Gates Industrial (GTES) Morgan Stanley‘s 12th Annual Laguna Conference summary

Business and market trends

• Industrial OEM and off-highway markets remain soft, with no near-term improvement expected in 2025.

• Automotive OEM is a small segment and has also softened, but automotive replacement remains strong.

• Industrial replacement and automotive replacement channels are performing as anticipated, with continued strength in automotive replacement.

• North America and EMEA are experiencing softness, while China and developing economies show growth potential in replacement markets.

• Data centers and Chain-to-Belt initiatives are identified as new growth vectors.

Growth drivers and strategic initiatives

• Mobility business expected to return to growth in 2025 due to improved channel inventory and program wins.

• Chain-to-Belt initiative targets market share gains by converting chain drives to belt drives in both replacement and OEM channels.

• Data center applications leverage existing technology, such as electronic water pumps and specialized hoses, to address liquid cooling needs.

• Expansion in automotive replacement markets in China, India, and other developing economies is a key focus.

• Organic growth pillars include mobility, Chain-to-Belt, and data center solutions.

Product and technology differentiation

• Chain-to-Belt offers customers quieter, cleaner, and more energy-efficient solutions, with strong payback in targeted verticals.

• Data center solutions include metal-free and halogen-free hoses, efficient electronic water pumps, and integrated packages for fluid conveyance and cooling.

• Material science capabilities enable smaller, more efficient water pumps, providing a competitive edge.

• Ability to offer a complete package (hoses, pumps, couplings) is a differentiator in the data center market.