GTES 10-K & 10-Q changes, risk factors and insider trading

A substantial portion of our operations are conducted and located outside the U.S. For Fiscal 2024,2025, 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. 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. 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, includingincluding, without limitation:

•macroeconomic factors beyond the Company’s control, such as recent significant volatility around inflation, material and logistics availability, supply chainchain, labor challenges, and laborour challengescustomers’ ability to access credit and ability to pay amounts due to us;

The likelihood of such occurrences and their potential effect on us vary from country to country and are unpredictable. Furthermore, increased economic and political volatility in our regions could result in significant or frequent fluctuations or declines in our sales and operating income, which could have a material adverse impact on our results of operations in future periods. While we have adopted certain operational and financial measures to reduce the risks associated with doing business internationally, such measures may not be successful and any one of the risks listed above may have a material adverse effect on our financial condition and results of operations.

We purchase our energy, steel, aluminum, rubber-based materials, chemicals, polymers and other key manufacturing inputs from outside sources. We do not traditionally have long-term pricing contracts with raw material suppliers. The costs of these raw materials have been volatile historically and are influenced by factors that are outside of our control, including the imposition of tariffs.tariffs which may be unpredictable. In recent years, the prices and availability of energy, metal alloys, polymers and certain other of our raw materials have fluctuated significantly, exacerbated by inflation and global disruptions suchand as the Russia-Ukraine conflict.conflicts. If we are unable to pass increases in the costs of our raw materials on to our customers on a timely basis or at all, maintain current pricing, or are otherwise unable to offset these cost increases, our operating margins and results of operations may be materially adversely affected.

Certain of our businesses operate with short lead times, and we order raw materials and supplies and plan production based on discussions with our customers and internal forecasts of demand. If we are unable to accurately forecast demand for our products, in terms of both volume and specific products, or react appropriately to abrupt changes in demand, we may experience delayed product shipments and customer dissatisfaction. If demand increases significantly from current levels, both we and our suppliers may have difficulty meeting such demand, particularly if such demand increases occur rapidly. Additionally, we may carry excess inventory if demand for our products decreases below projected levels. These risks may be heightened for new products supporting developing markets for which we do not have historical references, and are influenced by factors that are outside of our control, including the imposition of tariffs which may be unpredictable. 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.

The markets in which we operate, or seek to operate, are subject to technological change and, in some cases, developing. 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,change (such as artificial intelligence (“AI”) and machine learning), 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.us, including investment in our workforce and in competing for talent. 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 intelligenceAI) or that we will be unable to develop and market new products and applications in a timely fashion to satisfy customer demands. For example, the increased adoption of electric vehicles and demand for data centers may result in application requirements that are not supported by our current technologies. If we are unable to adapt to these changes, our business and results of operations may be adversely affected.

Longer lives of parts used in our end markets may adversely affect demand for some of our replacementaftermarket products.

The average useful life of certain parts used in our end markets has increased in recent years due to innovations in technologies and manufacturing processes. Extending the life or durability of these parts may allow end users to replace parts less often depending on operating conditions. As a result, a portion of our sales in replacementthe marketsaftermarket may be displaced. If this trend continues, it could adversely impact our replacement marketaftermarket sales.

CompetitionIncreasing in the replacement market in emerging marketscompetition may limit our ability to grow inor thosemaintain markets.our competitive position or margins.

We consider strategic transactions on an ongoing basis, and regularly discuss potential acquisitions of complementary businesses or assets to expand our product portfolio and geographic presence, certain of which may be material. Strategic transactions, particularly investments in emerging or developing markets, involve legal, economic, operational and political risks. 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 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. Our customers may in the future default on their obligations to us due to bankruptcy, lack of liquidity, operational failure or other reasons deriving from the general economic environment or circumstances affecting those customers in particular. If a customer defaults on its obligations to us, it could have a material adverse effect on our business, financial condition, results of operations or cash flows.

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. 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.sectors, and, if we are unable to meet our customers’ sustainability objectives, such as more-efficient, lower emissions products, our sales growth could be limited. We expect the impact on our customers to vary depending on their specific attributes, including reliance on or role in carbon-intensive activities. There is also a risk that we are unable to meet our sustainability objectives or the increasing expectations of our customers, employees, shareholders, and other stakeholders. Moreover, there has been a rise in “anti-ESG” activism, particularly in the U.S., 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.

Our brand has worldwide recognition and our success may be linked to our ability to maintain and enhance our brand image and reputation. In particular, we believe that maintaining and enhancing the Gates brand is critical to maintaining and expanding our customer base. 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. Moreover, sustainability topics and activities have been the subject of increased focus by certain of our stakeholders and regulators. Our business could be adversely impacted if we fail to achieve any of these objectives or if the reputation or image of our brand is tarnished or receives negative publicity. In addition, adverse publicity about regulatory or legal action against us could damage our reputation and brand image and reduce long-term demand for our products, even if the regulatory or legal action is unfounded or not material to our operations. If we are unable to maintain or enhance the image of our brand, it could materially adversely affect our business, financial condition and results of operations.

Increased global cybersecurity vulnerabilities, threats, computer viruses and more sophisticated and targeted cyber-related attacks (such as the recent increasing use of ransomware,ransomware and social engineering, and phishingthe attacksmisuse or malicious use of AI), as well as cybersecurity failures resulting from human error,actions, catastrophic events (such as fires, floods, hurricanes and tornadoes),events, and technological errors, pose a risk to our systems (including third-party systemssystems, 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. Additionally, the rapid evolution and increased availability of AI may intensify cybersecurity risks by making targeted attacks more sophisticated and cybersecurity incidents more difficult to detect, contain, and mitigate. An attack on our systems or those of certain of our vendors could result in security breaches, theft, lost or corrupted data, misappropriation of sensitive, confidential or personal data or information, loss of trade secrets and commercially valuable information, production downtimes and operational disruptions. We defend against attempted cyber-attacks in the normal course of our business. For example, in February 2023, we experienced a malware attack that temporarily disrupted our normal business operations, including some disruption to sales, and resulted in additional costs of $5.2 million in Fiscal 2023. 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.

Global data privacy, data protection and data security requirements are highly complex, evolving rapidly,evolving, and may increase our costs to comply.

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. The scope of the laws that may be applicable to us is often uncertain and may be conflicting, particularly with respect to foreign laws. For example, the General Data Protection Regulation (“GDPR”) adopted by the European Union (“EU”) greatly increased the jurisdictional reach of EU law and added a broad array of requirements for handling personal data, including the public disclosure of significant data breaches, and many other countries and several states in the U.S. have proposed or adopted similar legislation. Other countries such as China, India, Thailand, Brazil and Argentina have enacted or are enacting data privacy laws that restrict cross-border data transfers, as well as requiring that data subjects provide clear and concise consent on how collected data will be utilized. 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.

Existing or new laws and regulations, including but not limited to those relating to HSE, sustainability,sustainability and ESGproduct compliance matters, may prohibit, burden, restrict or make significantly more costly the sale of our products and the operation of our business.

InWe addition,are thesesubject to numerous laws and regulations haverelated becometo increasinglyHSE, stringent and new laws and regulations or stricter interpretation or enforcement of existing laws and regulations could adversely affect our business, financial condition and results of our operationssustainability and product demand.compliance Thismatters. includesThese 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. 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. ForThis example, we anticipateincludes the recent enactment of the EU’s Carbon Border Adjustment MechanismMechanism, willwhich is anticipated to increase the cost of materialsproduction weof needcertain forof productionour products in the EU and could reduce the demand for oursuch products manufactured for the EU market.products. GHG regulations and carbon taxes could also impactreduce oil and gas production, awhich keymay demandnegatively driverimpact our sales in the Energy and Resources end market. In addition, many of our industrial end markets, and reduce demand for our products byare drivingsubject downto the use of fossil fuels. The evolution ofevolving 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 substancessubstances, (“PFAS”)which could result in significant costs to us or limit our access to certain markets. 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.

We have incurred, and will continue to incur, both operating and capital costs to comply with HSE, sustainability,sustainability and ESGproduct 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. 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.

Certain organizations test the quality and safety of vehicle replacementaftermarket products. If these organizations decide not to test a particular vehicle product, or in the event that such organizations decide that a particular vehicle product does not meet applicable quality or safety standards, we may incur additional costs to meet such standards or experience a decrease in sales of such products, including as a result of a decision to discontinue sales of such product or insurance companies deciding to discontinue authorization of repairs using such product. Such events could adversely affect our business.

We are also subject to new and proposed ruleslaws and regulations ofin avarious number of governmental and self-regulatory bodies and organizations,jurisdictions, such as the SEC, the NYSE, the EU,EU and the U.K. government,U.K., that require increased public disclosure of data related to sustainability and ESG issues and mandate additional requirements for sustainability and ESG related marketing claims. 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. 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. These changing and inconsistent rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention to comply with or meet those regulations and expectations. For example, measuring and reporting information and metrics in compliance with the EU’s recently enacted Corporate Sustainability Reporting DirectiveDirective, and monitoring updates to its implementation and effectiveness, has been, and we expect will continue to be, costly, difficult and time consuming. Our sustainability initiatives and goals could be difficult and expensive to implement, and we could be criticized for or subject to litigation related to the accuracy, adequacy, consistency or completeness of our sustainability disclosures and marketing claims or the scope or nature of our initiatives or goals or revisions thereto. Further, statements about our sustainability initiatives and goals, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve and assumptions that are subject to change in the future. If our sustainability related data, claims, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our sustainability goals on a timely basis, or at all, our reputation and financial results could be adversely affected and we could be exposed to litigation.

Failure to develop, obtain, adequately protect or enforce our intellectual propertyIP rights could adversely affect our business, and third parties could allege that our products infringe on their intellectual propertyIP rights, adversely affecting our business.

Our success depends on our ability to develop technologies and inventions used in our products and to brand such products to obtain intellectual propertyIP rights and to protect and enforce such intellectual propertyIP rights worldwide. 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 patentsIP 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 intellectual propertyIP rights to the same extent as the laws of the U.S.

Even if we obtain patents or other intellectual propertyIP 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. 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.

Competitors and other third parties may challenge the ownership, validity, and/or enforceability of our patents or other intellectual property rights. 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 not as strong as in the U.S.limited. These products may compete with our products, and our intellectual propertyIP rights may not be effective or sufficient to prevent such competition.

Further, our efforts to enforce our intellectual propertyIP rights againstand infringersprevent misappropriation, infringement or other violation of our IP rights may not prove successfulunsuccessful and will generally be time consuming and expensive. Successful assertion of our intellectual propertyIP rights depends on the judicial strength and willingness of the issuing jurisdictions to enact and enforce sufficient intellectual propertyIP laws. To the extent we assert our intellectual propertyIP rights against third parties, adequate remedies may not be available. If we are unsuccessful in challenging such products on the basis of patent, trademark or other intellectual propertyIP misappropriation, continued sales of such imitating products may adversely affect our market share and impact customer perceptions and demand for our products. 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 propertyIP 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. 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 propertyIP 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 patents, trademarks or other intellectual propertyIP rights. For example, OEM manufacturers continue to seek and obtain utility and design patents to support claims of intellectual propertyIP infringement against manufacturers and distributors of aftermarket products in efforts to restrict or eliminate the sale of aftermarket products.

In addition, certain of our markets are competitivehighly competitive, and competitors and other third parties may challenge the ownership, validity, and/or enforceability of our effortsIP to prevent misappropriation, infringementrights or otherclaim violationthat ofour theproducts intellectualviolate propertytheir ofIP others may not be successful.rights. Any claim relating to intellectual propertyIP 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,IP, and royalties and other consideration going forward if we are forced to take a license. In addition,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. 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 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, intellectual property,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. Although it is not possible to predict with certainty the outcome of every claim, lawsuit or proceeding and the range of probable loss, we believe these claims, lawsuits and proceedings will not individually or in the aggregate have a material impact on our results. However, we could, in the future, be subject to various claims, lawsuits and proceedings, and we may incur judgments or enter into settlements of lawsuits and proceedings that are not covered or not sufficiently covered by insurance. Further, the insurance we carry may not be adequate to protect against unforeseen and damaging events, such as work stoppages and damage to facilities, equipment or reputation. We supply products to industries that are subject to inherent risks, including equipment defects, malfunctions and failures, and natural disasters (including as a result of climate change), which could expose us to liability. These exposures could have a material adverse effect on our business, financial condition and results of operations.

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.workers, the availability of which is limited in some of the locations in which we operate. It cannot be assured that we will be able to retain all our current senior management personnel and attract and retain other necessary personnel, including skilled workers, necessary for the development of our business. Further, in the event we do lose key personnel, the success of our business may depend on whether we have appropriate succession plans in place and can implement such plans to identify and integrate new personnel. 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.

Labor is a primary component of operating our business. As of December 28,31, 2024,2025, we had approximately 14,10013,000 full time employees worldwide. Certain of our employees are represented by various unions under collective bargaining agreements, or by various regional works councils. While we have no reason to believe that we will be impacted by work stoppages and other labor matters, weWe 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. Furthermore, increased unionization, new labor legislation or changes in regulations has disrupted and could further disrupt our operations, reduce our profitability, or interfere with the ability of our management to focus on executing our business strategies. Additionally, we have experienced, and may continue to experience, labor shortages, turnover and increased labor costs due to general macroeconomic factors. Any of these factors may have a materially adverse effect on us or may limit our flexibility in managing our workforce.

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 28,31, 2024,2025, the net pension obligation of our underfunded defined benefit pension plans globally was $58.5$52.0 million on athe Financial Accounting Standards Board’s Accounting Standards Codification Topic 715 “Compensation-Retirement Benefits” basis. 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 such as the payment of interest expense on our notes or our other indebtedness.business.

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. 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. Further, our tax liabilities could be adversely affected by numerous other factors, including income before taxes being lower than anticipated in countries with lower statutory tax rates and higher than anticipated in countries with higher statutory tax rates, changes in the valuation of deferred income tax assets and liabilities, and changes in tax laws and regulations. We are regularly under audit by taxing authorities in certain of the jurisdictions in which we operate. 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.

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. In addition, the Organization for Economic Co-operation and Development (“OECD”), which represents a coalition of member countries, has recommended fundamental tax reforms affecting the taxation of multinational corporations, including the Base Erosion and Profit Shifting (“BEPS”) project, which in part aims to address international corporate tax avoidance. Countries have already enacted significant measures in this regard. The OECD has undertaken another project to address the tax challenges of the digitization of the economy. The broad objectives of this project are to reform international allocation of taxing rights by allocating a greater share of taxing rights to countries where consumers are located, regardless of the physical presence of a business (“Pillar One”), and to implement a global minimum tax (“Pillar Two”). 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, whichwith are to applyeffect in respect of the fiscal years beginning from December 31, 2023. The U.K. has implemented certain elements of the Pillar Two proposal with effect in relation to accounting periods commencing on or after December 31, 2023, and the U.K. government announced in the Autumn Budget that (i) further elements of the OECD agreed Pillar Two model rules will bewere implemented in the U.K., with the effect in relation to accounting periods beginningcommencing on or after December 31, 20242024. andThe (ii)U.K. government announced as part of the 2025 Autumn Budget that further amendments would be made to the Pillar Two rules that have already been implemented. Such amendments are expected to largely take effect for accounting periods beginning on or after December 31, 2025. All sets of proposals are subject to exemptions and exclusions. Pillar One is generally intended to apply only to entities that are members of a consolidated group with an annual global turnover of at least €20 billion and profitability exceeding 10%, and Pillar Two is generally intended to apply only to entities that are members of a consolidated group with an annual revenue of at least €750 million. However,These thelegislative detailschanges of the proposals are complex and are subject to significant uncertainty, and consultation in respect of certain aspects of the proposals is ongoing. While the impact on the Company will need to be determined by reference to the final rules, we currently dodid not expecthave anya material impact asin offiscal Decemberyear 28, 2024,2025 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. 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). andwas adopted by the “ProposalEuropean for a Council DirectiveCommission on transferSeptember pricing”12, (which seeks to harmonize transfer pricing rules within the EU and ensure a common approach to transfer pricing).2023. 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. FollowingIf adoptionadopted by the European Council, theBEFIT proposals areis intended to come into force on July 1, 2028 (for BEFIT) and January 1, 2026 (for the transfer pricing proposals).2028. BEFIT has the potential to alter taxing rights with the EU, and may include substantive changes to applicable tax rules. Second, the European Council has agreed to implement changes to the procedures used across the European Union in respect of withholding taxes (known as “FASTER”). Specifically, the changes are aimed to simplify the procedures for a refund or to apply for relief at the source; however, the changes could have broader implications. These withholding tax proposals are expected to come into effect from January 1, 2030. The details and timing of the implementation of BEFIT (if adopted) and FASTER and the impact on our group entities which operate in the EU are uncertain.

Despite our current level of indebtedness, weWe 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.

We have no current plans to pay dividends on our ordinary shares. The declaration, amount and payment of any future dividends on our ordinary shares willwill, subject to contractual, legal, tax and regulatory restrictions, be at the sole discretion of our Board. 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 restrictionsrequirements 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, our ability to pay dividends is limited by our senior secured credit facilities and notes and may be limited by covenants of other indebtedness we or our subsidiaries incur in the future. As a result, our shareholders may not receive any return on an investment in our ordinary shares unless such shares are sold for a price greater than that which was paid for them.

We strongly encourage investors to hold ordinary shares in book-entry form through the facilities of The Depository Trust Company (“DTC”) as transfers outside of DTC may be subject to U.K. stamp duty or stamp duty reserve tax (“SDRT”) which would increase the cost of dealing in our shares. A transfer of title in the ordinary shares held within DTC to a purchaser out of DTC and any subsequent transfers that occur outside the DTC system, will generally attract a charge to U.K. stamp duty or SDRT at a rate of 0.5% of any consideration payable for such transfer, which is payable by the transferee of the ordinary shares. 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. However, if those ordinary shares are redeposited into DTC or any other depositary receipt system or clearance service, the redeposit will generally attract stamp duty or SDRT, at the rate of 1.5% of the value of the shares, which will normally be paid by the transferor.

We are a global manufacturer of innovative, highly engineered power transmission and fluid power solutions. We offer a broad portfolio of products to diverse replacementaftermarket channel customers, and to original equipment manufacturers (“OEM”) as specified components, with the majority of our revenue coming from replacementaftermarket channels. Our products are used in applications across numerous end markets, including automotive replacement,aftermarket, automotive OEM, diversified industrial, industrial off-highway, industrial on-highway, energy and resources, and personal mobility. 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 replacementthe markets.aftermarket channel. We sell our products globally under the Gates brand, which is recognized by distributors, equipment manufacturers, installers and end users as a premium brand for quality and technological innovation; this reputation has been built over more than 110 years since Gates’ founding in 1911.

Within the diverse end markets we serve, our highly engineered products are often critical components in applications for which the cost of downtime is high relative to the cost of our products, resulting in the willingness of end users to pay a premium for superior performance and availability. These applications subject our products to normal wear and tear, resulting in natural, and often preventative, replacementaftermarket 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. As a leading designer, manufacturer and marketer of highly engineered, mission-critical products, we have become an industry leader across most of our end markets and the regions in which we operate.

The diversification of our business limits our exposure to trends in any given end market. In addition, a majority of our sales are generated from customers in replacementaftermarket 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. Such trends include infrastructure investment and construction activity, agricultural production and related commodity prices, commercial and passenger vehicle production, miles driven and fleet age, evolving regulatory requirements related to emissions and fuel economy and oil and gas prices and production. Key indicators of our performance include industrial production, industrial sales and manufacturer shipments.

During Fiscal 2024,2025, sales into replacementaftermarket channels accounted for approximately 68% of our total net sales. Our replacementaftermarket 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. ReplacementAftermarket 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 2024,2025, demandswe fromrealized modest growth in our aftermarket channel led by the automotive aftermarket partially offset by a decline in our OEM channel, which was primarily impacted by Automotive. Our profitability improved supported by solid cost management and favorable channel mix. We anticipate demand in several of our industrial OEMend channelsmarkets softenedto whileimprove ourin enterprise2026. initiativesIn the first half of 2026, we expect certain one-time costs associated with system implementation and thefootprint favorable mix of replacement channel sales to OEM channel sales improved our profitability. We expect our business operations to capitalize on a potential industrial demand recovery during 2025 and our inventory position to support exceptional customer service and position us for growth.optimization. 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 improveenhance our profitability and drive higher organic growth over the long term.

(1) See “—Non-GAAP Financial Measures” for a reconciliation of Adjusted EBITDA to netNet income from continuing operations,Income, the closest comparable GAAP measure, for each of the periods presented.

Net sales during Fiscal 20242025 were $3,408.2$3,443.2 million, compared to $3,570.2$3,408.2 million during the prior year, aan decreaseincrease of 4.5%,1.0%, or $162.0$35.0 million. The following table lists the primary drivers behind the change in net sales (amounts in millions):

Cost of sales for Fiscal 20242025 was $2,049.7$2,071.5 million, compared to $2,211.3$2,049.7 million for the prior year, aan decreaseincrease of 7.3%,1.1%, or $161.6$21.8 million. The following table lists the primary drivers behind the change in cost of sales (amounts in millions):

Transaction-related expenses of $0.5 million were incurred during Fiscal 2025, related primarily to debt restructuring costs and certain other corporate transactions. Transaction-related expenses of $3.3 million were incurred during Fiscalthe 2024,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. Transaction-related expenses of $2.2 million were incurred during the prior year, related primarily to the three secondary offerings completed in 2023, fees for amending the 2022 Dollar Term Loans (as defined below) in October 2023, and certain other corporate transactions.

Restructuring and other restructuring related initiativesexpenses during Fiscal 20242025 included $4.1$14.3 million of severance and related benefits expense related to a global cost reduction effort. In addition, during Fiscal 2025, we incurred $5.7 million of costs related to the relocation of certain production activities and reorganization of our operations in Mexico.Mexico Additionally,and we incurred $1.6$3.6 million in severance and otherof costs related to a manufacturing reduction in force in the consolidationAmericas. ofAdditional productionrestructuring activitiesexpenses acrossduring certainFiscal North2025 American plants. Other costswere related to restructuringprofessional service fees 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.severance.

Restructuring and other restructuring related initiativesexpenses during Fiscal 20232024 included $2.1 million of costs related primarily to relocatingthe relocation of certain production activities in China and Mexico, which included severance and other costsreorganization of $4.5our millionoperations andin $3.0 million, respectively.Mexico. Additionally, we incurred $0.7$1.6 million in severance and other costs in Fiscal 2024 related to optimizingthe consolidation of production inactivities Europeacross andcertain $0.9North millionAmerican ofplants. non-severance labor and benefitAdditional costs related to relocationrestructuring incurred during Fiscal 2024 included professional service fees, and integration of certain support functions into our regional shared service center in Europe. Other restructuring costs during the period included $3.4 million for legal and consulting expenses, as well as activities associated with prior period facility closures or relocations in several countries.

Interest on debt for Fiscal 20242025 decreased by $27.1$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. In addition, we incurred no interest under the asset-backed revolver during 2024, which was terminated in June 2024.

Amortization of deferred issuance costs during Fiscal 20242025 increaseddecreased by $14.0$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.

The effective tax rate for Fiscal 2024 was primarily driven by $91.5a $25.5 million expense on net book-tax differences required to reconcile income tax expense of $82.0 million, computed at the U.K. statutory rate of 25%, to the Company’s total income tax provision of $107.5 million. The reconciling items include expenses 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, $10.7withholding milliontaxes ofand other U.S. 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;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.

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. Under such rules, a minimum effective tax rate of 15% would apply to multinational companies with consolidated revenue above €750 million. Under the Pillar Two rules, a company would be required to determine a combined effective tax rate for all entities located in a jurisdiction. 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%. WeThese arelegislative continuingchanges to monitor the pending implementation of Pillar Two by individual countries and the potential effects of Pillar Two on our business. In response to the implementation of Pillar Two in 2024, we took steps in 2023 to mitigate cash tax impacts of Pillar Two that had the effect of increasing our estimated annual effective tax rate by three to five percentage points starting from 2024. While the impact on the Company will need to be determined by reference to the final rules, we currently dodid not expecthave anya material impact asin offiscal Decemberyear 28, 2024,2025 and we do not expect a material impact in future years.

AfterIn weighingFiscal all of the evidence, giving more weight to the evidence that was objectively verifiable,2024, 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. 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. 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.

Net sales in Power Transmission for Fiscal 20242025 decreasedincreased by 3.8%,1.9%, or $83.1$39.0 million, driven by lowera volumes of $74.6$36.7 million benefit from pricing and adversefavorable movements in average currency exchange rates of $31.7$12.1 million. The decreaseincrease was offset by alower $23.2 million benefit from pricing.volumes. As such, core sales decreasedincreased by 2.3%,1.3%, or $51.4$26.9 million, compared to the prior year.

Power Transmission’s overall core sales to our industrial channel customers had a core sales declineincrease of 5.6%5.0% during Fiscal 2024,2025, compared to the prior year periods. Personal mobility, industrial off-highway,agriculture, and diversified industrial end marketson-highway experienced declinesgrowth of 22.4%,28.7%, 6.9%,14.6%, and 2.0%,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 0.4%0.8% during Fiscal 2024.2025. The decline in the automotive channel during Fiscal 20242025 was focused in EMEAGreater China and Greater China,EMEA, which experienced core sales declines of 2.0%5.4% and 11.6%,3.0%, 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.America.

Power Transmission Adjusted EBITDA for Fiscal 20242025 increased by 1.8%2.3%, or $8.1$10.9 million compared to the prior year, driven primarily by enterprisebenefits initiatives that favorably impacted manufacturing performance andfrom pricing, partially offset by lower manufacturing performance and volumes. As a result, the Adjusted EBITDA margin for Fiscal 20242025 was 22.2%,22.3%, a 12010 basis point increase from the prior year.

Fluid Power’s core sales decline in Fiscal 20242025 was driven by decreased core sales to industrial channel customers of 9.3%,3.1% compared to the prior year period. The decline of industrial sales were primarily in North America and EMEA, which had declines of 10.7%6.6% and 12.5%,1.6%, respectively, compared to the prior year period. ConstructionIndustrial on-highway and agriculturediversified industrial end markets drove most of the decline, with core sales that decreased by 9.1%12.3% and 18.4%,3.5%, respectively, during Fiscal 20242025 as compared to the prior year period. The decline in industrial sales was partially offset by core sales growth in the automotive channel of 7.9%8.4% compared to the prior year period. Growth of automotive channel sales was primarily contributed by North America and EMEA.

Fluid Power Adjusted EBITDA for Fiscal 20242025 increaseddecreased by 2.1%,0.6%, or $6.0$1.9 million, compared to the prior year period, driven primarily by enterprise initiatives that favorably impactedunfavorable manufacturing performanceperformance, lower volumes and pricing,the and favorable miximpact of replacementadverse channelmovements salesin tocurrency OEMexchange channel sales.rates. This decrease was partially offset by a benefit from pricing activities and lower volumes.SG&A spend during the year. As a result, the Adjusted EBITDA margin was 22.5%,22.4%, a 17010 basis point improvementdecrease from the prior year.

Cash provided by operating activities was $379.6$478.1 million during Fiscal 20242025 compared to cash provided by operating activities of $481.0$379.6 million during the prior year period, driven primarily by a decrease$56.4 million increase in net income, an increase of $135.5$120.2 million in trade working capital movement, combineda with an increasedecrease of $11.8$10.8 million in taxes paid.paid These increases in operating cash outflows were partially offset byand a decrease of $22.5$11.9 million cash paid for interest in the current year periodperiod. This increase was partially offset by an unfavorable movement of $47.6 million in other liabilities, a $17.7 million increase in taxes payable, a $13.9 million increase in deferred income taxes, an $8.4 million incremental decrease in postretirement benefit obligations (net), and improveda operating$12.7 performancemillion inloss Fiscalon 2024.the deconsolidation of a Russian subsidiary during the prior year period.

Net cash used in investing activities during Fiscal 20242025 was $104.4$119.0 million, compared to $81.8$104.4 million in the prior year period. The increase of cash used in investing activities was primarily driven by increased capital expenditures of $35.3$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. This increase was partially offset by a $12.5 million cash derecognition from the deconsolidation of our Russian subsidiary,subsidiary andthat higheroccurred investment purchases in Fiscal 2024 compared toduring the prior year period, partially offset by a $20.7 million increase in net cash received under company-owned life insurance policies.period.

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”. The Dollar Term Loans that were issued on February 24, 2021 and extinguished on June 4, 2024 are referred to as the “2021 Dollar Term Loans”. The newDollar trancheTerm of dollar term loansLoans 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.

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”.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 2026.2026 (as defined below). We issued the 2024 Dollar Term Loans with no discount and incurred third party costs totaling approximately $9.5 million, which have been deferred and will be amortized to interest expense over the remaining term of the related borrowings using the effective interest method. 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).

On June 4, 2024, we also issued new Dollar Senior Notes due 2029 of $500.0 million,million (the “Dollar Senior Notes due 2029”), and fully redeemed our existing Dollar Senior Notes due 2026 of $568.0 million aggregate principal amount,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 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 new Dollar Senior Notes due 2029 using the effective interest method. 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 FebruaryJuly 2024,2025, we made a voluntary principal debt repayment of $100.0 million against our 20212022 Dollar Term Loans. As a result of this repayment, we accelerated the recognition of $1.0$2.8 million of deferred issuance costs (recognized in interest expense).

DollarAmendments Term Loanto credit agreement amendmentsagreements

(2) Post-retirementPostretirement benefit obligations represent our expected cash contributions to defined benefit pension and other post-retirementpostretirement benefit plans in Fiscal 2025.2026. It is not practicable to present expected cash contributions for subsequent years because they are determined annually on an actuarial basis to provide for current and future benefits in accordance with federal law and other regulations.

EBITDA and Adjusted EBITDA

Management uses “Adjusted EBITDA” as its key profitability measure. ThisAdjusted EBITDA is a non-GAAP measure that represents Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), beforeadjusted 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. We use Adjusted EBITDA as our measure of segment profitability to assess the performance of our businesses, and it is used for total Gates as well because we believe it is important to consider our profitability on a basis that is consistent with that of our operating segments, as well as that of certain of our peer companies. 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.

•restructuring expenses, including severance-relatedseverance and restructuring-related expenses;

•credit (gain) loss related to a customer bankruptcy; and

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”)OEMs 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. 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. We sell our products globally under the Gates brand, which is recognized by distributors, equipment manufacturers, installers and end users as a premium brand for quality and technological innovation; this reputation has been built over more than 110 years since Gates’ founding in 1911.

During the threesix months ended MarchJune 28,27, 2026, 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. 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 the threesix months ended MarchJune 28,27, 2026, sales into OEM channels accounted for approximately 32% of our total net sales. First-fitOEM sales are to a variety of industrial and automotive customers. Our industrial OEM customers cover a diverse range of industries and applications and many of our largest first-fitOEM customers manufacture construction and agricultural equipment.

During the threesix months ended MarchJune 28,27, 2026, sales in the personal mobility end market continued to experience strong growth, and our aftermarket channel sales grew modestly, including positive core growth in the industrial aftermarket channel. We continue to focus on managing our business through current economic uncertainties, improving our gross margins through our efforts of material cost savings, footprint optimization and productivity. In the first half of 2026, we expect certain one-time footprint optimization, restructuring, and system implementation costs. We anticipate these and other investments and product development in personal mobility and data center opportunities will position us to drive long term growth and margin expansion.

Results for the three and six months ended MarchJune 28,27, 2026 compared to the results for the three and six months ended MarchJune 29,28, 2025

Net sales during the three months ended MarchJune 28,27, 2026 were $851.1$941.6 million, compared to $847.6$883.7 million during the prior year period, an increase of 0.4%,6.6%, or $3.5$57.9 million. The following table lists the primary drivers behind the change in net sales (amounts in millions):

Cost ofNet sales forduring the threesix months ended MarchJune 28,27, 2026 waswere $513.1$1,792.7 million, compared to $503.0$1,731.3 million forduring the prior year period, an increase of 2.0%,3.5%, or $10.1$61.4 million. The following table lists the primary drivers behind the change in cost ofnet sales (amounts in millions):

Selling, general and administrative (“SG&A”) expenses for the three months ended MarchJune 28,27, 2026 were $226.9$250.7 million compared to $216.2$231.2 million for the prior year period. This increase of $10.7$19.5 million was driven primarily by higher labor and benefits expense of $4.3$5.4 million, unfavorable impacts of exchange rates of $4.8$3.5 million, an increase in depreciation expense of $3.2 million, and higheran consultingincrease andin professionalrestructuring feesexpense of $2.5$2.2 million. This increase was partially offset by lower corporate owned life insurance expense of $2.2$3.0 million.

Transaction-related expenses forof the three months ended March 28, 2026 were $0.5$3.1 million comparedand to $0.4$3.6 million for the prior year period. Transaction-related expenseswere incurred during the three and six months ended MarchJune 28,27, 20262026, wererespectively, primarily related to expenses surrounding the previously disclosed acquisition of the belts business from the Timken company, which is expected to close in the second half of 2026, and certain other corporate transactions. Transaction-related expenses of $0.0 million and $0.4 million were incurred during the three and six months ended MarchJune 29,28, 20252025, respectively, and were primarily related to certain non-recurring debt related costs.

Restructuring expenses during the three and six months ended MarchJune 28,27, 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 related expenses during the three and six months ended MarchJune 28,27, 2026 included $2.4$3.9 million and $6.3 million, respectively, of costs related to the relocation of certain production activities and reorganization of our operations in Mexico and $1.4$5.4 million and $6.8 million, respectively, of costs related to professional service fees and general severance.

Details of our long-term debt are presented in Note 12 to the condensed consolidated financial statements included elsewhere in this report. Interest expense increased by $0.3$1.2 million and $1.5 million during the three and six months ended MarchJune 28,27, 2026, respectively, when compared to the equivalent prior year period, primarily due to a less favorable impact from derivatives, partially offset by lower applicable interest rates on the Dollar Term Loans.

Other expense for the three and six months ended MarchJune 28,27, 2026 was $2.1$1.4 million and $3.5 million, respectively, compared to $2.4$6.8 million and $9.2 million of expense, respectively, for the three and six months ended MarchJune 29,28, 2025. These changes were primarily driven by a financing related gain primarily due to foreign currency exchange rate movement on intercompany loans and hedging instruments. ThisFor the six months ended June 27, 2026, this was partially offset by a pension settlement loss of $5.2 million in March 2026.

For the three months ended MarchJune 28,27, 2026, we had an income tax expensebenefit of $11.5$78.0 million on pre-tax income of $77.9$100.2 million, which resulted in an effective tax rate of 14.8%,(77.8)%, compared to an income tax expense of $25.2$16.8 million on pre-tax income of $93.8$80.2 million, which resulted in an effective tax rate of 26.9%,20.9%, for the three months ended MarchJune 29,28, 2025.

For the threesix months ended MarchJune 28,27, 2026, the effective tax rate was driven primarily by net discrete tax benefits of $6.4$107.1 million, comprised of a discrete tax benefit of $99.0 million related to the changes in realizability of certain deferred tax assets primarily in Luxembourg, $9.1 million related to unrecognized tax benefits, $4.2 million related to the expected refund of research and development credits from prior years, $1.9and $3.0 million related to changesother net discrete tax benefits; offset by $8.2 million related to an audit settlement in realizabilityChina. For the six months ended June 28, 2025, the effective tax rate was driven primarily by net discrete tax benefits of certain$7.1 deferredmillion, taxof assetswhich primarily in Türkiye, $1.1$8.6 million related to excess tax benefits on stock option exercises, and $0.5$3.2 million related to prior year adjustments primarily from various foreign jurisdictions in which returns were filed and $0.6 million other net discrete tax benefits, offset by $1.3$3.2 million related to prior year adjustments, primarily in Türkiye, reflecting tax returns that were filed. For the three months ended March 29, 2025, the effective tax rate was driven primarily by the jurisdictional mix of earnings and by net discrete tax expense of $0.1 million, comprised of a discrete tax benefit of $6.0 million related to excess tax benefits on stock option exercises, and $0.1 million related to other net discrete benefits, offset by discrete expenses of $5.2 million primarily related to changes in the realizability of certain deferred tax assets and $1.0$2.1 million related to net unrecognized tax benefits.

Power Transmission (62.5% and 62.6% of Gates’ net sales for the three and six months ended MarchJune 28,27, 20262026, respectively)

Net sales in Power Transmission for the three months ended MarchJune 28,27, 2026, increased by 1.1%,7.0%, or $6.0$38.4 million, compared to the prior year period, driven primarily by an increase in volume of $20.2 million and benefits from pricing of $11.3$8.7 million, partially offset by lower volumes.million. Our net sales for the three months ended MarchJune 28,27, 2026 were favorably impacted by movements in average currency exchange rates of $19.2$9.5 million. As such, core sales decreasedincreased by 2.5%,5.3%, or $13.2$28.9 million, compared to the prior year period.

Net sales in FluidPower PowerTransmission for the threesix months ended MarchJune 28,27, 20262026, decreasedincreased by 0.8%,4.1%, or $2.5$44.4 million, compared to the prior year period, driven primarily by abenefits decreasefrom inpricing volume,of $20.0 million, partially offset by alower $9.0 million benefit from pricing.volumes. Our net sales for the six months ended June 27, 2026 were favorably impacted by movements in average currency exchange rates of $8.7$28.7 million. As such, core sales decreasedincreased by 3.5%,1.5%, or $11.2$15.7 million, compared to the prior year period.

FluidPower PowerTransmission Adjusted EBITDA for the three months ended MarchJune 28,27, 2026 decreasedincreased by 7.4%,9.8%, or $5.2$12.0 million, compared to the prior year period, driven primarily by loweran volumes,increase partiallyin offset byvolume, benefits from pricing.pricing and favorable manufacturing performance. As a result, the Adjusted EBITDA margin was 20.6%,22.9%, a 14060 basis point declineimprovement from the prior year period.

As market conditions warrant, we may from time to time seek to repurchase securities that we have issued or loans that we have borrowed in privately negotiated or open market transactions, by tender offer or otherwise. Subject to any applicable limitations contained in the agreements governing our indebtedness, any such purchases of ordinarycommon shares or other securities or loans may be funded by existing cash or by incurring new secured or unsecured debt, including borrowings under our credit facilities. The amounts involved in any such purchase transactions, individually or in the aggregate, may be material. Any such purchases of debt securities or loans may relate to a substantial amount of a particular tranche of debt, with a corresponding reduction, where relevant, in the trading liquidity of that debt. In addition, any such purchases of debt made at prices below the “adjusted issue price” (as defined for U.S. federal income tax purposes) may result in taxable cancellation of indebtedness income to us, which may be material, and result in related adverse tax consequences to us.

ThreeSix months ended MarchJune 28,27, 2026 compared to the threesix months ended MarchJune 29,28, 2025

Cash provided by operating activities was $30.2$108.8 million during the threesix months ended MarchJune 28,27, 2026, compared to cash provided by operating activities of $7.3$110.3 million during the prior year period, primarily driven by a $27.8$102.8 million favorableincrease in deferred income taxes, a $17.3 million unfavorable movement in operating assets and liabilities,liabilities partiallyand higher depreciation and amortization expense of $7.3 million, offset by a $2.1$112.8 million decreaseincrease in net income.

Net cash used in investing activities during the threesix months ended MarchJune 28,27, 2026, was $27.2$41.8 million, compared to $31.0$62.0 million in the prior year period. The decrease of cash used in investing activities was primarily driven by decreased capital expenditures of $4.7$15.4 million, partially offset byand a $0.4$5.3 million increasedecrease in net cash paid under company-owned life insurance policies, andpartially $0.7offset by $0.6 million fewer proceeds from the sale of property, plant and equipment.

Net cash used in financing activities was $25.1$50.8 million during the threesix months ended MarchJune 28,27, 2026, compared to $24.6$33.4 million in the prior year period. Current year outflows were primarily related to $16.6$38.7 million paid to acquire shares under our share repurchase program and $8.6$8.7 million of employee taxes paid from shares withheld on exercised options. Prior year outflows were primarily related to $13.0 million paid to acquire shares under our share repurchase program, $4.7 million in debt repayment, and $11.5$16.9 million of employee taxes paid from shares withheld on exercised options.options and $9.4 million in debt repayment.

For the three months ended MarchJune 28,27, 2026, before intercompany eliminations, our non-guarantor subsidiaries represented approximately 74% of our net sales and 70%67% of our EBITDA as defined in the financial covenants attaching to the senior secured credit facilities. As of MarchJune 28,27, 2026, before intercompany eliminations, our non-guarantor subsidiaries represented approximately 69% of our total assets and approximately 27%28% of our total liabilities.

Our secured revolving credit facility that provides for multi-currency revolving loans has a borrowing capacity of $500.0 million and matures on the date that is the earliest of (x) June 4, 2029 and (y) April 1, 2029, if greater than $500.0 million in aggregate principal amount of the Dollar Senior Notes due 2029 are outstanding. As of MarchJune 28,27, 2026, there were letters of credit outstanding against the facility amounting to $28.8$27.8 million. As of MarchJune 28,27, 2026, our total committed borrowing headroom was $471.2$472.2 million, in addition to cash and cash equivalents balances of $785.3$823.5 million.

(3) Other expenses (income) expenses excludes foreign currency transaction losses of $1.5 million and $4.3 million and insurance recoverieslosses of $3.5$1.8 million forand $2.5 million during the three and six months ended MarchJune 28,27, 2026;2026, respectively, and foreign currency transaction losslosses of $1.1$1.0 million forand $2.1 million during the three and six months ended MarchJune 29,28, 2025.2025, respectively.

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. These additional adjustments during the twelve months ended MarchJune 28,27, 2026, as calculated pursuant to such agreements, resulted in a net benefit to Adjusted EBITDA for ratio calculation purposes of $4.3$3.2 million. Pursuant to the terms of the credit agreement governing our revolving credit facility and term loans, the Company may not, subject to certain exceptions, permit its Consolidated First Lien Net Leverage Ratio (as defined in the credit agreement) to exceed 4.50 to 1.00 as of the end of the test period if borrowings under the revolving credit facility exceed a certain threshold. Pursuant to the credit agreement, this ratio is defined as Consolidated First Lien Net Debt (as defined in the credit agreement) divided by Consolidated EBITDA (as defined in the credit agreement). For a description of the other material terms related to our debt agreements, please refer to Note 12 to the condensed consolidated financial statements included elsewhere in this report, and for a discussion of risks related to the compliance or non-compliance with the covenants described herein on the Company’s financial condition and liquidity, please refer to the factors described in Item 1A. “Risk Factors—Risks Related to Our Indebtedness” in Part I of the annual report. During the periods covered by the condensed consolidated financial statements included in this report, we were in compliance with the financial covenant and had no borrowing on the revolving credit facility.

Gates Industrial Corporation plcLtd. is not an obligor under our revolving credit facility, our term loan facility or the indenture governing our outstanding notes. Gates Industrial Holdco Limited, a direct wholly-owned subsidiary of Gates Industrial Corporation plc,Ltd., is the parent guarantor under our revolving credit facility, our term loan facility, and our outstanding notes. 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) an additional net intercompany loan receivable due to Gates Industrial Holdco and its subsidiaries from the Company, which was $238.8$240.7 million and $226.4 million as of MarchJune 28,27, 2026 and December 31, 2025, respectively, (ii) an additional intercompany receivable of $3.7$1.5 million as of MarchJune 28,27, 2026 and an intercompany receivable of $7.5 million as of December 31, 2025, due to Gates Industrial Holdco Limited and its subsidiaries from the Company attributable to UK tax group relief, and (iii) an additional cash and cash equivalents held by the Company, which was $18.1$3.6 million and $10.6$7.4 million as of MarchJune 28,27, 2026 and December 31, 2025, respectively.