GTX Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Net Sales: $976 million, a 7% increase year-over-year (5% at constant currency).

Adjusted EBIT: $152 million, with an adjusted EBIT margin of 15.6%, up 200 basis points year-over-year.

Adjusted Free Cash Flow: $122 million, reflecting strong earnings to cash conversion (80% conversion rate).

Liquidity: Total liquidity of $788 million, including $630 million available under the revolver and $158 million in unrestricted cash.

Capital Returns: $15 million in dividends paid and $28 million in stock repurchases during the quarter.

2Strategic Updates and Business Highlights

Growth across all verticals, with notable performance in commercial vehicle and industrial applications.

Secured multiple awards for turbo technologies, including a significant program in North America and new power generation awards.

Continued development in zero-emission technologies, including partnerships for electric powertrains and HVAC applications.

Strong demand for industrial turbo applications, with expectations of reaching $200 million in sales for the year.

3Forward Guidance and Outlook

2026 Outlook: Increased guidance for net sales to $3.8 billion (4% growth at constant currency), adjusted EBIT of $580 million (15.3% margin), and adjusted free cash flow of $430 million.

Anticipated growth driven by share demand gains and a positive product mix, despite a softer outlook for light vehicle demand.

4Bad News, Challenges, or Points of Concern

Light Vehicle Market: Downgraded industry outlook due to weaker light vehicle demand, although Garrett expects to outperform the market.

Geopolitical and Macroeconomic Risks: Ongoing uncertainties in the macro environment could impact future performance.

Pricing Pressures: No significant price reductions anticipated, but the company acknowledges challenges in maintaining volume amidst a declining market.

5Notable Q&A Insights

Commercial Vehicle Demand: Positive trends in order books from European manufacturers, with expectations of growth in both on-highway and off-highway segments.

Genset Turbo Awards: Awards primarily from existing customers, with a focus on both diesel and natural gas generators. Revenue from these awards expected to grow but not significantly impact 2027.

E-Cooling Technology: Progress on HVAC applications, particularly for data centers, with production expected to start between late 2027 and early 2028.

Margin Dynamics: Stable margins expected in commercial vehicles, with ongoing efforts to improve operational efficiency and manage costs. Overall, Garrett Motion reported a strong quarter with solid growth and strategic advancements, while navigating challenges in the light vehicle market and broader economic uncertainties.