settlement, if any, is unknown at this time. Floating interest payments and payments and receipts on interest rate derivatives are estimated based on market interest rates prevailing at the balance sheet date.
Our net sales have historically been, and remain, highly correlated with industrial activity and utilization, and not with any single end market given the diversification of our business and high exposure to replacement markets.
Our net sales have historically been, and remain, highly correlated with industrial activity and utilization, and not with any single end market given the diversification of our business and high exposure to the aftermarket channel.
As of December 28, 2024, before intercompany eliminations, our non-guarantor subsidiaries represented approximately 66% of our total assets and approximately 25% of our total liabilities. Borrowing Headroom On June 4, 2024, we extinguished our asset-backed revolving credit facility as discussed further in Note 15 to the consolidated financial statements included elsewhere in this annual report.
As of December 31, 2025, before intercompany eliminations, our non-guarantor subsidiaries represented approximately 87% of our total assets and approximately 29% of our total liabilities. Borrowing Headroom On June 4, 2024, we extinguished our asset-backed revolving credit facility as discussed further in Note 15 to the consolidated financial statements included elsewhere in this annual report.
The decline in industrial sales was partially offset by core sales growth in the automotive channel of 7.9% compared to the prior year period. Growth of automotive channel sales was primarily contributed by North America and EMEA.
The decline in industrial sales was partially offset by core sales growth in the automotive channel of 8.4% compared to the prior year period. Growth of automotive channel sales was primarily contributed by North America and EMEA.
The discount rates used in the impairment tests of goodwill during Fiscal 2024 were 11.3% and 10.7% for the Power Transmission and Fluid Power reporting units, respectively. For both reporting units, the fair values exceeded the carrying values and no goodwill impairments were therefore recognized during Fiscal 2024.
The discount rates used in the impairment tests of goodwill during Fiscal 2025 were 10.7% and 10.2% for the Power Transmission and Fluid Power reporting units, respectively. For both reporting units, the fair values exceeded the carrying values and no goodwill impairments were therefore recognized during Fiscal 2025.
As a result, the Adjusted EBITDA margin was 22.5%, a 170 basis point improvement from the prior year. Liquidity and Capital Resources Treasury Responsibilities and Philosophy Our primary liquidity and capital resource needs are for working capital, debt service requirements, capital expenditures, share repurchases, facility expansions and acquisitions.
As a result, the Adjusted EBITDA margin was 22.4%, a 10 basis point decrease from the prior year. Liquidity and Capital Resources Treasury Responsibilities and Philosophy Our primary liquidity and capital resource needs are for working capital, debt service requirements, capital expenditures, share repurchases, facility expansions and acquisitions.
For the year ended December 28, 2024 (dollars in millions) Power Transmission Fluid Power Total Net sales for the year ended December 28, 2024 $ 2,108.1 $ 1,300.1 $ 3,408.2 Impact on net sales of movements in currency rates 31.7 4.7 36.4 Core sales for the year ended December 28, 2024 2,139.8 1,304.8 3,444.6 Net sales for the year ended December 30, 2023 2,191.2 1,379.0 3,570.2 Decrease in net sales $ (83.1) $ (78.9) $ (162.0) Decrease in net sales on a core basis (core sales) $ (51.4) $ (74.2) $ (125.6) Net sales decline (3.8) % (5.7) % (4.5) % Core sales decline (2.3) % (5.4) % (3.5) % For the year ended December 30, 2023 (dollars in millions) Power Transmission Fluid Power Total Net sales for the year ended December 30, 2023 $ 2,191.2 $ 1,379.0 $ 3,570.2 Impact on net sales of movements in currency rates 18.9 (10.0) 8.9 Core sales for the year ended December 30, 2023 2,210.1 1,369.0 3,579.1 Net sales for the year ended December 31, 2022 2,173.7 1,380.5 3,554.2 Decrease in net sales $ 17.5 $ (1.5) $ 16.0 Increase (decrease) in net sales on a core basis (core sales) $ 36.4 $ (11.5) $ 24.9 Net sales growth (decline) 0.8 % (0.1) % 0.5 % Core sales growth (decline) 1.7 % (0.8) % 0.7 % 43 Table of Contents Adjusted EBITDA adjustments for ratio calculation purposes The financial maintenance ratio in our credit agreement and other ratios related to incurrence-based covenants (measured only upon the taking of certain actions, including the incurrence of additional indebtedness) under our credit agreement governing our revolving credit facility and our term loan facility and the indenture governing our outstanding notes are calculated in part based on financial measures similar to Adjusted EBITDA as presented elsewhere in this report, which financial measures are determined at the Gates Industrial Holdco Limited level and adjust for certain additional items such as severance costs, the pro forma impacts of acquisitions and the pro forma impacts of cost-saving initiatives.
For the year ended December 31, 2025 (dollars in millions) Power Transmission Fluid Power Total Net sales for the year ended December 31, 2025 $ 2,147.1 $ 1,296.1 $ 3,443.2 Impact on net sales of movements in currency rates (12.1) 1.9 (10.2) Core sales for the year ended December 31, 2025 $ 2,135.0 $ 1,298.0 $ 3,433.0 Net sales for the year ended December 28, 2024 $ 2,108.1 $ 1,300.1 $ 3,408.2 Increase (decrease) in net sales $ 39.0 $ (4.0) $ 35.0 Increase (decrease) in net sales on a core basis (core sales) $ 26.9 $ (2.1) $ 24.8 Net sales increase (decrease) 1.9 % (0.3) % 1.0 % Core sales increase (decrease) 1.3 % (0.2) % 0.7 % For the year ended December 28, 2024 (dollars in millions) Power Transmission Fluid Power Total Net sales for the year ended December 28, 2024 $ 2,108.1 $ 1,300.1 $ 3,408.2 Impact on net sales of movements in currency rates 31.7 4.7 36.4 Core sales for the year ended December 28, 2024 $ 2,139.8 $ 1,304.8 $ 3,444.6 Net sales for the year ended December 30, 2023 $ 2,191.2 $ 1,379.0 $ 3,570.2 Decrease in net sales $ (83.1) $ (78.9) $ (162.0) Decrease in net sales on a core basis (core sales) $ (51.4) $ (74.2) $ (125.6) Net sales growth (decline) (3.8) % (5.7) % (4.5) % Core sales growth (decline) (2.3) % (5.4) % (3.5) % 43 Table of Contents Adjusted EBITDA adjustments for ratio calculation purposes The financial maintenance ratio in our credit agreement and other ratios related to incurrence-based covenants (measured only upon the taking of certain actions, including the incurrence of additional indebtedness) under our credit agreement governing our revolving credit facility and our term loan facility and the indenture governing our outstanding notes are calculated in part based on financial measures similar to Adjusted EBITDA as presented elsewhere in this report, which financial measures are determined at the Gates Industrial Holdco Limited level and adjust for certain additional items such as severance costs, the pro forma impacts of acquisitions and the pro forma impacts of cost-saving initiatives.
In each case, the discount rate was determined using a capital asset pricing model adjusted for a premium to reflect the higher risk specific to the nature of the intangible asset. The discount rate used in Fiscal 2024 impairment test was 12.0%. As a result of the impairment testing, no impairment was recognized during Fiscal 2024.
In each case, the discount rate was determined using a capital asset pricing model adjusted for a premium to reflect the higher risk specific to the nature of the intangible asset. The discount rate used in Fiscal 2025 impairment test was 11.5%. As a result of the impairment testing, no impairment was recognized during Fiscal 2025.
The redemption of our Dollar Senior Notes due 2026 resulted in the accelerated recognition of $2.6 million of deferred issuance costs (recognized in interest expense). In February 2024, we made a voluntary principal debt repayment of $100.0 million against our 2021 Dollar Term Loans.
The redemption of our Dollar Senior Notes due 2026 resulted in the accelerated recognition of $2.6 million of deferred issuance costs (recognized in interest expense). In July 2025, we made a voluntary principal debt repayment of $100.0 million against our 2022 Dollar Term Loans.
Management applied discount rates to the resulting cash flow projections that reflect current market assessments of the time value of money and the risks specific to each reporting unit. In each case, the discount rate was determined using a capital asset pricing model.
Under the market approach, fair value was determined using EBITDA multiples of peer companies. Management applied discount rates to the resulting cash flow projections that reflect current market assessments of the time value of money and the risks specific to each reporting unit. In each case, the discount rate was determined using a capital asset pricing model.
After weighing all of the evidence, giving more weight to the evidence that was objectively verifiable, we determined in Fiscal 2024 that it was more likely than not that deferred income tax assets of $5.5 million in Türkiye related to net operating losses, $3.7 million in Poland related to special economic zone business credits, and $3.4 million in the U.S. related to net operating losses, are not realizable.
In Fiscal 2024, we determined that it was more likely than not that deferred income tax assets of $5.5 million in Türkiye related to net operating losses, $3.7 million in Poland related to special economic zone business credits, and $3.4 million in the U.S. related to net operating losses, are not realizable.
On June 4, 2024, we amended the 2022 Dollar Term Loans’ interest rate to be, at our option, either Term SOFR (subject to a floor of 0.50%), plus a margin of 2.25% per annum or the base rate (subject to a 1.50% per annum floor), plus 1.25% per annum.
The 2022 Dollar Term Loans and 2024 Dollar Term Loans bear interest, at our option at, either Term SOFR (subject to a floor of 0.50%), plus a margin of 1.75% per annum, or the base rate (subject to a floor of 1.50%) plus 0.75% per annum. 39 Table of Contents On June 4, 2024, we amended the 2022 Dollar Term Loans’ interest rate to be, at our option, either Term SOFR (subject to a floor of 0.50%), plus a margin of 2.25% per annum or the base rate (subject to a 1.50% per annum floor), plus 1.25% per annum.
Interest expense For the year ended (dollars in millions) December 28, 2024 December 30, 2023 Debt: —Dollar Term Loans $ 88.8 $ 113.7 —Dollar Senior Notes 34.7 35.5 —Revolving credit facility 0.4 1.8 123.9 151.0 Amortization of deferred issuance costs 23.1 9.1 Other interest expense 8.8 3.1 $ 155.8 $ 163.2 Details of our long-term debt are presented in Note 15 to the consolidated financial statements included elsewhere in this report. 34 Table of Contents Interest on debt for Fiscal 2024 decreased by $27.1 million when compared to the prior year, primarily due to lower interest rates applicable on the floating rate Dollar Term Loans and the favorable impact of derivatives.
Interest expense For the year ended (dollars in millions) December 31, 2025 December 28, 2024 Debt: —Dollar Term Loans $ 70.8 $ 88.8 —Dollar Senior Notes 34.6 34.7 —Revolving credit facility — 0.4 105.4 123.9 Amortization of deferred issuance costs 9.0 23.1 Other interest expense 11.5 8.8 $ 125.9 $ 155.8 Details of our long-term debt are presented in Note 15 to the consolidated financial statements included elsewhere in this report. 34 Table of Contents Interest on debt for Fiscal 2025 decreased by $18.5 million when compared to the prior year, primarily due to lower interest rates applicable on the floating rate Dollar Term Loans and the favorable impact of derivatives.
We present core sales growth because it allows for a meaningful comparison of year-over-year performance without the volatility caused by foreign currency gains or losses or the incomparability that would be caused by impacts of acquisitions or disposals.
Core sales growth is the change in core sales expressed as a percentage of prior period net sales. We present core sales growth because it allows for a meaningful comparison of year-over-year performance without the volatility caused by foreign currency gains or losses or the incomparability that would be caused by impacts of acquisitions or disposals.
The 2022 Dollar Term Loans and 2024 Dollar Term Loans bear interest, at our option at, either Term SOFR (subject to a floor of 0.50%), plus a margin of 1.75% per annum, or the base rate (subject to a floor of 1.50%) plus 0.75% per annum.
The Revolving Credit Loans bear interest at our option either at Term SOFR (subject to a floor of 0%) plus a margin of 1.75% per annum or the base rate plus 0.75% per annum.
These additional adjustments during the last 12 months, as calculated pursuant to such agreements, resulted in a net benefit to Adjusted EBITDA for ratio calculation purposes of $8.5 million as of December 28, 2024.
These additional adjustments during the last 12 months, as calculated pursuant to such agreements, resulted in a net benefit to Adjusted EBITDA for ratio calculation purposes of $10.1 million as of December 31, 2025.
Forecasts for the future years were based on region-specific growth or decline assumptions determined by management, taking into account market trends and strategic initiatives. The terminal growth rate for both reporting units was set at 2.5%, a rate that does not exceed the expected long-term growth rates in the respective principal end markets.
Forecasts for the future years were based on region-specific growth or decline assumptions determined by management, taking into account market trends and strategic initiatives. The terminal growth rate for the Power Transmission and Fluid Power reporting units was set at 1.5% and 3.5%, respectively, which do not exceed the expected long-term growth rates in the respective principal end markets.
Floating rate interest payments are estimated based on forward market interest rates and terms prevailing as of December 28, 2024. (2) Post-retirement benefit obligations represent our expected cash contributions to defined benefit pension and other post-retirement benefit plans in Fiscal 2025.
Floating rate interest payments are estimated based on forward market interest rates and terms prevailing as of December 31, 2025. 40 Table of Contents (2) Postretirement benefit obligations represent our expected cash contributions to defined benefit pension and other postretirement benefit plans in Fiscal 2026.
Fluid Power (38.1% of Gates’ net sales for the year ended December 28, 2024) For the year ended (dollars in millions) December 28, 2024 December 30, 2023 Period over period change Net sales $ 1,300.1 $ 1,379.0 (5.7 %) Adjusted EBITDA $ 292.4 $ 286.4 2.1 % Adjusted EBITDA margin 22.5 % 20.8 % Net sales in Fluid Power for Fiscal 2024 decreased by 5.7%, or $78.9 million, driven by lower volumes of $98.3 million and adverse movements in average currency exchange rates of $4.7 million.
Fluid Power (37.6% of Gates’ net sales for the year ended December 31, 2025) For the year ended (dollars in millions) December 31, 2025 December 28, 2024 Period over period change Net sales $ 1,296.1 $ 1,300.1 (0.3 %) Adjusted EBITDA $ 290.5 $ 292.4 (0.6 %) Adjusted EBITDA margin 22.4 % 22.5 % Net sales in Fluid Power for Fiscal 2025 decreased by 0.3%, or $4.0 million, driven by lower volumes of $30.7 million and adverse movements in average currency exchange rates of $1.9 million.
As of December 28, 2024, there were letters of credit outstanding against the facility amounting to $28.2 million and no drawings on the revolving credit facility. As of December 28, 2024, our total committed borrowing headroom was $471.8 million, in addition to cash balances of $682.0 million.
As of December 31, 2025, there were letters of credit outstanding against the facility amounting to $29.0 million and no drawings on the revolving credit facility. As of December 31, 2025, our total committed borrowing headroom was $471.0 million, in addition to cash balances of $812.1 million.
The decline in the automotive channel during Fiscal 2024 was focused in EMEA and Greater China, which experienced core sales declines of 2.0% and 11.6%, respectively, compared to the prior year period. This was partially offset by core sales growth in the automotive channel in North America, South America and East Asia.
The decline in the automotive channel during Fiscal 2025 was focused in Greater China and EMEA, which experienced core sales declines of 5.4% and 3.0%, respectively, compared to the prior year period. This was partially offset by core sales growth in the automotive channel in North America.
The decrease was offset by a $24.1 million benefit from pricing. As such, core sales decreased by 5.4%, or $74.2 million, compared to the prior year. Fluid Power’s core sales decline in Fiscal 2024 was driven by decreased sales to industrial customers of 9.3%, compared to the prior year period.
The decrease was offset by a $28.6 million benefit from pricing. As such, core sales decreased by 0.2%, or $2.1 million, compared to the prior year. Fluid Power’s sales decline in Fiscal 2025 was driven by decreased core sales to industrial channel customers of 3.1% compared to the prior year period.
Management uses “Adjusted EBITDA” as its key profitability measure. This is a non-GAAP measure that 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.
Non-GAAP Financial Measures Adjusted EBITDA Management uses “Adjusted EBITDA” as its key profitability measure. Adjusted EBITDA is a non-GAAP measure that represents Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), adjusted for 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: • loss on deconsolidation of previously controlled subsidiary; • non-cash charges in relation to share-based compensation; • transaction-related expenses incurred in relation to major corporate transactions, including the acquisition of businesses, and equity and debt transactions; • asset impairments; • restructuring expenses, including severance-related expenses; 41 Table of Contents • credit loss related to a customer bankruptcy; • cybersecurity incident expenses; and • inventory adjustments related to certain inventories accounted for on the LIFO basis.
During the periods presented, the items excluded from EBITDA in computing Adjusted EBITDA primarily included: • transaction-related expenses incurred in relation to major corporate transactions, including the acquisition of businesses and related integration activities, and equity and debt transactions; • non-cash charges in relation to share-based compensation; • inventory adjustments related to certain inventories accounted for on a LIFO basis; • asset impairments; • restructuring expenses, including severance and restructuring-related expenses; • loss on deconsolidation of Russian subsidiary; • credit (gain) loss related to a customer bankruptcy; and • other expenses (income), excluding foreign currency transaction gain or loss and insurance recoveries.
Results for the year ended December 28, 2024 compared to the results for the year ended December 30, 2023 Summary Gates Performance For the year ended (dollars in millions) December 28, 2024 December 30, 2023 Net sales $ 3,408.2 $ 3,570.2 Cost of sales 2,049.7 2,211.3 Gross profit 1,358.5 1,358.9 Selling, general and administrative expenses 870.0 882.2 Transaction-related expenses 3.3 2.2 Asset impairments — 0.1 Restructuring expenses 6.5 11.6 Other operating expenses — 0.2 Operating income from continuing operations 478.7 462.6 Interest expense 155.8 163.2 Loss on deconsolidation of Russian subsidiary 12.7 — Other (income) expense (17.8) 14.1 Income from continuing operations before taxes 328.0 285.3 Income tax expense 107.5 28.3 Net income from continuing operations $ 220.5 $ 257.0 Adjusted EBITDA (1) $ 761.1 $ 747.0 (1) See “—Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to net income from continuing operations, the closest comparable GAAP measure, for each of the periods presented.
Results for the year ended December 31, 2025 compared to the results for the year ended December 28, 2024 Summary Gates Performance For the year ended (dollars in millions) December 31, 2025 December 28, 2024 Net sales $ 3,443.2 $ 3,408.2 Cost of sales 2,071.5 2,049.7 Gross profit 1,371.7 1,358.5 Selling, general and administrative expenses 876.1 876.5 Transaction-related expenses 0.5 3.3 Asset impairments 3.5 — Restructuring expenses 26.3 6.5 Other operating expenses — — Operating income from continuing operations 465.3 472.2 Interest expense 125.9 155.8 Loss on deconsolidation of Russian subsidiary — 12.7 Other (income) expense (0.8) (24.3) Income from continuing operations before taxes 340.2 328.0 Income tax expense 63.1 107.5 Net income from continuing operations $ 277.1 $ 220.5 Adjusted EBITDA (1) $ 770.1 $ 761.1 (1) See “—Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to Net Income, the closest comparable GAAP measure, for each of the periods presented.
Power Transmission Adjusted EBITDA for Fiscal 2024 increased by 1.8% or $8.1 million compared to the prior year, driven primarily by enterprise initiatives that favorably impacted manufacturing performance and pricing, partially offset by lower volumes. As a result, the Adjusted EBITDA margin for Fiscal 2024 was 22.2%, a 120 basis point increase from the prior year.
Power Transmission Adjusted EBITDA for Fiscal 2025 increased by 2.3%, or $10.9 million compared to the prior year, driven primarily by benefits from pricing, partially offset by lower manufacturing performance and volumes. As a result, the Adjusted EBITDA margin for Fiscal 2025 was 22.3%, a 10 basis point increase from the prior year.
The decline of industrial sales were primarily in North America and EMEA, which had declines of 10.7% and 12.5%, respectively, compared to the prior year period. Construction and agriculture end markets drove most of the decline, with core sales that decreased by 9.1% and 18.4%, respectively, during Fiscal 2024 as compared to the prior year period.
The decline of industrial sales were primarily in North America and EMEA, which had declines of 6.6% and 1.6%, respectively, compared to the prior year period. Industrial on-highway and diversified industrial end markets drove most of the decline, with core sales that decreased by 12.3% and 3.5%, respectively, during Fiscal 2025 as compared to the prior year period.
Income tax expense For Fiscal 2024, we had an income tax expense of $107.5 million on pre-tax income of $328.0 million, which resulted in an effective tax rate of 32.8% compared to an income tax expense of $28.3 million on pre-tax income of $285.3 million, which resulted in an effective tax rate of 9.9% for Fiscal 2023.
Income tax expense For Fiscal 2025, we had an income tax expense of $63.1 million on pre-tax income of $340.2 million, which resulted in an effective tax rate of 18.5% compared to an income tax expense of $107.5 million on pre-tax income of $328.0 million, which resulted in an effective tax rate of 32.8% for Fiscal 2024.
Other costs related to restructuring and restructuring related initiatives incurred during Fiscal 2024 included legal and consulting expenses, and costs associated with prior period facility closures or relocations in several countries.
Additional costs related to restructuring incurred during Fiscal 2024 included professional service fees, and costs associated with prior period facility closures or relocations in several countries.
Concurrently with this amendment, we terminated the $250.0 million asset-backed revolving credit facility governed by the second amended and restated credit agreement dated as of July 3, 2014 (as amended and restated).
Concurrently with this amendment, we terminated the $250.0 million asset-backed revolving credit facility governed by the second amended and restated credit agreement dated as of July 3, 2014 (as amended and restated). Non-guarantor subsidiaries The majority of the Company’s U.S. subsidiaries are guarantors of the senior secured credit facilities.
LIFO adjustments are determined based on published pricing indices, which often are not representative of the actual cost changes or timing of those changes as experienced by our business.
LIFO adjustments are determined based on published pricing indices, which often are not representative of the actual flow of product and costs as experienced by our business.
As part of this amendment, we upsized the revolving credit commitments and issued the “2024 Dollar Term Loans”. The proceeds of the 2024 Dollar Term Loans were used to extinguish the entire outstanding principal balance of the 2021 Dollar Term Loans plus $1.1 million of accrued interest and to redeem a portion of the Dollar Senior Notes due 2026.
The proceeds of the 2024 Dollar Term Loans were used to extinguish the entire outstanding principal balance of the 2021 Dollar Term Loans plus $1.1 million of accrued interest and to redeem a portion of the Dollar Senior Notes due 2026 (as defined below).
The following table lists the primary drivers behind the change in cost of sales (amounts in millions): 33 Table of Contents Year ended December 30, 2023 $ 2,211.3 Currency translation (26.4) Volume (85.2) Manufacturing performance (50.5) Mix (18.5) Other 19.0 Year ended December 28, 2024 $ 2,049.7 Selling, general and administrative (“SG&A”) expenses SG&A expenses for Fiscal 2024 were $870.0 million compared to $882.2 million for the prior year.
The following table lists the primary drivers behind the change in cost of sales (amounts in millions): Year ended December 28, 2024 $ 2,049.7 Currency translation 3.2 Volume (8.8) Manufacturing performance 32.9 Mix (9.9) Other 4.4 Year ended December 31, 2025 $ 2,071.5 Selling, general and administrative (“SG&A”) expenses SG&A expenses for Fiscal 2025 were $876.1 million compared to $876.5 million for the prior year.
Non-guarantor subsidiaries The majority of the Company’s U.S. subsidiaries are guarantors of the senior secured credit facilities. For the twelve months ended December 28, 2024, before intercompany eliminations, our non-guarantor subsidiaries represented approximately 73% of our net sales and 65% of our EBITDA as defined in the financial covenants attaching to the senior secured credit facilities.
For the twelve months ended December 31, 2025, before intercompany eliminations, our non-guarantor subsidiaries represented approximately 71% of our net sales and 55% of our EBITDA as defined in the financial covenants attaching to the senior secured credit facilities.
This facility was terminated on June 4, 2024. 39 Table of Contents Dollar Term Loan credit agreement amendments On December 10, 2024, we amended our credit agreement to lower the margin with respect to the 2022 Dollar Term Loans and 2024 Dollar Term Loans by 50 basis points compared to the previous term.
On December 10, 2024, we amended our credit agreement to lower the margin with respect to the 2022 Dollar Term Loans and 2024 Dollar Term Loans by 50 basis points compared to the previous term.
Other items are excluded from Adjusted EBITDA because they are individually or collectively significant items that are not considered to be representative of the underlying performance of our businesses.
We also exclude costs associated with major corporate transactions because we do not believe that they relate to our performance. Other items are excluded from Adjusted EBITDA because they are individually or collectively significant items that are not considered to be representative of the underlying performance of our businesses.
EBITDA and Adjusted EBITDA exclude items that can have a significant effect on our profit or loss and should, therefore, be used in conjunction with, not as substitutes for, profit or loss for the period. Management compensates for these limitations by separately monitoring net income from continuing operations for the period.
Adjusted EBITDA excludes items that can have a significant effect on our profit or loss and should, therefore, be used in conjunction with, not as substitutes for, profit or loss for the period.
Other (income) expenses For the year ended (dollars in millions) December 28, 2024 December 30, 2023 Interest income on bank deposits $ (13.7) $ (17.5) Foreign currency (gain) loss on net debt and hedging instruments (13.7) 4.2 Net adjustments related to post-retirement benefits (2.6) (3.0) Foreign currency loss on hyperinflation remeasurement 6.7 22.6 Other 5.5 7.8 $ (17.8) $ 14.1 Other (income) expenses for Fiscal 2024 was an income of $17.8 million, compared to a loss of $14.1 million in the prior year.
Other (income) expenses For the year ended (dollars in millions) December 31, 2025 December 28, 2024 Interest on bank deposits $ (9.6) $ (13.7) Foreign currency transaction loss (gain), net 5.2 (6.5) Financing related loss (income) 6.0 (13.7) Net interest related to postretirement benefits 1.3 (2.6) Foreign currency loss (gain) on hyperinflation remeasurement 6.5 6.7 Insurance recoveries (10.0) — Other (0.2) 5.5 $ (0.8) $ (24.3) Other (income) expenses for Fiscal 2025 was an income of $0.8 million, compared to income of $24.3 million in the prior year.
Analysis by Operating Segment Power Transmission (61.9% of Gates’ net sales for the year ended December 28, 2024) For the year ended (dollars in millions) December 28, 2024 December 30, 2023 Period over period change Net sales $ 2,108.1 $ 2,191.2 (3.8 %) Adjusted EBITDA $ 468.7 $ 460.6 1.8 % Adjusted EBITDA margin 22.2 % 21.0 % Net sales in Power Transmission for Fiscal 2024 decreased by 3.8%, or $83.1 million, driven by lower volumes of $74.6 million and adverse movements in average currency exchange rates of $31.7 million.
Analysis by Operating Segment Power Transmission (62.4% of Gates’ net sales for the year ended December 31, 2025) For the year ended (dollars in millions) December 31, 2025 December 28, 2024 Period over period change Net sales $ 2,147.1 $ 2,108.1 1.9 % Adjusted EBITDA $ 479.6 $ 468.7 2.3 % Adjusted EBITDA margin 22.3 % 22.2 % Net sales in Power Transmission for Fiscal 2025 increased by 1.9%, or $39.0 million, driven by a $36.7 million benefit from pricing and favorable movements in average currency exchange rates of $12.1 million.
Personal mobility, industrial off-highway, and diversified industrial end markets experienced declines of 22.4%, 6.9%, and 2.0%, respectively, compared to the prior year period, primarily in North America and EMEA. Automotive channel sales were relatively consistent compared to the prior year periods, declining by 0.4% during Fiscal 2024.
Personal mobility, agriculture, and industrial on-highway experienced growth of 28.7%, 14.6%, and 13.5%, respectively, compared to the prior year period, primarily in North America and EMEA. Automotive channel sales were relatively consistent compared to the prior year periods, declining by 0.8% during Fiscal 2025.
Cash Flow Year Ended December 28, 2024 compared to the year ended December 30, 2023 Cash provided by operating activities was $379.6 million during Fiscal 2024 compared to cash provided by operating activities of $481.0 million during the prior year period, driven primarily by a decrease of $135.5 million in trade working capital movement, combined with an increase of $11.8 million in taxes paid.
Cash Flow Year Ended December 31, 2025 compared to the year ended December 28, 2024 Cash provided by operating activities was $478.1 million during Fiscal 2025 compared to cash provided by operating activities of $379.6 million during the prior year period, driven primarily by a $56.4 million increase in net income, an increase of $120.2 million in trade working capital movement, a decrease of $10.8 million in taxes paid and a decrease of $11.9 million cash paid for interest in the current year period.
The decrease was offset by a $23.2 million benefit from pricing. As such, core sales decreased by 2.3%, or $51.4 million, compared to the prior year. 36 Table of Contents Power Transmission’s overall core sales to our industrial channel customers had a core sales decline of 5.6% during Fiscal 2024, compared to the prior year periods.
The increase was offset by lower volumes. As such, core sales increased by 1.3%, or $26.9 million, compared to the prior year. 36 Table of Contents Power Transmission’s overall core sales to our industrial channel customers had a core sales increase of 5.0% during Fiscal 2025, compared to the prior year periods.
Differences exist among our businesses and from period to period in the extent to which their respective employees receive share-based compensation or a charge for such compensation is recognized. We therefore exclude from Adjusted EBITDA the non-cash charges in relation to share-based compensation in order to assess the relative performance of our businesses.
We believe that Adjusted EBITDA should, therefore, be made available to securities analysts, investors and other interested parties to assist in their assessment of the performance of our businesses. Differences exist among our businesses and from period to period in the extent to which their respective employees receive share-based compensation or a charge for such compensation is recognized.
The following table lists the primary drivers behind the change in net sales (amounts in millions): Power Transmission Fluid Power Total Company Year ended December 30, 2023 $ 2,191.2 $ 1,379.0 $ 3,570.2 Currency translation (31.7) (4.7) (36.4) Volume (74.6) (98.3) (172.9) Pricing 23.2 24.1 47.3 Year ended December 28, 2024 $ 2,108.1 $ 1,300.1 $ 3,408.2 Cost of sales Cost of sales for Fiscal 2024 was $2,049.7 million, compared to $2,211.3 million for the prior year, a decrease of 7.3%, or $161.6 million.
The following table lists the primary drivers behind the change in net sales (amounts in millions): Power Transmission Fluid Power Total Company Year ended December 30, 2024 $ 2,108.1 $ 1,300.1 $ 3,408.2 Currency translation 12.1 (1.9) 10.2 Volume (9.8) (30.7) (40.5) Pricing 36.7 28.6 65.3 Year ended December 28, 2025 $ 2,147.1 $ 1,296.1 $ 3,443.2 33 Table of Contents Cost of sales Cost of sales for Fiscal 2025 was $2,071.5 million, compared to $2,049.7 million for the prior year, an increase of 1.1%, or $21.8 million.
The increase of cash used in investing activities was primarily driven by increased capital expenditures of $35.3 million, a $12.5 million cash derecognition from the deconsolidation of our Russian subsidiary, and higher investment purchases in Fiscal 2024 compared to the prior year period, partially offset by a $20.7 million increase in net cash received under company-owned life insurance policies.
The increase of cash used in investing activities was primarily driven by increased capital expenditures of $7.2 million, a $15.7 million increase in net cash paid under company-owned life insurance policies and fewer proceeds from the net purchases of investments in Fiscal 2025 compared to the prior year period.
Net sales Net sales during Fiscal 2024 were $3,408.2 million, compared to $3,570.2 million during the prior year, a decrease of 4.5%, or $162.0 million.
Net sales Net sales during Fiscal 2025 were $3,443.2 million, compared to $3,408.2 million during the prior year, an increase of 1.0%, or $35.0 million.
The effective tax rate for Fiscal 2024 was primarily driven by $91.5 million net tax expense related to $68.0 million of change in deferred tax assets for Luxembourg net operating losses related to a reduction in the Luxembourg corporate income tax rate enacted in 2024, $10.7 million of tax on international operations, $9.6 million of currency exchange rate movements primarily related to Luxembourg currency revaluation on indefinite-lived net operating losses, and $3.2 million of net other expense; offset by $66.0 million of net tax benefits related to $45.5 million of change in valuation allowance primarily related to a reduction in the Luxembourg corporate income tax rate enacted in 2024, $10.2 million of company-owned life insurance deductions, and $10.3 million of unrecognized tax benefits primarily due to audit settlement.
The reconciling items include expenses related to change in deferred tax assets for Luxembourg net operating losses related to a reduction in the Luxembourg corporate income tax rate enacted in 2024, withholding taxes and other U.S. tax on international operations, currency exchange rate movements primarily related to Luxembourg currency revaluation on indefinite-lived net operating losses, and net other expense, offset by benefits related to change in valuation allowance primarily related to a reduction in the Luxembourg corporate income tax rate enacted in 2024, company-owned life insurance deductions, and unrecognized tax benefits primarily due to audit settlement. 35 Table of Contents On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States.
Net cash used in financing activities was $286.7 million during Fiscal 2024, compared to $258.3 million in the prior year period.
Net cash used in investing activities during Fiscal 2025 was $119.0 million, compared to $104.4 million in the prior year period.
The 2024 Dollar Term Loans require a prepayment premium in connection with certain repricing transactions occurring within nine months following the closing of the amendment. The repayment of our 2021 Dollar Term Loans resulted in the accelerated recognition of $11.2 million of deferred issuance costs (recognized in interest expense).
The repayment of our 2021 Dollar Term Loans resulted in the accelerated recognition of $11.2 million of deferred issuance costs (recognized in interest expense).
The financing cash outflows in Fiscal 2024 also included $88.8 million higher debt repayments net of borrowings, and increased debt issuance costs paid of $20.3 million, compared to prior year periods. 38 Table of Contents Indebtedness Our long-term debt, consisting principally of two secured term loans and the U.S. dollar-denominated unsecured notes, was as follows: Carrying amount Principal amount (dollars in millions) As of December 28, 2024 As of December 30, 2023 As of December 28, 2024 As of December 30, 2023 Debt: —Secured —2024 Dollar Term Loans due June 4, 2031 $ 1,290.0 $ — $ 1,300.0 $ — —2022 Dollar Term Loans due November 16, 2029 548.0 547.8 563.5 567.8 —2021 Dollar Term Loans due November 16, 2029 — 1,322.5 — 1,336.1 —Unsecured —6.875% Dollar Senior Notes due July 1, 2029 512.6 — 500.0 — —6.250% Dollar Senior Notes due January 16, 2026 — 581.2 — 568.0 $ 2,350.6 $ 2,451.5 $ 2,363.5 $ 2,471.9 We refer to the term loans denominated in U.S. dollars as the “Dollar Term Loans” and the unsecured senior notes denominated in U.S. dollars as the “Dollar Senior Notes”.
This was primarily offset by an increase in employee taxes paid from shares withheld of $16.3 million as well as proceeds from long-term debt of $1,840.0 million that occurred in Fiscal 2024. 38 Table of Contents Indebtedness Our long-term debt, consisting principally of two secured term loans and the U.S. dollar-denominated unsecured notes, was as follows: Carrying amount Principal amount (dollars in millions) As of December 31, 2025 As of December 28, 2024 As of December 31, 2025 As of December 28, 2024 Debt: —Secured —2024 Dollar Term Loans due June 4, 2031 $ 1,276.2 $ 1,290.0 $ 1,283.8 $ 1,300.0 —2022 Dollar Term Loans due November 16, 2029 444.7 548.0 456.3 563.5 —Unsecured —6.875% Dollar Senior Notes due July 1, 2029 511.6 512.6 500.0 500.0 $ 2,232.5 $ 2,350.6 $ 2,240.1 $ 2,363.5 We refer to the term loans denominated in U.S. dollars as the “Dollar Term Loans” and the unsecured senior notes denominated in U.S. dollars as the “Dollar Senior Notes”.
In September and October 2024, we made payments on this amount and had no balance as of December 28, 2024. On June 4, 2024, we entered into an amendment to our credit agreement governing our term loans and our secured revolving credit facility.
Debt issuances and redemptions On June 4, 2024, we entered into an amendment to our credit agreement governing our term loans and our secured revolving credit facility. As part of this amendment, we upsized the revolving credit commitments and issued the 2024 Dollar Term Loans.
Core sales and core sales growth reconciliations Core sales is a non-GAAP measure that represents net sales for the period excluding the impacts of movements in average currency exchange rates and the first-year impacts of acquisitions and disposals, when applicable. Core sales growth is the change in core sales expressed as a percentage of prior period net sales.
(5) In July 2025, we received insurance recoveries related to a previously disclosed cybersecurity incident that occurred in February 2023 for which we previously excluded $5.2 million of expenses from Adjusted EBITDA. 42 Table of Contents Core sales and core sales growth reconciliations Core sales is a non-GAAP measure that represents net sales for the period excluding the impacts of movements in average currency exchange rates and the first-year impacts of acquisitions and disposals, when applicable.
Fluid Power Adjusted EBITDA for Fiscal 2024 increased by 2.1%, or $6.0 million, compared to the prior year period, driven primarily by enterprise initiatives that favorably impacted manufacturing performance and pricing, and favorable mix of replacement channel sales to OEM channel sales. This was partially offset by lower volumes.
Fluid Power Adjusted EBITDA for Fiscal 2025 decreased by 0.6%, or $1.9 million, compared to the prior year period, driven primarily by unfavorable manufacturing performance, lower volumes and the impact of adverse movements in currency exchange rates. This decrease was partially offset by a benefit from pricing activities and lower SG&A spend during the year.
In Fiscal 2023 we determined that it was more likely than not that deferred income tax assets in the U.S. related to net operating losses totaling $2.1 million are realizable as a result of changes in estimates of taxable profits against which these losses can be utilized.
During Fiscal 2025, we determined that it was more likely than not that deferred income tax assets of $2.4 million primarily in Türkiye related to other deferred tax assets and net operating losses are not realizable.
We exclude from Adjusted EBITDA acquisition-related costs that are required to be expensed in accordance with U.S. GAAP. We also exclude costs associated with major corporate transactions because we do not believe that they relate to our performance.
We therefore exclude from Adjusted EBITDA the non-cash charges in relation to share-based compensation in order to assess the relative performance of our businesses. We exclude from Adjusted EBITDA acquisition-related costs that are required to be expensed in accordance with U.S. GAAP.
The effective tax rate for Fiscal 2023 was primarily driven by $38.7 million net tax benefits related to $13.3 million of manufacturing incentives, $12.3 million in unrecognized tax benefits primarily due to audit settlement, $9.9 million of company-owned life insurance deductions, $8.8 million of change in valuation allowance, and $4.4 million of state tax provision (net federal benefit); offset by $10.1 million net tax expense related to $7.4 million of tax on international operations, $1.7 million of currency exchange rate movements and $1.0 million of net other expense. 35 Table of Contents Numerous foreign jurisdictions, including the U.K., have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate described in the Global Anti-Base Erosion, or Pillar Two, model rules issued by the Organization for Economic Co-operation and Development, or OECD.
Numerous foreign jurisdictions, including the U.K., have enacted or are in the process of enacting legislation to adopt a minimum effective tax rate described in the Global Anti-Base Erosion, or Pillar Two, model rules issued by the Organization for Economic Co-operation and Development, or OECD.
During the periods presented, we excluded restructuring expenses and severance-related expenses that reflect specific, strategic actions taken by management to shutdown, downsize, or otherwise fundamentally reorganize areas of Gates’ business, and changes in the LIFO inventory reserve recognized in cost of sales for certain inventories that are valued on a LIFO basis.
We excluded changes in the LIFO inventory reserve recognized in cost of sales for certain inventories that are valued on a LIFO basis.
If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. We are continuing to monitor the pending implementation of Pillar Two by individual countries and the potential effects of Pillar Two on our business.
If the jurisdictional effective tax rate determined under the Pillar Two rules is less than 15%, a top-up tax will be due to bring the jurisdictional effective tax rate up to 15%. These legislative changes did not have a material impact in fiscal year 2025 and we do not expect a material impact in future years.
This decrease of $12.2 million was primarily attributable to favorable movements in average currency exchange rates, gain from disposal of property, plant and equipment, higher corporate-owned life insurance related income, and lower provision for expected credit losses during the current year period. The decrease was partially offset by increased outbound freight costs, consulting fees, and other expenses.
This decrease of $0.4 million was primarily attributable to favorable labor and benefits expense and decreased outbound freight costs. The decrease was partially offset by higher restructuring-related costs and unfavorable movements in average currency exchange rates during the year.
Earliest period in which payments are due (dollars in millions) Total 2025 2026 and 2027 2028 and 2029 2030 and beyond Debt: —Principal $ 2,363.5 $ 23.4 $ 37.6 $ 1,070.9 $ 1,231.6 —Interest payments (1) 700.0 154.2 246.9 229.0 69.9 Finance leases 2.4 1.0 1.1 0.3 — Operating leases 203.3 31.6 53.0 41.2 77.5 Post-retirement benefits (2) 11.8 11.8 — — — Purchase obligations (3) 76.8 50.3 21.2 5.3 — Total $ 3,357.8 $ 272.3 $ 359.8 $ 1,346.7 $ 1,379.0 (1) Future interest payments include payments on fixed and floating rate debt.
Earliest period in which payments are due (dollars in millions) Total 2026 2027 and 2028 2029 and 2030 2031 and beyond Debt: —Principal $ 2,240.1 $ 18.8 $ 37.6 $ 965.0 $ 1,218.7 —Interest payments (1) 609.7 129.7 256.7 194.3 29.0 Finance leases 3.6 2.0 1.1 0.5 — Operating leases 198.6 34.0 57.8 38.7 68.1 Defined benefit pension (2) 10.6 10.6 — — — Other postretirement benefit plans (2) 20.3 2.6 4.8 4.3 8.6 Purchase obligations (3) 64.5 44.2 19.3 1.0 — Total $ 3,147.4 $ 241.9 $ 377.3 $ 1,203.8 $ 1,324.4 (1) Future interest payments include payments on fixed and floating rate debt.
Additionally, the increase of other income was also driven by a foreign currency gain on net debt and hedging instruments of $13.7 million during the year, compared to a loss of $4.2 million during Fiscal 2023.
The decrease of other income was primarily driven by financing related loss of $6.0 million during Fiscal 2025 compared to financing related income of $13.7 million during Fiscal 2024. Additionally, Fiscal 2025 had foreign currency transaction losses of $5.2 million compared to foreign currency transaction gains of $6.5 million in the prior year.
As the industrial markets stabilize, we expect that our ongoing execution of enterprise initiatives and incremental new business investments will enable us to improve profitability and drive higher organic growth over the long term. 32 Table of Contents Global conflicts, such as the conflict between Russia and Ukraine, and sanctions and counter-sanctions imposed in response, created increased economic uncertainty and operational complexity both in Europe, Middle East and Africa (“EMEA”) and globally, the impacts of which we cannot fully predict.
As the industrial markets stabilize, we expect that our ongoing execution of these and other enterprise initiatives and incremental new business investments will enable us to enhance our profitability and drive higher organic growth over the long term. Our global operating footprint and worldwide sales reach expose us to risks associated with geopolitical tensions and trade conflicts.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

6 edited+3 added−1 removed18 unchanged
Biggest changeThe currency profile of cash and debt, after taking into account the effect of the currency swaps and forwards used to manage those profiles, were as follows: (dollars in millions) As of December 28, 2024 As of December 30, 2023 Cash and cash equivalents by currency: —U.S. dollar $ 280.0 $ 343.9 —Chinese Yuan Renminbi 136.3 105.2 —Indian Rupee 25.3 27.7 —Euro 47.9 41.8 —Japanese Yen 46.9 37.3 —Other 145.6 164.7 $ 682.0 $ 720.6 Principal amount of debt by currency: —U.S. dollar $ 1,041.9 $ 1,385.9 —Euro 1,077.2 835.4 —Chinese Yuan Renminbi 244.4 250.6 $ 2,363.5 $ 2,471.9 As described in Note 13 to the audited consolidated financial statements included elsewhere in this annual report, during Fiscal 2024 we executed a USD-EUR fixed-to-fixed cross currency swap with a notional principal amount of €277.4 million with a contract term, from August 2, 2024 to August 2, 2029.
Biggest changeThe currency profile of cash and debt, after taking into account the effect of the currency swaps and forwards used to manage those profiles, were as follows: (dollars in millions) As of December 31, 2025 As of December 28, 2024 Cash and cash equivalents by currency: —U.S. dollar $ 353.8 $ 280.0 —Chinese Yuan Renminbi 163.7 136.3 —Indian Rupee 29.4 25.3 —Euro 48.9 47.9 —Japanese Yen 58.7 46.9 —Other 157.6 145.6 $ 812.1 $ 682.0 Principal amount of debt by currency: —U.S. dollar $ 193.0 $ 1,041.9 —Euro 1,213.6 1,077.2 —Chinese Yuan Renminbi 439.5 244.4 —Canadian dollar 286.1 — —Japanese Yen 107.9 — $ 2,240.1 $ 2,363.5 As described in Note 13 to the audited consolidated financial statements included elsewhere in this annual report, during Fiscal 2025 we expanded our net investment hedge capacity by entering into cross currency swaps and foreign exchange forward contracts with a gross notional value at inception of $820.0 million and terms between three to five years, designated in hedges of portions of our net investment in Canadian, Chinese, and Japanese subsidiaries.
Two customers of our North America businesses accounted for 13.7% and 6.1%, respectively, of our total trade accounts receivable balance as of December 28, 2024, compared to 12.5% and 9.6%, respectively, as of December 30, 2023. These concentrations are due to the extended payment terms common in the industry in which these businesses operate.
Two customers of our North America businesses accounted for 13.7% and 8.4%, respectively, of our total trade accounts receivable balance as of December 31, 2025, compared to 13.7% and 6.1%, respectively, as of December 28, 2024. These concentrations are due to the extended payment terms common in the industry in which these businesses operate.
The following table summarizes the key terms of the active interest rate derivatives held by the Company: Notional principal amount (millions) Interest rate Payable Receivable Variable Fixed Variable Fixed Variable rate index As of December 28, 2024 Maturity date: —June 2025 $ 870.0 — % 2.5 % 4.6 % — % 1 month Term SOFR —November 2027 $ 385.0 — % 7.6 % 8.1 % — % 1 month Term SOFR As of December 30, 2023 Maturity date: —June 2025 $ 870.0 — % 2.5 % 5.4 % — % 1 month Term SOFR —November 2027 $ 385.0 — % 7.6 % 8.9 % — % 1 month Term SOFR 48 Table of Contents The interest rate profile of the Company’s financial assets and liabilities, after taking into account the effect of the interest rate hedging activities, was as follows: As of December 28, 2024 As of December 30, 2023 Interest-bearing Interest-bearing ( dollars in millions ) Floating rate Fixed rate Non-interest bearing Total Floating rate Fixed rate Non-interest bearing Total Financial assets: Available-for-sale investments $ — $ — $ — $ — $ — $ — $ — $ — Cash and cash equivalents 244.7 — 437.3 682.0 364.4 — 356.2 720.6 Restricted cash — — 2.8 2.8 — — 3.4 3.4 244.7 — 440.1 684.8 364.4 — 359.6 724.0 Financial liabilities: Debt (608.5) (1,755.0) — (2,363.5) (648.9) (1,823.0) — (2,471.9) Obligations under finance leases — (2.2) — (2.2) — (1.7) — (1.7) (608.5) (1,757.2) — (2,365.7) (648.9) (1,824.7) — (2,473.6) $ (363.8) $ (1,757.2) $ 440.1 $ (1,680.9) $ (284.5) $ (1,824.7) $ 359.6 $ (1,749.6) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.
The following table summarizes the key terms of the active interest rate derivatives held by the Company: Notional principal amount (millions) Interest rate Payable Receivable Variable Fixed Variable Fixed Variable rate index As of December 31, 2025 Maturity date: —June 2030 $ 700.0 — % 3.4 % 3.7 % — % 1 month Term SOFR —November 2027 $ 385.0 — % 7.6 % 7.2 % — % 1 month Term SOFR As of December 28, 2024 Maturity date: —June 2025 $ 870.0 — % 2.5 % 4.6 % — % 1 month Term SOFR —November 2027 $ 385.0 — % 7.6 % 8.1 % — % 1 month Term SOFR 48 Table of Contents The interest rate profile of the Company’s financial assets and liabilities, after taking into account the effect of the interest rate hedging activities, was as follows: As of December 31, 2025 As of December 28, 2024 Interest-bearing Interest-bearing ( dollars in millions ) Floating rate Fixed rate Non-interest bearing Total Floating rate Fixed rate Non-interest bearing Total Financial assets: Available-for-sale investments $ — $ — $ — $ — $ — $ — $ — $ — Cash and cash equivalents 417.1 — 395.0 812.1 244.7 — 437.3 682.0 Restricted cash — — 2.9 2.9 — — 2.8 2.8 417.1 — 397.9 815.0 244.7 — 440.1 684.8 Financial liabilities: Debt (655.1) (1,585.0) — (2,240.1) (608.5) (1,755.0) — (2,363.5) Obligations under finance leases — (3.3) — (3.3) — (2.2) — (2.2) (655.1) (1,588.3) — (2,243.4) (608.5) (1,757.2) — (2,365.7) $ (238.0) $ (1,588.3) $ 397.9 $ (1,428.4) $ (363.8) $ (1,757.2) $ 440.1 $ (1,680.9) Liquidity risk Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.
As of December 28, 2024, the aggregated notional principal amount of the cross currency swaps was €1,033.5 million and ¥1,784.0 million compared to €756.1 million and ¥1,784.0 million as of December 30, 2023.
As of December 31, 2025, the aggregated notional principal amount of the cross currency swaps was EUR1,033.5 million, CNH3,068.1 million and CAD392.1 million compared to EUR1,033.5 million and CNH250.0 million as of December 28, 2024.
We historically have not entered into any derivative commodity instruments to manage the exposure to changing price risk for supplies, but we will continue to evaluate their viability. Credit risk Our principal financial assets are cash and cash equivalents, derivatives, trade and other receivables and investments.
We historically have not entered into any derivative commodity instruments to manage the exposure to changing price risk for supplies, but we will continue to evaluate their viability. Certain raw materials and commodities we use to manufacture our products are subject to tariffs.
Interest Rate Risk Our prevailing market risk on interest rates is the potential fluctuation in interest costs and in the fair value of long-term debt resulting from movements in interest rates. We use interest rate derivatives as part of our interest rate risk management strategy to add stability to interest expense and to manage our exposure to interest rate movements.
We use interest rate derivatives as part of our interest rate risk management strategy to add stability to interest expense and to manage our exposure to interest rate movements.
Removed
During Fiscal 2023, we executed a USD to Chinese Yuan fixed-to-fixed cross currency swap with a notional principal amount of ¥1,784.0 million with a contract term from November 30, 2023 to November 30, 2026.
Added
As of December 31, 2025, the aggregate notional principal amount of the foreign exchange forward contracts were JPY15,347.5 million, compared to JPY0.0 million as of December 28, 2024. Interest Rate Risk Our prevailing market risk on interest rates is the potential fluctuation in interest costs and in the fair value of long-term debt resulting from movements in interest rates.
Added
Currently, there is uncertainty on how recently enacted tariffs and potential future tariffs may affect the price of these raw materials and commodities. We are constantly assessing potential supply chain vulnerability and implementing strategies (i.e., surcharges) to mitigate potential tariff impacts. We are also utilizing local supply chains where possible to reduce supply and cost risks.
Added
Additionally, we continue to explore alternative supply sources and evaluate shifts in demand. Further discussion of our industry risks is included under “Part I - Item 1A. Risk Factors” within this annual report. Credit risk Our principal financial assets are cash and cash equivalents, derivatives, trade and other receivables and investments.

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