10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 28, 2024

or

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____ to ____

Commission file number 001-38366

Gates Industrial Corporation plc

(Exact Name of Registrant as Specified in its Charter)

England and Wales	98-1395184
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1144 Fifteenth Street, Denver, Colorado 80202

(Address of principal executive offices) (Zip Code)

(303) 744-1911

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary Shares, $0.01 par value per share	GTES	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  ☒ No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  ☒ No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ☐ No  ☒

As of October 28, 2024, there were 254,717,843 ordinary shares of $0.01 par value outstanding.

TABLE OF CONTENTS

Part I – Financial Information
Item 1.	Financial Statements (unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44
Item 4.	Controls and Procedures	45
Part II – Other Information
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	46
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	46
Item 5.	Other Information	46
Item 6.	Exhibits	47
Signatures		48

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “quarterly report” or “report”) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that reflect our current views with respect to, among other things, our operations and financial performance. Forward-looking statements include all statements that are not historical facts. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “predicts,” “intends,” “trends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those expressed in or implied by our forward-looking statements, including but not limited to the factors described in Item 1A. “Risk Factors” in Part I of the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023 (the “annual report”), as filed with the Securities and Exchange Commission (the “SEC”), which include the following: economic, political and other risks associated with international operations; availability of raw materials or other manufacturing inputs at favorable prices in sufficient quantities, or at a given time; changes in our relationships with, or the financial condition, performance, purchasing power or inventory levels of, key channel partners; catastrophic events, including global pandemics; dependence on the continued operation of our manufacturing facilities, supply chains, distribution systems and information technology systems; our ability to forecast demand or meet significant increases in demand; our cost-reduction actions; market acceptance of new product introductions and innovations; longer lives of products used in our end markets may affect demand for some of our replacement products; development of the replacement market in emerging markets may limit our ability to grow; pursuit of strategic transactions, including acquisitions, divestitures, restructurings, joint ventures, strategic alliances or investments, which could create risks and present unforeseen integration obstacles or costs; our investments in joint ventures; loss or financial instability of any significant customer; societal responses to sustainability issues, including those related to climate change; the ability to maintain and enhance our strong brand; pricing pressures from customers; cyber-security vulnerabilities, threats, and more sophisticated and targeted computer crimes; failure of information systems; highly complex and rapidly evolving global privacy, data protection and data security requirements; existing or new laws and regulations, including but not limited to those relating to health, safety, and environmental concerns, and the sale of aftermarket products; failure to comply with anti-corruption laws and other laws governing our international operations; recalls, product liability claims or product warranties claims; failure to develop, obtain, enforce and protect our intellectual property rights in all jurisdictions throughout the world; infringement on the intellectual property of others; litigation, legal and regulatory proceedings and obligations, and the availability and coverage of insurance; loss of senior management or key personnel; work stoppages and other labor matters; potential requirement to make additional cash contributions to our defined benefit pension plans; change in our effective tax rates or additional tax liabilities; change in tax laws; tax authorities may no longer treat us as being exclusively a resident of the U.K. for tax purposes; and our substantial leverage, including interest rate risk; and the influence of Blackstone (as defined herein) over us, as such factors may be updated from time to time in the Company’s periodic filings with the SEC. Investors are urged to consider carefully the disclosure in this report and our other filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this report and in our other periodic filings. Gates undertakes no obligation to update or supplement any forward-looking statements as a result of new information, future events or otherwise, except as required by law.

Website Disclosure

We use our website (www.gates.com) as a channel of distribution of company information. The information we post through this channel may be deemed material. Accordingly, investors should monitor this channel, in addition to following our press releases, SEC filings and public conference calls, and webcasts. In addition, you may automatically receive email alerts and other information about Gates Industrial Corporation when you enroll your email address by visiting the “Investor Resources—Email Alerts” section of our website at https://investors.gates.com. The contents of our website and any alerts are not, however, a part of this report.

ABOUT THIS QUARTERLY REPORT

Financial Statement Presentation

Gates Industrial Corporation plc is a public limited company that was incorporated under the Companies Act 2006 on September 25, 2017 and is registered in England and Wales.

Certain monetary amounts, percentages and other figures included elsewhere in this quarterly report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables or charts may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.

All amounts in this quarterly report are expressed in United States of America (the “U.S.”) dollars, unless indicated otherwise.

Certain Definitions

As used in this quarterly report, unless otherwise noted or the context requires otherwise:

•“Gates,” the “Company,” “we,” “us” and “our” refer to Gates Industrial Corporation plc and its consolidated subsidiaries;

•“Blackstone” refers to investment funds affiliated with Blackstone Inc., which together own approximately 8.4% of our outstanding ordinary shares as of September 28, 2024; and

•    “Board” refers to the board of directors of Gates Industrial Corporation plc.

PART I — FINANCIAL INFORMATION

Item 1: Financial Statements (unaudited)

Gates Industrial Corporation plc

Unaudited Condensed Consolidated Statements of Operations

	Three months ended				Nine months ended
(dollars in millions, except per share amounts)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net sales	$	830.7	$	872.9	$	2,578.8	$	2,706.9
Cost of sales	494.9		529.5		1,555.6		1,685.7
Gross profit	335.8		343.4		1,023.2		1,021.2
Selling, general and administrative expenses	219.9		213.4		649.9		666.2
Transaction-related expenses	0.5		1.3		2.1		2.1
Asset impairments	—		0.1		—		0.1
Restructuring expenses	2.2		2.6		5.0		10.3
Other operating expenses	—		0.1		0.1		0.2
Operating income from continuing operations	113.2		125.9		366.1		342.3
Interest expenses	35.1		39.5		121.7		124.8
Loss on deconsolidation of Russian subsidiary	12.8		—		12.8		—
Other (income) expenses	(3.9)		(0.2)		(8.5)		3.8
Income from continuing operations before taxes	69.2		86.6		240.1		213.7
Income tax expense	14.0		1.0		60.8		25.9
Net income from continuing operations	55.2		85.6		179.3		187.8
Loss on disposal of discontinued operations, net of tax, respectively, of $0, $0, $0 and $0	0.1		0.1		0.5		0.5
Net income	55.1		85.5		178.8		187.3
Less: non-controlling interests	7.5		6.8		20.5		17.3
Net income attributable to shareholders	$	47.6	$	78.7	$	158.3	$	170.0
Earnings per share
Basic
Earnings per share from continuing operations	$	0.18	$	0.30	$	0.61	$	0.62
Earnings per share from discontinued operations	—		—		—		—
Earnings per share	$	0.18	$	0.30	$	0.61	$	0.62
Diluted
Earnings per share from continuing operations	$	0.18	$	0.29	$	0.60	$	0.61
Earnings per share from discontinued operations	—		—		—		—
Earnings per share	$	0.18	$	0.29	$	0.60	$	0.61

The accompanying notes form an integral part of these condensed consolidated financial statements.

1

Gates Industrial Corporation plc

Unaudited Condensed Consolidated Statements of Comprehensive Income

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net income	$	55.1	$	85.5	$	178.8	$	187.3
Other comprehensive income (loss)
Foreign currency translation:
—Net translation gain (loss) on foreign operations, net of tax benefit, respectively, of $0.3, $4.0, $3.6 and $1.8	101.1		(87.7)		(59.5)		(5.4)
—(Loss) gain on net investment hedges, net of tax benefit (expense), respectively, of $0.3, $(3.7), $(3.6) and $0.1	(49.8)		20.2		(27.8)		1.9
Total foreign currency translation movements	51.3		(67.5)		(87.3)		(3.5)
Cash flow hedges (interest rate derivatives):
—(Loss) gain arising in the period, net of tax benefit (expense), respectively, of $4.3, $(2.9), $(0.1) and $(6.3)	(12.7)		8.5		0.3		18.7
—Reclassification to net income, net of tax benefit, respectively, of $2.3, $2.2, $6.8 and $3.8	(6.7)		(6.7)		(20.2)		(11.3)
Total cash flow hedges movements	(19.4)		1.8		(19.9)		7.4
Post-retirement benefits:
—Reclassification of prior year actuarial movements to net income, net of tax benefit, respectively, of $0.1, $0.3, $0.4 and $0.7	(0.5)		(0.6)		(1.4)		(1.9)
Total post-retirement benefits movements	(0.5)		(0.6)		(1.4)		(1.9)
Other comprehensive income (loss)	31.4		(66.3)		(108.6)		2.0
Comprehensive income for the period	$	86.5	$	19.2	$	70.2	$	189.3
Comprehensive income attributable to shareholders:
—Income arising from continuing operations	$	54.7	$	18.3	$	45.3	$	201.9
—Loss arising from discontinued operations	(0.1)		(0.1)		(0.5)		(0.5)
	54.6		18.2		44.8		201.4
Comprehensive income (loss) attributable to non-controlling interests	31.9		1.0		25.4		(12.1)
	$	86.5	$	19.2	$	70.2	$	189.3

The accompanying notes form an integral part of these condensed consolidated financial statements.

2

Gates Industrial Corporation plc

Unaudited Condensed Consolidated Balance Sheets

(dollars in millions, except share numbers and per share amounts)	As of September 28, 2024		As of December 30, 2023
Assets
Current assets
Cash and cash equivalents	$	574.4	$	720.6
Trade accounts receivable, net	811.8		768.2
Inventories	724.6		647.2
Taxes receivable	63.2		30.4
Prepaid expenses and other assets	226.5		234.9
Total current assets	2,400.5		2,401.3
Non-current assets
Property, plant and equipment, net	605.0		630.0
Goodwill	1,997.1		2,038.7
Pension surplus	8.4		8.6
Intangible assets, net	1,294.7		1,386.1
Right-of-use assets	136.5		120.1
Taxes receivable	18.3		18.5
Deferred income taxes	643.5		622.4
Other non-current assets	17.5		28.8
Total assets	$	7,121.5	$	7,254.5
Liabilities and equity
Current liabilities
Debt, current portion	$	36.2	$	36.5
Trade accounts payable	427.5		457.7
Taxes payable	66.6		36.6
Accrued expenses and other current liabilities	265.3		248.5
Total current liabilities	795.6		779.3
Non-current liabilities
Debt, less current portion	2,341.5		2,415.0
Post-retirement benefit obligations	77.6		83.8
Lease liabilities	125.8		110.6
Taxes payable	77.4		79.4
Deferred income taxes	101.8		119.4
Other non-current liabilities	143.9		123.1
Total liabilities	3,663.6		3,710.6
Commitments and contingencies (Note 18)
Shareholders’ equity
—Shares, par value of $0.01 each - authorized shares: 3,000,000,000; outstanding shares: 254,699,987 (December 30, 2023: authorized shares: 3,000,000,000; outstanding shares: 264,259,788)	2.5		2.6
—Additional paid-in capital	2,606.8		2,583.8
—Accumulated other comprehensive loss	(942.0)		(828.5)
—Treasury shares	(127.1)		—
—Retained earnings	1,570.1		1,462.3
Total shareholders’ equity	3,110.3		3,220.2
Non-controlling interests	347.6		323.7
Total equity	3,457.9		3,543.9
Total liabilities and equity	$	7,121.5	$	7,254.5

The accompanying notes form an integral part of these condensed consolidated financial statements.

3

Gates Industrial Corporation plc

Unaudited Condensed Consolidated Statements of Cash Flows

	Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023
Cash flows from operating activities
Net income	$	178.8	$	187.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	162.8		162.5
Foreign exchange and other non-cash financing (income) expenses	(26.2)		33.8
Share-based compensation expense	20.2		19.6
Decrease in post-employment benefit obligations, net	(6.6)		(7.0)
Deferred income taxes	(25.1)		(39.2)
Asset impairments	—		0.1
Loss on deconsolidation of Russian subsidiary	12.8		—
Gain on disposal of property, plant and equipment	(7.2)		—
Other operating activities	(1.5)		4.0
Changes in operating assets and liabilities:
—Accounts receivable	(46.1)		(22.9)
—Inventories	(84.0)		12.0
—Accounts payable	(25.0)		(24.4)
—Prepaid expenses and other assets	18.2		12.8
—Taxes payable	(2.6)		(5.8)
—Other liabilities	20.2		(41.1)
Net cash provided by operating activities	188.7		291.7
Cash flows from investing activities
Purchases of property, plant and equipment	(59.8)		(39.6)
Purchases of intangible assets	(13.5)		(7.6)
Purchases of investments	(11.3)		—
Cash paid under company-owned life insurance policies	(5.4)		(18.2)
Cash received under company-owned life insurance policies	11.2		6.6
Proceeds from the sale of property, plant and equipment	11.0		0.8
Cash deconsolidated from previously controlled subsidiary	(12.5)		—
Net cash used in investing activities	(80.3)		(58.0)
Cash flows from financing activities
Issuance of shares	10.0		17.5
Repurchase of shares	(176.1)		(251.7)
Proceeds from long-term debt	1,840.0		100.0
Payments of long-term debt	(1,917.0)		(114.7)
Debt issuance costs paid	(20.5)		(0.4)
Dividends paid to non-controlling interests	(1.7)		(0.5)
Other financing activities	11.8		8.1
Net cash used in financing activities	(253.5)		(241.7)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(1.4)		(13.3)
Net decrease in cash and cash equivalents and restricted cash	(146.5)		(21.3)
Cash and cash equivalents and restricted cash at the beginning of the period	724.0		581.4
Cash and cash equivalents and restricted cash at the end of the period	$	577.5	$	560.1
Supplemental schedule of cash flow information
Interest paid	$	104.7	$	125.8
Income taxes paid	$	88.5	$	70.9
Accrued capital expenditures	$	1.0	$	1.4

The accompanying notes form an integral part of these condensed consolidated financial statements.

4

Gates Industrial Corporation plc

Unaudited Condensed Consolidated Statements of Shareholders’ Equity

	Three months ended September 28, 2024
(dollars in millions)	Share capital		Additional paid-in capital		Treasury Shares		Accumulated other comprehensive loss		Retained earnings		Total shareholders’ equity		Non- controlling interests		Total equity
As of June 29, 2024	$	2.6	$	2,600.9	$	—	$	(949.0)	$	1,522.5	$	3,177.0	$	317.3	$	3,494.3
Net income	—		—		—		—		47.6		47.6		7.5		55.1
Other comprehensive income	—		—		—		7.0		—		7.0		24.4		31.4
Total comprehensive income	—		—		—		7.0		47.6		54.6		31.9		86.5
Other changes in equity:
—Issuance of shares	—		2.9		—		—		—		2.9		—		2.9
—Shares withheld for employee taxes	—		(2.3)		—		—		—		(2.3)		—		(2.3)
—Buy-back of shares	(0.1)		—		(127.1)		—		—		(127.2)		—		(127.2)
—Share-based compensation	—		5.3		—		—		—		5.3		0.1		5.4
—Dividends paid to non-controlling interests	—		—				—		—		—		(1.7)		(1.7)
As of September 28, 2024	$	2.5	$	2,606.8	$	(127.1)	$	(942.0)	$	1,570.1	$	3,110.3	$	347.6	$	3,457.9

	Three months ended September 30, 2023
(dollars in millions)	Share capital		Additional paid-in capital		Treasury Shares		Accumulated other comprehensive loss		Retained earnings		Total shareholders’ equity		Non- controlling interests		Total equity
As of July 1, 2023	$	2.6	$	2,573.1	$	—	$	(825.9)	$	1,320.6	$	3,070.4	$	320.6	$	3,391.0
Net income	—		—		—		—		78.7		78.7		6.8		85.5
Other comprehensive loss	—		—		—		(60.5)		—		(60.5)		(5.8)		(66.3)
Total comprehensive (loss) income	—		—		—		(60.5)		78.7		18.2		1.0		19.2
Other changes in equity:
—Issuance of shares	—		0.1		—		—		—		0.1		—		0.1
—Shares withheld for employee taxes	—		(1.5)		—		—		—		(1.5)		—		(1.5)
—Buy-back of shares	—		—		—		—		—		—		—		—
—Share-based compensation	—		4.0		—		—		—		4.0		—		4.0
—Dividends paid to non-controlling interests	—		—		—		—		—		—		(0.5)		(0.5)
As of September 30, 2023	$	2.6	$	2,575.7	$	—	$	(886.4)	$	1,399.3	$	3,091.2	$	321.1	$	3,412.3

5

	Nine months ended September 28, 2024
(dollars in millions)	Share capital		Additional paid-in capital		Treasury Shares		Accumulated other comprehensive loss		Retained earnings		Total shareholders’ equity		Non- controlling interests		Total equity
As of December 30, 2023	$	2.6	$	2,583.8	$	—	$	(828.5)	$	1,462.3	$	3,220.2	$	323.7	$	3,543.9
Net income	—		—		—		—		158.3		158.3		20.5		178.8
Other comprehensive (loss) income	—		—		—		(113.5)		—		(113.5)		4.9		(108.6)
Total comprehensive (loss) income	—		—		—		(113.5)		158.3		44.8		25.4		70.2
Other changes in equity:
—Issuance of shares	—		10.0		—		—		—		10.0		—		10.0
—Shares withheld for employee taxes	—		(4.7)		—		—		—		(4.7)		—		(4.7)
—Buy-back and cancellation of shares	(0.1)		—		(127.1)		—		(50.5)		(177.7)		—		(177.7)
—Share-based compensation	—		17.7		—		—		—		17.7		0.2		17.9
—Dividends paid to non-controlling interests	—		—		—		—		—		—		(1.7)		(1.7)
As of September 28, 2024	$	2.5	$	2,606.8	$	(127.1)	$	(942.0)	$	1,570.1	$	3,110.3	$	347.6	$	3,457.9

	Nine months ended September 30, 2023
(dollars in millions)	Share capital		Additional paid-in capital		Treasury Shares		Accumulated other comprehensive loss		Retained earnings		Total shareholders’ equity		Non- controlling interests		Total equity
As of December 31, 2022	$	2.8	$	2,542.1	$	—	$	(917.8)	$	1,482.9	$	3,110.0	$	333.6	$	3,443.6
Net income	—		—		—		—		170.0		170.0		17.3		187.3
Other comprehensive income (loss)	—		—		—		31.4		—		31.4		(29.4)		2.0
Total comprehensive income (loss)	—		—		—		31.4		170.0		201.4		(12.1)		189.3
Other changes in equity:
—Issuance of shares	—		17.5		—		—		—		17.5		—		17.5
—Shares withheld for employee taxes	—		(3.2)		—		—		—		(3.2)		—		(3.2)
—Buy-back and cancellation of shares	(0.2)		—		—		—		(253.6)		(253.8)		—		(253.8)
—Share-based compensation	—		19.3		—		—		—		19.3		0.1		19.4
—Dividends paid to non-controlling interests	—		—		—		—		—		—		(0.5)		(0.5)
As of September 30, 2023	$	2.6	$	2,575.7	$	—	$	(886.4)	$	1,399.3	$	3,091.2	$	321.1	$	3,412.3

6

Gates Industrial Corporation plc

Notes to the Unaudited Condensed Consolidated Financial Statements

1. Introduction

A. Background

Gates Industrial Corporation plc (the “Company”) is a public limited company that was registered in England and Wales on September 25, 2017.

In these condensed consolidated financial statements and related notes, all references to “Gates,” “we,” “us,” and “our” refer, unless the context requires otherwise, to Gates Industrial Corporation plc and its consolidated subsidiaries.

B. Accounting periods

The Company prepares its annual consolidated financial statements for the period ending on the Saturday nearest December 31. Accordingly, the condensed consolidated balance sheets as of September 28, 2024 and December 30, 2023, and the related condensed consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented, where relevant, for the 91-day period from June 30, 2024 to September 28, 2024, with comparative information for the 91-day period from July 2, 2023 to September 30, 2023 and for the 273-day period from December 31, 2023 to September 28, 2024, with comparative information for the 273-day period from January 1, 2023 to September 30, 2023.

C. Basis of preparation

The condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars unless otherwise indicated. The condensed consolidated financial statements and related notes contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company’s financial position as of September 28, 2024 and the results of its operations and cash flows for the periods ended September 28, 2024 and September 30, 2023. Interim period results are not necessarily indicative of the results to be expected for the full fiscal year.

The preparation of consolidated financial statements under U.S. GAAP requires us to make assumptions and estimates concerning the future that affect the reported amounts of assets, liabilities, revenue and expenses. Estimates and assumptions are particularly important in accounting for items such as revenue, rebates, impairment of long-lived assets, intangible assets and goodwill, inventory valuation, financial instruments, expected credit losses, product warranties, income taxes and post-retirement benefits. Estimates and assumptions used are based on factors such as historical experience, observance of trends in the industries in which we operate and information available from our customers and other outside sources.

These condensed consolidated financial statements are unaudited and have been prepared on substantially the same basis as Gates’ audited annual consolidated financial statements and related notes for the year ended December 30, 2023. The condensed consolidated balance sheet as of December 30, 2023 has been derived from those audited financial statements.

During 2021, the Company implemented a program with an unrelated third party under which we may periodically sell trade accounts receivable from one of our aftermarket customers with whom we have extended payment terms as part of a commercial agreement. The purpose of using this program is to offset the working capital impact resulting from this terms extension. All eligible accounts receivable from this customer are covered by the program, and any factoring is solely at our option. Following the factoring of a qualifying receivable, because we maintain no continuing involvement in the underlying receivable, and collectability risk is fully transferred to the unrelated third party, we account for these transactions as a sale of a financial asset and derecognize the asset. Cash received under the program is classified as operating cash inflows in the consolidated statement of cash flows. As of September 28, 2024, the collection of $114.1 million of our trade accounts receivable had been accelerated under this program, compared to the accelerated collection of $112.4 million as of December 30, 2023. During the three and nine months ended September 28, 2024, we incurred costs in respect of this program of $2.2 million and $6.6 million, respectively. During the three and nine months ended September 30, 2023, we incurred costs in respect of this program of $2.9 million and $5.1 million, respectively.

7

In 2022, as a result of the conflict between Russia and Ukraine, the Company began exiting substantially all its activities in Russia with only residual cash and de minimis administrative costs remaining in 2024. During the three months ended September 28, 2024, the Company concluded that the inability to repatriate remaining cash coupled with the significant government regulations and restrictions currently in place, which are expected to continue or worsen, severely limits its ability to manage and control its Russian subsidiary. As a result, the Company's Russian subsidiary was deconsolidated as of September 28, 2024. The impact of the deconsolidation was a $12.8 million loss included in the results of operations for the three and nine months ended September 28, 2024.

These condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and related notes for the year ended December 30, 2023 included in the Company’s Annual Report on Form 10-K.

The accounting policies used in preparing these condensed consolidated financial statements are the same as those applied in the prior year.

2. Recent accounting pronouncements

•Accounting Standards Update (“ASU”) 2023-07 “Segment Reporting” (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued an ASU that expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures regarding significant segment expenses. The updated standard is effective for our annual periods beginning in fiscal year 2024 and interim periods beginning in the first quarter of fiscal year 2025, with early adoption permitted. We are currently evaluating the impact the updated standard will have on our financial statement disclosures.

•ASU 2023-09 “Income Taxes” (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued an ASU that requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The updated standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The updated standard is effective for our annual periods beginning in fiscal year 2025 and interim periods beginning in the first quarter of fiscal year 2026, with early adoption permitted. We are currently evaluating the impact the updated standard will have on our financial statement disclosures.

3. Segment information

A. Background

The segment information provided in these condensed consolidated financial statements reflects the information that is used by the chief operating decision maker for the purposes of making decisions about allocating resources and in assessing the performance of each segment. The chief executive officer (“CEO”) of Gates serves as the chief operating decision maker. These decisions are based on net sales and Adjusted EBITDA (defined below).

B. Operating segments and segment assets

Gates manufactures a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and original equipment manufacturer (“OEM”) channels, throughout the world.

Our reportable segments are identified on the basis of our primary product lines, as this is the basis on which information is provided to the CEO for the purposes of allocating resources and assessing the performance of Gates’ businesses. Our operating and reporting segments are therefore Power Transmission and Fluid Power.

Segment asset information is not provided to the chief operating decision maker and therefore segment asset information has not been presented. Due to the nature of Gates’ operations, cash generation and profitability are viewed as the key measures rather than an asset-based measure.

8

C. Segment net sales and disaggregated net sales

Sales between reporting segments and the impact of such sales on Adjusted EBITDA for each segment are not included in internal reports presented to the CEO and have therefore not been included below.

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Power Transmission	$	513.4	$	536.4	$	1,588.1	$	1,658.4
Fluid Power	317.3		336.5		990.7		1,048.5
Continuing operations	$	830.7	$	872.9	$	2,578.8	$	2,706.9

Our commercial function is organized by region and therefore, in addition to reviewing net sales by our reporting segments, the CEO also reviews net sales information disaggregated by region, including between emerging and developed markets.

The following table summarizes our net sales by key geographic region of origin:

	Three months ended
	September 28, 2024				September 30, 2023
(dollars in millions)	Power Transmission		Fluid Power		Power Transmission		Fluid Power
U.S.	$	140.9	$	168.1	$	150.3	$	179.3
North America, excluding U.S.	56.6		49.2		60.7		55.3
United Kingdom (“U.K.”)	9.1		16.0		10.0		14.8
EMEA(1), excluding U.K.	137.5		46.1		145.4		50.9
East Asia and India	70.4		18.5		69.8		19.4
Greater China	72.6		8.8		72.0		5.8
South America	26.3		10.6		28.2		11.0
Net sales	$	513.4	$	317.3	$	536.4	$	336.5

	Nine months ended
	September 28, 2024				September 30, 2023
(dollars in millions)	Power Transmission		Fluid Power		Power Transmission		Fluid Power
U.S.	$	425.8	$	524.1	$	450.7	$	552.2
North America, excluding U.S.	182.0		153.0		172.0		163.0
U.K.	29.6		50.7		34.3		54.9
EMEA(1), excluding U.K.	449.1		144.9		481.5		158.9
East Asia and India	205.6		58.3		214.5		59.4
Greater China	214.7		30.3		222.4		27.6
South America	81.3		29.4		83.0		32.5
Net sales	$	1,588.1	$	990.7	$	1,658.4	$	1,048.5

(1)    Europe, Middle East and Africa (“EMEA”).

The following table summarizes our net sales into emerging and developed markets:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Developed	$	533.9	$	570.0	$	1,663.4	$	1,784.1
Emerging	296.8		302.9		915.4		922.8
Net sales	$	830.7	$	872.9	$	2,578.8	$	2,706.9

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D. Measure of segment profit or loss

The CEO uses Adjusted EBITDA, as defined below, to measure the profitability of each segment. Adjusted EBITDA is, therefore, the measure of segment profit or loss presented in Gates’ segment disclosures.

“EBITDA” represents net income from continuing operations for the period before net interest and other expense, income taxes, depreciation and amortization.

Adjusted EBITDA represents EBITDA before certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. During the periods presented, the items excluded from EBITDA in computing Adjusted EBITDA primarily included:

•    loss on deconsolidation of previously controlled subsidiary;

•    non-cash charges in relation to share-based compensation;

•    transaction-related expenses incurred in relation to major corporate transactions, including the acquisition of businesses and related integration activities, and equity and debt transactions;

•    restructuring expenses, including severance-related expenses;

•    credit loss related to a customer bankruptcy;

•    cybersecurity incident expenses; and

•    inventory adjustments related to certain inventories accounted for on a Last-in First-out (“LIFO”) basis.

Adjusted EBITDA by segment was as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Power Transmission	$	113.0	$	116.5	$	355.8	$	343.2
Fluid Power	69.5		72.9		224.5		218.0
Continuing operations	$	182.5	$	189.4	$	580.3	$	561.2

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Reconciliation of net income from continuing operations to Adjusted EBITDA:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net income from continuing operations	$	55.2	$	85.6	$	179.3	$	187.8
Income tax expense	14.0		1.0		60.8		25.9
Income from continuing operations before taxes	69.2		86.6		240.1		213.7
Interest expense	35.1		39.5		121.7		124.8
Loss on deconsolidation of Russian subsidiary (1)	12.8		—		12.8		—
Other (income) expenses	(3.9)		(0.2)		(8.5)		3.8
Operating income from continuing operations	113.2		125.9		366.1		342.3
Depreciation and amortization	53.7		54.0		162.8		162.5
Transaction-related expenses (2)	0.5		1.3		2.1		2.1
Asset impairments	—		0.1		—		0.1
Restructuring expenses	2.2		2.6		5.0		10.3
Share-based compensation expense	6.4		3.3		20.2		19.6
Inventory impairments and adjustments (3) (included in cost of sales)	4.4		2.2		21.7		6.3
Severance expenses (included in cost of sales)	0.9		(0.1)		0.9		0.4
Severance expenses (included in SG&A)	1.4		—		1.5		0.9
Credit (gain) loss related to customer bankruptcy (included in SG&A) (4)	(0.2)		—		(0.1)		11.4
Cybersecurity incident expenses (5)	—		—		—		5.1
Other items not directly related to current operations (6)	—		0.1		0.1		0.2
Adjusted EBITDA	$	182.5	$	189.4	$	580.3	$	561.2

(1)    In July 2022, as a result of the conflict between Russia and Ukraine, Gates suspended our operations in Russia. As of September 28 2024, we deconsolidated the Russian subsidiary upon loss of control and recognized a deconsolidation loss.

(2)    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.

(3)    Inventory impairments and adjustments include the reversal of the adjustment to remeasure certain inventories on a LIFO basis.

(4)    On January 31, 2023, one of our customers filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In connection with the bankruptcy proceedings, we preliminarily evaluated our potential risk and exposure relating to our outstanding pre-petition accounts receivable balance from the customer and recorded an initial pre-tax charge to reflect our estimated recovery. We continue to monitor the circumstances surrounding the bankruptcy and adjust our estimate as necessary.

(5)    On February 11, 2023, Gates determined that it was the target of a malware attack. Cybersecurity incident expenses include legal, consulting, and other costs incurred as a direct result of this incident, some of which may be partially offset by insurance recoveries.

(6)    Other items not directly related to current operations include other charges.

4. Restructuring and other strategic initiatives

Gates continues to undertake various restructuring and other strategic initiatives to drive increased productivity in all aspects of our operations. These actions include efforts to consolidate our manufacturing and distribution footprint, scale operations to current demand levels, streamline our selling, general and administrative (“SG&A”) back-office functions and relocate certain operations to lower cost locations.

11

Overall costs associated with our restructuring and other strategic initiatives have been recognized in the condensed consolidated statements as set forth below. Expenses incurred in relation to certain of these actions qualify as restructuring expenses under U.S. GAAP.

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Restructuring expenses:
—Severance expense	$	1.0	$	—	$	0.5	$	4.4
—Non-severance labor and benefit (income) expenses	(0.2)		0.3		(0.1)		1.1
—Consulting expenses	1.1		0.8		2.6		1.7
—Other net restructuring expenses	0.3		1.5		2.0		3.1
	2.2		2.6		5.0		10.3
Restructuring expenses in asset impairments:
—Impairment of fixed and other assets	—		0.1		—		0.1
Restructuring expenses in cost of sales:
—Impairment of inventory	—		0.1		—		0.1
Total restructuring expenses	$	2.2	$	2.8	$	5.0	$	10.5
Expenses related to other strategic initiatives:
—Severance and other expenses (income) included in cost of sales	0.9		(0.1)		0.9		0.4
—Severance and other expenses included in SG&A	1.4		—		1.5		0.9
Total expenses (income) related to other strategic initiatives	$	2.3	$	(0.1)	$	2.4	$	1.3

Restructuring and other strategic initiatives during the three and nine months ended September 28, 2024 included $1.0 million and $2.5 million, respectively, of costs related to the relocation of certain production activities in Mexico. During the three months ended September 28, 2024, we also incurred severance costs of $1.0 million related to the consolidation of production activities across certain North American plants. Other restructuring costs incurred during the three and nine months ended September 28, 2024 included legal and consulting expenses, and costs associated with prior period facility closures or relocations in several countries.

Restructuring and other strategic initiatives during the three and nine months ended September 30, 2023 related primarily to severance and other non-labor costs related to relocating certain production activities in China, Mexico and Europe. During the three months ended September 30, 2023, we also incurred additional non-severance labor and benefit costs of $0.3 million related to relocation and integration of certain support functions into our regional shared service center in Europe. Other restructuring costs incurred during the three months ended September 30, 2023 related to legal and consulting expenses, as well as costs associated with prior period facility closures or relocations in several countries.

Restructuring activities

As indicated above, restructuring expenses, as defined under U.S. GAAP, form a subset of our total expenses related to restructuring and other strategic initiatives. These expenses include the impairment of inventory if applicable, which is recognized in cost of sales. Analyzed by segment, our restructuring expenses were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Power Transmission	$	0.6	$	1.5	$	1.4	$	7.2
Fluid Power	1.6		1.3		3.6		3.3
Continuing operations	$	2.2	$	2.8	$	5.0	$	10.5

12

The following summarizes the reserve for restructuring expenses for the nine months ended September 28, 2024 and September 30, 2023, respectively:

	Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023
Balance as of the beginning of the period	$	5.1	$	7.5
Utilized during the period	(6.3)		(11.1)
Charge for the period	5.7		10.5
Released during the period	(0.7)		(0.2)
Foreign currency translation	—		(0.1)
Balance as of the end of the period	$	3.8	$	6.6

Restructuring reserves, which are expected to be utilized during 2024 and 2025, are included in the condensed consolidated balance sheet within the accrued expenses and other current liabilities line.

5. Income taxes

We compute the year-to-date income tax provision by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjust for discrete tax items in the period in which they occur.

For the three months ended September 28, 2024, we had income tax expense of $14.0 million on pre-tax income of $69.2 million, which resulted in an effective tax rate of 20.2%, compared to an income tax expense of $1.0 million on pre-tax income of $86.6 million, which resulted in an effective tax rate of 1.2% for the three months ended September 30, 2023.

For the three months ended September 28, 2024, the effective tax rate was driven primarily by net discrete tax benefits of $7.8 million, of which $6.5 million related to changes in the realizability of certain deferred tax assets, primarily related to U.S. foreign tax credit carryforwards, $3.2 million of discrete tax benefit related to the loss on deconsolidation of Russian subsidiary, offset by $1.9 million of other net discrete tax expenses. For the three months ended September 30, 2023, the effective tax rate was driven primarily by net discrete tax benefits of $11.0 million, of which $12.9 million related to unrecognized tax benefits due to audit closures, offset by $1.9 million of other net discrete tax expenses.

For the nine months ended September 28, 2024, we had an income tax expense of $60.8 million on pre-tax income of $240.1 million, which resulted in an effective tax rate of 25.3%, compared to an income tax expense of $25.9 million on pre-tax income of $213.7 million, which resulted in an effective tax rate of 12.1% for the nine months ended September 30, 2023.

For the nine months ended September 28, 2024, we had net discrete tax benefits of $8.3 million, of which $13.8 million related to unrecognized tax benefits due to audit closures and $3.2 million discrete tax benefit from a loss on deconsolidation of Russian subsidiary, offset by $3.4 million of uncertain tax benefit interest accrual, $4.2 million of net discrete expense related to changes in the realizability of certain deferred tax assets and $1.1 million of other net discrete tax expenses. For the nine months ended September 30, 2023, the effective tax rate was driven primarily by discrete benefits of $11.0 million, of which $12.9 million related to unrecognized tax benefits due to audit closures, offset by $1.9 million of other net discrete tax expenses.

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.

13

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 during the three months ended September 28, 2024 that it is more likely than not that deferred tax assets in the U.S. totaling $6.9 million are realizable. Accordingly, we recognized $5.7 million of discrete benefit, while the remaining $1.2 million is recognized as part of the annual effective tax rate. As a result of changes in estimates of future taxable profits against which the foreign tax credits can be utilized, our judgment changed regarding valuation allowances on these deferred tax assets.

6. Earnings per share

Basic earnings per share represents net income attributable to shareholders divided by the weighted average number of shares outstanding during the period. Diluted earnings per share considers the dilutive effect of potential shares, unless the inclusion of the potential shares would have an anti-dilutive effect. The treasury stock method is used to determine the potential dilutive shares resulting from assumed exercises of equity-related instruments.

The computation of earnings per share is presented below:

	Three months ended				Nine months ended
(dollars in millions, except share numbers and per share amounts)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net income attributable to shareholders	$	47.6	$	78.7	$	158.3	$	170.0
Weighted average number of shares outstanding	258,889,598		263,984,434		261,001,362		274,460,054
Dilutive effect of share-based awards	4,551,974		3,850,577		4,853,706		4,028,006
Diluted weighted average number of shares outstanding	263,441,572		267,835,011		265,855,068		278,488,060
Number of anti-dilutive shares excluded from the diluted earnings per share calculation	5,410,122		3,934,925		2,785,491		5,065,975
Basic earnings per share	$	0.18	$	0.30	$	0.61	$	0.62
Diluted earnings per share	$	0.18	$	0.29	$	0.60	$	0.61

7. Inventories

(dollars in millions)	As of September 28, 2024		As of December 30, 2023
Raw materials and supplies	$	203.5	$	168.2
Work in progress	49.0		43.3
Finished goods	472.1		435.7
Total inventories	$	724.6	$	647.2

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8. Goodwill

(dollars in millions)	Power Transmission		Fluid Power		Total
Cost and carrying amount
As of December 30, 2023	$	1,338.5	$	700.2	$	2,038.7
Foreign currency translation	(15.7)		(25.9)		(41.6)
As of September 28, 2024	$	1,322.8	$	674.3	$	1,997.1

9. Intangible assets

	As of September 28, 2024						As of December 30, 2023
(dollars in millions)	Cost		Accumulated amortization and impairment		Net		Cost		Accumulated amortization and impairment		Net
Finite-lived:
—Customer relationships	$	1,981.7	$	(1,202.8)	$	778.9	$	2,003.6	$	(1,127.7)	$	875.9
—Technology	90.8		(90.8)		—		90.6		(90.3)		0.3
—Capitalized software	131.1		(84.7)		46.4		117.3		(76.8)		40.5
	2,203.6		(1,378.3)		825.3		2,211.5		(1,294.8)		916.7
Indefinite-lived:
—Brands and trade names	513.4		(44.0)		469.4		513.4		(44.0)		469.4
Total intangible assets	$	2,717.0	$	(1,422.3)	$	1,294.7	$	2,724.9	$	(1,338.8)	$	1,386.1

During the three months ended September 28, 2024, the amortization expense recognized in respect of intangible assets was $32.0 million, compared to $32.1 million for the three months ended September 30, 2023. In addition, movements in foreign currency exchange rates resulted in an increase in the net carrying value of total intangible assets of $11.4 million for the three months ended September 28, 2024, compared to a decrease of $10.3 million for the three months ended September 30, 2023.

During the nine months ended September 28, 2024, the amortization expense recognized in respect of intangible assets was $96.7 million, compared to $96.4 million for the nine months ended September 30, 2023. In addition, movements in foreign currency exchange rates resulted in a decrease in the net carrying value of total intangible assets of $8.2 million for the nine months ended September 28, 2024, compared to a decrease of $3.0 million for the nine months ended September 30, 2023.

10. Derivative financial instruments

We are exposed to certain financial risks relating to our ongoing business operations. From time to time, we use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact.

We recognize derivative instruments as either assets or liabilities in the condensed consolidated balance sheet. We designate certain of our currency swaps as net investment hedges and designate our interest rate caps and interest rate swaps as cash flow hedges. The gain or loss on the designated derivative instrument is recognized in other comprehensive income (“OCI”) and reclassified into net income in the same period or periods during which the hedged transaction affects earnings.

Derivative instruments that have not been designated in an effective hedging relationship are considered economic hedges, and their change in fair value is recognized in net income in each period.

15

The period end fair values of derivative financial instruments were as follows:

	As of September 28, 2024										As of December 30, 2023
(dollars in millions)	Prepaid expenses and other assets		Other non- current assets		Accrued expenses and other current liabilities		Other non- current liabilities		Net		Prepaid expenses and other assets		Other non- current assets		Accrued expenses and other current liabilities		Other  non- current liabilities		Net
Derivatives designated as hedging instruments:
—Currency swaps	$	10.0	$	—	$	—	$	(103.4)	$	(93.4)	$	8.5	$	—	$	—	$	(77.7)	$	(69.2)
—Interest rate swaps	17.4		—		(10.0)		(8.0)		(0.6)		29.9		11.8		(9.9)		(13.6)		18.2
Derivatives not designated as hedging instruments:
—Currency forward contracts	2.0		—		(1.1)		—		0.9		3.9		—		(1.8)		—		2.1
	$	29.4	$	—	$	(11.1)	$	(111.4)	$	(93.1)	$	42.3	$	11.8	$	(11.7)	$	(91.3)	$	(48.9)

A. Instruments designated as net investment hedges

We hold cross currency swaps that have been designated as net investment hedges of certain of our European and Chinese operations. We hold USD-EUR cross currency swaps with a notional principal amount of €254.5 million and extended maturity date of March 31, 2027, and additional USD-EUR cross currency swaps with the notional principal amount of €501.6 million and contract term from November 16, 2022 to November 16, 2027. All USD-EUR cross currency swaps were designated as net investment hedges of certain of our European operations. In May 2023, we amended our €254.5 million USD-EUR cross currency swaps to transition from a floating rate based on the London Interbank Offered Rate (“LIBOR”) to a floating rate based on a term secured overnight financing rate (“Term SOFR”). In November 2023, we executed a USD to Chinese Yuan fixed-to-fixed cross currency swap with a notional principal amount of ¥1,784.0 million with a contract term from November 30, 2023 to November 30, 2026. This has been designated as a net investment hedge of certain of our Chinese operations. In July 2024, we executed a new USD-EUR fixed-to-fixed cross currency swap with a notional principal amount of €277.4 million with a contract term from August 2, 2024 to August 2, 2029. This has been designated as a net investment hedge of certain of our European operations. As of September 28, 2024, the aggregated notional principal amounts of the cross currency swaps were €1,033.5 million and ¥1,784.0 million, as compared to €756.1 million and ¥1,784.0 million December 30, 2023.

The fair value gains (losses) before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net fair value gains recognized in OCI in relation to:
—Designated cross currency swaps	(50.1)		23.9		(24.2)		1.8
Total net fair value (losses) gains	$	(50.1)	$	23.9	$	(24.2)	$	1.8

During the three and nine months ended September 28, 2024, a net gain of $5.7 million and $10.0 million, respectively, was recognized in interest expense in relation to our cross currency swaps that have been designated as net investment hedges, compared to a net gain of $2.5 million and $8.0 million, respectively, during the three and nine months ended September 30, 2023.

B. Instruments designated as cash flow hedges

We use interest rate swaps and interest rate caps as part of our interest rate risk management strategy to add stability to interest expense and to manage our exposure to interest rate movements. These instruments are all designated as cash flow hedges. As of both September 28, 2024 and December 30, 2023, we held pay-fixed, receive-floating interest rate swaps with an aggregate notional amount of $1,255.0 million. Interest rate swaps with a notional amount of $870.0 million run from June 30, 2020 through June 30, 2025, while interest rate swaps with a notional amount of $385.0 million have the contract term from November 16, 2022 to November 16, 2027.

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The movements before tax recognized in OCI in relation to our cash flow hedges were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Movement recognized in OCI in relation to:
—Fair value gain on cash flow hedges	$	(17.0)	$	11.4	$	0.4	$	25.0
—Amortization to net income of prior period fair value losses	—		—		—		8.9
—Deferred OCI reclassified to net income	(9.0)		(8.9)		(27.0)		(24.0)
Total movement	$	(26.0)	$	2.5	$	(26.6)	$	9.9

C. Derivative instruments not designated as hedging instruments

We do not designate our currency forward contracts, which are used primarily in respect of operational currency exposures related to payables, receivables and material procurement, or the currency swap contracts that are used to manage the currency profile of Gates’ cash as hedging instruments for the purposes of hedge accounting.

As of September 28, 2024, the notional amount of outstanding currency forward contracts that are used to manage operational foreign exchange exposures was $150.5 million, compared to $140.8 million as of December 30, 2023.

The fair value gains (losses) recognized in net income in relation to derivative instruments that have not been designated as hedging instruments were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Fair value gains (losses) recognized in relation to:
—Currency forward contracts recognized in SG&A	$	0.2	$	(0.8)	$	3.4	$	3.3
Total	$	0.2	$	(0.8)	$	3.4	$	3.3

11. Fair value measurement

A. Fair value hierarchy

We account for certain assets and liabilities at fair value. Topic 820 “Fair Value Measurements and Disclosures” establishes the following hierarchy for the inputs that are used in fair value measurement:

•“Level 1” inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

•“Level 2” inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

•“Level 3” inputs are not based on observable market data (unobservable inputs).

Assets and liabilities that are measured at fair value are categorized in one of the three levels on the basis of the lowest-level input that is significant to its valuation.

B. Financial instruments not held at fair value

Certain financial assets and liabilities are not measured at fair value; however, items such as cash and cash equivalents, restricted cash, drawings under revolving credit facilities and bank overdrafts generally attract interest at floating rates and accordingly their carrying amounts are considered to approximate fair value. Due to their short maturities, the carrying amounts of accounts receivable and accounts payable are also considered to approximate their fair values.

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The carrying amount and fair value of our debt are set out below:

	As of September 28, 2024				As of December 30, 2023
(dollars in millions)	Carrying  amount		Fair value		Carrying  amount		Fair value
Current	$	36.2	$	36.1	$	36.5	$	36.5
Non-current	2,341.5		2,389.5		2,415.0		2,444.7
	$	2,377.7	$	2,425.6	$	2,451.5	$	2,481.2

Debt is comprised principally of borrowings under the secured credit facilities and the unsecured senior notes. The dollar term loans under the secured credit facilities pay interest at floating rates, subject to a 0.50% Term SOFR floor as further described in Note 12. The fair values of the term loans are derived from a market price, discounted for illiquidity. The unsecured senior notes have fixed interest rates, are traded by “Qualified Institutional Buyers” and certain other eligible investors, and their fair value is derived from their quoted market price.

C. Assets and liabilities measured at fair value on a recurring basis

The following table categorizes the assets and liabilities that are measured at fair value on a recurring basis:

(dollars in millions)	Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Total
As of September 28, 2024
Derivative assets	$	—	$	29.4	$	29.4
Derivative liabilities	$	—	$	(122.5)	$	(122.5)
Cash equivalents	$	—	$	27.9	$	27.9
Available for sale investments	$	—	$	5.0	$	5.0
As of December 30, 2023
Derivative assets	$	—	$	54.1	$	54.1
Derivative liabilities	$	—	$	(103.0)	$	(103.0)
Cash equivalents	$	76.2	$	52.8	$	129.0
Available for sale investments	$	—	$	—	$	—

Derivative assets and liabilities included in Level 2 represent foreign currency exchange forward and swap contracts, and interest rate derivative contracts. Cash equivalents included in Level 1 represent treasury bills and money market funds, while Level 2 represent certificates of deposit and commercial paper. Available for sale investments included in the Level 2 represent our investments in corporate bonds in Argentina.

We value our foreign currency exchange derivatives using models consistent with those used by a market participant that maximize the use of market observable inputs including forward prices for currencies.

We value our interest rate derivative contracts using a widely accepted discounted cash flow valuation methodology that reflects the contractual terms of each derivative, including the period to maturity. The methodology derives the fair values of the derivatives using the market standard methodology of netting the discounted future cash payments and the discounted expected receipts. The inputs used in the calculation are based on observable market-based inputs, including interest rate curves, implied volatilities and credit spreads.

We incorporate credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.

Transfers between levels of the fair value hierarchy

During the periods presented, there were no transfers between Levels 1 and 2, and Gates had no assets or liabilities measured at fair value on a recurring basis using Level 3 inputs.

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D. Assets measured at fair value on a non-recurring basis

Gates has non-recurring fair value measurements related to certain assets, including goodwill, intangible assets, and property, plant, and equipment. No significant impairment was recognized during the three and nine months ended September 28, 2024 and September 30, 2023. During April 2024, Gates made a $5.0 million equity investment in a privately held company. Gates does not have the ability to exercise significant influence over the investee and the investment does not have a readily determinable fair value. We elected to recognize the investment at its cost in accordance with ASC 321 “Investments – Equity Securities” and will adjust the fair value of the investment if we identify any observable price changes in orderly transactions.

12. Debt

(dollars in millions)	As of September 28, 2024		As of December 30, 2023
Secured debt:
—2024 Dollar Term Loans due June 4, 2031	$	1,300.0	$	—
—2022 Dollar Term Loans due November 16, 2029	564.9		567.8
—2021 Dollar Term Loans due November 16, 2029	—		1,336.1
—Revolving credit facility	30.0		—
Unsecured debt:
—6.875% Dollar Senior Notes due July 1, 2029	500.0		—
—6.250% Dollar Senior Notes due January 16, 2026	—		568.0
Total principal of debt	2,394.9		2,471.9
Deferred issuance costs	(34.6)		(37.4)
Accrued interest	17.4		17.0
Total carrying value of debt	2,377.7		2,451.5
Debt, current portion	36.2		36.5
Debt, less current portion	$	2,341.5	$	2,415.0

Gates’ secured debt is jointly and severally, irrevocably and fully and unconditionally guaranteed by certain of its subsidiaries and is secured by liens on substantially all of their assets.

Gates is subject to covenants, representations and warranties under certain of its debt facilities. During the periods covered by these condensed consolidated financial statements, we were in compliance with the applicable financial covenants. Also under the agreements governing our debt facilities, our ability to engage in activities such as incurring certain additional indebtedness, making certain investments and paying certain dividends is dependent, in part, on our ability to satisfy tests based on measures determined under those agreements.

Debt issuances and redemptions

During August 2024, we drew $40.0 million under our revolving credit facility to partially fund the purchase of our ordinary shares under our 2024 share repurchase program, as discussed further in Note 15 below. During September 2024, we partially paid down the borrowings on the revolving credit facility and had a balance of $30.0 million as of September 28, 2024. We had no outstanding borrowings as of December 30, 2023.

On June 4, 2024, we entered into an amendment to our credit agreement governing our term loan facilities and our secured revolving credit facility. As part of this amendment, we issued a new tranche of $1,300.0 million of dollar-denominated term loans (the “2024 Dollar Term Loans”) and used the proceeds to extinguish the entire outstanding principal balance of dollar-denominated term loans of $1,232.6 million, which was issued on February 24, 2021 (the “2021 Dollar Term Loans”), plus $1.1 million of accrued interest. 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).

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Under the credit agreement amendment, we also repriced our dollar-denominated term loans drawn on November 16, 2022 (the “2022 Dollar Term Loans”), reducing the interest rate spread by 75 basis points from Term SOFR plus 3.00% to Term SOFR plus 2.25%. Third party costs of $0.9 million incurred with the 2022 Dollar Term Loans repricing were recognized in interest expense.

Additionally, in connection with the amendment to our credit agreement, we increased borrowing capacity under our revolving credit facility from $250.0 million to $500.0 million and extended the maturity from November 18, 2026 to 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 2024 Unsecured Notes (as defined below) are outstanding. We incurred associated third party costs of approximately $2.5 million, which have been deferred and will be amortized to interest expense over the remaining term of the revolving credit facility. Concurrently with this amendment, we terminated the $250.0 million asset-backed revolving credit facility governed by the second amended and restated credit agreement dated as of November 18, 2021. The termination of our asset-backed revolving credit facility resulted in the accelerated recognition of $1.0 million of deferred issuance costs (recognized in interest expense).

On June 4, 2024, we also issued new unsecured senior notes of $500.0 million (the “2024 Unsecured Senior Notes”), and fully redeemed our existing unsecured senior notes due 2026 of $568.0 million aggregate principal amount (the “2019 Unsecured Senior Notes”), which included the payment of $13.7 million of accrued interest thereon. We issued the 2024 Unsecured Senior Notes 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 2024 Unsecured Senior Notes using the effective interest method. The redemption of our 2019 Unsecured Senior Notes resulted in the accelerated recognition of $2.6 million of deferred issuance costs (recognized in interest expense).

During February 2024, we made a voluntary principal debt repayment of $100.0 million against our 2021 Dollar Term Loans. As a result of this repayment, we accelerated the recognition of $1.0 million of deferred issuance costs (recognized in interest expense).

During May 2023, we drew $100.0 million under our former asset-backed revolving credit facility to partially fund the purchase of shares under our 2023 share repurchase program. During fiscal year 2023 we paid down the borrowings on the asset-backed revolver and had no outstanding borrowings as of September 28, 2024 and December 30, 2023. As of December 30, 2023, the letters of credit outstanding under this facility were $29.7 million. As discussed above, this facility was terminated on June 4, 2024.

Dollar Term Loans

Our secured credit facilities consist of two loans, which include the 2024 Dollar Term Loans and the 2022 Dollar Term Loans described above. These term loan facilities bear interest at a floating rate, at our option, at either a base rate as defined in the credit agreement plus an applicable margin, or Term SOFR plus an applicable margin.

The 2024 Dollar Term Loans’ interest rate is currently Term SOFR, subject to a floor of 0.50%, plus a margin of 2.25%, and as of September 28, 2024, borrowings under this facility bore interest at a rate of 7.50% per annum. The interest rate is currently re-set on the last business day of each month based on the election of one month interest periods. The 2024 Dollar Term Loans mature on June 4, 2031.

The 2022 Dollar Term Loans’ interest rate as of September 28, 2024 was Term SOFR, subject to a floor of 0.50%, plus a margin of 2.25%, and as of September 28, 2024, borrowings under this facility bore interest at a rate of 7.50% per annum. The 2022 Dollar Term Loans’ interest rate is currently re-set on the last business day of each month based on the election of one month interest periods. The 2022 Dollar Term Loans mature on November 16, 2029.

The 2022 Dollar Term Loans and the 2024 Dollar Term Loans are subject to quarterly amortization payments of 0.25%, based on the original principal amount less certain repayments with the balance payable on maturity. During the nine months ended September 28, 2024, we made amortization payments against the 2021 Dollar Term Loans, the 2024 Dollar Term Loans and the 2022 Dollar Term Loans of $3.4 million, $0.0 million and $2.9 million, respectively.

Under the terms of the credit agreement, we are obliged to offer annually to the term loan lenders an “excess cash flow” amount as defined under the credit agreement, based on the preceding year’s final results. Based on our 2023 results, the leverage ratio as defined under the credit agreement was below the threshold above which payments are required, and therefore no excess cash flow payment is required to be made in 2024.

Gates Corporation, a wholly-owned U.S. subsidiary of Gates Industrial Holdco Limited (the parent guarantor and direct subsidiary of Gates Industrial Corporation plc), is the principal obligor under the term loans for U.S. federal income tax purposes and makes the payments due on the term loans. As a result, interest received by lenders of this tranche of debt is U.S. source income.

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2024 Unsecured Senior Notes

As of September 28, 2024, we had $500.0 million of 2024 Senior Notes outstanding that were issued on June 4, 2024. The 2024 Unsecured Senior Notes are scheduled to mature on July 1, 2029 and bear interest at an annual fixed rate of 6.875% with semi-annual interest payments.

Prior to July 1, 2026, we may redeem the 2024 Unsecured Senior Notes, at our option, in whole at any time or in part from time to time, at a “make-whole” redemption price. In addition, on or subsequent to July 1, 2026, we may redeem the 2024 Unsecured Senior Notes, at our option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest to the redemption date:

	Redemption price
On or subsequent to:
—July 1, 2026	103.438	%
—July 1, 2027	101.719	%
—July 1, 2028 and thereafter	100.000	%

Additionally, net cash proceeds from an equity offering can be utilized at any time prior to July 1. 2026, to redeem up to 40% of the 2024 Unsecured Senior Notes at a redemption price equal to 106.875% of the principal amount thereof, plus accrued and unpaid interest through to the redemption date.

Upon the occurrence of specified types of change of control or of certain qualifying asset sales, the holders of the 2024 Unsecured Senior Notes will have the right to require us to make an offer to repurchase each holder's notes at a price equal to 101% (in the case of a change of control offer) or 100% (in the case of an asset sale offer) of their principal amount, plus accrued and unpaid interest.

As noted above, on June 4, 2024, we redeemed all $568.0 million in aggregate principal amount of our 2019 Unsecured Senior Notes.

Revolving credit facility

We have a secured revolving credit facility that provides for multi-currency revolving loans. On June 4, 2024, we amended the credit agreement governing this facility to increase the size of the facility from $250.0 million to $500.0 million, and extended the maturity date from November 18, 2026 to 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 2024 Unsecured Senior Notes are outstanding. This facility also includes a letter of credit sub-facility of $150.0 million.

As of September 28, 2024, we had a balance of $30.0 million under the revolving credit facility following a draw in August 2024 to facilitate the share repurchase transactions discussed further in Note 15. As of December 30, 2023, there were no drawings for cash under the revolving credit facility. The letters of credit outstanding under this facility were $28.8 million and $0.0 million as of September 28, 2024 and December 30, 2023, respectively.

Debt under the revolving credit facility bears interest at a floating rate, at our option, at either a base rate as defined in the credit agreement plus an applicable margin or the reference rate plus an applicable margin.

In addition, Gates had other outstanding performance bonds, letters of credit and bank guarantees amounting to $8.6 million as of September 28, 2024, compared to $8.4 million as of December 30, 2023.

13. Post-retirement benefits

Gates provides defined benefit pension plans in certain of the countries in which it operates, in particular, in the U.S. and U.K. All of the defined benefit pension plans are closed to new entrants. In addition to the funded defined benefit pension plans, Gates has unfunded defined benefit obligations to certain current and former employees.

Gates also provides other post-retirement benefits, principally health and life insurance coverage, on an unfunded basis to certain of its employees in the U.S. and Canada.

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Net periodic benefit cost (income)

The components of the net periodic benefit cost (income) for pensions and other post-retirement benefits were as follows:

	Three months ended September 28, 2024						Three months ended September 30, 2023
(dollars in millions)	Pensions		Other post-retirement benefits		Total		Pensions		Other post-retirement benefits		Total
Reported in operating income:
—Employer service cost	$	1.0	$	—	$	1.0	$	1.0	$	—	$	1.0
Reported outside of operating income:
—Interest cost	6.0		0.4		6.4		6.3		0.4		6.7
—Expected return on plan assets	(6.5)		—		(6.5)		(6.5)		—		(6.5)
—Net amortization of prior period losses (gains)	0.2		(0.8)		(0.6)		—		(0.9)		(0.9)
—Settlements and curtailments	0.1		—		0.1		—		—		—
Net periodic benefit cost (income)	$	0.8	$	(0.4)	$	0.4	$	0.8	$	(0.5)	$	0.3
Cash Contributions	$	2.2	$	0.7	$	2.9	$	1.6	$	0.6	$	2.2

	Nine months ended September 28, 2024						Nine months ended September 30, 2023
(dollars in millions)	Pensions		Other post-retirement benefits		Total		Pensions		Other post-retirement benefits		Total
Reported in operating income:
—Employer service cost	$	3.0	$	—	$	3.0	$	2.9	$	—	$	2.9
Reported outside of operating income:
—Interest cost	18.2		1.0		19.2		18.8		1.1		19.9
—Expected return on plan assets	(19.4)		—		(19.4)		(19.5)		—		(19.5)
—Net amortization of prior period losses (gains)	0.6		(2.4)		(1.8)		(0.1)		(2.5)		(2.6)
—Settlements and curtailments	0.1		—		0.1		—		—		—
Net periodic benefit cost (income)	$	2.5	$	(1.4)	$	1.1	$	2.1	$	(1.4)	$	0.7
Cash Contributions	$	5.4	$	2.4	$	7.8	$	5.3	$	2.5	$	7.8

The components of the above net periodic benefit cost (income) for pensions and other post-retirement benefits that are reported outside of operating income are all included in the other (income) expense line in the condensed consolidated statement of operations.

For 2024 as a whole, we expect to contribute approximately $7.3 million to our defined benefit pension plans and approximately $3.0 million to our other post-retirement benefit plans.

14. Share-based compensation

The Company operates a share-based incentive plan over its shares to provide incentives to Gates’ senior executives and other eligible employees. During the three and nine months ended September 28, 2024, we recognized a charge of $6.4 million and $20.2 million, respectively, compared to $3.3 million and $19.6 million, respectively, in the three and nine months ended September 30, 2023.

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Awards issued under the 2014 Gates Industrial Corporation plc Stock Incentive Plan (the “2014 Plan”)

Gates has a number of share-based incentive awards issued under the 2014 Plan, which was assumed by the Company and renamed the Gates Industrial Corporation plc Stock Incentive Plan in connection with our initial public offering in January 2018 (our “IPO”). No new awards have been granted under this plan since 2017. The options granted prior to our IPO were split equally into four tiers, each with specific vesting conditions. Tier I options vested evenly over 5 years from the grant date, subject to the participant continuing to provide service to Gates on the vesting date. Tier II, III and IV options vested, if at all, on achievement of specified investment returns by certain investment funds affiliated with Blackstone Inc. (“Blackstone”) at the time of a defined liquidity event, which was also subject to the participant’s continued provision of service to Gates on the vesting date. The performance conditions associated with Tiers II, III and IV must have been achieved on or prior to July 3, 2022 in order for vesting to occur. All the options expire ten years after the date of grant.

During March 2022, a liquidity event as defined occurred following the sale by Blackstone of a certain portion of their interest in Gates and the Tier II and IV options vested as the specified investment returns related to these options had been met. On July 3, 2022, the performance period for the Tier III options expired and, as the specified investment returns were not achieved, all Tier III awards expired during fiscal year 2022.

Due to Chinese regulatory restrictions on foreign stock ownership, awards granted under this plan to Chinese employees have been issued as stock appreciation rights (“SARs”). The terms of these SARs are identical to those of the options described above with the exception that no share is issued on exercise; instead, cash equivalent to the increase in the value of the shares from the date of grant to the date of exercise is paid to the employee. These awards are therefore treated as liability awards under Topic 718 “Compensation - Stock Compensation” and are revalued to their fair value at each period end. The SARs include option awards with the same vesting terms as the Tier II, III and IV option awards described above. All Tier III SARs expired on July 3, 2022 as the specific performance hurdle was not achieved.

Changes in the awards granted under this plan are summarized in the tables below.

Awards issued under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (the “2018 Plan”)

In conjunction with the initial public offering in January 2018, Gates adopted the 2018 Plan, which is a market-based long-term incentive program that allows for the issue of a variety of equity-based and cash-based awards, including stock options, SARs and restricted stock units (“RSUs”).

The SARs issued under this plan take the form of options, except that no share is issued on exercise; instead, cash equivalent to the increase in the value of the shares from the date of grant to the date of exercise is paid to the employee. These awards are therefore treated as liability awards under Topic 718 “Compensation - Stock Compensation” and are revalued to their fair value at each period end. The SARs and the majority of the share options issued under this plan vest evenly over either three years or four years from the grant date. Certain premium-priced options vested evenly over a three-year period, starting two years from the grant date. All options vest subject to the participant’s continued employment by Gates on the vesting date and expire ten years after the date of grant.

The RSUs issued under the plan consist of time-vesting RSUs and performance-based RSUs (“PRSUs”). The time-vesting RSUs vest evenly over either one or three years from the date of grant, subject to the participant’s continued provision of service to Gates on the vesting date. The PRSUs issued prior to 2022 provide that 50% of the award will generally vest if Gates achieves a certain level of average annual adjusted return on invested capital as defined in the plan (“Adjusted ROIC”) and the remaining 50% of the PRSUs will generally vest if Gates achieves certain relative total shareholder return (“Relative TSR”) goals, in each case, measured over a three-year performance period and subject to the participant’s continued employment through the end of the performance period. The total number of PRSUs that vest at the end of the performance period will range from 0% to 200% of the target based on actual performance against a pre-established scale. Starting in Fiscal 2022, the terms for PRSUs are identical, except that 75% of the award will generally vest based on the specified Adjusted ROIC achievement and the remaining 25% will generally vest based on Relative TSR goal attainment.

23

New awards and movements in existing awards granted under this plan are summarized in the tables below.

Summary of movements in options outstanding

		Nine months ended September 28, 2024
	Plan	Number of options	Weighted average exercise price $
Outstanding at the beginning of the period:
—Tier I	2014 Plan	1,828,327	$	6.98
—Tier II	2014 Plan	1,996,017	$	7.01
—Tier IV	2014 Plan	1,986,416	$	10.52
—SARs	Both plans	735,221	$	10.47
—Share options	2018 Plan	2,345,520	$	14.90
—Premium-priced options	2018 Plan	835,469	$	18.88
		9,726,970	$	10.90
Granted during the period:
—SARs	2018 Plan	22,100	$	14.87
		22,100	$	14.87
Forfeited during the period:
—SARs	2018 Plan	(3,535)	$	13.50
		(3,535)	$	13.50
Expired during the period:
—SARs	Both Plans	(266)	$	14.04
—Share options	2018 Plan	(331,730)	$	17.27
		(331,996)	$	17.26
Exercised during the period:
—Tier I	2014 Plan	(133,758)	$	6.81
—Tier II	2014 Plan	(177,264)	$	6.87
—Tier IV	2014 Plan	(195,676)	$	10.51
—SARs	Both Plans	(148,438)	$	9.68
—Share options	2018 Plan	(408,422)	$	14.17
		(1,063,558)	$	10.73
Outstanding at the end of the period:
—Tier I	2014 Plan	1,694,569	$	6.99
—Tier II	2014 Plan	1,818,753	$	7.02
—Tier IV	2014 Plan	1,790,740	$	10.52
—SARs	Both plans	605,082	$	10.81
—Share options	2018 Plan	1,605,368	$	14.60
—Premium-priced options	2018 Plan	835,469	$	18.88
		8,349,981	$	10.68
Exercisable at the end of the period		8,269,839	$	10.64
Vested and expected to vest at the end of the period		8,349,643	$	10.68

As of September 28, 2024, the aggregate intrinsic value of options that were exercisable was $60.5 million, and these options had a weighted average remaining contractual term of 2.5 years. As of September 28, 2024, the aggregate intrinsic value of options that were vested or expected to vest was $60.8 million, and these options had a weighted average remaining contractual term of 2.6 years.

As of September 28, 2024, the unrecognized compensation charge relating to the nonvested options was $0.3 million, which is expected to be recognized over a weighted-average period of 1.7 years.

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During the three and nine months ended September 28, 2024, cash of $2.9 million and $10.0 million was received in relation to the exercise of vested options, respectively, compared to $0.8 million and $17.5 million during the three and nine months ended September 30, 2023, respectively. The aggregate intrinsic value of options exercised during the three and nine months ended September 28, 2024 was $0.7 million and $3.4 million, respectively, compared to $0.0 million and $5.0 million during the three and nine months ended September 30, 2023, respectively.

Summary of movements in RSUs and PRSUs outstanding

	Nine months ended September 28, 2024
	Number of awards	Weighted average grant date fair value $
Outstanding at the beginning of the period:
—RSUs	3,032,230	$	13.78
—PRSUs	917,661	$	16.77
	3,949,891	$	14.47
Granted during the period:
—RSUs	1,222,752	$	14.91
—PRSUs	426,607	$	16.37
	1,649,359	$	15.28
Forfeited during the period:
—RSUs	(276,392)	$	13.69
—PRSUs	(154,837)	$	15.77
	(431,229)	$	14.44
Vested during the period:
—RSUs	(1,357,673)	$	13.80
—PRSUs	(154,274)	15.00
	(1,511,947)	$	13.92
Outstanding at the end of the period:
—RSUs	2,620,917	$	14.30
—PRSUs	1,035,157	$	17.02
	3,656,074	$	15.07

As of September 28, 2024, the unrecognized compensation charge relating to unvested RSUs and PRSUs was $16.7 million, which is expected to be recognized over a weighted average period of 1.5 years, subject, where relevant, to the achievement of the performance conditions described above. The total fair value of RSUs and PRSUs vested during the three and nine months ended September 28, 2024 was $5.8 million and $21.1 million, respectively, compared to $5.8 million and $21.1 million during the three and nine months ended September 30, 2023, respectively.

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Valuation of awards granted during the period

The grant date fair value of the SARs are measured using a Black-Scholes valuation model. RSUs are valued at the share price on the date of grant. The Relative TSR component of the PRSUs were valued using Monte Carlo simulations. As Gates only has volatility data for its shares for the period since its IPO, this volatility has, where necessary, been weighted with the debt-levered volatility of a peer group of public companies in order to determine the expected volatility over the expected option life. The expected option life represents the period of time for which the options are expected to be outstanding and is based on consideration of the contractual life of the option, option vesting period, and historical exercise patterns. The weighted average fair values and relevant assumptions were as follows:

	Nine months ended
	September 28, 2024			September 30, 2023
Weighted average grant date fair value:
—SARs	$	6.95		$	6.71
—RSUs	$	14.91		$	13.86
—PRSUs	$	16.37		$	15.88
Inputs to the model:
—Expected volatility — SARs	41.7		%	43.4		%
—Expected volatility — PRSUs	31.6		%	37.7		%
—Expected option life for SARs (years)	6.0			6.0
—Risk-free interest rate:
SARs	4.2		%	4.1		%
PRSUs	4.4		%	4.6		%

15. Equity

Movements in the Company’s number of shares in issue for the nine months ended September 28, 2024 and September 30, 2023, respectively, were as follows:

	Nine months ended
(number of shares)	September 28, 2024	September 30, 2023
Balance as of the beginning of the period	264,259,788	282,578,917
Exercise of share options	915,120	2,120,169
Vesting of restricted stock units, net of withholding taxes	1,215,382	1,329,609
Shares repurchased and cancelled	(11,690,303)	(21,934,634)
Balance as of the end of the period	254,699,987	264,094,061

In February 2024, the Company’s Board approved a share repurchase program for up to $100.0 million in authorized share repurchases, with an expiration date of October 6, 2024. On February 12, 2024, the Company, certain selling shareholders affiliated with Blackstone, and the representatives of the several underwriters entered into an underwriting agreement pursuant to which the selling shareholders sold to the underwriters 20,125,000 ordinary shares of the Company at a price of $12.045 per ordinary share (the “February 2024 Offering”). The Company did not receive any proceeds from the sale of ordinary shares in the February 2024 Offering, which closed on February 16, 2024. In connection with the February 2024 Offering, the Company repurchased 4,151,100 ordinary shares through Citigroup Global Markets Inc. from the same selling shareholders at a price of $12.045 per ordinary share for an aggregate consideration of approximately $50.0 million (the “February 2024 Repurchase”), plus costs paid directly related to the transaction of $0.3 million. This repurchase was funded by cash on hand. All shares repurchased pursuant to the February 2024 Repurchase have been cancelled.

In July 2024, the Company’s Board cancelled the then existing share repurchase program and approved a new share repurchase program, providing for up to $250.0 million in share repurchases, which expires on December 31, 2025. On August 16, 2024, the Company, certain selling shareholders affiliated with Blackstone, and the representatives of the several underwriters entered into an underwriting agreement pursuant to which the selling shareholders sold to the underwriters 23,000,000 ordinary shares of the

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Company at a price of $16.58 per ordinary share (the “August 2024 Offering”). The Company did not receive any proceeds from the sale of ordinary shares in the August 2024 Offering, which closed on August 21, 2024. In connection with the August 2024 Offering, the Company repurchased 7,539,203 ordinary shares through Citigroup Global Markets Inc. from the same selling shareholders at a price of $16.58 per ordinary share for an aggregate consideration of approximately $125.0 million (the “August 2024 Repurchase”), plus costs paid directly related to the transaction of $0.8 million. This repurchase was funded by cash on hand and a borrowing of $40.0 million under Gates’ secured revolving credit facility. All shares repurchased pursuant to the August 2024 Repurchase were pending cancellation as of September 28, 2024.

16. Analysis of accumulated other comprehensive (loss) income

Changes in accumulated other comprehensive (loss) income by component, net of tax, were as follows:

(dollars in millions)	Post- retirement benefits		Cumulative translation adjustment		Cash flow hedges		Accumulated OCI attributable to shareholders		Non-controlling interests		Accumulated OCI
As of December 30, 2023	$	(15.3)	$	(832.3)	$	19.1	$	(828.5)	$	(78.4)	$	(906.9)
Foreign currency translation	(2.9)		(89.3)		—		(92.2)		4.9		(87.3)
Cash flow hedges movements	—		—		(19.9)		(19.9)		—		(19.9)
Post-retirement benefit movements	(1.4)		—		—		(1.4)		—		(1.4)
Other comprehensive loss	(4.3)		(89.3)		(19.9)		(113.5)		4.9		(108.6)
As of September 28, 2024	$	(19.6)	$	(921.6)	$	(0.8)	$	(942.0)	$	(73.5)	$	(1,015.5)

(dollars in millions)	Post- retirement benefits		Cumulative translation adjustment		Cash flow hedges		Accumulated OCI attributable to shareholders		Non-controlling interests		Accumulated OCI
As of December 31, 2022	$	0.6	$	(950.0)	$	31.6	$	(917.8)	$	(64.6)	$	(982.4)
Foreign currency translation	(1.3)		27.2		—		25.9		(29.4)		(3.5)
Cash flow hedges movements	—		—		7.4		7.4		—		7.4
Post-retirement benefit movements	(1.9)		—		—		(1.9)		—		(1.9)
Other comprehensive (loss) income	(3.2)		27.2		7.4		31.4		(29.4)		2.0
As of September 30, 2023	$	(2.6)	$	(922.8)	$	39.0	$	(886.4)	$	(94.0)	$	(980.4)

17. Related party transactions

A. Entities affiliated with Blackstone

In connection with the initial public offering of Gates, we entered into a Support and Services Agreement with Blackstone Management Partners L.L.C. (“BMP”) under which the Company and certain of its direct and indirect subsidiaries reimburse BMP for customary support services provided by Blackstone’s portfolio operations group to the Company at BMP’s direction. BMP will invoice the Company for such services based on the time spent by the relevant personnel providing such services during the applicable period and Blackstone’s allocated costs of such personnel. During the periods presented, no amounts were paid or were outstanding under this agreement. This agreement terminates on the date Blackstone beneficially owns less than 5% of our ordinary shares and such shares have a fair market value of less than $25.0 million, or such earlier date as may be chosen by Blackstone.

As described in Note 15, in February 2024, the Company repurchased 4,151,100 ordinary shares through Citigroup Global Markets Inc. from certain shareholders affiliated with Blackstone for an aggregate consideration of $50.0 million, plus costs paid directly related to the transaction of $0.3 million. In addition, during August 2024, the Company repurchased 7,539,203 ordinary shares through Citigroup Global Markets Inc. from certain shareholders affiliated with Blackstone for an aggregate consideration of $125.0 million, plus costs paid directly related to the transaction of $0.8 million.

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B. Equity method investees

Purchases from equity method investees were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Purchases	$	(4.0)	$	(4.5)	$	(11.9)	$	(13.7)

Amounts outstanding in respect of these transactions were payables of $0.2 million as of September 28, 2024, compared to $0.2 million as of December 30, 2023. No dividends were received from our equity method investees during the periods presented.

C. Non-Gates entities controlled by non-controlling shareholders

Sales to and purchases from non-Gates entities controlled by non-controlling shareholders were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Sales	$	10.9	$	9.7	$	30.3	$	34.8
Purchases	$	(4.0)	$	(3.4)	$	(11.2)	$	(11.8)

Amounts outstanding in respect of these transactions were as follows:

(dollars in millions)	As of September 28, 2024		As of December 30, 2023
Receivables	$	4.4	$	3.2
Payables	$	(3.6)	$	(3.2)

18. Commitments and contingencies

A. Contingencies

Gates is, from time to time, party to general legal proceedings and claims, which arise in the ordinary course of business. Gates is also, from time to time, party to legal proceedings and claims in respect of environmental obligations, product liability, intellectual property, commercial and contractual disputes, employment matters and other matters which arise in the ordinary course of business and against which management believes Gates has meritorious defenses available. When appropriate, management consults with legal counsel and other appropriate experts to assess claims. If, in management’s opinion, we have incurred a probable loss as set forth by U.S. GAAP, an estimate is made of the loss and the appropriate accrual is reflected in our consolidated financial statements. Currently, there are no material amounts accrued.

While it is not possible to quantify the financial impact or predict the outcome of all pending claims and litigation, management does not anticipate that the outcome of any current proceedings or known claims, either individually or in aggregate, will materially affect Gates’ financial position, results of operations or cash flows.

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B. Warranties

The following summarizes the movements in the warranty liability for the nine months ended September 28, 2024 and September 30, 2023, respectively:

	Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023
Balance as of the beginning of the period	$	15.9	$	17.6
Charge for the period	7.1		3.7
Payments made	(5.7)		(5.7)
Released during the period	(0.2)		(0.1)
Foreign currency translation	0.1		(0.4)
Balance as of the end of the period	$	17.2	$	15.1

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Item 2: Management’s Discussion and Analysis
of Financial Condition and Results of Operations

The following discussion 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 replacement channel customers, and to OEM as specified components, with the majority of our revenue coming from replacement channels. Our products are used in applications across numerous end markets, including: automotive replacement and OEM; diversified industrial; industrial off-highway; industrial on-highway; 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 replacement markets. 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, replacement 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

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 replacement channels. This diversification limits our exposure to trends in any given end market. In addition, a majority of our sales are generated from customers in replacement 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 nine months ended September 28, 2024, sales into replacement channels accounted for approximately 67% of our total net sales. Our replacement 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. Replacement 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 nine months ended September 28, 2024, sales into OEM channels accounted for approximately 33% 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.

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During the nine months ended September 28, 2024, demands from industrial OEM channels softened while our enterprise initiatives and the favorable mix of replacement channel sales to OEM channel sales improved our profitability. We are continuing to manage our inventory position for the balance of the year to support exceptional customer service and position us for growth in 2025. As the industrial markets stabilize, we expect that our ongoing execution of enterprise initiatives and incremental new business investments will enable us to improve profitability and drive higher organic growth over the long term.

Global conflicts, such as the conflict between Russia and Ukraine, and sanctions and counter-sanctions imposed in response, created increased economic uncertainty and operational complexity both in Europe, Middle East and Africa (“EMEA”) and globally, the impacts of which we cannot fully predict. Gates had a single distribution center in Russia that sold primarily to customers based in Russia. In early July 2022, we suspended our operations in Russia. As of September 28, 2024, we deconsolidated the Russian subsidiary upon loss of control and recognized a deconsolidation loss of $12.8 million during the three months ended September 28, 2024.

Results for the three and nine months ended September 28, 2024 compared to the results for the three and nine months ended September 30, 2023

Summary Gates Performance

	Three months ended						Nine months ended
(dollars in millions)	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Net sales	$	830.7		$	872.9		$	2,578.8		$	2,706.9
Cost of sales	494.9			529.5			1,555.6			1,685.7
Gross profit	335.8			343.4			1,023.2			1,021.2
Selling, general and administrative expenses	219.9			213.4			649.9			666.2
Transaction-related expenses	0.5			1.3			2.1			2.1
Asset impairments	—			0.1			—			0.1
Restructuring expenses	2.2			2.6			5.0			10.3
Other operating expenses	—			0.1			0.1			0.2
Operating income from continuing operations	113.2			125.9			366.1			342.3
Interest expense	35.1			39.5			121.7			124.8
Loss on deconsolidation of Russian subsidiary	12.8			—			12.8			—
Other (income) expenses	(3.9)			(0.2)			(8.5)			3.8
Income from continuing operations before taxes	69.2			86.6			240.1			213.7
Income tax expense	14.0			1.0			60.8			25.9
Net income from continuing operations	$	55.2		$	85.6		$	179.3		$	187.8
Net income from continuing operations margin (1)	6.6		%	9.8		%	7.0		%	6.9		%
Adjusted EBITDA(2)	$	182.5		$	189.4		$	580.3		$	561.2
Adjusted EBITDA margin(2)	22.0		%	21.7		%	22.5		%	20.7		%

(1)    Net income from continuing operations expressed as a percentage of net sales.

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

Net sales

Net sales during the three months ended September 28, 2024 were $830.7 million, compared to $872.9 million during the prior year period, a decrease of 4.8%, or $42.2 million, driven primarily by the impact of lower sales volume, partially offset by a $10.0 million benefit from pricing. Our net sales for the three months ended September 28, 2024 were adversely impacted by movements in average currency exchange rates of $8.8 million compared to the prior year period, principally due to the strengthening of the U.S. dollar against a number of currencies, in particular the Mexican Peso and Brazilian Real. As such, core sales decreased by $33.4 million, or 3.8%, during the three months ended September 28, 2024 compared to the prior year period.

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The overall decline in core sales was primarily driven by a 15.0% decline in sales to our industrial OEM channel for the three months ended September 28, 2024, primarily in North America and EMEA. The industrial sales decline was primarily driven by construction, agriculture, and personal mobility end markets for the three months ended September 28, 2024. Sales to our automotive OEM channel declined during the three months ended September 28, 2024, partially offset by a 2.9% sales increase to our automotive replacement channel, primarily in EMEA.

Net sales during the nine months ended September 28, 2024 were $2,578.8 million, compared to $2,706.9 million during the prior year period, a decrease of 4.7%, or $128.1 million, driven primarily by the impact of lower sales volume, partially offset by a $34.3 million benefit from pricing. Our net sales for the nine months ended September 28, 2024 were adversely impacted by movements in average currency exchange rates of $24.7 million compared to the prior year period, principally due to the strengthening of the U.S. dollar against a number of currencies, in particular the Turkish Lira, Japanese Yen, and Chinese Renminbi. As such, core sales decreased by $103.4 million, or 3.8%, during the nine months ended September 28, 2024 compared to the prior year period.

The overall decline in core sales was primarily driven by an 8.2% decrease of sales to our industrial customers for the nine months ended September 28, 2024, particularly in North America and EMEA. Personal mobility, agriculture and construction drove most of the decline, with decreases of 30.1%, 13.5% and 8.5%, respectively, during the nine months ended September 28, 2024 compared to the prior year period.

Cost of sales

Cost of sales for the three months ended September 28, 2024 was $494.9 million, compared to $529.5 million for the prior year period, a decrease of 6.5%, or $34.6 million. This decrease was primarily attributable to a combined impact of lower volumes and enterprise initiatives that favorably impacted manufacturing performance. Favorable movements in average currency exchange rates further contributed a decrease of $5.8 million. The decrease was partially offset by higher inflation-related costs.

Cost of sales for the nine months ended September 28, 2024 was $1,555.6 million, compared to $1,685.7 million for the prior year period, a decrease of 7.7%, or $130.1 million. The decrease was primarily attributable to a combined impact of lower volumes and enterprise initiatives that favorably impacted manufacturing performance and $19.1 million due to favorable movements in average currency exchange rates, partially offset by higher inflation-related costs.

Gross profit

As a result of the factors described above, gross profit for the three months ended September 28, 2024 was $335.8 million, compared to $343.4 million for the prior year period, a decrease of 2.2% or $7.6 million. Our gross profit margin improved by 110 basis points to 40.4% for the three months ended September 28, 2024.

As a result of the factors described above, gross profit for the nine months ended September 28, 2024 was $1,023.2 million, compared to $1,021.2 million for the prior year period, an increase of 0.2% or $2.0 million. Our gross profit margin improved by 200 basis points to 39.7% for the nine months ended September 28, 2024.

Selling, general and administrative expenses

Selling, general and administrative (“SG&A”) expenses for the three months ended September 28, 2024 were $219.9 million compared to $213.4 million for the prior year period. This increase of $6.5 million was driven primarily by the $3.1 million increase in stock compensation expense, increased outbound freight and warranty expenses, partially offset by a decrease in labor and benefit expense of $4.3 million.

SG&A expenses for the nine months ended September 28, 2024 were $649.9 million compared to $666.2 million for the prior year period. This decrease of $16.3 million was primarily attributable to an $11.5 million charge related to the credit loss due to a customer bankruptcy incurred during the prior year period. The decrease was further driven by the $7.1 million gain from disposal of property, plant and equipment, and higher corporate-owned life insurance related income, partially offset by increased outbound freight and warranty costs.

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Transaction-related expenses

Transaction-related expenses of $0.5 million and $2.1 million were incurred during the three and nine months ended September 28, 2024, respectively. Transaction expenses for the three months ended September 28, 2024 were primarily related to the secondary offering completed during August 2024. Transaction expenses for the nine months ended September 28, 2024 were primarily related to the debt refinancing that occurred in June 2024, the secondary offerings completed in both February and August 2024, and certain other corporate transactions. Transaction-related expenses of $1.3 million and $2.1 million were incurred during the prior year three and nine months ended September 30, 2023, respectively, related primarily to the fees for amending the New Dollar Term Loans in October 2023 and certain other corporate transactions.

Restructuring expenses

Restructuring and other strategic initiatives during the three and nine months ended September 28, 2024 included $1.0 million and $2.5 million, respectively, of costs related to the relocation of certain production activities in Mexico. During the three months ended September 28, 2024, we also incurred severance costs of $1.0 million related to the consolidation of production activities across certain North American plants. Other restructuring costs incurred during the three and nine months ended September 28, 2024 included legal and consulting expenses, and costs associated with prior period facility closures or relocations in several countries.

Restructuring and other strategic initiatives during the three and nine months ended September 30, 2023 related primarily to severance and other non-labor costs related to relocating certain production activities in China, Mexico and Europe. During the three months ended September 30, 2023, we also incurred additional non-severance labor and benefit costs of $0.3 million related to relocation and integration of certain support functions into our regional shared service center in Europe. Other restructuring costs incurred during the three months ended September 30, 2023 related to legal and consulting expenses, as well as costs associated with prior period facility closures or relocations in several countries.

Interest expense

Our interest expense was as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Debt:
Dollar Term Loans	$	21.9	$	26.9	$	69.4	$	87.5
Dollar Senior Notes	8.5		8.7		26.1		26.6
Revolving credit facility	—		1.0		—		1.8
	30.4		36.6		95.5		115.9
Amortization of deferred issuance costs	1.7		2.3		21.8		6.7
Other interest expense	3.0		0.6		4.4		2.2
	$	35.1	$	39.5	$	121.7	$	124.8

Details of our long-term debt are presented in Note 12 to the condensed consolidated financial statements included elsewhere in this report. Interest on debt decreased by $4.4 million for the three months ended September 28, 2024 when compared to the equivalent prior year period, primarily due to the favorable impact of derivatives and lower interest rates applicable on the floating rate Dollar Term Loans. Interest on debt decreased by $3.1 million for the nine months ended September 28, 2024 when compared to the equivalent prior year period. Interest expenses on the principal amount of debt decreased for the nine months ended September 28, 2024 primarily due to favorable impact of derivatives and lower interest rates applicable on the floating rate Dollar Term Loans. Amortization of deferred issuance costs during the nine months ended September 28, 2024 increased by $15.1 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” in February 2024.

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Other (income) expenses

Our other (income) expense was as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Interest income on bank deposits	$	(2.8)	$	(4.0)	$	(11.2)	$	(9.2)
Foreign currency (gain) loss on net debt and hedging instruments	(1.9)		(1.4)		(7.0)		1.5
Net adjustments related to post-retirement benefits	(0.6)		(0.7)		(1.9)		(2.2)
Foreign currency loss on hyperinflation remeasurement	1.4		3.7		6.0		8.5
Other	—		2.2		5.6		5.2
	$	(3.9)	$	(0.2)	$	(8.5)	$	3.8

Other (income) expenses for the three and nine months ended September 28, 2024 were income of $3.9 million and $8.5 million, respectively, compared to income of $0.2 million and expenses of $3.8 million, respectively, in the prior year periods. These changes were primarily driven by the impact of net movements in foreign currency exchange rates on net debt and hedging instruments and foreign currency remeasurement loss related to translation adjustments for entities that operate in highly inflationary economies, specifically Argentina and Türkiye, for the three months ended September 28, 2024 compared to the prior year period. The change was also attributed to the increased interest income on our bank deposits for the nine months ended September 28, 2024 compared to the prior year period.

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 September 28, 2024, we had income tax expense of $14.0 million on pre-tax income of $69.2 million, which resulted in an effective tax rate of 20.2%, compared to an income tax expense of $1.0 million on pre-tax income of $86.6 million, which resulted in an effective tax rate of 1.2% for the three months ended September 30, 2023.

For the three months ended September 28, 2024, the effective tax rate was driven primarily by net discrete tax benefits of $7.8 million, of which $6.5 million related to changes in the realizability of certain deferred tax assets, primarily related to U.S. foreign tax credit carryforwards, $3.2 million of discrete tax benefit related to the loss on deconsolidation of Russian subsidiary, offset by $1.9 million of other net discrete tax expenses. For the three months ended September 30, 2023, the effective tax rate was driven primarily by net discrete tax benefits of $11.0 million, of which $12.9 million related to unrecognized tax benefits due to audit closures, offset by $1.9 million of other net discrete tax expenses.

For the nine months ended September 28, 2024, we had an income tax expense of $60.8 million on pre-tax income of $240.1 million, which resulted in an effective tax rate of 25.3%, compared to an income tax expense of $25.9 million on pre-tax income of $213.7 million, which resulted in an effective tax rate of 12.1% for the nine months ended September 30, 2023.

For the nine months ended September 28, 2024, we had net discrete tax benefits of $8.3 million, of which $13.8 million related to unrecognized tax benefits due to audit closures and $3.2 million discrete tax benefit from a loss on deconsolidation of Russian subsidiary, offset by $3.4 million of uncertain tax benefit interest accrual, $4.2 million of net discrete expense related to changes in the realizability of certain deferred tax assets and $1.1 million of other net discrete tax expenses. For the nine months ended September 30, 2023, the effective tax rate was driven primarily by discrete benefits of $11.0 million, of which $12.9 million related to unrecognized tax benefits due to audit closures, offset by $1.9 million of other net discrete tax expenses.

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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%. We are continuing 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 expected 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.

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 during the three months ended September 28, 2024 that it is more likely than not that deferred tax assets in the U.S. totaling $6.9 million are realizable. Accordingly, we recognized $5.7 million of discrete benefit, while the remaining $1.2 million is recognized as part of the annual effective tax rate. As a result of changes in estimates of future taxable profits against which the foreign tax credits can be utilized, our judgment changed regarding valuation allowances on these deferred tax assets.

Adjusted EBITDA

Adjusted EBITDA for the three months ended September 28, 2024 was $182.5 million, compared to $189.4 million in the prior year period, a decrease of 3.6% or $6.9 million. Adjusted EBITDA margin was 22.0% for the three months ended September 28, 2024, a 30 basis point increase from the prior year period margin of 21.7%. The decrease in Adjusted EBITDA was largely the result of lower volumes and adverse impacts of movements in average currency exchange rates, partially offset by enterprise initiatives that favorably impacted manufacturing performance and pricing.

Adjusted EBITDA for the nine months ended September 28, 2024 was $580.3 million, compared to $561.2 million in the prior year period, an increase of 3.4% or $19.1 million. Adjusted EBITDA margin was 22.5% for the nine months ended September 28, 2024, a 180 basis point improvement from the prior year period Adjusted EBITDA margin of 20.7%. The increase in Adjusted EBITDA was largely the result of enterprise initiatives that favorably impacted manufacturing performance and pricing, and favorable mix of replacement channel sales to OEM channel sales, partially offset by lower volumes.

For a reconciliation of net income from continuing operations to Adjusted EBITDA for each of the periods presented and the calculation of the Adjusted EBITDA margin, see “—Non-GAAP Measures.”

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Analysis by Operating Segment

Power Transmission (61.8% and 61.6%, respectively, of Gates’ net sales for the three and nine months ended September 28, 2024)

	Three months ended
(dollars in millions)	September 28, 2024			September 30, 2023			Period over period change
Net sales	$	513.4		$	536.4		(4.3	%)
Adjusted EBITDA	$	113.0		$	116.5		(3.0	%)
Adjusted EBITDA margin	22.0		%	21.7		%

	Nine months ended
(dollars in millions)	September 28, 2024			September 30, 2023			Period over period change
Net sales	$	1,588.1		$	1,658.4		(4.2	%)
Adjusted EBITDA	$	355.8		$	343.2		3.7	%
Adjusted EBITDA margin	22.4		%	20.7		%

Net sales in Power Transmission for the three months ended September 28, 2024 decreased by 4.3%, or $23.0 million, compared to the prior year period, driven primarily by a decrease in volume, partially offset by a $4.5 million benefit from pricing. Our net sales for the three months ended September 28, 2024 were adversely impacted by movements in average currency exchange rates of $5.4 million. As such, core sales decreased by 3.3%, or $17.6 million, compared to the prior year period,

Net sales in Power Transmission for the nine months ended September 28, 2024 decreased by 4.2%, or $70.3 million, compared to the prior year period, driven primarily by a decrease in volume, partially offset by an $18.8 million benefit from pricing. Our net sales for the nine months ended September 28, 2024 were adversely impacted by movements in average currency exchange rates of $23.5 million. As such, core sales decreased by 2.8%, or $46.8 million, compared to the prior year period.

Power Transmission’s core sales to industrial customers decreased by 5.7% and 7.1% during the three and nine months ended September 28, 2024, respectively, compared to the prior year periods. Industrial OEM sales declined by 11.7% and 16.2%, respectively, during the three and nine months ended September 28, 2024 compared to the prior year period, particularly in North America and EMEA. Sales to our industrial replacement customers slightly declined by 1.3% for the three months ended September 28, 2024. While most industrial end markets experienced sales decline, personal mobility had the most significant impact, which declined by 17.6% and 31.8%, respectively, during the three and nine months ended September 28, 2024 compared to the prior year period. Sales to our automotive channel during the three and nine months ended September 28, 2024 remained relatively consistent with the prior year period, with decreasing demands from automotive OEM channel partially offset by automotive replacement sales growth.

Power Transmission Adjusted EBITDA for the three months ended September 28, 2024 decreased by 3.0%, or $3.5 million, compared to the prior year period, driven primarily by lower volumes and movements in average currency exchange rates, partially offset by enterprise initiatives that favorably impacted manufacturing performance and pricing. As a result, Adjusted EBITDA margin was 22.0%, a 30 basis point improvement from the prior year period.

Power Transmission Adjusted EBITDA for the nine months ended September 28, 2024 increased by 3.7%, or $12.6 million, compared to the prior year period. This increase was driven primarily by enterprise initiatives that favorably impacted manufacturing performance and pricing, partially offset by lower volumes and higher inflation related costs. The increase resulted in an Adjusted EBITDA margin of 22.4%, a 170 basis point improvement compared to the prior year period.

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Fluid Power (38.2% and 38.4%, respectively, of Gates’ net sales for the three and nine months ended September 28, 2024)

	Three months ended
(dollars in millions)	September 28, 2024			September 30, 2023			Period over period change
Net sales	$	317.3		$	336.5		(5.7	%)
Adjusted EBITDA	$	69.5		$	72.9		(4.7	%)
Adjusted EBITDA margin	21.9		%	21.7		%

	Nine months ended
(dollars in millions)	September 28, 2024			September 30, 2023			Period over period change
Net sales	$	990.7		$	1,048.5		(5.5	%)
Adjusted EBITDA	$	224.5		$	218.0		3.0	%
Adjusted EBITDA margin	22.7		%	20.8		%

Net sales in Fluid Power for the three months ended September 28, 2024 decreased by 5.7%, or $19.2 million, compared to the prior year period, driven primarily by a decrease in volume, partially offset by a $5.5 million benefit from pricing. Our net sales were adversely impacted by movements in average currency exchange rates of $3.4 million. As such, core sales decreased by 4.7%, or $15.8 million, compared to the prior year period.

Net sales in Fluid Power for the nine months ended September 28, 2024 decreased by 5.5%, or $57.8 million, compared to the prior year period, driven primarily by a decrease in volume, partially offset by a $15.5 million benefit from pricing. Our net sales were adversely impacted by movements in average currency exchange rates of $1.2 million. As such, core sales decreased by 5.4%, or $56.6 million, compared to the prior year period.

Fluid Power’s core sales to our industrial channel declined by 7.6%, while sales to our automotive channel increased by 4.5% during the three months ended September 28, 2024 compared to the prior year period. The decline in the industrial channel was primarily attributed to North America and EMEA, with construction and agriculture driving most of the sales decline of 10.3% and 14.2%, respectively, during the three months ended September 28, 2024 compared to prior year period. During the nine months ended September 28, 2024, the decline of Fluid Power’s core sales was primarily attributable to a 9.0% decrease in the industrial channel sales compared to the prior year period, primarily driven by agriculture, construction, and energy end markets. The decline in industrial sales was partially offset by a 7.3% increase in automotive sales for the nine months ended September 28, 2024, primarily from North America and EMEA.

 Fluid Power Adjusted EBITDA for the three months ended September 28, 2024 decreased by 4.7%, or $3.4 million, compared to the prior year period, driven primarily by lower volumes, partially offset by enterprise initiatives that favorably impacted manufacturing performance and pricing. As a result, the Adjusted EBITDA margin was 21.9%, a 20 basis point improvement from the prior year period.

 Fluid Power Adjusted EBITDA for the nine months ended September 28, 2024 increased by 3.0%, or $6.5 million, compared to the prior year period. This increase was driven primarily by enterprise initiatives that favorably impacted manufacturing performance and pricing, partially offset by lower volumes, resulting in an Adjusted EBITDA margin of 22.7%, a 190 basis points improvement compared to 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 revolving credit facilities. 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.

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As market conditions warrant, we and/or Blackstone 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 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 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 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

Nine months ended September 28, 2024 compared to the nine months ended September 30, 2023

Cash provided by operating activities was $188.7 million during the nine months ended September 28, 2024 compared to cash provided by operating activities of $291.7 million during the prior year period, driven primarily by $119.8 million in trade working capital movement compared to the prior year period and an increase of $17.6 million in income taxes paid, partially offset by a decrease of $21.1 million interest paid compared to the prior year period.

Net cash used in investing activities during the nine months ended September 28, 2024 was $80.3 million, compared to $58.0 million in the prior year period. The increase of cash used in investing activities was primarily driven by increased capital expenditures of $26.1 million, a $12.5 million cash derecognition from the deconsolidation of our Russian subsidiary, and higher investment purchases of $11.3 million. The increase in cash used in investing activities was partially offset by a $17.4 million decrease in net cash paid under company-owned life insurance policies, and $10.2 million additional proceeds from the sale of property, plant and equipment.

Net cash used in financing activities was $253.5 million during the nine months ended September 28, 2024, compared to $241.7 million in the prior year period. Current year outflows were primarily related to the $1,917.0 million debt repayment partially offset by the inflows of $1,840.0 million related to new debt issuance, $176.1 million paid to acquire shares under our share repurchase program, including shares repurchased through an intermediary from Blackstone as further described in Note 15 to the condensed consolidated financial statements included elsewhere in this report, and $20.5 million payments related to debt issuance costs.

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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 of September 28, 2024		As of December 30, 2023		As of September 28, 2024		As of December 30, 2023
Secured debt:
—2024 Dollar Term Loans due June 4, 2031	$	1,293.7	$	—	$	1,300.0	$	—
—2022 Dollar Term Loans due November 16, 2029	550.4		547.8		564.9		567.8
—2021 Dollar Term Loans due November 16, 2029	—		1,322.5		—		1,336.1
—Revolving credit facility	30.0		—		30.0		—
Unsecured debt:
—6.875% Dollar Senior Notes due July 1, 2029	503.6		—		500.0		—
—6.250% Dollar Senior Notes due January 16, 2026	—		581.2		—		568.0
	$	2,377.7	$	2,451.5	$	2,394.9	$	2,471.9

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.

Debt issuances and redemptions

During August 2024, we drew $40.0 million under our revolving credit facility to partially fund the purchase of our ordinary shares under our 2024 share repurchase program, as discussed further in Note 15 to the condensed consolidated financial statements included elsewhere in this quarterly report. During September 2024, we partially paid down the borrowings on the revolving credit facility and had a balance of $30.0 million as of September 28, 2024.

On June 4, 2024, we entered into an amendment to our credit agreement governing our term loan facilities and our secured revolving credit facility. As part of this amendment, we issued new “2024 Dollar Term Loans” and used the proceeds to extinguish the entire outstanding principal balance of the 2021 Dollar Term Loans plus $1.1 million of accrued interest. 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 of $500.0 million, and fully redeemed our existing Dollar Senior Notes due 2026 of $568.0 million aggregate principal amount, which included the payment of $13.7 million of accrued interest thereon. We issued the new Dollar Senior Notes 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 using the effective interest method. The redemption of our existing Dollar Senior Notes resulted in the accelerated recognition of $2.6 million of deferred issuance costs (recognized in interest expense).

During February 2024, we made a voluntary principal debt repayment of $100.0 million against our 2021 Dollar Term Loans. As a result of this repayment, we accelerated the recognition of $1.0 million of deferred issuance costs (recognized in interest expense).

During May 2023, we drew $100.0 million under our asset-backed revolving credit facility to partially fund the purchase of shares under our 2023 share repurchase program. During fiscal 2023, we paid down the borrowings on the asset-backed revolver and had no remaining outstanding balance as of September 28, 2024 and December 30, 2023.

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Dollar Term Loan credit agreement amendments

On June 4, 2024, we amended the 2022 Dollar Term Loans’ interest rate to be, at our option, either Term SOFR, subject to a floor of 0.50%, plus a margin of 2.25% per annum, or the base rate, subject to a 1.50% per annum floor, plus 1.50% per annum.

On June 4, 2024, in connection with the amendment to our credit agreement, we increased borrowing capacity under our revolving credit facility from $250.0 million to $500.0 million and extended the maturity from November 18, 2026 to 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 2024 Unsecured Senior Notes are outstanding. We incurred associated third party costs of approximately $2.5 million, which have been deferred and will be amortized to interest expense over the remaining term of the revolving credit facility. Concurrently with this amendment, we terminated the $250.0 million asset-backed revolving credit facility governed by the second amended and restated credit agreement dated as of November 18, 2021.

On October 10, 2023, we amended the 2022 Dollar Term Loans’ interest rate to be, at our option, either Term SOFR, subject to a floor of 0.50%, plus a margin of 3.00% per annum, or the base rate, subject to a 1.50% per annum floor, plus 2.00% per annum.

On March 1, 2023, we amended the 2021 Dollar Term Loans, revolving credit facility and asset-backed revolver, which bore interests at LIBOR plus an applicable margin. The amendments modified the reference rates for borrowings in dollar from LIBOR to Term SOFR or Adjusted Term SOFR, as applicable. For further information on the facilities, see Note 12 to the condensed consolidated financial statements included elsewhere in this quarterly report.

Non-guarantor subsidiaries

The majority of the Company’s U.S. subsidiaries are guarantors of the senior secured credit facilities.

For the twelve months ended September 28, 2024, before intercompany eliminations, our non-guarantor subsidiaries represented approximately 75% of our net sales and 72% of our EBITDA as defined in the financial covenants attaching to the senior secured credit facilities. As of September 28, 2024, before intercompany eliminations, our non-guarantor subsidiaries represented approximately 66% of our total assets and approximately 27% of our total liabilities.

Borrowing Headroom

On June 4, 2024, we extinguished our asset-backed revolving credit facility as discussed further in Note 12 to the condensed consolidated financial statements included elsewhere in this quarterly report. In connection with the amendment to our credit agreement, we increased borrowing capacity under our secured revolving credit facility that provides for multi-currency revolving loans from $250.0 million to $500.0 million and extended the maturity from November 18, 2026 to June 4, 2029. The letters of credit outstanding under this facility were $28.8 million as of September 28, 2024. As of September 28, 2024, drawings for cash under the revolving credit facility totaled $30.0 million.

In total, our committed borrowing headroom was $441.2 million, in addition to cash and cash equivalents balances of $574.4 million.

Non-GAAP Measures

EBITDA and Adjusted EBITDA

EBITDA is a non-GAAP measure that represents net income or loss from continuing operations for the period before the impact of income taxes, net interest and other expenses, depreciation and amortization. EBITDA is widely used by securities analysts, investors and other interested parties to evaluate the profitability of companies. EBITDA eliminates potential differences in performance caused by variations in capital structures (affecting net finance costs), tax positions (such as the availability of net operating losses against which to relieve taxable profits), the cost and age of tangible assets (affecting relative depreciation expense) and the extent to which intangible assets are identifiable (affecting relative amortization expense).

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Management uses Adjusted EBITDA as its key profitability measure. This is a non-GAAP measure that represents EBITDA before 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 our peer companies with a similar leveraged, private equity ownership history. 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.

During the periods presented, the items excluded from EBITDA in computing Adjusted EBITDA primarily included:

•loss on deconsolidation of previously controlled subsidiary;

•non-cash charges in relation to share-based compensation;

•transaction-related expenses incurred in relation to major corporate transactions, including the acquisition of businesses and related integration activities, and equity and debt transactions;

•restructuring expenses, including severance-related expenses;

•credit loss related to a customer bankruptcy;

•cybersecurity incident expenses; and

•inventory adjustments related to certain inventories accounted for on a LIFO basis.

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, we excluded loss on the deconsolidation of a previously controlled subsidiary reflecting management’s determination that the Company is unable to manage and control its Russian subsidiary; restructuring expenses and severance-related expenses that reflect specific, strategic actions taken by management to shutdown, downsize, or otherwise fundamentally reorganize areas of Gates’ business; expenses related to a malware attack that occurred in February 2023; and 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.

EBITDA and Adjusted EBITDA exclude 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.

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The following table reconciles net income from continuing operations, the most directly comparable GAAP measure, to EBITDA and Adjusted EBITDA:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net income from continuing operations	$	55.2	$	85.6	$	179.3	$	187.8
Income tax expense	14.0		1.0		60.8		25.9
Net interest and other expenses	31.2		39.3		113.2		128.6
Depreciation and amortization	53.7		54.0		162.8		162.5
EBITDA	166.9		179.9		528.9		504.8
Loss on deconsolidation of Russian subsidiary (1)	12.8		—		12.8		—
Transaction-related expenses (2)	0.5		1.3		2.1		2.1
Asset impairments	—		0.1		—		0.1
Restructuring expenses	2.2		2.6		5.0		10.3
Share-based compensation expense	6.4		3.3		20.2		19.6
Inventory impairments and adjustments (included in cost of sales) (3)	4.4		2.2		21.7		6.3
Severance expenses (included in cost of sales)	0.9		(0.1)		0.9		0.4
Severance expenses (included in SG&A)	1.4		—		1.5		0.9
Credit (gain) loss related to customer bankruptcy (included in SG&A) (4)	(0.2)		—		(0.1)		11.4
Cybersecurity incident expenses (5)	—		—		—		5.1
Other items not directly related to current operations (6)	—		0.1		0.1		0.2
Adjusted EBITDA	$	182.5	$	189.4	$	580.3	$	561.2

(1)    In July 2022, Gates suspended our operations in Russia. As of September 28 2024, we deconsolidated the Russian subsidiary upon loss of control and recognized a deconsolidation loss.

(2)    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.

(3)    Inventory impairments and adjustments include the reversal of the adjustment to remeasure certain inventories on a LIFO basis.

(4)    On January 31, 2023, one of our customers filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In connection with the bankruptcy proceedings, we preliminarily evaluated our potential risk and exposure relating to our outstanding pre-petition accounts receivable balance from the customer and recorded an initial pre-tax charge to reflect our estimated recovery. We continue to monitor the circumstances surrounding the bankruptcy and adjust our estimate as necessary.

(5)    On February 11, 2023, Gates determined that it was the target of a malware attack. Cybersecurity incident expenses include legal, consulting, and other costs incurred as a direct result of this incident, some of which may be partially offset by insurance recoveries.

(6)    Other items not directly related to current operations include other charges.

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Adjusted EBITDA Margin

Adjusted EBITDA margin is a non-GAAP measure that represents Adjusted EBITDA expressed as a percentage of net sales. We use Adjusted EBITDA margin to measure the success of our businesses in managing our cost base and improving profitability.

	Three months ended						Nine months ended
(dollars in millions)	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
Net sales	$	830.7		$	872.9		$	2,578.8		$	2,706.9
Adjusted EBITDA	$	182.5		$	189.4		$	580.3		$	561.2
Adjusted EBITDA margin	22.0		%	21.7		%	22.5		%	20.7		%

Core sales growth reconciliations

Core sales growth 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. We present core 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 September 28, 2024
(dollars in millions)	Power Transmission			Fluid Power			Total
Net sales for the three months ended September 28, 2024	$	513.4		$	317.3		$	830.7
Impact on net sales of movements in currency rates	5.4			3.4			8.8
Core sales for the three months ended September 28, 2024	$	518.8		$	320.7		$	839.5
Net sales for the three months ended September 30, 2023	536.4			336.5			872.9
Decrease in net sales on a core basis (core sales)	$	(17.6)		$	(15.8)		$	(33.4)
Core sales decline	(3.3		%)	(4.7		%)	(3.8		%)

	Nine months ended September 28, 2024
(dollars in millions)	Power Transmission			Fluid Power			Total
Net sales for the nine months ended September 28, 2024	$	1,588.1		$	990.7		$	2,578.8
Impact on net sales of movements in currency rates	23.5			1.2			24.7
Core sales for the nine months ended September 28, 2024	$	1,611.6		$	991.9		$	2,603.5
Net sales for the nine months ended September 30, 2023	1,658.4			1,048.5			2,706.9
Decrease in net sales on a core basis (core sales)	$	(46.8)		$	(56.6)		$	(103.4)
Core sales decline	(2.8		%)	(5.4		%)	(3.8		%)

43

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 last 12 months, as calculated pursuant to such agreements, resulted in a net benefit to Adjusted EBITDA for ratio calculation purposes of $7.8 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 plc 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, is the parent guarantor under our revolving credit facility, our term loan facility, and our outstanding notes. The only significant difference 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 is (i) additional net intercompany loan payable due to Gates Industrial Holdco Limited and its subsidiaries from the Company, which was $262.2 million and $333.6 million as of September 28, 2024 and December 30, 2023, respectively, (ii) additional intercompany payables due to Gates Industrial Holdco Limited and its subsidiaries from the Company attributable to UK tax group relief of $22.2 million and $26.6 million as of September 28, 2024 and December 30, 2023, respectively and (iii) additional cash and cash equivalents held by the Company, which was $9.5 million and $3.5 million as of September 28, 2024 and December 30, 2023, 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.

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 30, 2023, as filed with the SEC, from which there have been no material changes.

Item 3: Quantitative and Qualitative Disclosures about Market Risk

Our market risk includes the potential loss arising from adverse changes in foreign currency exchange rates, interest rates and commodity prices, and the credit risk of our customers and third-party depository institutions that hold our cash and short term deposits. From time to time, we use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options), and interest rate swaps to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact. Our objective in managing these risks is to reduce fluctuations in earnings and cash flows associated with changes in foreign currency exchange rates and interest rate movements. For a discussion of quantitative and qualitative disclosures about market risk, please refer to our annual report from which our exposure to market risk has not materially changed.

44

Item 4: Controls and Procedures

Disclosure Controls and Procedures

The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Any controls and procedures, no matter how well designed and operated, can provide only reasonable, not absolute, assurance of achieving the desired control objectives. The Company’s management, with the participation of the Company’s Chief Executive Officer and the Company’s Chief Financial Officer, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation, the Company’s Chief Executive Officer and the Company’s Chief Financial Officer concluded that, as of September 28, 2024, the Company’s disclosure controls and procedures were effective to accomplish their objectives at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

45

PART II — OTHER INFORMATION

Item 1: Legal Proceedings

Information regarding legal proceedings is incorporated into this Part II, Item 1 from Note 18 of the notes to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Item 1A: Risk Factors

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Item 1A. “Risk Factors” in Part I of the Company’s annual report, which could materially affect the Company’s business, financial condition, operating results or liquidity or future results. The risks described in the annual report are not the only risks facing the Company. Additional risks and uncertainties not currently known to the Company or that it currently deems to be immaterial also may materially adversely affect its results of operations, financial condition or liquidity. There have been no material changes to the risk factors disclosed in the annual report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth information regarding our purchases of our ordinary shares during the three months ended September 28, 2024:

Period	Total number of shares purchased	Average price paid per share (1)		Total number of shares purchased as part of publicly announced plans or programs(2)	Maximum dollar value of shares that may yet be purchased under the plans or programs ($ million)
6/30/2024 - 7/27/2024	—	$	—	—	$	250.0
7/28/2024 - 8/24/2024	7,539,203	$	16.5800	7,539,203	$	125.0
8/25/2024 - 9/28/2024	—	$	—	—	$	125.0
Total	7,539,203	$	16.5800	7,539,203	$	125.0

(1)    Does not include commissions or other costs paid to repurchase shares.

(2)    The share repurchase program was established in July 2024, allowing for up to $250 million in authorized share repurchases of our ordinary shares, exclusive of commissions, through December 2025. Under this publicly announced program, we are authorized to repurchase ordinary shares using a variety of methods, including but not limited to open market purchases and privately negotiated transactions, all in compliance with the rules and regulations of the SEC and other applicable legal requirements. In August 2024, we repurchased approximately $125 million of our ordinary shares under the share repurchase program pursuant to a share repurchase contract with Citigroup Global Markets Inc.

Item 5. Other Information

Section 13(r) Disclosure

Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, which added Section 13(r) of the Exchange Act, we hereby incorporate by reference herein Exhibit 99.1 of this report, which includes disclosures regarding activities at Mundys S.p.A. (formerly Atlantia S.p.A.), which may be, or may have been at the time considered to be, an affiliate of Blackstone and, therefore, our affiliate.

Trading Arrangements

During the three months ended September 28, 2024, no director or officer (as defined in Rule 16a-1(f) of the Exchange Act) of the Company informed us of the adoption or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

46

Item 6: Exhibits

Exhibit No.	Description
3.1	Certificate of Incorporation of Gates Industrial Corporation plc (incorporated by reference from Exhibit 3.1 to the registrant’s Amendment No. 1 to its Registration Statement on Form S-1, filed on January 8, 2018 (File No. 333-222310))
3.2	Articles of Association of Gates Industrial Corporation plc, effective October 7, 2019 (incorporated by reference from Exhibit 3.2 to the registrant’s Quarterly Report on Form 10-Q, filed on November 6, 2019)
31.1	Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
31.2	Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*
32.1	Certification by the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002**
99.1	Section 13(r) Disclosure*
101	The following financial information from Gates Industrial Corporation’s Quarterly Report on Form 10-Q for the three and nine months ended September 28, 2024, formatted in inline Extensible Business Reporting Language (iXBRL): (i) Condensed Consolidated Statements of Operations for the three and nine months ended September 28, 2024 and September 30, 2023, (ii) Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended September 28, 2024 and September 30, 2023, (iii) Condensed Consolidated Balance Sheets as of September 28, 2024 and December 30, 2023, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 28, 2024 and September 30, 2023, (v) Condensed Consolidated Statements of Shareholders’ Equity for the three and nine months ended September 28, 2024 and September 30, 2023, and (vi) Notes to the Condensed Consolidated Financial Statements*
104	Cover Page Interactive Data File (Embedded within the Inline XBRL document and included in Exhibit 101)

*    Filed herewith.

**    Furnished herewith.

The agreements and other documents filed as exhibits to this report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and you should not rely on them for that purpose. In particular, any representations and warranties made by us in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

47

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

GATES INDUSTRIAL CORPORATION PLC (Registrant)
By:	/s/ L. Brooks Mallard
	Name:	L. Brooks Mallard
	Title:	Chief Financial Officer
		(On behalf of the Registrant)
By:	/s/ John S. Patouhas
	Name:	John S. Patouhas
	Title:	Chief Accounting Officer
		(Principal Accounting Officer)

Date: October 30, 2024

48

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Ivo Jurek, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 28, 2024 of Gates Industrial Corporation plc (the “registrant”);

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 30, 2024
/s/ Ivo Jurek
Ivo Jurek
Chief Executive Officer
(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, L. Brooks Mallard, certify that:

1.    I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 28, 2024 of Gates Industrial Corporation plc (the “registrant”);

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	October 30, 2024
/s/ L. Brooks Mallard
L. Brooks Mallard
Chief Financial Officer
(Principal Financial Officer)

EX-32.1

Exhibit 32.1

Certification pursuant to

18 U.S.C. Section 1350,

as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the Quarterly Report on Form 10-Q of Gates Industrial Corporation plc (the “Company”) for the period ended September 28, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned certifies, in his capacity as an officer of the Company and pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:

(i)    The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Ivo Jurek
Ivo Jurek
Chief Executive Officer
(Principal Executive Officer)
Date:	October 30, 2024
/s/ L. Brooks Mallard
L. Brooks Mallard
Chief Financial Officer
(Principal Financial Officer)
Date:	October 30, 2024

A signed original of this certification required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request. The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

EX-99.1

Exhibit 99.1

Section 13(r) Disclosure

After Gates Industrial Corporation plc (“Gates”) filed its Form 10-Q for the quarter ended June 29, 2024 with the Securities and Exchange Commission (the “SEC”), Blackstone Inc. (“Blackstone”) filed the disclosure reproduced below with respect to its quarter ended June 30, 2024, in accordance with Section 13(r) of the Securities Exchange Act of 1934, as amended, in regard to Mundys S.p.A. (formerly, Atlantia S.p.A.). Mundys S.p.A. may be, or may have been at the time considered to be, an affiliate of Blackstone, and therefore an affiliate of Gates.As of the date Gates filed its Form 10-Q for the quarter ended September 28, 2024 with the SEC, Blackstone had not yet filed its Form 10-Q for its quarter ended September 30, 2024. Therefore, the disclosure reproduced below does not include any information for the quarter ended September 28, 2024.Gates did not independently verify or participate in the preparation of the disclosure reproduced below.

Blackstone included the following disclosure in its Form 10-Q for the period ended June 30, 2024:

Mundys S.p.A. (formerly “Atlantia S.p.A.”) provided the disclosure reproduced below in connection with activities during the quarter ended June 30, 2024. We have not independently verified or participated in the preparation of this disclosure.

“Disclosure pursuant to Section 13(r) of the Securities Exchange Act of 1934. Funds affiliated with Blackstone first invested in Mundys S.p.A. on November 18, 2022 in connection with the voluntary public tender offer by Schema Alfa S.p.A. for all of the shares of Mundys S.p.A., pursuant to which such funds obtained a minority non-controlling interest in Mundys S.p.A. Mundys S.p.A. owns and controls Aeroporti di Roma S.p.A. (“ADR”), an operator of airports in Italy including Leonardo da Vinci-Fiumicino Airport. Iran Air has historically operated periodic flights to and from Leonardo da Vinci-Fiumicino Airport as authorized, from time to time, by an aviation-related bilateral agreement between Italy and Iran, scheduled in compliance with European Regulation 95/93, and approved by the Italian Civil Aviation Authority. ADR, as airport operator, is under a mandatory obligation to provide airport services to all air carriers (including Iran Air) authorized by the applicable Italian authority. The relevant turnover attributable to these activities (whose consideration is calculated on the basis of general tariffs determined by such independent Italian authority) in the quarter ended June 30, 2024 was less than €50,000. Mundys S.p.A. does not track profits specifically attributable to these activities.”

XML

Cover Page - shares	9 Months Ended
	Sep. 28, 2024	Oct. 28, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 28, 2024
Document Transition Report	false
Entity File Number	001-38366
Entity Registrant Name	Gates Industrial Corporation plc
Entity Incorporation, Country Code	X0
Entity Tax Identification Number	98-1395184
Entity Address, Street Address	1144 Fifteenth Street
Entity Address, City	Denver
Entity Address, State	CO
Entity Address, Postal Zip Code	80202
City Area Code	303
Local Phone Number	744-1911
Title of each class	Ordinary Shares, $0.01 par value per share
Trading Symbol(s)	GTES
Name of each exchange on which registered	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		254,717,843
Entity Central Index Key	0001718512
Current Fiscal Year End Date	--12-28
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Income Statement [Abstract]
Net sales	$ 830.7	$ 872.9	$ 2,578.8	$ 2,706.9
Cost of sales	494.9	529.5	1,555.6	1,685.7
Gross profit	335.8	343.4	1,023.2	1,021.2
Selling, general and administrative expenses	219.9	213.4	649.9	666.2
Transaction-related expenses	0.5	1.3	2.1	2.1
Asset impairments	0.0	0.1	0.0	0.1
Restructuring expenses	2.2	2.6	5.0	10.3
Other operating expenses	0.0	0.1	0.1	0.2
Operating income from continuing operations	113.2	125.9	366.1	342.3
Interest expenses	35.1	39.5	121.7	124.8
Loss on deconsolidation of Russian subsidiary	12.8	0.0	12.8	0.0
Other (income) expenses	(3.9)	(0.2)	(8.5)	3.8
Income from continuing operations before taxes	69.2	86.6	240.1	213.7
Income tax expense	14.0	1.0	60.8	25.9
Net income from continuing operations	55.2	85.6	179.3	187.8
Loss on disposal of discontinued operations, net of tax, respectively, of $0, $0, $0 and $0	0.1	0.1	0.5	0.5
Net income	55.1	85.5	178.8	187.3
Less: non-controlling interests	7.5	6.8	20.5	17.3
Net income attributable to shareholders	$ 47.6	$ 78.7	$ 158.3	$ 170.0
Basic
Earnings per share from continuing operations (in usd per share)	$ 0.18	$ 0.30	$ 0.61	$ 0.62
Earnings per share from discontinued operations (in usd per share)	0	0	0	0
Earnings per share (in usd per share)	0.18	0.30	0.61	0.62
Diluted
Earnings per share from continuing operations (in usd per share)	0.18	0.29	0.60	0.61
Earnings per share from discontinued operations (in usd per share)	0	0	0	0
Earnings per share (in usd per share)	$ 0.18	$ 0.29	$ 0.60	$ 0.61

XML

Unaudited Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Income Statement [Abstract]
Loss on disposal of discontinued operations, net of tax	$ 0	$ 0	$ 0	$ 0

XML

Unaudited Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Net income	$ 55.1	$ 85.5	$ 178.8	$ 187.3
Foreign currency translation:
—Net translation gain (loss) on foreign operations, net of tax benefit, respectively, of $0.3, $4.0, $3.6 and $1.8	101.1	(87.7)	(59.5)	(5.4)
—(Loss) gain on net investment hedges, net of tax benefit (expense), respectively, of $0.3, $(3.7), $(3.6) and $0.1	(49.8)	20.2	(27.8)	1.9
Total foreign currency translation movements	51.3	(67.5)	(87.3)	(3.5)
Cash flow hedges (interest rate derivatives):
—(Loss) gain arising in the period, net of tax benefit (expense), respectively, of $4.3, $(2.9), $(0.1) and $(6.3)	(12.7)	8.5	0.3	18.7
—Reclassification to net income, net of tax benefit, respectively, of $2.3, $2.2, $6.8 and $3.8	(6.7)	(6.7)	(20.2)	(11.3)
Total cash flow hedges movements	(19.4)	1.8	(19.9)	7.4
Post-retirement benefits:
—Reclassification of prior year actuarial movements to net income, net of tax benefit, respectively, of $0.1, $0.3, $0.4 and $0.7	(0.5)	(0.6)	(1.4)	(1.9)
Total post-retirement benefits movements	(0.5)	(0.6)	(1.4)	(1.9)
Other comprehensive income (loss)	31.4	(66.3)	(108.6)	2.0
Comprehensive income for the period	86.5	19.2	70.2	189.3
Comprehensive income attributable to shareholders:
Comprehensive income attributable to shareholders:	54.6	18.2	44.8	201.4
Comprehensive income (loss) attributable to non-controlling interests	31.9	1.0	25.4	(12.1)
Comprehensive income for the period	86.5	19.2	70.2	189.3
—Income arising from continuing operations
Comprehensive income attributable to shareholders:
Comprehensive income attributable to shareholders:	54.7	18.3	45.3	201.9
—Loss arising from discontinued operations
Comprehensive income attributable to shareholders:
Comprehensive income attributable to shareholders:	$ (0.1)	$ (0.1)	$ (0.5)	$ (0.5)

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Unaudited Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Foreign currency translation:
Net translation gain (loss) on foreign operations, tax	$ 0.3	$ 4.0	$ 3.6	$ 1.8
(Loss) gain on net investment hedges, tax	0.3	(3.7)	(3.6)	0.1
Cash flow hedges (interest rate derivatives):
(Loss) gain arising in the period, tax expense	4.3	(2.9)	(0.1)	(6.3)
Reclassification to net income, net of tax benefit	2.3	2.2	6.8	3.8
Post-retirement benefits:
Reclassification of prior year actuarial movements to net income, net of tax benefit	$ 0.1	$ 0.3	$ 0.4	$ 0.7

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Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Millions	Sep. 28, 2024	Dec. 30, 2023
Current assets
Cash and cash equivalents	$ 574.4	$ 720.6
Trade accounts receivable, net	811.8	768.2
Inventories	724.6	647.2
Taxes receivable	63.2	30.4
Prepaid expenses and other assets	226.5	234.9
Total current assets	2,400.5	2,401.3
Non-current assets
Property, plant and equipment, net	605.0	630.0
Goodwill	1,997.1	2,038.7
Pension surplus	8.4	8.6
Intangible assets, net	1,294.7	1,386.1
Right-of-use assets	136.5	120.1
Taxes receivable	18.3	18.5
Deferred income taxes	643.5	622.4
Other non-current assets	17.5	28.8
Total assets	7,121.5	7,254.5
Current liabilities
Debt, current portion	36.2	36.5
Trade accounts payable	427.5	457.7
Taxes payable	66.6	36.6
Accrued expenses and other current liabilities	265.3	248.5
Total current liabilities	795.6	779.3
Non-current liabilities
Debt, less current portion	2,341.5	2,415.0
Post-retirement benefit obligations	77.6	83.8
Lease liabilities	125.8	110.6
Taxes payable	77.4	79.4
Deferred income taxes	101.8	119.4
Other non-current liabilities	143.9	123.1
Total liabilities	3,663.6	3,710.6
Commitments and contingencies (Note 18)
Shareholders’ equity
—Shares, par value of $0.01 each - authorized shares: 3,000,000,000; outstanding shares: 254,699,987 (December 30, 2023: authorized shares: 3,000,000,000; outstanding shares: 264,259,788)	2.5	2.6
—Additional paid-in capital	2,606.8	2,583.8
—Accumulated other comprehensive loss	(942.0)	(828.5)
—Treasury shares	(127.1)	0.0
—Retained earnings	1,570.1	1,462.3
Total shareholders’ equity	3,110.3	3,220.2
Non-controlling interests	347.6	323.7
Total equity	3,457.9	3,543.9
Total liabilities and equity	$ 7,121.5	$ 7,254.5

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Unaudited Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 28, 2024	Dec. 30, 2023
Statement of Financial Position [Abstract]
Par value (in usd per share)	$ 0.01	$ 0.01
Authorized shares (in shares)	3,000,000,000	3,000,000,000
Outstanding shares ( in shares)	254,699,987	264,259,788

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Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions	9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023
Cash flows from operating activities
Net income	$ 178.8	$ 187.3
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	162.8	162.5
Foreign exchange and other non-cash financing (income) expenses	(26.2)	33.8
Share-based compensation expense	20.2	19.6
Decrease in post-employment benefit obligations, net	(6.6)	(7.0)
Deferred income taxes	(25.1)	(39.2)
Asset impairments	0.0	0.1
Loss on deconsolidation of Russian subsidiary	12.8	0.0
Gain on disposal of property, plant and equipment	(7.2)	0.0
Other operating activities	(1.5)	4.0
Changes in operating assets and liabilities:
—Accounts receivable	(46.1)	(22.9)
—Inventories	(84.0)	12.0
—Accounts payable	(25.0)	(24.4)
—Prepaid expenses and other assets	18.2	12.8
—Taxes payable	(2.6)	(5.8)
—Other liabilities	20.2	(41.1)
Net cash provided by operating activities	188.7	291.7
Cash flows from investing activities
Purchases of property, plant and equipment	(59.8)	(39.6)
Purchases of intangible assets	(13.5)	(7.6)
Purchases of investments	(11.3)	0.0
Cash paid under company-owned life insurance policies	(5.4)	(18.2)
Cash received under company-owned life insurance policies	11.2	6.6
Proceeds from the sale of property, plant and equipment	11.0	0.8
Cash deconsolidated from previously controlled subsidiary	(12.5)	0.0
Net cash used in investing activities	(80.3)	(58.0)
Cash flows from financing activities
Issuance of shares	10.0	17.5
Repurchase of shares	(176.1)	(251.7)
Proceeds from long-term debt	1,840.0	100.0
Payments of long-term debt	(1,917.0)	(114.7)
Debt issuance costs paid	(20.5)	(0.4)
Dividends paid to non-controlling interests	(1.7)	(0.5)
Other financing activities	11.8	8.1
Net cash used in financing activities	(253.5)	(241.7)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(1.4)	(13.3)
Net decrease in cash and cash equivalents and restricted cash	(146.5)	(21.3)
Cash and cash equivalents and restricted cash at the beginning of the period	724.0	581.4
Cash and cash equivalents and restricted cash at the end of the period	577.5	560.1
Supplemental schedule of cash flow information
Interest paid	104.7	125.8
Income taxes paid	88.5	70.9
Accrued capital expenditures	$ 1.0	$ 1.4

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Unaudited Condensed Consolidated Statements of Shareholders’ Equity - USD ($) $ in Millions	Total	Total shareholders’ equity	Share capital	Additional paid-in capital	Treasury Shares	Accumulated other comprehensive loss	Retained earnings	Non- controlling interests
Beginning balance at Dec. 31, 2022	$ 3,443.6	$ 3,110.0	$ 2.8	$ 2,542.1	$ 0.0	$ (917.8)	$ 1,482.9	$ 333.6
Increase (Decrease) in Stockholders' Equity
Net income	187.3	170.0					170.0	17.3
Other comprehensive (loss) income	2.0	31.4				31.4		(29.4)
Total comprehensive (loss) income	189.3	201.4	0.0	0.0	0.0	31.4	170.0	(12.1)
—Issuance of shares	17.5	17.5		17.5
—Shares withheld for employee taxes	(3.2)	(3.2)		(3.2)
—Buy-back and cancellation of shares	(253.8)	(253.8)	(0.2)				(253.6)
—Share-based compensation	19.4	19.3		19.3				0.1
—Dividends paid to non-controlling interests	(0.5)							(0.5)
Ending balance at Sep. 30, 2023	3,412.3	3,091.2	2.6	2,575.7	0.0	(886.4)	1,399.3	321.1
Beginning balance at Jul. 01, 2023	3,391.0	3,070.4	2.6	2,573.1	0.0	(825.9)	1,320.6	320.6
Increase (Decrease) in Stockholders' Equity
Net income	85.5	78.7					78.7	6.8
Other comprehensive (loss) income	(66.3)	(60.5)				(60.5)		(5.8)
Total comprehensive (loss) income	19.2	18.2	0.0	0.0	0.0	(60.5)	78.7	1.0
—Issuance of shares	0.1	0.1		0.1
—Shares withheld for employee taxes	(1.5)	(1.5)		(1.5)
—Buy-back and cancellation of shares	0.0
—Share-based compensation	4.0	4.0		4.0				0.0
—Dividends paid to non-controlling interests	(0.5)							(0.5)
Ending balance at Sep. 30, 2023	3,412.3	3,091.2	2.6	2,575.7	0.0	(886.4)	1,399.3	321.1
Beginning balance at Dec. 30, 2023	3,543.9	3,220.2	2.6	2,583.8	0.0	(828.5)	1,462.3	323.7
Increase (Decrease) in Stockholders' Equity
Net income	178.8	158.3					158.3	20.5
Other comprehensive (loss) income	(108.6)	(113.5)				(113.5)		4.9
Total comprehensive (loss) income	70.2	44.8	0.0	0.0	0.0	(113.5)	158.3	25.4
—Issuance of shares	10.0	10.0		10.0
—Shares withheld for employee taxes	(4.7)	(4.7)		(4.7)
—Buy-back and cancellation of shares	(177.7)	(177.7)	(0.1)		(127.1)		(50.5)
—Share-based compensation	17.9	17.7		17.7				0.2
—Dividends paid to non-controlling interests	(1.7)							(1.7)
Ending balance at Sep. 28, 2024	3,457.9	3,110.3	2.5	2,606.8	(127.1)	(942.0)	1,570.1	347.6
Beginning balance at Jun. 29, 2024	3,494.3	3,177.0	2.6	2,600.9	0.0	(949.0)	1,522.5	317.3
Increase (Decrease) in Stockholders' Equity
Net income	55.1	47.6					47.6	7.5
Other comprehensive (loss) income	31.4	7.0				7.0		24.4
Total comprehensive (loss) income	86.5	54.6	0.0	0.0	0.0	7.0	47.6	31.9
—Issuance of shares	2.9	2.9		2.9
—Shares withheld for employee taxes	(2.3)	(2.3)		(2.3)
—Buy-back and cancellation of shares	(127.2)	(127.2)	(0.1)		(127.1)
—Share-based compensation	5.4	5.3		5.3				0.1
—Dividends paid to non-controlling interests	(1.7)							(1.7)
Ending balance at Sep. 28, 2024	$ 3,457.9	$ 3,110.3	$ 2.5	$ 2,606.8	$ (127.1)	$ (942.0)	$ 1,570.1	$ 347.6

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Introduction

9 Months Ended

Sep. 28, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Introduction

Introduction

A. Background

Gates Industrial Corporation plc (the “Company”) is a public limited company that was registered in England and Wales on September 25, 2017.

In these condensed consolidated financial statements and related notes, all references to “Gates,” “we,” “us,” and “our” refer, unless the context requires otherwise, to Gates Industrial Corporation plc and its consolidated subsidiaries.

B. Accounting periods

The Company prepares its annual consolidated financial statements for the period ending on the Saturday nearest December 31. Accordingly, the condensed consolidated balance sheets as of September 28, 2024 and December 30, 2023, and the related condensed consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented, where relevant, for the 91-day period from June 30, 2024 to September 28, 2024, with comparative information for the 91-day period from July 2, 2023 to September 30, 2023 and for the 273-day period from December 31, 2023 to September 28, 2024, with comparative information for the 273-day period from January 1, 2023 to September 30, 2023.

C. Basis of preparation

The condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars unless otherwise indicated. The condensed consolidated financial statements and related notes contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company’s financial position as of September 28, 2024 and the results of its operations and cash flows for the periods ended September 28, 2024 and September 30, 2023. Interim period results are not necessarily indicative of the results to be expected for the full fiscal year.

The preparation of consolidated financial statements under U.S. GAAP requires us to make assumptions and estimates concerning the future that affect the reported amounts of assets, liabilities, revenue and expenses. Estimates and assumptions are particularly important in accounting for items such as revenue, rebates, impairment of long-lived assets, intangible assets and goodwill, inventory valuation, financial instruments, expected credit losses, product warranties, income taxes and post-retirement benefits. Estimates and assumptions used are based on factors such as historical experience, observance of trends in the industries in which we operate and information available from our customers and other outside sources.

These condensed consolidated financial statements are unaudited and have been prepared on substantially the same basis as Gates’ audited annual consolidated financial statements and related notes for the year ended December 30, 2023. The condensed consolidated balance sheet as of December 30, 2023 has been derived from those audited financial statements.

During 2021, the Company implemented a program with an unrelated third party under which we may periodically sell trade accounts receivable from one of our aftermarket customers with whom we have extended payment terms as part of a commercial agreement. The purpose of using this program is to offset the working capital impact resulting from this terms extension. All eligible accounts receivable from this customer are covered by the program, and any factoring is solely at our option. Following the factoring of a qualifying receivable, because we maintain no continuing involvement in the underlying receivable, and collectability risk is fully transferred to the unrelated third party, we account for these transactions as a sale of a financial asset and derecognize the asset. Cash received under the program is classified as operating cash inflows in the consolidated statement of cash flows. As of September 28, 2024, the collection of $114.1 million of our trade accounts receivable had been accelerated under this program, compared to the accelerated collection of $112.4 million as of December 30, 2023. During the three and nine months ended September 28, 2024, we incurred costs in respect of this program of $2.2 million and $6.6 million, respectively. During the three and nine months ended September 30, 2023, we incurred costs in respect of this program of $2.9 million and $5.1 million, respectively.

In 2022, as a result of the conflict between Russia and Ukraine, the Company began exiting substantially all its activities in Russia with only residual cash and de minimis administrative costs remaining in 2024. During the three months ended September 28, 2024, the Company concluded that the inability to repatriate remaining cash coupled with the significant government regulations and restrictions currently in place, which are expected to continue or worsen, severely limits its ability to manage and control its Russian subsidiary. As a result, the Company's Russian subsidiary was deconsolidated as of September 28, 2024. The impact of the deconsolidation was a $12.8 million loss included in the results of operations for the three and nine months ended September 28, 2024.

These condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and related notes for the year ended December 30, 2023 included in the Company’s Annual Report on Form 10-K.

The accounting policies used in preparing these condensed consolidated financial statements are the same as those applied in the prior year.

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Recent accounting pronouncements

9 Months Ended

Sep. 28, 2024

Accounting Policies [Abstract]

Recent accounting pronouncements

Recent accounting pronouncements

•Accounting Standards Update (“ASU”) 2023-07 “Segment Reporting” (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued an ASU that expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures regarding significant segment expenses. The updated standard is effective for our annual periods beginning in fiscal year 2024 and interim periods beginning in the first quarter of fiscal year 2025, with early adoption permitted. We are currently evaluating the impact the updated standard will have on our financial statement disclosures.

•ASU 2023-09 “Income Taxes” (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued an ASU that requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The updated standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The updated standard is effective for our annual periods beginning in fiscal year 2025 and interim periods beginning in the first quarter of fiscal year 2026, with early adoption permitted. We are currently evaluating the impact the updated standard will have on our financial statement disclosures.

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Segment information

9 Months Ended

Sep. 28, 2024

Segment Reporting [Abstract]

Segment information

Segment information

A. Background

The segment information provided in these condensed consolidated financial statements reflects the information that is used by the chief operating decision maker for the purposes of making decisions about allocating resources and in assessing the performance of each segment. The chief executive officer (“CEO”) of Gates serves as the chief operating decision maker. These decisions are based on net sales and Adjusted EBITDA (defined below).

B. Operating segments and segment assets

Gates manufactures a wide range of power transmission and fluid power products and components for a large variety of industrial and automotive applications, both in the aftermarket and original equipment manufacturer (“OEM”) channels, throughout the world.

Our reportable segments are identified on the basis of our primary product lines, as this is the basis on which information is provided to the CEO for the purposes of allocating resources and assessing the performance of Gates’ businesses. Our operating and reporting segments are therefore Power Transmission and Fluid Power.

Segment asset information is not provided to the chief operating decision maker and therefore segment asset information has not been presented. Due to the nature of Gates’ operations, cash generation and profitability are viewed as the key measures rather than an asset-based measure.

C. Segment net sales and disaggregated net sales

Sales between reporting segments and the impact of such sales on Adjusted EBITDA for each segment are not included in internal reports presented to the CEO and have therefore not been included below.

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Power Transmission	$	513.4	$	536.4	$	1,588.1	$	1,658.4
Fluid Power	317.3		336.5		990.7		1,048.5
Continuing operations	$	830.7	$	872.9	$	2,578.8	$	2,706.9

Our commercial function is organized by region and therefore, in addition to reviewing net sales by our reporting segments, the CEO also reviews net sales information disaggregated by region, including between emerging and developed markets.

The following table summarizes our net sales by key geographic region of origin:

	Three months ended
	September 28, 2024				September 30, 2023
(dollars in millions)	Power Transmission		Fluid Power		Power Transmission		Fluid Power
U.S.	$	140.9	$	168.1	$	150.3	$	179.3
North America, excluding U.S.	56.6		49.2		60.7		55.3
United Kingdom (“U.K.”)	9.1		16.0		10.0		14.8
EMEA(1), excluding U.K.	137.5		46.1		145.4		50.9
East Asia and India	70.4		18.5		69.8		19.4
Greater China	72.6		8.8		72.0		5.8
South America	26.3		10.6		28.2		11.0
Net sales	$	513.4	$	317.3	$	536.4	$	336.5

	Nine months ended
	September 28, 2024				September 30, 2023
(dollars in millions)	Power Transmission		Fluid Power		Power Transmission		Fluid Power
U.S.	$	425.8	$	524.1	$	450.7	$	552.2
North America, excluding U.S.	182.0		153.0		172.0		163.0
U.K.	29.6		50.7		34.3		54.9
EMEA(1), excluding U.K.	449.1		144.9		481.5		158.9
East Asia and India	205.6		58.3		214.5		59.4
Greater China	214.7		30.3		222.4		27.6
South America	81.3		29.4		83.0		32.5
Net sales	$	1,588.1	$	990.7	$	1,658.4	$	1,048.5

(1)    Europe, Middle East and Africa (“EMEA”).

The following table summarizes our net sales into emerging and developed markets:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Developed	$	533.9	$	570.0	$	1,663.4	$	1,784.1
Emerging	296.8		302.9		915.4		922.8
Net sales	$	830.7	$	872.9	$	2,578.8	$	2,706.9

D. Measure of segment profit or loss

The CEO uses Adjusted EBITDA, as defined below, to measure the profitability of each segment. Adjusted EBITDA is, therefore, the measure of segment profit or loss presented in Gates’ segment disclosures.

“EBITDA” represents net income from continuing operations for the period before net interest and other expense, income taxes, depreciation and amortization.

Adjusted EBITDA represents EBITDA before certain items that are considered to hinder comparison of the performance of our businesses on a period-over-period basis or with other businesses. During the periods presented, the items excluded from EBITDA in computing Adjusted EBITDA primarily included:

•    loss on deconsolidation of previously controlled subsidiary;

•    non-cash charges in relation to share-based compensation;

•    transaction-related expenses incurred in relation to major corporate transactions, including the acquisition of businesses and related integration activities, and equity and debt transactions;

•    restructuring expenses, including severance-related expenses;

•    credit loss related to a customer bankruptcy;

•    cybersecurity incident expenses; and

•    inventory adjustments related to certain inventories accounted for on a Last-in First-out (“LIFO”) basis.

Adjusted EBITDA by segment was as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Power Transmission	$	113.0	$	116.5	$	355.8	$	343.2
Fluid Power	69.5		72.9		224.5		218.0
Continuing operations	$	182.5	$	189.4	$	580.3	$	561.2

Reconciliation of net income from continuing operations to Adjusted EBITDA:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net income from continuing operations	$	55.2	$	85.6	$	179.3	$	187.8
Income tax expense	14.0		1.0		60.8		25.9
Income from continuing operations before taxes	69.2		86.6		240.1		213.7
Interest expense	35.1		39.5		121.7		124.8
Loss on deconsolidation of Russian subsidiary (1)	12.8		—		12.8		—
Other (income) expenses	(3.9)		(0.2)		(8.5)		3.8
Operating income from continuing operations	113.2		125.9		366.1		342.3
Depreciation and amortization	53.7		54.0		162.8		162.5
Transaction-related expenses (2)	0.5		1.3		2.1		2.1
Asset impairments	—		0.1		—		0.1
Restructuring expenses	2.2		2.6		5.0		10.3
Share-based compensation expense	6.4		3.3		20.2		19.6
Inventory impairments and adjustments (3) (included in cost of sales)	4.4		2.2		21.7		6.3
Severance expenses (included in cost of sales)	0.9		(0.1)		0.9		0.4
Severance expenses (included in SG&A)	1.4		—		1.5		0.9
Credit (gain) loss related to customer bankruptcy (included in SG&A) (4)	(0.2)		—		(0.1)		11.4
Cybersecurity incident expenses (5)	—		—		—		5.1
Other items not directly related to current operations (6)	—		0.1		0.1		0.2
Adjusted EBITDA	$	182.5	$	189.4	$	580.3	$	561.2

(1)    In July 2022, as a result of the conflict between Russia and Ukraine, Gates suspended our operations in Russia. As of September 28 2024, we deconsolidated the Russian subsidiary upon loss of control and recognized a deconsolidation loss.

(2)    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.

(3)    Inventory impairments and adjustments include the reversal of the adjustment to remeasure certain inventories on a LIFO basis.

(4)    On January 31, 2023, one of our customers filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In connection with the bankruptcy proceedings, we preliminarily evaluated our potential risk and exposure relating to our outstanding pre-petition accounts receivable balance from the customer and recorded an initial pre-tax charge to reflect our estimated recovery. We continue to monitor the circumstances surrounding the bankruptcy and adjust our estimate as necessary.

(5)    On February 11, 2023, Gates determined that it was the target of a malware attack. Cybersecurity incident expenses include legal, consulting, and other costs incurred as a direct result of this incident, some of which may be partially offset by insurance recoveries.

(6)    Other items not directly related to current operations include other charges.

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Restructuring and other strategic initiatives

9 Months Ended

Sep. 28, 2024

Restructuring and Related Activities [Abstract]

Restructuring and other strategic initiatives

Restructuring and other strategic initiatives

Gates continues to undertake various restructuring and other strategic initiatives to drive increased productivity in all aspects of our operations. These actions include efforts to consolidate our manufacturing and distribution footprint, scale operations to current demand levels, streamline our selling, general and administrative (“SG&A”) back-office functions and relocate certain operations to lower cost locations.

Overall costs associated with our restructuring and other strategic initiatives have been recognized in the condensed consolidated statements as set forth below. Expenses incurred in relation to certain of these actions qualify as restructuring expenses under U.S. GAAP.

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Restructuring expenses:
—Severance expense	$	1.0	$	—	$	0.5	$	4.4
—Non-severance labor and benefit (income) expenses	(0.2)		0.3		(0.1)		1.1
—Consulting expenses	1.1		0.8		2.6		1.7
—Other net restructuring expenses	0.3		1.5		2.0		3.1
	2.2		2.6		5.0		10.3
Restructuring expenses in asset impairments:
—Impairment of fixed and other assets	—		0.1		—		0.1
Restructuring expenses in cost of sales:
—Impairment of inventory	—		0.1		—		0.1
Total restructuring expenses	$	2.2	$	2.8	$	5.0	$	10.5
Expenses related to other strategic initiatives:
—Severance and other expenses (income) included in cost of sales	0.9		(0.1)		0.9		0.4
—Severance and other expenses included in SG&A	1.4		—		1.5		0.9
Total expenses (income) related to other strategic initiatives	$	2.3	$	(0.1)	$	2.4	$	1.3

Restructuring and other strategic initiatives during the three and nine months ended September 28, 2024 included $1.0 million and $2.5 million, respectively, of costs related to the relocation of certain production activities in Mexico. During the three months ended September 28, 2024, we also incurred severance costs of $1.0 million related to the consolidation of production activities across certain North American plants. Other restructuring costs incurred during the three and nine months ended September 28, 2024 included legal and consulting expenses, and costs associated with prior period facility closures or relocations in several countries.

Restructuring and other strategic initiatives during the three and nine months ended September 30, 2023 related primarily to severance and other non-labor costs related to relocating certain production activities in China, Mexico and Europe. During the three months ended September 30, 2023, we also incurred additional non-severance labor and benefit costs of $0.3 million related to relocation and integration of certain support functions into our regional shared service center in Europe. Other restructuring costs incurred during the three months ended September 30, 2023 related to legal and consulting expenses, as well as costs associated with prior period facility closures or relocations in several countries.

Restructuring activities

As indicated above, restructuring expenses, as defined under U.S. GAAP, form a subset of our total expenses related to restructuring and other strategic initiatives. These expenses include the impairment of inventory if applicable, which is recognized in cost of sales. Analyzed by segment, our restructuring expenses were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Power Transmission	$	0.6	$	1.5	$	1.4	$	7.2
Fluid Power	1.6		1.3		3.6		3.3
Continuing operations	$	2.2	$	2.8	$	5.0	$	10.5

The following summarizes the reserve for restructuring expenses for the nine months ended September 28, 2024 and September 30, 2023, respectively:

	Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023
Balance as of the beginning of the period	$	5.1	$	7.5
Utilized during the period	(6.3)		(11.1)
Charge for the period	5.7		10.5
Released during the period	(0.7)		(0.2)
Foreign currency translation	—		(0.1)
Balance as of the end of the period	$	3.8	$	6.6

Restructuring reserves, which are expected to be utilized during 2024 and 2025, are included in the condensed consolidated balance sheet within the accrued expenses and other current liabilities line.

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Income taxes

9 Months Ended

Sep. 28, 2024

Income Tax Disclosure [Abstract]

Income taxes

Income taxes

We compute the year-to-date income tax provision by applying our estimated annual effective tax rate to our year-to-date pre-tax income and adjust for discrete tax items in the period in which they occur.

For the three months ended September 28, 2024, we had income tax expense of $14.0 million on pre-tax income of $69.2 million, which resulted in an effective tax rate of 20.2%, compared to an income tax expense of $1.0 million on pre-tax income of $86.6 million, which resulted in an effective tax rate of 1.2% for the three months ended September 30, 2023.

For the three months ended September 28, 2024, the effective tax rate was driven primarily by net discrete tax benefits of $7.8 million, of which $6.5 million related to changes in the realizability of certain deferred tax assets, primarily related to U.S. foreign tax credit carryforwards, $3.2 million of discrete tax benefit related to the loss on deconsolidation of Russian subsidiary, offset by $1.9 million of other net discrete tax expenses. For the three months ended September 30, 2023, the effective tax rate was driven primarily by net discrete tax benefits of $11.0 million, of which $12.9 million related to unrecognized tax benefits due to audit closures, offset by $1.9 million of other net discrete tax expenses.

For the nine months ended September 28, 2024, we had an income tax expense of $60.8 million on pre-tax income of $240.1 million, which resulted in an effective tax rate of 25.3%, compared to an income tax expense of $25.9 million on pre-tax income of $213.7 million, which resulted in an effective tax rate of 12.1% for the nine months ended September 30, 2023.

For the nine months ended September 28, 2024, we had net discrete tax benefits of $8.3 million, of which $13.8 million related to unrecognized tax benefits due to audit closures and $3.2 million discrete tax benefit from a loss on deconsolidation of Russian subsidiary, offset by $3.4 million of uncertain tax benefit interest accrual, $4.2 million of net discrete expense related to changes in the realizability of certain deferred tax assets and $1.1 million of other net discrete tax expenses. For the nine months ended September 30, 2023, the effective tax rate was driven primarily by discrete benefits of $11.0 million, of which $12.9 million related to unrecognized tax benefits due to audit closures, offset by $1.9 million of other net discrete tax expenses.

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 during the three months ended September 28, 2024 that it is more likely than not that deferred tax assets in the U.S. totaling $6.9 million are realizable. Accordingly, we recognized $5.7 million of discrete benefit, while the remaining $1.2 million is recognized as part of the annual effective tax rate. As a result of changes in estimates of future taxable profits against which the foreign tax credits can be utilized, our judgment changed regarding valuation allowances on these deferred tax assets.

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Earnings per share

9 Months Ended

Sep. 28, 2024

Earnings Per Share [Abstract]

Earnings per share

Earnings per share

Basic earnings per share represents net income attributable to shareholders divided by the weighted average number of shares outstanding during the period. Diluted earnings per share considers the dilutive effect of potential shares, unless the inclusion of the potential shares would have an anti-dilutive effect. The treasury stock method is used to determine the potential dilutive shares resulting from assumed exercises of equity-related instruments.

The computation of earnings per share is presented below:

	Three months ended				Nine months ended
(dollars in millions, except share numbers and per share amounts)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net income attributable to shareholders	$	47.6	$	78.7	$	158.3	$	170.0
Weighted average number of shares outstanding	258,889,598		263,984,434		261,001,362		274,460,054
Dilutive effect of share-based awards	4,551,974		3,850,577		4,853,706		4,028,006
Diluted weighted average number of shares outstanding	263,441,572		267,835,011		265,855,068		278,488,060
Number of anti-dilutive shares excluded from the diluted earnings per share calculation	5,410,122		3,934,925		2,785,491		5,065,975
Basic earnings per share	$	0.18	$	0.30	$	0.61	$	0.62
Diluted earnings per share	$	0.18	$	0.29	$	0.60	$	0.61

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Inventories

9 Months Ended

Sep. 28, 2024

Inventory Disclosure [Abstract]

Inventories

Inventories

(dollars in millions)	As of September 28, 2024		As of December 30, 2023
Raw materials and supplies	$	203.5	$	168.2
Work in progress	49.0		43.3
Finished goods	472.1		435.7
Total inventories	$	724.6	$	647.2

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Goodwill

9 Months Ended

Sep. 28, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

Goodwill

(dollars in millions)	Power Transmission		Fluid Power		Total
Cost and carrying amount
As of December 30, 2023	$	1,338.5	$	700.2	$	2,038.7
Foreign currency translation	(15.7)		(25.9)		(41.6)
As of September 28, 2024	$	1,322.8	$	674.3	$	1,997.1

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Intangible assets

9 Months Ended

Sep. 28, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets

Intangible assets

	As of September 28, 2024						As of December 30, 2023
(dollars in millions)	Cost		Accumulated amortization and impairment		Net		Cost		Accumulated amortization and impairment		Net
Finite-lived:
—Customer relationships	$	1,981.7	$	(1,202.8)	$	778.9	$	2,003.6	$	(1,127.7)	$	875.9
—Technology	90.8		(90.8)		—		90.6		(90.3)		0.3
—Capitalized software	131.1		(84.7)		46.4		117.3		(76.8)		40.5
	2,203.6		(1,378.3)		825.3		2,211.5		(1,294.8)		916.7
Indefinite-lived:
—Brands and trade names	513.4		(44.0)		469.4		513.4		(44.0)		469.4
Total intangible assets	$	2,717.0	$	(1,422.3)	$	1,294.7	$	2,724.9	$	(1,338.8)	$	1,386.1

During the three months ended September 28, 2024, the amortization expense recognized in respect of intangible assets was $32.0 million, compared to $32.1 million for the three months ended September 30, 2023. In addition, movements in foreign currency exchange rates resulted in an increase in the net carrying value of total intangible assets of $11.4 million for the three months ended September 28, 2024, compared to a decrease of $10.3 million for the three months ended September 30, 2023.

During the nine months ended September 28, 2024, the amortization expense recognized in respect of intangible assets was $96.7 million, compared to $96.4 million for the nine months ended September 30, 2023. In addition, movements in foreign currency exchange rates resulted in a decrease in the net carrying value of total intangible assets of $8.2 million for the nine months ended September 28, 2024, compared to a decrease of $3.0 million for the nine months ended September 30, 2023.

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Derivative financial instruments

9 Months Ended

Sep. 28, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative financial instruments

Derivative financial instruments

We are exposed to certain financial risks relating to our ongoing business operations. From time to time, we use derivative financial instruments, principally foreign currency swaps, forward foreign currency contracts, interest rate caps (options) and interest rate swaps, to reduce our exposure to foreign currency risk and interest rate risk. We do not hold or issue derivatives for speculative purposes and monitor closely the credit quality of the institutions with which we transact.

We recognize derivative instruments as either assets or liabilities in the condensed consolidated balance sheet. We designate certain of our currency swaps as net investment hedges and designate our interest rate caps and interest rate swaps as cash flow hedges. The gain or loss on the designated derivative instrument is recognized in other comprehensive income (“OCI”) and reclassified into net income in the same period or periods during which the hedged transaction affects earnings.

Derivative instruments that have not been designated in an effective hedging relationship are considered economic hedges, and their change in fair value is recognized in net income in each period.

The period end fair values of derivative financial instruments were as follows:

	As of September 28, 2024										As of December 30, 2023
(dollars in millions)	Prepaid expenses and other assets		Other non- current assets		Accrued expenses and other current liabilities		Other non- current liabilities		Net		Prepaid expenses and other assets		Other non- current assets		Accrued expenses and other current liabilities		Other  non- current liabilities		Net
Derivatives designated as hedging instruments:
—Currency swaps	$	10.0	$	—	$	—	$	(103.4)	$	(93.4)	$	8.5	$	—	$	—	$	(77.7)	$	(69.2)
—Interest rate swaps	17.4		—		(10.0)		(8.0)		(0.6)		29.9		11.8		(9.9)		(13.6)		18.2
Derivatives not designated as hedging instruments:
—Currency forward contracts	2.0		—		(1.1)		—		0.9		3.9		—		(1.8)		—		2.1
	$	29.4	$	—	$	(11.1)	$	(111.4)	$	(93.1)	$	42.3	$	11.8	$	(11.7)	$	(91.3)	$	(48.9)

A. Instruments designated as net investment hedges

We hold cross currency swaps that have been designated as net investment hedges of certain of our European and Chinese operations. We hold USD-EUR cross currency swaps with a notional principal amount of €254.5 million and extended maturity date of March 31, 2027, and additional USD-EUR cross currency swaps with the notional principal amount of €501.6 million and contract term from November 16, 2022 to November 16, 2027. All USD-EUR cross currency swaps were designated as net investment hedges of certain of our European operations. In May 2023, we amended our €254.5 million USD-EUR cross currency swaps to transition from a floating rate based on the London Interbank Offered Rate (“LIBOR”) to a floating rate based on a term secured overnight financing rate (“Term SOFR”). In November 2023, we executed a USD to Chinese Yuan fixed-to-fixed cross currency swap with a notional principal amount of ¥1,784.0 million with a contract term from November 30, 2023 to November 30, 2026. This has been designated as a net investment hedge of certain of our Chinese operations. In July 2024, we executed a new USD-EUR fixed-to-fixed cross currency swap with a notional principal amount of €277.4 million with a contract term from August 2, 2024 to August 2, 2029. This has been designated as a net investment hedge of certain of our European operations. As of September 28, 2024, the aggregated notional principal amounts of the cross currency swaps were €1,033.5 million and ¥1,784.0 million, as compared to €756.1 million and ¥1,784.0 million December 30, 2023.

The fair value gains (losses) before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net fair value gains recognized in OCI in relation to:
—Designated cross currency swaps	(50.1)		23.9		(24.2)		1.8
Total net fair value (losses) gains	$	(50.1)	$	23.9	$	(24.2)	$	1.8

During the three and nine months ended September 28, 2024, a net gain of $5.7 million and $10.0 million, respectively, was recognized in interest expense in relation to our cross currency swaps that have been designated as net investment hedges, compared to a net gain of $2.5 million and $8.0 million, respectively, during the three and nine months ended September 30, 2023.

B. Instruments designated as cash flow hedges

We use interest rate swaps and interest rate caps as part of our interest rate risk management strategy to add stability to interest expense and to manage our exposure to interest rate movements. These instruments are all designated as cash flow hedges. As of both September 28, 2024 and December 30, 2023, we held pay-fixed, receive-floating interest rate swaps with an aggregate notional amount of $1,255.0 million. Interest rate swaps with a notional amount of $870.0 million run from June 30, 2020 through June 30, 2025, while interest rate swaps with a notional amount of $385.0 million have the contract term from November 16, 2022 to November 16, 2027.

The movements before tax recognized in OCI in relation to our cash flow hedges were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Movement recognized in OCI in relation to:
—Fair value gain on cash flow hedges	$	(17.0)	$	11.4	$	0.4	$	25.0
—Amortization to net income of prior period fair value losses	—		—		—		8.9
—Deferred OCI reclassified to net income	(9.0)		(8.9)		(27.0)		(24.0)
Total movement	$	(26.0)	$	2.5	$	(26.6)	$	9.9

C. Derivative instruments not designated as hedging instruments

We do not designate our currency forward contracts, which are used primarily in respect of operational currency exposures related to payables, receivables and material procurement, or the currency swap contracts that are used to manage the currency profile of Gates’ cash as hedging instruments for the purposes of hedge accounting.

As of September 28, 2024, the notional amount of outstanding currency forward contracts that are used to manage operational foreign exchange exposures was $150.5 million, compared to $140.8 million as of December 30, 2023.

The fair value gains (losses) recognized in net income in relation to derivative instruments that have not been designated as hedging instruments were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Fair value gains (losses) recognized in relation to:
—Currency forward contracts recognized in SG&A	$	0.2	$	(0.8)	$	3.4	$	3.3
Total	$	0.2	$	(0.8)	$	3.4	$	3.3

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Fair value measurement

9 Months Ended

Sep. 28, 2024

Fair Value Disclosures [Abstract]

Fair value measurement

Fair value measurement

A. Fair value hierarchy

We account for certain assets and liabilities at fair value. Topic 820 “Fair Value Measurements and Disclosures” establishes the following hierarchy for the inputs that are used in fair value measurement:

•“Level 1” inputs are unadjusted quoted prices in active markets for identical assets or liabilities;

•“Level 2” inputs are those other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

•“Level 3” inputs are not based on observable market data (unobservable inputs).

Assets and liabilities that are measured at fair value are categorized in one of the three levels on the basis of the lowest-level input that is significant to its valuation.

B. Financial instruments not held at fair value

Certain financial assets and liabilities are not measured at fair value; however, items such as cash and cash equivalents, restricted cash, drawings under revolving credit facilities and bank overdrafts generally attract interest at floating rates and accordingly their carrying amounts are considered to approximate fair value. Due to their short maturities, the carrying amounts of accounts receivable and accounts payable are also considered to approximate their fair values.

The carrying amount and fair value of our debt are set out below:

	As of September 28, 2024				As of December 30, 2023
(dollars in millions)	Carrying  amount		Fair value		Carrying  amount		Fair value
Current	$	36.2	$	36.1	$	36.5	$	36.5
Non-current	2,341.5		2,389.5		2,415.0		2,444.7
	$	2,377.7	$	2,425.6	$	2,451.5	$	2,481.2

Debt is comprised principally of borrowings under the secured credit facilities and the unsecured senior notes. The dollar term loans under the secured credit facilities pay interest at floating rates, subject to a 0.50% Term SOFR floor as further described in Note 12. The fair values of the term loans are derived from a market price, discounted for illiquidity. The unsecured senior notes have fixed interest rates, are traded by “Qualified Institutional Buyers” and certain other eligible investors, and their fair value is derived from their quoted market price.

C. Assets and liabilities measured at fair value on a recurring basis

The following table categorizes the assets and liabilities that are measured at fair value on a recurring basis:

(dollars in millions)	Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Total
As of September 28, 2024
Derivative assets	$	—	$	29.4	$	29.4
Derivative liabilities	$	—	$	(122.5)	$	(122.5)
Cash equivalents	$	—	$	27.9	$	27.9
Available for sale investments	$	—	$	5.0	$	5.0
As of December 30, 2023
Derivative assets	$	—	$	54.1	$	54.1
Derivative liabilities	$	—	$	(103.0)	$	(103.0)
Cash equivalents	$	76.2	$	52.8	$	129.0
Available for sale investments	$	—	$	—	$	—

Derivative assets and liabilities included in Level 2 represent foreign currency exchange forward and swap contracts, and interest rate derivative contracts. Cash equivalents included in Level 1 represent treasury bills and money market funds, while Level 2 represent certificates of deposit and commercial paper. Available for sale investments included in the Level 2 represent our investments in corporate bonds in Argentina.

We value our foreign currency exchange derivatives using models consistent with those used by a market participant that maximize the use of market observable inputs including forward prices for currencies.

We value our interest rate derivative contracts using a widely accepted discounted cash flow valuation methodology that reflects the contractual terms of each derivative, including the period to maturity. The methodology derives the fair values of the derivatives using the market standard methodology of netting the discounted future cash payments and the discounted expected receipts. The inputs used in the calculation are based on observable market-based inputs, including interest rate curves, implied volatilities and credit spreads.

We incorporate credit valuation adjustments, which consider the impact of any credit enhancements to the contracts, to appropriately reflect both our own nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements.

Transfers between levels of the fair value hierarchy

During the periods presented, there were no transfers between Levels 1 and 2, and Gates had no assets or liabilities measured at fair value on a recurring basis using Level 3 inputs.

D. Assets measured at fair value on a non-recurring basis

Gates has non-recurring fair value measurements related to certain assets, including goodwill, intangible assets, and property, plant, and equipment. No significant impairment was recognized during the three and nine months ended September 28, 2024 and September 30, 2023. During April 2024, Gates made a $5.0 million equity investment in a privately held company. Gates does not have the ability to exercise significant influence over the investee and the investment does not have a readily determinable fair value. We elected to recognize the investment at its cost in accordance with ASC 321 “Investments – Equity Securities” and will adjust the fair value of the investment if we identify any observable price changes in orderly transactions.

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Debt

9 Months Ended

Sep. 28, 2024

Debt Disclosure [Abstract]

Debt

Debt

(dollars in millions)	As of September 28, 2024		As of December 30, 2023
Secured debt:
—2024 Dollar Term Loans due June 4, 2031	$	1,300.0	$	—
—2022 Dollar Term Loans due November 16, 2029	564.9		567.8
—2021 Dollar Term Loans due November 16, 2029	—		1,336.1
—Revolving credit facility	30.0		—
Unsecured debt:
—6.875% Dollar Senior Notes due July 1, 2029	500.0		—
—6.250% Dollar Senior Notes due January 16, 2026	—		568.0
Total principal of debt	2,394.9		2,471.9
Deferred issuance costs	(34.6)		(37.4)
Accrued interest	17.4		17.0
Total carrying value of debt	2,377.7		2,451.5
Debt, current portion	36.2		36.5
Debt, less current portion	$	2,341.5	$	2,415.0

Gates’ secured debt is jointly and severally, irrevocably and fully and unconditionally guaranteed by certain of its subsidiaries and is secured by liens on substantially all of their assets.

Gates is subject to covenants, representations and warranties under certain of its debt facilities. During the periods covered by these condensed consolidated financial statements, we were in compliance with the applicable financial covenants. Also under the agreements governing our debt facilities, our ability to engage in activities such as incurring certain additional indebtedness, making certain investments and paying certain dividends is dependent, in part, on our ability to satisfy tests based on measures determined under those agreements.

Debt issuances and redemptions

During August 2024, we drew $40.0 million under our revolving credit facility to partially fund the purchase of our ordinary shares under our 2024 share repurchase program, as discussed further in Note 15 below. During September 2024, we partially paid down the borrowings on the revolving credit facility and had a balance of $30.0 million as of September 28, 2024. We had no outstanding borrowings as of December 30, 2023.

On June 4, 2024, we entered into an amendment to our credit agreement governing our term loan facilities and our secured revolving credit facility. As part of this amendment, we issued a new tranche of $1,300.0 million of dollar-denominated term loans (the “2024 Dollar Term Loans”) and used the proceeds to extinguish the entire outstanding principal balance of dollar-denominated term loans of $1,232.6 million, which was issued on February 24, 2021 (the “2021 Dollar Term Loans”), plus $1.1 million of accrued interest. 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).

Under the credit agreement amendment, we also repriced our dollar-denominated term loans drawn on November 16, 2022 (the “2022 Dollar Term Loans”), reducing the interest rate spread by 75 basis points from Term SOFR plus 3.00% to Term SOFR plus 2.25%. Third party costs of $0.9 million incurred with the 2022 Dollar Term Loans repricing were recognized in interest expense.

Additionally, in connection with the amendment to our credit agreement, we increased borrowing capacity under our revolving credit facility from $250.0 million to $500.0 million and extended the maturity from November 18, 2026 to 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 2024 Unsecured Notes (as defined below) are outstanding. We incurred associated third party costs of approximately $2.5 million, which have been deferred and will be amortized to interest expense over the remaining term of the revolving credit facility. Concurrently with this amendment, we terminated the $250.0 million asset-backed revolving credit facility governed by the second amended and restated credit agreement dated as of November 18, 2021. The termination of our asset-backed revolving credit facility resulted in the accelerated recognition of $1.0 million of deferred issuance costs (recognized in interest expense).

On June 4, 2024, we also issued new unsecured senior notes of $500.0 million (the “2024 Unsecured Senior Notes”), and fully redeemed our existing unsecured senior notes due 2026 of $568.0 million aggregate principal amount (the “2019 Unsecured Senior Notes”), which included the payment of $13.7 million of accrued interest thereon. We issued the 2024 Unsecured Senior Notes 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 2024 Unsecured Senior Notes using the effective interest method. The redemption of our 2019 Unsecured Senior Notes resulted in the accelerated recognition of $2.6 million of deferred issuance costs (recognized in interest expense).

During February 2024, we made a voluntary principal debt repayment of $100.0 million against our 2021 Dollar Term Loans. As a result of this repayment, we accelerated the recognition of $1.0 million of deferred issuance costs (recognized in interest expense).

During May 2023, we drew $100.0 million under our former asset-backed revolving credit facility to partially fund the purchase of shares under our 2023 share repurchase program. During fiscal year 2023 we paid down the borrowings on the asset-backed revolver and had no outstanding borrowings as of September 28, 2024 and December 30, 2023. As of December 30, 2023, the letters of credit outstanding under this facility were $29.7 million. As discussed above, this facility was terminated on June 4, 2024.

Dollar Term Loans

Our secured credit facilities consist of two loans, which include the 2024 Dollar Term Loans and the 2022 Dollar Term Loans described above. These term loan facilities bear interest at a floating rate, at our option, at either a base rate as defined in the credit agreement plus an applicable margin, or Term SOFR plus an applicable margin.

The 2024 Dollar Term Loans’ interest rate is currently Term SOFR, subject to a floor of 0.50%, plus a margin of 2.25%, and as of September 28, 2024, borrowings under this facility bore interest at a rate of 7.50% per annum. The interest rate is currently re-set on the last business day of each month based on the election of one month interest periods. The 2024 Dollar Term Loans mature on June 4, 2031.

The 2022 Dollar Term Loans’ interest rate as of September 28, 2024 was Term SOFR, subject to a floor of 0.50%, plus a margin of 2.25%, and as of September 28, 2024, borrowings under this facility bore interest at a rate of 7.50% per annum. The 2022 Dollar Term Loans’ interest rate is currently re-set on the last business day of each month based on the election of one month interest periods. The 2022 Dollar Term Loans mature on November 16, 2029.

The 2022 Dollar Term Loans and the 2024 Dollar Term Loans are subject to quarterly amortization payments of 0.25%, based on the original principal amount less certain repayments with the balance payable on maturity. During the nine months ended September 28, 2024, we made amortization payments against the 2021 Dollar Term Loans, the 2024 Dollar Term Loans and the 2022 Dollar Term Loans of $3.4 million, $0.0 million and $2.9 million, respectively.

Under the terms of the credit agreement, we are obliged to offer annually to the term loan lenders an “excess cash flow” amount as defined under the credit agreement, based on the preceding year’s final results. Based on our 2023 results, the leverage ratio as defined under the credit agreement was below the threshold above which payments are required, and therefore no excess cash flow payment is required to be made in 2024.

Gates Corporation, a wholly-owned U.S. subsidiary of Gates Industrial Holdco Limited (the parent guarantor and direct subsidiary of Gates Industrial Corporation plc), is the principal obligor under the term loans for U.S. federal income tax purposes and makes the payments due on the term loans. As a result, interest received by lenders of this tranche of debt is U.S. source income.

2024 Unsecured Senior Notes

As of September 28, 2024, we had $500.0 million of 2024 Senior Notes outstanding that were issued on June 4, 2024. The 2024 Unsecured Senior Notes are scheduled to mature on July 1, 2029 and bear interest at an annual fixed rate of 6.875% with semi-annual interest payments.

Prior to July 1, 2026, we may redeem the 2024 Unsecured Senior Notes, at our option, in whole at any time or in part from time to time, at a “make-whole” redemption price. In addition, on or subsequent to July 1, 2026, we may redeem the 2024 Unsecured Senior Notes, at our option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest to the redemption date:

	Redemption price
On or subsequent to:
—July 1, 2026	103.438	%
—July 1, 2027	101.719	%
—July 1, 2028 and thereafter	100.000	%

Additionally, net cash proceeds from an equity offering can be utilized at any time prior to July 1. 2026, to redeem up to 40% of the 2024 Unsecured Senior Notes at a redemption price equal to 106.875% of the principal amount thereof, plus accrued and unpaid interest through to the redemption date.

Upon the occurrence of specified types of change of control or of certain qualifying asset sales, the holders of the 2024 Unsecured Senior Notes will have the right to require us to make an offer to repurchase each holder's notes at a price equal to 101% (in the case of a change of control offer) or 100% (in the case of an asset sale offer) of their principal amount, plus accrued and unpaid interest.

As noted above, on June 4, 2024, we redeemed all $568.0 million in aggregate principal amount of our 2019 Unsecured Senior Notes.

Revolving credit facility

We have a secured revolving credit facility that provides for multi-currency revolving loans. On June 4, 2024, we amended the credit agreement governing this facility to increase the size of the facility from $250.0 million to $500.0 million, and extended the maturity date from November 18, 2026 to 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 2024 Unsecured Senior Notes are outstanding. This facility also includes a letter of credit sub-facility of $150.0 million.

As of September 28, 2024, we had a balance of $30.0 million under the revolving credit facility following a draw in August 2024 to facilitate the share repurchase transactions discussed further in Note 15. As of December 30, 2023, there were no drawings for cash under the revolving credit facility. The letters of credit outstanding under this facility were $28.8 million and $0.0 million as of September 28, 2024 and December 30, 2023, respectively.

Debt under the revolving credit facility bears interest at a floating rate, at our option, at either a base rate as defined in the credit agreement plus an applicable margin or the reference rate plus an applicable margin.

In addition, Gates had other outstanding performance bonds, letters of credit and bank guarantees amounting to $8.6 million as of September 28, 2024, compared to $8.4 million as of December 30, 2023.

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Post-retirement benefits

9 Months Ended

Sep. 28, 2024

Postemployment Benefits [Abstract]

Post-retirement benefits

Post-retirement benefits

Gates provides defined benefit pension plans in certain of the countries in which it operates, in particular, in the U.S. and U.K. All of the defined benefit pension plans are closed to new entrants. In addition to the funded defined benefit pension plans, Gates has unfunded defined benefit obligations to certain current and former employees.

Gates also provides other post-retirement benefits, principally health and life insurance coverage, on an unfunded basis to certain of its employees in the U.S. and Canada.

Net periodic benefit cost (income)

The components of the net periodic benefit cost (income) for pensions and other post-retirement benefits were as follows:

	Three months ended September 28, 2024						Three months ended September 30, 2023
(dollars in millions)	Pensions		Other post-retirement benefits		Total		Pensions		Other post-retirement benefits		Total
Reported in operating income:
—Employer service cost	$	1.0	$	—	$	1.0	$	1.0	$	—	$	1.0
Reported outside of operating income:
—Interest cost	6.0		0.4		6.4		6.3		0.4		6.7
—Expected return on plan assets	(6.5)		—		(6.5)		(6.5)		—		(6.5)
—Net amortization of prior period losses (gains)	0.2		(0.8)		(0.6)		—		(0.9)		(0.9)
—Settlements and curtailments	0.1		—		0.1		—		—		—
Net periodic benefit cost (income)	$	0.8	$	(0.4)	$	0.4	$	0.8	$	(0.5)	$	0.3
Cash Contributions	$	2.2	$	0.7	$	2.9	$	1.6	$	0.6	$	2.2

	Nine months ended September 28, 2024						Nine months ended September 30, 2023
(dollars in millions)	Pensions		Other post-retirement benefits		Total		Pensions		Other post-retirement benefits		Total
Reported in operating income:
—Employer service cost	$	3.0	$	—	$	3.0	$	2.9	$	—	$	2.9
Reported outside of operating income:
—Interest cost	18.2		1.0		19.2		18.8		1.1		19.9
—Expected return on plan assets	(19.4)		—		(19.4)		(19.5)		—		(19.5)
—Net amortization of prior period losses (gains)	0.6		(2.4)		(1.8)		(0.1)		(2.5)		(2.6)
—Settlements and curtailments	0.1		—		0.1		—		—		—
Net periodic benefit cost (income)	$	2.5	$	(1.4)	$	1.1	$	2.1	$	(1.4)	$	0.7
Cash Contributions	$	5.4	$	2.4	$	7.8	$	5.3	$	2.5	$	7.8

The components of the above net periodic benefit cost (income) for pensions and other post-retirement benefits that are reported outside of operating income are all included in the other (income) expense line in the condensed consolidated statement of operations.

For 2024 as a whole, we expect to contribute approximately $7.3 million to our defined benefit pension plans and approximately $3.0 million to our other post-retirement benefit plans.

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Share-based compensation

9 Months Ended

Sep. 28, 2024

Share-Based Payment Arrangement [Abstract]

Share-based compensation

Share-based compensation

The Company operates a share-based incentive plan over its shares to provide incentives to Gates’ senior executives and other eligible employees. During the three and nine months ended September 28, 2024, we recognized a charge of $6.4 million and $20.2 million, respectively, compared to $3.3 million and $19.6 million, respectively, in the three and nine months ended September 30, 2023.

Awards issued under the 2014 Gates Industrial Corporation plc Stock Incentive Plan (the “2014 Plan”)

Gates has a number of share-based incentive awards issued under the 2014 Plan, which was assumed by the Company and renamed the Gates Industrial Corporation plc Stock Incentive Plan in connection with our initial public offering in January 2018 (our “IPO”). No new awards have been granted under this plan since 2017. The options granted prior to our IPO were split equally into four tiers, each with specific vesting conditions. Tier I options vested evenly over 5 years from the grant date, subject to the participant continuing to provide service to Gates on the vesting date. Tier II, III and IV options vested, if at all, on achievement of specified investment returns by certain investment funds affiliated with Blackstone Inc. (“Blackstone”) at the time of a defined liquidity event, which was also subject to the participant’s continued provision of service to Gates on the vesting date. The performance conditions associated with Tiers II, III and IV must have been achieved on or prior to July 3, 2022 in order for vesting to occur. All the options expire ten years after the date of grant.

During March 2022, a liquidity event as defined occurred following the sale by Blackstone of a certain portion of their interest in Gates and the Tier II and IV options vested as the specified investment returns related to these options had been met. On July 3, 2022, the performance period for the Tier III options expired and, as the specified investment returns were not achieved, all Tier III awards expired during fiscal year 2022.

Due to Chinese regulatory restrictions on foreign stock ownership, awards granted under this plan to Chinese employees have been issued as stock appreciation rights (“SARs”). The terms of these SARs are identical to those of the options described above with the exception that no share is issued on exercise; instead, cash equivalent to the increase in the value of the shares from the date of grant to the date of exercise is paid to the employee. These awards are therefore treated as liability awards under Topic 718 “Compensation - Stock Compensation” and are revalued to their fair value at each period end. The SARs include option awards with the same vesting terms as the Tier II, III and IV option awards described above. All Tier III SARs expired on July 3, 2022 as the specific performance hurdle was not achieved.

Changes in the awards granted under this plan are summarized in the tables below.

Awards issued under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (the “2018 Plan”)

In conjunction with the initial public offering in January 2018, Gates adopted the 2018 Plan, which is a market-based long-term incentive program that allows for the issue of a variety of equity-based and cash-based awards, including stock options, SARs and restricted stock units (“RSUs”).

The SARs issued under this plan take the form of options, except that no share is issued on exercise; instead, cash equivalent to the increase in the value of the shares from the date of grant to the date of exercise is paid to the employee. These awards are therefore treated as liability awards under Topic 718 “Compensation - Stock Compensation” and are revalued to their fair value at each period end. The SARs and the majority of the share options issued under this plan vest evenly over either three years or four years from the grant date. Certain premium-priced options vested evenly over a three-year period, starting two years from the grant date. All options vest subject to the participant’s continued employment by Gates on the vesting date and expire ten years after the date of grant.

The RSUs issued under the plan consist of time-vesting RSUs and performance-based RSUs (“PRSUs”). The time-vesting RSUs vest evenly over either one or three years from the date of grant, subject to the participant’s continued provision of service to Gates on the vesting date. The PRSUs issued prior to 2022 provide that 50% of the award will generally vest if Gates achieves a certain level of average annual adjusted return on invested capital as defined in the plan (“Adjusted ROIC”) and the remaining 50% of the PRSUs will generally vest if Gates achieves certain relative total shareholder return (“Relative TSR”) goals, in each case, measured over a three-year performance period and subject to the participant’s continued employment through the end of the performance period. The total number of PRSUs that vest at the end of the performance period will range from 0% to 200% of the target based on actual performance against a pre-established scale. Starting in Fiscal 2022, the terms for PRSUs are identical, except that 75% of the award will generally vest based on the specified Adjusted ROIC achievement and the remaining 25% will generally vest based on Relative TSR goal attainment.

New awards and movements in existing awards granted under this plan are summarized in the tables below.

Summary of movements in options outstanding

		Nine months ended September 28, 2024
	Plan	Number of options	Weighted average exercise price $
Outstanding at the beginning of the period:
—Tier I	2014 Plan	1,828,327	$	6.98
—Tier II	2014 Plan	1,996,017	$	7.01
—Tier IV	2014 Plan	1,986,416	$	10.52
—SARs	Both plans	735,221	$	10.47
—Share options	2018 Plan	2,345,520	$	14.90
—Premium-priced options	2018 Plan	835,469	$	18.88
		9,726,970	$	10.90
Granted during the period:
—SARs	2018 Plan	22,100	$	14.87
		22,100	$	14.87
Forfeited during the period:
—SARs	2018 Plan	(3,535)	$	13.50
		(3,535)	$	13.50
Expired during the period:
—SARs	Both Plans	(266)	$	14.04
—Share options	2018 Plan	(331,730)	$	17.27
		(331,996)	$	17.26
Exercised during the period:
—Tier I	2014 Plan	(133,758)	$	6.81
—Tier II	2014 Plan	(177,264)	$	6.87
—Tier IV	2014 Plan	(195,676)	$	10.51
—SARs	Both Plans	(148,438)	$	9.68
—Share options	2018 Plan	(408,422)	$	14.17
		(1,063,558)	$	10.73
Outstanding at the end of the period:
—Tier I	2014 Plan	1,694,569	$	6.99
—Tier II	2014 Plan	1,818,753	$	7.02
—Tier IV	2014 Plan	1,790,740	$	10.52
—SARs	Both plans	605,082	$	10.81
—Share options	2018 Plan	1,605,368	$	14.60
—Premium-priced options	2018 Plan	835,469	$	18.88
		8,349,981	$	10.68
Exercisable at the end of the period		8,269,839	$	10.64
Vested and expected to vest at the end of the period		8,349,643	$	10.68

As of September 28, 2024, the aggregate intrinsic value of options that were exercisable was $60.5 million, and these options had a weighted average remaining contractual term of 2.5 years. As of September 28, 2024, the aggregate intrinsic value of options that were vested or expected to vest was $60.8 million, and these options had a weighted average remaining contractual term of 2.6 years.

As of September 28, 2024, the unrecognized compensation charge relating to the nonvested options was $0.3 million, which is expected to be recognized over a weighted-average period of 1.7 years.

During the three and nine months ended September 28, 2024, cash of $2.9 million and $10.0 million was received in relation to the exercise of vested options, respectively, compared to $0.8 million and $17.5 million during the three and nine months ended September 30, 2023, respectively. The aggregate intrinsic value of options exercised during the three and nine months ended September 28, 2024 was $0.7 million and $3.4 million, respectively, compared to $0.0 million and $5.0 million during the three and nine months ended September 30, 2023, respectively.

Summary of movements in RSUs and PRSUs outstanding

	Nine months ended September 28, 2024
	Number of awards	Weighted average grant date fair value $
Outstanding at the beginning of the period:
—RSUs	3,032,230	$	13.78
—PRSUs	917,661	$	16.77
	3,949,891	$	14.47
Granted during the period:
—RSUs	1,222,752	$	14.91
—PRSUs	426,607	$	16.37
	1,649,359	$	15.28
Forfeited during the period:
—RSUs	(276,392)	$	13.69
—PRSUs	(154,837)	$	15.77
	(431,229)	$	14.44
Vested during the period:
—RSUs	(1,357,673)	$	13.80
—PRSUs	(154,274)	15.00
	(1,511,947)	$	13.92
Outstanding at the end of the period:
—RSUs	2,620,917	$	14.30
—PRSUs	1,035,157	$	17.02
	3,656,074	$	15.07

As of September 28, 2024, the unrecognized compensation charge relating to unvested RSUs and PRSUs was $16.7 million, which is expected to be recognized over a weighted average period of 1.5 years, subject, where relevant, to the achievement of the performance conditions described above. The total fair value of RSUs and PRSUs vested during the three and nine months ended September 28, 2024 was $5.8 million and $21.1 million, respectively, compared to $5.8 million and $21.1 million during the three and nine months ended September 30, 2023, respectively.

Valuation of awards granted during the period

The grant date fair value of the SARs are measured using a Black-Scholes valuation model. RSUs are valued at the share price on the date of grant. The Relative TSR component of the PRSUs were valued using Monte Carlo simulations. As Gates only has volatility data for its shares for the period since its IPO, this volatility has, where necessary, been weighted with the debt-levered volatility of a peer group of public companies in order to determine the expected volatility over the expected option life. The expected option life represents the period of time for which the options are expected to be outstanding and is based on consideration of the contractual life of the option, option vesting period, and historical exercise patterns. The weighted average fair values and relevant assumptions were as follows:

	Nine months ended
	September 28, 2024			September 30, 2023
Weighted average grant date fair value:
—SARs	$	6.95		$	6.71
—RSUs	$	14.91		$	13.86
—PRSUs	$	16.37		$	15.88
Inputs to the model:
—Expected volatility — SARs	41.7		%	43.4		%
—Expected volatility — PRSUs	31.6		%	37.7		%
—Expected option life for SARs (years)	6.0			6.0
—Risk-free interest rate:
SARs	4.2		%	4.1		%
PRSUs	4.4		%	4.6		%

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Equity

9 Months Ended

Sep. 28, 2024

Equity [Abstract]

Equity

Equity

Movements in the Company’s number of shares in issue for the nine months ended September 28, 2024 and September 30, 2023, respectively, were as follows:

	Nine months ended
(number of shares)	September 28, 2024	September 30, 2023
Balance as of the beginning of the period	264,259,788	282,578,917
Exercise of share options	915,120	2,120,169
Vesting of restricted stock units, net of withholding taxes	1,215,382	1,329,609
Shares repurchased and cancelled	(11,690,303)	(21,934,634)
Balance as of the end of the period	254,699,987	264,094,061

In February 2024, the Company’s Board approved a share repurchase program for up to $100.0 million in authorized share repurchases, with an expiration date of October 6, 2024. On February 12, 2024, the Company, certain selling shareholders affiliated with Blackstone, and the representatives of the several underwriters entered into an underwriting agreement pursuant to which the selling shareholders sold to the underwriters 20,125,000 ordinary shares of the Company at a price of $12.045 per ordinary share (the “February 2024 Offering”). The Company did not receive any proceeds from the sale of ordinary shares in the February 2024 Offering, which closed on February 16, 2024. In connection with the February 2024 Offering, the Company repurchased 4,151,100 ordinary shares through Citigroup Global Markets Inc. from the same selling shareholders at a price of $12.045 per ordinary share for an aggregate consideration of approximately $50.0 million (the “February 2024 Repurchase”), plus costs paid directly related to the transaction of $0.3 million. This repurchase was funded by cash on hand. All shares repurchased pursuant to the February 2024 Repurchase have been cancelled.

In July 2024, the Company’s Board cancelled the then existing share repurchase program and approved a new share repurchase program, providing for up to $250.0 million in share repurchases, which expires on December 31, 2025. On August 16, 2024, the Company, certain selling shareholders affiliated with Blackstone, and the representatives of the several underwriters entered into an underwriting agreement pursuant to which the selling shareholders sold to the underwriters 23,000,000 ordinary shares of the

Company at a price of $16.58 per ordinary share (the “August 2024 Offering”). The Company did not receive any proceeds from the sale of ordinary shares in the August 2024 Offering, which closed on August 21, 2024. In connection with the August 2024 Offering, the Company repurchased 7,539,203 ordinary shares through Citigroup Global Markets Inc. from the same selling shareholders at a price of $16.58 per ordinary share for an aggregate consideration of approximately $125.0 million (the “August 2024 Repurchase”), plus costs paid directly related to the transaction of $0.8 million. This repurchase was funded by cash on hand and a borrowing of $40.0 million under Gates’ secured revolving credit facility. All shares repurchased pursuant to the August 2024 Repurchase were pending cancellation as of September 28, 2024.

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Analysis of accumulated other comprehensive (loss) income

9 Months Ended

Sep. 28, 2024

Equity [Abstract]

Analysis of accumulated other comprehensive (loss) income

Analysis of accumulated other comprehensive (loss) income

Changes in accumulated other comprehensive (loss) income by component, net of tax, were as follows:

(dollars in millions)	Post- retirement benefits		Cumulative translation adjustment		Cash flow hedges		Accumulated OCI attributable to shareholders		Non-controlling interests		Accumulated OCI
As of December 30, 2023	$	(15.3)	$	(832.3)	$	19.1	$	(828.5)	$	(78.4)	$	(906.9)
Foreign currency translation	(2.9)		(89.3)		—		(92.2)		4.9		(87.3)
Cash flow hedges movements	—		—		(19.9)		(19.9)		—		(19.9)
Post-retirement benefit movements	(1.4)		—		—		(1.4)		—		(1.4)
Other comprehensive loss	(4.3)		(89.3)		(19.9)		(113.5)		4.9		(108.6)
As of September 28, 2024	$	(19.6)	$	(921.6)	$	(0.8)	$	(942.0)	$	(73.5)	$	(1,015.5)

(dollars in millions)	Post- retirement benefits		Cumulative translation adjustment		Cash flow hedges		Accumulated OCI attributable to shareholders		Non-controlling interests		Accumulated OCI
As of December 31, 2022	$	0.6	$	(950.0)	$	31.6	$	(917.8)	$	(64.6)	$	(982.4)
Foreign currency translation	(1.3)		27.2		—		25.9		(29.4)		(3.5)
Cash flow hedges movements	—		—		7.4		7.4		—		7.4
Post-retirement benefit movements	(1.9)		—		—		(1.9)		—		(1.9)
Other comprehensive (loss) income	(3.2)		27.2		7.4		31.4		(29.4)		2.0
As of September 30, 2023	$	(2.6)	$	(922.8)	$	39.0	$	(886.4)	$	(94.0)	$	(980.4)

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Related party transactions

9 Months Ended

Sep. 28, 2024

Related Party Transactions [Abstract]

Related party transactions

Related party transactions

A. Entities affiliated with Blackstone

In connection with the initial public offering of Gates, we entered into a Support and Services Agreement with Blackstone Management Partners L.L.C. (“BMP”) under which the Company and certain of its direct and indirect subsidiaries reimburse BMP for customary support services provided by Blackstone’s portfolio operations group to the Company at BMP’s direction. BMP will invoice the Company for such services based on the time spent by the relevant personnel providing such services during the applicable period and Blackstone’s allocated costs of such personnel. During the periods presented, no amounts were paid or were outstanding under this agreement. This agreement terminates on the date Blackstone beneficially owns less than 5% of our ordinary shares and such shares have a fair market value of less than $25.0 million, or such earlier date as may be chosen by Blackstone.

As described in Note 15, in February 2024, the Company repurchased 4,151,100 ordinary shares through Citigroup Global Markets Inc. from certain shareholders affiliated with Blackstone for an aggregate consideration of $50.0 million, plus costs paid directly related to the transaction of $0.3 million. In addition, during August 2024, the Company repurchased 7,539,203 ordinary shares through Citigroup Global Markets Inc. from certain shareholders affiliated with Blackstone for an aggregate consideration of $125.0 million, plus costs paid directly related to the transaction of $0.8 million.

B. Equity method investees

Purchases from equity method investees were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Purchases	$	(4.0)	$	(4.5)	$	(11.9)	$	(13.7)

Amounts outstanding in respect of these transactions were payables of $0.2 million as of September 28, 2024, compared to $0.2 million as of December 30, 2023. No dividends were received from our equity method investees during the periods presented.

C. Non-Gates entities controlled by non-controlling shareholders

Sales to and purchases from non-Gates entities controlled by non-controlling shareholders were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Sales	$	10.9	$	9.7	$	30.3	$	34.8
Purchases	$	(4.0)	$	(3.4)	$	(11.2)	$	(11.8)

Amounts outstanding in respect of these transactions were as follows:

(dollars in millions)	As of September 28, 2024		As of December 30, 2023
Receivables	$	4.4	$	3.2
Payables	$	(3.6)	$	(3.2)

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Commitments and contingencies

9 Months Ended

Sep. 28, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and contingencies

Commitments and contingencies

A. Contingencies

Gates is, from time to time, party to general legal proceedings and claims, which arise in the ordinary course of business. Gates is also, from time to time, party to legal proceedings and claims in respect of environmental obligations, product liability, intellectual property, commercial and contractual disputes, employment matters and other matters which arise in the ordinary course of business and against which management believes Gates has meritorious defenses available. When appropriate, management consults with legal counsel and other appropriate experts to assess claims. If, in management’s opinion, we have incurred a probable loss as set forth by U.S. GAAP, an estimate is made of the loss and the appropriate accrual is reflected in our consolidated financial statements. Currently, there are no material amounts accrued.

While it is not possible to quantify the financial impact or predict the outcome of all pending claims and litigation, management does not anticipate that the outcome of any current proceedings or known claims, either individually or in aggregate, will materially affect Gates’ financial position, results of operations or cash flows.

B. Warranties

The following summarizes the movements in the warranty liability for the nine months ended September 28, 2024 and September 30, 2023, respectively:

	Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023
Balance as of the beginning of the period	$	15.9	$	17.6
Charge for the period	7.1		3.7
Payments made	(5.7)		(5.7)
Released during the period	(0.2)		(0.1)
Foreign currency translation	0.1		(0.4)
Balance as of the end of the period	$	17.2	$	15.1

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Pay vs Performance Disclosure - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net income attributable to shareholders	$ 47.6	$ 78.7	$ 158.3	$ 170.0

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Insider Trading Arrangements	3 Months Ended
	Sep. 28, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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Introduction (Policies)

9 Months Ended

Sep. 28, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background

Background

Gates Industrial Corporation plc (the “Company”) is a public limited company that was registered in England and Wales on September 25, 2017.

In these condensed consolidated financial statements and related notes, all references to “Gates,” “we,” “us,” and “our” refer, unless the context requires otherwise, to Gates Industrial Corporation plc and its consolidated subsidiaries.

Accounting periods

Accounting periods

The Company prepares its annual consolidated financial statements for the period ending on the Saturday nearest December 31. Accordingly, the condensed consolidated balance sheets as of September 28, 2024 and December 30, 2023, and the related condensed consolidated statements of operations, comprehensive income, cash flows, and shareholders’ equity are presented, where relevant, for the 91-day period from June 30, 2024 to September 28, 2024, with comparative information for the 91-day period from July 2, 2023 to September 30, 2023 and for the 273-day period from December 31, 2023 to September 28, 2024, with comparative information for the 273-day period from January 1, 2023 to September 30, 2023.

Basis of preparation

Basis of preparation

The condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are presented in U.S. dollars unless otherwise indicated. The condensed consolidated financial statements and related notes contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company’s financial position as of September 28, 2024 and the results of its operations and cash flows for the periods ended September 28, 2024 and September 30, 2023. Interim period results are not necessarily indicative of the results to be expected for the full fiscal year.

The preparation of consolidated financial statements under U.S. GAAP requires us to make assumptions and estimates concerning the future that affect the reported amounts of assets, liabilities, revenue and expenses. Estimates and assumptions are particularly important in accounting for items such as revenue, rebates, impairment of long-lived assets, intangible assets and goodwill, inventory valuation, financial instruments, expected credit losses, product warranties, income taxes and post-retirement benefits. Estimates and assumptions used are based on factors such as historical experience, observance of trends in the industries in which we operate and information available from our customers and other outside sources.

These condensed consolidated financial statements are unaudited and have been prepared on substantially the same basis as Gates’ audited annual consolidated financial statements and related notes for the year ended December 30, 2023. The condensed consolidated balance sheet as of December 30, 2023 has been derived from those audited financial statements.

During 2021, the Company implemented a program with an unrelated third party under which we may periodically sell trade accounts receivable from one of our aftermarket customers with whom we have extended payment terms as part of a commercial agreement. The purpose of using this program is to offset the working capital impact resulting from this terms extension. All eligible accounts receivable from this customer are covered by the program, and any factoring is solely at our option. Following the factoring of a qualifying receivable, because we maintain no continuing involvement in the underlying receivable, and collectability risk is fully transferred to the unrelated third party, we account for these transactions as a sale of a financial asset and derecognize the asset. Cash received under the program is classified as operating cash inflows in the consolidated statement of cash flows. As of September 28, 2024, the collection of $114.1 million of our trade accounts receivable had been accelerated under this program, compared to the accelerated collection of $112.4 million as of December 30, 2023. During the three and nine months ended September 28, 2024, we incurred costs in respect of this program of $2.2 million and $6.6 million, respectively. During the three and nine months ended September 30, 2023, we incurred costs in respect of this program of $2.9 million and $5.1 million, respectively.

In 2022, as a result of the conflict between Russia and Ukraine, the Company began exiting substantially all its activities in Russia with only residual cash and de minimis administrative costs remaining in 2024. During the three months ended September 28, 2024, the Company concluded that the inability to repatriate remaining cash coupled with the significant government regulations and restrictions currently in place, which are expected to continue or worsen, severely limits its ability to manage and control its Russian subsidiary. As a result, the Company's Russian subsidiary was deconsolidated as of September 28, 2024. The impact of the deconsolidation was a $12.8 million loss included in the results of operations for the three and nine months ended September 28, 2024.

These condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and related notes for the year ended December 30, 2023 included in the Company’s Annual Report on Form 10-K.

The accounting policies used in preparing these condensed consolidated financial statements are the same as those applied in the prior year.

Recent accounting pronouncements

Recent accounting pronouncements

•Accounting Standards Update (“ASU”) 2023-07 “Segment Reporting” (Topic 280): Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued an ASU that expands annual and interim disclosure requirements for reportable segments, primarily through enhanced disclosures regarding significant segment expenses. The updated standard is effective for our annual periods beginning in fiscal year 2024 and interim periods beginning in the first quarter of fiscal year 2025, with early adoption permitted. We are currently evaluating the impact the updated standard will have on our financial statement disclosures.

•ASU 2023-09 “Income Taxes” (Topic 740): Improvements to Income Tax Disclosures

In December 2023, the FASB issued an ASU that requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The updated standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The updated standard is effective for our annual periods beginning in fiscal year 2025 and interim periods beginning in the first quarter of fiscal year 2026, with early adoption permitted. We are currently evaluating the impact the updated standard will have on our financial statement disclosures.

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Segment information (Tables)

9 Months Ended

Sep. 28, 2024

Segment Reporting [Abstract]

Schedule of Net Sales by Operating Segment

Sales between reporting segments and the impact of such sales on Adjusted EBITDA for each segment are not included in internal reports presented to the CEO and have therefore not been included below.

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Power Transmission	$	513.4	$	536.4	$	1,588.1	$	1,658.4
Fluid Power	317.3		336.5		990.7		1,048.5
Continuing operations	$	830.7	$	872.9	$	2,578.8	$	2,706.9

Adjusted EBITDA by segment was as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Power Transmission	$	113.0	$	116.5	$	355.8	$	343.2
Fluid Power	69.5		72.9		224.5		218.0
Continuing operations	$	182.5	$	189.4	$	580.3	$	561.2

Schedule of Net sales by Key Geographic Regions and Markets

The following table summarizes our net sales by key geographic region of origin:

	Three months ended
	September 28, 2024				September 30, 2023
(dollars in millions)	Power Transmission		Fluid Power		Power Transmission		Fluid Power
U.S.	$	140.9	$	168.1	$	150.3	$	179.3
North America, excluding U.S.	56.6		49.2		60.7		55.3
United Kingdom (“U.K.”)	9.1		16.0		10.0		14.8
EMEA(1), excluding U.K.	137.5		46.1		145.4		50.9
East Asia and India	70.4		18.5		69.8		19.4
Greater China	72.6		8.8		72.0		5.8
South America	26.3		10.6		28.2		11.0
Net sales	$	513.4	$	317.3	$	536.4	$	336.5

	Nine months ended
	September 28, 2024				September 30, 2023
(dollars in millions)	Power Transmission		Fluid Power		Power Transmission		Fluid Power
U.S.	$	425.8	$	524.1	$	450.7	$	552.2
North America, excluding U.S.	182.0		153.0		172.0		163.0
U.K.	29.6		50.7		34.3		54.9
EMEA(1), excluding U.K.	449.1		144.9		481.5		158.9
East Asia and India	205.6		58.3		214.5		59.4
Greater China	214.7		30.3		222.4		27.6
South America	81.3		29.4		83.0		32.5
Net sales	$	1,588.1	$	990.7	$	1,658.4	$	1,048.5

(1)    Europe, Middle East and Africa (“EMEA”).

The following table summarizes our net sales into emerging and developed markets:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Developed	$	533.9	$	570.0	$	1,663.4	$	1,784.1
Emerging	296.8		302.9		915.4		922.8
Net sales	$	830.7	$	872.9	$	2,578.8	$	2,706.9

Schedule of Reconciliation of Adjusted EBITDA to Net Income from Continuing Operations

Reconciliation of net income from continuing operations to Adjusted EBITDA:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net income from continuing operations	$	55.2	$	85.6	$	179.3	$	187.8
Income tax expense	14.0		1.0		60.8		25.9
Income from continuing operations before taxes	69.2		86.6		240.1		213.7
Interest expense	35.1		39.5		121.7		124.8
Loss on deconsolidation of Russian subsidiary (1)	12.8		—		12.8		—
Other (income) expenses	(3.9)		(0.2)		(8.5)		3.8
Operating income from continuing operations	113.2		125.9		366.1		342.3
Depreciation and amortization	53.7		54.0		162.8		162.5
Transaction-related expenses (2)	0.5		1.3		2.1		2.1
Asset impairments	—		0.1		—		0.1
Restructuring expenses	2.2		2.6		5.0		10.3
Share-based compensation expense	6.4		3.3		20.2		19.6
Inventory impairments and adjustments (3) (included in cost of sales)	4.4		2.2		21.7		6.3
Severance expenses (included in cost of sales)	0.9		(0.1)		0.9		0.4
Severance expenses (included in SG&A)	1.4		—		1.5		0.9
Credit (gain) loss related to customer bankruptcy (included in SG&A) (4)	(0.2)		—		(0.1)		11.4
Cybersecurity incident expenses (5)	—		—		—		5.1
Other items not directly related to current operations (6)	—		0.1		0.1		0.2
Adjusted EBITDA	$	182.5	$	189.4	$	580.3	$	561.2

(1)    In July 2022, as a result of the conflict between Russia and Ukraine, Gates suspended our operations in Russia. As of September 28 2024, we deconsolidated the Russian subsidiary upon loss of control and recognized a deconsolidation loss.

(2)    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.

(3)    Inventory impairments and adjustments include the reversal of the adjustment to remeasure certain inventories on a LIFO basis.

(4)    On January 31, 2023, one of our customers filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In connection with the bankruptcy proceedings, we preliminarily evaluated our potential risk and exposure relating to our outstanding pre-petition accounts receivable balance from the customer and recorded an initial pre-tax charge to reflect our estimated recovery. We continue to monitor the circumstances surrounding the bankruptcy and adjust our estimate as necessary.

(5)    On February 11, 2023, Gates determined that it was the target of a malware attack. Cybersecurity incident expenses include legal, consulting, and other costs incurred as a direct result of this incident, some of which may be partially offset by insurance recoveries.

(6)    Other items not directly related to current operations include other charges.

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Restructuring and other strategic initiatives (Tables)

9 Months Ended

Sep. 28, 2024

Restructuring and Related Activities [Abstract]

Schedule of Restructuring Costs

Overall costs associated with our restructuring and other strategic initiatives have been recognized in the condensed consolidated statements as set forth below. Expenses incurred in relation to certain of these actions qualify as restructuring expenses under U.S. GAAP.

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Restructuring expenses:
—Severance expense	$	1.0	$	—	$	0.5	$	4.4
—Non-severance labor and benefit (income) expenses	(0.2)		0.3		(0.1)		1.1
—Consulting expenses	1.1		0.8		2.6		1.7
—Other net restructuring expenses	0.3		1.5		2.0		3.1
	2.2		2.6		5.0		10.3
Restructuring expenses in asset impairments:
—Impairment of fixed and other assets	—		0.1		—		0.1
Restructuring expenses in cost of sales:
—Impairment of inventory	—		0.1		—		0.1
Total restructuring expenses	$	2.2	$	2.8	$	5.0	$	10.5
Expenses related to other strategic initiatives:
—Severance and other expenses (income) included in cost of sales	0.9		(0.1)		0.9		0.4
—Severance and other expenses included in SG&A	1.4		—		1.5		0.9
Total expenses (income) related to other strategic initiatives	$	2.3	$	(0.1)	$	2.4	$	1.3

These expenses include the impairment of inventory if applicable, which is recognized in cost of sales. Analyzed by segment, our restructuring expenses were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Power Transmission	$	0.6	$	1.5	$	1.4	$	7.2
Fluid Power	1.6		1.3		3.6		3.3
Continuing operations	$	2.2	$	2.8	$	5.0	$	10.5

Schedule of Restructuring Reserves Activity

The following summarizes the reserve for restructuring expenses for the nine months ended September 28, 2024 and September 30, 2023, respectively:

	Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023
Balance as of the beginning of the period	$	5.1	$	7.5
Utilized during the period	(6.3)		(11.1)
Charge for the period	5.7		10.5
Released during the period	(0.7)		(0.2)
Foreign currency translation	—		(0.1)
Balance as of the end of the period	$	3.8	$	6.6

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Earnings per share (Tables)

9 Months Ended

Sep. 28, 2024

Earnings Per Share [Abstract]

Schedule of Computation of Net Income Per Share

The computation of earnings per share is presented below:

	Three months ended				Nine months ended
(dollars in millions, except share numbers and per share amounts)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net income attributable to shareholders	$	47.6	$	78.7	$	158.3	$	170.0
Weighted average number of shares outstanding	258,889,598		263,984,434		261,001,362		274,460,054
Dilutive effect of share-based awards	4,551,974		3,850,577		4,853,706		4,028,006
Diluted weighted average number of shares outstanding	263,441,572		267,835,011		265,855,068		278,488,060
Number of anti-dilutive shares excluded from the diluted earnings per share calculation	5,410,122		3,934,925		2,785,491		5,065,975
Basic earnings per share	$	0.18	$	0.30	$	0.61	$	0.62
Diluted earnings per share	$	0.18	$	0.29	$	0.60	$	0.61

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Inventories (Tables)

9 Months Ended

Sep. 28, 2024

Inventory Disclosure [Abstract]

Schedule of Inventories

(dollars in millions)	As of September 28, 2024		As of December 30, 2023
Raw materials and supplies	$	203.5	$	168.2
Work in progress	49.0		43.3
Finished goods	472.1		435.7
Total inventories	$	724.6	$	647.2

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Goodwill (Tables)

9 Months Ended

Sep. 28, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

(dollars in millions)	Power Transmission		Fluid Power		Total
Cost and carrying amount
As of December 30, 2023	$	1,338.5	$	700.2	$	2,038.7
Foreign currency translation	(15.7)		(25.9)		(41.6)
As of September 28, 2024	$	1,322.8	$	674.3	$	1,997.1

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Intangible assets (Tables)

9 Months Ended

Sep. 28, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets

	As of September 28, 2024						As of December 30, 2023
(dollars in millions)	Cost		Accumulated amortization and impairment		Net		Cost		Accumulated amortization and impairment		Net
Finite-lived:
—Customer relationships	$	1,981.7	$	(1,202.8)	$	778.9	$	2,003.6	$	(1,127.7)	$	875.9
—Technology	90.8		(90.8)		—		90.6		(90.3)		0.3
—Capitalized software	131.1		(84.7)		46.4		117.3		(76.8)		40.5
	2,203.6		(1,378.3)		825.3		2,211.5		(1,294.8)		916.7
Indefinite-lived:
—Brands and trade names	513.4		(44.0)		469.4		513.4		(44.0)		469.4
Total intangible assets	$	2,717.0	$	(1,422.3)	$	1,294.7	$	2,724.9	$	(1,338.8)	$	1,386.1

Schedule of Indefinite-Lived Intangible Assets

	As of September 28, 2024						As of December 30, 2023
(dollars in millions)	Cost		Accumulated amortization and impairment		Net		Cost		Accumulated amortization and impairment		Net
Finite-lived:
—Customer relationships	$	1,981.7	$	(1,202.8)	$	778.9	$	2,003.6	$	(1,127.7)	$	875.9
—Technology	90.8		(90.8)		—		90.6		(90.3)		0.3
—Capitalized software	131.1		(84.7)		46.4		117.3		(76.8)		40.5
	2,203.6		(1,378.3)		825.3		2,211.5		(1,294.8)		916.7
Indefinite-lived:
—Brands and trade names	513.4		(44.0)		469.4		513.4		(44.0)		469.4
Total intangible assets	$	2,717.0	$	(1,422.3)	$	1,294.7	$	2,724.9	$	(1,338.8)	$	1,386.1

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Derivative financial instruments (Tables)

9 Months Ended

Sep. 28, 2024

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Fair Values of Derivative Financial Instruments

The period end fair values of derivative financial instruments were as follows:

	As of September 28, 2024										As of December 30, 2023
(dollars in millions)	Prepaid expenses and other assets		Other non- current assets		Accrued expenses and other current liabilities		Other non- current liabilities		Net		Prepaid expenses and other assets		Other non- current assets		Accrued expenses and other current liabilities		Other  non- current liabilities		Net
Derivatives designated as hedging instruments:
—Currency swaps	$	10.0	$	—	$	—	$	(103.4)	$	(93.4)	$	8.5	$	—	$	—	$	(77.7)	$	(69.2)
—Interest rate swaps	17.4		—		(10.0)		(8.0)		(0.6)		29.9		11.8		(9.9)		(13.6)		18.2
Derivatives not designated as hedging instruments:
—Currency forward contracts	2.0		—		(1.1)		—		0.9		3.9		—		(1.8)		—		2.1
	$	29.4	$	—	$	(11.1)	$	(111.4)	$	(93.1)	$	42.3	$	11.8	$	(11.7)	$	(91.3)	$	(48.9)

Schedule of Derivative Effect on OCI

The fair value gains (losses) before tax recognized in OCI in relation to the instruments designated as net investment hedging instruments were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Net fair value gains recognized in OCI in relation to:
—Designated cross currency swaps	(50.1)		23.9		(24.2)		1.8
Total net fair value (losses) gains	$	(50.1)	$	23.9	$	(24.2)	$	1.8

The movements before tax recognized in OCI in relation to our cash flow hedges were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Movement recognized in OCI in relation to:
—Fair value gain on cash flow hedges	$	(17.0)	$	11.4	$	0.4	$	25.0
—Amortization to net income of prior period fair value losses	—		—		—		8.9
—Deferred OCI reclassified to net income	(9.0)		(8.9)		(27.0)		(24.0)
Total movement	$	(26.0)	$	2.5	$	(26.6)	$	9.9

Schedule of Gain (Losses) Recognized from Derivative Instruments

The fair value gains (losses) recognized in net income in relation to derivative instruments that have not been designated as hedging instruments were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Fair value gains (losses) recognized in relation to:
—Currency forward contracts recognized in SG&A	$	0.2	$	(0.8)	$	3.4	$	3.3
Total	$	0.2	$	(0.8)	$	3.4	$	3.3

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Fair value measurement (Tables)

9 Months Ended

Sep. 28, 2024

Fair Value Disclosures [Abstract]

Schedule of Carrying Amount and Fair Value of Debt

The carrying amount and fair value of our debt are set out below:

	As of September 28, 2024				As of December 30, 2023
(dollars in millions)	Carrying  amount		Fair value		Carrying  amount		Fair value
Current	$	36.2	$	36.1	$	36.5	$	36.5
Non-current	2,341.5		2,389.5		2,415.0		2,444.7
	$	2,377.7	$	2,425.6	$	2,451.5	$	2,481.2

Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table categorizes the assets and liabilities that are measured at fair value on a recurring basis:

(dollars in millions)	Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Total
As of September 28, 2024
Derivative assets	$	—	$	29.4	$	29.4
Derivative liabilities	$	—	$	(122.5)	$	(122.5)
Cash equivalents	$	—	$	27.9	$	27.9
Available for sale investments	$	—	$	5.0	$	5.0
As of December 30, 2023
Derivative assets	$	—	$	54.1	$	54.1
Derivative liabilities	$	—	$	(103.0)	$	(103.0)
Cash equivalents	$	76.2	$	52.8	$	129.0
Available for sale investments	$	—	$	—	$	—

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Debt (Tables)

9 Months Ended

Sep. 28, 2024

Debt Disclosure [Abstract]

Schedule of Long-term Debt

(dollars in millions)	As of September 28, 2024		As of December 30, 2023
Secured debt:
—2024 Dollar Term Loans due June 4, 2031	$	1,300.0	$	—
—2022 Dollar Term Loans due November 16, 2029	564.9		567.8
—2021 Dollar Term Loans due November 16, 2029	—		1,336.1
—Revolving credit facility	30.0		—
Unsecured debt:
—6.875% Dollar Senior Notes due July 1, 2029	500.0		—
—6.250% Dollar Senior Notes due January 16, 2026	—		568.0
Total principal of debt	2,394.9		2,471.9
Deferred issuance costs	(34.6)		(37.4)
Accrued interest	17.4		17.0
Total carrying value of debt	2,377.7		2,451.5
Debt, current portion	36.2		36.5
Debt, less current portion	$	2,341.5	$	2,415.0

Schedule of Redemption Prices Plus Accrued and Unpaid Interest

Prior to July 1, 2026, we may redeem the 2024 Unsecured Senior Notes, at our option, in whole at any time or in part from time to time, at a “make-whole” redemption price. In addition, on or subsequent to July 1, 2026, we may redeem the 2024 Unsecured Senior Notes, at our option, in whole at any time or in part from time to time, at the following redemption prices (expressed as a percentage of the principal amount), plus accrued and unpaid interest to the redemption date:

	Redemption price
On or subsequent to:
—July 1, 2026	103.438	%
—July 1, 2027	101.719	%
—July 1, 2028 and thereafter	100.000	%

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Post-retirement benefits (Tables)

9 Months Ended

Sep. 28, 2024

Postemployment Benefits [Abstract]

Schedule of Components of Net Periodic Benefit Income for Pensions and Other Post-Retirement Benefits

The components of the net periodic benefit cost (income) for pensions and other post-retirement benefits were as follows:

	Three months ended September 28, 2024						Three months ended September 30, 2023
(dollars in millions)	Pensions		Other post-retirement benefits		Total		Pensions		Other post-retirement benefits		Total
Reported in operating income:
—Employer service cost	$	1.0	$	—	$	1.0	$	1.0	$	—	$	1.0
Reported outside of operating income:
—Interest cost	6.0		0.4		6.4		6.3		0.4		6.7
—Expected return on plan assets	(6.5)		—		(6.5)		(6.5)		—		(6.5)
—Net amortization of prior period losses (gains)	0.2		(0.8)		(0.6)		—		(0.9)		(0.9)
—Settlements and curtailments	0.1		—		0.1		—		—		—
Net periodic benefit cost (income)	$	0.8	$	(0.4)	$	0.4	$	0.8	$	(0.5)	$	0.3
Cash Contributions	$	2.2	$	0.7	$	2.9	$	1.6	$	0.6	$	2.2

	Nine months ended September 28, 2024						Nine months ended September 30, 2023
(dollars in millions)	Pensions		Other post-retirement benefits		Total		Pensions		Other post-retirement benefits		Total
Reported in operating income:
—Employer service cost	$	3.0	$	—	$	3.0	$	2.9	$	—	$	2.9
Reported outside of operating income:
—Interest cost	18.2		1.0		19.2		18.8		1.1		19.9
—Expected return on plan assets	(19.4)		—		(19.4)		(19.5)		—		(19.5)
—Net amortization of prior period losses (gains)	0.6		(2.4)		(1.8)		(0.1)		(2.5)		(2.6)
—Settlements and curtailments	0.1		—		0.1		—		—		—
Net periodic benefit cost (income)	$	2.5	$	(1.4)	$	1.1	$	2.1	$	(1.4)	$	0.7
Cash Contributions	$	5.4	$	2.4	$	7.8	$	5.3	$	2.5	$	7.8

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Share-based compensation (Tables)

9 Months Ended

Sep. 28, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Option Activity

New awards and movements in existing awards granted under this plan are summarized in the tables below.

Summary of movements in options outstanding

		Nine months ended September 28, 2024
	Plan	Number of options	Weighted average exercise price $
Outstanding at the beginning of the period:
—Tier I	2014 Plan	1,828,327	$	6.98
—Tier II	2014 Plan	1,996,017	$	7.01
—Tier IV	2014 Plan	1,986,416	$	10.52
—SARs	Both plans	735,221	$	10.47
—Share options	2018 Plan	2,345,520	$	14.90
—Premium-priced options	2018 Plan	835,469	$	18.88
		9,726,970	$	10.90
Granted during the period:
—SARs	2018 Plan	22,100	$	14.87
		22,100	$	14.87
Forfeited during the period:
—SARs	2018 Plan	(3,535)	$	13.50
		(3,535)	$	13.50
Expired during the period:
—SARs	Both Plans	(266)	$	14.04
—Share options	2018 Plan	(331,730)	$	17.27
		(331,996)	$	17.26
Exercised during the period:
—Tier I	2014 Plan	(133,758)	$	6.81
—Tier II	2014 Plan	(177,264)	$	6.87
—Tier IV	2014 Plan	(195,676)	$	10.51
—SARs	Both Plans	(148,438)	$	9.68
—Share options	2018 Plan	(408,422)	$	14.17
		(1,063,558)	$	10.73
Outstanding at the end of the period:
—Tier I	2014 Plan	1,694,569	$	6.99
—Tier II	2014 Plan	1,818,753	$	7.02
—Tier IV	2014 Plan	1,790,740	$	10.52
—SARs	Both plans	605,082	$	10.81
—Share options	2018 Plan	1,605,368	$	14.60
—Premium-priced options	2018 Plan	835,469	$	18.88
		8,349,981	$	10.68
Exercisable at the end of the period		8,269,839	$	10.64
Vested and expected to vest at the end of the period		8,349,643	$	10.68

Schedule of RSU and PRSU Activity

Summary of movements in RSUs and PRSUs outstanding

	Nine months ended September 28, 2024
	Number of awards	Weighted average grant date fair value $
Outstanding at the beginning of the period:
—RSUs	3,032,230	$	13.78
—PRSUs	917,661	$	16.77
	3,949,891	$	14.47
Granted during the period:
—RSUs	1,222,752	$	14.91
—PRSUs	426,607	$	16.37
	1,649,359	$	15.28
Forfeited during the period:
—RSUs	(276,392)	$	13.69
—PRSUs	(154,837)	$	15.77
	(431,229)	$	14.44
Vested during the period:
—RSUs	(1,357,673)	$	13.80
—PRSUs	(154,274)	15.00
	(1,511,947)	$	13.92
Outstanding at the end of the period:
—RSUs	2,620,917	$	14.30
—PRSUs	1,035,157	$	17.02
	3,656,074	$	15.07

Schedule of Share Based Compensation Valuation Techniques

The weighted average fair values and relevant assumptions were as follows:

	Nine months ended
	September 28, 2024			September 30, 2023
Weighted average grant date fair value:
—SARs	$	6.95		$	6.71
—RSUs	$	14.91		$	13.86
—PRSUs	$	16.37		$	15.88
Inputs to the model:
—Expected volatility — SARs	41.7		%	43.4		%
—Expected volatility — PRSUs	31.6		%	37.7		%
—Expected option life for SARs (years)	6.0			6.0
—Risk-free interest rate:
SARs	4.2		%	4.1		%
PRSUs	4.4		%	4.6		%

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Equity (Tables)

9 Months Ended

Sep. 28, 2024

Equity [Abstract]

Schedule of Movement in Number of Shares in Issue

Movements in the Company’s number of shares in issue for the nine months ended September 28, 2024 and September 30, 2023, respectively, were as follows:

	Nine months ended
(number of shares)	September 28, 2024	September 30, 2023
Balance as of the beginning of the period	264,259,788	282,578,917
Exercise of share options	915,120	2,120,169
Vesting of restricted stock units, net of withholding taxes	1,215,382	1,329,609
Shares repurchased and cancelled	(11,690,303)	(21,934,634)
Balance as of the end of the period	254,699,987	264,094,061

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Analysis of accumulated other comprehensive (loss) income (Tables)

9 Months Ended

Sep. 28, 2024

Equity [Abstract]

Schedule of Accumulated Other Comprehensive (Loss) Income

Changes in accumulated other comprehensive (loss) income by component, net of tax, were as follows:

(dollars in millions)	Post- retirement benefits		Cumulative translation adjustment		Cash flow hedges		Accumulated OCI attributable to shareholders		Non-controlling interests		Accumulated OCI
As of December 30, 2023	$	(15.3)	$	(832.3)	$	19.1	$	(828.5)	$	(78.4)	$	(906.9)
Foreign currency translation	(2.9)		(89.3)		—		(92.2)		4.9		(87.3)
Cash flow hedges movements	—		—		(19.9)		(19.9)		—		(19.9)
Post-retirement benefit movements	(1.4)		—		—		(1.4)		—		(1.4)
Other comprehensive loss	(4.3)		(89.3)		(19.9)		(113.5)		4.9		(108.6)
As of September 28, 2024	$	(19.6)	$	(921.6)	$	(0.8)	$	(942.0)	$	(73.5)	$	(1,015.5)

(dollars in millions)	Post- retirement benefits		Cumulative translation adjustment		Cash flow hedges		Accumulated OCI attributable to shareholders		Non-controlling interests		Accumulated OCI
As of December 31, 2022	$	0.6	$	(950.0)	$	31.6	$	(917.8)	$	(64.6)	$	(982.4)
Foreign currency translation	(1.3)		27.2		—		25.9		(29.4)		(3.5)
Cash flow hedges movements	—		—		7.4		7.4		—		7.4
Post-retirement benefit movements	(1.9)		—		—		(1.9)		—		(1.9)
Other comprehensive (loss) income	(3.2)		27.2		7.4		31.4		(29.4)		2.0
As of September 30, 2023	$	(2.6)	$	(922.8)	$	39.0	$	(886.4)	$	(94.0)	$	(980.4)

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Related party transactions (Tables)

9 Months Ended

Sep. 28, 2024

Related Party Transactions [Abstract]

Schedule of Related Party Transactions

Purchases from equity method investees were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Purchases	$	(4.0)	$	(4.5)	$	(11.9)	$	(13.7)

Sales to and purchases from non-Gates entities controlled by non-controlling shareholders were as follows:

	Three months ended				Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023		September 28, 2024		September 30, 2023
Sales	$	10.9	$	9.7	$	30.3	$	34.8
Purchases	$	(4.0)	$	(3.4)	$	(11.2)	$	(11.8)

Amounts outstanding in respect of these transactions were as follows:

(dollars in millions)	As of September 28, 2024		As of December 30, 2023
Receivables	$	4.4	$	3.2
Payables	$	(3.6)	$	(3.2)

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Commitments and contingencies (Tables)

9 Months Ended

Sep. 28, 2024

Commitments and Contingencies Disclosure [Abstract]

Schedule of Warranty Liabilities

The following summarizes the movements in the warranty liability for the nine months ended September 28, 2024 and September 30, 2023, respectively:

	Nine months ended
(dollars in millions)	September 28, 2024		September 30, 2023
Balance as of the beginning of the period	$	15.9	$	17.6
Charge for the period	7.1		3.7
Payments made	(5.7)		(5.7)
Released during the period	(0.2)		(0.1)
Foreign currency translation	0.1		(0.4)
Balance as of the end of the period	$	17.2	$	15.1

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Introduction (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023	Dec. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Trade account receivables held for sale	$ 114.1		$ 114.1		$ 112.4
Expenses related to the reclassification of receivables	2.2	$ 2.9	6.6	$ 5.1
Loss on deconsolidation of Russian subsidiary	$ 12.8	$ 0.0	$ 12.8	$ 0.0

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Segment information - Sales and Adjusted EBITDA by Reporting Segment (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Segment Reporting Information
Net sales	$ 830.7	$ 872.9	$ 2,578.8	$ 2,706.9
Adjusted EBITDA	182.5	189.4	580.3	561.2
Power Transmission
Segment Reporting Information
Net sales	513.4	536.4	1,588.1	1,658.4
Adjusted EBITDA	113.0	116.5	355.8	343.2
Fluid Power
Segment Reporting Information
Net sales	317.3	336.5	990.7	1,048.5
Adjusted EBITDA	$ 69.5	$ 72.9	$ 224.5	$ 218.0

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Segment information - Net Sales by Geographic Regions and Markets (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Revenues from External Customers and Long-Lived Assets
Net sales	$ 830.7	$ 872.9	$ 2,578.8	$ 2,706.9
Power Transmission
Revenues from External Customers and Long-Lived Assets
Net sales	513.4	536.4	1,588.1	1,658.4
Fluid Power
Revenues from External Customers and Long-Lived Assets
Net sales	317.3	336.5	990.7	1,048.5
U.S. | Power Transmission
Revenues from External Customers and Long-Lived Assets
Net sales	140.9	150.3	425.8	450.7
U.S. | Fluid Power
Revenues from External Customers and Long-Lived Assets
Net sales	168.1	179.3	524.1	552.2
North America, excluding U.S. | Power Transmission
Revenues from External Customers and Long-Lived Assets
Net sales	56.6	60.7	182.0	172.0
North America, excluding U.S. | Fluid Power
Revenues from External Customers and Long-Lived Assets
Net sales	49.2	55.3	153.0	163.0
United Kingdom (“U.K.”) | Power Transmission
Revenues from External Customers and Long-Lived Assets
Net sales	9.1	10.0	29.6	34.3
United Kingdom (“U.K.”) | Fluid Power
Revenues from External Customers and Long-Lived Assets
Net sales	16.0	14.8	50.7	54.9
EMEA, excluding U.K. | Power Transmission
Revenues from External Customers and Long-Lived Assets
Net sales	137.5	145.4	449.1	481.5
EMEA, excluding U.K. | Fluid Power
Revenues from External Customers and Long-Lived Assets
Net sales	46.1	50.9	144.9	158.9
East Asia and India | Power Transmission
Revenues from External Customers and Long-Lived Assets
Net sales	70.4	69.8	205.6	214.5
East Asia and India | Fluid Power
Revenues from External Customers and Long-Lived Assets
Net sales	18.5	19.4	58.3	59.4
Greater China | Power Transmission
Revenues from External Customers and Long-Lived Assets
Net sales	72.6	72.0	214.7	222.4
Greater China | Fluid Power
Revenues from External Customers and Long-Lived Assets
Net sales	8.8	5.8	30.3	27.6
South America | Power Transmission
Revenues from External Customers and Long-Lived Assets
Net sales	26.3	28.2	81.3	83.0
South America | Fluid Power
Revenues from External Customers and Long-Lived Assets
Net sales	10.6	11.0	29.4	32.5
Developed
Revenues from External Customers and Long-Lived Assets
Net sales	533.9	570.0	1,663.4	1,784.1
Emerging
Revenues from External Customers and Long-Lived Assets
Net sales	$ 296.8	$ 302.9	$ 915.4	$ 922.8

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Segment information - Reconciliation of Adjusted EBITDA to Net Income (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Segment Reporting Information
Net income from continuing operations	$ 55.2	$ 85.6	$ 179.3	$ 187.8
Income tax expense	14.0	1.0	60.8	25.9
Income from continuing operations before taxes	69.2	86.6	240.1	213.7
Interest expenses	35.1	39.5	121.7	124.8
Loss on deconsolidation of Russian subsidiary	12.8	0.0	12.8	0.0
Other (income) expenses	(3.9)	(0.2)	(8.5)	3.8
Operating income from continuing operations	113.2	125.9	366.1	342.3
Depreciation and amortization	53.7	54.0	162.8	162.5
Transaction-related expenses	0.5	1.3	2.1	2.1
Asset impairments	0.0	0.1	0.0	0.1
Restructuring expenses	2.2	2.6	5.0	10.3
Share-based compensation expense	6.4	3.3	20.2	19.6
Inventory impairments and adjustments (included in cost of sales)	4.4	2.2	21.7	6.3
Credit (gain) loss related to customer bankruptcy (included in SG&A)	(0.2)	0.0	(0.1)	11.4
Cybersecurity incident expenses	0.0	0.0	0.0	5.1
Other items not directly related to current operations	0.0	0.1	0.1	0.2
Adjusted EBITDA	182.5	189.4	580.3	561.2
—Severance and other expenses (income) included in cost of sales
Segment Reporting Information
Severance expenses	0.9	(0.1)	0.9	0.4
SG&A
Segment Reporting Information
Severance expenses	$ 1.4	$ 0.0	$ 1.5	$ 0.9

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Restructuring and other strategic initiatives - Income Statement Location (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Restructuring Cost and Reserve
Total restructuring expenses	$ 2.2	$ 2.6	$ 5.0	$ 10.3
Total expenses related to other strategic initiatives	2.2	2.8	5.0	10.5
Expenses related to other strategic initiatives:	2.3	(0.1)	2.4	1.3
—Severance and other expenses (income) included in cost of sales
Restructuring Cost and Reserve
Expenses related to other strategic initiatives:	0.9	(0.1)	0.9	0.4
—Severance and other expenses included in SG&A
Restructuring Cost and Reserve
Expenses related to other strategic initiatives:	1.4	0.0	1.5	0.9
—Severance expense
Restructuring Cost and Reserve
Total restructuring expenses	$ 1.0	$ 0.0	$ 0.5	$ 4.4
Restructuring Charges, Statement of Income or Comprehensive Income [Extensible Enumeration]	Restructuring expenses	Restructuring expenses	Restructuring expenses	Restructuring expenses
—Non-severance labor and benefit (income) expenses
Restructuring Cost and Reserve
Total restructuring expenses	$ (0.2)	$ 0.3	$ (0.1)	$ 1.1
Restructuring Charges, Statement of Income or Comprehensive Income [Extensible Enumeration]	Restructuring expenses	Restructuring expenses	Restructuring expenses	Restructuring expenses
—Consulting expenses
Restructuring Cost and Reserve
Total restructuring expenses	$ 1.1	$ 0.8	$ 2.6	$ 1.7
Restructuring Charges, Statement of Income or Comprehensive Income [Extensible Enumeration]	Restructuring expenses	Restructuring expenses	Restructuring expenses	Restructuring expenses
—Other net restructuring expenses
Restructuring Cost and Reserve
Total restructuring expenses	$ 0.3	$ 1.5	$ 2.0	$ 3.1
Restructuring Charges, Statement of Income or Comprehensive Income [Extensible Enumeration]	Restructuring expenses	Restructuring expenses	Restructuring expenses	Restructuring expenses
—Impairment of fixed and other assets
Restructuring Cost and Reserve
—Impairment of fixed and other assets	$ 0.0	$ 0.1	$ 0.0	$ 0.1
—Impairment of inventory
Restructuring Cost and Reserve
—Impairment of fixed and other assets	$ 0.0	$ 0.1	$ 0.0	$ 0.1

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Restructuring and other strategic initiatives - Narratives (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Restructuring Cost and Reserve
Restructuring expenses	$ 2.2	$ 2.6	$ 5.0	$ 10.3
Employee Relocation
Restructuring Cost and Reserve
Restructuring expenses	1.0	$ 0.3	$ 2.5
Employee Relocation | North America
Restructuring Cost and Reserve
Restructuring expenses	$ 1.0

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Restructuring and other strategic initiatives - Restructuring Costs by Segment (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Restructuring Cost and Reserve
Total expenses related to other strategic initiatives	$ 2.2	$ 2.8	$ 5.0	$ 10.5
Power Transmission
Restructuring Cost and Reserve
Total expenses related to other strategic initiatives	0.6	1.5	1.4	7.2
Fluid Power
Restructuring Cost and Reserve
Total expenses related to other strategic initiatives	$ 1.6	$ 1.3	$ 3.6	$ 3.3

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Restructuring and other strategic initiatives - Restructuring Reserve Activity (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023
Restructuring reserves
Balance as of the beginning of the period	$ 5.1	$ 7.5
Utilized during the period	(6.3)	(11.1)
Charge for the period	5.7	10.5
Released during the period	(0.7)	(0.2)
Foreign currency translation	0.0	(0.1)
Balance as of the end of the period	$ 3.8	$ 6.6

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Income taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Operating Loss Carryforwards
Income tax expense	$ 14.0	$ 1.0	$ 60.8	$ 25.9
Income from continuing operations before taxes	$ 69.2	$ 86.6	$ 240.1	$ 213.7
Reported effective income tax rate (as a percent)	20.20%	1.20%	25.30%	12.10%
Discrete tax (benefit) expense	$ (7.8)	$ (11.0)	$ (8.3)	$ (11.0)
Effective income tax rate reconciliation, tax credit, foreign, amount	6.5
Unrecognized tax benefits	3.2		3.2
Uncertain tax benefit interest accrual	1.9
Audit adjustments		12.9	13.8	(12.9)
Other net discrete tax expenses		$ 1.9		$ 1.9
Mexico and Poland
Operating Loss Carryforwards
Discrete tax (benefit) expense	5.7
Net deferred income tax assets	1.2		1.2
Deferred tax asset, net	6.9		6.9
Russia
Operating Loss Carryforwards
Discrete tax (benefit) expense			4.2
Unrecognized tax benefits	$ 3.2		3.2
Uncertain tax benefit interest accrual			3.4
Other net discrete tax expenses			$ 1.1

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Earnings per share (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Earnings Per Share [Abstract]
Net income attributable to shareholders	$ 47.6	$ 78.7	$ 158.3	$ 170.0
Weighted average number of shares outstanding (in shares)	258,889,598	263,984,434	261,001,362	274,460,054
Dilutive effect of share-based awards (in shares)	4,551,974	3,850,577	4,853,706	4,028,006
Diluted weighted average number of shares outstanding (in shares)	263,441,572	267,835,011	265,855,068	278,488,060
Number of anti-dilutive shares excluded from the diluted earnings per share calculation (in shares)	5,410,122	3,934,925	2,785,491	5,065,975
Basic earnings per share (in usd per share)	$ 0.18	$ 0.30	$ 0.61	$ 0.62
Diluted earnings per share (in usd per share)	$ 0.18	$ 0.29	$ 0.60	$ 0.61

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Inventories (Details) - USD ($) $ in Millions	Sep. 28, 2024	Dec. 30, 2023
Inventory Disclosure [Abstract]
Raw materials and supplies	$ 203.5	$ 168.2
Work in progress	49.0	43.3
Finished goods	472.1	435.7
Total inventories	$ 724.6	$ 647.2

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Goodwill (Details) $ in Millions	9 Months Ended
	Sep. 28, 2024 USD ($)
Cost and carrying amount
Beginning balance	$ 2,038.7
Foreign currency translation	(41.6)
Ending balance	1,997.1
Power Transmission
Cost and carrying amount
Beginning balance	1,338.5
Foreign currency translation	(15.7)
Ending balance	1,322.8
Fluid Power
Cost and carrying amount
Beginning balance	700.2
Foreign currency translation	(25.9)
Ending balance	$ 674.3

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Intangible assets - Finite-Lived and Indefinite-Lived Intangible Assets (Details) - USD ($) $ in Millions	Sep. 28, 2024	Dec. 30, 2023
Finite-Lived Intangible Assets
Finite-lived, cost	$ 2,203.6	$ 2,211.5
Finite-lived, accumulated amortization and impairment	(1,378.3)	(1,294.8)
Finite-lived, net	825.3	916.7
Indefinite-lived, cost	513.4	513.4
Indefinite-lived, accumulated amortization and impairment	(44.0)	(44.0)
Indefinite-lived, net	469.4	469.4
Cost	2,717.0	2,724.9
Accumulated amortization and impairment	(1,422.3)	(1,338.8)
Net	1,294.7	1,386.1
—Customer relationships
Finite-Lived Intangible Assets
Finite-lived, cost	1,981.7	2,003.6
Finite-lived, accumulated amortization and impairment	(1,202.8)	(1,127.7)
Finite-lived, net	778.9	875.9
—Technology
Finite-Lived Intangible Assets
Finite-lived, cost	90.8	90.6
Finite-lived, accumulated amortization and impairment	(90.8)	(90.3)
Finite-lived, net	0.0	0.3
—Capitalized software
Finite-Lived Intangible Assets
Finite-lived, cost	131.1	117.3
Finite-lived, accumulated amortization and impairment	(84.7)	(76.8)
Finite-lived, net	$ 46.4	$ 40.5

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Intangible assets - Narratives (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 32.0	$ 32.1	$ 96.7	$ 96.4
Intangible assets, foreign currency translation gain (loss)	$ 11.4	$ (10.3)	$ (8.2)	$ (3.0)

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Derivative financial instruments - Fair Values of Derivative Instruments (Details) - USD ($) $ in Millions	Sep. 28, 2024	Dec. 30, 2023
Derivatives, Fair Value
Net	$ (93.1)	$ (48.9)
—Currency swaps | Derivatives designated as hedging instruments:
Derivatives, Fair Value
Net	(93.4)	(69.2)
—Interest rate swaps | Derivatives designated as hedging instruments:
Derivatives, Fair Value
Net	(0.6)	18.2
—Currency forward contracts | Derivatives not designated as hedging instruments:
Derivatives, Fair Value
Net	0.9	2.1
Prepaid expenses and other assets
Derivatives, Fair Value
Derivative assets	$ 29.4	$ 42.3
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Prepaid expenses and other assets	Prepaid expenses and other assets
Prepaid expenses and other assets | —Currency swaps | Derivatives designated as hedging instruments:
Derivatives, Fair Value
Derivative assets	$ 10.0	$ 8.5
Prepaid expenses and other assets | —Interest rate swaps | Derivatives designated as hedging instruments:
Derivatives, Fair Value
Derivative assets	17.4	29.9
Prepaid expenses and other assets | —Currency forward contracts | Derivatives not designated as hedging instruments:
Derivatives, Fair Value
Derivative assets	2.0	3.9
Other non- current assets
Derivatives, Fair Value
Derivative assets	$ 0.0	$ 11.8
Derivative Asset, Statement of Financial Position [Extensible Enumeration]	Other non-current assets	Other non-current assets
Other non- current assets | —Currency swaps | Derivatives designated as hedging instruments:
Derivatives, Fair Value
Derivative assets	$ 0.0	$ 0.0
Other non- current assets | —Interest rate swaps | Derivatives designated as hedging instruments:
Derivatives, Fair Value
Derivative assets	0.0	11.8
Other non- current assets | —Currency forward contracts | Derivatives not designated as hedging instruments:
Derivatives, Fair Value
Derivative assets	0.0	0.0
Accrued expenses and other current liabilities
Derivatives, Fair Value
Derivative liabilities	$ (11.1)	$ (11.7)
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Accrued expenses and other current liabilities	Accrued expenses and other current liabilities
Accrued expenses and other current liabilities | —Currency swaps | Derivatives designated as hedging instruments:
Derivatives, Fair Value
Derivative liabilities	$ 0.0	$ 0.0
Accrued expenses and other current liabilities | —Interest rate swaps | Derivatives designated as hedging instruments:
Derivatives, Fair Value
Derivative liabilities	(10.0)	(9.9)
Accrued expenses and other current liabilities | —Currency forward contracts | Derivatives not designated as hedging instruments:
Derivatives, Fair Value
Derivative liabilities	(1.1)	(1.8)
Other  non- current liabilities
Derivatives, Fair Value
Derivative liabilities	$ (111.4)	$ (91.3)
Derivative Liability, Statement of Financial Position [Extensible Enumeration]	Other non-current liabilities	Other non-current liabilities
Other  non- current liabilities | —Currency swaps | Derivatives designated as hedging instruments:
Derivatives, Fair Value
Derivative liabilities	$ (103.4)	$ (77.7)
Other  non- current liabilities | —Interest rate swaps | Derivatives designated as hedging instruments:
Derivatives, Fair Value
Derivative liabilities	(8.0)	(13.6)
Other  non- current liabilities | —Currency forward contracts | Derivatives not designated as hedging instruments:
Derivatives, Fair Value
Derivative liabilities	$ 0.0	$ 0.0

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Derivative financial instruments - Narratives (Details)	3 Months Ended		9 Months Ended
	Sep. 28, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 28, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 28, 2024 EUR (€)	Sep. 28, 2024 USD ($)	Jul. 31, 2024 EUR (€)	Dec. 30, 2023 EUR (€)	Dec. 30, 2023 CNY (¥)	Dec. 30, 2023 USD ($)	Nov. 30, 2023 CNY (¥)
Derivatives not designated as hedging instruments
Derivative
Gain on derivative, recognized in the income statement	$ 200,000	$ (800,000)	$ 3,400,000	$ 3,300,000
Currency swap | Derivatives designated as hedging instruments | Net Investment Hedges
Derivative
Notional amount of derivative contracts					€ 1,033,500,000			€ 756,100,000	¥ 1,784,000,000		¥ 1,784,000,000
Gain on derivative, recognized in the income statement	$ 5,700,000	$ 2,500,000	$ 10,000,000	$ 8,000,000
Currency swap | Derivatives designated as hedging instruments | —Euro Term Loan | Net Investment Hedges
Derivative
Notional amount of derivative contracts | €					254,500,000		€ 277,400,000
Interest rate swaps | Cash Flow Hedging
Derivative
Notional amount of derivative contracts						$ 1,255,000,000				$ 1,255,000,000
Interest rate swaps due June 30, 2020 through June 30, 2025 | Cash Flow Hedging
Derivative
Notional amount of derivative contracts						870,000,000
Interest rate swaps due November 16, 2022 through November 16, 2027 | Cash Flow Hedging
Derivative
Notional amount of derivative contracts						385,000,000
Interest rate swaps due November 16, 2022 through November 16, 2027 | Derivatives designated as hedging instruments | Net Investment Hedges
Derivative
Notional amount of derivative contracts | €					€ 501,600,000
—Currency forward contracts | Derivatives not designated as hedging instruments
Derivative
Notional amount of derivative contracts						$ 150,500,000				$ 140,800,000

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Derivative financial instruments - Net Investment Hedging Instruments in OCI (Details) - Net Investment Hedges - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Derivative Instruments, Gain (Loss)
Total net fair value (losses) gains	$ (50.1)	$ 23.9	$ (24.2)	$ 1.8
—Designated cross currency swaps
Derivative Instruments, Gain (Loss)
Total net fair value (losses) gains	$ (50.1)	$ 23.9	$ (24.2)	$ 1.8

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Derivative financial instruments - OCI Movement (Details) - Interest Rate Contract - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Movement recognized in OCI in relation to:
—Fair value gain (loss) on cash flow hedges	$ (17.0)	$ 11.4	$ 0.4	$ 25.0
—Amortization to net income of prior period fair value losses	0.0	0.0	0.0	8.9
—Deferred OCI reclassified to net income	(9.0)	(8.9)	(27.0)	(24.0)
Total movement	$ (26.0)	$ 2.5	$ (26.6)	$ 9.9

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Derivative financial instruments - Gains (Losses) From Derivative Instruments Not Designated as Hedging Instruments (Details) - Derivatives not designated as hedging instruments - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Derivative Instruments, Gain (Loss)
Gain (losses) on derivative, recognized in the income statement	$ 0.2	$ (0.8)	$ 3.4	$ 3.3
—Currency forward contracts recognized in SG&A
Derivative Instruments, Gain (Loss)
Gain (losses) on derivative, recognized in the income statement	$ 0.2	$ (0.8)	$ 3.4	$ 3.3

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Fair value measurement - Carrying Amount and Fair Value of Debt (Details) - USD ($) $ in Millions	Sep. 28, 2024	Dec. 30, 2023
Carrying  amount
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Current	$ 36.2	$ 36.5
Non-current	2,341.5	2,415.0
Fair value of debt	2,377.7	2,451.5
Fair value
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Current	36.1	36.5
Non-current	2,389.5	2,444.7
Fair value of debt	$ 2,425.6	$ 2,481.2

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Fair value measurement - Narratives (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 28, 2024	Apr. 30, 2024
Debt Instrument
Equity investment in a privately held company		$ 5.0
Secured Credit Facilities | Secured Debt
Debt Instrument
Variable rate (as a percent)	0.50%

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Fair value measurement - Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Millions	Sep. 28, 2024	Apr. 30, 2024	Dec. 30, 2023
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Available for sale investments		$ 5.0
Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivative assets	$ 29.4		$ 54.1
Derivative liabilities	(122.5)		(103.0)
Cash equivalents	27.9		129.0
Available for sale investments	5.0		0.0
Quoted prices in active markets (Level 1) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivative assets	0.0		0.0
Derivative liabilities	0.0		0.0
Cash equivalents	0.0		76.2
Available for sale investments	0.0		0.0
Significant observable inputs (Level 2) | Fair Value, Measurements, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis
Derivative assets	29.4		54.1
Derivative liabilities	(122.5)		(103.0)
Cash equivalents	27.9		52.8
Available for sale investments	$ 5.0		$ 0.0

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Debt - Long-Term Debt (Details) - USD ($)	Sep. 28, 2024	Dec. 30, 2023
Debt Instrument
Total principal of debt	$ 2,394,900,000	$ 2,471,900,000
Deferred issuance costs	(34,600,000)	(37,400,000)
Accrued interest	17,400,000	17,000,000.0
Total carrying value of debt	2,377,700,000	2,451,500,000
Debt, current portion	36,200,000	36,500,000
Debt, less current portion	2,341,500,000	2,415,000,000
—Revolving credit facility | Secured debt:
Debt Instrument
Total principal of debt	30,000,000.0	0
—2024 Dollar Term Loans due June 4, 2031 | Secured debt:
Debt Instrument
Total principal of debt	1,300,000,000	0
—2022 Dollar Term Loans due November 16, 2029 | Secured debt:
Debt Instrument
Total principal of debt	564,900,000	567,800,000
—2021 Dollar Term Loans due November 16, 2029 | Secured debt:
Debt Instrument
Total principal of debt	0	1,336,100,000
—6.875% Dollar Senior Notes due July 1, 2029 | Unsecured debt:
Debt Instrument
Total principal of debt	$ 500,000,000	0
Stated interest rate on debt (as a percent)	6.875%
—6.25% Dollar Senior Notes due 2026 | Unsecured debt:
Debt Instrument
Total principal of debt	$ 0	$ 568,000,000.0
Stated interest rate on debt (as a percent)	6.25%

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Debt - Debt Issuances and Redemptions Narratives (Details) - USD ($)					1 Months Ended			9 Months Ended
	Aug. 16, 2024	Jun. 04, 2024	Jun. 03, 2024	Nov. 16, 2022	Aug. 31, 2024	Feb. 29, 2024	May 31, 2023	Sep. 28, 2024	Sep. 30, 2023	Dec. 30, 2023
Debt Instrument
Proceeds from long-term debt								$ 1,840,000,000	$ 100,000,000.0
Total principal of debt								2,394,900,000		$ 2,471,900,000
Interest paid								104,700,000	125,800,000
Debt issuance costs, net								34,600,000		37,400,000
Repayments of debt								1,917,000,000	$ 114,700,000
—Revolving credit facility
Debt Instrument
Proceeds from long-term debt	$ 40,000,000				$ 40,000,000
Maximum borrowing capacity of credit facility		$ 500,000,000	$ 250,000,000
Line of credit, deferred issuance costs		2,500,000
Letter of Credit Sub-Facility
Debt Instrument
Line of credit carrying value										29,700,000
Secured debt: | —Revolving credit facility
Debt Instrument
Total principal of debt								30,000,000.0		0
—2024 Dollar Term Loans due June 4, 2031 | Secured debt:
Debt Instrument
Total principal of debt								$ 1,300,000,000		0
Debt instrument principal amount		1,300,000,000
2021 Dollar Term Loans | Secured debt:
Debt Instrument
Redeemable amount		1,232,600,000
Interest paid		1,100,000
Deferred financing cost recognized		11,200,000
2024 Dollar Term Loans | Secured debt:
Debt Instrument
Amortization of debt discount		0
Debt issuance costs, net		$ 9,500,000
Variable rate (as a percent)								0.50%
2022 Dollar Term Loans | Secured debt:
Debt Instrument
Deferred financing cost recognized				$ 900,000
Decrease in variable rate (percent)		7500.00%
Variable rate (as a percent)		2.25%	3.00%					0.50%
Secured Multi-Currency Facility | —Revolving credit facility
Debt Instrument
Maximum borrowing capacity of credit facility		$ 500,000,000	$ 250,000,000
Line of credit facility, outstanding balance trigger		500,000,000
Secured Multi-Currency Facility | Letter of Credit Sub-Facility
Debt Instrument
Maximum borrowing capacity of credit facility		150,000,000
Line of credit carrying value								$ 28,800,000		$ 0
Asset-backed revolver | —Revolving credit facility
Debt Instrument
Proceeds from long-term debt							$ 100,000,000
Deferred financing cost recognized		1,000,000
Line of credit facility, borrowing capacity terminated		250,000,000
2024 Unsecured Senior Notes | Unsecured debt:
Debt Instrument
Debt instrument principal amount		500,000,000
Debt issuance costs, net		7,600,000
Unamortized discount		0
2019 Unsecured Senior Notes | Unsecured debt:
Debt Instrument
Redeemable amount		568,000,000
Interest paid		13,700,000
Deferred financing cost recognized		$ 2,600,000
Existing DollarTerm Loans | Secured debt:
Debt Instrument
Deferred financing cost recognized						$ 1,000,000
Repayments of debt						$ 100,000,000

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Debt - Dollar Term Loans Narratives (Details) - Secured debt: $ in Millions			9 Months Ended
	Jun. 04, 2024 loan	Jun. 03, 2024	Sep. 28, 2024 USD ($)
—Dollar Term Loans
Debt Instrument
Number of loans (loan) | loan	2
2024 Dollar Term Loans
Debt Instrument
Variable rate (as a percent)			0.50%
Stated interest rate on debt (as a percent)			2.25%
Interest rate during period on debt (as a percent)			7.50%
Quarterly amortization payment rate (as a percent)			0.25%
Quarterly amortization payment on debt			$ 0.0
2022 Dollar Term Loans
Debt Instrument
Variable rate (as a percent)	2.25%	3.00%	0.50%
Stated interest rate on debt (as a percent)			2.25%
Interest rate during period on debt (as a percent)			7.50%
Quarterly amortization payment rate (as a percent)			0.25%
Quarterly amortization payment on debt			$ 2.9
2021 Dollar Term Loans
Debt Instrument
Quarterly amortization payment on debt			$ 3.4

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Debt - 2024 Unsecured Senior Notes Narratives (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 28, 2024	Jun. 04, 2024	Dec. 30, 2023
Debt Instrument
Total principal of debt	$ 2,394.9		$ 2,471.9
Unsecured debt:
Debt Instrument
Redemption price in the event of change in control (as a percent)	101.00%
Redemption price in the event of sale (as a percent)	100.00%
—6.875% Dollar Senior Notes due July 1, 2029 | Unsecured debt:
Debt Instrument
Total principal of debt	$ 500.0		$ 0.0
Stated interest rate on debt (as a percent)	6.875%
Equity offering (as a percent)	40.00%
—6.875% Dollar Senior Notes due July 1, 2029 | Unsecured debt: | Prior to July 1, 2026
Debt Instrument
Redemption price (as a percent)	106.875%
2019 Unsecured Senior Notes | Unsecured debt:
Debt Instrument
Redeemable amount		$ 568.0

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Debt - Redemption Prices Plus Accrued and Unpaid Interest (Details) - —6.875% Dollar Senior Notes due July 1, 2029 - Unsecured Debt	9 Months Ended
	Sep. 28, 2024
—July 1, 2026
Debt Instrument, Redemption
Redemption price (as a percent)	103.438%
—July 1, 2027
Debt Instrument, Redemption
Redemption price (as a percent)	101.719%
—July 1, 2028 and thereafter
Debt Instrument, Redemption
Redemption price (as a percent)	100.00%

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Debt - Revolving Credit Facility Narratives (Details) - USD ($)	Sep. 28, 2024	Jun. 04, 2024	Jun. 03, 2024	Dec. 30, 2023
Line of Credit Facility
Total principal of debt	$ 2,394,900,000			$ 2,471,900,000
Performance Bonds, Letters of Credit and Bank Guarantees
Line of Credit Facility
Line of credit carrying value	8,600,000			8,400,000
—Revolving credit facility
Line of Credit Facility
Maximum borrowing capacity of credit facility		$ 500,000,000	$ 250,000,000
—Revolving credit facility | Secured debt:
Line of Credit Facility
Total principal of debt	30,000,000.0			0
—Revolving credit facility | Secured Multi-Currency Facility
Line of Credit Facility
Maximum borrowing capacity of credit facility		500,000,000	$ 250,000,000
Line of credit facility, outstanding balance trigger		500,000,000
Letter of Credit Sub-Facility
Line of Credit Facility
Line of credit carrying value				29,700,000
Letter of Credit Sub-Facility | Secured Multi-Currency Facility
Line of Credit Facility
Maximum borrowing capacity of credit facility		$ 150,000,000
Line of credit carrying value	$ 28,800,000			$ 0

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Post-retirement benefits - Components of Net Periodic Benefit (Income) Cost (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Defined Benefit Plans and Other Postretirement Benefit Plans
—Employer service cost	$ 1.0	$ 1.0	$ 3.0	$ 2.9
—Interest cost	6.4	6.7	19.2	19.9
—Expected return on plan assets	(6.5)	(6.5)	(19.4)	(19.5)
—Net amortization of prior period losses (gains)	(0.6)	(0.9)	(1.8)	(2.6)
—Settlements and curtailments	0.1	0.0	0.1	0.0
Net periodic benefit cost	0.4	0.3	1.1	0.7
Cash Contributions	2.9	2.2	7.8	7.8
Pensions
Defined Benefit Plans and Other Postretirement Benefit Plans
—Employer service cost	1.0	1.0	3.0	2.9
—Interest cost	6.0	6.3	18.2	18.8
—Expected return on plan assets	(6.5)	(6.5)	(19.4)	(19.5)
—Net amortization of prior period losses (gains)	0.2	0.0	0.6	(0.1)
—Settlements and curtailments	0.1	0.0	0.1	0.0
Net periodic benefit cost	0.8	0.8	2.5	2.1
Cash Contributions	2.2	1.6	5.4	5.3
Other post-retirement benefits
Defined Benefit Plans and Other Postretirement Benefit Plans
—Employer service cost	0.0	0.0	0.0	0.0
—Interest cost	0.4	0.4	1.0	1.1
—Expected return on plan assets	0.0	0.0	0.0	0.0
—Net amortization of prior period losses (gains)	(0.8)	(0.9)	(2.4)	(2.5)
—Settlements and curtailments	0.0	0.0	0.0	0.0
Net periodic benefit cost	(0.4)	(0.5)	(1.4)	(1.4)
Cash Contributions	$ 0.7	$ 0.6	$ 2.4	$ 2.5

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Post-retirement benefits - Narratives (Details) $ in Millions	Sep. 28, 2024 USD ($)
Pensions
Defined Benefit Plan Disclosure
Expected future employer contributions in current fiscal year	$ 7.3
Other post-retirement benefits
Defined Benefit Plan Disclosure
Expected future employer contributions in current fiscal year	$ 3.0

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Share-based compensation - Narratives (Details) - USD ($) $ in Millions			3 Months Ended		6 Months Ended	9 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Sep. 28, 2024	Sep. 30, 2023	Jul. 02, 2022	Sep. 28, 2024	Sep. 30, 2023	Jan. 01, 2022
Share-based Compensation Arrangement by Share-based Payment Award
Share based compensation expense recognized			$ 6.4	$ 3.3		$ 20.2	$ 19.6
Proceeds from stock options exercised			2.9	0.8		10.0	17.5
—Share options
Share-based Compensation Arrangement by Share-based Payment Award
Aggregate intrinsic value of options exercisable			60.5			$ 60.5
Contractual term of options exercisable (in years)						2 years 6 months
Aggregate intrinsic value of options that were vested or expected to vest			60.8			$ 60.8
Contractual term of options that were vested or expect to vest (in years)						2 years 7 months 6 days
Unrecognized compensation relating to non-vested awards			0.3			$ 0.3
Unrecognized compensation relating to non-vested awards, recognition period (in years)						1 year 8 months 12 days
Aggregate intrinsic value of options exercised			0.7	0.0		$ 3.4	5.0
—Share options | Omaha Topco Ltd. Stock Incentive Plan | —Tier I
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period (in years)						5 years
Term of award (in years)						10 years
—Share options | Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period (in years)						3 years
—Share options | Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period (in years)						4 years
—Premium-priced options | Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period (in years)						3 years
Term of award (in years)						10 years
Post grant date start date (in years)						2 years
—RSUs | Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period (in years)		1 year
—RSUs | Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period (in years)		3 years
—PRSUs
Share-based Compensation Arrangement by Share-based Payment Award
Unrecognized compensation relating to non-vested awards other than option			16.7			$ 16.7
—PRSUs | Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award
Percentage of shares expected to vest upon achievement of average annual adjusted return on invested capital (as a percent)	75.00%							50.00%
Percentage of shares expected to vest upon achievement of certain relative shareholders return (as a percent)	25.00%							50.00%
Performance period (in years)					3 years
—PRSUs | Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | Minimum
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period (in years)		1 year
Total number of shares expected to vest at term of award arrangement (as a percent)	0.00%
—PRSUs | Gates Industrial Corporation Plc 2018 Omnibus Incentive Plan | Maximum
Share-based Compensation Arrangement by Share-based Payment Award
Vesting period (in years)		3 years
Total number of shares expected to vest at term of award arrangement (as a percent)	200.00%
RSU's and PRSU's
Share-based Compensation Arrangement by Share-based Payment Award
Unrecognized compensation relating to non-vested awards, recognition period (in years)						1 year 6 months
Unrecognized compensation relating to non-vested awards other than option			16.7			$ 16.7
Aggregate intrinsic value of non options vested			$ 5.8	$ 5.8		$ 21.1	$ 21.1

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Share-based compensation - Stock Option and SAR Rollforward (Details)	9 Months Ended
	Sep. 28, 2024 $ / shares shares
Number of options
Beginning balance (in shares) | shares	9,726,970
Granted (in shares) | shares	22,100
Forfeited (in shares) | shares	(3,535)
Expired (in shares) | shares	(331,996)
Exercised (in shares) | shares	(1,063,558)
Ending balance (in shares) | shares	8,349,981
Weighted average exercise price
Beginning balance (in usd per share) | $ / shares	$ 10.90
Granted (in usd per share) | $ / shares	14.87
Forfeited (in usd per share) | $ / shares	13.50
Expired (in usd per share) | $ / shares	17.26
Exercised (in usd per share) | $ / shares	10.73
Ending balance (in usd per share) | $ / shares	$ 10.68
—Share options
Number of options
Beginning balance (in shares) | shares	2,345,520
Expired (in shares) | shares	(331,730)
Exercised (in shares) | shares	(408,422)
Ending balance (in shares) | shares	1,605,368
Weighted average exercise price
Beginning balance (in usd per share) | $ / shares	$ 14.90
Expired (in usd per share) | $ / shares	17.27
Exercised (in usd per share) | $ / shares	14.17
Ending balance (in usd per share) | $ / shares	$ 14.60
Exercisable at the end of the period (in shares) | shares	8,269,839
Exercisable at the end of the period (in usd per share) | $ / shares	$ 10.64
Vested and expected to vest at the end of the period (in shares) | shares	8,349,643
Vested and expected to vest at the end of the period (in usd per share) | $ / shares	$ 10.68
—SARs
Number of options
Beginning balance (in shares) | shares	735,221
Granted (in shares) | shares	22,100
Forfeited (in shares) | shares	(3,535)
Expired (in shares) | shares	(266)
Exercised (in shares) | shares	(148,438)
Ending balance (in shares) | shares	605,082
Weighted average exercise price
Beginning balance (in usd per share) | $ / shares	$ 10.47
Granted (in usd per share) | $ / shares	14.87
Forfeited (in usd per share) | $ / shares	13.50
Expired (in usd per share) | $ / shares	14.04
Exercised (in usd per share) | $ / shares	9.68
Ending balance (in usd per share) | $ / shares	$ 10.81
—Premium-priced options
Number of options
Beginning balance (in shares) | shares	835,469
Ending balance (in shares) | shares	835,469
Weighted average exercise price
Beginning balance (in usd per share) | $ / shares	$ 18.88
Ending balance (in usd per share) | $ / shares	$ 18.88
—Tier I | —Share options
Number of options
Beginning balance (in shares) | shares	1,828,327
Exercised (in shares) | shares	(133,758)
Ending balance (in shares) | shares	1,694,569
Weighted average exercise price
Beginning balance (in usd per share) | $ / shares	$ 6.98
Exercised (in usd per share) | $ / shares	6.81
Ending balance (in usd per share) | $ / shares	$ 6.99
—Tier II | —Share options
Number of options
Beginning balance (in shares) | shares	1,996,017
Exercised (in shares) | shares	(177,264)
Ending balance (in shares) | shares	1,818,753
Weighted average exercise price
Beginning balance (in usd per share) | $ / shares	$ 7.01
Exercised (in usd per share) | $ / shares	6.87
Ending balance (in usd per share) | $ / shares	$ 7.02
—Tier IV | —Share options
Number of options
Beginning balance (in shares) | shares	1,986,416
Exercised (in shares) | shares	(195,676)
Ending balance (in shares) | shares	1,790,740
Weighted average exercise price
Beginning balance (in usd per share) | $ / shares	$ 10.52
Exercised (in usd per share) | $ / shares	10.51
Ending balance (in usd per share) | $ / shares	$ 10.52

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Share-based compensation - RSU and PRSU Rollforward (Details)	9 Months Ended
	Sep. 28, 2024 $ / shares shares
Number of awards
Beginning balance (in shares) | shares	3,949,891
Granted (in shares) | shares	1,649,359
Forfeited (in shares) | shares	(431,229)
Vested (in shares) | shares	(1,511,947)
Ending balance (in shares) | shares	3,656,074
Weighted average grant date fair value $
Beginning balance (in usd per share) | $ / shares	$ 14.47
Granted (in usd per share) | $ / shares	15.28
Forfeited (in usd per share) | $ / shares	14.44
Vested (in usd per share) | $ / shares	13.92
Ending balance (in usd per share) | $ / shares	$ 15.07
—RSUs
Number of awards
Beginning balance (in shares) | shares	3,032,230
Granted (in shares) | shares	1,222,752
Forfeited (in shares) | shares	(276,392)
Vested (in shares) | shares	(1,357,673)
Ending balance (in shares) | shares	2,620,917
Weighted average grant date fair value $
Beginning balance (in usd per share) | $ / shares	$ 13.78
Granted (in usd per share) | $ / shares	14.91
Forfeited (in usd per share) | $ / shares	13.69
Vested (in usd per share) | $ / shares	13.80
Ending balance (in usd per share) | $ / shares	$ 14.30
—PRSUs
Number of awards
Beginning balance (in shares) | shares	917,661
Granted (in shares) | shares	426,607
Forfeited (in shares) | shares	(154,837)
Vested (in shares) | shares	(154,274)
Ending balance (in shares) | shares	1,035,157
Weighted average grant date fair value $
Beginning balance (in usd per share) | $ / shares	$ 16.77
Granted (in usd per share) | $ / shares	16.37
Forfeited (in usd per share) | $ / shares	15.77
Vested (in usd per share) | $ / shares	15.00
Ending balance (in usd per share) | $ / shares	$ 17.02

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Share-based compensation - Fair Value and Valuation Assumptions (Details) - $ / shares	9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023
—SARs
Share-based Compensation Arrangement by Share-based Payment Award
Weighted average grant date fair value (in usd per share)	$ 6.95	$ 6.71
Expected volatility (as a percent)	41.70%	43.40%
Expected option life (in years)	6 years	6 years
Risk-free interest rate (as a percent)	4.20%	4.10%
—RSUs
Share-based Compensation Arrangement by Share-based Payment Award
Weighted average grant date fair value (in usd per share)	$ 14.91	$ 13.86
—PRSUs
Share-based Compensation Arrangement by Share-based Payment Award
Weighted average grant date fair value (in usd per share)	$ 16.37	$ 15.88
Expected volatility (as a percent)	31.60%	37.70%
Risk-free interest rate (as a percent)	4.40%	4.60%

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Equity - Movement in Number of Shares in Issue (Details) - shares	9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023
Increase (Decrease) in Stockholders' Equity
Balance as of the beginning of the period (in shares)	264,259,788	282,578,917
Exercise of share options (in shares)	915,120	2,120,169
Vesting of restricted stock units, net of withholding taxes (in shares)	1,215,382	1,329,609
Shares repurchased and cancelled (in shares)	(11,690,303)	(21,934,634)
Balance as of the end of the period (in shares)	254,699,987	264,094,061

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Equity - Narratives (Details) - USD ($)				1 Months Ended		9 Months Ended
	Aug. 16, 2024	Feb. 16, 2024	Feb. 12, 2024	Aug. 31, 2024	Feb. 29, 2024	Sep. 28, 2024	Sep. 30, 2023	Jul. 31, 2024
Equity
Repurchase program, authorized amount					$ 100,000,000			$ 250,000,000
Shares repurchased and cancelled (in shares)						11,690,303	21,934,634
Payments for repurchase of common stock						$ 176,100,000	$ 251,700,000
Proceeds from long-term debt						$ 1,840,000,000	$ 100,000,000.0
—Revolving credit facility
Equity
Proceeds from long-term debt	$ 40,000,000			$ 40,000,000
Citigroup | Affiliated Entity
Equity
Share price (in usd per share)		$ 12.045
Shares repurchased and cancelled (in shares)	7,539,203	4,151,100			4,151,100
Payments for repurchase of common stock	$ 125,000,000	$ 50,000,000			$ 50,000,000
Equity instrument, cost related transaction amount	$ 800,000	$ 300,000			$ 300,000
Scenario, Plan | Private Placement
Equity
Issuance of shares (in shares)	23,000,000		20,125,000
Share price (in usd per share)	$ 16.58		$ 12.045

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Analysis of accumulated other comprehensive (loss) income (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning balance	$ 3,494.3	$ 3,391.0	$ 3,543.9	$ 3,443.6
Other comprehensive (loss) income, net of tax, attributable to parent			(92.2)	25.9
Other comprehensive income (loss)	31.4	(66.3)	(108.6)	2.0
Ending balance	3,457.9	3,412.3	3,457.9	3,412.3
Accumulated OCI
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning balance			(906.9)	(982.4)
Ending balance	(1,015.5)	(980.4)	(1,015.5)	(980.4)
Accumulated OCI attributable to shareholders
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning balance	(949.0)	(825.9)	(828.5)	(917.8)
Other comprehensive (loss) income, net of tax, attributable to parent			(113.5)	31.4
Other comprehensive income (loss)	7.0	(60.5)	(113.5)	31.4
Ending balance	(942.0)	(886.4)	(942.0)	(886.4)
Post- retirement benefits
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning balance			(15.3)	0.6
Other comprehensive (loss) income, net of tax, attributable to parent			(4.3)	(3.2)
Other comprehensive income (loss)			(1.4)	(1.9)
Ending balance	(19.6)	(2.6)	(19.6)	(2.6)
Foreign currency translation
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Other comprehensive (loss) income, net of tax, attributable to parent			(2.9)	(1.3)
Post-retirement benefit movements
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Other comprehensive (loss) income, net of tax, attributable to parent			(1.4)	(1.9)
Cumulative translation adjustment
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning balance			(832.3)	(950.0)
Other comprehensive (loss) income, net of tax, attributable to parent			(89.3)	27.2
Other comprehensive (loss) income, net of tax, attributable to noncontrolling interest			4.9	(29.4)
Other comprehensive income (loss)			(87.3)	(3.5)
Ending balance	(921.6)	(922.8)	(921.6)	(922.8)
Cash flow hedges
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning balance			19.1	31.6
Other comprehensive (loss) income, net of tax, attributable to parent			(19.9)	7.4
Ending balance	(0.8)	39.0	(0.8)	39.0
Non-controlling interests
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax
Beginning balance			(78.4)	(64.6)
Other comprehensive (loss) income, net of tax, attributable to noncontrolling interest			4.9	(29.4)
Ending balance	$ (73.5)	$ (94.0)	$ (73.5)	$ (94.0)

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Related party transactions - Narratives (Details) - USD ($)			1 Months Ended	3 Months Ended		9 Months Ended
	Aug. 16, 2024	Feb. 16, 2024	Feb. 29, 2024	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023	Dec. 30, 2023
Related Party Transaction
Shares repurchased and cancelled (in shares)						11,690,303	21,934,634
Payments for repurchase of common stock						$ 176,100,000	$ 251,700,000
Affiliated Entity
Related Party Transaction
Payables to related parties				$ 3,600,000		3,600,000		$ 3,200,000
Affiliated Entity | Citigroup
Related Party Transaction
Shares repurchased and cancelled (in shares)	7,539,203	4,151,100	4,151,100
Payments for repurchase of common stock	$ 125,000,000	$ 50,000,000	$ 50,000,000
Equity instrument, cost related transaction amount	$ 800,000	$ 300,000	$ 300,000
Equity Method Investees
Related Party Transaction
Payables to related parties				200,000		200,000		$ 200,000
Dividends received from equity method investees				$ 0	$ 0	$ 0	$ 0
Support and Services Agreement | Sponsor
Related Party Transaction
Related party transaction, ownership percentage threshold which terminates milestone payment (as a percent)						5.00%
Related party transaction, fair value of equity threshold which terminates milestone payment						$ 25,000,000

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Related party transactions - Purchases with Equity Method Investees (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023
Equity Method Investees
Related Party Transaction
Purchases	$ (4.0)	$ (4.5)	$ (11.9)	$ (13.7)

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Related party transactions - Transactions with Non-Gates Entities (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023	Sep. 28, 2024	Sep. 30, 2023	Dec. 30, 2023
Related Party Transaction
Net sales	$ 830.7	$ 872.9	$ 2,578.8	$ 2,706.9
Affiliated Entity
Related Party Transaction
Net sales	10.9	9.7	30.3	34.8
Purchases	(4.0)	$ (3.4)	(11.2)	$ (11.8)
Receivables	4.4		4.4		$ 3.2
Payables	$ (3.6)		$ (3.6)		$ (3.2)

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Commitments and contingencies - Warranty Liability (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 28, 2024	Sep. 30, 2023
Warranty reserves
Balance as of the beginning of the period	$ 15.9	$ 17.6
Charge for the period	7.1	3.7
Payments made	(5.7)	(5.7)
Released during the period	(0.2)	(0.1)
Foreign currency translation	0.1	(0.4)
Balance as of the end of the period	$ 17.2	$ 15.1