DRIVEN BY POSSIBILITY NOVEMBER 2020

LEGAL DISCLAIMERS

2

FORWARD-LOOKING STATEMENTS

This presentation contains, and management may make on our call today, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "predicts," "intends," "trends" "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. These statements include, but are not limited to, statements related to expectations regarding the performance of the Company's business, financial results, liquidity and capital resources, productivity improvements, product initiatives, restructuring activities, and statements regarding the impact of and the recovery from the COVID-19 pandemic and our 2020 framework. Such forward-looking statements are subject to various risks and uncertainties, including, among others, the uncertainties relating to the impact of the COVID-19 pandemic and associated governmental measures on the company's business, operations, employees, financial condition and results of operations, risks inherent to the manufacturing industry, macroeconomic factors beyond the Company's control such as end-market recovery, continued operation of our manufacturing facilities, our ability to forecast and meet demand, market acceptance of new products, and the significant influence of the Company's majority shareholders, investment funds affiliated with The Blackstone Group Inc. Additional factors that could cause the Company's results to differ materially from those described in the forward-looking statements can be found under the section entitled "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended December 28, 2019, filed with the Securities and Exchange Commission ("SEC") as supplemented by the risks and uncertainties set forth in the Company's Quarterly Report on Form 10-Q for the quarter ended March 28, 2020, as such factors may be further updated from time to time in the Company's periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the Company's filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

NON-GAAP FINANCIAL INFORMATION

This presentation includes certain non-GAAP financial measures, which management believes are useful to investors. Non-GAAP financial measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP. Please refer to the Appendix of this presentation and our earnings release filed with the SEC and posted on our website at investors.gates.com for a reconciliation of historical non-GAAP financial measures to the most directly comparable financial measures prepared in accordance with GAAP.

Because GAAP financial measures on a forward-looking basis are not accessible, and reconciling information is not available without unreasonable effort, we have not provided reconciliations for forward-looking non- GAAP measures. For the same reasons, we are unable to address the probable significance of the unavailable information, which could be material to future results.

ROUNDING ADJUSTMENTS

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

©2020 Gates Corporation. All rights reserved.

GATES OVERVIEW

3

  • RESILIENT BUSINESS MODEL DRIVEN BY MISSION- CRITICAL, REPLACEMENT PRODUCTS
  • GLOBAL LEADER WITH SIGNIFICANT CORE MARKET OPPORTUNITY
  • REVITALIZATION OF BROAD PRODUCT PORTFOLIO WELL UNDERWAY
  • LARGE GROWTH INVESTMENT BEHIND US - NEW CAPACITY IN PLACE
  • ATTRACTIVE FINANCIAL PROFILE WITH SUBSTANTIAL FREE CASH FLOW GENERATION
  • WELL POSITIONED TO CAPITALIZE ON THE RECOVERY

THE CHARACTERISTICS OF OUR BUSINESS RESULT IN A COMPELLING FINANCIAL PROFILE

©2020 Gates Corporation. All rights reserved.

GATES VISION

4

ACHIEVE GLOBAL PRODUCT INNOVATION LEADERSHIP

AND EXPAND OUR PREMIER POSITION IN OUR CORE POWER

TRANSMISSION AND FLUID POWER MARKETS,

WHILE DELIVERING ABOVE-MARKET GROWTH,

SUPERIOR PROFITABILITY AND STRONG CASH FLOW GENERATION

TO PROVIDE SHAREHOLDERS WITH ATTRACTIVE RETURNS

©2020 Gates Corporation. All rights reserved.

GATES AT A GLANCE

5

COMPANY STATS

Founded

1911

Countries

30

Locations

120+

Employees

14,000+

2019 FINANCIAL STATS

2019 SEGMENT DATA

REVENUE

% REPL.

Revenue

$3.1B

Power Transmission

$2.0B

62%

Adjusted EBITDA1

$0.6B | 20% Margin

Fluid Power

$1.1B

63%

TWO SCALED, LEADING PRODUCT SEGMENTS WITH SIMILAR BUSINESS CHARACTERISTICS, CUSTOMERS AND END MARKETS

©2020 Gates Corporation. All rights reserved.

1 Reconciliations of non-GAAP measures used throughout this presentation can be found in the Appendix

POWER TRANSMISSION - SEGMENT OVERVIEW

6

2019 PT REVENUE: $1,946M

BY REGION

IND. FIRST-FIT

BY CHANNEL

EA&I 15%

NA

•

Gen. Industrial

13%

REPLACEMENT

•

HD Truck

•

Automotive

CHINA 15%

37%

•

Agriculture

•

General Industrial

•

Construction

24%

63%

•

HD Truck

AFF

•

Energy

EMEA

28%

SA

•

Agriculture

•

Construction

5%

PRODUCT PORTFOLIO

Micro-V

Timing

Engine Metal

Mechanical Water

Kits

Belts

Belts

Components

Pumps

Industrial

Industrial

Industrial

Industrial Metal

Synchronous Belts

Asynchronous Belts

TPU Belts

Components

SUMMARY

  • Leading global belt provider
  • Broadest catalog of mission-critical components

Replacement market focus

IR

  • Diverse customers, applications and end markets
  • Global footprint and channel coverage

IFF

Unique belt drive system value propositions

MARKET OPPORTUNITY

  • One of few scaled players in a large, fragmented $36B addressable market1

Gates

$36B

Total Addressable Market

SIGNIFICANT GROWTH OPPORTUNITIES IN EXISTING MARKETS

©2020 Gates Corporation. All rights reserved.

1 Market sizes referred to throughout this presentation are based on management estimates

GROWTH OPPORTUNITIES - POWER TRANSMISSION

7

INDUSTRIAL

CHAIN-TO-BELT

Gates

Diversified end

markets &

applications

~$6B

Opportunity to

convert large installed base of drives powered by chain

  • Recent Win: Major US airport baggage conveying system / HVAC
  • Value Prop: Belts significantly reduced energy and maintenance costs

CHAIN-TO-BELT

PERSONAL

MOBILITY

Gates

Bicycles

Scooters

~$1B

Motorcycles

Market

experiencing

accelerated trend

of electrification

  • Recent Win: Commuter e-bikes at major European manufacturer
  • Value Prop: Belts offered longer life, no maintenance and quiet operation

PRECISION MOTION

CONTROL

Gates

Warehousing &

logistics

Robotics &

~$1B industrial automation

Food processing E-commerce

  • Recent Win: Material handling & logistics systems OE in Japan
  • Value Prop: TPU belts offered maintenance-free precision operation

BELT-TO-BELT

INDUSTRIAL

BELT-TO-BELT

Gates

New products

improve

competitive

~$2B

positioning

Conversion

opportunities

within large

installed base

  • Recent Win: Rice harvester application at major OE in China
  • Value Prop: Gates V-belts are critical to ensuring high-cost machine uptime

LINK TO LEARN MORE:UNCHAIN YOUR OPERATIONS

Confidential Information. Use and disclosure limited for Gates business purposes only. ©2020 Gates Inc. All rights reserved.

FLUID POWER - SEGMENT OVERVIEW

8

2019 FP REVENUE: $1,141M

SUMMARY

BY REGION

BY CHANNEL

CHINA

EA&I

NA

REPLACEMENT

5%

7%

EMEA

IND. FIRST-FIT

•

General Industrial

37%

•

Agriculture

18%

•

Construction

•

Construction

63%

66%

•

HD Truck

•

Energy

SA

•

Agriculture

•

Automotive

4%

•

General Industrial

•

HD Truck

PRODUCTS0%

  • Mission-criticalcomponents for hydraulic and fluid conveyance applications
  • Core market with several avenues for growthIR
  • Favorable replacement dynamics
  • Heritage of product innovation
  • Extending premium product line within existing applications

IFF

AR

MARKET OPPORTUNITY

  • One of few scaled players in a large, fragmented $29B addressable market

Gates

$29B

Hydraulic Hose

Hydraulic

Industrial Hose

Engine

Oil & Gas

and Couplings

Tubing

and Couplings

Hose / Electric

Drilling Hose

Water Pumps

Total Addressable Market

LEADER IN A HIGHLY FRAGMENTED MARKET WITH OPPORTUNITY TO GROW ACROSS PRODUCT LINES, REGIONS AND END MARKETS

©2020 Gates Corporation. All rights reserved.

GROWTH OPPORTUNITIES - FLUID POWER

9

GEOGRAPHIC

EXPANSION

Gates Accelerating penetration

in large international core

~$3B

markets

Fragmented emerging

markets provide

opportunity

  • Recent Win: Construction application at major OE in Europe
  • Value Prop: Gates MXT™ hydraulic hose durability and performance enabled new customer win

EXTEND PREMIUM

PERFORMANCE

Gates Innovative new products

driving differentiated

~$3B

competitive position

Serving diverse end

markets with premium

performance products

  • Recent Win: High-power wind turbine application at major OE in Europe
  • Value Prop: Gates Megasys with XtraTuff™ operates in extreme operating conditions where uptime is key

BROADEN APPLICATION

COVERAGE

Gates

Enhanced innovation

capabilities enabling

~$3B

broadened product

portfolio to increase

addressable market

Large opportunity in

stationary hydraulics

  • Recent Win: Injection molding OE application at major OE in India
  • Value Prop: Gates MXT™ and MXG™ hydraulic hoses are easier to route into tight spaces in machines - a common requirement on stationary applications

SIGNIFICANT RUNWAY TO EXPAND SHARE IN UNDERPENETRATED REGIONS AND

EXTEND PRODUCT PORTFOLIO TO COVER BROADER APPLICATION REQUIREMENTS

Confidential Information. Use and disclosure limited for Gates business purposes only. ©2020 Gates Inc. All rights reserved.

STRONG REPLACEMENT CHANNEL PRESENCE

10

PORTFOLIO UNITED BY COMMON BUSINESS MODEL

  • Mission-criticalproducts
    • Cost of Gates' products insignificant vs. cost of application downtime

Replacement-driven revenue stream

37% $3.1B

    • Normal wear and tear results in natural, often preventive, maintenance intervals
  • Difficult to replicate

FY2019

Revenue

63%

  • Broad product coverage across wide range of applications

• Extensive, longstanding global channel presence

Replacement

BENEFITS

First-Fit

  • Lower revenue volatility through the cycle
  • Well-positionedto offset inflation
  • Higher margins enable reinvestment

WE MANUFACTURE MISSION-CRITICAL, ENGINEERED WEAR PARTS WHOSE COST IS INSIGNIFICANT RELATIVE TO COST OF DOWNTIME

©2020 Gates Corporation. All rights reserved.

DIVERSIFIED END MARKETS

11

Largest

END MARKET EXPOSURE

Smallest

Industrial/mfg activity

Industrial End

Construction activity

Markets

35%

Commodities

REPLACEMENT

General Ind. / Mfg.

Construction

Agriculture

Oil & Gas

HD Truck

Mining

CHANNELS

Age of fleet (7-12 yrs)

Automotive

Miles driven

End Market

27%

Developed

Emerging

Equipment production

Commodities

Industrial End

Freight

Markets

23%

Construction

General Ind.

HD Truck

Agriculture

Industrial activity

FIRST-FIT

China

US

Production

Automotive

~4%

~1%

End Market

Selective participation

15%

Total Sales

Total Sales

FY2019 Revenue

Emerging

Developed

WELL-BALANCED, DIVERSIFIED BUSINESS ACROSS CHANNELS, END MARKETS AND APPLICATIONS

©2020 Gates Corporation. All rights reserved.

DIVERSIFIED GEOGRAPHIES

12

GEOGRAPHIC DIVERSITY

4%48%

11% $3.1B

FY2019

12% Revenue

25%

North America

Europe, Middle East & Africa

East Asia & India

Greater China

South America

GLOBAL PRESENCE

Administrative

Manufacturing

Sales

Major R&D Centers

Warehouse

Regional Headquarters

  • Over 120 locations globally
  • Strong regional teams in place
  • In-region,for-region operating strategy

HIGHLY DIVERSIFIED BUSINESS ACROSS GEOGRAPHIES WITH WELL-ESTABLISHED LOCAL FOOTPRINT AND CHANNEL PRESENCE

©2020 Gates Corporation. All rights reserved.

WINNING THROUGH INNOVATION

13

PRODUCT

DESIGN

MATERIALS

SCIENCE

PROCESS

ENGINEERING

  • Deep understanding of customer applications
  • Revitalized innovation and R&D capabilities
  • Product roadmaps in place to refresh entire portfolio
  • Targeting 25%+ new product vitality1

SHARE GAINS IN EXISTING MARKETS

Commercial Excellence │ Geographic Expansion

TECHNOLOGICAL DISRUPTION

Chain-to-Belt │ Hydraulics Innovations │ Belt-to-Belt

INCREASE OPERATIONAL EFFICIENCY

Process Innovation │ Gates Operating System │ Digital Front End

NEW PRODUCT INNOVATION FOCUSED ON BRINGING DISRUPTIVE TECHNOLOGIES TO MARKET

©2020 Gates Corporation. All rights reserved.

1 New Product Vitality = % of total revenues from products launched within the past 5 years

GATES VALUE CREATION PLAYBOOK

14

CORE

R&D,

GROWTH

SALES &

G&A

MKTG

ACCELERATE

REINVEST FOR

GROWTH

IMPROVE COST

GROWTH

STRUCTURE

EPS GROWTH

CASH GENERATION

COMPOUNDING

RETURNS

  • Principles of Gates Operating System are foundational across the organization
    • Efficiency improvements across functions
    • Gates Production System driving manufacturing productivity
  • Inorganic opportunities to accelerate growth

EXPANDING MARGINS TO REINVEST IN THE BUSINESS AND CREATE VALUE FOR SHAREHOLDERS

©2020 Gates Corporation. All rights reserved.

Q3 2020 YTD FINANCIAL PERFORMANCE

15

USD in millions

NET SALES

$2,361

$1,999

(13.6%)

Core

(1.8%)

FX

Q3 2019 YTD

Q3 2020 YTD

23% sequential improvement

in Q3

ADJUSTED EBITDA

ADJUSTED EPS(1)

$476

$0.76

$344

$0.50

20.2%

17.2%

Margin

Margin

Q3 2019 YTD

Q3 2020 YTD

Q3 2019 YTD

Q3 2020 TYD

Q3 margin expansion of 40 bps to

Adjusted EPS growth of 16% in Q3

19.7% compared to prior year

RESILIENT TOP-LINE PERFORMANCE IN Q3 - OPERATIONAL INITIATIVES DRIVING MARGIN IMPROVEMENT

©2020 Gates Corporation. All rights reserved.

(1)

Adjusted Net Income per diluted share

(2)

Decremental margin is calculated as the change in Adjusted EBITDA vs. the prior-year period divided by the change in revenue vs. the prior-year period

BALANCE SHEET AND CASH FLOW

16

USD in millions, except multiple data

TRADE WORKING CAPITAL

FREE CASH FLOW

ROIC

$913

$857

19.7%

14.2%

$230$261

28.9%31.5%

Q3 2019 LTM

Q3 2020 LTM

Q3 2019 LTM

Q3 2020 LTM

Q3 2019 LTM

Q3 2020 LTM

Reduced investment in

128% Free Cash Flow

Q2 '20 negatively impacting

receivables and inventory

Conversion

LTM operating income

SUBSTANTIAL FREE CASH FLOW GENERATION THROUGH PERIOD OF CHALLENGING MARKET CONDITIONS

Notes: Trade Working Capital: Trade Accounts Receivable plus Inventory minus Trade Accounts Payable; Trade Working Capital is also shown as % of LTM Revenues LTM Free Cash Flow: Net Cash Provided by Operations minus capital expenditures; Free Cash Flow Conversion shown as % of Adjusted Net Income

ROIC: Tax-effected LTM Adjusted EBIT divided by total assets minus cash, accounts payable, deferred tax assets, taxes receivable and intangibles related to 2014 acquisition of Gates

©2020 Gates Corporation. All rights reserved.

LIQUIDITY

17

USD in millions

Total

$1,105

RCF

$185

ABL$2471

Cash$672

Total Liquidity - 9/26/20

FINANCIAL COVENANTS

  • Revolving credit facility (RCF)
    • Undrawn - can be drawn up to 30% with no financial covenants
    • >30% draw requires senior secured net leverage <7.15x credit facility EBITDA (3.6x as of Q3 2020)
  • Asset-backedloan (ABL)
    • Undrawn - can be drawn up to 90% with no financial covenants
    • >90% draw requires fixed charge coverage >1.0x (2.2x as of Q3 2020)

MATURITY SCHEDULE2

$2,338

Term

Loans

$568

$31

$25

$25

$25

$0

Bonds

20203

2021

2022

2023

2024

2025

2026

STRONG FINANCIAL POSITION OF OVER $1.1 BILLION PROVIDES FLEXIBILITY

(1)

ABL net borrowing capacity as of 9/26/20

©2020 Gates Corporation. All rights reserved.

(2)

RCF and ABL mature in 2023, if drawn

(3)

Remaining portion of required 2020 principal payments is $13M

2020 FRAMEWORK

18

  • Q4 expected to reflect continued sequential improvement
    • Absent broad re-implementation of movement restrictions, change in Q4 core revenue anticipated to be in the range of (3%)-1% year- over-year
  • Improving profitability
    • Second-halfdecrementals expected to be 10% - 15%, compared to previous expectation of ~30%
  • Solid cash flow generation
    • Investing in working capital to support increased demand
    • Capex of ~$70M expected for the full year
    • Non-cashdeferred tax impact
    • Free Cash Flow Conversion expected to be > 80% of Adjusted Net Income

BUSINESS POSITIONED TO DRIVE IMPROVED PROFITABILITY, PARTICULARLY AS VOLUMES RECOVER

©2020 Gates Corporation. All rights reserved.

CORE GROWTH PERFORMANCE

19

TRACK RECORD

  • Solid performance through 2015-16 industrial downturn, with sales into replacement channels less impacted
  • Growth in 2017 and 2018 led by industrial end markets
  • 2019 impacted by trade uncertainty and resulting destocking

LONG-TERM PLAN TARGETS

  • Maintain >60% replacement channel mix
  • Continued growth in larger industrial end markets

KEY INITIATIVES

REVENUE

$3,348M

Chain-to-belt

•

$3,042M$3,087M

$2,745M $2,747M

CORE

(1.4)%

+2.5%

+9.0%

+5.9%

(5.7)%

GROWTH

2015A

2016A

2017A

2018A

2019A

Industrial chain-to-belt conversion

•

Focused TPU commercial execution

•

Personal mobility market penetration

Hydraulics expansion

Emerging markets

MAINTAIN SUSTAINABLE AND PROFITABLE LONG-TERM GROWTH PROFILE

©2020 Gates Corporation. All rights reserved.

INVESTING IN ORGANIC GROWTH WITH ATTRACTIVE RETURNS 20

TRACK RECORD

  • Maintenance capex historically ~1.5% of sales, growth capex ~1.5% of sales
  • Large investment in new capacity behind us - elevated capex in 2017 & 2018 reflects construction of new plants
  • Returns on invested capital typically > 20%

CAPEX5.5%

3.6%

3.0%

3.1%

0.8%

2.7%

2.5%

1.4%

1.0%

1.3%

1.0%

1.2%

1.7%

1.5%

1.5%

1.5%

1.5%

2015A

2016A

2017A

2018A

~1.5%

2019A

New Plant

Other Growth

Maintenance

LONG-TERM PLAN TARGETS

  • Prioritization of investment in largest end markets
  • ROIC > 20%

KEY INITIATIVES

  • Support rollout of new technologies
  • Upgrading manufacturing processes
  • Digital capabilities to support growth

ROIC1

30%

25.4%

25.2%

25.4%

25%

20.6%

19.2%

20%

15%

10%

5%

0%

2015A

2016A

2017A

2018A

2019A

REINVESTING IN DIVERSE SET OF INITIATIVES TO DRIVE ORGANIC GROWTH

©2020 Gates Corporation. All rights reserved.

1ROIC: Tax-effected Adjusted EBIT divided by total assets minus cash, accounts payable, deferred tax assets, taxes receivable and intangibles related to 2014 acquisition of Gates

HISTORY OF MARGIN EXPANSION

21

TRACK RECORD

  • Demonstrated ability to expand margins
  • 2018 negatively impacted by acquisitions, new plants coming online and costs associated with supply-constrained market
  • 2019 headwinds from destocking and lower volumes, as well as new plants

ADJUSTED EBITDA

$756M

$669M

$611M

$547M

$595M

22.6%

22.0%

19.8%

19.9%

21.7%

2015A

2016A

2017A

2018A

2019A

LONG-TERM PLAN TARGETS

  • 24%+ Adjusted EBITDA margin

KEY INITIATIVES

  • VA/VE initiatives to optimize performance and cost
  • New products with more efficient manufacturing processes
  • Pricing actions to offset inflation
  • Capitalize on operating leverage
  • Continued focus on manufacturing initiatives

DEMONSTRATED ABILITY TO EXPAND ADJUSTED EBITDA MARGIN

©2020 Gates Corporation. All rights reserved.

STRONG CASH GENERATION

22

TRACK RECORD

  • Significant Free Cash Flow generation
  • Demonstrated through periods of significant growth, as well as downturns

FREE CASH FLOW

FCF

Tax Refund

New Capacity Capex

$309M

$278M

167%

100%

$234M

$230M

$193M

112%

61%

> 80%

145%

$267M

CASH

$266M CONV

144%

$209M

$131M

95%

100%

35%

2015A

2016A

2017A

2018A

2019A

LONG-TERM PLAN TARGETS

  • 100% Free Cash Flow conversion
  • Consistent working capital improvement

KEY INITIATIVES

  • Operating efficiency to reduce working capital requirements
  • Tax efficiency

CHARACTERISTICS OF BUSINESS RESULT IN STRONG THROUGH-THE-CYCLE CASH GENERATION

©2020 Gates Corporation. All rights reserved.

DISCIPLINED CAPITAL DEPLOYMENT

23

DELEVERAGING

Achieve net leverage of < 3.0x

Flexibility on continued debt pay down

ORGANIC GROWTH

Continue investing in capacity - capex returning to ~3% of sales

Prioritize capital projects with high return on invested capital

M&A

Utilize M&A to accelerate organic strategies

Focus on deals with high value creation

DIVIDENDS /

$

Near-term focus on deleveraging, organic growth and M&A

SHARE BUYBACK

Optionality increases once leverage falls < 3.0x

BALANCING DEBT REDUCTION WHILE INVESTING FOR GROWTH

©2020 Gates Corporation. All rights reserved.

GATES INVESTMENT HIGHLIGHTS

24

  • Replacement market focus with mission-critical products
  • Large, diverse end markets
  • Market leader with broad footprint, product portfolio and channel coverage
  • Disruptive innovation drives above-market growth
  • Refined commercial capabilities and focus
  • Continued opportunity for margin expansion
  • Attractive financial profile
  • Short-cyclebusiness that has historically rebounded quickly
  • Strong team in place with track record of execution

ORGANIC PORTFOLIO TRANSFORMATION IN LARGE, UNDERPENETRATED CORE MARKETS DRIVEN BY INNOVATION

©2020 Gates Corporation. All rights reserved.

APPENDIX

RECONCILIATIONS - ADJUSTED EBITDA AND ADJUSTED

26

EBITDA MARGIN

(USD in millions)

Q3 YTD 2020

Q3 YTD 2019

FY2019

FY2018

FY2017

FY2016

FY2015

Reconciliation to Adjusted EBITDA

Net Income from Continuing Operations

$

57.8

$

669.3

$

694.7

$

271.7

$

182.0

$

71.9

$

50.9

Adjusted for:

Income tax (benefit) expense

(31.5)

(497.8)

(495.9)

31.8

(72.5)

21.1

(9.2)

Net interest and other expenses

99.4

107.3

148.0

193.3

293.4

212.3

147.7

Depreciation and amortization

163.2

167.4

222.2

218.5

212.2

240.8

269.9

Transaction-related expenses

5.2

0.7

2.6

6.7

18.1

0.4

0.7

Asset impairments

5.1

0.7

0.7

0.6

2.8

3.2

51.1

Restructuring expenses

26.4

3.9

6.0

6.4

17.4

11.4

15.6

Share-based compensation expense

13.5

10.5

15.0

6.0

5.4

4.2

4.3

Sponsor fees (included in other operating expenses)

1.9

4.9

6.5

8.0

6.7

6.1

7.0

Inventory impairments and adjustments (included in cost of sales)

1.4

1.3

1.2

1.5

3.2

20.7

9.6

Duplicate expenses incurred on facility relocation

-

-

-

5.2

-

-

-

Severance expenses (included in cost of sales)

0.9

3.0

4.0

1.7

-

-

-

Other primarily severance-related expenses (included in SG&A)

3.8

3.0

3.4

4.4

-

-

-

Other adjustments

(3.1)

1.7

2.6

-

0.4

2.8

(0.4)

Adjusted EBITDA

$

344.0

$

475.9

$

611.0

$

755.8

$

669.1

$

594.9

$

547.2

Adjusted EBITDA margin

Net Sales

$

1,998.8

$

2,361.4

$

3,087.1

$

3,347.6

$

3,041.7

$

2,747.0

$

2,745.1

Adjusted EBITDA

$

344.0

$

475.9

$

611.0

$

755.8

$

669.1

$

594.9

$

547.2

Adjusted EBITDA margin

17.2%

20.2%

19.8%

22.6%

22.0%

21.7%

19.9%

©2020 Gates Corporation. All rights reserved.

RECONCILIATIONS - ADJUSTED NET INCOME

27

(USD in millions, except share numbers and per share amounts)

Q3 YTD 2020

Q3 YTD 2019

FY 2019

FY2018

FY2017

FY2016

FY2015

Reconciliation to Adjusted Net Income

Net Income Attributable to Shareholders

$

55.1

$

670.7

$

690.1

$

245.3

$

151.3

$

57.7

$

24.9

Adjusted for:

Loss (gain) on disposal of discontinued operations

0.3

0.6

0.6

0.6

(0.7)

(12.4)

-

Amortization of intangible assets arising from the 2014 acquisition of Gates

87.6

88.8

118.2

120.3

124.2

141.9

158.5

Transaction-related expenses

5.2

0.7

2.6

6.7

18.1

0.4

0.7

Asset impairments

5.1

0.7

0.7

0.6

2.8

3.2

51.1

Restructuring expenses

26.4

3.9

6.0

6.4

17.4

11.4

15.6

Share-based compensation expense

13.5

10.5

15.0

6.0

5.4

4.2

4.3

Sponsor fees (included in other operating expenses)

1.9

4.9

6.5

8.0

6.7

6.1

7.0

Inventory impairments and adjustments (included in cost of sales)

1.4

1.3

1.2

1.5

3.2

20.7

9.6

Adjustments relating to post-retirement benefits

(2.6)

(2.6)

(3.2)

3.1

2.5

6.4

4.8

Premium on redemption of long-term debt

-

-

-

27.0

-

-

-

Financing-related FX (gains) losses

(4.0)

(1.0)

(0.8)

(8.8)

61.2

(7.6)

(62.8)

One-time deferred tax benefit from U.S. tax reform

-

-

-

-

(118.2)

-

-

One-time net tax expense (benefit)

-

(513.0)

(513.0)

-

-

-

-

One-timenon-controlling interest adjustment

-

(15.0)

(15.0)

-

-

-

-

Other adjustments (1)

(14.2)

1.4

1.6

0.8

(10.5)

(8.1)

(10.9)

Estimated tax effect of the above adjustments

(28.9)

(29.1)

(31.2)

(38.3)

(53.9)

(38.9)

(70.0)

Adjusted Net Income

$

146.8

$

222.8

$

279.3

$

379.2

$

209.5

$

185.0

$

132.8

Diluted weighted average number of shares outstanding

291,883,435

291,666,931

291,627,461

291,698,273

250,490,828

248,360,187

247,674,034

Adjusted Net Income per diluted share

$

0.50

$

0.76

$

0.96

$

1.30

$

0.84

$

0.74

$

0.54

©2020 Gates Corporation. All rights reserved.

(1) During the nine months ended September 26, 2020, other adjustments included $15.8 million in relation to the non-controlling interest share of the adjustments above, primarily restructuring

expenses incurred in relation to the closure of our manufacturing facility in Korea.

RECONCILIATIONS - FREE CASH FLOW AND FREE CASH

28

FLOW CONVERSION

(USD in millions)

LTM Q3 2020

LTM Q3 2019

FY2019

FY2018

FY2017

FY2016

FY2015

Reconciliation of Free Cash Flow

Net Cash Provided by Operations

$

331.2

$

316.4

$

348.9

$

313.5

$

319.9

$

376.7

$

278.6

Capital Expenditures (1)

$

(70.2)

$

(86.3)

(83.1)

(182.7)

(111.1)

(68.1)

(85.8)

Free Cash Flow

$

261.0

$

230.1

$

265.8

$

130.8

$

208.8

$

308.6

$

192.8

Adjusted Net Income

$

203.3

$

327.7

$

279.3

$

379.2

$

209.5

$

185.0

$

132.8

Free Cash Flow Conversion

128.4%

70.2%

95.2%

34.5%

99.7%

166.8%

145.2%

©2020 Gates Corporation. All rights reserved. (1) Capital expenditures represent purchases of property, plant and equipment and purchases of intangible assets.

RECONCILIATIONS - RETURN ON INVESTED CAPITAL (ROIC)

29

(USD in millions)

Q3 2020

Q3 2020

FY 2019

FY 2018

FY 2017

FY 2016

FY 2015

Return On Invested Capital (ROIC)

LTM Adjusted EBITDA

$

479.1

$

661.7

$

611.0

$

755.8

$

669.1

$

594.9

$

547.2

LTM Total depreciation and amortization

(218.0)

(222.6)

(222.2)

(218.5)

(212.2)

(240.8)

(269.9)

LTM Amortization of intangible assets arising from the 2014 acquisition of Gates

117.0

118.3

118.2

120.3

124.2

141.9

158.5

LTM Adjusted EBIT

378.1

557.4

507.0

657.6

581.1

496.0

435.8

Notional tax at 25%

(94.5)

(139.3)

(126.8)

(164.4)

(145.3)

(124.0)

(109.0)

LTM Tax-effected Adjusted EBIT

$

283.6

$

418.1

$

380.2

$

493.2

$

435.8

$

372.0

$

326.8

Total Assets

$

7,335.7

$

7,285.9

$

7,411.3

$

6,722.6

$

6,853.7

$

6,383.3

$

6,565.6

Adjusted for:

Cash

(672.3)

(456.1)

(635.3)

(423.4)

(564.4)

(527.2)

(340.2)

Taxes receivable

(53.9)

(59.0)

(45.1)

(35.1)

(46.8)

(41.0)

(44.1)

Deferred tax assets

(620.4)

(552.6)

(587.1)

(5.1)

(5.8)

(2.4)

(3.1)

Accounts payable

(339.4)

(328.5)

(374.7)

(424.0)

(392.0)

(313.1)

(274.0)

Intangibles arising from the acquisition of Gates

(3,652.8)

(3,768.7)

(3,788.8)

(3,890.4)

(4,114.5)

(4,034.2)

(4,318.0)

Invested Capital

$

1,996.9

$

2,121.0

$

1,980.3

$

1,944.6

$

1,730.2

$

1,465.4

$

1,586.2

Return On Invested Capital

14.2%

19.7%

19.2%

25.4%

25.2%

25.4%

20.6%

©2020 Gates Corporation. All rights reserved.

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Gates Corporation plc published this content on 13 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 November 2020 09:58:01 UTC