Core Insights - Garrett Motion Inc. inaugurated its new Wuhan Innovation Center, enhancing its zero-emission R&D capabilities in China and globally [2][3] - The center is part of Garrett's strategy to strengthen its position as a leader in differentiated automotive technologies, particularly in electrification and decarbonization [3][7] Company Developments - The Wuhan Innovation Center is Garrett's second innovation hub in China, complementing the Shanghai R&D Center to create a "dual innovation engine" [2][5] - The center focuses on high-speed E-Powertrain systems for zero-emission applications, supporting both automotive and industrial decarbonization efforts [5][9] Technological Advancements - Garrett has a history of innovation in mobility technologies, including variable geometry turbines and hydrogen fuel cell compressors, with a strong emphasis on zero-emission solutions [4][6] - The E-Powertrain system integrates an electric motor, inverter, and gearbox, reducing system size and weight by up to 40% and cutting the use of critical materials by approximately 30% [8] Strategic Importance - The Wuhan Innovation Center embodies Garrett's "East for East" strategy, integrating R&D and manufacturing capabilities to accelerate the commercialization of zero-emission technologies [10] - The center aims to attract cross-disciplinary talent and foster partnerships with academic institutions and industry players to drive innovation [10]

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].

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]

Core Insights - Garrett Motion is transitioning from a traditional turbo supplier to a cash-flowing entity with opportunities in electric vehicles (EV) and industrial sectors, indicating a strategic shift in its business model [1] - The stock of Garrett Motion is still considered a buy due to the ongoing relevance of turbochargers and internal combustion engines (ICE) in the market [1] Company Overview - Garrett Motion is focusing on enhancing its cash flow while diversifying into emerging markets such as EVs and industrial applications [1] - The company is leveraging its legacy in turbo technology while adapting to new market demands [1] Market Position - The relevance of turbochargers and ICE remains significant, which supports the investment thesis for Garrett Motion's stock [1] - The company is positioned to benefit from both traditional automotive markets and the growing EV sector, providing a balanced growth opportunity [1]