Garrett Motion (GTX) Q4 2023 earnings summary

Executive summary

• FY2023 net sales reached a record $3.886B, up 8%, and adjusted EBITDA was a record $635M; adjusted free cash flow rose to $422M.

• Strong cash generation supported $213M of 2023 share repurchases and $200M of debt repayment; a $350M repurchase authorization was established for 2024.

Financial highlights

• Q4 net sales were $945M, up 5% reported and 3% at constant currency; Q4 net income was $52M versus $112M.

• FY2023 net income was $261M versus $390M; gross profit rose to $756M from $683M, and gross margin increased to 19.5% from 19.0%.

• Q4 gross profit rose to $189M from $161M, with gross margin of 20.0% versus 17.9%; Q4 adjusted EBITDA was $145M versus $140M.

• FY2023 adjusted EBITDA was $635M versus $570M; adjusted free cash flow was $422M versus $313M.

• FY operating cash flow was $465M versus $375M; Q4 adjusted free cash flow was $137M versus $132M.

Outlook and guidance

• FY2024 net sales guidance is $3.80B–$3.95B, or -2% to +2% at constant currency; net income guidance is $230M–$275M.

• FY2024 adjusted EBITDA guidance is $590M–$650M; operating cash flow is $370M–$470M and adjusted free cash flow is $325M–$425M.

• Planning assumptions include light-vehicle production flat to down 1%, commercial-vehicle production up 2%, and average light-vehicle BEV penetration of 15%.

• R&D is planned at 4.5% of sales, with ~60% for zero-emission technologies; capex is planned at 2.2% of sales.