Garrett Motion (GTX) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were $826 million, down 14% year-over-year, reflecting industry softness in Europe and China, competitive OEM pressures, and customer mix headwinds, but gross margin improved to 20.1% and adjusted EBITDA margin to 17.4%.

• Net income was $52 million (6.3% margin), with adjusted EBITDA of $144 million, supported by cost actions and commodity deflation pass-through.

• Generated $71 million in adjusted free cash flow and repurchased $226 million in stock year-to-date, with $52 million repurchased in Q3 and $124 million remaining under the program.

• Secured new business wins in marine, commercial, and zero-emission vehicle technologies, including a partnership with Sinotruk for e-powertrain systems and recognition from Stellantis.

• Divested equity interest in a JV for $58 million, recognizing a $27 million gain.

Financial highlights

• Q3 2024 net sales declined to $826 million from $960 million in Q3 2023, a 14% decrease; nine-month net sales were $2.63 billion, down 11%.

• Adjusted EBITDA margin improved to 17.4%, up 160 basis points year-over-year, despite lower volumes.

• Gross profit was $166 million (20.1% margin), with net income for Q3 at $52 million and EPS of $0.24.

• Adjusted free cash flow for Q3 was $71 million, up from $57 million in Q3 2023.

• Liquidity at quarter-end was $696 million, including $600 million undrawn revolver and $96 million cash; total debt outstanding was $1,495 million.

Outlook and guidance

• Full-year 2024 net sales outlook revised to $3.40–$3.50 billion, down from prior $3.50–$3.65 billion, with expected net income of $240–$255 million and adjusted EBITDA of $585–$605 million.

• Adjusted free cash flow expected at $300–$350 million; capital expenditures projected at ~2.5% of sales, with over 30% for zero-emission technologies.

• Over 50% of 2024 R&D spend dedicated to zero-emission technologies; R&D at ~4.7% of sales.

• Q4 sales expected to be flat sequentially, reflecting continued industry softness.

• Management remains focused on operational execution and investment in electrification and new technologies.