Garrett Motion, Inc. Q1 FY2025 earnings call

• Garrett delivered outstanding operating performance in a soft industry environment with adjusted EBIT of $131 million and margin of 14.9% up 170 basis points from Q1 2024, driven by cost actions from 2024.
• Showcased industry-leading technologies at Shanghai Auto Show, with wins in turbocharged range-extended EVs and plug-in hybrids in China and North America.
• Secured first series production award for high-speed E-motor and inverter technology from Hyundai for heavy-duty commercial vehicles, targeted for 2027.
• Well-balanced sales split with 20% of sales in North America and region-for-region manufacturing; continued to repurchase stock and pay dividends, with Board declaring second quarterly dividend in June 2025.

Net sales for the first quarter were $878 million, slightly down year-over-year. Adjusted EBIT was $131 million with an adjusted EBIT margin of 14.9%, up 170 basis points compared to Q1 2024. Gasoline applications saw 6% growth in the quarter, offset by diesel softness due to lower industry production mainly in Europe. Net sales decreased by $37 million year-over-year, 4% on a reported basis and 2% on a constant currency basis. Gasoline applications had strong year-over-year growth from new launches and ramp-ups, particularly in North America, while diesel was soft due to lower industry production in Europe. Foreign exchange resulted in a $21 million or 2% sales decline.

• 2025 outlook remains unchanged with midpoints: net sales $3.4 billion, net income $232 million, adjusted EBIT $457 million, net cash provided by operating activities $402 million, adjusted free cash flow $345 million.
• Monitoring impact of tariffs on global economy and industry demand, ready to adjust cost structure to adapt to changes in customer demand.

• Uncertainty around near-term impact of new and future tariffs on the global economy which could adversely impact the industry and subsequent demand for turbos.

Q: Hamed Khorsand asked about North America new launches and ramps not showing in Q1 sales split.

A: Sean Deason explained that gasoline is ramping up in North America but offset by declines in commercial vehicles and aftermarket.

Q: About gasoline opportunities in 2026-2027.

A: Olivier Rabiller mentioned significant opportunities in North America with carmakers pivoting to hybrids and range-extended electric vehicles.

Q: Impact of Euro staying north of 110 on guidance.

A: Sean Deason said Euro strength would favor revenue and EBITDA, but guidance kept as is for now.

Q: Exposure to North American tariffs.

A: Sean Deason said they pass through tariffs, with ~$60 million impact, and limited exposure due to 20% sales in North America and region manufacturing.