Michael Halloran here, Industrial Analyst with Baird. We're pleased to welcome the Gates team with us today. Ivo Jurek, CEO, is on stage. He's gonna give some prepared remarks. Rich Kwas is buried in the audience. Decides he didn't wanna be on stage with us. So he's gonna give some quick prepared remarks, go through kind of the overview on Gates, and then we're gonna do a Q&A. Any questions you have, let me know. Raise your hand, I'll make sure you get called on. If you feel more comfortable, fire me an email to the room ID, room email address, and I'll make sure we get your questions involved that way. So with that, Ivo, thanks for coming. The floor is yours. Thank you. Good, good morning, I think still, yes? Still, yep. I'll keep it pretty cool and chill here for a few, just a few slides. As Mike said, I'm Ivo Jurek, Chief Executive Officer of Gates Corporation. I'm very excited to be here with you today and share a few more outlines about Gates and some of the opportunities that are available to us to drive what we believe is a significant shareholder value over the next couple of years. So with that, let me just really quickly remind everybody about the legal things here, and that some of the remarks include forward-looking statements within the meaning of the Private Securities Litigation Reform Act, that are covered by the Safe Harbor disclaimers. So with that, let me, let me move to, to slide 3, that provides a very brief overview of our company. We are a well-diversified, $3.6 billion company with strong profit margins and attractive free cash flow generation and characteristics. Our business is supported by approximately 15,000 associates and over 750 engineers, who are the foundation of our innovation efforts. We believe we have the broadest distribution footprint globally in our product categories, with over 100,000 ship-to locations globally. About half of our revenues come from North America, and we serve a very diversified mix of end markets. Almost two-thirds of our revenues, for our business come through replacement channels, with the balance going through the OEMs. A very nice mix that provides resiliency through the cycle. Moving now to slide 4 of the presentation, an overview of our product line segments. Our Power Transmission business is the company's heritage, and we are a clear global leader in our core market. We engineer and manufacture belts and related components that power drives in demanding applications across a very broad range of end markets. And importantly, they do wear out and need a replacement at very regular intervals. Our Fluid Power business, where we are one of the top three premier global players, supplying hydraulics and fluid conveyance products across a very wide range of applications and also end markets. Similar to Power Transmission, these products are highly engineered, but also operate in harsh applications and also need to be replaced quite regularly. On the next slide, we illustrate our capital allocation strategy. Over the last three years, we have steadily improved our balance sheet position while investing in our business and returning capital to shareholders. As you can see here, our net leverage ratio has declined to 2.6x, more than two turns decline since the mid-2020s. In addition, we have deployed almost $450 million to share repurchases over that period of time. We expect to finish 2023 with net leverage ratio at 2.5x, a reduction of 0.3 turns versus 2022, and that includes a $250 million share repurchase completed earlier this year. We intend to remain very balanced with our capital allocation over the midterm. So before we go to Q&A, slide 6, our key strategic priorities. We are highly focused on driving productivity across our supply chain and operations. Our utilization of 80/20 is helping to reduce our business complexity and yielding operational and financial benefits. We are making investments in growth, such as personal mobility and industrial chain development, and allocating resources to product innovation and product improvements. And finally, as alluded to earlier, we are improving the capital structure of the enterprise, which we believe will increase strategic optionality and enhance shareholder value long term. So with that, it's a very exciting time at Gates Corporation. We have very experienced, committed teams globally, executing on the significant opportunities we have, and I truly believe the best days are ahead of us. With that, I'll turn it over to Mike. Thanks, Ivo. Again, if you have any questions, raise your hand or send it to the session four email address. Maybe we'll just start higher level here and apologize for the scraggly throat. It is better, though, than Friday. It's better. Maybe talk about differentiation from a product standpoint, right? One thing we get a lot of is, you see the products and I don't know if people understand the material science that goes into it and the R&D efforts that go into it. So maybe some high-level thoughts on that piece. Look, innovation and R&D investments are key differentiating factor into what we do. We operate, our products fit in very harsh and hazardous, very durable type environments, and our customers rely on the quality and reliability of the products that we manufacture. We are, in Power Transmission, the undisputed global market share leader and technical leader in these products. And in Fluid Power, we are top three manufacturer globally in these applications that require high premium type construction of materials. So we believe that innovation and R&D spend are critical in staying in the right position where we rightfully belong. What I would also like to indicate is that, you know, over the last five years, we have made substantial investment in innovation. Mm-hmm. When, Blackstone, our sponsor, purchased the company, the company had a very low level of new product vitality. The vitality was very low, single digits. We are presently approaching a 20% target of NPI vitality, with Fluid Power products already being at or above that level of vitality, and the Power Transmission getting, and accelerating its product vitality being at kind of the low teens presently. So while we still have a little bit of work to do on Power Transmission side, we're making tremendous progress in being able to drive innovation in what traditionally has been, you know, very conservative type end markets, and that brings benefits, substantially for the enterprise. So why don't we start high-level on the demand side, and then we'll dig a little bit into the two segments, go into some secular thought process on that. What are you seeing from a high-level demand picture as we sit here today, and any kind of thoughts there, and we'll dig off that? Yeah. Look, we you know we kind of pride ourselves on being very transparent as we report our results throughout the quarterly cadence, and, you know, we have been quite vocal about some of the choppiness that we have seen in industrial end markets, frankly, over the last four quarters. And, you know, perhaps it's maybe today more apparent that there may be a little more destocking type activities than people anticipated, we kind of felt that there was some level of uneven demand that was already occurring, basically kind of from Q4 of last year. And it was showing itself up in Europe one quarter in maybe North America, in another quarter, and then in China in second half of 2023. So, you know, our sense is that, you know, there's some uneven demand, but we have already seen deceleration in those end markets over the last 12 months. The automotive business, at a kind of a broad, broad level, is performing very, very well, both on the OEM side, which we have a reasonably small presence in. Only about 8% of our company's revenue is in the automotive OEM space, but that's performing quite well, about mid-single-digit growth in, in most recent quarter. And the automotive replacement market, which is by far more important to us, that represents about 25% of company's revenue, is performing as well as, or slightly better than the auto OEM end market. So kind of almost tale of two stories there. Automotive in a very healthy spot, and industrial, still a little bit choppy. Now, you mentioned the destocking headwind piece. Where do you think we are in the destocking piece for your channels, and when does that become at least a comparison-oriented tailwind? You know, I mean, demand still could be going down, but when does that comp at least become more positive for you? Yeah. So from my vantage point, you know, it's really very tough to predict when destocking is going to end, because it's also partially sentiment driven. Yeah. Right? Where people, you know, people's sentiment get impacted and perhaps, you know, the logic doesn't necessarily dictate that you already are starting to see maybe greater stability in the markets than what the external environment is telling you. So my sense is that from a comparative perspective, it should become a tailwind in the second half of 2024. But as I said, you know, I'm a little bit of a contrarian. While I'm not prepared to talk about 2024, my sense is that 2024 could be potentially a little bit better than maybe most people feel. All of the end units that you take a look at, whether or not it's, you know, the heavy-duty construction machinery end units, ag units, we're not really coming from a peak-ish volume growth side. You know, the volumes have been, you know, kind of muted. There were lots of price- Good pricing, yeah. that was, you know, that was driving top-line growth and profitability enhancements. And so that's kind of a good news, I think, for companies like Gates, where, you know, if there's a dec ell, you should see much more muted deceleration rather than coming off a very sharp peak- Mm. - driven, volume peak-driven, expansion. You know, so if you think about ag, you're thinking about commercial construction, you're thinking about heavy-duty truck, you know, that's kind of, to me, what that represents, a more muted unit volume deceleration.... On the other side, you know, I believe it's-- that's gonna be quite all right. Autos, both, new builds are, coming from a reasonably low base, and the replacement side of the business that, that is important, again, to us, has some very strong market dynamics. I mean, the car fleets in the Western economies are aging very dramatically. They are the oldest in history, both in United States as well as in, in Western Europe, so that represents a great opportunity. If you think about China, China is the largest car park in the world, and it is very quickly approaching the age car fleet that is important for our company. The China car fleet is gonna be about 6 years of age next year, and the sweet spot for our products is 7-11. So, you know, we kind of wanna press a piece of some, you know, nice tailwind as well as we move forward. So we feel reasonably good about the auto business, moving into 2024. So let's dig into the two segments, and then we'll talk about the margin profile. The Power Transmission piece, maybe talk about the Chain- to-B elt initiative you have, traction, and what the customer response looks like. Yeah. You know, so, so Chain- to-B elt for Gates represent almost an unprecedented growth opportunity that we believe we will be executing on for the next 20-30 years. It's kind of a $7-$8 billion market opportunity, where we are competing against nontraditional competition, which is industrial chain. Well, why is it that we can compete? You know, traditionally, you would think that a chain, a steel chain, is more tough and better transmitter of power than a polymer-based composite belt. Well, we have developed a belt that is capable of transmitting same amount of power as an industrial chain. That belt is much more ecologically friendly. So from an ESG perspective, the end user are getting tremendous amount of value. They don't need to use lubricants. Lubricants are corrosive and dangerous. You have an improvement in productivity because you don't have to tighten the chain drive, where the chain drive needs to be tightened relatively frequently, once every two weeks, once a month. When you put a belt drive, you don't have to tighten the belt drive for a year, year and a half, so you get productivity improvements, and ultimately, you also get operational improvements through lower energy consumption. So we're providing a better solution. Today, that solution is still a little bit more expensive than the traditional chain-based solution, but we are very quickly working towards getting to parity in cost structure. We believe that over the next 18 months, we're gonna be able to do that, and it's gonna continue to open up more opportunities, particularly in the industrial space, where point of acquisition is as important as the improvements in efficiency. So we're doing quite well there, and we believe that that's a very long-term opportunity for us to drive above market growth. The second part of that story really is very exciting as well, and that's personal mobility. In the personal mobility spaces, we are replacing what we all traditionally know as a chain on a bike or a motorcycle, e-scooter. And when these devices get electrified, the need for our belt is even more unique because we have a capability to transmit more power than a chain on a very rapid acceleration. So we believe that that's another, almost an unprecedented opportunity for us to grow well into the future. And, you know, we've taken the business from 2018, when the business was maybe, gosh, $20 million or so, to 2022, when the business was approaching $200 million. So we've demonstrated that we can convert these opportunities and that those are real. We have a tremendous pipeline of new business that we are winning with the OEMs, both on the e-bike, e-scooter, and motorcycle side of the business. And as we kind of get through what I would call the pandemic destocking activity in personal mobility, we are very confident that we can get to that $400 million target on personal mobility kind of by the 2025, 2026. So we can still, you know, envisage doubling of that business over the next three years, which is, you know, quite a unique position for an industrial company to be in. So yeah, let's take those two separately then. You know, what's the payback, and what's the total cost of ownership benefit for an industrial company buying into this Chain- to-B elt thematic? So we've developed a really cool digital tool where we go into factories, and we work with factory managers, and we give them a demonstration on payback if they switch from an industrial chain to a Gates belt drive. And the payback actually varies. It depends on, you know, the applications and the size of the drive, how many hours per day they operate those assets. You know, and the payback may be as short as six months. Mm. And generally speaking, I would say that the payback in an industrial complex is somewhere between 6-18 months, so it's actually quite reasonable. The biggest issue for conversions in that space is actually shutting the drive down for 1-2 weeks- Yeah ... to be able to drive that conversion. So we have, over the last several years, we have highlighted a rather significant spectrum of opportunities that we have converted, and the conversion's actually quite quite interesting. Anything from, you know, belts moving baggage apparatus in airports to heavy duty air conditioning systems to pharmaceutical production lines, you know, logistics and distribution warehouses. So it's a whole slew of industrial apparatus that we have been able to demonstrate that we can convert, and we're very excited about it. Now, you know, the other side of that story is working with the OEMs. And we have seen tremendous amount of opportunities with industrial robotics, where these belts are offering a highly precise capacity to drive motion. And so, many robotics companies have been able to convert certain type of robotics into belt drives because it's cheaper construction and much lighter robots. And as, you know, as that becomes important, that, that's a really nice opportunity for us as well. Maybe talk about the sales cycle. How you go about convincing the person across the table from you that this is worthwhile for their time and investment? So, I think the big issue in here is driving digital tool set. And so we have, you know, we are making quite a bit of an investment to get to a position where we can ease the design cycle for the designers of these drives, because as you can imagine, people have been designing chain drives in industrial apparatus for 150 years. Yeah. For a long time. So it is something that you don't have to think about. It's ingrained in you. And so we are developing tool sets that make it much easier for these folks to be able to design these drives into these apparatus. 'Cause we believe it's gonna be critical, not only to convert an existing install base, which we have been doing reasonably effectively, but it, it's gonna become a force multiplier for us to get to the OEMs and to these niche machine builders that design equipment on, you know, daily, weekly basis, to be able to switch away from those industrial chains. The value proposition actually is rather interesting because, you know, we all care about productivity today. You know, if you're running industrial assets, productivity is really important, and interestingly enough, productivity is not that easy to get these days, right? So being able to go into a designer and says, "Look, you put this apparatus in, you substitute a chain with a belt, you're gonna be able to offer your client much larger or longer runtimes," where the time between service is significantly larger. And that, you know, that's a real big selling feature for these systems. On the personal mobility side, maybe just talk about the confidence in the profile of the category. Meaning, you know, you're talking about a destock here. I certainly get questions about what the true long-term growth profile is or there's a saturation level. Yeah. Maybe just go through some of the information and data you guys have collected to give that confidence. Yes. So look, on the destock side, you know, I mean, there's a ton of publicly available data- Mm-hmm ... that clearly points out that there's this destocking that has been happening, you know, probably from middle of last year, and it's probably gonna continue all the way through middle of next year. And that's, you know, you can see a large unit volume peak in the COVID era, and we are finally starting to descend on the end units produced and sold in personal mobility that is at kind of 2019 run rate. Right. So, you know, we're starting to see that you know, that peak has been chopped off, and you're starting to see kind of the underlying market- Yeah ... you know, market consumption of those units. So that's the good news. Still need to work itself through, and again, we believe that maybe middle of next year, that, that will, that will occur. Putting that aside, there's over 200 million personal mobility devices that build every year around the world. Yeah. Today, we have about 1% market share. You know, the math is really quite straightforward. The value proposition is great. You know, if I'll let you ride a bicycle that has Gates Carbon Drive on it, you will never wanna ride a bike with a chain, I promise you that. They are. It's clean. You will never get your hands dirty. You don't have to maintain the chain, just like you don't have to maintain the chain on an industrial drive. If anybody lives around ocean, you can keep your bike inside of a garage, and your bike will still rust, and it will become useless after about 18-24 months. With Gates Carbon Drive, well, it requires no maintenance. All you need to do is pump some air into those tires. So the value prop is really, really good. And so what we are focusing on is truly driving that penetration rate, right? So we started small in 2018. Lots of skepticism about, you know, why would anybody do that? I think we have scaled that business up nicely, and it, it's not an easy feat to grow a business in three years from $20 million to almost $200 million. It's not an easy feat to grow it from $200 million to $400 million. We recognize that, but we believe that penetration, we can go from 1% penetration to about 10% penetration over the next 5-7 years. And, you know, the math speaks for itself. It's rather dramatic. And over the long term, is there really a need for a chain drive? You know, I happen to believe that there is a need for a chain drive, that all chains should be replaced with Gates drives. And you know, is it gonna happen? Yeah, you know, time will tell. We have a high degree of confidence that we will be able to get that penetration. Our design wins would speak towards our ability to win in that market segment. There'll be more competition at some point in time. We are the pioneers. We have created this market opportunity, and we believe that-... We have the best market position out there, and we will continue to innovate, we'll continue to drive from the top end of that apparatus to, you know, to a bicycle that you can buy at, you know, at Walmart at some point in time. That will take some time, but, we're very excited about it. No, I saw them when I took my seven-year-old daughter to get her a new bike. There were a bunch of them in the store. I hadn't seen it before. I'll give you a plug-in. You can buy them at Costco if you go in and buy a Priority bike that's got a Gates drive, and you'll love it, I promise you. I gotta get a membership to Costco first, though, Ivo. I'll let you use my card. Oh, hey, nice. Nice, nice. Yeah. You know, I don't know if it's cost-effective for me to fly to Denver to pull that off, but let's say I drove to Denver. Maybe talk about a segue to the auto piece here. I still get questions about EVs. Mm-hmm. You know, it's a good bridge between the two segments. I think there's a misconception about what EVs mean for you holistically. So just talk about the tailwind that that can provide longer term. Longer term. Absolutely. Look, electrification of propulsion is a terrific, terrific business opportunity for Gates. We, you know, we should not misconstrue a muted enthusiasm from our side for lack of opportunity or risk. Our content grows from about $125 to nearly $300, ICE versus electric vehicle, electric propulsion on a vehicle. Our content is predominantly in fluid power. In fluid power, we develop products that provide thermal, thermal management for battery, for motors and for the inverter. And we use the, the word thermal management because these batteries presently not only need to get cooled, but they also need to get warmed up in winter. If you are in a Northeast area, if you live in Denver and, you know, you have cold weather and snow, you get a significant reduction in range. So this battery needs to have a much better thermal management, and that's, you know, that's ultimately the large opportunity for us. But as I stated, you know, we are very thoughtful about how much OEM business we take on board. We've spent quite a bit of time over the last five years. We have reduced our exposure to automotive OEMs rather dramatically by nearly $150 million. And we are going to be very thoughtful about what business we're gonna go and take on. So as I said, you know, we are an aftermarket participant, 7-11 years of age, and so firstly, you have to make these EVs, then you have to sell them, and then they have to age to 7 and 11 years. So for us, the market opportunity for BEVs is more in, 2030s- Yep. Rather than in the 2020s. But that doesn't mean that we are standing still. We continue to develop our broad portfolio. Today, we have probably the broadest coverage of all of the BEVs on the road. You know, the numbers are still very small. There's only about 700,000 BEVs that are 7-11 years of age. They're mostly Teslas. And, you know, we have a very, very strong presence on those, and, you know, if you take them to an independent repair shop, we'll be able to repair them with, with Gates products. So that, you know, that being said, I, you know, I think that over the next 15 years, it will be a very nice tailwind for our business. So last question here. Why don't we talk a little bit about the margin opportunity? 19% margins, was it last year? Opportunity set to get to the mid-20s%. A lot of that's in your control. Some of it's volume. Maybe talk about the piece that's in your control. You know, it's almost 500 basis points. What are you doing internally to make sure you get there? Some of it's catch-up, supply chain, everything. A lot of it, though, is operational control, operational improvements in your control. Absolutely. Look, you know, starting with the 19%, because I think that was a good baseline from last year, and again, I remind everybody that, you know, last year, we, you know, none of us at the management felt we have done a great job in managing our business. It was all driven by conflict in Ukraine, where lots of industrial assets got destroyed, and we were impacted with highly engineered polymers that we utilize in our portfolio, and that impacted our ability to ride to run our assets effectively. But 19% would have still been the best profitability in a company's 113-year history prior to the LBO. Yeah. So it wasn't, you know, a terrible output, despite the fact that we felt it wasn't great. But coming back to that opportunity, which is by far more important, look, about 225 basis points from the margin recovery resides just in the supply chain normalization. And, you know, we, we basically delivered that- Yep. - in 2023. So we feel that the margin recovery from the supply chain disruption is behind us, and, you know, that will be getting into the baseline year. Still have a little bit of a go from a comparison perspective in Q1 of next year, but as far as I'm concerned, we've pretty much delivered that improvement. Secondarily, we have enterprise initiatives. Our enterprise initiatives are around productivity, 80/20, and restructuring. That represents about 250 basis points of market opportunity, and we believe that that is doable with, and within our control, without necessarily having to rely on significant unit volume growth. And we have about 50 basis points of improvement that we will deliver through standard volume rebound- Yeah ... at kind of 35%-40% incrementals. So, you know, volume growth is a very small component of getting the 500 basis points to that 24% EBITDA, and we feel that I'm in a very good position to be able to do that. Well, great. Well, please join me in thanking Ivo for his time.