Gates Industrial Corp: 2Q Results: Post-ERP Strength and 2H Acceleration; PT Raised to $34

Research evidence excerpt

Gates Industrial Corp: 2Q Results: Post-ERP Strength and 2H Acceleration; PT Raised to $34

J P M O R G A N North America Equity Research

03 August 2026

Gates Industrial Corp Overweight

GTES, GTES US

2Q Results: Post-ERP Strength and 2H Acceleration; Price (31 Jul 26):$27.98

PT Raised to $34 ▲Price Target (Dec-27):$34.00 Prior (Dec-26):$32.00

Gates Industrial delivered a strong 2Q26, with net sales of $942M (up 6.6% YoY)

and core sales growth of 4.9%. Adjusted EBITDA of $211M (vs. consensus North America Small and Mid Cap

Industrials$206M) translated to a margin of 22.5%, modestly ahead of expectations,

alongside adjusted gross profit margin of 41.8% (+50 bps YoY). Book-to-bill Tomohiko Sano AC

remained above 1.0x, with management framing the quarter as the early stages of (1-212) 622-1099

tomohiko.sano@jpmorgan.com

an industrial recovery and pointing to improving demand trends globally. Gates

raised FY26 guidance for core sales growth (2.5%-4.5%), adjusted EBITDA Ethan Coyle

(1-212) 270-0613

($800-830M), and adjusted EPS ($1.62-1.70). We remain constructive, ethan.coyle@jpmchase.com

maintaining our Overweight rating and raising our price target to $34.

Brendan Shea, CFA

• ERP Headwinds Fading: Resilient Quarter: Following a 1H constrained by (1-212)brendan.shea@jpmorgan.com622-0770

ERP-related disruption, the residual headwind appeared modest this quarter, J.P. Morgan Securities LLC

with core sales growth of 4.9% YoY and broad-based strength across regions

and end markets. Looking ahead, management guided 3Q sales of $880M-

$920M (implying ~5.5% core growth at the midpoint) and an adjusted Quarterly Forecasts (FYE Dec)

EBITDA margin up ~70 bps YoY at the midpoint, while reiterating confidence Adj. EPS ($)

in achieving ~23.5% adjusted EBITDA margin in 2H26.