Gates Industrial Corporation Ltd. (NYSE:GTES) saw its shares fall approximately 3.24% in pre-market trading on Friday following the release of its third-quarter financial results. Although the global provider of fluid power and power transmission solutions delivered a quarterly beat, investor sentiment was dampened by full-year guidance that disappointed the market.
For the third quarter, the company reported adjusted earnings per share of $0.47, exceeding the analyst consensus of $0.43 by four cents. Revenue climbed 5.6% year-over-year to reach $903.6 million, surpassing the estimated $898.84 million. Despite these positive quarterly figures, the company's raised full-year adjusted EPS guidance of $1.66 to $1.72 missed the consensus expectation of $1.68, with a midpoint of $1.69 representing only a marginal improvement.
CEO Ivo Jurek highlighted strong execution during the quarter, noting mid-single digit sales growth and a significant increase in gross profit margins compared to the prior year period. He pointed out that sales within the Industrial OEM channel grew by high-teens percentages, while year-over-year growth in the Industrial Aftermarket channel accelerated relative to the previous quarter.
Segment performance showed solid gains across the board. The Power Transmission segment generated $560.1 million in revenue, a 5.0% increase from the prior-year quarter, with core sales growth of 5.2%. Adjusted EBITDA for this segment reached $137.1 million, reflecting a margin of 24.5%, which is up 160 basis points year-over-year. Meanwhile, the Fluid Power segment posted revenue of $343.5 million, up 6.5% from the previous year, with adjusted EBITDA of $78.3 million and a margin of 22.8%.
Looking ahead to fiscal 2026, Gates adjusted its full-year adjusted EBITDA guidance to a range of $809 million to $823 million, narrowing from the previous range of $800 million to $830 million. The company maintained its outlook for core sales growth between 3.2% and 3.8%.
Sources: Investing.com News.