The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and related notes thereto included elsewhere in this quarterly report. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management’s expectations. Factors that could cause such differences are discussed in “Cautionary Note Regarding Forward-Looking Statements” above and Part I, Item 1A. “Risk Factors” in our annual report. Our Company 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 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. 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, aftermarket 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. Business Trends 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 aftermarket 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 the six months ended June 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 six months ended June 27, 2026, sales into OEM channels accounted for approximately 32% of our total net sales. OEM 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 OEM customers manufacture construction and agricultural equipment. During the six months ended June 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. 30 On February 20, 2026, the U.S. Supreme Court issued a ruling addressing the validity of certain tariffs implemented under the International Emergency Economic Powers Act ("IEEPA"). In March 2026, the U.S. Court of International Trade issued an additional ruling that importers that paid tariffs under IEEPA are due refunds. We paid tariffs during fiscal years 2025 and 2026 on certain imported products and materials that were subject to these IEEPA‑based duties. The Company submitted refund claims in the second quarter of 2026 and recognized a receivable for these claims. The Company is evaluating the disposition and potential pass-through of refunds to customers that were charged for tariffs related to these refunds. The ultimate receipt and disposition of IEEPA refunds is not material to the Company’s financial results. Our global operating footprint and worldwide sales reach expose us to risks associated with geopolitical tensions and trade conflicts. Global trade conflicts due to recent U.S. and retaliatory tariffs and geopolitical tensions, including the conflict in the Middle East, have led to, and may continue to lead to, inflationary pressures, supply chain disruptions, uncertainty, and volatility in the market and, therefore, could impact our operations and financial performance. As the geopolitical climate continues to evolve, we could have additional exposures in the future. We will continue to monitor and evaluate risks related to geopolitical tensions and trade conflicts and any resulting impact on macroeconomic conditions and our business. Results for the three and six months ended June 27, 2026 compared to the results for the three and six months ended June 28, 2025 Summary Gates Performance Three months ended Six months ended (dollars in millions) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Net sales $ 941.6 $ 883.7 $ 1,792.7 $ 1,731.3 Cost of sales 555.5 523.5 1,068.6 1,026.5 Gross profit 386.1 360.2 724.1 704.8 Selling, general and administrative expenses 250.7 231.2 477.6 447.4 Transaction-related expenses 3.1 — 3.6 0.4 Asset impairments — 0.2 — 0.8 Restructuring expenses 0.7 13.0 1.4 14.6 Operating income from continuing operations 131.6 115.8 241.5 241.6 Interest expense 30.0 28.8 59.9 58.4 Other expense 1.4 6.8 3.5 9.2 Income from continuing operations before taxes 100.2 80.2 178.1 174.0 Income tax (benefit) expense (78.0) 16.8 (66.5) 42.0 Net income from continuing operations $ 178.2 $ 63.4 $ 244.6 $ 132.0 Adjusted EBITDA(1) $ 211.4 $ 199.2 $ 388.8 $ 386.5 (1) See “—Non-GAAP Measures” for a reconciliation of Adjusted EBITDA to net income, the closest comparable GAAP measure, for each of the periods presented. Net sales Net sales during the three months ended June 27, 2026 were $941.6 million, compared to $883.7 million during the prior year period, an increase of 6.6%, or $57.9 million. The following table lists the primary drivers behind the change in net sales (amounts in millions): Power Transmission Fluid Power Total Company Three months ended June 28, 2025 $ 550.1 $ 333.6 $ 883.7 Currency translation 9.5 5.5 15.0 Volume 20.2 2.9 23.1 Pricing 8.7 11.1 19.8 Three months ended June 27, 2026 $ 588.5 $ 353.1 $ 941.6 31 Net sales during the six months ended June 27, 2026 were $1,792.7 million, compared to $1,731.3 million during the prior year period, an increase of 3.5%, or $61.4 million. The following table lists the primary drivers behind the change in net sales (amounts in millions): Power Transmission Fluid Power Total Company Six months ended June 28, 2025 $ 1,077.3 $ 654.0 $ 1,731.3 Currency translation 28.7 14.2 42.9 Volume (4.3) (17.3) (21.6) Pricing 20.0 20.1 40.1 Six months ended June 27, 2026 $ 1,121.7 $ 671.0 $ 1,792.7 Cost of sales Cost of sales for the three months ended June 27, 2026 was $555.5 million, compared to $523.5 million for the prior year period, an increase of 6.1%, or $32.0 million. The following table lists the primary drivers behind the change in cost of sales (amounts in millions): Three months ended June 28, 2025 $ 523.5 Currency translation 6.2 Volume 16.3 Manufacturing performance (6.5) Mix (0.2) Inflation 7.8 Tariff 6.9 Inventory impairments and adjustments (0.3) Restructuring 2.8 Other (1.0) Three months ended June 27, 2026 $ 555.5 Cost of sales for the six months ended June 27, 2026 was $1,068.6 million, compared to $1,026.5 million for the prior year period, an increase of 4.1%, or $42.1 million. The following table lists the primary drivers behind the change in cost of sales (amounts in millions): Six months ended June 28, 2025 $ 1,026.5 Currency translation 21.2 Volume 21.7 Manufacturing performance (37.0) Mix (2.0) Inflation 16.0 Tariff 15.6 Inventory impairments and adjustments 4.6 Restructuring 4.1 Other (2.1) Six months ended June 27, 2026 $ 1,068.6 Selling, general and administrative expenses Selling, general and administrative (“SG&A”) expenses for the three months ended June 27, 2026 were $250.7 million compared to $231.2 million for the prior year period. This increase of $19.5 million was driven primarily by higher labor and benefits expense of $5.4 million, unfavorable impacts of exchange rates of $3.5 million, an increase in depreciation expense of $3.2 million, and an increase in restructuring expense of $2.2 million. This increase was partially offset by lower corporate owned life insurance expense of $3.0 million. 32 SG&A expenses for the six months ended June 27, 2026 were $477.6 million compared to $447.4 million for the prior year period. This increase of $30.2 million was driven primarily by higher labor and benefits expense of $9.7 million, unfavorable impacts of exchange rates of $9.6 million, an increase in depreciation expense of $5.4 million and higher consulting and professional fees of $3.1 million. This increase was partially offset by lower corporate owned life insurance expense of $5.2 million. Transaction-related expenses Transaction-related expenses of $3.1 million and $3.6 million were incurred during the three and six months ended June 27, 2026, respectively, 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 June 28, 2025, respectively, and were primarily related to certain non-recurring debt related costs. Restructuring expenses 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 related expenses during the three and six months ended June 27, 2026 included $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 $5.4 million and $6.8 million, respectively, of costs related to professional service fees and general severance. 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 related expenses during the three and six months ended June 28, 2025 included $1.3 million and $2.3 million, respectively, of costs related to the relocation of certain production activities and reorganization of our operations in Mexico and $3.0 million and $4.7 million, respectively, of costs related to professional service fees and general severance. Interest expense Our interest expense was as follows: Three months ended Six months ended (dollars in millions) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Debt: Dollar Term Loans $ 18.0 $ 15.6 $ 35.3 $ 32.3 Dollar Senior Notes 8.5 8.5 16.9 17.2 26.5 24.1 52.2 49.5 Amortization of deferred issuance costs 1.5 1.7 3.0 3.2 Other interest expense 2.0 3.0 4.7 5.7 $ 30.0 $ 28.8 $ 59.9 $ 58.4 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 $1.2 million and $1.5 million during the three and six months ended June 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. 33 Other expense Our other expense was as follows: Three months ended Six months ended (dollars in millions) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Interest income on bank deposits $ (2.5) $ (2.6) $ (4.7) $ (4.8) Foreign currency transaction loss (gain), net 1.5 1.0 4.3 2.1 Net adjustments related to post-retirement benefits 0.2 0.5 5.6 0.9 Foreign currency loss on hyperinflation remeasurement 1.2 1.0 1.4 2.0 Other 1.0 6.9 (3.1) 9.0 $ 1.4 $ 6.8 $ 3.5 $ 9.2 Other expense for the three and six months ended June 27, 2026 was $1.4 million and $3.5 million, respectively, compared to $6.8 million and $9.2 million of expense, respectively, for the three and six months ended June 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. For the six months ended June 27, 2026, this was partially offset by a pension settlement loss of $5.2 million in March 2026. Income tax expense 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 related to changes in the realizability of certain deferred tax assets, offset by $0.6 million of other net discrete tax expenses. For the six months ended June 27, 2026, we had an income tax benefit of $66.5 million on pre-tax income of $178.1 million, which resulted in an effective tax rate of (37.3)%, compared to an income tax expense of $42.0 million on pre-tax income of $174.0 million, which resulted in an effective tax rate of 24.1%, for the six months ended June 28, 2025. For the six months ended June 27, 2026, the effective tax rate was driven primarily by net discrete tax benefits of $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, and $3.0 million related to other net discrete tax benefits; offset by $8.2 million related to an audit settlement in China. For the six months ended June 28, 2025, the effective tax rate was driven primarily by net discrete tax benefits of $7.1 million, of which $8.6 million related to excess tax benefits on stock option exercises, $3.2 million related to prior year adjustments primarily from various foreign jurisdictions in which returns were filed and $0.6 million other discrete tax benefits, offset by $3.2 million related to changes in the realizability of certain deferred tax assets and $2.1 million related to net unrecognized tax benefits. 34 In connection with facilitating the Redomiciliation, the Company recognized a tax benefit from the reduction of a valuation allowance on certain foreign deferred tax assets that are expected to be used in future periods. As a result, beginning the second quarter of 2026, the Company’s effective tax rate decreased, and is expected to be followed by an increase during the period in which the foreign deferred tax asset is utilized. Because these items are non-cash in nature and resulted from the non-recurring Redomiciliation rather than the Company’s ordinary operations, the resulting tax benefit in the three months ended June 27, 2026 is not, and the expected tax detriment in future periods will not be, reflected in certain of the Company’s non-GAAP measures, including adjusted net income and the adjusted effective tax rate. Deferred Tax Assets and Liabilities We recognize deferred tax assets and liabilities for future tax consequences arising from differences between the carrying amounts of existing assets and liabilities under U.S. GAAP and their respective tax bases, and for net operating loss carryforwards and tax credit carryforwards. We evaluate the recoverability of our deferred tax assets, weighing all positive and negative evidence, and are required to establish or maintain a valuation allowance for these assets if we determine that it is more likely than not that some or all of the deferred tax assets will not be realized. As of each reporting date, we consider new evidence, both positive and negative, that could impact our view with regard to the future realization of deferred tax assets. We will maintain our positions with regard to future realization of deferred tax assets, including those with respect to which we continue maintaining valuation allowances, until there is sufficient new evidence to support a change in expectations. Such a change in expectations could arise due to many factors, including those impacting our forecasts of future earnings, as well as changes in the international tax laws under which we operate and tax planning. It is not reasonably possible to forecast any such changes at the present time, but it is possible that, should they arise, our view of their effect on the future realization of deferred tax assets may materially impact our financial statements. After weighing all of the evidence, giving more weight to the evidence that was objectively verifiable, we determined that, as of June 27, 2026, it is more likely than not that deferred tax assets in Luxembourg totaling $108.6 million are realizable as a result of facilitating the Redomiciliation which increased Luxembourg’s projected earnings. Accordingly, we recognized $96.6 million of our deferred tax assets as a discrete event in the quarter, while the remaining $12.0 million will be recognized during the year through the effective tax rate. As a result of changes in future taxable profits against which net operating losses and interest carryforward can be utilized, our position and judgment regarding the realizability of these deferred tax assets changed. Analysis by Operating Segment Power Transmission (62.5% and 62.6% of Gates’ net sales for the three and six months ended June 27, 2026, respectively) Three months ended (dollars in millions) June 27, 2026 June 28, 2025 Period over period change Net sales $ 588.5 $ 550.1 7.0 % Adjusted EBITDA $ 134.8 $ 122.8 9.8 % Adjusted EBITDA margin 22.9 % 22.3 % Six months ended (dollars in millions) June 27, 2026 June 28, 2025 Period over period change Net sales $ 1,121.7 $ 1,077.3 4.1 % Adjusted EBITDA $ 246.8 $ 239.5 3.0 % Adjusted EBITDA margin 22.0 % 22.2 % Net sales in Power Transmission for the three months ended June 27, 2026, increased by 7.0%, or $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 $8.7 million. Our net sales for the three months ended June 27, 2026 were favorably impacted by movements in average currency exchange rates of $9.5 million. As such, core sales increased by 5.3%, or $28.9 million, compared to the prior year period. 35 Net sales in Power Transmission for the six months ended June 27, 2026, increased by 4.1%, or $44.4 million, compared to the prior year period, driven primarily by benefits from pricing of $20.0 million, partially offset by lower volumes. Our net sales for the six months ended June 27, 2026 were favorably impacted by movements in average currency exchange rates of $28.7 million. As such, core sales increased by 1.5%, or $15.7 million, compared to the prior year period. Power Transmission’s core sales to industrial customers increased by 9.0% and 6.3% during the three and six months ended June 27, 2026, respectively, compared to the prior year periods. Industrial OEM core sales increased by 13.6% and 10.4% during the three and six months ended June 27, 2026, respectively, particularly in APAC and EMEA. Core sales in the automotive end markets increased by 3.1% during the three months ended June 27, 2026, and decreased by 1.4% during the six months ended June 27, 2026. During the three months ended June 27, 2026, the growth in industrial sales were focused in personal mobility and on highway, which increased by 25.5% and 25.9% respectively. During the six months ended June 27, 2026, the growth in industrial sales were focused in personal mobility and on highway, which increased by 19.8% and 18.7%, respectively. The growth in personal mobility and on highway were primarily focused in EMEA and APAC. Power Transmission Adjusted EBITDA for the three months ended June 27, 2026 increased by 9.8%, or $12.0 million, compared to the prior year period, driven primarily by an increase in volume, benefits from pricing and favorable manufacturing performance. As a result, Adjusted EBITDA margin was 22.9%, a 60 basis point improvement from the prior year period. Power Transmission Adjusted EBITDA for the six months ended June 27, 2026 increased by 3.0%, or $7.3 million, compared to the prior year period, driven primarily by favorable manufacturing performance, benefits from pricing and favorable impacts in average currency exchange rates, partially offset by lower volume, increased spend in SG&A and inflationary impacts. As a result, Adjusted EBITDA margin was 22.0%, a 20 basis point decline from the prior year period. Fluid Power (37.5% and 37.4% of Gates’ net sales for the three and six months ended June 27, 2026, respectively) Three months ended (dollars in millions) June 27, 2026 June 28, 2025 Period over period change Net sales $ 353.1 $ 333.6 5.8 % Adjusted EBITDA $ 76.6 $ 76.4 0.3 % Adjusted EBITDA margin 21.7 % 22.9 % Six months ended (dollars in millions) June 27, 2026 June 28, 2025 Period over period change Net sales $ 671.0 $ 654.0 2.6 % Adjusted EBITDA $ 142.0 $ 147.0 (3.4 %) Adjusted EBITDA margin 21.2 % 22.5 % Net sales in Fluid Power for the three months ended June 27, 2026 increased by 5.8%, or $19.5 million, compared to the prior year period, driven primarily by an $11.1 million benefit from pricing and favorable impacts in average currency exchange rates of $5.5 million. As such, core sales increased by 4.2%, or $14.0 million, compared to the prior year period. Net sales in Fluid Power for the six months ended June 27, 2026 increased by 2.6%, or $17.0 million, compared to the prior year period, driven primarily by a $20.1 million benefit from pricing, partially offset by lower volumes. Our net sales for the six months ended June 27, 2026 were favorably impacted by movements in average currency exchange rates of $14.2 million. As such, core sales increased by 0.4%, or $2.8 million, compared to the prior year period. Fluid Power’s core sales to industrial customers increased by 5.6% during the three months ended June 27, 2026, and remained flat for the six months ended June 27, 2026. The growth to industrial customers was primarily driven by industrial OEM core sales, which increased by 11.3% and 2.7% for the three and six months ended June 27, 2026, respectively, particularly in APAC. Fluid Power’s core sales to automotive customers increased by 0.3% and 1.7% for the three and six months ended June 27, 2026, respectively. This increase was driven primarily from automotive aftermarket, particularly in the Americas. Fluid Power Adjusted EBITDA for the three months ended June 27, 2026 increased by 0.3%, or $0.2 million, compared to the prior year period, driven primarily by lower volumes and inflationary impacts, partially offset by benefits from pricing. As a result, the Adjusted EBITDA margin was 21.7%, a 120 basis point decline from the prior year period. 36 Fluid Power Adjusted EBITDA for the six months ended June 27, 2026 decreased by 3.4%, or $5.0 million, compared to the prior year period, driven primarily by lower volumes and inflationary impacts, partially offset by benefits from pricing. As a result, the Adjusted EBITDA margin was 21.2%, a 130 basis point decline from the prior year period. Liquidity and Capital Resources Treasury Responsibilities and Philosophy Our primary liquidity and capital resource needs are for working capital, debt service requirements, capital expenditures, share repurchases, facility expansions and acquisitions. We expect to finance our future cash requirements with cash on hand, cash flows from operations and, where necessary, borrowings under our secured revolving credit facility. We have historically relied on our cash flow from operations and various debt and equity financings for liquidity. From time to time, we enter into currency derivative contracts to manage currency transaction exposures. Similarly, from time to time, we may enter into interest rate derivatives to maintain the desired mix of floating and fixed rate debt. 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 common 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. It is our policy to retain sufficient liquidity throughout the capital expenditure cycle to maintain our financial flexibility. We do not have any meaningful debt maturities until 2029; however, we regularly evaluate market conditions, our liquidity profile, and various financing alternatives for opportunities to enhance our capital structure, and may refinance all or a portion of our indebtedness on or before maturity. We do not anticipate any material long-term deterioration in our overall liquidity position in the foreseeable future, and believe that we have adequate liquidity and capital resources for the next twelve months. Cash Flow Six months ended June 27, 2026 compared to the six months ended June 28, 2025 Cash provided by operating activities was $108.8 million during the six months ended June 27, 2026, compared to cash provided by operating activities of $110.3 million during the prior year period, primarily driven by a $102.8 million increase in deferred income taxes, a $17.3 million unfavorable movement in operating assets and liabilities and higher depreciation and amortization expense of $7.3 million, offset by a $112.8 million increase in net income. Net cash used in investing activities during the six months ended June 27, 2026, was $41.8 million, compared to $62.0 million in the prior year period. The decrease of cash used in investing activities was primarily driven by decreased capital expenditures of $15.4 million, and a $5.3 million decrease in net cash paid under company-owned life insurance policies, partially offset by $0.6 million fewer proceeds from the sale of property, plant and equipment. Net cash used in financing activities was $50.8 million during the six months ended June 27, 2026, compared to $33.4 million in the prior year period. Current year outflows were primarily related to $38.7 million paid to acquire shares under our share repurchase program and $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, $16.9 million of employee taxes paid from shares withheld on exercised options and $9.4 million in debt repayment. 37 Indebtedness Our long-term debt, consisting principally of secured term loans and the U.S. dollar denominated unsecured senior notes, was as follows: Carrying amount Principal amount (dollars in millions) As ofJune 27, 2026 As ofDecember 31, 2025 As ofJune 27, 2026 As ofDecember 31, 2025 Secured debt: —2024 Dollar Term Loans due June 4, 2031 $ 1,274.9 $ 1,276.2 $ 1,280.5 $ 1,283.8 —2022 Dollar Term Loans due November 16, 2029 446.6 444.7 454.8 456.3 Unsecured debt: —6.875% Dollar Senior Notes due July 1, 2029 512.0 511.6 500.0 500.0 $ 2,233.5 $ 2,232.5 $ 2,235.3 $ 2,240.1 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 are referred to as the “2021 Dollar Term Loans”, which were extinguished on June 4, 2024. The new tranche of dollar term loans that were issued on June 4, 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 are referred to as the “2022 Dollar Term Loans.” Details of our long-term debt are presented in Note 12 to the condensed consolidated financial statements included elsewhere in this quarterly report. Amendments to credit agreements On January 21, 2025, we amended our credit agreement to lower the margin with respect to the Revolving Credit Loans by 50 basis points compared to the previous term. The Revolving Credit Loans bear interest at our option either Term SOFR (subject to a floor of —%) plus a margin of 1.75% per annum or the base rate plus 0.75% per annum. The applicable margin for the Revolving Credit Facility borrowings will be subject to one 25 basis point step down determined in accordance with Gates Industrial Holdco Limited achieving a certain consolidated first lien net leverage level. Non-guarantor subsidiaries The majority of the Company’s U.S. subsidiaries are guarantors of the senior secured credit facilities. For the three months ended June 27, 2026, before intercompany eliminations, our non-guarantor subsidiaries represented approximately 74% of our net sales and 67% of our EBITDA as defined in the financial covenants attaching to the senior secured credit facilities. As of June 27, 2026, before intercompany eliminations, our non-guarantor subsidiaries represented approximately 69% of our total assets and approximately 28% of our total liabilities. Borrowing Headroom 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 June 27, 2026, there were letters of credit outstanding against the facility amounting to $27.8 million. As of June 27, 2026, our total committed borrowing headroom was $472.2 million, in addition to cash and cash equivalents balances of $823.5 million. 38 Non-GAAP Measures Adjusted EBITDA Management uses “Adjusted EBITDA” as its key profitability measure. Adjusted EBITDA is a non-GAAP measure that represents Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”), adjusted 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. Differences exist among our businesses and from period to period in the extent to which their respective employees receive share-based compensation or a charge for such compensation is recognized. We therefore exclude from Adjusted EBITDA the non-cash charges in relation to share-based compensation in order to assess the relative performance of our businesses. We exclude from Adjusted EBITDA acquisition-related costs that are required to be expensed in accordance with U.S. GAAP. We also exclude costs associated with major corporate transactions because we do not believe that they relate to our performance. Other items are excluded from Adjusted EBITDA because they are individually or collectively significant items that are not considered to be representative of the underlying performance of our businesses. During the periods presented, the items excluded from EBITDA in computing Adjusted EBITDA primarily included: •transaction-related expenses incurred in relation to major corporate transactions, including the acquisition of businesses and related integration activities, and equity and debt transactions; •non-cash charges in relation to share-based compensation; •inventory adjustments related to certain inventories accounted for on a LIFO basis; •asset impairments; •restructuring expenses, including severance and restructuring-related expenses; and •other expenses (income), excluding foreign currency transaction gain or loss and insurance recoveries. We excluded changes in the LIFO inventory reserve recognized in cost of sales for certain inventories that are valued on a LIFO basis. During inflationary or deflationary pricing environments, LIFO adjustments can result in variability of the cost of sales recognized each period as the most recent costs are matched against current sales, while historical, typically lower, costs are retained in inventory. LIFO adjustments are determined based on published pricing indices, which often are not representative of the actual cost changes or timing of those changes as experienced by our business. Excluding the impact from the application of LIFO therefore improves the comparability of our financial performance from period to period and with the Company’s peers, and more closely represents the physical flow of our inventory and how we manage the business. Adjusted EBITDA excludes items that can have a significant effect on our profit or loss and should, therefore, be used in conjunction with, not as substitutes for, profit or loss for the period. Management compensates for these limitations by separately monitoring net income from continuing operations for the period. 39 The following table reconciles net income to Adjusted EBITDA: Three months ended Six months ended (dollars in millions) June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Net income $ 178.0 $ 63.1 $ 244.2 $ 131.4 Loss on disposal of discontinued operations 0.2 0.3 0.4 0.6 Income tax (benefit) expense (78.0) 16.8 (66.5) 42.0 Interest expense 30.0 28.8 59.9 58.4 Depreciation and amortization 57.1 53.3 112.8 105.5 Share-based compensation expense 9.4 9.6 15.7 15.7 Transaction-related expenses (1) 3.1 — 3.6 0.4 Inventory adjustments (included in cost of sales) (2) 3.6 4.0 7.6 3.0 Restructuring expenses 0.7 13.0 1.4 14.6 Restructuring related expenses (included in cost of sales) 4.0 1.2 6.5 2.4 Restructuring related expenses (included in SG&A) 5.3 3.1 6.6 4.6 Asset impairments — 0.2 — 0.8 Other expense, excluding foreign currency transaction gain or loss and insurance recoveries (3) (2.0) 5.8 (3.4) 7.1 Adjusted EBITDA $ 211.4 $ 199.2 $ 388.8 $ 386.5 (1) Transaction-related expenses relate primarily to advisory fees and other costs recognized in respect of major corporate transactions, including the acquisition of businesses, and equity and debt transactions. (2) Inventory adjustments includes the reversal of the adjustment to remeasure certain inventories on a LIFO basis. (3) Other(income) expenses excludes foreign currency transaction losses of $1.5 million and $4.3 million and insurance losses of $1.8 million and $2.5 million during the three and six months ended June 27, 2026, respectively, and foreign currency transaction losses of $1.0 million and $2.1 million during the three and six months ended June 28, 2025, respectively. Core sales growth reconciliations Core sales is a non-GAAP measure that represents net sales for the period excluding the impacts of movements in average currency exchange rates and the first-year impacts of acquisitions and disposals, when applicable. Core sales growth is the change in core sales expressed as a percentage of prior period net sales. We present core sales growth because it allows for a meaningful comparison of year-over-year performance without the volatility caused by foreign currency gains or losses or the incomparability that would be caused by impacts of acquisitions or disposals. Management believes that this measure is therefore useful for securities analysts, investors and other interested parties to assist in their assessment of the operating performance of our businesses. The closest GAAP measure is net sales. Three months ended June 27, 2026 (dollars in millions) Power Transmission Fluid Power Total Net sales for the three months ended June 27, 2026 $ 588.5 $ 353.1 $ 941.6 Impact on net sales of movements in currency rates (9.5) (5.5) (15.0) Core sales for the three months ended June 27, 2026 $ 579.0 $ 347.6 $ 926.6 Net sales for the three months ended June 28, 2025 $ 550.1 $ 333.6 $ 883.7 Increase in net sales 38.4 19.5 57.9 Increase in net sales on a core basis (core sales) 28.9 14.0 42.9 Net sales increase 7.0 % 5.8 % 6.6 % Core sales increase 5.3 % 4.2 % 4.9 % 40 Six months ended June 27, 2026 (dollars in millions) Power Transmission Fluid Power Total Net sales for the six months ended June 27, 2026 $ 1,121.7 $ 671.0 $ 1,792.7 Impact on net sales of movements in currency rates (28.7) (14.2) (42.9) Core sales for the six months ended June 27, 2026 $ 1,093.0 $ 656.8 $ 1,749.8 Net sales for the six months ended June 28, 2025 $ 1,077.3 $ 654.0 $ 1,731.3 Increase in net sales 44.4 17.0 61.4 Increase in net sales on a core basis (core sales) 15.7 2.8 18.5 Net sales increase 4.1 % 2.6 % 3.5 % Core sales increase 1.5 % 0.4 % 1.1 % Adjusted EBITDA adjustments for ratio calculation purposes 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 June 27, 2026, as calculated pursuant to such agreements, resulted in a net benefit to Adjusted EBITDA for ratio calculation purposes of $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 Ltd. 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 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 $240.7 million and $226.4 million as of June 27, 2026 and December 31, 2025, respectively, (ii) an additional intercompany receivable of $1.5 million as of June 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 $3.6 million and $7.4 million as of June 27, 2026 and December 31, 2025, respectively. Critical Accounting Estimates and Judgments Our management’s discussion and analysis of financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions concerning the future that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reported period. 41 Please refer to “Critical Accounting Estimates and Judgments” described in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as filed with the SEC, from which there have been no material changes.