Financial Analysis

Debt (dollars in millions) As of June 27, 2026 As of December 31, 2025 Secured debt: 2024 Dollar Term Loans due June 4, 2031 $ 1,280.5 $ 1,283.8 2022 Dollar Term Loans due November 16, 2029 454.8 456.3 Unsecured debt: 6.875% Dollar Senior Notes due July 1, 2029 500.0 500.0 Total principal of debt 2,235.3 2,240.1 Deferred issuance costs (22.3) (25.0) Accrued interest 20.5 17.4 Total carrying value of debt 2,233.5 2,232.5 Debt, current portion 39.2 36.2 Debt, less current portion $ 2,194.3 $ 2,196.3 Weighted average interest rate 5.71 % 5.78 % Gates secured debt is jointly and severally, irrevocably and fully and unconditionally guaranteed by certain of its subsidiaries and is secured by liens on substantially all of their assets. Gates is subject to covenants, representations and warranties under certain of its debt facilities. During the periods covered by these condensed consolidated financial statements, we were in compliance with the applicable financial covenants. Also under the agreements governing our debt facilities, our ability to engage in activities such as incurring certain additional indebtedness, making certain investments and paying certain dividends is dependent, in part, on our ability to satisfy tests based on measures determined under those agreements. Dollar Term Loans Our outstanding secured credit facilities consist of two loans, which include a tranche of $1,300.0 million dollar-denominated term loans issued on June 4, 2024 (the 2024 Dollar Term Loans) a …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

Share-based compensation The Company operates a share-based incentive plan over its shares to provide incentives to Gates senior executives and other eligible employees. During the three and six months ended June 27, 2026, we recognized a charge of $9.4 million and $15.7 million, respectively, compared to $9.6 million and $15.7 million during the three and six months ended June 28, 2025, respectively. Awards issued under the 2014 Gates Industrial Corporation plc Stock Incentive Plan (the 2014 Plan) Gates has a number of share-based incentive awards issued under the 2014 Plan, which was assumed by Gates Industrial Corporation plc and renamed the Gates Industrial Corporation plc Stock Incentive Plan in connection with our initial public offering in January 2018 (our IPO) and subsequently assumed by Gates Industrial Corporation Ltd. in connection with our Redomiciliation in July 2026. No new awards have been granted under this plan since 2017. The options granted prior to our IPO were split equally into four tiers, each with specific vesting conditions. Tier I, Tier II and IV options all vested, while the performance conditions associated with Tier III were not achieved and therefore expired during 2022. All the options expire ten years after the date of grant. Due to Chinese regulatory restrictions on foreign stock ownership, awards granted under this plan to Chinese employees have been issued as stock appreciation rights (SARs). The terms of these SARs are identical to those o …

DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock · excerpt; the full note is in the filing

Fair value measurement A. Fair value hierarchy We account for certain assets and liabilities at fair value. Topic 820 Fair Value Measurements and Disclosures establishes the following hierarchy for the inputs that are used in fair value measurement: Level 1 inputs are unadjusted quoted prices in active markets for identical assets or liabilities; Level 2 inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 inputs are not based on observable market data (unobservable inputs). Assets and liabilities that are measured at fair value are categorized in one of the three levels on the basis of the lowest-level input that is significant to its valuation. B. Financial instruments not held at fair value Certain financial assets and liabilities are not measured at fair value; however, items such as cash and cash equivalents, restricted cash, drawings under revolving credit facilities and bank overdrafts generally attract interest at floating rates and accordingly their carrying amounts are considered to approximate fair value. Due to their short maturities, the carrying amounts of accounts receivable and accounts payable are also considered to approximate their fair values. The carrying amount and fair value of our debt are set out below: As of June 27, 2026 As of December 31, 2025 (dollars in millions) Carrying amount Fair value Carrying am …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

Income taxes We compute the year-to-date income tax provision by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjust for discrete tax items in the period in which they occur. For the three months ended June 27, 2026, we had an income tax benefit of $78.0 million on pre-tax income of $100.2 million, which resulted in an effective tax rate of (77.8)%, compared to an income tax expense of $16.8 million on pre-tax income of $80.2 million, which resulted in an effective tax rate of 20.9%, for the three months ended June 28, 2025. For the three months ended June 27, 2026, the effective tax rate was driven primarily by net discrete tax benefits of $100.7 million, comprised of discrete tax benefits related to $97.1 million of changes in realizability of certain deferred tax assets primarily in Luxembourg, $8.3 million related to unrecognized tax benefits, and $3.5 million related to other net discrete tax benefits, offset by $8.2 million of discrete expense related to an audit settlement in China. For the three months ended June 28, 2025, the effective tax rate was driven primarily by net discrete tax benefits of $7.2 million, of which $3.2 million related to prior year adjustments primarily from various foreign jurisdictions in which returns were filed, $2.6 million related to excess tax benefits on stock option exercises, and $2.0 million relat ed to changes in the realizability of certain deferred tax assets; offset by $0.6 million of oth …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

Recent accounting pronouncements not yet adopted The following accounting pronouncements are relevant to Gates operations but have not yet been adopted. Accounting Standards Update (ASU) 2026-02 Environmental Credits and Environmental Credit Obligations (Topic 818) In May 2026, the Financial Accounting Standards Board (FASB) issued an ASU to improve the financial accounting for and disclosure of environmental credits and environmental credit obligations. This update impacts recognition, measurement, presentation, and disclosure requirements for all entities that generate, purchase, or receive environmental credits, or have a regulatory compliance obligation that may be settled with environmental credits. The updated standard is effective for our annual periods beginning in fiscal year 2028 and interim periods beginning in the first quarter of fiscal year 2029, with early adoption permitted. We are currently evaluating the impact the updated standard will have on our consolidated financial statements and disclosures and do not expect the application of this standard to have a material impact. ASU 2025-6 Intangibles - Goodwill and Other Internal-Use Software (Subtopic 350-40) In September 2025, the FASB issued an ASU to modernize the accounting for software costs. The amendment removes all references to prescriptive and sequential software development stages (referred to as project stages) for capitalization throughout Subtopic 350-40 and introduces a principles-based capitaliz …

NewAccountingPronouncementsPolicyPolicyTextBlock · excerpt; the full note is in the filing

Post-retirement benefits Gates provides defined benefit pension plans in certain of the countries in which it operates, in particular, in the U.S. and U.K. All of the defined benefit pension plans are closed to new entrants. In addition to the funded defined benefit pension plans, Gates has unfunded defined benefit obligations to certain current and former employees. Gates also provides other post-retirement benefits, principally health and life insurance coverage, on an unfunded basis to certain of its employees in the U.S. and Canada. Net periodic benefit cost (income) The components of the net periodic benefit cost (income) for pensions and other post-retirement benefits were as follows: Pension benefits (dollars in millions) Three months ended June 27, 2026 Three months ended June 28, 2025 U.S. Non-U.S. U.S. Non-U.S. Net Periodic Benefit Cost: Employer service cost $ 0.3 $ 0.6 $ 0.5 $ 0.5 Settlements and curtailments Interest cost 1.8 4.3 2.0 4.4 Expected return on plan assets (2.2) (3.9) (2.0) (4.0) Amortization of prior net actuarial (gain) loss 0.6 0.5 Total net periodic benefit cost (income) $ (0.1) $ 1.6 $ 0.5 $ 1.4 Pension benefits (dollars in millions) Six months ended June 27, 2026 Six months ended June 28, 2025 U.S. Non-U.S. U.S. Non-U.S. Net Periodic Benefit Cost: Employer service cost $ 0.5 $ 1.1 $ 0.9 $ 1.1 Settlements and curtailments 5.2 Interest cost 3.6 8.6 4.1 8.4 Expected return on plan assets (4.4) (7.7) (4.0) (7.7) Amortization of prior net actuarial ( …

PensionAndOtherPostretirementBenefitsDisclosureTextBlock · excerpt; the full note is in the filing

Related party transactions A. Equity method investees Purchases from equity method investees were as follows: Three months ended Six months ended (dollars in millions) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Purchases $ (4.0) $ (3.8) $ (7.7) $ (7.5) Amounts outstanding in respect of these transactions were payables of $0.2 million as of June 27, 2026, compared to $0.1 million as of December 31, 2025. No dividends were received from our equity method investees during the periods presented. B. Non-Gates entities controlled by non-controlling shareholders Sales to and purchases from non-Gates entities controlled by non-controlling shareholders were as follows: Three months ended Six months ended (dollars in millions) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Sales $ 13.6 $ 11.0 $ 24.1 $ 21.5 Purchases $ (3.7) $ (4.0) $ (7.4) $ (7.9) Amounts outstanding in respect of these transactions were as follows: (dollars in millions) As of June 27, 2026 As of December 31, 2025 Receivables $ 4.9 $ 3.5 Payables $ (3.1) $ (2.9)

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Restructuring, asset impairments, and restructuring related expenses Gates continues to undertake various restructuring and restructuring related initiatives to drive increased productivity in all aspects of our operations. These actions include efforts to consolidate our manufacturing and distribution footprint, scale operations to current demand levels, streamline our SG&A back-office functions and relocate certain operations to lower cost locations. Restructuring expenses by expense type and asset impairments are included in the table below: Three months ended Six months ended (dollars in millions) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Restructuring expenses: Severance and related benefit expense 0.5 12.9 0.8 13.0 Professional service fees 0.1 0.1 1.3 Other net restructuring expenses 0.1 0.1 0.5 0.3 Total restructuring expenses 0.7 13.0 1.4 14.6 Asset impairments related to restructuring 0.2 0.8 Total restructuring expenses and asset impairments $ 0.7 $ 13.2 $ 1.4 $ 15.4 Restructuring expenses during the three and six months ended June 27, 2026 included $0.7 million and $1.4 million, respectively, of costs related to a global cost reduction effort and reorganization of our operations in Mexico. Restructuring expenses during both the three and six months ended June 28, 2025 primarily included $12.6 million of severance and other labor and benefits expense related to a global cost reduction effort. Restructuring expenses and asset impairments by segment …

RestructuringAndRelatedActivitiesDisclosureTextBlock · excerpt; the full note is in the filing

"Segment information A. Background The segment information provided in these condensed consolidated financial statements reflects the information that is used by the chief operating decision maker for the purposes of making decisions about allocating resources and in assessing the performance of each segment. The chief executive officer (CEO) of Gates serves as the chief operating decision maker. These decisions are based principally on net sales and Adjusted EBITDA (defined below). B. Operating segments and segment assets Gates manufactures a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and original equipment manufacturer (OEM) channels, throughout the world. Our reportable segments are identified on the basis of our primary product lines, as this is the basis on which information is provided to the CEO for the purposes of allocating resources and assessing the performance of Gates businesses. Our operating and reporting segments are therefore Power Transmission and Fluid Power. Segment asset information is not provided to the chief operating decision maker and therefore segment asset information has not been presented. Due to the nature of Gates operations, cash generation and profitability are viewed as the key measures rather than an asset-based measure. C. Segment net sales and disaggregated net sales Sales between reportable segments and the impact of such …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

Equity Movements in the Companys number of shares in issue for the six months ended June 27, 2026 and June 28, 2025, respectively, were as follows: Six months ended (number of shares) June 27, 2026 June 28, 2025 Balance as of the beginning of the period 253,543,540 255,203,987 Exercise of share options 254,125 1,866,110 Vesting of restricted stock units, net of withholding taxes 986,510 1,050,897 Shares repurchased (1,633,005) (672,911) Balance as of the end of the period 253,151,170 257,448,083 In March 2026, the Company repurchased 710,058 shares under the existing share repurchase program in the open market at a total cost of approximately $16.5 million, plus costs paid directly related to the transaction of $0.1 million. All shares repurchased in March 2026 were cancelled. In May 2026, the Company repurchased 922,947 shares under the existing share repurchase program in the open market at a total cost of approximately $22.0 million, plus costs paid directly related to the transaction of $0.1 million. All shares repurchased in May 2026 were cancelled. Approximately $155.8 million remained available under the share repurchase program as of June 27, 2026. On July 22, 2026, the Board of Gates Industrial Corporation Ltd. approved the assumption of the remaining amounts available under the share repurchase program from Gates Industrial Corporation plc. …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing