Gates Industrial Corporation’s second quarter results were largely in line with Wall Street expectations, with flat year-over-year sales and a slight beat on adjusted earnings per share. Management attributed the company’s steady performance to resilience in the personal mobility business, strength in the replacement channel, and ongoing progress in margin improvement initiatives. CEO Ivo Jurek highlighted the “continued ramp-up of new design wins” in personal mobility and noted, “Our replacement channels were constructive, posting low single-digit growth.” Margins were pressured by a combination of higher research and development spending and the absence of a one-time gain recognized last year, but the company emphasized ongoing cost-saving measures and operational efficiencies.
Is now the time to buy GTES? Find out in our full research report (it’s free).
Gates Industrial Corporation (GTES) Q2 CY2025 Highlights:
- Revenue: $883.7 million vs analyst estimates of $875.3 million (flat year on year, 1% beat)
- Adjusted EPS: $0.39 vs analyst estimates of $0.38 (3% beat)
- Adjusted EBITDA: $199.2 million vs analyst estimates of $197.7 million (22.5% margin, 0.8% beat)
- Management raised its full-year Adjusted EPS guidance to $1.48 at the midpoint, a 2.8% increase
- EBITDA guidance for the full year is $780 million at the midpoint, above analyst estimates of $761.9 million
- Operating Margin: 13.1%, down from 15.1% in the same quarter last year
- Organic Revenue was flat year on year vs analyst estimates of flat growth (76.4 basis point miss)
- Market Capitalization: $6.30 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Gates Industrial Corporation’s Q2 Earnings Call
- Nigel Edward Coe (Wolfe Research) asked about the company’s confidence in achieving a growth inflection in Q3. CEO Ivo Jurek responded that order rates are improving, especially in personal mobility, and easier comparisons support higher growth.
- Deane Michael Dray (RBC Capital Markets) questioned the ongoing softness in automotive OEM and whether this reflected strategic decisions. Jurek explained that Gates continues to be highly selective in pursuing auto OEM business, aiming to further reduce its revenue share.
- Julian C.H. Mitchell (Barclays) inquired about end-market demand trends for the remainder of the year. Jurek said most markets are stable, with notable strength in personal mobility and emerging data center opportunities offsetting softness in on-highway and construction.
- Zachary Walljasper (UBS) sought clarification on the drivers behind the revised guidance. CFO Brooks Mallard attributed the increase mainly to favorable currency trends and highlighted the company’s ability to adjust pricing in response to tariffs.
- Jeffrey David Hammond (KeyBanc) asked about the prospects for industrial recovery and free cash flow conversion. Mallard expressed confidence in hitting cash conversion targets, pointing to supply chain improvements and stable replacement demand.
Catalysts in Upcoming Quarters
In the coming quarters, StockStory analysts will closely watch (1) the pace of revenue acceleration in personal mobility and data center products, (2) how effectively Gates manages tariff-related cost pressures and executes on pricing strategies, and (3) progress in gross margin expansion through ongoing operational improvements. The scale and timing of new product wins in growth markets will also be key to tracking execution against strategic goals.
Gates Industrial Corporation currently trades at $24.45, down from $24.73 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
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