stockrowWhat it does
Gates Industrial makes belts, hoses and related components that move power or fluids through machinery and vehicles. It sells replacement parts through aftermarket channels and supplies components specified for use in new equipment by original equipment manufacturers, or OEMs. Its products are used in factories, vehicles, construction and agricultural machinery, energy operations, data centers and personal mobility equipment.
The company operates through two product segments. Power Transmission makes drive belts and components that transfer power from a motor or engine to another part of a machine. Fluid Power makes hoses, tubing and fittings that carry hydraulic fluid, as well as hoses for other fluid-transfer applications. The company also supplies electric water pumps for thermal management.
Many of these components wear out as equipment operates. Customers replace them both when they wear and as a preventive measure, because equipment downtime or damage can cost more than the components themselves. Gates also provides application engineering, installation training and digital tools to help customers select and use its products.
Gates sells globally under its own brand and, in certain markets, under customer brands. It was founded in 1911, and Ivo Jurek is its chief executive officer. As of December 31, 2025, it employed approximately 13,000 people worldwide.
How it makes money
Gates earns revenue by selling components for new equipment and replacement parts for equipment already in use. Aftermarket channels generated approximately 68% of fiscal 2025 net sales; OEM channels generated approximately 32%. Aftermarket demand comes from wear and preventive maintenance, creating recurring sales as equipment owners replace belts, hoses and other components.
Power Transmission generated $2.1 billion in fiscal 2025 revenue. Its belts transfer power, convey materials and control motion in applications ranging from factory equipment and harvesters to vehicle engines and bicycles. Gates also sells pulleys, tensioners and other metal drive components, along with kits that package parts for automotive repairs. The majority of segment revenue came from aftermarket channels.
Fluid Power generated $1.3 billion in fiscal 2025 revenue. Its hydraulic hoses, couplings, tubing and fittings move power in stationary and mobile machinery. Other products carry fluids in vehicle cooling systems, industrial processes and liquid-cooled data centers. The largest portion of segment revenue came from the aftermarket, with industrial applications accounting for most of that channel’s revenue.
Gates’ products are often used where the cost of equipment downtime is high relative to the component’s price. It works with customers and suppliers on pricing and costs; Gates increased prices across its customer base as inflation rose in 2026.
Net sales were $3,443.2 million in fiscal 2025 and approximately $904 million in the third quarter of 2026.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Power Transmission | $2.1 billion | 62.4% | 1.85% |
| Fluid Power | $1.3 billion | 37.6% | −0.31% |
Customers and how it sells
Gates sells to regional and local distributors, multinational distributors and equipment manufacturers. Its aftermarket partners serve owners of installed equipment who need replacement parts, while its OEM customers buy components for use in new machines and vehicles. Gates helps distributors and installers with training and digital content, and works with OEM engineering teams on equipment design and component selection.
No single customer accounted for more than 10% of fiscal 2025 net sales. Customers operate across automotive, industrial, agriculture, construction, energy, commercial vehicle and personal mobility markets. Many of Gates’ largest industrial OEM customers manufacture construction and agricultural equipment.
In 2025, Gates products were sold in over 130 countries. Its commercial regions were the Americas; Europe, Middle East and Africa; Greater China; and East Asia and India. Its mix of aftermarket and OEM sales varies by region. In North America and EMEA, each market derived approximately 73% of fiscal 2025 net sales from aftermarket channels. In parts of southeast Asia and eastern Europe, aftermarket channels are still developing.
Manufacturing facilities, service centers and technical centers gave Gates a presence in 31 countries. Its local sales representatives and regional distribution networks help it respond to customer requirements and product availability needs.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Power Transmission | $2.1 billion | 62.4% | 1.85% |
| Fluid Power | $1.3 billion | 37.6% | −0.31% |
Suppliers and costs
Gates buys a range of materials from suppliers around the world, generally seeking to source them in the regions where its products are made. Its belts use polymer formulations, fabrics and reinforcing cords; hydraulic hoses use elastomers reinforced with steel wire or textile yarn. Gates also sources, manufactures and sells metal drive components. It manages material costs through measures including supplier and customer pricing discussions, material substitutions and qualifying new suppliers.
Gates typically makes OEM and aftermarket products in the same factories. Its regional manufacturing model allows it to make products near customers and share raw materials across the two channels. The company also operates service and technical centers.
Fiscal 2025 cost of sales was $2,071.5 million, and selling, general and administrative expenses were $876.1 million. Gates incurred restructuring costs associated with a global cost-reduction effort and changes to production operations. In 2026, it built raw-material safety stock to support customer supply. Gates also said higher-cost inventory and pricing would affect gross margin as costs moved through its system.
- Revenue$3.4B
- Cost of revenue−$2.1B
- Selling, general and administrative−$876.1M
- Other operating costs−$30.3M
- Operating income$465.3M
Competitive position
Gates competes in fragmented markets, with competition varying by product line, geography, end market and sales channel. Competitors include smaller regional and low-cost-country manufacturers, but no individual competitors are identified. Customers select products based on application requirements, performance, reliability, service and availability. Gates differentiates its offering through product quality, innovation, portfolio breadth, customer support, training and order fulfillment.
Our reading: Availability and distribution are meaningful competitive strengths because aftermarket customers can miss a sale when a replacement part cannot be obtained quickly. Gates’ regional manufacturing and distribution networks help it serve those needs.
Our reading: Engineering and product design provide another source of differentiation, particularly where downtime is costly and customers need components suited to specific operating conditions. Close work with OEM engineering teams can also help Gates have its products specified on new equipment.
Our reading: Intellectual property offers protection across the portfolio, but its value as a stand-alone barrier is limited by the absence of an individually critical patent and the possibility that competitors develop similar technology independently. Gates held more than 2,300 patents and patent applications as of December 31, 2025, and also protects technologies and processes as trade secrets.
Growth opportunities
Gates’ growth initiatives include expanding its aftermarket channels, introducing products and adding capacity. The company expects that greater brand visibility and OEM participation in emerging markets will help it develop aftermarket channels as those markets mature. It also develops belt drives intended to replace chains in industrial and personal mobility applications.
Data centers are another area of product investment. In 2025, Gates added hoses and couplings for liquid cooling and offered pumps used in coolant distribution units. In the third quarter of 2026, its data center revenue increased about 2.5x compared with the prior year’s third quarter. Gates is adding capacity across hoses, couplings and pumps and expanding its customer base in those applications.
For the third quarter of 2026, Gates reported total sales growth of 5.6% and core growth of 5.5%, driven by industrial markets. Personal mobility sales increased approximately 35%, while commercial on-highway sales expanded more than 20%. Gates expects full-year 2026 core sales growth in a range of 3.2% to 3.8%.
It was reported on 30 October 2026 that Gates expected its acquisition of Timken’s belts business to contribute approximately 100 basis points of revenue in 2027. Gates expects a more meaningful revenue contribution from the acquired business to begin in 2027 and aims to bring it to company-average profitability over the following approximately 12 months.
- $3.5BFY2021
- $3.6BFY2022
- $3.6BFY2023
- $3.4BFY2024
- $3.4BFY2025
Structural risks
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Cyclical demand: Gates’ sales are correlated with industrial activity and utilization. Some customers operate in cyclical industries that can be adversely affected by economic downturns, reducing demand for its products.
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Trade and global operations: Tariffs, trade restrictions, geopolitical tensions and exchange-rate fluctuations can affect operations, costs and financial performance. Gates has experienced cost increases and a slower-than-expected demand recovery, primarily in North America.
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Operational disruption: Gates depends on the continued operation of manufacturing facilities, supply chains, distribution systems and information technology. A major disruption or closure could materially affect the business; cybersecurity threats also pose risks to its systems and data.
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Regulation and environmental obligations: Health, safety, environmental and product rules can restrict operations or make them more costly. Gates is conducting environmental investigations or remediation at current and former facilities and incurs costs related to offsite waste-disposal locations.
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Debt: As of December 31, 2025, total principal debt was $2,240.1 million. Debt service can divert cash from other uses, and variable-rate borrowings expose Gates to increased interest rates.
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Technology and personnel: Intellectual property rights may not provide a significant commercial advantage, and competitors may independently develop similar technology. The loss of senior management or other key personnel could also adversely affect the business.
Bottom line
Our reading
Our reading: Gates combines an equipment-components business with a recurring replacement-parts business, supported by a broad distribution network and products used where downtime can be costly. That aftermarket exposure does not remove its dependence on industrial activity, manufacturing operations or material costs.
Our reading: Data-center components and personal mobility offer additional avenues for growth, while debt, trade conditions and the execution of capacity and acquisition plans remain important considerations.