Garrett Motion (US:GTX)2024-10-24 11:02Financial Performance - In Q3 2024, Garrett Motion Inc. reported a net income of $52 million and an Adjusted EBITDA of $144 million[101]. - Net sales for Q3 2024 decreased by $134 million or 14% compared to the prior year, primarily due to lower gasoline and diesel application sales[109]. - For the nine months ended September 30, 2024, net sales decreased by $310 million or 11% compared to the prior year[112]. - Net income for the three months ended September 30, 2024 decreased by $5 million compared to the prior year, primarily due to $10 million decreased gross profit and $11 million higher tax expense[132]. - For the nine months ended September 30, 2024, net income decreased by $27 million compared to the prior year, primarily due to $44 million decreased gross profit[133]. - For the three months ended September 30, 2024, net income decreased by $5 million, and Adjusted EBITDA decreased by $8 million, primarily due to lower volumes and commodity deflation impacts[140]. - During the nine months ended September 30, 2024, net income decreased by $27 million, and Adjusted EBITDA decreased by $45 million, mainly due to soft demand across all product lines except aftermarket[144]. Sales and Revenue - Gasoline product sales fell by $81 million or 19%, driven by reduced demand in China and North America[110]. - Diesel product sales decreased by $49 million or 21%, mainly due to lower passenger vehicle sales in Europe[110]. - For the nine months ended September 30, 2024, gross profit decreased by $44 million, primarily due to $92 million lower sales volumes and $51 million from commodity deflation impact on pricing[119]. Expenses and Costs - Cost of goods sold for Q3 2024 was $660 million, a decrease of $124 million or 15.8% compared to Q3 2023[114]. - Selling, general and administrative (SG&A) expenses for the three months ended September 30, 2024 decreased by $6 million, primarily driven by $5 million lower professional service and legal fees[121]. - Interest expense for the three months ended September 30, 2024 decreased by $11 million, primarily due to $10 million lower debt issuance cost amortization[123]. - For the nine months ended September 30, 2024, interest expense increased by $26 million, primarily driven by $17 million higher accelerated debt issuance cost amortization[124]. Shareholder Actions - The company repurchased $52 million of common stock in Q3 2024, with $124 million remaining under the share repurchase program[102]. - The company repurchased $226 million of common stock during the nine months ended September 30, 2024, with $124 million remaining under the authorized share repurchase program[152]. Debt and Financing - Garrett Motion Inc. completed an $800 million offering of 7.75% Senior Notes and repaid $985 million in debt during Q2 2024[103]. - The company completed an offering of $800 million in aggregate principal amount of the 2032 Senior Notes, which bear interest at a rate of 7.75% per annum[149]. Cash Flow and Liquidity - Cash provided by operating activities decreased by $53 million for the nine months ended September 30, 2024, primarily driven by a decrease in net income and unfavorable impacts from changes in working capital[153]. - Cash used for financing activities was $439 million for the nine months ended September 30, 2024, compared to $366 million in the prior year, including $226 million for common stock repurchases[155]. - As of September 30, 2024, cash and cash equivalents were $96 million, down from $259 million as of December 31, 2023[147]. Tax and Non-Operating Income - The effective tax rate for the three months ended September 30, 2024 was 31.6%, compared to 18.6% for the same period in 2023[128]. - Non-operating income for the nine months ended September 30, 2024 was $7 million, compared to an expense of $3 million in the prior year[126]. - The company recorded $23 million of gains on interest derivatives for the nine months ended September 30, 2024, compared to $18 million in the prior year[124]. Research and Development - R&D expenses increased by $6 million for the three months and $10 million for the nine months ended September 30, 2024, reflecting continued investment in new technologies and zero-emission technologies[141][145]. Currency and Risk Management - Losses in foreign currency from translational and transactional effects accounted for a $4 million decrease in Adjusted EBITDA for the three months and an $18 million decrease for the nine months ended September 30, 2024[142][146]. - As of September 30, 2024, the net fair value of all financial instruments with exposure to currency risk was a $8 million liability[166]. - A hypothetical 10% adverse change in currency exchange rates could result in a potential loss of $213 million, while a favorable change could yield a gain of $(187) million[166]. - There have been no material changes to the Company's disclosures about interest rate or commodity price risks since the 2023 Form 10-K[167]. Market Expansion - The company secured significant contracts in marine and power generation sectors, indicating successful expansion in new markets[102].