Gates Industrial Corporation plc

~~Unaudited Condensed Consolidated Balance Sheets~~

(dollars in millions, except share numbers and per share amounts) As of March 31, 2018 As of December 30, 2017
Assets
Current assets
Cash and cash equivalents $ 328.5
$ 564.4
Trade accounts receivable, net 799.6
713.8
Inventories 492.0
457.1
Taxes receivable 7.0
14.1
Prepaid expenses and other assets 91.5
76.8
Total current assets 1,718.6
1,826.2
Non-current assets
Property, plant and equipment, net 738.9
686.2
Goodwill 2,131.3
2,085.5
Pension surplus 60.2
57.7
Intangible assets, net 2,123.3
2,126.8
Taxes receivable 33.1
32.7
Other non-current assets 34.7
38.6
Total assets $ 6,840.1
$ 6,853.7
Liabilities and equity
Current liabilities
Debt, current portion $ 33.7
$ 66.4
Trade accounts payable 423.2
392.0
Taxes payable 34.4
29.0
Accrued expenses and other current liabilities 190.2
210.4
Total current liabilities 681.5

697.8
Non-current liabilities
Debt, less current portion 3,013.6
3,889.3
Post-retirement benefit obligations 157.6
157.1
Taxes payable 87.7
100.6
Deferred income taxes 509.5
517.1
Other non-current liabilities 75.1
63.4
Total liabilities 4,525.0

5,425.3
Commitments and contingencies (Note 18)

Shareholders’ equity
—Shares, par value of $0.01 each - authorized shares: 3,000,000,000; outstanding shares: 289,756,379 (December 30, 2017: authorized shares: 3,000,000,000; outstanding shares: 245,474,605) 2.9
2.5
—Additional paid-in capital 2,412.1
1,622.6
—Accumulated other comprehensive loss (696.6 ) (747.4 )
—Retained earnings 161.1
136.9
Total shareholders’ equity 1,879.5

1,014.6
Non-controlling interests 435.6
413.8
Total equity 2,315.1

1,428.4
Total liabilities and equity $ 6,840.1
$ 6,853.7

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

~~Gates Industrial Corporation plc~~

Unaudited Condensed Consolidated Statements of ~~Cash Flows~~

Three months ended
(dollars in millions) March 31, 2018 April 1, 2017
Cash flows from operating activities
Net income $ 29.3
$ 26.3
Adjustments to reconcile net income to net cash provided by operations:
Depreciation and amortization 55.0
52.4
Non-cash currency transaction loss (gain) on net debt and hedging instruments 4.7
(1.3 )
Premium paid on redemption of long-term debt 27.0
—
Other net non-cash financing costs 6.4
8.6
Share-based compensation expense 1.6
0.8
Decrease in post-employment benefit obligations (net) (1.2 ) (0.2 )
Deferred income taxes (11.1 ) (12.1 )
Other operating activities 0.8
0.7
Changes in operating assets and liabilities, net of effects of acquisitions:
—Increase in accounts receivable (78.8 ) (60.7 )
—Increase in inventories (29.0 ) (14.8 )
—Increase in accounts payable 23.3
23.8
—Increase in prepaid expenses and other assets (1.3 ) (1.9 )
—(Decrease) increase in taxes payable (2.4 ) 5.6
—Decrease in other liabilities (50.8 ) (39.7 )
Net cash used in operations (26.5 )
(12.5 )
Cash flows from investing activities
Purchases of property, plant and equipment (55.9 ) (12.6 )
Purchases of intangible assets (4.6 ) (1.3 )
Net cash paid under corporate-owned life insurance policies (8.0 ) (8.3 )
Proceeds from the sale of property, plant and equipment —
0.7
Other investing activities (0.9 ) (0.1 )
Net cash used in investing activities (69.4 )
(21.6 )
Cash flows from financing activities
Issue of shares, net of cost of issuance 799.1
0.6
Deferred offering costs (3.2 ) —
Buy-back of shares —
(1.3 )
Proceeds from long-term debt —
150.0
Payments of long-term debt (920.1 ) (7.0 )
Premium paid on redemption of long-term debt (27.0 ) —
Debt issuance costs paid —
(3.2 )
Dividends paid to non-controlling interests —
(5.9 )
Other financing activities 6.2
—
Net cash (used in) provided by financing activities (145.0 ) 133.2
Effect of exchange rate changes on cash and cash equivalents and restricted cash 5.1
7.8
Net (decrease) increase in cash and cash equivalents and restricted cash (235.8 ) 106.9
Cash and cash equivalents and restricted cash at the beginning of the period 566.0
528.8
Cash and cash equivalents and restricted cash at the end of the period $ 330.2

$ 635.7
Supplemental schedule of cash flow information
Interest paid $ 73.4
$ 67.7
Income taxes paid, net $ 25.5
$ 19.6
Non-cash accrued capital expenditures $ 2.6
$ 1.2
Accrued deferred offering costs $ 5.1
$ —

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

~~Gates Industrial Corporation plc~~

~~Unaudited Condensed Consolidated Statements of Shareholders’ Equity~~

(dollars in millions) Share
capital
Additional
paid-in capital
Accumulated
other
comprehensive
loss Retained
(deficit) earnings Total
shareholders’
equity Non-
controlling
interests Total
equity
As of December 31, 2016 $ 2.5
$ 1,619.0
$ (915.9 ) $ (14.3 ) $ 691.3
$ 377.1
$ 1,068.4

Net income —
—
—
18.8
18.8
7.5
26.3
Other comprehensive income —
—
92.0
—
92.0
10.8
102.8
Total comprehensive income —

—

92.0

18.8

110.8

18.3
129.1
Other changes in equity:
—Issue of shares —
0.6
—
—
0.6
—
0.6
—Buy-back of shares —
(1.3 ) —
—
(1.3 ) —
(1.3 )
—Share-based compensation —
0.8
—
—
0.8
—
0.8
—Dividends paid to non-controlling
interests —
—
—
—
—
(5.9 ) (5.9 )
As of April 1, 2017 $ 2.5
$ 1,619.1
$ (823.9 ) $ 4.5
$ 802.2
$ 389.5
$ 1,191.7

(dollars in millions) Share
capital
Additional
paid-in capital
Accumulated
other
comprehensive
loss Retained
earnings Total
shareholders’
equity Non-
controlling
interests Total
equity
As of December 30, 2017 $ 2.5
$ 1,622.6
$ (747.4 ) $ 136.9
$ 1,014.6
$ 413.8
$ 1,428.4

Net income —
—
—
24.2
24.2
5.1
29.3
Other comprehensive income —
—
50.8
—
50.8
16.7
67.5
Total comprehensive income —
—
50.8
24.2
75.0
21.8
96.8
Other changes in equity:
—Issue of shares 0.4
840.8
—
—
841.2
—
841.2
—Share-based compensation —
1.4
—
—
1.4
—
1.4
—Cost of shares issued —
(52.7 ) —
—
(52.7 ) —
(52.7 )
As of March 31, 2018 $ 2.9
$ 2,412.1
$ (696.6 ) $ 161.1
$ 1,879.5
$ 435.6
$ 2,315.1
Comprehensive Income


	Three months ended
(dollars in millions)	March 30, 2024		April 1, 2023
Net income	$	46.1	$	30.6
Other comprehensive (loss) income
Foreign currency translation:
—Net translation (loss) gain on foreign operations, net of tax benefit (expense), respectively, of $3.1 and $(2.0)	(69.4)		82.1
—Gain (loss) on net investment hedges, net of tax (expense) benefit, respectively, of $(3.0) and $1.7	16.0		(10.5)
Total foreign currency translation movements	(53.4)		71.6
Cash flow hedges (interest rate derivatives):
—Gain (loss) arising in the period, net of tax (expense) benefit, respectively, of $(3.4) and $2.5	10.2		(7.5)
—Reclassification to net income, net of tax benefit, respectively, of $2.2 and $0.6	(6.8)		(1.8)
Total cash flow hedges movements	3.4		(9.3)
Post-retirement benefits:

—Reclassification of prior year actuarial movements to net income, net of tax benefit, respectively, of $0.2 and $0.2	(0.4)		(0.7)
Total post-retirement benefits movements	(0.4)		(0.7)
Other comprehensive (loss) income	(50.4)		61.6
Comprehensive (loss) income for the period	$	(4.3)	$	92.2

Comprehensive income attributable to shareholders:
—Income arising from continuing operations	$	2.7	$	87.5
—Loss arising from discontinued operations	(0.1)		(0.3)
	2.6		87.2
Comprehensive (loss) income attributable to non-controlling interests	(6.9)		5.0
	$	(4.3)	$	92.2

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

Table of Contents

Gates Industrial Corporation plc

Unaudited Condensed Consolidated Balance Sheets


(dollars in millions, except share numbers and per share amounts)	As of March 30, 2024		As of December 30, 2023
Assets
Current assets
Cash and cash equivalents	$	522.2	$	720.6
Trade accounts receivable, net	797.7		768.2
Inventories	677.2		647.2
Taxes receivable	44.2		30.4
Prepaid expenses and other assets	245.8		234.9
Total current assets	2,287.1		2,401.3
Non-current assets
Property, plant and equipment, net	619.2		630.0
Goodwill	2,012.5		2,038.7
Pension surplus	8.4		8.6
Intangible assets, net	1,347.0		1,386.1
Right-of-use assets	120.9		120.1
Taxes receivable	18.3		18.5
Deferred income taxes	607.4		622.4
Other non-current assets	25.1		28.8
Total assets	$	7,045.9	$	7,254.5
Liabilities and equity
Current liabilities
Debt, current portion	$	27.9	$	36.5
Trade accounts payable	451.4		457.7
Taxes payable	44.9		36.6
Accrued expenses and other current liabilities	223.7		248.5
Total current liabilities	747.9		779.3
Non-current liabilities
Debt, less current portion	2,313.1		2,415.0
Post-retirement benefit obligations	81.6		83.8
Lease liabilities	112.0		110.6
Taxes payable	83.3		79.4
Deferred income taxes	114.3		119.4
Other non-current liabilities	98.3		123.1
Total liabilities	3,550.5		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: 261,244,776 (December 30, 2023: authorized shares: 3,000,000,000; outstanding shares: 264,259,788)	2.6		2.6
—Additional paid-in capital	2,590.1		2,583.8
—Accumulated other comprehensive loss	(865.9)		(828.5)

—Retained earnings	1,451.8		1,462.3
Total shareholders’ equity	3,178.6		3,220.2
Non-controlling interests	316.8		323.7
Total equity	3,495.4		3,543.9
Total liabilities and equity	$	7,045.9	$	7,254.5

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

Table of Contents

Gates Industrial Corporation plc

Unaudited Condensed Consolidated Statements of Cash Flows


	Three months ended
(dollars in millions)	March 30, 2024		April 1, 2023
Cash flows from operating activities
Net income	$	46.1	$	30.6
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	54.6		54.5
Foreign exchange and other non-cash financing (income) expenses	(11.1)		9.7


Share-based compensation expense	8.6		9.5
Decrease in post-employment benefit obligations, net	(2.2)		(3.0)
Deferred income taxes	(1.1)		(3.1)

Other operating activities	(4.8)		1.0
Changes in operating assets and liabilities:
—Accounts receivable	(38.7)		(27.7)
—Inventories	(36.9)		6.5
—Accounts payable	(0.4)		(22.6)
—Prepaid expenses and other assets	3.7		4.8
—Taxes payable	(2.3)		(9.2)
—Other liabilities	(36.5)		1.5
Net cash (used in) provided by operating activities	(21.0)		52.5
Cash flows from investing activities
Purchases of property, plant and equipment	(16.0)		(11.8)
Purchases of intangible assets	(2.1)		(2.8)

Cash paid under company-owned life insurance policies	(4.1)		(17.0)
Cash received under company-owned life insurance policies	2.7		1.5
Proceeds from the sale of property, plant and equipment	—		0.2


Net cash used in investing activities	(19.5)		(29.9)
Cash flows from financing activities
Issuance of shares	2.5		11.3

Repurchase of shares	(50.3)		—

Payments of long-term debt	(104.9)		(4.9)

Debt issuance costs paid	—		(0.3)

Other financing activities	3.8		(8.2)
Net cash used in financing activities	(148.9)		(2.1)
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(8.9)		(4.1)
Net (decrease) increase in cash and cash equivalents and restricted cash	(198.3)		16.4
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	$	525.7	$	597.8
Supplemental schedule of cash flow information
Interest paid	$	45.5	$	45.9
Income taxes paid	$	36.5	$	27.3
Accrued capital expenditures	$	1.6	$	2.0

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

Table of Contents

Gates Industrial Corporation plc

Unaudited Condensed Consolidated Statements of Shareholders’ Equity


	Three Months Ended March 30, 2024

(dollars in millions)	Share capital		Additional paid-in capital		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	—		—		—		40.0		40.0		6.1		46.1
Other comprehensive income	—		—		(37.4)		—		(37.4)		(13.0)		(50.4)
Total comprehensive (loss) income	—		—		(37.4)		40.0		2.6		(6.9)		(4.3)
Other changes in equity:
—Issuance of shares	—		2.5		—		—		2.5		—		2.5
—Shares withheld for employee taxes	—		(2.4)		—		—		(2.4)		—		(2.4)
—Repurchase and cancellation of shares	—		—		—		(50.5)		(50.5)		—		(50.5)

—Share-based compensation	—		6.2		—		—		6.2		—		6.2




As of March 30, 2024	$	2.6	$	2,590.1	$	(865.9)	$	1,451.8	$	3,178.6	$	316.8	$	3,495.4


	Three Months Ended April 1, 2023

(dollars in millions)	Share capital		Additional paid-in capital		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	—		—		—		26.4		26.4		4.2		30.6
Other comprehensive income	—		—		60.8		—		60.8		0.8		61.6
Total comprehensive income	—		—		60.8		26.4		87.2		5.0		92.2
Other changes in equity:
—Issuance of shares	—		11.3		—		—		11.3		—		11.3
—Shares withheld for employee taxes	—		(1.6)		—		—		(1.6)		—		(1.6)

—Share-based compensation	—		8.1		—		—		8.1		—		8.1




As of April 1, 2023	$	2.8	$	2,559.9	$	(857.0)	$	1,509.3	$	3,215.0	$	338.6	$	3,553.6

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

Table of Contents

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 ~~organized under the laws of~~registered in England and Wales on September 25, 2017. Prior to the completion of the initial public offering of the Company’s shares in January 2018, the Company undertook certain reorganization transactions such that Gates Industrial Corporation plc became the indirect owner of all of the equity interests in Omaha Topco Limited (“Omaha Topco”), and has become the holding company of the Gates business. The previous owners of Omaha Topco were various investment funds managed by The Blackstone Group L.P. (“Blackstone” or our “Sponsor”), and Gates management equity holders. These equity owners of Omaha Topco received depositary receipts representing ordinary shares in the Company in consideration for their equity in Omaha Topco, at a ratio of 0.76293 of our ordinary shares for each outstanding ordinary share of Omaha Topco. All share and per share amounts in these condensed consolidated financial statements have been retrospectively adjusted to reflect the effect of this split. The reorganization was accounted for as a transaction between entities under common control and the net assets were recorded on the historical cost basis, in a manner similar to a pooling of interests, when Omaha Topco was contributed into the Company. Gates Industrial Corporation plc had no significant business transactions or activities prior to the date of the reorganization transactions, and as a result, the historical financial information for periods prior to those transactions reflects that of Omaha Topco.

In these condensed consolidated financial statements and related notes, all references to “Gates,” “we,” “us,” and “our” refer, ~~(1) prior~~unless the context requires otherwise, to the ~~completion of the reorganization transactions completed immediately prior to the initial public offering, to Omaha Topco~~Company and its consolidated ~~subsidiaries and (2) after the completion of the reorganization transactions, to Gates Industrial Corporation plc and its consolidated subsidiaries, as the case may be.~~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 sheet is presented as of March ~~31, 2018~~30, 2024 and December 30, ~~2017~~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 December 31, ~~2017~~2023 to March ~~31, 2018,~~30, 2024, with comparative information for the 91 day period from January 1, ~~2017~~2023 to April 1, ~~2017.~~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 March ~~31, 2018~~30, 2024 and the results of its operations and cash flows for the periods ended March ~~31, 2018~~30, 2024 and April 1, ~~2017.~~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, ~~2017.~~2023. The condensed consolidated balance sheet as of December 30, ~~2017~~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 generally 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 March 30, 2024, the collection of $119.3 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 months ended March 30, 2024, we incurred costs in respect of this program of $3.2 million, which are recorded under other (income) expenses. During the three months ended April 1, 2023 we incurred costs in respect of this program of $1.4 million.

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.

Table of Contents

The accounting policies used in preparing these condensed consolidated financial statements are the same as those applied in the prior year, except for the adoption on the first day of the 2018 fiscal year of the following new Accounting Standard Updates (each, an “ASU”) , all of which were adopted using the method prescribed by the respective ASU, unless otherwise specified.year.

~~ASU 2014-09 “Revenue From Contracts With Customers” (Topic 606): Revenue Recognition~~

~~ASU 2016-08 “Revenue from Contracts with Customers” (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net)~~

~~ASU 2016-10 “Revenue from Contracts with Customers” (Topic 606): Identifying Performance Obligations and Licensing~~

~~ASU 2016-12 “Revenue from Contracts with Customers” (Topic 606): Narrow-Scope Improvements and Practical Expedients~~

~~ASU 2016-20 “Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers~~”

~~ASU 2017-13 “Revenue from Contracts with Customers” (Topic 606): Amendments to SEC Paragraphs~~

~~ASU 2017-14 “Income Statement – Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606)~~”

~~In May 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2014-09 “Revenue from Contracts with Customers~~”~~(Topic 606) (“Topic 606”). Topic 606 supersedes the revenue recognition requirements in Topic 605, “Revenue Recognition~~”~~(Topic 605)~~(“Topic 605”), and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the considerations to which the entity expects to be entitled in exchange for those goods or services. The standards update provides a single, principles-based, five-step model to be applied to all contracts with customers. The five steps are: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The ASU also sets out requirements to disclose sufficient information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. Subsequent to issuing this ASU, the FASB issued several amendments, listed above, which provide clarification, additional guidance, practical expedients and technical corrections.

The Company adopted the requirements of Topic 606 as of December 31, 2017, the first day of our 2018 fiscal year, utilizing the modified retrospective method of transition. We have therefore not made any changes to the comparative information which continues to be reported under the prior guidance of Topic 605. As part of the implementation process, the Company comprehensively reviewed its relationships with its customers and analyzed a number of areas of potential change under Topic 606, including the treatment and calculation of warranty expenses, rebates, branded products, and consignment sales. Management concluded that the impact of Topic 606 on each of these areas on the Company's financial statements was not significant for any of the periods presented or for any of the annual periods that will be included in the Company's 2018 annual consolidated financial statements. No significant changes in net sales or other items in the condensed consolidated financial statements have therefore been made for the three months ended March 31, 2018 in relation to the adoption of Topic 606.

Gates derives its net sales primarily from the sale of 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 first-fit channels, throughout the world. Our products are sold in more than 100 countries across our four commercial regions: (1) the Americas; (2) Europe, Middle East & Africa (“EMEA”); (3) Greater China; and (4) East Asia & India. We have a long-standing presence in each of these regions, including our emerging markets, which include China, Southeast Asia, Eastern Europe and South America. We sell to a large variety of customers in many sectors of the industrial and consumer markets, with no significant exposure to any one customer or market.

~~In the substantial majority of our agreements with customers, we~~ consider accepted customer purchase orders, which in some cases are governed by master sales agreements, to represent the contracts with our customers. Revenue from the sale of goods under these contracts is measured at the invoiced amount, net of estimated returns, early settlement discounts and rebates. Taxes collected from customers relating to product sales and remitted to government authorities are excluded from revenues. Where a customer has the right to return goods, future returns are estimated based on historical returns profiles. Settlement discounts that may apply to unpaid invoices are estimated based on the settlement histories of the relevant customers. Our transactions prices often include variable consideration, usually in the form of rebates that may apply to issued invoices. The reduction in the transaction price for variable consideration requires that we make estimations of the expected total qualifying sales to the relevant customers. These estimates, including an analysis for potential constraint on variable consideration, take into account factors such as the nature of the rebate program, historical information and expectations of customer and consumer behavior. Overall, the transaction price is reduced to reflect our estimate of the amount of consideration to which we are entitled based on the terms of the contract.

The Company allocates the transaction price to each distinct product based on their relative standalone selling price. The product price as specified on the accepted purchase order is considered to be the standalone selling price.

In substantially all of our contracts with customers, our performance obligations are satisfied at a point in time, rather than over a period of time, when control of the product is transferred to the customer. This occurs typically at shipment. In determining whether control has transferred and the customer is consequently able to control the use of the product for their own benefit, the Company considers if there is a present right to payment, legal title has been transferred, and whether the risks and rewards of ownership have transferred to the customer. The majority of our revenue therefore continues to be recognized consistently with Topic 605, when products are shipped from our manufacturing or distribution facilities.

~~As part of our adoption of Topic 606, we elected to use the following practical expedients:~~


~~(i)~~	to exclude disclosures of transaction prices allocated to remaining performance obligations when the Company expects to recognize such revenue for all periods prior to the date of initial application of Topic 606;


~~(ii)~~	to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less, which is the case in the substantial majority of the Company’s contracts with customers;


~~(iii)~~	~~not to assess whether a contract has a significant financing component (as the Company’s standard payment terms are less than one year);~~


~~(iv)~~	~~not to assess whether promised goods are performance obligations if they are immaterial in the context of the contract with the customer;~~


~~(v)~~	~~to exclude from the measurement of the transaction price all taxes assessed by a governmental authority and collected by the Company from a customer; and~~


~~(vi)~~	~~to account for shipping or handling activities occurring after control has passed to the customer as a fulfillment cost rather than as a performance obligation.~~

~~ASU 2016-15 “Statement of Cash Flows” (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~

~~ASU 2016-18 “Statement of Cash Flows” (Topic 230): Restricted Cash~~

In 2016, the FASB issued two ASUs that clarify the operating, investing and financing cash flow classifications when receiving or paying cash in certain situations including debt prepayments, distributions from equity method investees and proceeds from settlement of corporate-owned life insurance policies.

In addition, the new requirement states that an entity should include restricted cash in the cash and cash equivalents line when reconciling the beginning-of-period and end-of-period amounts in the statement of cash flows.

In accordance with the transition requirements of these ASUs, the presentation changes to the condensed consolidated statement of cash flows have been made retrospectively with comparative information restated accordingly. This resulted in the reclassification of a cash outflow of $8.3 million in the first three months of 2017 related to the payment of premiums paid under our corporate-owned life insurance policies from cash flow from operating activities to cash flows from investing activities. A similar amount is presented as an investing cash outflow in first three months of 2018. In addition, cash and cash equivalents for the purposes of the condensed consolidated statement of cash flows includes restricted cash of $1.7 million as of March 31, 2018 and $1.6 million as of December 30, 2017, and $1.6 million as of both April 1, 2017 and December 31, 2016.

~~ASU 2017-07 “Compensation-Retirement Benefits” (Topic 715): Improving the Presentation of Net Periodic Pension Costs and Net Periodic Post-retirement Benefit Cost~~

In March 2017, the FASB issued an ASU which requires that an employer report the service cost component of its net periodic pension and other post-retirement costs in the same line item as other compensation costs arising from services rendered by the relevant employees during the period. The other components of net periodic benefit cost (which include the interest cost, expected return on plan assets, gains or losses on settlements and curtailments, the amortization of any prior service cost or credit and prior year actuarial gains or losses) are required to be presented in the income statement separately from the service cost component and outside of operating income.

Following adoption of this ASU, Gates continues to present the service cost component of our net periodic pension and other post-retirement benefit cost in the lines within operating income to which the relevant employees' other compensation costs are reported. All other components are now included in the other expense (income) line, outside of operating income. In accordance with the transition requirements of this ASU, these presentation changes to the statement of operations have been amended retrospectively. We have adopted the practical expedient of using the amounts disclosed in our historical financial statements as the estimation basis for applying these retrospective presentation requirements.

The following ASUs that were also adopted on the first day of the 2018 fiscal year did not have, and we believe will not have, a significant impact on Gates' results, financial position or disclosures:

~~ASU 2016-01 “Financial Instruments” (Topic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~

~~ASU 2016-16 “Income Taxes” (Topic 740): Intra-entity Transfers of Assets other than Inventory~~

~~ASU 2017-01 “Business Combinations” (Topic 805): Clarifying the definition of a business~~

~~ASU 2017-09 “Stock Compensation” (Topic 718): Scope of Modification Accounting~~

~~ASU 2018-03 “Technical Corrections and Improvements to Financial Instruments - Overall” (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~

This ASU provides technical corrections and clarifications on various items included in ASU 2016-01, which we have adopted as of the beginning of the 2018 fiscal year. Consistent with our adoption of ASU 2016-01, none of these technical corrections or clarifications are currently expected to have an impact on Gates. While the amendments are effective for the current fiscal year, they are only effective for interim periods beginning after June 15, 2018.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes for the year ended December 30, 2017, prepared in accordance with U.S. GAAP, included the Company’s Annual Report on Form 10-K.

~~Certain amounts in the prior period’s condensed consolidated financial statements have been reclassified to conform to the current year presentation.~~

2. Recent accounting pronouncements not yet adopted

The following recent accounting pronouncements are relevant to Gates’ operations but have not yet been adopted. Unless otherwise indicated, management has not yet completed its evaluation of the impact of the adoption of these pronouncements.None.

~~ASU 2016-02 “Leases” (Topic 842)~~

In February 2016, the FASB issued an ASU which introduces a lessee model that will bring most leases of property, plant and equipment onto the balance sheet. It requires a lessee to recognize a lease obligation (present value of future lease payments) and also a “right of use asset” for all leases, although certain short-term leases are exempted from the standard. The ASU introduces two models for the subsequent measurement of the lease asset and liability, depending on whether the lease qualifies as a “finance lease” or an “operating lease”. This distinction focuses on whether or not effective control of the asset is being transferred from the lessor to the lessee.

The ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The impact on our consolidated financial statements of adopting this ASU, which will affect the recognition, measurement and presentation of leases, is expected to be material given the number and value of leases held, but is still early in the process of being evaluated.

~~ASU 2016-13 “Financial Instruments” (Topic 326): Measurement of Credit Losses on Financial Instruments~~

In June 2016, the FASB issued an ASU which broadens the information that an entity must consider when developing its expected credit loss estimate for assets. The financial asset must be measured at the net amount expected to be collected.

The ASU is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The impact on our consolidated financial statements of adopting this ASU, which may affect the recognition, measurement and presentation of financial assets, is still being evaluated.

~~ASU 2017-12 “Derivatives and Hedging” (Topic 815): Targeted Improvements to Accounting for Hedging Activities~~

In August 2017, the FASB issued an ASU with the objective of improving the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments in ASU 2017-12 require an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported. The new approach no longer separately measures and reports hedge ineffectiveness.

The amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2018. Early application is permitted in any interim period after issuance of ASU 2017-12. An entity should apply a cumulative effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income (“OCI”) and retained earnings as of the beginning of the fiscal year that the entity adopts. The amended presentation and disclosure guidance is required only prospectively. We expect the adoption of this standard update to affect the disclosure and presentation of our derivative and hedging activities, but we have not yet quantified the impact to our financial statements.

~~ASU 2018-02 “Income Statement – Reporting Comprehensive Income” (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~

In February 2018, the FASB issued an ASU to address concerns about the guidance in current U.S. GAAP that requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date. This concern stemmed from the U.S. federal government’s enactment of H.R.1, “An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018,” known as the Tax Cuts and Jobs Act (the “Tax Act”), on December 22, 2017. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act.

The amendments are effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, and the amendments should be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Act is recognized. The impact on our consolidated financial statements of adopting this standard update, which may affect the recognition, measurement and presentation of taxes, is still being evaluated.

~~ASU 2018-05~~ ~~"Income Taxes"~~ ~~(Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting~~ ~~Bulletin No. 118 (SEC Update)~~

This ASU adds additional paragraphs to Topic 740, Income Taxes, that contain SEC guidance related to Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the Tax Act.

3. ~~Acquisitions~~

~~Description and financial effect of acquisitions~~

In June 2017, Gates purchased 100% of GTF Engineering and Services UK Limited, the owner of the majority of the net assets of Techflow Flexibles, for $36.7 million. Techflow Flexibles is a fully integrated engineering, manufacturing and commercial operation based in the United Kingdom that specializes in high-pressure flexible hoses.

On October 2, 2017, Gates completed the acquisition of Atlas Hydraulics for $74.0 million, net of cash acquired. Atlas Hydraulics is a fully-integrated product engineering, manufacturing, and commercial business headquartered in Ontario, Canada. With locations in Canada, the U.S. and Mexico, the company specializes in the design, manufacture, and supply of hydraulic tube and hose assemblies.

~~Gates incurred aggregate costs related directly to these acquisitions of $3.0 million, all of which are included in the transaction-related costs line in the statement of operations.~~

~~The following is the record of the fair value of net assets acquired and liabilities assumed:~~

(dollars in millions) Techflow Flexibles Atlas Hydraulics
Assets acquired
Accounts receivable $ 1.7
$ 10.3
Inventories 4.2
21.2
Prepaid expenses and other receivables 1.7
0.5
Taxes receivable —
2.7
Property, plant and equipment 13.0
24.5
Intangible assets 3.8
23.0
Total assets 24.4

82.2

Liabilities assumed
Accounts payable 2.6
5.5
Accrued expenses 4.8
2.4
Other current liabilities 0.3
10.5
Taxes payable 1.9
—
Deferred income taxes 0.6
11.6
Total liabilities 10.2

30.0
Net assets acquired $ 14.2

$ 52.2

~~Goodwill has been recognized as follows:~~

(dollars in millions) Techflow Flexibles Atlas Hydraulics
Consideration, net of cash acquired $ 36.7
$ 74.0
Net assets acquired (14.2 ) (52.2 )
Goodwill $ 22.5

$ 21.8

The goodwill of $22.5 million arising from the acquisition of Techflow Flexibles relates largely to the expected enhancement to Gates’ ability to make and supply long-length and large-diameter hoses, primarily for the oil & gas exploration and production industries. None of the goodwill recognized is expected to be deductible for income tax purposes.

The goodwill of $21.8 million arising from the acquisition of Atlas Hydraulics relates primarily to the expansion of Gates’ presence in industrial markets through increased manufacturing capacity and geographic reach. None of the goodwill recognized is expected to be deductible for income tax purposes.

~~Pro forma information has not been presented for these acquisitions due to their size relative to Gates.~~

4. Segment information

A. Background

~~Topic 280 “Segment Reporting~~” requires segment information provided in the consolidated financial statements to reflect the information that was provided to 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.

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 principally on net sales and Adjusted EBITDA (defined below).

B. Operating ~~Segments~~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 first-fit 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. ~~Disaggregated revenue~~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
(dollars in millions)	March 30, 2024		April 1, 2023
Power Transmission	$	532.8	$	548.1
Fluid Power	329.8		349.6
Continuing operations	$	862.6	$	897.7

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:~~region of origin:


	Three months ended March 30, 2024			Three months ended April 1, 2023
(dollars in millions)		Power Transmission		Fluid Power		Power Transmission		Fluid Power
U.S.		$	141.0	$	172.0	$	144.8	$	181.8
North America, excluding U.S.		63.1		50.5		54.8		51.8
United Kingdom (“U.K.”)		10.6		15.8		10.5		20.4
EMEA(1), excluding U.K.		153.0		52.0		167.7		53.9
East Asia and India		68.6		19.9		74.0		19.8
Greater China		68.7		10.4		70.0		11.3
South America		27.8		9.2		26.3		10.6
Net sales		$	532.8	$	329.8	$	548.1	$	349.6

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

Table of Contents

Net Sales
Three months ended
(dollars in millions) March 31, 2018 April 1, 2017
North America $ 396.0
$ 345.1
EMEA 231.3
189.0
East Asia & India 98.3
90.2
Greater China 92.7
73.4
South America 33.7
32.5
Net Sales $ 852.0
$ 730.2

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

Net Sales
Three months ended
(dollars in millions) March 31, 2018 April 1, 2017
Developed $ 562.2
$ 487.0
Emerging 289.8
243.2
Net Sales $ 852.0
$ 730.2


	Three months ended
(dollars in millions)	March 30, 2024		April 1, 2023
Developed	$	557.0	$	581.2
Emerging	305.6		316.5
Net sales	$	862.6	$	897.7

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 ~~expense~~ and other ~~expenses,~~(income) expense, income taxes, depreciation and ~~amortization derived from financial information prepared in accordance with U.S. GAAP.~~amortization.

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

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

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

~~the effect~~•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 ~~cost~~a Last-in First-out (“LIFO”) basis.

Table of ~~sales of fair value adjustments to the carrying amount of inventory acquired in business combinations;~~Contents

~~impairments, comprising impairments of goodwill and significant impairments or write downs of other assets;~~

~~restructuring costs;~~

~~the net gain or loss on disposals and on the exit of businesses; and~~

~~fees paid to our private equity sponsor for monitoring, advisory and consulting services.~~

~~E. Net sales and~~ Adjusted EBITDA ~~– continuing operations~~by segment was as follows:


	Three months ended
(dollars in millions)	March 30, 2024		April 1, 2023
Power Transmission	$	119.0	$	107.7
Fluid Power	76.6		66.8
Continuing operations	$	195.6	$	174.5

Net Sales
Three months ended
(dollars in millions) March 31, 2018 April 1, 2017
Power Transmission $ 546.0
$ 485.6
Fluid Power 306.0
244.6
Continuing operations $ 852.0

$ 730.2

Adjusted EBITDA
Three months ended
(dollars in millions) March 31, 2018 April 1, 2017
Power Transmission $ 125.3
$ 107.5
Fluid Power 58.6
45.5
Continuing operations $ 183.9

$ 153.0

~~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 above.~~

Reconciliation of ~~Adjusted EBITDA to~~ net income from continuing ~~operations:~~operations to Adjusted EBITDA:


	Three months ended
(dollars in millions)	March 30, 2024		April 1, 2023
Net income from continuing operations	$	46.2	$	30.9
Income tax expense	34.5		15.3
Income from continuing operations before taxes	80.7		46.2
Interest expense	37.5		40.8
Other (income) expenses	(1.5)		0.3
Operating income from continuing operations	116.7		87.3
Depreciation and amortization	54.6		54.5
Transaction-related expenses (1)	0.4		0.2

Restructuring expenses	1.2		5.5

Share-based compensation expense	8.6		9.5


Inventory impairments and adjustments (included in cost of sales) (2)	13.9		0.6

Severance expenses (included in cost of sales)	—		0.5
Severance expenses (included in SG&A)	0.1		0.6
Credit loss related to customer bankruptcy (included in SG&A) (3)	0.1		10.7
Cybersecurity incident expenses (4)	—		5.1

Adjusted EBITDA	$	195.6	$	174.5

(1)Transaction-related expenses relate primarily to advisory fees and other costs recognized in respect of major corporate transactions, including the acquisition of businesses, and equity and debt transactions.

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

(3) 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. Based on further developments in the bankruptcy proceedings, we recorded an additional $0.1 million pre-tax charge during the three months ended March 30, 2024. We will continue to monitor the circumstances surrounding the bankruptcy in determining whether adjustments to this recovery estimate are necessary.

(4) 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.

~~19. Subsequent events~~

~~On April 26, 2018, we signed a share purchase agreement to acquire Rapro, a Turkey-based business that engineers, manufactures and sells molded and branched hoses and other products, the majority~~Table of which are sold into replacement markets. Rapro’s annual sales are approximately $23 million and it operates out of two facilities in Izmir, Turkey, with its products serving heavy-duty, commercial and light-vehicle applications. This bolt-on acquisition accelerates our growth strategy within the Fluid Power product line, expanding our product range and geographic coverage to accelerate our growth in replacement channels, particularly in emerging markets.Contents

Item 2: Management’s Discussion and Analysis

of Financial Condition and Results of Operations

The following discussion should be read in conjunction with ~~our~~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 ~~“Forward-Looking~~“Cautionary Note Regarding Forward-Looking Statements” ~~above.~~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 original equipment manufacturers (“first-fit”) as specified components, with the majority of our ~~revenues~~revenue coming from replacement channels. Our products are used in applications across numerous end markets, ~~which include construction, agriculture, energy,~~including: automotive ~~transportation, general~~replacement and first-fit; diversified industrial; industrial ~~consumer products~~off-highway; industrial on-highway; and ~~many others.~~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 ~~for~~ over ~~a century~~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 a natural, and often preventative, replacement ~~cycle~~cycles that ~~drives~~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 ~~blue-chip~~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 ~~and end markets~~ in which we operate.

Business Trends

Our ~~revenue has~~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. Our products are used in applications across numerous end markets across both our replacement and first-fit channels, including construction, agriculture, energy, automotive, transportation, general industrial, consumer products and many others. 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 three months ended March ~~31, 2018,~~30, 2024, sales into replacement channels accounted for approximately ~~60%~~66% 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 three months ended March ~~31, 2018,~~30, 2024, sales into first-fit channels accounted for approximately ~~40%~~34% of our total net sales. First-fit sales are to a variety of industrial and automotive customers. Our industrial first-fit customers cover a diverse range of industries and applications and many of our largest first-fit customers manufacture construction and agricultural equipment. Among our automotive first-fit customers, a majority of our net sales are to emerging market customers, where we believe our first-fit presence provides us with a strategic advantage in developing those markets and ultimately increasing our higher margin replacement channel sales. First-fit automotive sales in developed markets represented approximately 9% of our total net sales in

During the three months ended March ~~31, 2018, with first-fit automotive sales~~30, 2024, previous challenges related to supply chains, logistics, and inflation continued to ease, which improved our productivity and expanded our profitability. We continue to make progress on improving our inventory position and turnover to meet our customer demands. We expect our enterprise initiatives to continue improving our profitability and cash generation through Fiscal 2024.

Table of Contents

Global conflicts, such as the conflict between Russia and Ukraine and the sanctions and counter-sanctions imposed in ~~North America contributing less than 3%~~response to it, created increased economic uncertainty and operational complexity both in Europe, Middle East and Africa (“EMEA”) and globally, the impacts of ~~total sales. As~~which we cannot fully predict. Gates had a ~~result of~~single distribution center in Russia that sold primarily to customers based in Russia. In early July 2022, we suspended our operations in Russia. The Russia-Ukraine and other global conflicts did not have a significant adverse impact on our operating results during the ~~foregoing factors, we do not believe that~~three months ended March 30, 2024. We will continue to monitor if the Russia-Ukraine and other conflicts impact global economic conditions or our ~~historical revenues have had any meaningful correlation to global automotive production but are positively correlated to industrial production.~~

business.

Results for the three months ended March ~~31, 2018~~30, 2024 compared ~~with~~to the results for the three months ended April 1, ~~2017~~2023

Summary Gates Performance


	Three months ended
(dollars in millions)		March 30, 2024			April 1, 2023
Net sales		$	862.6		$	897.7
Cost of sales		532.6			572.6
Gross profit		330.0			325.1
Selling, general and administrative expenses		211.7			232.1
Transaction-related expenses		0.4			0.2

Restructuring expenses		1.2			5.5

Operating income from continuing operations		116.7			87.3
Interest expense		37.5			40.8
Other (income) expenses		(1.5)			0.3
Income from continuing operations before taxes		80.7			46.2
Income tax expense		34.5			15.3
Net income from continuing operations		$	46.2		$	30.9

Operating income from continuing operations margin		13.5		%	9.7		%
Adjusted EBITDA(1)		$	195.6		$	174.5
Adjusted EBITDA margin		22.7		%	19.4		%

(1) 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.

Three months ended
(dollars in millions) March 31, 2018 April 1, 2017
Net sales $ 852.0
$ 730.2
Cost of sales 516.1
443.4
Gross profit 335.9

286.8
Selling, general and administrative expenses 208.6
188.5
Transaction-related costs 4.7
2.0
Impairment of intangibles and other assets 0.3
—
Restructuring (benefits) expenses (0.3 ) 1.8
Other operating expenses 4.3
0.1
Operating income 118.3

94.4
Interest expense 59.8
55.2
Other expenses 17.4
0.7
Income before taxes 41.1

38.5
Income tax expense 11.7
12.5
Net income from continuing operations $ 29.4

$ 26.0

Adjusted EBITDA⁽¹⁾
$ 183.9
$ 153.0
Adjusted EBITDA margin (%) 21.6 % 21.0 %


⁽¹⁾	~~See “—Non-GAAP Measures” for a reconciliation of Adjusted EBITDA to net income, the closest comparable GAAP measure, for each of the periods presented.~~

Net sales

Net sales during the ~~first~~ three months ~~of 2018~~ended March 30, 2024 were ~~$852.0 million, up by 16.7%, or $121.8~~$862.6 million, compared ~~with net sales~~to $897.7 million during the prior year period, a decrease of ~~$730.2 million.~~3.9%, or $35.1 million, driven primarily by lower volumes, partially offset by a $14.5 million benefit from pricing. Our net sales infor the ~~first~~ three months ~~of 2018~~ended March 30, 2024 were ~~positively~~adversely impacted by movements in average currency exchange rates of ~~$42.2~~$2.8 million compared ~~with~~to the prior year ~~period,~~period, principally due ~~principally~~ to the strengthening of the ~~Euro ($23.4 million)~~U.S. dollar against a number of currencies, primarily Chinese Renminbi, Turkish Lira and Japanese Yen, partially offset by the weakening of the U.S. dollar against the Mexican Peso and the ~~Chinese Renminbi ($6.8 million) against the U.S. dollar. In addition, the acquisitions of Techflow Flexibles and Atlas Hydraulics in the second half of 2017 contributed $34.1 million to our first quarter 2018 net sales. Excluding these impacts,~~ Euro. As such, core sales in~~creased~~decreased by ~~$45.5~~$32.3 million, or ~~6.2%~~3.6%, during the three months ended March ~~31, 2018~~30, 2024 compared to the prior year period.

The overall core sales decline was driven primarily by a decrease in sales to customers in our industrial channels, which were 10.0% lower compared with the prior year period. ~~This increase was due primarily to higher volumes of $34.2 million, with some benefit coming also from favorable pricing.~~

~~Core~~Industrial first-fit and industrial replacement sales ~~in our Power Transmission~~declined by 17.5% and ~~Fluid Power businesses grew by 5.8% and 7.2% in~~3.8%, respectively, during the ~~first~~ three months ~~of 2018 and 2017, respectively. This growth was mostly driven by industrial end markets, which have continued~~ended March 30, 2024 compared to ~~perform well across all regions, driving over half of our core growth in dollars in the first three months of 2018 compared with~~ the prior year period. The majority of the sales decline in the industrial channel was from EMEA and North America, ~~Europe, Middle East & Africa ("EMEA")~~which declined by 19.7% and ~~China were the primary contributors~~7.9%, respectively. The industrial sales decline was primarily driven by off-highway and personal mobility end markets, with a 10.1% and 41.4% decline, respectively, compared to this industrial growth, particularly to industrial first-fit customers. Sales to industrial first-fit customers grew by 13.7% (or $17.4 million) on a core basis in the first three months of 2018 compared with the prior year period. Sales ~~through our industrial replacement~~from automotive channels increased by ~~5.3% (or $11.5 million) on a core basis~~4.2% during the three months ended March 30, 2024 compared ~~with~~to the prior year period, particularly in North America and EMEA with increases of 4.7% and 2.2%, respectively, compared to the ~~regional growth coming primarily from EMEA and North America. Core growth in our construction and agricultural end markets was 14.2% and 10.8% for the first three months~~prior year period.

Table of 2018 and 2017, respectively. Sales into the construction end market grew in all of our commercial regions, and we saw particular strength in emerging markets. Growth in agriculture was driven primarily by North America. Overall, core sales into emerging and developed markets grew by 11.9% and 3.3% in the first three months of 2018 and 2017, respectively.Contents

Cost of sales

Cost of sales for the ~~first~~ three months ended March 30, 2024 was $532.6 million, compared to $572.6 million for the prior year period, a decrease of ~~2018~~7.0%, or $40.0 million. The decrease was ~~$516.1~~primarily attributable to a combined impact of lower volumes and enterprise initiatives which favorably impacted manufacturing performance, totaling $37.3 million, for the three months ended March 30, 2024 compared to the prior period.

Gross profit

As a result of the factors described above, gross profit for the three months ended March 30, 2024 was $330.0 million, compared to $325.1 million for the prior year period, an increase of ~~16.4%,~~1.5% or ~~$72.7~~$4.9 million. Our gross profit margin improved by 210 basis points to 38.3% for the three months ended March 30, 2024, up from 36.2% for the prior year period.

Selling, general and administrative expenses

SG&A expenses for the three months ended March 30, 2024 were $211.7 million compared ~~with $443.4~~to $232.1 million infor the prior year period. This decrease of $20.4 million was primarily attributable to a $10.6 million charge related to the credit loss due to a customer bankruptcy incurred during the prior year period. The decrease was also driven by lower labor and benefits expenditures and higher corporate-owned life insurance related income, totaling $10.0 million for the three months ended March 30, 2024.

Transaction-related expenses

Transaction-related expenses for the three months ended March 30, 2024 were $0.4 million compared to $0.2 million for the prior year period. The increase ~~was driven~~in expenses related primarily ~~by the acquisition of businesses in the second half of 2017, which contributed $27.1 million~~ to the ~~increase from~~secondary offering completed during the ~~prior year, in addition to the impacts from higher volumes of~~ ~~$20.0 million, movements in average currency exchange rates of $25.4 million~~ ~~and, to a lesser extent, a combination of wage and material inflation of~~ ~~$7.2 million. These increases were~~ ~~offset partially by procurement cost savings of $4.2 million and productivity improvements of $3.6 million.~~

~~Gross profit~~

~~Gross profit for the first~~ three months ended March 30, 2024.

Restructuring expenses

Restructuring expenses of ~~2018 was $335.9~~$1.2 million ~~up 17.1% from $286.8 million~~were incurred during the prior year period, driven by the factors described above. The increase reflected the benefits from higher volumes of $14.2 million, higher selling prices of $12.6 million and a $16.8 million positive impact from movements in average currency exchange rates. Wage and material inflation of $7.2 million was more than offset by procurement cost savings and productivity improvements of $4.2 million and $3.6 million, respectively.

~~Our gross profit margin improved by 10 basis points to 39.4% during the first~~ three months of 2018, up from 39.3% during the prior year period. The benefit from higher volumes on a partially fixed cost base and benefits from procurement cost savings and productivity improvements were offset somewhat by the dilutive impact of the recent acquisitions, as well as by inflation. The acquisitions, which did not impact the prior year period, had a 80 basis point dilutive impact on the gross margin for the first three months of 2018.

~~Selling, general and administrative expenses~~

Selling, general and administrative (“SG&A”) expenses for the first three months of 2018 were $208.6 million compared with $188.5 million during the prior year period. This increase of $20.1 million was driven primarily by the adverse impact of movements in average currency exchange rates of $7.6 million and by investments in our commercial and corporate functions of $4.5 million. A further $3.6 million of the increaseended March 30, 2024, related to ~~the recent acquisitions, which did not impact the~~legal and consulting expenses, relocation of certain production activities in Mexico, and other restructuring costs associated with prior ~~year period.~~

~~Transaction-related costs~~

~~Transaction-related costs for the first three months of 2018 were $4.7 million compared with $2.0 million during the prior year period. Expenses~~period facility closures or relocations in the first three months of 2018 included $4.0 million related to our initial public offering and a further $0.3 million related to the extension in January 2018 of the maturity dates of our two revolving credit facilities. The transaction-related costs incurred in the prior year period related to professional fees incurred as part of the debt refinancing initiated during March 2017.several countries.

Restructuring ~~(benefits)~~ expenses

~~No significant net restructuring costs were recognized during the first three months~~ of ~~2018. Restructuring costs of $1.8~~$5.5 million were recognized during the prior year period, ~~including $1.2 million in relation~~related primarily to severance and non-severance labor costs ~~largely~~and other costs related to facility closures or relocations in ~~the U.S. and Europe.~~

several countries.

Interest expense

~~Interest expense for the first three months of 2018 was $59.8 million compared with $55.2 million for the prior year period.~~ Our interest expense ~~may be analyzed~~was as follows:

Three months ended
(dollars in millions) March 31, 2018 April 1, 2017
Debt:
Dollar Term Loan $ 21.8
$ 28.5
Euro Term Loan 6.0
2.2
Dollar notes 12.1
15.9
Euro notes 1.3
3.6
41.2

50.2
Amortization of deferred issuance costs 18.0
4.3
Other interest expense 0.6
0.7
$ 59.8

$ 55.2


	Three months ended
(dollars in millions)		March 30, 2024		April 1, 2023
Debt:
Dollar Term Loans		$	24.6	$	29.5

Dollar Senior Notes		8.9		9.0


		33.5		38.5
Amortization of deferred issuance costs		3.2		2.2
Other interest expense		0.8		0.1
		$	37.5	$	40.8

Details of ~~the bank and other loans~~our long-term debt are presented in ~~note 13~~Note 12 to the ~~unaudited~~ condensed consolidated financial statements included elsewhere in this report. Interest ~~expense includes~~on debt for the ~~amortization of the deferred premium on our interest rate caps.~~

~~Interest expense during the first~~ three months ~~of 2018 increased over~~ended March 30, 2024 decreased when compared to the equivalent prior year period, primarily due ~~primarily~~ to the ~~acceleration~~favorable impact of ~~$15.4 million~~derivatives partially offset by higher interest rates applicable on the floating rate Dollar Term Loans. Amortization of deferred ~~financing cost amortization as a consequence of the debt payments made~~issuance costs during the ~~first~~ three months ended March 30, 2024 included the accelerated amortization of ~~2018. Partially offsetting this increase was~~$1.0 million due to the ~~interest saving from~~$100.0 million repayment against our Existing Dollar Term Loans (as defined below) in February 2024.

Table of Contents

Other (income) expenses

Our other expenses were as follows:


	Three months ended
(dollars in millions)		March 30, 2024		April 1, 2023
Interest income on bank deposits		$	(5.7)	$	(2.0)
Foreign currency (gain) loss on net debt and hedging instruments		(0.8)		1.6

Net adjustments related to post-retirement benefits		(0.7)		(0.7)
Foreign currency loss on hyperinflation remeasurement		3.4		—
Other		2.3		1.4
		$	(1.5)	$	0.3

Other income for the ~~reduced principal amounts outstanding, which we expect to benefit our future interest expense by approximately $54 million per year. The interest expense in the first~~ three months ~~of 2018 benefited further from margin reductions negotiated in 2017.~~

~~Other expenses~~

~~Other~~ended March 30, 2024 was $1.5 million, compared to $0.3 million expense ~~for the first three months of 2018 was $17.4 million, which increased from $0.7 million~~ in the prior year period. This ~~increase~~change was driven primarily by the ~~payment~~impact of ~~$27.0 million of redemption premiums~~higher interest income on ~~repayment of~~bank deposits compared to the ~~Euro Senior Notes~~prior year period due to higher interest rates, and ~~Dollar Senior Notes~~net movements in ~~January and February of 2018. Partially offsetting these premiums were net~~ foreign currency ~~gains of $9.4 million~~exchange rates on net debt and hedging ~~instruments, including a $5.8 million gain on a derivative used~~instruments. The increase was partially offset by foreign currency remeasurement loss related to ~~lock~~translation adjustments for entities that operate in highly inflationary economies, specifically Argentina and Türkiye, and higher costs incurred in relation to our trade accounts receivable factoring program due to an increase in the exchange rate used to repay the Euro Senior Notes. We also benefited from a $0.6 million reduction in net adjustments related to post-retirement benefit obligations, due primarily to lower net interest on the reduced net obligation during the first three months of 2018 as compared with the prior year period. Our other expense may be analyzed as follows:

Three months ended
(dollars in millions) March 31, 2018 April 1, 2017
Interest income on bank deposits $ (1.1 ) $ (1.1 )
Foreign currency (gain) loss on net debt and hedging instruments (9.4 ) 0.2
Premiums paid on debt redemptions 27.0
—
Net adjustments related to post-retirement benefits 1.0
1.6
Other (0.1 ) —
$ 17.4

$ 0.7
discount rate.

Income tax expense (benefit)

~~For interim~~We compute the year-to-date income tax ~~reporting we estimate~~provision by applying our estimated annual ~~effective tax rate and apply this~~ effective tax rate to our ~~year to date~~year-to-date pre-tax ~~income. The~~income and adjust for discrete tax ~~effects of unusual or infrequently occurring~~ items ~~including the effects of changes in tax laws or rates, are reported~~ in the ~~interim~~ period in which they occur.

For the ~~first~~ three months ~~of 2018,~~ended March 30, 2024, we had an income tax expense of ~~$11.7~~$34.5 million on pre-tax income of ~~$41.1~~$80.7 million, ~~resulting~~which resulted in an effective tax rate of ~~28.5%~~42.8%, compared ~~with~~to an income tax expense of ~~$12.5~~$15.3 million on pre-tax income of ~~$38.5~~$46.2 million, which resulted in an effective ~~income~~ tax rate of ~~32.5%~~33.1% for the ~~prior year period.~~ ~~The decrease in~~three months ended April 1, 2023.

For the ~~2018~~three months ended March 30, 2024 the effective tax rate ~~is due~~was driven primarily ~~to the beneficial impact of~~by the jurisdictional mix of ~~earnings. The decrease~~earnings and by discrete expenses of $11.7 million, of which $9.1 million related to changes in the realizability of certain deferred tax assets, $1.4 million related to net unrecognized tax benefits, and $1.2 million related to other net discrete expenses. For the three months ended April 1, 2023, the effective tax rate was driven primarily by discrete tax expenses of $6.4 million, of which $2.6 million related to the impacts of tax law changes primarily in Türkiye and Belgium, $1.9 million related to undistributed foreign earnings, and $2.9 million related to other net discrete expenses, partially offset ~~partially~~by $1.0 million of net unrecognized tax benefits.

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 ~~discrete~~Organization for Economic Co-operation and Development, or OECD. Under such rules, a minimum effective tax ~~impacts~~rate of ~~$21.1 million~~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 ~~non-operating expenses for which no corresponding~~a jurisdiction. If the jurisdictional effective tax ~~benefit was recognized.~~

~~On December 22, 2017,~~rate determined under the ~~U.S. government enacted comprehensive legislation commonly referred~~Pillar Two rules is less than 15%, a top-up tax will be due to asbring the ~~Tax Act. In~~jurisdictional effective tax rate up to 15%. We are continuing to monitor the ~~fourth quarter~~pending implementation of ~~2017, we made a reasonable estimate to account for~~Pillar Two by individual countries and the ~~income tax~~potential effects of Pillar Two on our business. We do not expect the provisions effective in 2024 to have a materially adverse impact on our results of operations, financial position or cash flows.

Deferred Tax ~~Act, however,~~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 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 ~~update~~support a change

Table of Contents

in expectations. Such a change in expectations could arise due to many factors, including those impacting our ~~calculations~~forecasts of future earnings, as ~~additional required information is prepared and analyzed, interpretations and assumptions are refined, and additional guidance is issued.~~

The Tax Act established new provisions for global intangible low taxed income (“GILTI”) and base erosion anti-abuse tax (“BEAT”) that taxes certain payments between U.S. Corporations and their subsidiaries. We are subject to both the GILTI and BEAT provisions beginning January 1, 2018. For the period ended March 31, 2018, we have reported the estimated impacts of both GILTI and BEAT, including partial utilization of our foreign tax credit carryforwards,well as changes in the ~~annual~~international tax laws under which we operate and tax planning. It is not reasonably possible to forecast any such changes at the present time, but it is possible that, should they arise, our view of their effect on the future realization of deferred tax assets may materially impact our financial statements.

After weighing all of the evidence, giving more weight to the evidence that was objectively verifiable, we determined that, as of March 30, 2024, it is more likely than not that deferred tax assets in the U.S., Germany, and China totaling $12.3 million are not realizable. Accordingly, we discretely recognized $9.1 million expense from deferred tax assets that are no longer realizable, while the remaining $3.2 million will be recognized during the year through the effective tax rate. ~~However, due to~~As a result of changes in our Sponsor’s ownership in us and estimates of future taxable profits against which net operating losses and foreign tax credits can be utilized, our position and judgment regarding the ~~complexity~~realizability of these ~~provisions, we continue to monitor additional regulatory and administrative guidance to further refine the impacts.~~deferred tax assets changed.

Adjusted EBITDA

Adjusted EBITDA for the ~~first~~ three months ~~of 2018~~ended March 30, 2024 was ~~$183.9 million, an increase of 20.2% or $30.9~~$195.6 million, compared ~~with~~to $174.5 million for the prior year period, ~~Adjusted EBITDA~~an increase of ~~$153.0~~12.1% or $21.1 million. ~~The~~ Adjusted EBITDA margin was ~~21.6%,~~22.7% for the three months ended March 30, 2024, a 60330 basis point ~~increase~~improvement from the prior year period margin of ~~21.0%~~19.4%. The increase in Adjusted EBITDA was ~~driven primarily~~largely the result of enterprise initiatives which favorably impacted manufacturing performance, benefits from pricing and favorable movements in average currency exchange rates, partially offset by ~~higher sales of $121.8 million, which resulted in additional gross profit of $49.1 million as described above. Partially offsetting this increase were higher SG&A costs as noted above.~~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.”

Analysis by Operating Segment

Power Transmission ~~(64.1%~~(61.8% of Gates’ net sales for the ~~first~~ three months ~~of 2018)~~

Three months ended
(dollars in millions) March 31, 2018 April 1, 2017 Period over Period Change
Net sales $ 546.0
$ 485.6
12.4 %
Adjusted EBITDA $ 125.3
$ 107.5
16.6 %
Adjusted EBITDA margin (%) 22.9 % 22.1 %
ended March 30, 2024)


	Three months ended
(dollars in millions)	March 30, 2024			April 1, 2023			Period over Period Change
Net sales	$	532.8		$	548.1		(2.8	%)
Adjusted EBITDA	$	119.0		$	107.7		10.5	%
Adjusted EBITDA margin	22.3		%	19.6		%

Net sales in Power Transmission for the ~~first~~ three months ~~of 2018 were $546.0 million, an increase of 12.4%~~ended March 30, 2024 decreased by 2.8%, or ~~$60.4~~$15.3 million, ~~when~~ compared ~~with~~to the prior year period driven primarily by a $17.8 million decrease in volume, partially offset by $8.4 million from favorable pricing. In addition, Power Transmission’s net sales ~~of $485.6 million. Excluding the positive impact of~~were adversely impacted by movements in average currency exchange rates of ~~$32.4 million,~~$5.9 million. As such, core sales ~~increased~~decreased by ~~5.8%~~1.7%, or ~~$28.0 million,~~$9.4 million.

Power Transmission’s core sales decline was driven primarily by lower sales to customers in our industrial channels, which declined by 10.0% during the three months ended March 30, 2024 compared ~~with~~to the prior year period. The decline in industrial sales was primarily driven by EMEA and North America, with sales declines of 27.6% and 4.5%, respectively, compared to the prior year period. The personal mobility end market drove the majority of this decline, with a 45.0% decrease in sales compared to the prior year period, primarily in EMEA. Automotive channel sales increased by 3.7% globally compared to the prior year period, particularly in North America which saw a 4.9% increase ~~was due~~in sales during the three months ended March 30, 2024 compared to ~~higher sales volumes.~~the prior year period.

Core growth in Power Transmission's net sales was positive in all of our end markets, with mid to high single digit growth coming from energy, general industrial, automotive and industrial transportation. On a regional basis, we saw the highest growth rates in South America at 14.7% and greater China at 18.4%.

~~Our~~ Power Transmission Adjusted EBITDA for the ~~first~~ three months ~~of 2018 was $125.3 million, an increase of 16.6%~~ended March 30, 2024 increased by 10.5%, or ~~$17.8~~$11.3 million, compared ~~with~~to the prior period. This increase was driven primarily by a combination of benefits from pricing, enterprise initiatives which favorably impacted manufacturing performance, and lower inflation costs, partially offset by lower volume. As a result, Adjusted EBITDA margin for the three months ended March 30, 2024 was 22.3%, a 270 basis point increase from the prior year period Adjusted EBITDA margin of ~~$107.5~~19.6%.

Table of Contents

Fluid Power (38.2% of Gates’ net sales for the three months ended March 30, 2024)


	Three months ended
(dollars in millions)	March 30, 2024			April 1, 2023			Period over Period Change
Net sales	$	329.8		$	349.6		(5.7	%)
Adjusted EBITDA	$	76.6		$	66.8		14.7	%
Adjusted EBITDA margin	23.2		%	19.1		%

Net sales in Fluid Power for the three months ended March 30, 2024 decreased by 5.7%, or $19.8 million driven primarily by lower volumes, partially offset by a $6.1 million benefit from pricing. In addition, Fluid Power’s net sales were favorably impacted by movements in average currency exchange rates of $3.1 million. As such, core sales decreased by 6.6%, or $22.9 million, compared to the prior year period.

Fluid Power’s core sales decline in the three months ended March 30, 2024 was driven primarily by declines in sales to our industrial customers. Sales to our industrial first-fit and replacement customers declined by 15.8% and 5.0%, respectively, compared to the prior year period, predominately from North America and EMEA. Sales to the off-highway end markets, which drove the majority of this decrease, declined by 12.1% globally during the three months ended March 30, 2024 compared to the prior year period. This decline was partially offset by an increase of 6.3% in sales to automotive channel compared to the prior year period.

Fluid Power Adjusted EBITDA for the three months ended March 30, 2024 increased by 14.7%, or $9.8 million, compared to the prior year period. The increase in Adjusted EBITDA was driven primarily by ~~higher sales~~a combination of ~~$60.4 million,~~enterprise initiatives which was the primary driver of a $26.8 million increase in gross profit. Adjusted EBITDA margin for the first three months of 2018 was 22.9%, a 80 basis point improvement over the prior year period adjusted EBITDA margin of 22.1%. Gross profit margin accounted for approximately 50 of the 80 basis point expansion. The additional expansion resultedfavorably impacted manufacturing performance, benefits from ~~SG&A leverage.~~

~~Fluid Power (35.9% of Gates’ net sales for the first three months of 2018)~~

Three months ended
(dollars in millions) March 31, 2018 April 1, 2017 Period over
Period Change
Net sales $ 306.0
$ 244.6
25.1 %
Adjusted EBITDA $ 58.6
$ 45.5
28.8 %
Adjusted EBITDA margin (%) 19.2 % 18.6 %

Net sales in Fluid Power for the first three months of 2018 were $306.0 million, an increase of 25.1%, or $61.4 million, compared with net sales during the prior year period of $244.6 million. Excluding the positive impact ofpricing, and favorable movements in average currency exchange rates, ~~of $9.8 million and the benefit of $34.1 million from businesses acquired in the second half of 2017, core sales~~partially offset by lower volumes. The Adjusted EBITDA margin consequently increased by ~~7.2%, or $17.5 million,~~410 basis points compared ~~with~~to the prior year period. ~~This increase was due primarily to higher volumes and pricing in substantially equal parts.~~

Core sales growth was driven primarily by industrial end markets, particularly construction, agriculture and general industrial. We continued to see strong demand for hydraulics products, particularly in mobile industrial applications. Fluid Power had core growth across all of its commercial regions, with East Asia & India growing by 21.9% and North America, the largest region, growing by 6.7% compared with the prior year period. We saw particular strength in emerging market countries, which collectively grew by more than 20%.

Adjusted EBITDA for the first three months of 2018 was $58.6 million, an increase of 28.8%, or $13.1 million, compared with the prior year period Adjusted EBITDA of $45.5 million. This increase was driven by the higher core growth as well as an impact of $3.4 million from the businesses acquired in 2017. Positive movements in foreign currency exchange rates contributed a further $1.5 million of the increase. Adjusted EBITDA margin increased by 60 basis points, driven primarily by SG&A leverage.

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.

As market conditions warrant, we ~~and~~and/or our ~~majority equity holders, Blackstone and its affiliates,~~Sponsor may from time to time seek to repurchase ~~debt~~ 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 ~~balances~~ or ~~the incurrence of~~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 ~~amounts~~ 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 2026; 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. Management believes~~future, and believe that we have adequate liquidity and capital resources for the ~~current level~~next twelve months.

Table of ~~working capital is sufficient for Gates’ present requirements.~~Contents

Cash Flow

Three ~~months ended~~Months Ended March ~~31, 2018~~30, 2024 compared ~~with~~to the three months ended April 1, ~~2017:~~2023

Cash used in ~~operations~~operating activities was ~~$26.5~~$21.0 million during the ~~first~~ three months ended March 30, 2024 compared to cash provided by operating activities of 2018 compared with $12.5 million during the prior year period. Operating cash inflow before movements in operating assets and liabilities was $112.5 million during the first three months of 2018 compared with $75.2$52.5 million during the prior year period, driven primarily by an increase of ~~$37.3~~$32.2 million ~~that was due largely~~in trade working capital movement compared to the ~~improved operational performance~~prior year period, an increased amount of ~~Gates which flowed through~~bonus payments compared to ~~operating income. Movements in operating assets~~the prior year period, and ~~liabilities during the first three months~~an increase of ~~2018 gave rise to a decrease of $139.0~~$9.2 million in ~~cash~~income taxes paid compared ~~with a decrease of $87.7 million in~~to the prior year period. ~~This decrease, or further spend of cash, was driven primarily by the build of working capital due to increased demand.~~

Net cash used in investing activities during the ~~first~~ three months ~~of 2018~~ended March 30, 2024 was ~~$69.4~~$19.5 million, compared ~~with $21.6~~to $29.9 million in the prior year period. ~~Capital expenditure~~The decrease of cash used in investing activities was primarily driven by a $14.1 million decrease in net cash paid under company-owned life insurance policies, partially offset by increased ~~by $46.6 million from $13.9 million in the first three months~~capital expenditures of 2017 to $60.5 million in the first three months of 2018, driven primarily by expenditures on the expansion of one of our existing facilities and on two new facilities that are being built to expand production capacity in our Fluid Power segment.$3.5 million.

Net cash used in financing activities was ~~$145.0~~$148.9 million during the ~~first~~ three months ~~of 2018,~~ended March 30, 2024, compared ~~with $133.2~~to $2.1 million ~~net cash provided by financing activities~~ in the prior year period. ~~This net outflow in the first three months of 2018~~Current year outflows were primarily related ~~primarily~~ to the ~~flow of cash resulting from our initial public offering~~$104.9 million debt repayment, and the ~~use of~~$50.3 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 funds therefrom to redeem debt. We redeemed $920.1 million of our debt and paid premiums thereon of $27.0 million. This outflow was funded primarily by a net inflow of cash from the initial public offering of $799.1 million. In contrast, the net cash inflow from financing activitiescondensed consolidated financial statements included elsewhere in ~~the prior year period was driven by the receipt of proceeds of $150.0 million from a debt issue as part of the debt refinancing that was completed in April 2017.~~this report.

Indebtedness

~~As of March 31, 2018, our~~Our long-term debt, ~~consisted~~consisting principally of two secured term loans ~~two~~and the U.S. dollar denominated unsecured senior notes, ~~and two revolving credit facilities.~~

~~Our long-term debt as of March 31, 2018 and December 30, 2017 may be analyzed~~was as follows:


	Carrying amount				Principal amount
(dollars in millions)	As of March 30, 2024		As of December 30, 2023		As of March 30, 2024		As of December 30, 2023
Debt:
—Secured
Dollar Term Loans	$	1,768.4	$	1,870.3	$	1,799.0	$	1,903.9


—Unsecured
Dollar Senior Notes	572.6		581.2		568.0		568.0

	$	2,341.0	$	2,451.5	$	2,367.0	$	2,471.9

Carrying amount Principal amount
(dollars in millions) As of
March 31, 2018 As of December 30, 2017 As of
March 31, 2018 As of December 30, 2017
Bank and other loans:
—Secured
Term Loans (U.S. dollar and Euro denominated) $ 2,481.2
$ 2,467.8
$ 2,526.3
$ 2,515.0
—Unsecured
Senior Notes (U.S. dollar and Euro denominated) 565.8
1,487.5
568.0
1,472.5
Other debt 0.3
0.4
0.3
0.4
$ 3,047.3

$ 3,955.7

$ 3,094.6

$ 3,987.9

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 originally drawn on July 3, 2014 and refinanced on February 24, 2021 are referred to as the “Existing Dollar Term Loans”, and the Dollar Term Loans that were issued on November 16, 2022 are referred to as the “New Dollar Term Loans.” Details of our long-term debt are presented in ~~note 13~~Note 12 to ~~our unaudited~~the condensed consolidated financial statements included elsewhere in this quarterly report.

During January 2018, upon completion of our initial public offering, the applicable margins on each of the term loans was reduced by a further 0.25%, as agreed as part of the refinancing completed in November 2017.Debt drawings and redemptions

During ~~the first quarter~~February 2024, we made a voluntary principal debt repayment of ~~2018, Gates redeemed in full its outstanding €235.0~~$100.0 million ~~of Euro Senior Notes and made partial redemptions of the~~against our Existing Dollar Senior Notes. All of these prepayments, totaling $913.7 million in principal, $27.0 million in redemption premiums and $3.1 million in accrued interest, were funded by the net proceeds from our initial public offering of approximately $799.1 million, with the remainder of the funds coming from excess cash on hand.

In addition, in connection with the reorganization transactions completed in connection with our initial public offering, a wholly-owned U.S. subsidiary of Gates Global LLC, entered into an intercompany agreement pursuant to which it became an obligor under the Dollar Senior Notes for U.S. federal income tax purposes and agreed to make future payments due on the Dollar Senior Notes.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 ~~Dollar Senior Notes is U.S. source income.~~asset-backed revolver and had no remaining outstanding balance as of March 30, 2024 and December 30, 2023, as discussed further in Note 12 to the condensed consolidated financial statements included elsewhere in this quarterly report.

~~Dollar and Euro Term Loans~~

~~Gates’ secured credit facilities include a~~ Dollar Term Loan credit ~~facility and a Euro Term Loan credit facility that were drawn on July 3, 2014. These facilities mature on March 31, 2024, with a springing maturity of April 15, 2022 if more than $500 million of~~agreement amendments

On October 10, 2023, we amended the ~~Dollar Senior Notes remain in issue at that time.~~

~~These term loan facilities bear interest at a floating rate. As of March 31, 2018, borrowings under the~~New Dollar Term ~~Loan facility, which currently bears~~Loans’ interest rate to be, at ~~LIBOR,~~our option, either Term SOFR, subject to a floor of ~~1.00%, plus a margin of 2.75%, bore interest at a rate of 5.05% per annum. As of March 31, 2018, the Euro Term Loan bore interest at Euro LIBOR, which is currently below 0%, subject to a floor of 0%~~0.50%, plus a margin of 3.00%.

~~Both term loans are~~ per annum, or the base rate, subject to ~~quarterly amortization payments~~a 1.50% per annum floor, plus 2.00% per annum.

Table of ~~0.25%, based on~~Contents

On March 1, 2023, we amended the ~~original principal amount less certain prepayments with the balance payable on maturity. During the first three months of 2018, we made quarterly amortization payments against the~~Existing Dollar Term ~~Loan and the Euro Term Loan of $4.3 million and $2.0 million, respectively.~~

Under the terms of the credit agreement, Gates is obliged to offer annually to the term loan lenders an “excess cash flow” amount as defined under the agreement, based on the preceding year’s final results. Based on our 2017 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 was required to be made in 2018.

During the first three months of 2018, a transactional foreign exchange loss of $17.7 million, compared with a $5.4 million loss for the prior year period, was recognized in respect of the Euro Term Loan. Of these losses, $7.5 million, compared with $0 for the prior year period, was recognized in other expense and a $10.2 million loss, compared with a $5.4 million loss for the prior year period, was recognized in OCI as part of this facility is designated as a net investment hedge of certain of Gates’ Euro investments. In the first three months of 2018, the loss recognized in other expense was offset substantially by a gain on a Euro-denominated intercompany receivable.

As of March 31, 2018, the principal amount outstanding under the Dollar Term Loan was $1,725.0 million and the principal amount outstanding under the Euro Term Loan was $801.3 million (€651.9 million).

~~Unsecured Senior Notes~~

Following the full redemption of the Euro Senior Notes and partial redemption of the Dollar Senior Notes, as described above, there are no longer any Euro Senior Notes outstanding and as of March 31, 2018, there were $568.0 million of Dollar Senior Notes outstanding. These Dollar Senior Notes are scheduled to mature on July 15, 2022 and bear interest at an annual fixed rate of 6.00% with semi-annual interest payments.

Up to the date of their redemption, a transactional foreign exchange loss of $9.2 million, compared with a $6.6 million loss in the prior year period, was recognized in respect of the Euro Senior Notes. Of these losses, $4.2 million, compared with $0 for the prior year period, was recognized in other expense and $5.0 million, compared with $6.6 million for the prior year period, was recognized in OCI for the period during which this facility was designated as a net investment hedge of certain of Gates’ Euro investments.

~~Revolving Credit Facility~~

Gates also has a secured revolving credit facility, maturing on January 29, 2023, that provides for multi-currency revolving loans up to an aggregate principal amount of $185.0 million, with a letter of credit sub-facility of $20.0 million. In January 2018, the maturity date of this facility was extended to January 29, 2023, with a springing maturity of April 15, 2022 if more than $500 million of the Dollar Senior Notes remain in issue at that time. In addition, as part of this amendment, the facility size was increased from $125.0 million to $185.0 million.

~~As of both March 31, 2018 and December 30, 2017, there were $0 drawings for cash under the~~Loans, revolving credit facility and ~~there were no letters of credit outstanding.~~

~~Asset-Backed Revolver~~

~~Gates has a revolving credit facility backed by certain of its assets~~asset-backed revolver, which bore interests at LIBOR plus an applicable margin. The amendments modified the reference rates for borrowings in ~~North America. The facility allows for loans of up~~dollar from LIBOR to ~~a maximum of $325.0 million ($322.0 million~~Term SOFR or Adjusted Term SOFR, as ~~of March 31, 2018, compared with $293.7 million as of December 30, 2017, based~~applicable. For further information on the ~~values of~~facilities, see Note 12 to the ~~secured assets on those dates) with a letter of credit sub-facility of $150.0 million.~~

~~In January 2018, the maturity date of~~condensed consolidated financial statements included elsewhere in this ~~facility was extended to January 29, 2023, with a springing maturity of April 15, 2022 if more than $500 million of the Dollar Senior Notes remain in issue at that time.~~

As of March 31, 2018 and December 30, 2017, there were $0 drawings for cash under the asset-backed revolver. The letters of credit outstanding under the asset-backed revolver were $58.4 million and $58.0 million as of March 31, 2018 and December 30, 2017, respectively.quarterly report.

Non-guarantor subsidiaries

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

For the ~~first three~~twelve months ~~of 2018,~~ended March 30, 2024, before intercompany eliminations, our non-guarantor subsidiaries represented approximately ~~69%~~75% of our ~~revenues~~net sales and ~~65%~~74% of our EBITDA as defined in the financial covenants attaching to the senior secured credit facilities. As of March ~~31, 2018,~~30, 2024, before intercompany eliminations, our non-guarantor subsidiaries represented approximately ~~96%~~68% of our total assets and approximately ~~117%~~26% of our total liabilities. After adjusting for intercompany loans payable and receivable by Finco Omaha Limited, a non-guarantor intermediate holding company, our non-guarantor subsidiaries represented approximately 51% of our total assets and approximately 39% ~~of our total liabilities. The intercompany loan asset and liability held by Finco Omaha Limited largely offset each other.~~

Net Debt

Net Debt is a non-GAAP measure representing the principal amount of our debt less the carrying amount of cash and cash equivalents. During the ~~first~~ three months ~~of 2018,~~ended March 30, 2024, our ~~net debt decreased~~Net Debt increased by ~~$672.5~~$93.5 million from ~~$3,391.3~~$1,751.3 million as of December 30, ~~2017~~2023 to ~~$2,718.8~~$1,844.8 million as of March ~~31, 2018. The primary driver~~30, 2024. Net Debt was impacted adversely by $8.9 million due to movements in currency exchange rates. Excluding this impact, Net Debt increased by $84.6 million, which was driven primarily by $50.3 million paid to acquire shares under our share repurchase program, $21.0 million of ~~this decrease was the net cash proceeds of $799.1 million received from our initial public offering. Partially offsetting this decrease in net debt was~~ cash used in operating activities, and $18.1 million of capital expenditures during the ~~first~~ three months ~~of 2018 of $26.5 million, capital expenditure of $60.5 million and the payment of the debt redemption premiums of $27.0 million.~~

Movements in foreign currency had an unfavorable net impact of $21.9 million on net debt during the first three months of 2018, the majority of the movement relating to the impact on our Euro-denominated debt of the strengthening of the Euro against the U.S. dollar. Partially offsetting this was a decrease in deferred financing costs of $17.7 million, $15.4 million of which resulted from the full and partial redemption of the Euro Senior Notes and Dollar Senior Notes.ended March 30, 2024.

Borrowing Headroom

As of March ~~31, 2018,~~30, 2024, our asset-backed revolving credit facility had a borrowing base of ~~$322.0~~$250.0 million, being the maximum amount ~~the Company~~we can draw down based on the current value of the secured assets. ~~The facility was undrawn for cash but~~As of March 30, 2024, there were letters of credit outstanding against the facility amounting to ~~$58.4~~$28.6 million. We also have a secured revolving credit facility that provides for multi-currency revolving loans up to an aggregate principal amount of ~~$185.0 million. We had~~$250.0 million, with no ~~drawings against uncommitted borrowing facilities (bank overdrafts) but we had outstanding performance bonds, letters~~amounts drawn as of ~~credit and bank guarantees amounting to $3.4 million (in addition to those outstanding under the revolving credit facility).~~March 30, 2024.

~~Overall, therefore,~~In total, our committed borrowing headroom was ~~$445.2~~$471.4 million, in addition to cash and cash equivalents balances of ~~$328.5~~$522.2 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).

Management uses Adjusted EBITDA as its key profitability measure. This is a non-GAAP measure that represents EBITDA before certain items that ~~impact~~are considered to hinder comparison of the performance of our businesses ~~either~~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.

Table of Contents

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

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

~~the effect~~•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 ~~cost of sales of fair value adjustments to the carrying amount of inventory acquired in business combinations;~~

~~impairments, comprising impairments of goodwill and significant impairments or write downs of other assets;~~

~~restructuring costs;~~

~~the net gain or loss on disposals and on the exit of businesses; and~~

~~fees paid to our private equity sponsor for monitoring, advisory and consulting services.~~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 ~~those~~ acquisition-related costs that are required to be expensed in accordance with ~~Topic 805 “Business Combinations,” in particular, the effect on cost of sales of the uplift to the carrying amount of inventory held by Gates at the date of its acquisition by Blackstone, and~~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 restructuring ~~costs~~expenses and severance-related expenses that reflect specific, strategic actions taken by management to ~~improve~~shutdown, downsize, or otherwise fundamentally reorganize areas of Gates’ ~~future profitability; the net gain or loss on disposals of assets other than~~business; expenses related to a malware attack that occurred in February 2023; and changes in the ~~ordinary course~~LIFO inventory reserve recognized in cost of operations and gains and losses incurred in relation to non-Gates businesses disposed of in prior periods; and impairments of goodwill and significant impairments of other assets, representing the excess of their carrying amounts over the amountssales for certain inventories that are ~~expected~~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 ~~be recovered from them in~~period and with the ~~future.~~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.

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


	Three months ended
(dollars in millions)		March 30, 2024		April 1, 2023
Net income from continuing operations		$	46.2	$	30.9
Income tax expense		34.5		15.3
Net interest and other expenses		36.0		41.1
Depreciation and amortization		54.6		54.5
EBITDA		171.3		141.8
Transaction-related expenses (1)		0.4		0.2

Restructuring expenses		1.2		5.5
Share-based compensation expense		8.6		9.5


Inventory impairments and adjustments (included in cost of sales) (2)		13.9		0.6

Severance expenses (included in cost of sales)		—		0.5
Severance expenses (included in SG&A)		0.1		0.6

Credit loss related to customer bankruptcy (included in SG&A) (3)		0.1		10.7
Cybersecurity incident expenses (4)		—		5.1
Adjusted EBITDA		$	195.6	$	174.5

Table of Contents

Three months ended
(dollars in millions) March 31, 2018 April 1, 2017
Net income $ 29.4
$ 26.0
Income tax expense 11.7
12.5
Net interest and other expenses 77.2
55.9
Amortization 32.9
32.9
Depreciation 22.1
19.5
EBITDA 173.3

146.8
Share-based compensation 1.6
0.8
Transaction-related costs 4.7
2.0
Impairment of intangibles and other assets 0.3
—
Restructuring (benefits) expenses (0.3 ) 1.8
Other operating expenses 2.4
0.1
Sponsor fees 1.9
1.5
Adjusted EBITDA $ 183.9

$ 153.0
(1) Transaction-related expenses relate primarily to advisory fees and other costs recognized in respect of major corporate transactions, including the acquisition of businesses, and equity and debt transactions.

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

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
(dollars in millions) March 31, 2018 April 1, 2017
Net sales $ 852.0
$ 730.2
Adjusted EBITDA $ 183.9
$ 153.0
Adjusted EBITDA margin (%) 21.6 % 21.0 %


	Three months ended
(dollars in millions)		March 30, 2024			April 1, 2023
Net sales		$	862.6		$	897.7
Adjusted EBITDA		$	195.6		$	174.5
Adjusted EBITDA margin		22.7		%	19.4		%

Core growth reconciliations

Core sales growth is a non-GAAP measure that represents net sales for the period excluding the impacts of movements in ~~foreign~~average currency exchange rates and the first-year impacts of acquisitions and ~~disposals.~~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 ~~the impact~~impacts of ~~an acquisition~~acquisitions or ~~disposal.~~disposals. Management believes that this measure is therefore useful for securities analysts, investors and other interested parties to assist in their assessment of the ~~trading~~operating performance of our businesses. The closest GAAP measure is net sales.

(dollars in millions) Power Transmission Fluid Power Total
Net sales for the three months ended March 31, 2018 $ 546.0
$ 306.0
$ 852.0
Impact on net sales of movements in currency rates 32.4
9.8
42.2
Impact on net sales of acquisitions —
34.1
34.1
Core sales for the three months ended March 31, 2018 $ 513.6

$ 262.1

$ 775.7

Net sales for the three months ended April 1, 2017 485.6
244.6
730.2
Increase in net sales on a core basis (core sales) $ 28.0

$ 17.5

$ 45.5

Core sales growth (%) 5.8 % 7.2 % 6.2 %


	Three months ended March 30, 2024
(dollars in millions)	Power Transmission			Fluid Power			Total
Net sales for the three months ended March 30, 2024	$	532.8		$	329.8		$	862.6
Impact on net sales of movements in currency rates	5.9			(3.1)			2.8

Core sales for the three months ended March 30, 2024	$	538.7		$	326.7		$	865.4

Net sales for the three months ended April 1, 2023	548.1			349.6			897.7
Decrease in net sales on a core basis (core sales)	$	(9.4)		$	(22.9)		$	(32.3)

Core sales decline	(1.7		%)	(6.6		%)	(3.6		%)

Net Debt

Management uses ~~net debt,~~Net Debt, rather than the narrower measure of ~~net~~ cash and cash equivalents and restricted cash which forms the basis for the condensed consolidated statement of cash ~~flow statement,~~flows, as a measure of our liquidity and in assessing the strength of our balance sheet.

Management analyzes the key cash flow items driving the movement in net debt to better understand and assess Gates’ cash performance and utilization in order to maximize the efficiency with which resources are allocated. The analysis of cash movements in ~~net debt~~Net Debt also allows management to more clearly identify the level of cash generated from operations that remains available for distribution after servicing our debt and post-employment benefit obligations and after the cash impacts of acquisitions and disposals.

Table of Contents

Net ~~debt~~Debt represents the net total of:

• the ~~carrying~~principal amount of our ~~debt (bank overdrafts and bank and other loans);~~debt; and

• the carrying amount of cash and cash equivalents.

Net ~~debt may be analyzed~~Debt was as follows:


(dollars in millions)	As of March 30, 2024		As of December 30, 2023
Principal amount of debt	$	2,367.0	$	2,471.9
Less: Cash and cash equivalents	(522.2)		(720.6)
Net Debt	$	1,844.8	$	1,751.3

(dollars in millions) As of March 31, 2018 As of December 30, 2017
Long-term debt:
—Bank and other loans $ 3,047.3
$ 3,955.7
Cash and cash equivalents 328.5
564.4
Net debt $ 2,718.8
$ 3,391.3
The principal amount of debt is reconciled to the carrying amount of debt as follows:


(dollars in millions)	As of March 30, 2024		As of December 30, 2023
Principal amount of debt	$	2,367.0	$	2,471.9
Accrued interest	8.4		17.0
Deferred issuance costs	(34.4)		(37.4)
Carrying amount of debt	$	2,341.0	$	2,451.5

Adjusted EBITDA adjustments for ratio calculation purposes

~~Our~~The financial maintenance ratio in our ~~revolving~~ 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 ~~quarterly~~ report, which financial measures are determined at the Gates Global LLC 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, ~~result~~resulted in a net benefit to Adjusted EBITDA for ratio calculation purposes o~~f $12.8~~of $4.2 million. Pursuant to the terms of the credit agreement governing our revolving credit facility and term loans, the Company may not, subject to certain exceptions, permit its Consolidated First Lien Net Leverage Ratio (as defined in the credit agreement) to exceed 5.75 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 Global LLC, an indirect subsidiary of Gates Industrial Corporation plc, is the borrower under our revolving credit facility and our term loan facility and the issuer of 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 Global LLC and those for the Company that are included elsewhere in this ~~quarterly~~ report is a payable of $382.3 million due to Gates Global LLC and its subsidiaries from indirect parent entities of Gates Global LLC as of March 30, 2024 (compared to a payable of $333.6 million due to Gates Global LLC and its subsidiaries as of December 30, 2023) and additional cash and cash equivalents held by the Company and other indirect parent entities of ~~$1.5~~Gates Global LLC of $15.7 million and ~~$8.3~~$3.5 million as of March ~~31, 2018~~30, 2024 and December 30, ~~2017,~~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

Table of Contents

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.~~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, ~~and~~ 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.

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 March ~~31, 2018,~~30, 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.

Table of Contents

PART II — OTHER INFORMATION

Item 1: Legal Proceedings

Information regarding legal proceedings is incorporated into this Part II, Item 1 from ~~note~~Note 18 of the notes to the condensed consolidated financial statements in Part 1,I, Item 1 of this Quarterly Report on ~~From~~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 ~~the section entitled~~Item 1A. “Risk Factors” in ~~Gates’~~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 2:2. Unregistered Sales of Equity Securities and Use of Proceeds

~~Recent Sales~~The following table sets forth information regarding our purchases of ~~Unregistered Securities~~our ordinary shares during the three months ended March 30, 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)
1/31/2024 - 1/27/2024	—	$	—	—	$	100.0
1/28/2024 -2/24/2024	4,151,100	$	12.0450	4,151,100	$	50.0
2/25/2024 - 3/30/2024	—	$	—	—	$	50.0
Total	4,151,100	$	12.0450	4,151,100	$	50.0

~~In connection~~(1) Does not include commissions or other costs paid to repurchase shares. All shares repurchased were cancelled by the end of the quarter ended March 30, 2024.

(2) The share repurchase program was established in February 2024, allowing for up to $100 million in authorized share repurchases of our ordinary shares, exclusive of commissions, through October 2024. Under this publicly announced program, we were 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 ~~closing~~rules and regulations of the SEC and other applicable legal requirements. In February 2024, we repurchased approximately $50 million of our ~~initial public offering on January 29, 2018, we issued 245,474,605~~ ordinary shares under the share repurchase program pursuant to a share repurchase contract with Citigroup Global Markets Inc. and no additional shares are authorized for repurchase under the program.

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 March 30, 2024, no director or officer (as defined in ~~consideration for~~Rule 16a-1(f) of the ~~ordinary shares and certain indebtedness~~Exchange Act) of the Company informed us of the adoption or termination of a ~~newly formed subsidiary~~“Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of ~~Omaha Topco, and our Sponsor, together with the other owners~~Regulation S-K.

Table of Omaha Topco prior to the initial public offering, received depositary receipts representing such ordinary shares. Such securities were issued in reliance on the exemption contained in Section 4(a)(2) of the Securities Act, as transactions by issuers not involving a public offering. No general solicitation or underwriters were involved in such issuances.Contents

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 ~~3.1~~3.2 to the registrant’s ~~Current~~Quarterly Report on Form ~~8-K,~~10-Q, filed on ~~January 29, 2018 (File No. 001-38366)).~~November 6, 2019)
10.1		~~Gates Corporation Supplemental Retirement Plan, amended and restated effective March 8, 2018*†~~
~~10.2~~	~~Form of Option Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan*†~~
~~10.3~~	~~Form of Time-Based Restricted Stock Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan*†~~
~~10.4~~	Form of Time-Based Restricted Stock Unit Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan ~~(Non-Employee Director)~~(U.S. Employee), effective January 1, 202 4 *†
~~31.1~~10.2		Form of Global Time-Based Restricted Stock Unit Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (Non-U.S. Employee), effective January 1, 2024*
10.3		Form of Time-Based Restricted Stock Unit Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (Executive Officer), effective January 1, 2024*
10.4		Form of Performance-Based Restricted Stock Unit Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (U.S. Employee), effective January 1, 2024*
10.5		Form of Global Performance-Based Restricted Stock Unit Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan (Non-U.S. Employee), effective January 1, 2024*
10.6		Form of Global Stock Appreciation Right Agreement under the Gates Industrial Corporation plc 2018 Omnibus Incentive Plan, effective January 1, 2024*
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 months ended March 30, 2024, formatted in inline Extensible Business Reporting Language (iXBRL): (i) Condensed Consolidated Statements of Operations for the three months ended March 30, 2024 and April 1, 2023, (ii) Condensed Consolidated Statements of Comprehensive Income for the three months ended March 30, 2024 and April 1, 2023, (iii) Condensed Consolidated Balance Sheets as of March 30, 2024 and December 30, 2023, (iv) Condensed Consolidated Statements of Cash Flows for the three months ended March 30, 2024 and April 1, 2023, (v) Condensed Consolidated Statements of Shareholders’ Equity for the three months ended March 30, 2024 and April 1, 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.

~~† Management contract~~The agreements and other documents filed as exhibits to this report are not intended to provide factual information or ~~compensatory plan~~other disclosure other than with respect to the terms of the agreements or ~~arrangement.~~

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.

Table of Contents

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:

~~(Registrant)~~/s/ L. Brooks Mallard

Name:

~~By:~~

L. Brooks Mallard

Title:

~~Name: David H. Naemura~~

~~Title:~~ Chief Financial Officer

(On behalf of the Registrant and as Principal Financial Officer)

Date: May ~~3, 2018~~

1, 2024



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



~~1551 Wewatta Street, Denver, Colorado~~				~~80202~~
(Address of principal executive offices)				(Zip Code)



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



Large accelerated filer	☐☒		Accelerated filer		☐
Non-accelerated filer		~~☒ (Do not check if a smaller reporting company)~~☐		Smaller reporting company		☐
				Emerging growth company		☐



Part I – Financial Information

Item 1.	~~Unaudited Condensed Consolidated~~ Financial Statements (unaudited)	41
Item 2.	~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations	3026
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	4137
Item 4.	Controls and Procedures	4237

Part II – Other Information

Item 1.	Legal Proceedings	4338
Item 1A.	Risk Factors	4338
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4338
Item 6.5.	~~Exhibits~~Other Information	4338
Item 6.	Exhibits	39
Signatures		4440



	Three months ended
(dollars in millions, except per share amounts)	March 31, 2018			April 1, 2017
Net sales	$	852.0		$	730.2
Cost of sales	516.1			443.4
Gross profit	335.9			286.8
Selling, general and administrative expenses	208.6			188.5
Transaction-related costs	4.7			2.0
Impairment of intangibles and other assets	0.3			—
Restructuring (benefits) expenses	(0.3		)	1.8
Other operating expenses	4.3			0.1
Operating income from continuing operations	118.3			94.4
Interest expense	59.8			55.2
Other expenses	17.4			0.7
Income from continuing operations before taxes	41.1			38.5
Income tax expense	11.7			12.5
Net income from continuing operations	29.4			26.0
Loss (gain) on disposal of discontinued operations, net of tax, respectively, of $0 and $0	0.1			(0.3		)
Net income	29.3			26.3
Non-controlling interests	(5.1		)	(7.5		)
Net income attributable to shareholders	$	24.2		$	18.8

Earnings per share
Basic
Earnings per share from continuing operations	$	0.09		$	0.08
Earnings per share from discontinued operations	—			—
Net income per share	$	0.09		$	0.08

Diluted
Earnings per share from continuing operations	$	0.09		$	0.07
Earnings per share from discontinued operations	—			0.01
Net income per share	$	0.09		$	0.08



(dollars in millions, except share numbers and per share amounts)	As of March 31, 2018			As of December 30, 2017
Assets
Current assets
Cash and cash equivalents	$	328.5		$	564.4
Trade accounts receivable, net	799.6			713.8
Inventories	492.0			457.1
Taxes receivable	7.0			14.1
Prepaid expenses and other assets	91.5			76.8
Total current assets	1,718.6			1,826.2
Non-current assets
Property, plant and equipment, net	738.9			686.2
Goodwill	2,131.3			2,085.5
Pension surplus	60.2			57.7
Intangible assets, net	2,123.3			2,126.8
Taxes receivable	33.1			32.7
Other non-current assets	34.7			38.6
Total assets	$	6,840.1		$	6,853.7
Liabilities and equity
Current liabilities
Debt, current portion	$	33.7		$	66.4
Trade accounts payable	423.2			392.0
Taxes payable	34.4			29.0
Accrued expenses and other current liabilities	190.2			210.4
Total current liabilities	681.5			697.8
Non-current liabilities
Debt, less current portion	3,013.6			3,889.3
Post-retirement benefit obligations	157.6			157.1
Taxes payable	87.7			100.6
Deferred income taxes	509.5			517.1
Other non-current liabilities	75.1			63.4
Total liabilities	4,525.0			5,425.3
Commitments and contingencies (Note 18)
Shareholders’ equity
—Shares, par value of $0.01 each - authorized shares: 3,000,000,000; outstanding shares: 289,756,379 (December 30, 2017: authorized shares: 3,000,000,000; outstanding shares: 245,474,605)	2.9			2.5
—Additional paid-in capital	2,412.1			1,622.6
—Accumulated other comprehensive loss	(696.6		)	(747.4		)
—Retained earnings	161.1			136.9
Total shareholders’ equity	1,879.5			1,014.6
Non-controlling interests	435.6			413.8
Total equity	2,315.1			1,428.4
Total liabilities and equity	$	6,840.1		$	6,853.7



(dollars in millions)	Techflow Flexibles		Atlas Hydraulics
Assets acquired
Accounts receivable	$	1.7	$	10.3
Inventories	4.2		21.2
Prepaid expenses and other receivables	1.7		0.5
Taxes receivable	—		2.7
Property, plant and equipment	13.0		24.5
Intangible assets	3.8		23.0
Total assets	24.4		82.2

Liabilities assumed
Accounts payable	2.6		5.5
Accrued expenses	4.8		2.4
Other current liabilities	0.3		10.5
Taxes payable	1.9		—
Deferred income taxes	0.6		11.6
Total liabilities	10.2		30.0
Net assets acquired	$	14.2	$	52.2


⁽¹⁾	Transaction-related costs relate primarily to advisory costs recognized in respect of our initial public offering, the acquisition of businesses and costs related to other corporate transactions such as debt refinancings.



(dollars in millions)	As of March 31, 2018			As of April 1, 2017
Balance as of the beginning of the period	$	8.6		$	5.0
Net (benefit) charge for the period	(1.0		)	0.3
Utilized during the period	(3.1		)	(2.0		)
Foreign currency translation	0.1			—
Balance as of the end of the period	$	4.6		$	3.3


(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	(23.9)		(2.3)		(26.2)
As of March 30, 2024	$	1,314.6	$	697.9	$	2,012.5


(dollars in millions)	Quoted prices in active markets (Level 1)		Significant observable inputs (Level 2)		Total
As of March 30, 2024

Derivative assets	$	—	$	53.6	$	53.6
Derivative liabilities	$	—	$	(76.5)	$	(76.5)
Cash equivalents	$	21.3	$	34.0	$	55.3

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



	~~Dollar Senior Note~~ ~~Redemption price~~
~~During the year commencing:~~
~~—July 15, 2018~~	~~101.500~~	%
~~—July 15, 2019 and thereafter~~	~~100.000~~	%



	Three months ended March 31, 2018									Three months ended April 1, 2017
(dollars in millions)	Pensions			Other post-retirement benefits			Total			Pensions			Other post-retirement benefits		Total
Reported in operating income:
—Employer service cost	$	1.4		$	—		$	1.4		$	1.3		$	—	$	1.3
Reported outside of operating income:
—Interest cost	6.0			0.6			6.6			7.8			0.7		8.5
—Expected return on plan assets	(5.8		)	—			(5.8		)	(7.0		)	—		(7.0		)
—Amortization of net actuarial (gain) loss	—			(0.2		)	(0.2		)	0.1			—		0.1
—Settlements	0.4			—			0.4			—			—		—
Net periodic benefit cost	$	2.0		$	0.4		$	2.4		$	2.2		$	0.7	$	2.9


		Three Months Ended March 30, 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	(3,001)	$	13.40


		(3,001)	$	13.40
Expired during the period:





—Share options	2018 Plan	(15,000)	$	14.99

		(15,000)	$	14.99
Exercised during the period:
—Tier I	2014 Plan	(95,237)	$	6.80
—Tier II	2014 Plan	(84,642)	$	6.88

—Tier IV	2014 Plan	(71,783)	$	10.32
—SARs	Both Plans	(134,766)	$	9.23
—Share options	2018 Plan	(37,081)	$	14.05

		(423,509)	$	8.82
Outstanding at the end of the period:
—Tier I	2014 Plan	1,733,090	$	6.99
—Tier II	2014 Plan	1,911,375	$	7.02

—Tier IV	2014 Plan	1,914,633	$	10.53
—SARs	Both plans	619,554	$	10.88
—Share options	2018 Plan	2,293,439	$	14.91
—Premium-priced options	2018 Plan	835,469	$	18.88
		9,307,560	$	11.00

Exercisable at the end of the period		9,215,590	$	10.96
Vested and expected to vest at the end of the period		9,295,189	$	10.99


	Three Months Ended March 30, 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	1,151,752	$	14.87
—PRSUs	426,607	$	16.37
	1,578,359	$	15.27
Forfeited during the period:
—RSUs	(15,201)	$	14.63
—PRSUs	(86,680)	$	15.26
	(101,881)	$	15.16




Vested during the period:
—RSUs	(862,708)	$	14.84
—PRSUs	(154,274)	15.00
	(1,016,982)	$	14.86
Outstanding at the end of the period:
—RSUs	3,306,073	$	13.88
—PRSUs	1,103,314	$	16.98
	4,409,387	$	14.66



(number of shares)	As of March 31, 2018	As of April 1, 2017
Balance as of the beginning of the period	245,474,605	245,627,952
Issuance of shares	44,275,000	80,107
Exercise of share options	6,774	—
Buy back of shares	—	(187,680	)
Balance as of the end of the period	289,756,379	245,520,379


(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	0.1		(40.5)		—		(40.4)		(13.0)		(53.4)
Cash flow hedges movements	—		—		3.4		3.4		—		3.4
Post-retirement benefit movements	(0.4)		—		—		(0.4)		—		(0.4)
Other comprehensive (loss) income	(0.3)		(40.5)		3.4		(37.4)		(13.0)		(50.4)
As of March 30, 2024	$	(15.6)	$	(872.8)	$	22.5	$	(865.9)	$	(91.4)	$	(957.3)


(dollars in millions)	Available-for- sale investments			Post- retirement benefit			Cumulative translation adjustment			Cash flow hedges			Accumulated OCI attributable to shareholders			Non- controlling interests			Accumulated OCI
As of December 31, 2016	$	(0.2	)	$	(6.5	)	$	(884.1	)	$	(25.1	)	$	(915.9	)	$	(55.4	)	$	(971.3	)
(dollars in millions)
(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
Foreign currency translation	—			—			90.8			—			90.8			10.9			101.7
Cash flow hedges movements	—			—			—			1.2			1.2			—			1.2
Available-for-sale investment movements	(0.1		)	—			—			—			(0.1		)	(0.1		)	(0.2		)
Post-retirement benefit movements	—			0.1			—			—			0.1			—			0.1
Other comprehensive (loss) income	(0.1		)	0.1			90.8			1.2			92.0			10.8			102.8
As of April 1, 2017	$	(0.3	)	$	(6.4	)	$	(793.3	)	$	(23.9	)	$	(823.9	)	$	(44.6	)	$	(868.5	)
As of April 1, 2023