Garrett Motion (GTX)2025-05-01 12:30Financial 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]