All right, well, good morning, everybody, and welcome to the Midwest IDEAS Conference. Presenting is gonna be Gates Industrial Corp, traded on the New York Stock Exchange under GTES. On behalf of the company, we have Rich Kwas, VP of IR. Rich? Thanks, Errol, and thanks to the team here for hosting us. Really pleased to be here and share the Gates story. We are based in Denver, Colorado, and been around for now one hundred and thirteen years, so have a long history, and we've been public since early 2018, and so we have a nice history now as a public company. Let me get into it, and we can do some Q&A in a little bit. First, the forward-looking statements and legal disclaimers here. And then here's some background on our strategy here. So there's three pillars. We really are focused on driving organic growth and outgrowing our key end markets. I think if you look over a long term, you'll see that we've grown organically about 4% since 2016, and so. Which is a decent performance considering the cycles that we've gone through and COVID, et cetera. And so our target here through 2026 is to grow at a 3-5% CAGR. We typically grow two times industrial production, and so if you think about us in those terms, we should be able to drive, you know, close to mid-single-digit growth. And then in times when industrial PMI really picks up, we should really be able to outgrow 3-5% in those short periods of time when PMI is really rising. We typically have a good correlation with industrial PMI. So as you watch over the, hopefully, the next couple quarters for a turn in industrial PMI, we should respond pretty quickly to that. We're also focused on margins and return on invested capital. We have a target out there at 24.5% by 2026. Our guidance this year is 22% Adjusted EBITDA margin, and we have several strategic enterprise initiatives in place to drive that margin performance. And I'll get into that in a little bit. Then historically, we've done a pretty good job balancing our capital allocation priorities. We've done a significant amount of debt reduction since we've been public, and then we've also returned capital to shareholders via share repurchases, more targeted over the last few years. Some of that's been helping our sponsor sell down their position and facilitate that sell down. Currently, Blackstone owns 8.4% of our shares, and that's down, just to put that in context, that's down from 63% in May of 2023. So a fair amount of progress made over the last 15 months. Here's just a overview of the company. You can see about $3.5 billion in revenue. I'd highlight that our ROIC at 23% is pretty strong relative to a lot of industrials you see out there. I always kind of think of 20% plus as being a good bogey, and our target over the next couple of years is to get into the mid-20s. You can see on the bottom, the breakdown. One of the key tenets is that second pie chart, the channel mix. It's about 64-65% replacement. The balance is OE. So what that does is it provides, mitigates some of the typical cyclicality you would see from an industrial company. We have a big installed base out there across many of our end markets, and we're able to supply replacement parts on a continuous basis. You can see geographically and from an end market standpoint, we are pretty well diversified. You know, one of the areas that is a growing end market, even though it's been had slowed down over the last year or so, is personal mobility. You can see on the right side there, the yellow piece, yellow slice there. That's really focused on two-wheelers. So think of it as bikes, e-bikes, scooters, motorcycles, and we have Carbon Drive technology that is very advanced technology and competitive, and we're really the strongest player in the space in terms of supporting the electrification of two-wheelers and have a good position in that market. The reason I point that out is that's a market that had been growing double digits, has slowed down as the bike market has gone through some destocking. But as we get into twenty twenty-five, we expect that to reemerge as a good grower for us. And right now, it's about, as highlighted here, about 4% of sales, and we expect that to grow over time. The other thing I'd note is that perception-wise, you may think of us as being, having a lot of auto. I'd say look at the right chart, and our auto OE is now 9% of sales. When we went public, it was 15-16% of sales. We've done a selective participation in that market, and so that piece, that mix of sales, we expect to stay where it is or decline over time. We have a couple product segments that we report on. Power Transmission, this is the majority of our sales, and you can see the products here. Think of it as belts, tensioners, sprockets, and we have some of the key product lines here. You know, you can see the benefits here. We have what's called a chain-to-belt initiative, that's focused on converting chain to belt for industrial applications. Our personal mobility business, that's been a key tenet and key strategy within that, converting chain to belt for two-wheelers, and we have an opportunity over the long term to drive that in the industrial space, and you can see here, the mix of sales is pretty similar to the corporate average, with 63% coming from the replacement market. The other thing I'd note is, we have a strong market position on a global basis, but it's still a fragmented market. As you can see, it's a $40 billion total addressable market, and we have only a small slice of that. The other product segment we have is Fluid Power, little less than 40% of sales. Again, fragmented market, opportunity over the long term to consolidate the market potentially. Also, a good mix of replacement sales, even higher than the Power Transmission market, and think of this as hoses and couplings. I'd say one of the more exciting areas here that is starting to emerge for us is, you probably have seen with the emergence of AI and the need for the build-out of data centers, particularly how those are gonna be cooled. There is a greater focus on liquid cooling as a solution for data centers, and we have an opportunity to play a nice role in that over the long term. I'd say right now this is an emerging focus for us. It's still nascent, but data centers can be a nice opportunity, we think, over the next five to ten years for growth. On the growth side of things here, you can see on the left side. This is a snapshot of how we've performed since twenty nineteen. I think from my perspective, we get, you know, I'd say criticized a little bit because of our growth or perception of our growth, and there's a perception out there we don't grow. This chart shows that we've outgrown some of our key competitors over the last four years, and I think if you look at some research that's been publicly available over the last couple months, you know, as I mentioned, 4% is kind of the number that we've been able to drive over the last several years, six or seven years, organically, and that's kind of in the middle of the pack versus, you know, 20 or 30 different industrials. This is a more targeted subsegment, but I think the focus is, we do grow the business. One of the things here, as our balance sheet continues to improve, there's gonna be an opportunity to do M&A. The company went public at four times net leverage, now we're at two point three times the net leverage. Our target is in the one to two times range, and there's gonna be an opportunity to add acquisitions over the midterm. And so, that's gonna be a focal point from a capital deployment standpoint, and so that'll also augment longer term, we think it'll be a good way to augment our growth. You can see just, I'll kind of briefly cover this: above-market growth, margin expansion, and deploying capital. Those are, you know, our strategic, a few of our, focuses, our key focus on, growing, you know, expanding the business over the next years and driving shareholder value. This is our Eco-In novation system. One of the things that I think is, underappreciated for the business is material science. So, if you ever get to Denver, please feel free to reach out. We have our headquarters there, but we also have a tech center there, where we do a lot of materials testing. And so we take a lot of different compounds, and polymers and develop new recipes. And we're testing on a continuous basis to make our products less expensive, more durable, more robust, and find new ways for applications, to apply them to new applications. I think the material science is one of the key tenets. You can see, you know, we noted the adjusted EBITDA margin at 22%, going to 24.5% as the target. You know, our gross margins right now are gonna be above 39% this year, which is pretty good for an industrial company relative to what you see, you normally see out there. We have a target to get that into the 40s%, and so I think when you think about our margin profile, material science is a pretty important driver of that. You also can see we're focused on process engineering, product engineering. You know, that's again, kind of using the material science as kind of a core to drive that process engineering. You know, we can find ways to be more efficient in our factories and improve our asset utilization. And then product engineering is really, again, using material science to find new ways, new products for different applications. And this is NPI, New Product Innovation. Our vitality rate is now in the high teens. We have a target to get that into the mid-twenties, and you can see the product launches over the last several years, that they've been consistent and growing. And you can see down on the lower right in addition to personal mobility and chain and belt, we've actually also grown our product, new products in the auto replacement business. Auto replacement is a nice business for us, very strong on a global basis in terms of market position, and we continue to reinvent new products or reinvent our product lines there. Here's our key enterprise initiatives. These are kind of the tenets of what's gonna get us to 24.5% adjusted EBITDA margin. We are positioned for secular growth themes. I talked about personal mobility. I talked about data center. You know, we are using digital tools to help our customers make it facilitate their ease of doing business with us. And then, as I mentioned, material science investments are ongoing. We also embarked over the last 24 months on 80/20 initiatives throughout the organization. We were pretty aggressive over the last year or two in the auto replacement space, and we're deploying that to industrial replacement, and that's continuing to evolve here. So we see that as contributing to the margin trajectory over the next couple of years. And then we really feel from a margin standpoint, a lot of this is in our control. We have a lot of self-help that's in place. You know, certainly wanna see the industrial markets pick up over the next year, and that would be beneficial to us, but we feel from our margin target, that we're able to... a lot of it's what is in our control and our ability to getting to that 23.5%-25.5% Adjusted EBITDA margin range. Again, this is kind of a reiteration of what we're focused on: material cost reduction, operational excellence, and footprint optimization. So material cost reduction, we're gonna grow our margins this year over a hundred basis points on an adjusted EBITDA basis, and that's in a down volume environment. Not all of it, but a decent chunk of it's coming from material cost reduction, and that's kinda, as we've outlined it over the three-year period, the material cost reduction initiative is a little more front-end loaded than the other two, and so we're starting to see benefits from that. And so I think as you look at our financials, you'll see margins up with organic revenue down and volume down. So you should think of that as volumes come back, the opportunity could be nice, you know, over the next couple of years in terms of incremental margins. So we expect that'll continue to contribute, but probably at a lesser rate as we go through into later into 2025 and into 2026. As volumes start to rebound hopefully over the next year or two, you know, we'll have the opportunity to drive better productivity. One of the things that I think has been lacking, primarily due to COVID supply chain phenomenon, is productivity. We've had lost a couple of years of productivity benefits. So as volumes with the supply chain stabilizing and volumes stabilizing and improving, we see that productivity in the plants is gonna get stronger here, and that's gonna contribute to our operational efficiency. It also put in there that, you know, 80/20 is gonna be an ongoing driver of that operational excellence as well. And then the last piece is footprint optimization, and we talked about this six months ago or so at our Capital Markets Day. We updated on the Q2 call that we intend to pull forward some of our footprint optimization by a couple quarters. And so, we have footprint optimization in place here that is gonna start here later this year. We had intended at the Capital Markets Day that it really was gonna launch in earnest in 2025. We pulled that forward a little bit opportunistically, and what we've indicated is that about... it's a $40 million total savings. We'll get 40% of that run rate by the end of 2025, and then the balance at a run rate by the end of 2026. So think of it as from a dollar standpoint, some benefit in 2025, more benefit in 2026, and then there'll be some lap over benefit in 2027 from a dollar standpoint. Here's visually a good way to think about where we were in 2023 and where we're going in 2026, and you can see the material cost reduction is a key component, and the operational excellence and footprint optimization is gonna be the, you know, driver of reducing our conversion costs. On the footprint optimization, the one thing I'd also mention is there's a little bit of fixed asset takeout within that, but think of it as we're redeploying capacity to facilities that have better labor availability and are more optimal from an operating standpoint. If you think about some of the consolidation activities that we'll have over the next couple of years, the point of that is, as volumes get better and up cycles emerge, what we plan to do with this is be able to drive higher incrementals and more consistent incrementals when the cycle turns. So in the past, we've had some challenges here and there with regards to supporting that volume increase. This footprint optimization is gonna put us in a place to drive stronger incrementals. Here's just the margin walk. You can see we do have some operating leverage factored in there for the next three years. That's within the 3%-5% CAGR. You can see material cost reduction is the biggest component, as I highlighted earlier, footprint optimization, another 50 to 100, and then productivity in 80/20 is about 50 basis points at the midpoint. We also have some R&D investment inflation factored into this, so we haven't just you know, looked at all, everything sunny side up, everything's good, and we don't factor in any incremental costs that may emerge in the business. So we factor that into the margin target. Free cash flow conversion, you can see over that three-year period, which was an interesting three-year period for industrials because of supply chain, COVID, et cetera. You know, we did 79%. The peer group average was 81%, so more or less right there. Last year, we did 110% and outperformed that group. You can see we're targeting 100% over the midterm. Think of it as, this year we're expecting to do 90+%. Last year, we did 110, so we're averaging out 100. Think about over, you know, a period of time, we'll be right around 100%. You can see the assumptions here around how we're our cash needs, et cetera. I'd also say that one thing here that is on a tax standpoint, just from and more from an EPS standpoint, on last quarter's call, what we've done is we've gone to a operating adjusted tax rate on a go-forward basis, which is 26%-28%. The tax rate's a little bit higher than what's indicated here. We've had a lot of volatility with our tax rate, if you look back historically, since we've been a public company. The 26%-28% is a number that we feel comfortable with, and there's potential opportunity that could get trimmed with some tax strategies that are put in place. But think of it as that's gonna be more consistent rate going forward, and we've really tried to strip out the volatility, because if you look back historically on an adjusted EPS basis, it's bounced around a bit. You can see this was going back from 2020, mid-2020, to the end of last year, how we've deployed our cash, and you can see how we spent it and deployed it. So you can see the CapEx. As in the middle two, you could see share repurchases and debt paydown were about pretty similar. Now, this year, we refinanced our debt. We got upgrades at S&P and Moody's, and we refinanced our debt stack in June. That was very successful. We were able to generate some modest annualized interest savings. And then, also, as I mentioned, we did with the Blackstone sell downs here, we've been opportunistic with buying back shares from them. We did a $50 million buyback in February, and then more recently, a couple of weeks ago, we did a $125 million buyback. So our balance sheet, you know, we would expect to be somewhere around two times by year-end on our net leverage ratio, and our target is one to two times. For our business, you should think of our business as all else equal. If we don't do anything with capital deployment in any given year, in a normal year, we'll usually reduce our net leverage ratio by about half a turn. So the business generates good cash flow and can deliver in a fairly quick manner. Here's a capital structure. Again, you know, 4.3 times at the end of 2020. Our target is one to two times. We'll be probably near the top end of that here at the end of this year. So opportunity to continue to further reduce that and get that under two times. Our credit ratings here have. This is a little bit. There's some updates here on the lower right. We got an upgrade at Moody's, and this, the S&P, you could see, is that reflects the upgrade from earlier this year. And so, you know, again, the balance sheet is improving, getting better, and it's gonna create opportunities for us to explore other longer-term strategic opportunities that may arise over the next several years. You know, again, with the buyback and debt reduction, I'd say right now, those are still two of the key focal points here. We do have a target of wanting to get our gross debt down below $2.2 billion. This is just another illustration on net leverage and where our target is. Here's an EPS walk with getting out to $2.20 2026, and you can see the midpoint at $2.10. And again, we factored in some incremental SG&A investments here as a partial offset, but you can see how the walk works here. And then this is kind of a summary of what we expect, where we expect to be in 2026. And so, I think if any of you look at our valuation relative to these financials, I'd humbly say there's a disconnect, so and that could create some opportunity. And, but, you know, we feel like we're on a good path here with where we are with the business to drive these results over the next couple of years and, you know, hopefully see a much higher stock price over the next couple of years. Again, you know, we've been around. Now, coming up, we're gonna be finishing our seventh year as a public company. You know, this is, we've gone through cycles, we've demonstrated ability to be resilient, we've learned from things that in cycles we've gone through as a public company, including COVID and the supply chain issues that emerged post-COVID, along with the various industrial cycles that we've seen since 2018. So we think this business is very resilient. It's in strong position to drive financials, very compelling financials over the next few years. A lot of this is in our control, and we're building optionality for the future. And so I'll stop there and see if there are any questions. Yeah, it's so the question is, why explain the chain to belt initiative and the advantages of chain? So if you think about or of belts, excuse me. So if you think about belts versus a chain, first of all, they're quieter, so there's just less noise, less disruption. If you think about a chain versus a belt, there's more maintenance required in general, lubricants, et cetera, to support that. And belts need. You can put a belt on, and it'll be very little maintenance required over a long period of time. And so if you're thinking about from a risk of production, if you're a manufacturer in a facility, there's generally gonna be much less disruption with a belt versus a chain. I think also, if you think about the environment, environmental benefits in general with chain versus belt, you know, with the oil and lubricants and other things needed to support chain, you know, you don't need that with a belt. So from an environmental standpoint, you know, as companies are more focused on the environmental wear and tear, if you will, from their facilities, that emerges. You know, a belt is an opportunity to take that out of that equation. And, you know, longer term, there is from a durability standpoint, and, you know, if you ever get to Denver, let me know, but there, we show that the belt is extremely strong. So, like, you have a perception that chain is gonna be stronger than belt. We have instances. We have shown instances at our CSC, and we have examples where we show, you know, belts can hold very, very, very heavy equipment. So, it's on par, if not better, from a durability and application standpoint. So I think, you know, one of the things that we're working on with that initiative is, and we've had successes with, in, you know, food and beverage, in, at airports on replacing chain with belt. So those, there have been instances, of that where we've had good successes. I'd say there, there's an opportunity for us from a commercial standpoint, to work more closely with machine builders to get designed in directly into those machines, 'cause you know, chain's been around for, you know, over a century. It's kind of the de facto technology that's picked, that's currently chosen, and it's the path of least resistance if you're a machine builder. So the opportunity for us is really to highlight the opportunity here and get designed in, and, you know, that's not gonna be an overnight phenomenon, but we've actually in the last, you know, six months or so, reformulated our commercial strategy around that, and I think, you know, there's gonna be some benefits that starts to emerge, you know, over the next three to five years. Mm-hmm. Yep? Yeah, so you guys, I got two questions, if I may. So what percentage of your gross margin comes from aftermarket? I imagine it's kind of a razor-razor blade business model. Yeah, so we've not been specific with that, but if you think about our corporate average gross margin in the 39% plus range, think about the aftermarket replacement piece is gonna be higher than that. So. And it's, you know, decently higher. And then if you think about the OE first-fit mix, you know, whether it's auto or industrial, it's gonna be lower than the corporate average. Gotcha. And then you guys generate pretty attractive returns on invested capital for an industrial company. How are you weighing the potential for share repurchases versus M&A, and what are the deal multiples looking like in your pipeline? Yeah, I think. So our balance sheet has kind of been a, you know, a complete limiting factor for us, so we, we really haven't done anything of any significance as a public company. And that's been, you know, as you can appreciate, investors look at anything that certainly in the three range, but even in the two range, as being a little risky. And I think we're, you know, starting to move into that bandwidth where we can start to entertain that in terms of potential transactions. I'd say we're gonna be pretty cognizant of where we are trading as a, from a multiple standpoint, and where the targets would be, which generally for good industrial businesses, are gonna be in the double digits, you know, on an EBITDA basis. So that's certainly a consideration. I think from a share repurchase standpoint, our stock is still discounted versus the peer group, and, you know, you could argue that that's the most attractive risk-adjusted deployment of capital. So, but I'd also say that we're also paid to grow the business long term, and we have to position the company for the next decade and more in the best position possible, and so M&A is gonna be a piece of that, but we're cognizant of where we are trading right now, and so I think it all goes into the equation, and, you know, I think also that our leverage reduction, getting into the ones on a, you know, a consistent basis would be beneficial as well. But, you know, we're preparing to put some seeds in place around getting the competencies internally at the company to be able to prepare to support potential M&A over the midterm. Other questions? Okay. No, another one? Yeah, it's still somewhat early days, I'd say. We're, you know, certainly I wouldn't say I don't know if we're quite, but, you know, our CEO would say, "Well, we're putting the uniforms on." I think we're a little bit past that. You know, we're very early innings and, you know, we've had success so far in our auto replacement business. That is beginning to roll out across our industrial replacement business. And so we kinda look at it as a journey in terms of there's not likely gonna be any one year where it's just this huge windfall of savings and benefits. It's gonna be, really, if you're doing it right, it's over a consistent basis over several years, and that's how we look at it. And, you know, that, so that's the focus, and I'd say that think of it as even beyond twenty twenty-six, we think there's gonna be certainly opportunity for us to continue to implement it, hone it, improve it, and get savings from it. I think, you know, one company that we look to as a, from an aspirational standpoint is ITW. You know, over a long period of time, they did a fantastic job of executing that, and so we look at how they've done it, and, you know, that's something that I think you should think we, we would try to emulate. So q uestion? Yeah. Question on Blackstone shares? Yes. You said that they're down below 100%. I think the number correct, and it was over 63% initially, on the shares that you're buying back. Blackstone shares or market shares? No, they've been, we've been facilitating their sell down, so opportunistically, it hasn't been every transaction. So the question is the, have we been buying shares back from Blackstone directly? And then in the times when we've been repurchasing shares, we have been buying shares back from them directly because we feel it's, it solves, you know, one of the issues for the stock. It helps solve it at least, then progresses, a solution. So, the $125 million we recently repurchased, along with the $50 million we repurchased earlier in the year, were from them, so. Yes, question. So, why is Blackstone investing in another position? I'll give you a little history. Blackstone bought the company in July of twenty fourteen, took it public in early twenty eighteen, and, you know, is still an owner here in twenty twenty-four. You know, I can't speak for them, but I think just giving you those pieces of data probably helps you get to a conclusion.