Core Insights - Gates Industrial reported a record year in 2025, achieving record adjusted EBITDA and adjusted earnings per share despite a challenging demand environment [3][6] - The company ended 2025 with over $800 million in cash and received an S&P credit rating upgrade to BB from BB- [1][6] - Management expressed cautious optimism for 2026, with core sales growth guidance of 1% to 4% and adjusted EBITDA projected between $775 million and $835 million [5][13] Financial Performance - Gates generated nearly 1% core growth in 2025, with adjusted EBITDA margin at 21.9%, reflecting a year-over-year increase of approximately 10 basis points [3][7] - Fourth-quarter sales reached $856 million, with total revenue slightly above 3% growth, aided by favorable foreign currency translation [7] - Net leverage improved to 1.85x, down from the previous year, and the company executed over $100 million in share buybacks in Q4 [2][6] Market Trends - Personal mobility and data center markets showed strong growth, with personal mobility exceeding 25% core growth in 2025 and data center demand growing fourfold compared to 2024 [3][4] - Book-to-bill ratio exited 2025 above 1x, indicating strengthening orders and positive demand signals [4][17] - Mixed performance was noted in end markets, with growth in industrial sectors offset by declines in automotive OEM [8][12] 2026 Guidance - Management anticipates first-half headwinds from an ERP transition and footprint actions, projecting a 100-basis-point drag on EBITDA margin [5][14] - Adjusted EPS guidance for 2026 is set at $1.52 to $1.68, reflecting a 5% growth at the midpoint [15] - First-quarter revenue is expected to be between $845 million and $875 million, with a core sales decline of 2% to 2.5% anticipated [16] Strategic Focus - The company aims for high-20% to 30% compound annual growth rate in personal mobility through 2028, driven by electrification and two-wheel mobility [21] - Data center revenue is targeted to reach $100 million to $200 million by 2028, with significant growth expected in 2026 [21] - Gates is open to non-transformational acquisitions to enhance shareholder value, viewing its stock as inexpensive [22]