Garrett Motion (GTX) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were $826 million, down 14% year-over-year due to industry softness in Europe and China and competitive pressures, but gross margin improved to 20.1% and adjusted EBITDA margin rose to 17.4%, up 160 basis points year-over-year.

• Net income was $52 million (6.3% margin); adjusted EBITDA was $144 million, down $8 million year-over-year, reflecting lower volumes but improved margins from cost actions and commodity deflation pass-through.

• Generated $71 million in adjusted free cash flow in Q3 and repurchased $226 million in stock year-to-date, with $52 million repurchased in Q3 and $124 million remaining under the program.

• Expanded business in turbo and zero-emission technologies, securing new contracts in marine, commercial, and passenger vehicle sectors, and advanced partnerships for e-powertrain systems.

• Recognized with the 2024 Stellantis Innovation Award for zero-emission vehicle technology and signed a letter of intent with Sino Truk for e-powertrain systems targeting production in 2027.

Financial highlights

• Q3 2024 net sales declined to $826 million from $960 million in Q3 2023, a 14% decrease; nine-month net sales were $2.63 billion, down 11% year-over-year.

• Gross profit was $166 million (20.1% margin), down from $176 million, but margin improved due to productivity and favorable product mix.

• Net income for Q3 2024 was $52 million, compared to $57 million in Q3 2023; Q3 EPS was $0.24.

• Adjusted EBITDA for Q3 was $144 million (17.4% margin), down from $152 million; adjusted free cash flow was $71 million, up from $57 million.

• Liquidity at quarter-end was $696 million, including $600 million undrawn revolver and $96 million cash; total debt outstanding was $1,495 million.

Outlook and guidance

• Full-year 2024 net sales outlook revised to $3.40–$3.50 billion, down from prior $3.50–$3.65 billion, reflecting a 12% to 10% decline; adjusted EBITDA guidance set at $585–$605 million; adjusted free cash flow expected at $300–$350 million.

• Net income guidance set at $240–$255 million; net cash from operations expected at $375 million.

• Over 50% of 2024 R&D spending and over 30% of capex dedicated to zero-emission technologies.

• Q4 sales expected to be flat sequentially, with continued industry softness in light vehicles and stable commercial vehicle performance.

• 2024 light vehicle production expected down 3%, commercial vehicle production down 1%.