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Garrett Motion Inc. (GTX)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 beat on revenue and S&P Global consensus EPS; net sales were $0.878B vs $0.838B consensus*, and Primary EPS was ~$0.36 vs ~$0.29*, while GAAP diluted EPS was $0.30; adjusted EBITDA improved year-on-year amid cost actions .
  • Margins expanded YoY (gross margin 20.4% vs 18.8%) on productivity, commodity/transport deflation, and pricing, offsetting lower diesel and aftermarket volumes; management reiterated full-year 2025 outlook .
  • Strategic momentum: first major series production award for high‑speed electric traction motor/inverter (HanDe) with SOP targeted 2027; refinancing extended maturities (term loan 2032, RCF 2030) and liquidity stood at $760M .
  • Watch items: diesel softness (Europe), aftermarket softness (North America), higher tax expense reducing GAAP net income YoY, and tariff/macro uncertainty (company expects full pass-through; ~“$60-ish million” 2025 exposure) .

What Went Well and What Went Wrong

  • What Went Well

    • Margin expansion and operational execution: adjusted EBIT margin 14.9% (+170 bps YoY) and gross margin 20.4% (+160 bps YoY) on productivity, commodity/transport/energy deflation, pricing actions, and structural cost savings implemented in 2024 .
    • Strategic wins and ZEV progress: “first major series production award for our high‑speed electric traction motor and matched inverter… for On Highway Heavy Duty truck applications” (SOP 2027); HanDe agreement signed at Shanghai Auto Show .
    • Capital allocation and balance sheet: $30M buybacks, first quarterly dividend ($12M), liquidity $760M; management refinanced term loan and upsized/extended RCF, adding flexibility .
    • Management quote: “We drove outstanding operating performance and saw the positive impact from structural cost savings actions… We also continued to return capital to shareholders…” — CEO Olivier Rabiller .

  • What Went Wrong

    • Volume headwinds: diesel down (lower industry production, mainly Europe) and aftermarket softness (North America); net sales −4% reported (−2% cc) YoY .
    • Higher tax expense and financing costs: tax expense rose to $23M (vs $15M), other expense increased from term loan/RCF refinancing; GAAP net income fell to $62M (vs $66M) .
    • Working capital drag on cash: CFO fell to $56M (vs $84M), driven by unfavorable working capital changes despite non-cash offsets; adjusted FCF down to $36M (vs $68M) .
    • Analyst concerns: NA mix and CV/aftermarket offsets to gasoline ramp; management flagged tariff/macro uncertainty despite pass‑through .

Financial Results

Key financials (chronological columns: oldest → newest)

MetricQ1 2024Q4 2024Q1 2025
Revenue ($USD Millions)915 844 878
Net Income ($USD Millions)66 100 62
Diluted EPS ($)0.28 0.47 0.30
Gross Profit Margin (%)18.8% 21.6% 20.4%
Adjusted EBITDA ($USD Millions)151 153 159
Adjusted EBITDA Margin (%)16.5% 18.1% 18.1%
Cash from Operations ($USD Millions)84 131 56
Adjusted Free Cash Flow ($USD Millions)68 157 36

Vs. S&P Global consensus (Q1 2025)

MetricQ1 2025 ActualQ1 2025 ConsensusBeat/Miss
Revenue ($USD Millions)878 838*Beat
Primary EPS ($)0.36*0.29*Beat
EBITDA ($USD Millions)141*136*Beat

Note: Company reported diluted EPS was $0.30 (GAAP), while S&P Global “Primary EPS” actual was ~$0.36; similarly, company adjusted EBITDA was $159M vs S&P Global EBITDA actual ~$141M due to differing definitions. Values marked with “*” retrieved from S&P Global.

Segment/product trends (YoY, Q1 2025)

SegmentReported Sales % YoYConstant Currency % YoY
Gasoline+4% +6%
Diesel−14% −11%
Commercial Vehicles−4% −2%
Aftermarket−13% −10%
Other Sales+8% +11%

Operating and liquidity KPIs

KPIQ1 2025Prior
Available Liquidity ($M)760 (Cash $130 + undrawn RCF $630) 725 at 12/31/24 (Cash $125 + undrawn RCF $600)
Total Debt – principal ($M)1,494 1,493 at 12/31/24
Share Repurchases ($M)30 in Q1 2025 296 in FY 2024
Dividend$0.06 per share declared (payable Jun 16, 2025) New dividend framework announced Dec 2024

Guidance Changes

Maintained full-year 2025 outlook; no changes vs Feb 20, 2025 initiation.

MetricPeriodPrevious Guidance (Feb 20, 2025)Current Guidance (May 1, 2025)Change
Net Sales (GAAP)FY 2025$3.3B – $3.5B $3.3B – $3.5B Maintained
Net Sales Growth at Constant CurrencyFY 2025−3% to +2% −3% to +2% Maintained
Net Income (GAAP)FY 2025$209M – $254M $209M – $254M Maintained
Adjusted EBITDAFY 2025$545M – $605M $545M – $605M Maintained
Adjusted EBITFY 2025$427M – $487M $427M – $487M Maintained
Net Cash from Ops (GAAP)FY 2025$357M – $447M $357M – $447M Maintained
Adjusted Free Cash FlowFY 2025$300M – $390M $300M – $390M Maintained
AssumptionsFY 2025LV prod flat to −3%; CV 0–2%; BEV 16%; EUR/USD 1.05; R&D ~4.6% of sales; capex ~2.8% Same plus direct tariff pass‑through; reiterated Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Zero-emission/high‑speed e‑motor & inverterBuilding momentum; partnerships in CV; customer validation; awards (Stellantis) First major series production award; HanDe strategic agreement; SOP 2027; strong interest beyond vehicles into industrial Improving
Product mix: gasoline vs dieselQ3: gasoline/diesel softness; mix headwinds Gasoline +6% cc; diesel softness (Europe); aftermarket softness (NA) Mixed
Tariffs/macroFY25 outlook excluded tariff impacts (Feb) Full pass‑through so far; monitoring macro risk; ~$60M tariff exposure expected to be passed through Watch
Capital allocation2024: $296M buybacks; new 2025 plan; dividend initiation $30M buybacks; $0.06 dividend declared; targeting ≥75% of adj. FCF to shareholders over time Ongoing
FX (EUR/USD)2024 Q3 stable FX assumption 1.08 Guidance holds 1.05; higher EUR would benefit revenue/profit but staying prudent Neutral/benefit potential

Management Commentary

  • Strategy and execution: “We achieved outstanding operating performance… benefits from structural cost savings actions implemented in 2024… continued to return capital to shareholders through $30 million of repurchases and our first quarterly dividend” — CEO Olivier Rabiller .
  • Technology leadership: “We secured our first series production award… integrating Garrett’s high‑speed e‑motor and inverter… for heavy‑duty trucks with production targeted for 2027” — CEO Olivier Rabiller .
  • Profitability focus: “We have transitioned to adjusted EBIT as a measure of profitability… highlighting the strength of our asset‑light and cash‑generative operating model” — CFO Sean Deason .
  • Risk management: “We are closely monitoring… tariffs… have been able to implement pass‑through… ready to take further measures to recover costs and adapt to slowing demand” — CEO Olivier Rabiller .

Q&A Highlights

  • North America dynamics: Gasoline ramps (new launches/ramp-ups) offset by softer CV (off-highway) and aftermarket in NA; mix effects explain limited change in % of sales .
  • Gasoline opportunity set: OEMs pivoting to hybrids and range‑extended EVs, particularly in North America; turbo content seen as supported through decade-end .
  • China: Healthy share across passenger and commercial vehicles; progress with leading local brands; hybrids and range‑extended EVs driving turbo demand .
  • FX and tariffs: Stronger EUR would be favorable to revenue and profit; tariff exposure around “$60‑ish million,” expected to be fully passed through; only ~20% of sales in NA; region‑for‑region manufacturing helps limit exposure .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue $878M vs $838M (beat), Primary EPS ~$0.36 vs ~$0.29 (beat), EBITDA ~$141M vs ~$136M (beat). Company GAAP diluted EPS was $0.30 and adjusted EBITDA $159M; differences reflect metric definitions between company reporting and S&P Global normalization . Values marked with “*” retrieved from S&P Global.
  • Coverage depth was limited (2 estimates for revenue and EPS), suggesting potential for estimate dispersion as coverage expands.*
MetricQ1 2025 ConsensusQ1 2025 Actual (S&P Global)
Revenue ($USD Millions)838.0*878.0*
Primary EPS ($)0.2895*0.3584*
EBITDA ($USD Millions)136.0*141.0*
Primary EPS – # of Estimates2*—
Revenue – # of Estimates2*—

Values marked with “*” retrieved from S&P Global.

Key Takeaways for Investors

  • Quality beat: Revenue and S&P Global Primary EPS exceeded consensus on better gasoline ramps and cost execution; margin expansion supports earnings durability in a mixed demand backdrop .
  • Guidance intact: Full‑year 2025 outlook maintained; tariff costs being passed through, but macro demand risk persists (monitor diesel/aftermarket and tariff developments) .
  • ZEV optionality: HanDe series production award validates high‑speed e‑motor/inverter; potential multi‑year growth vector into 2027+ alongside core turbo franchise .
  • Capital returns + balance sheet: Ongoing buybacks/dividend with ample liquidity and extended maturities; management targets distributing ≥75% of adjusted FCF over time .
  • Mix watch: Gasoline strength offset by diesel and aftermarket softness; regional diversification (only ~20% NA sales) and region‑for‑region manufacturing mitigate policy shocks .
  • Estimate implications: Limited street coverage and positive Q1 surprise likely prompt modest upward revisions to revenue/EPS and focus on cadence of working capital recovery and cash conversion into 2H .

References: Q1 2025 8‑K/press release ; Q1 2025 press release ; Q1 2025 earnings call ; Q4 2024 8‑K ; Q3 2024 8‑K .

S&P Global estimates disclaimer: Values marked with “*” retrieved from S&P Global.