Sign in
GM

Garrett Motion Inc. (GTX)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue of $844M (-11% YoY) with strong margin resilience: gross margin 21.6% (+160 bps YoY) and adjusted EBITDA margin 18.1% (+280 bps YoY), driven by productivity, deflation and mix; diluted EPS rose to $0.47 from $0.22 YoY .
  • Cash generation remained robust: Q4 cash from operations $131M and adjusted free cash flow $157M; full-year AFCF was $358M (60% conversion of adjusted EBITDA), enabling $296M in buybacks (13% share reduction) .
  • 2025 outlook introduced: net sales $3.3–$3.5B, net income $209–$254M, adj. EBITDA $545–$605M, adj. FCF $300–$390M; R&D planned at 4.6% of sales with >50% to zero-emission tech; new $250M repurchase authorization and $50M annual dividend underpin capital return .
  • Estimate comparisons: S&P Global Wall Street consensus data was unavailable at time of analysis due to data-access limits; we cannot quantify beats/misses vs consensus for Q4 2024 (or prior two quarters). We will update upon access restoration.

What Went Well and What Went Wrong

  • What Went Well
    • Margin expansion despite lower volumes: Q4 adjusted EBITDA margin 18.1% (+280 bps YoY); management cited cost productivity, deflation and favorable mix as key drivers .
    • Cash generation and returns: Q4 adjusted FCF $157M; full-year AFCF $358M (60% conversion) enabled $296M buybacks (13% share reduction) and paved the way for a $50M 2025 dividend and new $250M buyback plan .
    • Strategic tech traction: CEO emphasized validation and early production awards for high-speed e-powertrain (3-in-1), fuel cell compressors and thermal tech; first launches as early as 2027 .
  • What Went Wrong
    • Demand headwinds: Q4 net sales down 11% YoY on diesel softness in Europe and gasoline softness in China/North America; constant-currency declines across gasoline (-8%) and diesel (-22%) .
    • FX and mix headwinds: Q4 foreign exchange was a headwind; unfavorable mix and higher R&D spend pressured gross profit despite margin expansion .
    • Industry softness and competitive pressure at OEMs persisted through 2024; management expects light vehicle production flat to down 3% in 2025, tempering top-line growth .

Financial Results

Headline metrics by quarter

MetricQ2 2024Q3 2024Q4 2024
Revenue ($M)$890 $826 $844
Diluted EPS ($)$0.28 $0.24 $0.47
Adjusted EBITDA ($M)$150 $144 $153
Gross Margin (%)20.8% 20.1% 21.6%
Adjusted EBITDA Margin (%)16.9% 17.4% 18.1%
Net Income Margin (%)7.2% 6.3% 11.8%

Q4 2024 vs Q4 2023 (YoY)

MetricQ4 2023Q4 2024
Revenue ($M)$945 $844
Diluted EPS ($)$0.22 $0.47
Adjusted EBITDA ($M)$145 $153
Gross Margin (%)20.0% 21.6%
Adjusted EBITDA Margin (%)15.3% 18.1%
Net Income Margin (%)5.5% 11.8%

Segment/Product trends (Q4 2024 YoY, constant currency)

CategoryYoY Constant-Currency Sales Change
Gasoline-8%
Diesel-22%
Commercial Vehicles+3%
Aftermarket-3%
Other Sales-24%

KPIs and balance sheet (Q4 2024)

KPIQ4 2024
Cash from Operations ($M)$131
Adjusted Free Cash Flow ($M)$157
Expenditures for PP&E ($M)$22
Liquidity ($M)$725 ($125 cash + $600 undrawn RCF)
Total Debt, principal ($M)$1,493
Q4 Share Repurchases ($M)$70
Weighted Avg Diluted Shares212,955,723

Estimates vs. Actuals

  • S&P Global consensus estimates for revenue, EPS, and EBITDA for Q4 2024 (and prior two quarters) were not accessible at time of analysis due to S&P Global daily request limits. We cannot determine beat/miss vs. consensus at this time. We will update once access is restored.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (GAAP)FY 2025—$3.3B–$3.5B New
Net Sales Growth at CCFY 2025—-3% to +2% New
Net Income (GAAP)FY 2025—$209M–$254M New
Adjusted EBITDA (Non-GAAP)FY 2025—$545M–$605M New
Adjusted EBIT (Non-GAAP)FY 2025—$427M–$487M New
Net Cash from Ops (GAAP)FY 2025—$357M–$447M New
Adjusted Free Cash FlowFY 2025—$300M–$390M New
RD&E (% of Sales)FY 2025—~4.6%; >50% to zero-emission tech New
Capex (% of Sales)FY 2025—~2.8%; >25% to zero-emission tech New
Dividend2025—~$50M annual; $0.06 per share declared for Jan 31, 2025 Initiated
Share Repurchases20252024 program expiredNew $250M authorization New

Notes:

  • Management expects 2025 light vehicle production flat to down 3%, commercial vehicles 0% to +2%, and BEV penetration ~16%; FX assumption EUR/USD 1.05 .
  • 2025 adj. EBITDA expected flat ex-FX; adj. EBIT slightly lower ex-FX due to stock comp and depreciation .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Zero-emission tech (fuel cell compressors, high-speed e-powertrain, thermal/Equilibrium tech)Q2: Wins in fuel cell compressors; first e-powertrain predevelopment programs with CV players . Q3: SinoTruk e-powertrain LOI; Stellantis Innovation Award; momentum across zero-emission high-speed solutions .Moving from prototyping to lab/vehicle testing; first production awards as early as 2027; significant customer interest across auto and non-auto (data centers, battery farms) .Positive validation; pipeline maturing toward SOP 2027.
Macro/tariffs/geopoliticsNot highlighted in Q2/Q3 press releases .Management stressing flexibility; proactive customer engagement amid tariff/geopolitical uncertainty .Heightened focus on agility.
Regional trends (China/Europe/NA)Q2: Demand softness across gasoline/diesel/CV; aftermarket strength . Q3: Industry softness in Europe/China; aftermarket +1% CC YTD .Gasoline softness in China/NA; ramp-ups in Europe; traction with new Chinese brands; commercial vehicle early recovery in China/NA .Europe stabilizing; China mix shifting (PHEV/REVs).
Capital allocationQ2: $65M buybacks; $800M notes issuance, deleveraging . Q3: Continued repurchases; liquidity strong .2024 buybacks $296M; 2025: $250M buyback + $50M dividend; refi term loan (saves ~$3M/yr), upsized RCF to $630M .Increasing shareholder returns; improved flexibility.
R&D intensityFY24 outlook: ~4.4% (Q2) ; ~4.7% (Q3) .2025 plan: 4.6% with >50% to zero-emission tech; continued turbo investment .Sustained investment mix toward ZET.
Product/category performanceQ2: Aftermarket +7% CC; mix/FX headwinds . Q3: Gasoline/diesel pressure; CV flat; aftermarket resilient .Q4 CC change: Gasoline -8%, Diesel -22%, CV +3%, Aftermarket -3%; Europe ~45% of sales .CV recovery emerging; LV softness persists.

Management Commentary

  • CEO: “We expanded adjusted EBITDA margin by 90 basis points year-over-year to 17.2% and generated $358 million in adjusted free cash flow... We also announced... a new capital allocation plan which includes the initiation of a $50 million annual dividend... and a new $250 million share repurchase program for 2025.” .
  • CFO: “We generated very strong adjusted free cash flow of $157 million in the quarter... We expect to continue to deliver a 60% adjusted free cash flow conversion on adjusted EBITDA annually.” .
  • CFO on 2025 outlook midpoints: “Net sales of $3.4 billion... net income of $232 million, adjusted EBITDA of $575 million, adjusted EBIT of $457 million, net cash from operations of $402 million and adjusted free cash flow of $345 million.” .
  • CEO on tech roadmap: “We are seeing several passenger and commercial vehicle customers embracing and testing our advanced three-in-one high-speed technology solution... with first production awards expected to launch as early as 2027.” .

Q&A Highlights

  • Tariffs/geopolitics: Management emphasized flexibility and rapid response with customers amid uncertainty; building processes to react faster than five years ago .
  • China strategy: Continued importance of China; traction with new local brands (PHEV, range extender), building specific products for those platforms; timing of new business aligns with 2026–2027 .
  • Adjusted FCF definition: Operating cash flow less capex, excluding repositioning and other one-time items; factoring is adjusted out to avoid transient benefits .
  • M&A posture: Organic growth (turbo leadership, zero-emission solutions) remains priority; active but high bar for non-dilutive M&A .

Estimates Context

  • We attempted to retrieve S&P Global consensus estimates for GTX for Q4 2024 and the prior two quarters, including Revenue Consensus Mean, Primary EPS Consensus Mean, and EBITDA Consensus Mean; however, access was blocked due to S&P Global daily request limits at the time of analysis. As a result, we cannot assess beats/misses vs consensus in this report. We will update when access is restored.

Key Takeaways for Investors

  • Margin and cash resilience: Despite an 11% YoY revenue decline in Q4, adjusted EBITDA margin expanded to 18.1% and adjusted FCF reached $157M, underscoring structural cost actions and strong operational execution .
  • 2025: Managing for stability with FX headwinds: Outlook implies flat adj. EBITDA ex-FX and steady margins (17.2% midpoint), with R&D sustained at 4.6% of sales and emphasis on zero-emission technologies .
  • Capital returns accelerate: New $250M repurchase authorization and $50M dividend (initiated in Q1’25) support shareholder yield while maintaining ample liquidity and extended maturities post-refi .
  • End-market dynamics: Light vehicle remains soft (gasoline/diesel), but commercial vehicles show early recovery; aftermarket modestly softer in Q4; geographic mix shows Europe stabilizing and growing engagement with Chinese OEMs .
  • Strategic optionality from tech: Validated high-speed e-powertrain and fuel cell compressors broaden TAM beyond core turbo; first SOPs around 2027 present medium-term growth optionality .
  • Watch items: FX (EUR/USD), tariff/geopolitics, OEM competitive pressure and platform consolidation remain key variables; management signaling agility and cost discipline to sustain margins .
  • Update pending on consensus: We could not assess beats/misses due to S&P Global access limits; reassess stock setup once consensus comparisons are available.

Supporting detail and sources:

  • Q4 2024 8-K/press release and 2025 outlook .
  • Q4 2024 earnings call transcript prepared remarks and Q&A .
  • Q3 2024 press release for prior-quarter trends .
  • Q2 2024 press release for prior-quarter trends .
  • Capital allocation framework (dividend/buyback) .