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].

FEBRUARY 20, 2025 Q4 2024 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," "shoul ...

Financial Data and Key Metrics Changes - The company reported fourth quarter net sales of $844 million, slightly up sequentially, stabilizing after declines over the past four quarters [19] - Adjusted EBITDA for Q4 was $153 million, an increase of $8 million from $145 million in the previous year, with an adjusted EBITDA margin of 18.1%, up from 15.3% [19][24] - Full year adjusted EBITDA was $598 million, representing a $37 million decrease from the prior year, with a full year adjusted EBITDA margin of 17.2%, up 90 basis points compared to the prior year [25][28] Business Line Data and Key Metrics Changes - The company experienced gasoline softness in China and North America, partially offset by ramp-ups in Europe, which comprised 45% of net sales [21] - Diesel decline in Q4 was mainly due to lower industry production in Europe, while commercial vehicle sales showed a slight increase, indicating the beginning of an industry recovery in China and North America [22] - The aftermarket business increased by 1% at constant currency due to continued demand for replacement parts, primarily in China and Europe [22] Market Data and Key Metrics Changes - The company noted a shift towards local Chinese players in the automotive industry, particularly in battery electric vehicles, plug-in hybrids, and range-extended electric vehicles [50][52] - The company is actively pursuing new technologies and products to meet the needs of these local players in China, indicating a growing market opportunity [51][53] Company Strategy and Development Direction - The company aims to strengthen its leadership position in the turbo industry while developing new technologies and expanding into industrial applications [38] - Investments in differentiated technologies, particularly in turbo and zero-emission applications, are expected to continue, with R&D spending increasing to 4.6% of sales in 2025 [34][36] - A new $250 million share repurchase program has been authorized for 2025, alongside a plan to pay $50 million in dividends throughout the year [12][30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges posed by geopolitical factors and tariffs but emphasized the company's flexibility and quick response to market changes [45][46] - The outlook for 2025 includes net sales of $3.4 billion, with adjusted EBITDA expected to be $575 million, reflecting an improvement in the commercial vehicle market while anticipating continued softness in the light vehicle industry [33][34] - The company expects to maintain strong margins and free cash flow in 2025, supported by structural cost actions implemented in 2024 [41] Other Important Information - The company ended 2024 with a strong liquidity position of $725 million, significantly improving financial flexibility [28] - Total debt was reduced by $203 million in 2024, with a net leverage ratio remaining relatively flat at 2.21 times [28] Q&A Session Summary Question: How is the company managing geopolitical and tariff challenges? - Management emphasized the importance of flexibility and quick reactions to unplanned events, indicating a proactive approach to navigating these challenges [45][46] Question: Can you provide more details on the business in China? - Management highlighted the shift towards local Chinese players and the company's efforts to engage with new brands and products, particularly in hybrid and electric vehicle segments [50][52] Question: How is adjusted free cash flow defined? - Adjusted free cash flow is defined as operating cash flow less capital expenditures, excluding repositioning and one-time charges [60][61] Question: What is the company's stance on M&A opportunities? - Management stated that while they are actively looking at M&A opportunities, they prioritize organic growth strategies and have a high bar for any potential acquisitions to avoid diluting shareholder value [66][68]

Core Viewpoint - Garrett Motion reported strong quarterly earnings, significantly exceeding expectations, indicating potential growth and positive market sentiment towards the company [1][2]. Financial Performance - The company achieved earnings of $0.47 per share, surpassing the Zacks Consensus Estimate of $0.26 per share, and up from $0.22 per share a year ago, reflecting an earnings surprise of 80.77% [1][2]. - Revenues for the quarter were $844 million, exceeding the Zacks Consensus Estimate by 5.24%, although down from $945 million in the same quarter last year [3]. Market Position and Outlook - Garrett Motion's stock has increased by approximately 2.7% since the beginning of the year, underperforming compared to the S&P 500's gain of 4.5% [4]. - The company's earnings outlook is favorable, with current consensus EPS estimates of $0.28 for the upcoming quarter and $1.25 for the current fiscal year, alongside revenues of $841 million and $3.51 billion respectively [8]. Industry Context - The Automotive - Original Equipment industry, to which Garrett Motion belongs, is currently ranked in the bottom 37% of over 250 Zacks industries, suggesting potential challenges ahead [9]. - The performance of Garrett Motion's stock may be influenced by the overall industry outlook, as historical data indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [9].

Financial Performance - In 2024, net income was $282 million and adjusted EBITDA was $598 million, despite a global decrease in turbocharger production from approximately 50 million units in 2023 to 49 million units in 2024 [191]. - Total net sales for 2024 were $3,475 million, a decrease of $411 million or 11% compared to 2023, primarily due to soft demand in gasoline, diesel, and commercial vehicle applications [201]. - Gross profit for 2024 was $705 million, a decrease of $51 million from the previous year, mainly due to lower sales volumes [212]. - Adjusted EBITDA for the year ended December 31, 2024, decreased by $37 million compared to the prior year, mainly due to soft demand across all product lines except aftermarket [236]. - The company reported a decrease in gross profit of $51 million for the year ended December 31, 2024, impacting net income despite other positive factors [228]. Sales and Demand - Diesel product sales decreased by $165 million or 17% in 2024, driven mainly by passenger vehicle demand in Europe [203]. - Gasoline product sales decreased by $215 million or 13% in 2024, impacted by soft demand in China and North America [202]. - The company experienced a decline in demand for gasoline, diesel, and commercial vehicle applications during 2024, partially offset by favorable demand in aftermarket for replacement parts in North America, China, and Europe [237]. Expenses and Costs - Cost of goods sold decreased by $360 million in 2024, primarily due to lower sales volumes and commodity deflation [211]. - For the year ended December 31, 2024, selling, general and administrative (SG&A) expenses decreased by $7 million to $240 million, representing 6.9% of sales [215]. - SG&A expenses for the year ended December 31, 2023, increased by $31 million to $247 million, primarily due to legal and advisory fees related to a transaction [216]. - Interest expense for the year ended December 31, 2024, decreased by $3 million to $156 million, primarily due to $24 million of higher gains on interest derivatives [217]. Investments and Dividends - The Board of Directors announced plans to declare and pay quarterly dividends totaling approximately $50 million in 2025 [195]. - The company expects capital spending to increase slightly in 2025 compared to 2024, driven by investments in new product launches [248][262]. - The company repurchased $296 million of its Common Stock during the year ended December 31, 2024, under a $350 million share repurchase program [251]. Cash Flow and Liquidity - Cash provided by operating activities decreased by $57 million for the year ended December 31, 2024, primarily due to a $32 million change in working capital [255]. - Liquidity overview shows cash and cash equivalents decreased to $125 million in 2024 from $259 million in 2023 [246]. - Cash used for financing activities increased by $117 million in 2024, primarily due to $992 million in debt repayments [257]. Tax and Non-Operating Income - The effective tax rate for 2024 decreased to 24.8% from 17.8% in 2023, primarily due to releases of reserves and settlements with taxing authorities [224]. - Non-operating income, net for the year ended December 31, 2024, increased to $13 million compared to $2 million in the prior year, driven by a $13 million loss on remeasurement of Series A Preferred Stock Agreements in the prior year [220]. Currency and Interest Rate Risk - As of December 31, 2024, the net fair value of all financial instruments with exposure to currency risk was a $87 million asset, with a potential loss or gain of $196 million from a hypothetical 10% change in currency exchange rates [282]. - The net fair value of all financial instruments with exposure to interest rate risk was a $6 million asset as of December 31, 2024, with a 50 basis point increase in interest rates potentially increasing interest expense by $4 million [283][284]. - Approximately 83% of the cost of sales consists of purchased components with significant raw material content, with a 10% variation in commodity prices potentially impacting cost of sales by up to $43 million per year [285].

Financial Performance - Net sales for Q4 2024 totaled $844 million, down 11% year-over-year, with a net income of $100 million and a net income margin of 11.8%[5]. - Full year 2024 net sales reached $3,475 million, a decrease of 11% from 2023, with adjusted EBITDA of $598 million and an adjusted EBITDA margin of 17.2%[5]. - Net income for the year ended December 31, 2024, increased to $282 million, compared to $261 million in 2023, resulting in earnings per share of $1.27[30][33]. - Net income for Q4 2024 was $100 million, up from $52 million in Q4 2023, resulting in a net income margin of 11.8% compared to 5.5% in the previous year[34]. - Adjusted EBITDA for Q4 2024 was $153 million, an increase from $145 million in Q4 2023, with an adjusted EBITDA margin of 18.1%, up from 15.3%[34]. - Full year 2025 outlook projects net income between $209 million and $254 million, with adjusted EBITDA expected to range from $545 million to $605 million[40]. Cash Flow and Liquidity - Adjusted free cash flow for 2024 was $358 million, enabling the company to repurchase $296 million of common shares, representing a 13% reduction in share count[4]. - Cash and cash equivalents at the end of Q4 2024 were $126 million, down from $260 million at the end of Q4 2023[33]. - The company reported a net cash provided by operating activities of $408 million for the year ended December 31, 2024, compared to $465 million in 2023[33]. - Adjusted free cash flow for 2025 is projected to be between $300 million and $390 million, with net cash provided by operating activities estimated at $357 million to $447 million[41]. Debt and Liabilities - As of December 31, 2024, total principal amount of debt outstanding was $1,493 million, down from $1,696 million in 2023, due to early debt repayments[18]. - Total liabilities decreased to $2,949 million as of December 31, 2024, from $3,262 million in 2023[32]. - Available liquidity as of December 31, 2024, was $725 million, including $125 million in cash and cash equivalents[17]. Future Projections - For 2025, the company projects net sales between $3.3 billion and $3.5 billion, with adjusted EBITDA expected to range from $545 million to $605 million[23]. - The 2025 outlook includes a forecast of flat to down 3% light vehicle industry production compared to 2024, and a commercial vehicle industry growth of 0% to 2%[26]. - The company anticipates a reported net sales change of -6% to 0% for 2025, with constant currency sales growth projected between -3% and 2%[39]. - Capital expenditures for 2025 are expected to be $94 million, impacting the net cash provided by operating activities[41]. - Stock compensation expense for 2025 is projected at $25 million, contributing to the adjusted EBITDA calculation[40]. - The company reported a foreign currency translation impact of -3% to -2% on net sales for 2025[39]. Investments and Strategic Initiatives - Research, development, and engineering investment is projected at 4.6% of sales in 2025, with over 50% allocated to zero-emission technologies[26]. - The company secured contracts for marine and back-up power with its largest turbocharger, set to start production in 2026, and entered a letter of intent with SinoTruk for e-powertrain systems by 2027[4]. - Garrett Motion is focusing on developing technology solutions for Zero Emission Vehicles, including fuel cell compressors and electric propulsion systems[28]. - The company plans to initiate a $50 million annual dividend and a new $250 million share repurchase program for 2025[4]. - The company repurchased $296 million of common stock during the year, reflecting a strategic move to enhance shareholder value[33]. Operational Metrics - Gross profit for the year ended December 31, 2024, was $705 million, down from $756 million in 2023, reflecting a gross margin of 20.2%[30]. - Total assets decreased to $2,276 million as of December 31, 2024, from $2,527 million in 2023[32]. - The company has five R&D centers and 13 manufacturing facilities, employing over 9,000 people globally[28]. - Constant currency sales for Q4 2024 showed a decline of 10%, while gasoline sales decreased by 8% and diesel sales decreased by 22%[37].

Financial Performance - Garrett Motion Inc. reported strong financial performance in 2024, with an adjusted EBITDA margin expansion of 90 basis points year-over-year to 17.2% and generated $358 million in adjusted free cash flow [4][6] - Net sales for Q4 2024 were $844 million, down 11% from Q4 2023, primarily due to lower diesel production volumes in Europe and soft gasoline demand in China and North America [6][7] - The company achieved a net income of $100 million in Q4 2024, compared to $52 million in Q4 2023, driven by lower interest and tax expenses [14][6] Cost and Profitability - Cost of goods sold for Q4 2024 was $662 million, down from $756 million in Q4 2023, attributed to lower sales volumes and higher productivity [8][9] - Gross profit for Q4 2024 was $182 million, with a gross profit percentage of 21.6%, an increase from 20.0% in Q4 2023 [9][6] - Selling, general and administrative expenses decreased to $62 million in Q4 2024 from $69 million in Q4 2023, due to lower professional services and legal fees [10] Shareholder Returns and Capital Allocation - In 2024, Garrett repurchased $296 million of common shares, equivalent to a 13% reduction in share count, and initiated a $50 million annual dividend [5][20] - A new $250 million share repurchase program was authorized for 2025, reflecting the company's commitment to returning value to shareholders [21] Liquidity and Debt Management - As of December 31, 2024, Garrett had $725 million in available liquidity, including $125 million in cash and cash equivalents [18] - Total principal amount of debt outstanding decreased to $1,493 million from $1,696 million as of December 31, 2023, due to early debt repayments [19] 2025 Outlook - For 2025, Garrett expects net sales between $3.3 billion and $3.5 billion, with a constant currency sales growth forecast of -3% to +2% [24][25] - The company anticipates adjusted EBITDA for 2025 to be in the range of $545 million to $605 million [49][50]

PLYMOUTH, Mich. and ROLLE, Switzerland, Feb. 06, 2025 (GLOBE NEWSWIRE) -- Garrett Motion Inc. (Nasdaq: GTX), a leading provider of differentiated automotive technology, today announced that it plans to release its fourth quarter financial results on Thursday, February 20, 2025, prior to the opening of the market trading in the United States. Garrett will host a conference call that same day at 8:30 am EDT / 2:30 pm CET. To participate in the conference call, please dial +1-877-883-0383 (U.S.) or +1-412-902- ...

Core Viewpoint - Garrett Motion Inc. has successfully refinanced its existing debt, reducing interest expenses and extending the maturity profile of its loans, which reflects strong market demand and confidence in the company's financial health [1][2]. Financial Summary - The company refinanced a $692 million term loan and upsized its revolving credit facility from $600 million to $630 million [1]. - The new borrowings will bear interest at SOFR plus 225 basis points, a reduction of 50 basis points from previous rates [1]. - The new term loan will mature in 2032, extending the maturity by approximately four years, while the revolving credit facility will mature in 2030, extending by about two years [1]. Company Overview - Garrett Motion Inc. is a leader in differentiated automotive technology with a 70-year history in innovation across various sectors, including automotive and off-highway equipment [3]. - The company specializes in turbocharging technology, contributing to reduced engine size, fuel consumption, and CO2 emissions [3]. - Garrett is actively developing technology solutions for Zero Emission Vehicles, including fuel cell compressors and electric propulsion systems [3]. - The company operates five R&D centers and 13 manufacturing facilities, employing over 9,000 people in more than 20 countries [3].