Garrett Motion (GTX) - 2024 Q4 - Annual Report

Financial Performance - In 2024, net income was $282 million and adjusted EBITDA was$598 million, despite a global decrease in turbocharger production from approximately 50 million units in 2023 to 49 million units in 2024 [191]. - Total net sales for 2024 were $3,475 million, a decrease of$411 million or 11% compared to 2023, primarily due to soft demand in gasoline, diesel, and commercial vehicle applications [201]. - Gross profit for 2024 was $705 million, a decrease of$51 million from the previous year, mainly due to lower sales volumes [212]. - Adjusted EBITDA for the year ended December 31, 2024, decreased by $37 million compared to the prior year, mainly due to soft demand across all product lines except aftermarket [236]. - The company reported a decrease in gross profit of$51 million for the year ended December 31, 2024, impacting net income despite other positive factors [228]. Sales and Demand - Diesel product sales decreased by $165 million or 17$215 million or 13% in 2024, impacted by soft demand in China and North America [202]. - The company experienced a decline in demand for gasoline, diesel, and commercial vehicle applications during 2024, partially offset by favorable demand in aftermarket for replacement parts in North America, China, and Europe [237]. Expenses and Costs - Cost of goods sold decreased by 360 million in 2024, primarily due to lower sales volumes and commodity deflation [211]. - For the year ended December 31, 2024, selling, general and administrative (SG&A) expenses decreased by 7 million to $240 million, representing 6.9$31 million to $247 million, primarily due to legal and advisory fees related to a transaction [216]. - Interest expense for the year ended December 31, 2024, decreased by$3 million to $156 million, primarily due to$24 million of higher gains on interest derivatives [217]. Investments and Dividends - The Board of Directors announced plans to declare and pay quarterly dividends totaling approximately $50 million in 2025 [195]. - The company expects capital spending to increase slightly in 2025 compared to 2024, driven by investments in new product launches [248][262]. - The company repurchased$296 million of its Common Stock during the year ended December 31, 2024, under a $350 million share repurchase program [251]. Cash Flow and Liquidity - Cash provided by operating activities decreased by$57 million for the year ended December 31, 2024, primarily due to a $32 million change in working capital [255]. - Liquidity overview shows cash and cash equivalents decreased to$125 million in 2024 from $259 million in 2023 [246]. - Cash used for financing activities increased by$117 million in 2024, primarily due to $992 million in debt repayments [257]. Tax and Non-Operating Income - The effective tax rate for 2024 decreased to 24.8$13 million compared to $2 million in the prior year, driven by a$13 million loss on remeasurement of Series A Preferred Stock Agreements in the prior year [220]. Currency and Interest Rate Risk - As of December 31, 2024, the net fair value of all financial instruments with exposure to currency risk was a $87 million asset, with a potential loss or gain of$196 million from a hypothetical 10% change in currency exchange rates [282]. - The net fair value of all financial instruments with exposure to interest rate risk was a $6 million asset as of December 31, 2024, with a 50 basis point increase in interest rates potentially increasing interest expense by$4 million [283][284]. - Approximately 83% of the cost of sales consists of purchased components with significant raw material content, with a 10% variation in commodity prices potentially impacting cost of sales by up to $43 million per year [285].