Core Viewpoint - Garrett Motion announced a significant secondary offering of 17 million shares, leading to a 10% drop in its stock value as investors reacted negatively to the increased share supply [1][4]. Company Overview - Garrett Motion is the former auto division of Honeywell International, specializing in turbochargers for internal combustion engine vehicles and components for hybrid and battery electric vehicles [3]. - The company underwent bankruptcy after separating from Honeywell but has since returned to public markets with substantial ownership from private equity firms that aided in its restructuring [3]. Shareholder Dynamics - The secondary offering consists of shares owned by affiliates of Oaktree Capital Management, Centerbridge Partners, and Cyrus Capital Partners, with Garrett not receiving any proceeds from this offering [4]. - Private equity investors typically do not hold long-term stakes, indicating their intention to gradually cash out to return capital to their investors [5]. Financial Performance - Despite the ownership overhang from private equity sales, Garrett has successfully transformed into a free cash flow-generating entity, with the capacity to repurchase shares and currently offering a dividend yield of 2.3% [6]. Investment Perspective - For investors seeking solid cash generation opportunities, Garrett is considered an attractive option despite the short-term volatility associated with the secondary offering [7].

Company Overview - Garrett Motion Inc. is a leading differentiated automotive technology provider with a 70-year history of innovation in the automotive sector and beyond, including off-highway equipment, marine, and power generators [8] - The company specializes in turbocharging technology, which has led to significant reductions in engine size, fuel consumption, and CO2 emissions [8] - Garrett is actively developing technology solutions for Zero Emission Vehicles, including fuel cell compressors for hydrogen fuel cell vehicles and electric propulsion systems for battery electric vehicles [8] - The company operates five R&D centers and 13 manufacturing facilities, employing over 9,000 people in more than 20 countries [8] Recent Developments - Garrett announced a proposed secondary public offering of 17,000,000 shares of common stock held by certain entities managed by affiliates of Oaktree Capital Management, Centerbridge Partners, and Cyrus Capital Partners [1] - The underwriters have a 30-day option to purchase an additional 2,550,000 shares from the Selling Stockholders [1] - The company has authorized the repurchase of approximately 2 million shares of common stock as part of the secondary public offering, with a maximum aggregate repurchase amount of $25 million [2] - This repurchase is part of Garrett's existing $250 million share repurchase program [2] Underwriters and Regulatory Filings - Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC are acting as lead bookrunners for the proposed offering, with several other firms serving as joint bookrunning managers [3] - A shelf registration statement and a preliminary prospectus supplement relating to the offering have been filed with the Securities and Exchange Commission [4]

Financial Data and Key Metrics Changes - Net sales for Q1 2025 were $878 million, slightly down year over year, but outperforming the industry in light vehicle turbo sales, with gasoline applications growing by 6% [7][14] - Adjusted EBIT was $131 million, with an adjusted EBIT margin of 14.9%, up 170 basis points compared to Q1 2024 [8][14] - Adjusted free cash flow was $36 million, in line with expectations for the quarter [8][18] Business Line Data and Key Metrics Changes - Net sales decreased by $37 million year over year, down 4% on a reported basis and 2% on a constant currency basis, with strong growth in gasoline applications offset by diesel softness [16] - Commercial vehicle and aftermarket applications saw lower demand, contributing to the overall sales decline [16] Market Data and Key Metrics Changes - The company has a well-balanced sales split across geographies, with only 20% of sales in North America [9] - Foreign exchange impacts resulted in a $21 million or 2% sales decline, primarily due to a weaker euro [16] Company Strategy and Development Direction - The company aims to identify unmet customer needs and leverage innovation capabilities to develop differentiated solutions at scale [22] - There is a focus on strengthening leadership in the turbo industry while developing new zero-emission and turbo technologies [22] Management Comments on Operating Environment and Future Outlook - Management remains cautious about the impact of tariffs on demand forecasts but has not noticed any material impact so far [8][21] - The 2025 outlook remains unchanged, with net sales expected to be $3.4 billion and adjusted EBIT of $457 million [21] Other Important Information - The company repurchased $30 million of common stock and paid a $12 million quarterly dividend [11][20] - A significant milestone was reached with the first series production award from Hyundai for high-speed technologies [12][24] Q&A Session Summary Question: Comments on North America sales dynamics - Management noted that gasoline sales are ramping up, but there are offsets in commercial vehicle and aftermarket segments that were slightly down [26] Question: Opportunities in gasoline for 2026 and 2027 - Management sees significant opportunities in North America, particularly with carmakers pivoting to hybrids and range-extended electric vehicles [28] Question: Market share in China and EV trends - Management feels positive about market share in China, highlighting strong demand for differentiated technology from both traditional and new carmakers [30][32] Question: Guidance on euro assumptions - Management indicated that if the euro remains above 1.1, there would be favorable impacts on revenue and EBITDA, but guidance remains unchanged for now [33] Question: Exposure to North American tariffs - Management estimates around $60 million in tariffs could be passed through, emphasizing limited exposure from Europe due to regional manufacturing [34][35]

Financial Data and Key Metrics Changes - Net sales for Q1 2025 were $878 million, slightly down year over year, but outperforming the industry in light vehicle turbo sales, with gasoline applications growing by 6% [6][12] - Adjusted EBIT was $131 million, with an adjusted EBIT margin of 14.9%, up 170 basis points compared to Q1 2024 [7][12] - Adjusted free cash flow was $36 million, in line with expectations for the quarter [7][17] Business Line Data and Key Metrics Changes - Net sales decreased by $37 million year over year, down 4% on a reported basis and 2% on a constant currency basis, with strong growth in gasoline applications offset by diesel softness [14] - The company experienced lower demand for commercial vehicles and aftermarket applications [14] Market Data and Key Metrics Changes - The company has a well-balanced sales split across geographies, with only 20% of sales in North America [8] - Foreign exchange impacts resulted in a $21 million or 2% sales decline, primarily due to a weaker euro [14] Company Strategy and Development Direction - The company aims to identify unmet customer needs and leverage innovation capabilities to develop differentiated solutions at scale [21] - Garrett is strengthening its leadership position in the turbo industry while expanding into industrial applications and developing zero-emission technologies [21] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the impact of tariffs on demand forecasts but has not noticed any material impact so far [7][20] - The 2025 outlook remains unchanged, with net sales expected to be $3.4 billion and adjusted EBIT of $457 million [20] Other Important Information - The company repurchased $30 million of common stock and paid a $12 million quarterly dividend [9][19] - A significant milestone was reached with a series production award from Hyundai for high-speed technologies, targeting production in 2027 [10][23] Q&A Session Summary Question: Comments on North America sales dynamics - Management noted that gasoline sales are ramping up, driven by North America, but there are offsets in commercial vehicle and aftermarket segments [26] Question: Opportunities in gasoline for 2026 and 2027 - Significant opportunities are seen in North America, particularly with carmakers pivoting to hybrids and range-extended electric vehicles [28] Question: Market share in China and EV trends - Management feels positive about market share in China, with strong demand for both passenger and commercial vehicles, especially in hybrids [30][32] Question: Guidance on euro exchange rate impact - If the euro remains above 1.1, there would be favorable impacts on revenue and EBITDA, but guidance remains conservative due to macro uncertainties [34] Question: Exposure to North American tariffs - The company expects to pass through approximately $60 million in tariffs, with limited exposure due to regional manufacturing strategies [35][36]

Company Performance - Garrett Motion reported quarterly earnings of $0.30 per share, exceeding the Zacks Consensus Estimate of $0.29 per share, and up from $0.28 per share a year ago [1] - The company achieved revenues of $878 million for the quarter, surpassing the Zacks Consensus Estimate by 4.15%, although this represents a decline from year-ago revenues of $915 million [3] - The earnings surprise for the quarter was 3.45%, and over the last four quarters, Garrett Motion has surpassed consensus EPS estimates three times [2] Market Position - Garrett Motion shares have increased approximately 2.1% since the beginning of the year, contrasting with a decline of 5.3% in the S&P 500 [4] - The current Zacks Rank for Garrett Motion is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [7] Future Outlook - The consensus EPS estimate for the upcoming quarter is $0.31 on revenues of $865 million, and for the current fiscal year, it is $1.25 on revenues of $3.43 billion [8] - The estimate revisions trend for Garrett Motion is currently mixed, which may change following the recent earnings report [7] Industry Context - The Automotive - Original Equipment industry, to which Garrett Motion belongs, is currently ranked in the bottom 31% of over 250 Zacks industries, suggesting potential challenges ahead [9] - Adient, another company in the same industry, is expected to report a year-over-year earnings decline of 33.3% in its upcoming results [10]

Financial Data and Key Metrics Changes - Net sales for Q1 2025 were $878 million, slightly down year over year, but outperformed the industry in light vehicle turbo sales, with gasoline applications growing by 6% [5][11] - Adjusted EBIT was $131 million, with an adjusted EBIT margin of 14.9%, up 170 basis points compared to Q1 2024, driven by sustainable cost actions implemented in 2024 [6][12] - Adjusted free cash flow was $36 million, in line with expectations for the quarter [6][12] Business Line Data and Key Metrics Changes - Net sales decreased by $37 million year over year, down 4% on a reported basis and 2% on a constant currency basis, with strong growth in gasoline applications offset by diesel softness [13] - Commercial vehicle and aftermarket applications saw lower demand, contributing to the overall sales decline [13] Market Data and Key Metrics Changes - The company has a well-balanced sales split across geographies, with only 20% of sales in North America, allowing for resilience against regional downturns [7] - Foreign exchange impacts resulted in a $21 million or 2% sales decline, primarily due to a weaker euro [13] Company Strategy and Development Direction - The company aims to strengthen its leadership in the turbo industry while developing new zero-emission and turbo technologies, expanding into industrial applications [20] - The focus remains on identifying unmet customer needs and leveraging innovation capabilities to develop differentiated solutions at scale [20] Management's Comments on Operating Environment and Future Outlook - Management remains cautious about the impact of tariffs on demand forecasts but has not noticed any material impact so far [6][19] - The 2025 outlook remains unchanged, with net sales expected to be $3.4 billion and adjusted EBIT of $457 million, despite uncertainties surrounding tariffs and their potential impact on the global economy [19] Other Important Information - The company repurchased $30 million of common stock and paid a $12 million quarterly dividend, with a second quarterly dividend declared for June 2025 [8][18] - The company achieved a significant milestone by securing its first series production award for high-speed e-motor and inverter technology from Hyundai [10][22] Q&A Session Summary Question: Comments on North America sales dynamics - Management noted that gasoline sales are ramping up, but there are offsets in commercial vehicle and aftermarket segments that were slightly down [24][25] Question: Opportunities in gasoline for 2026 and 2027 - Significant opportunities are anticipated in North America, especially with carmakers pivoting to add more hybrids and range-extended electric vehicles [26][27] Question: Market share and EV trends in China - The company feels positive about its market share in China, with strong demand in both passenger and commercial vehicle segments [29][30] Question: Guidance on euro assumptions and FX impact - Management indicated that if the euro remains strong, there would be favorable impacts on revenue and EBITDA, but guidance remains conservative due to macro uncertainties [33] Question: Exposure to North American tariffs - The company expects to pass through approximately $60 million of tariff impacts, with limited exposure due to regional manufacturing strategies [34][35]

MAY 01,, 2025 Q1 2025 FINANCIAL RESULTS © 2025 Garrett Motion Inc. Forward Looking Statements This communication and related comments by management may include "forward-looking statements" within the meaning of the U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact and can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should, " ...

Sales Performance - For the three months ended March 31, 2025, net sales decreased by $37 million or 4% to $878 million compared to $915 million in the prior period[112][113]. - Diesel product sales decreased by $33 million or 14% to $208 million, primarily due to a transition to gasoline hybrids in Europe[110][115]. - Gasoline product sales increased by $15 million or 4% to $403 million, driven by new application launches in North America and recovery in Japan[110][114]. Profitability - Gross profit increased by $7 million to $179 million, with a gross profit margin of 20.4%, up from 18.8% in the prior year[118][119]. - Net income for the three months ended March 31, 2025, decreased by $4 million to $62 million, with a net income margin of 7.1%[128]. - Adjusted EBIT increased by $10 million to $131 million, driven by productivity improvements and lower costs, despite lower volumes across all product lines except gasoline[137]. Expenses - Selling, general and administrative expenses decreased by $5 million to $59 million, representing 6.7% of sales[120]. - Cash provided by operating activities decreased by $28 million to $56 million, primarily due to unfavorable working capital changes[147]. - R&D expenses remained flat, reflecting a shift in investment focus from turbo technology to zero-emission technologies[140]. Shareholder Actions - The company repurchased $30 million of common stock under its share repurchase program, with $220 million remaining authorized[107]. - Cash used for financing activities was $31 million, significantly lower than $112 million in the prior year, with $30 million allocated for common stock repurchases[149]. - The company repurchased $30 million of common stock during the three months ended March 31, 2025, with $220 million remaining under the share repurchase program[145]. Debt and Taxation - The company refinanced its debt, replacing the 2021 Dollar Term Facility with a new 2025 Dollar Term Facility of $692 million[106]. - The effective tax rate increased to 27.1% from 18.5% in the prior year, primarily due to higher U.S. taxes on international operations[125]. - The company refinanced its $692 million 2021 Dollar Term Facility with a new 2025 Dollar Term Facility, maturing on January 30, 2032[143]. Currency Effects - Losses from foreign currency effects accounted for a $7 million decrease in Adjusted EBIT for the three months ended March 31, 2025[142]. - The net fair value of financial instruments with exposure to currency risk was $21 million, with potential losses or gains of $276 million and $(259) million from a hypothetical 10% change in exchange rates[156]. Transition in Reporting Metrics - The company transitioned from Adjusted EBITDA to Adjusted EBIT as its non-GAAP reporting metric to better reflect core operating performance[130].

Financial Performance - Net sales for Q1 2025 totaled $878 million, a decrease of 4% from $915 million in Q1 2024, with a 2% decline on a constant currency basis[3] - Gross profit increased to $179 million in Q1 2025, with a gross profit margin of 20.4%, up from 18.8% in Q1 2024[6] - Adjusted EBIT rose to $131 million in Q1 2025, representing an adjusted EBIT margin of 14.9%, compared to 13.2% in Q1 2024[15] - Net income for Q1 2025 was $62 million, resulting in a net income margin of 7.1%, slightly down from 7.2% in Q1 2024[12] - Adjusted EBITDA for Q1 2025 was $159 million, compared to $151 million in Q1 2024, with an adjusted EBITDA margin of 18.1%[33] - Reported net sales for the full year 2025 are expected to decline between 6% and 0%[39] - Net income for the full year 2025 is projected to be between $209 million and $254 million[40] - Adjusted EBITDA for the full year 2025 is forecasted to range from $545 million to $605 million[40] - Full year 2025 net sales growth at constant currency is expected to range from -3% to 2%[39] Cash Flow and Investments - Adjusted free cash flow decreased to $36 million in Q1 2025, down from $68 million in Q1 2024, primarily due to unfavorable working capital changes[16] - Cash flows from operating activities decreased to $56 million in Q1 2025 from $84 million in Q1 2024[32] - Adjusted free cash flow for the full year 2025 is anticipated to be between $300 million and $390 million[41] - Net cash provided by operating activities is estimated to be between $357 million and $447 million[41] - Expenditures for property, plant, and equipment are projected to be $96 million for the full year 2025[41] Debt and Liquidity - As of March 31, 2025, total principal amount of debt outstanding was $1,494 million, with available liquidity of $760 million[17][18] - Total liabilities increased to $2,975 million as of March 31, 2025, compared to $2,949 million as of December 31, 2024[31] - Interest expense for the full year 2025 is projected to be $117 million[40] Future Outlook - Full-year 2025 net sales outlook is projected between $3.3 billion and $3.5 billion, with net income expected between $209 million and $254 million[20] - The company plans to invest 4.6% of sales in R&D for 2025, focusing more than 50% on zero-emission technologies[22] - Cash payments for repositioning are estimated at $20 million for the full year 2025[41] Other Financial Metrics - The company incurred repositioning costs of $7 million in Q1 2025, compared to $11 million in Q1 2024[33] - Tax expense for the full year 2025 is expected to be between $70 million and $85 million[40] - The company reported a constant currency sales percentage change of -2% for Q1 2025, compared to -5% in Q1 2024[36] - The company announced a cash dividend of $0.06 per share, payable on June 16, 2025[1] - Garrett secured its first major series production award for electric motors, with production expected to start in 2027[3] - Total assets as of March 31, 2025, were $2,275 million, slightly down from $2,276 million as of December 31, 2024[31]

Financial Highlights - Net sales for Q1 2025 were $878 million, a decrease of 4% from $915 million in Q1 2024, with a 2% decline on a constant currency basis [4][38] - Gross profit increased to $179 million, with a gross profit margin of 20.4%, compared to 18.8% in Q1 2024 [7][36] - Net income for Q1 2025 was $62 million, down from $66 million in Q1 2024, resulting in a net income margin of 7.1% [13][36] - Adjusted EBIT rose to $131 million, with an adjusted EBIT margin of 14.9%, compared to 13.2% in the prior year [15][36] - Adjusted EBITDA was $159 million, with an adjusted EBITDA margin of 18.1%, up from 16.5% in Q1 2024 [15][36] - Net cash provided by operating activities totaled $56 million, down from $84 million in Q1 2024 [14][36] - Adjusted free cash flow decreased to $36 million from $68 million in the previous year [16][36] Business Highlights - The company declared a cash dividend of $0.06 per share, payable on June 16, 2025 [2] - The company repurchased $30 million of common stock during the quarter, with a remaining repurchase capacity of $220 million [18] - The company secured new business in turbocharging, particularly in plug-in hybrid and range-extended electric platforms [3][4] - A significant milestone was achieved with the first major series production award for high-speed electric traction motors, expected to start production in 2027 [3][4] Liquidity and Capital Resources - As of March 31, 2025, the company had $760 million in available liquidity, including $130 million in cash and cash equivalents [17] - Total principal amount of debt outstanding was $1,494 million, slightly up from $1,493 million at the end of 2024 [18] Full Year 2025 Outlook - The company expects net sales for 2025 to be between $3.3 billion and $3.5 billion, with a constant currency growth forecast of -3% to +2% [21][44] - Projected net income for 2025 is between $209 million and $254 million [21][45] - Adjusted EBITDA is expected to range from $545 million to $605 million for the full year [21][45]