Garrett Motion Inc - New
Q2 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +1.27%.
Did GTX Beat Earnings? Q2 2025 Results
Garrett Motion posted a mixed but broadly solid second quarter, delivering earnings per share of $0.42 against a flat consensus estimate while revenue of $913.00 million came in just 0.54% below the $918.00 million Wall Street had anticipated, still representing 2.6% growth year over year. The most material driver of the quarter was a sharp improvement in net income, which climbed 36% to $87.00 million from $64.00 million a year ago, largely on the back of $37.00 million in lower interest expense, even as gross margin compressed to 19.8% from 20.8% due to $25.00 million in unfavorable product mix headwinds. Adjusted free cash flow nearly doubled to $121.00 million from $62.00 million, reflecting favorable working capital dynamics. Looking ahead, Garrett raised its full-year 2025 net sales outlook to $3.40 billion to $3.60 billion and lifted its net income guidance to $233.00 million to $278.00 million, citing favorable currency tailwinds, a constructive signal for a stock that has already gained roughly 39% year-to-date amid growing confidence in the durability of its turbocharger business.
- Strong demand for gasoline and commercial vehicle turbocharger applications
- Favorable foreign currency translation of $23 million (3% impact)
- Recoveries on newly enacted import tariffs
- Productivity gains of $11 million offset by $25 million unfavorable product mix
- Significant reduction in interest expense ($37 million lower YoY) due to reduced debt issuance cost amortization
- Favorable working capital changes driving operating cash flow improvement
“Garrett delivered another strong quarter, outperforming the industry with solid financial results and an Adjusted EBIT margin of 13.6%. Our operational execution generated $121 million of Adjusted free cash flow, enabling $22 million in share repurchases and the payment of our second quarterly dividend of $13 million. We also reinforced our leadership in turbocharging, by securing awards for more than $1 billion in light vehicle program extensions whilst continuing to advance our zero-emission technologies, achieving new milestones in our E-Powertrain, E-Cooling, and Fuel Cell programs. With the launch of our second innovation center in Wuhan, we are scaling our R&D capabilities to meet the growing global demand for high-efficiency electrification solutions. Lastly, our inclusion in the Russell 2000® index this quarter reflects the positive momentum generated by our strategy and capital discipline.”
Garrett Motion CEO, on the earnings call
Forward Guidance & Outlook
Garrett raised its full-year 2025 outlook to reflect favorable foreign currency impacts. Updated guidance: net sales of $3.4 billion to $3.6 billion (prior: $3.3B-$3.5B); net income of $233M-$278M (prior: $209M-$254M); Adjusted EBIT of $470M-$530M (prior: $427M-$487M); Adjusted EBITDA of $590M-$650M (prior: $545M-$605M); operating cash flow of $370M-$450M; adjusted free cash flow of $330M-$410M. Constant currency sales growth unchanged at -3% to +2%. Assumptions include light vehicle industry production down 3% to flat, commercial vehicle production flat to +2%, 16% average BEV penetration, EUR/USD at 1.13, R&D investment at 4.2% of sales, capex at 2.5% of sales, and full direct tariff recovery (excludes potential indirect impact of global trade policies).
GTX YoY Financials
Figures from SEC filings and company reports. Not investment advice.