MAY 01,, 2025 Q1 2025 FINANCIAL RESULTS © 2025 Garrett Motion Inc. Forward Looking Statements This communication and related comments by management may include "forward-looking statements" within the meaning of the U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact and can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should, " ...

Sales Performance - For the three months ended March 31, 2025, net sales decreased by $37 million or 4% to $878 million compared to $915 million in the prior period[112][113]. - Diesel product sales decreased by $33 million or 14% to $208 million, primarily due to a transition to gasoline hybrids in Europe[110][115]. - Gasoline product sales increased by $15 million or 4% to $403 million, driven by new application launches in North America and recovery in Japan[110][114]. Profitability - Gross profit increased by $7 million to $179 million, with a gross profit margin of 20.4%, up from 18.8% in the prior year[118][119]. - Net income for the three months ended March 31, 2025, decreased by $4 million to $62 million, with a net income margin of 7.1%[128]. - Adjusted EBIT increased by $10 million to $131 million, driven by productivity improvements and lower costs, despite lower volumes across all product lines except gasoline[137]. Expenses - Selling, general and administrative expenses decreased by $5 million to $59 million, representing 6.7% of sales[120]. - Cash provided by operating activities decreased by $28 million to $56 million, primarily due to unfavorable working capital changes[147]. - R&D expenses remained flat, reflecting a shift in investment focus from turbo technology to zero-emission technologies[140]. Shareholder Actions - The company repurchased $30 million of common stock under its share repurchase program, with $220 million remaining authorized[107]. - Cash used for financing activities was $31 million, significantly lower than $112 million in the prior year, with $30 million allocated for common stock repurchases[149]. - The company repurchased $30 million of common stock during the three months ended March 31, 2025, with $220 million remaining under the share repurchase program[145]. Debt and Taxation - The company refinanced its debt, replacing the 2021 Dollar Term Facility with a new 2025 Dollar Term Facility of $692 million[106]. - The effective tax rate increased to 27.1% from 18.5% in the prior year, primarily due to higher U.S. taxes on international operations[125]. - The company refinanced its $692 million 2021 Dollar Term Facility with a new 2025 Dollar Term Facility, maturing on January 30, 2032[143]. Currency Effects - Losses from foreign currency effects accounted for a $7 million decrease in Adjusted EBIT for the three months ended March 31, 2025[142]. - The net fair value of financial instruments with exposure to currency risk was $21 million, with potential losses or gains of $276 million and $(259) million from a hypothetical 10% change in exchange rates[156]. Transition in Reporting Metrics - The company transitioned from Adjusted EBITDA to Adjusted EBIT as its non-GAAP reporting metric to better reflect core operating performance[130].

Financial Performance - Net sales for Q1 2025 totaled $878 million, a decrease of 4% from $915 million in Q1 2024, with a 2% decline on a constant currency basis[3] - Gross profit increased to $179 million in Q1 2025, with a gross profit margin of 20.4%, up from 18.8% in Q1 2024[6] - Adjusted EBIT rose to $131 million in Q1 2025, representing an adjusted EBIT margin of 14.9%, compared to 13.2% in Q1 2024[15] - Net income for Q1 2025 was $62 million, resulting in a net income margin of 7.1%, slightly down from 7.2% in Q1 2024[12] - Adjusted EBITDA for Q1 2025 was $159 million, compared to $151 million in Q1 2024, with an adjusted EBITDA margin of 18.1%[33] - Reported net sales for the full year 2025 are expected to decline between 6% and 0%[39] - Net income for the full year 2025 is projected to be between $209 million and $254 million[40] - Adjusted EBITDA for the full year 2025 is forecasted to range from $545 million to $605 million[40] - Full year 2025 net sales growth at constant currency is expected to range from -3% to 2%[39] Cash Flow and Investments - Adjusted free cash flow decreased to $36 million in Q1 2025, down from $68 million in Q1 2024, primarily due to unfavorable working capital changes[16] - Cash flows from operating activities decreased to $56 million in Q1 2025 from $84 million in Q1 2024[32] - Adjusted free cash flow for the full year 2025 is anticipated to be between $300 million and $390 million[41] - Net cash provided by operating activities is estimated to be between $357 million and $447 million[41] - Expenditures for property, plant, and equipment are projected to be $96 million for the full year 2025[41] Debt and Liquidity - As of March 31, 2025, total principal amount of debt outstanding was $1,494 million, with available liquidity of $760 million[17][18] - Total liabilities increased to $2,975 million as of March 31, 2025, compared to $2,949 million as of December 31, 2024[31] - Interest expense for the full year 2025 is projected to be $117 million[40] Future Outlook - Full-year 2025 net sales outlook is projected between $3.3 billion and $3.5 billion, with net income expected between $209 million and $254 million[20] - The company plans to invest 4.6% of sales in R&D for 2025, focusing more than 50% on zero-emission technologies[22] - Cash payments for repositioning are estimated at $20 million for the full year 2025[41] Other Financial Metrics - The company incurred repositioning costs of $7 million in Q1 2025, compared to $11 million in Q1 2024[33] - Tax expense for the full year 2025 is expected to be between $70 million and $85 million[40] - The company reported a constant currency sales percentage change of -2% for Q1 2025, compared to -5% in Q1 2024[36] - The company announced a cash dividend of $0.06 per share, payable on June 16, 2025[1] - Garrett secured its first major series production award for electric motors, with production expected to start in 2027[3] - Total assets as of March 31, 2025, were $2,275 million, slightly down from $2,276 million as of December 31, 2024[31]

Financial Highlights - Net sales for Q1 2025 were $878 million, a decrease of 4% from $915 million in Q1 2024, with a 2% decline on a constant currency basis [4][38] - Gross profit increased to $179 million, with a gross profit margin of 20.4%, compared to 18.8% in Q1 2024 [7][36] - Net income for Q1 2025 was $62 million, down from $66 million in Q1 2024, resulting in a net income margin of 7.1% [13][36] - Adjusted EBIT rose to $131 million, with an adjusted EBIT margin of 14.9%, compared to 13.2% in the prior year [15][36] - Adjusted EBITDA was $159 million, with an adjusted EBITDA margin of 18.1%, up from 16.5% in Q1 2024 [15][36] - Net cash provided by operating activities totaled $56 million, down from $84 million in Q1 2024 [14][36] - Adjusted free cash flow decreased to $36 million from $68 million in the previous year [16][36] Business Highlights - The company declared a cash dividend of $0.06 per share, payable on June 16, 2025 [2] - The company repurchased $30 million of common stock during the quarter, with a remaining repurchase capacity of $220 million [18] - The company secured new business in turbocharging, particularly in plug-in hybrid and range-extended electric platforms [3][4] - A significant milestone was achieved with the first major series production award for high-speed electric traction motors, expected to start production in 2027 [3][4] Liquidity and Capital Resources - As of March 31, 2025, the company had $760 million in available liquidity, including $130 million in cash and cash equivalents [17] - Total principal amount of debt outstanding was $1,494 million, slightly up from $1,493 million at the end of 2024 [18] Full Year 2025 Outlook - The company expects net sales for 2025 to be between $3.3 billion and $3.5 billion, with a constant currency growth forecast of -3% to +2% [21][44] - Projected net income for 2025 is between $209 million and $254 million [21][45] - Adjusted EBITDA is expected to range from $545 million to $605 million for the full year [21][45]

Core Insights - Garrett Motion is transitioning from a traditional turbo supplier to a cash-flowing entity with opportunities in electric vehicles (EV) and industrial sectors, indicating a strategic shift in its business model [1] - The stock of Garrett Motion is still considered a buy due to the ongoing relevance of turbochargers and internal combustion engines (ICE) in the market [1] Company Overview - Garrett Motion is focusing on enhancing its cash flow while diversifying into emerging markets such as EVs and industrial applications [1] - The company is leveraging its legacy in turbo technology while adapting to new market demands [1] Market Position - The relevance of turbochargers and ICE remains significant, which supports the investment thesis for Garrett Motion's stock [1] - The company is positioned to benefit from both traditional automotive markets and the growing EV sector, providing a balanced growth opportunity [1]

Core Insights - Garrett Motion Inc. and Shaanxi Hande Axle Co., Ltd. have signed a strategic agreement to co-develop advanced electric beam axle systems for medium and heavy-duty trucks, marking a significant milestone in the electrification of commercial transport [1][5][7] Company Overview - Garrett Motion is a leading differentiated automotive technology provider with a 70-year history of innovation in the automotive sector, focusing on turbocharging and electric propulsion technologies [10] - The company has established a strong presence in China since 1994, with advanced manufacturing facilities in Shanghai and Wuhan, and a dedicated R&D team of over 200 specialists [8][9] Strategic Partnership Details - The partnership aims to integrate Garrett's high-speed e-motor and inverter technology into HanDe's axle and transmission platforms, targeting production for 2027 [5][6] - Initial manufacturing will occur in Xi'an and Wuhan, with test fleets expected to begin field trials in 2026 as part of a global rollout strategy [6] Technological Advancements - Garrett's technology promises significant reductions in size and weight compared to current industry benchmarks, leading to lower total cost of ownership (TCO) for fleets through reduced energy use and maintenance [4] - The collaboration aims to minimize the use of rare earths and critical minerals, supporting sustainable sourcing and contributing to the local electrification ecosystem [4][7] Market Impact - The strategic partnership includes a multi-year production award from major Chinese commercial vehicle manufacturers, supporting both domestic output and international expansion [6] - There is strong interest from global commercial vehicle OEMs and fleet operators in adopting Garrett's E-powertrain solution due to its tangible TCO savings and sustainability benefits [4][7]

Core Insights - Garrett Motion Inc. is showcasing its latest innovations at Auto Shanghai 2025, including the debut of its 3-in-1 E-Powertrain and E-Cooling Compressor, which are pivotal for zero-emission mobility [1][4][10] Group 1: Technology Innovations - The 3-in-1 E-Powertrain integrates a high-speed electric motor, inverter, and reducer, achieving a size and weight reduction of up to 40% compared to industry standards [6] - The E-Cooling Compressor utilizes high-speed centrifugal technology for enhanced battery and cabin cooling, essential for the efficient operation of electric vehicles [6] - Garrett's Fuel Cell Compressor portfolio is the broadest and most mature in the industry, offering best-in-class efficiency and reliability [7] Group 2: Market Trends and Demand - Global production of new energy vehicles (NEVs) reached 18 million units in 2024, with China leading in adoption, driving demand for lightweight and efficient electric platforms [4] - By 2030, the market share of Plug-in Hybrid Electric Vehicles (PHEVs) and Range-Extended Electric Vehicles (REEVs) in China is expected to approach that of Battery Electric Vehicles (BEVs) [10] - In 2024, 75% of China's vehicle exports were powered by internal combustion engines (ICE), indicating continued relevance of ICE technologies alongside electrification [9] Group 3: Company Overview and Strategy - Garrett Motion has a 70-year history in automotive innovation, focusing on turbocharging technologies that reduce engine size, fuel consumption, and CO2 emissions [13] - The company operates five R&D centers and 13 manufacturing facilities globally, employing over 9,000 people [13] - Garrett is committed to advancing motion through differentiated technology solutions for zero-emission vehicles, including electric propulsion and thermal management systems [13]

Core Viewpoint - Garrett Motion Inc. is set to release its first quarter financial results on May 01, 2025, before the U.S. market opens [1] Financial Results Announcement - The financial results will be announced prior to market opening on May 01, 2025 [1] - A conference call will be held on the same day at 8:30 am EDT / 2:30 pm CET to discuss the results [2] Conference Call Details - Participants can join the conference call by dialing +1-877-883-0383 (U.S.) or +1-412-902-6506 (international) with passcode 2829687 [2] - The conference call will be webcast and include a slide presentation, accessible via the Investor Relations section of Garrett's website [3] - A replay of the conference call will be available through specific dialing options and access codes [3] Company Overview - Garrett Motion Inc. has a 70-year history in automotive technology, focusing on turbocharging and reducing engine size, fuel consumption, and CO2 emissions [4] - The company is developing technology solutions for Zero Emission Vehicles, including fuel cell compressors and electric propulsion systems [4] - Garrett operates five R&D centers, 13 manufacturing facilities, and employs over 9,000 people across more than 20 countries [4]

Company Overview - Garrett Motion (GTX) shares increased by 9.8% to $8.06 in the last trading session, following a period of 22.4% loss over the past four weeks, indicating a significant recovery in stock performance [1] - The company operates in the niche turbocharger market, benefiting from limited competition that helps protect profit margins [2] Financial Performance - Garrett Motion is expected to report quarterly earnings of $0.28 per share, unchanged from the same quarter last year, with revenues projected at $839 million, reflecting an 8.3% decline year-over-year [3] - The consensus EPS estimate for Garrett has remained stable over the last 30 days, suggesting that stock price movements may not sustain without trends in earnings estimate revisions [5] Market Position and Competitors - The recent stock gain is attributed to new business wins that underscore Garrett's technology leadership and support its expansion in the US and China [2] - Garrett Motion is part of the Zacks Automotive - Original Equipment industry, where another competitor, Denso Corp. (DNZOY), saw a 2.9% increase in its stock price, although it has returned -15.5% over the past month [5]

Core Viewpoint - Value investing remains a preferred strategy for identifying strong stocks across various market conditions, utilizing established valuation metrics to uncover potential opportunities [2][3]. Company Analysis - Garrett Motion (GTX) is highlighted as a strong value stock, currently holding a Zacks Rank of 2 (Buy) and an A for Value, with a Forward P/E ratio of 7.70, significantly lower than the industry average of 22.27 [4]. - GTX's Forward P/E has fluctuated between a high of 9.41 and a low of 6.04 over the past year, with a median of 7.31 [4]. - The P/S ratio for GTX stands at 0.58, slightly below the industry average of 0.6, indicating potential undervaluation [5]. - Strattec Security (STRT) is another notable value stock, rated 1 (Strong Buy) with a Value score of A, currently trading at a Forward P/E ratio of 13.36 and a PEG ratio of 1.34, both favorable compared to the industry averages [5][6]. - STRT's price-to-earnings ratio has ranged from a high of 26.50 to a low of 12.04, with a median of 16.39 over the past year [6]. - The P/B ratio for STRT is 0.92, significantly lower than the industry's price-to-book ratio of 3.72, suggesting it may be undervalued [7]. - STRT's P/B has varied between a high of 0.94 and a low of 0.40, with a median of 0.64 in the last 12 months [7]. Investment Outlook - Both Garrett Motion and Strattec Security exhibit strong value characteristics, indicating they are likely undervalued at present, supported by their positive earnings outlooks [7].