Garrett Motion (US:GTX)2025-10-23 13:30Financial Data and Key Metrics Changes - Net sales for Q3 2025 were $902 million, representing a 6% increase at constant currency and a 9% increase on a reported basis compared to the previous year [5][10] - Adjusted EBIT was $133 million with an adjusted EBIT margin of 14.7%, reflecting a 50 basis point improvement year-over-year [10][12] - Adjusted free cash flow for the quarter was $107 million, contributing to a year-to-date total of $264 million [16][18] - The company raised its 2025 outlook midpoint, now projecting net sales of $3.55 billion and adjusted EBIT of $510 million [15] Business Line Data and Key Metrics Changes - Gasoline sales grew by 10% in Q3, driven by demand gains and new product launches [5][11] - Diesel performance was strong in Europe and North America, although overall diesel trends are slowly declining [36][37] - The aftermarket experienced weakness, particularly in the commercial vehicle off-highway segment [20][21] Market Data and Key Metrics Changes - The company noted strong growth in light vehicle turbo sales, outperforming the industry [5][11] - Demand for stationary power generation products is expected to exceed $100 million in 2025, driven by the expansion of data centers [7][17] - The company secured several awards for zero-emission technologies, indicating strong customer interest [8][31] Company Strategy and Development Direction - The strategic focus remains on developing differentiated, high-speed, and highly efficient technologies to meet customer needs [16] - The company is investing in turbo and zero-emission technologies, with a goal of achieving $1 billion in revenue from zero-emission technologies by 2030 [28][30] - The company aims to return 75% of adjusted free cash flow to shareholders through dividends and share repurchases [14][44] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the automotive industry's improved forecast for the second half of 2025 [6][15] - The company is optimistic about the growth potential in zero-emission technologies and stationary power applications [8][32] - Management acknowledged cyclical effects impacting the aftermarket and commercial vehicle segments but expects recovery over time [21][22] Other Important Information - The board approved a 33% increase in the quarterly dividend, raising it to $0.08 per share for Q4 2025 [6][14] - The company repurchased $84 million of common stock during the quarter [6][14] - Both Fitch and S&P upgraded the company's ratings, reflecting reduced net leverage and decreased private equity ownership [13] Q&A Session Summary Question: Can you elaborate on the volume mix and its geographic impact? - Management clarified that the mix impact is primarily due to the growth in gasoline versus commercial vehicles and ongoing weakness in the aftermarket, particularly in the commercial vehicle off-highway segment [20][21] Question: What is the outlook for commercial vehicle strength? - Management noted that while the outlook is generally soft, there are signs of stabilization in China, particularly in off-highway applications [23][24] Question: Can you discuss the progress on zero-emission technologies? - Management highlighted three key technologies contributing to the $1 billion revenue goal, with significant potential from e-power trains and eco-link compressors [28][30][31] Question: What is the recovery seen in diesel? - Diesel remains a strong business, particularly in light commercial vehicles, despite a general trend of decline in passenger vehicle diesel applications [36][37] Question: What are the expectations for stationary power revenue? - Management indicated that stationary power applications are growing rapidly, with $100 million expected this year, primarily from gensets for data centers [38][42] Question: What should be expected regarding capital allocation and share repurchases? - Management reaffirmed the commitment to return capital to shareholders, targeting 75% of adjusted free cash flow over time, with variability based on market conditions [44][53]