Garrett Motion (GTX) Q2 2024 earnings summary

Executive summary

• Q2 2024 net sales were $890M, down 12% year-over-year, with net income of $64M and a 16.9% Adjusted EBITDA margin, up 40bps sequentially and 10bps year-over-year.

• Adjusted EBITDA was $150M, down from $170M in Q2 2023, but margin improved; adjusted free cash flow was $62M.

• Advanced turbo and zero-emission vehicle technologies, securing new contracts in industrial, marine, and commercial vehicle segments.

• Maintained operational efficiency and cost flexibility to offset lower sales volumes and industry headwinds.

• Completed $65M in share repurchases in Q2, with $176M remaining under the current program.

Financial highlights

• Q2 2024 net sales were $890M, down 12% year-over-year (10% at constant currency), with gasoline and diesel products down 15% and 14% respectively.

• Adjusted EBITDA was $150M (16.9% margin), down from $170M, and adjusted free cash flow was $62M.

• Gross profit for Q2 2024 was $185M (20.8% margin), down from $202M (20.0%) in Q2 2023.

• Net income for Q2 2024 was $64M, down from $71M in Q2 2023; net income margin was 7.2%.

• Aftermarket sales grew 7% at constant currency, now 14% of net sales.

Outlook and guidance

• Full-year 2024 net sales expected at $3.50B–$3.65B, revised down from prior $3.80B–$3.95B guidance.

• Net income forecasted at $245M–$285M; adjusted EBITDA at $583M–$633M; adjusted free cash flow at $300M–$400M.

• Sales expected to be flat to slightly down in H2 2024; commodity deflation to continue, with no EBITDA impact due to pass-through.

• Key assumptions: light vehicle industry down 2%, commercial vehicle industry flat to down 1%, increased investment in electrification.

• Maintains strong operational execution and cash generation despite ongoing market volatility.