8-K: Garrett Motion Reports Solid First Quarter 2025 Results; Secures Major Electric Motor Production Award

Garrett Motion announces its Q1 2025 financial results, highlighting a slight sales decrease but improved profitability and a significant win in electric motors.

Summary

• Garrett Motion reported net sales of $878 million for Q1 2025, a 4% decrease compared to $915 million in Q1 2024.
• Net income totaled $62 million, with a net income margin of 7.1%.
• Adjusted EBIT reached $131 million, resulting in an adjusted EBIT margin of 14.9%.
• The company generated $56 million in net cash from operating activities and $36 million in adjusted free cash flow.
• Garrett secured its first major series production award for electric motors, with production slated to begin in 2027.
• A cash dividend of $0.06 per share was declared, payable on June 16, 2025.
• The company is reiterating its full-year outlook, projecting net sales between $3.3 billion and $3.5 billion.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the company's improved profitability metrics, new business wins in electric motors, and reiteration of its full-year outlook, despite a slight decrease in net sales.

Positives

• Gross profit increased to $179 million from $172 million year-over-year.
• Adjusted EBIT margin improved to 14.9% from 13.2% in the prior year.
• Adjusted EBITDA margin increased to 18.1% from 16.5% in the prior year.
• The company secured new business in plug-in hybrid and range extended electric platforms.
• Garrett has $760 million in available liquidity as of March 31, 2025.
• The company is returning capital to shareholders through share repurchases and dividends.

Negatives

• Net sales decreased by 4% compared to the first quarter of 2024.
• Net cash provided by operating activities decreased to $56 million from $84 million year-over-year.
• Adjusted free cash flow decreased to $36 million from $68 million year-over-year.
• The decrease in sales was driven by a decline in diesel sales from lower industry production mainly in Europe, and lower aftermarket sales due to softness in North America.

Risks

• The company faces risks related to the automotive industry, the competitive landscape, and macroeconomic and geopolitical conditions.
• The full year 2025 outlook excludes the potential impact of global trade policies and inflation.
• The company's performance is subject to light vehicle and commercial vehicle industry production volumes.

Future Outlook

Garrett reiterates its full-year 2025 outlook, projecting net sales between $3.3 billion and $3.5 billion, and adjusted EBITDA between $545 million and $605 million.

Management Comments

• Garrett started the year with strong first quarter results in a pressured industry environment, according to President and CEO, Olivier Rabiller.
• We drove outstanding operating performance and saw the positive impact from structural cost savings actions that we deployed in 2024, according to President and CEO, Olivier Rabiller.
• We also continued to return capital to shareholders through $30 million of common share repurchases and our first quarterly dividend of $12 million, according to President and CEO, Olivier Rabiller.
• With our zero-emission technologies, we achieved a significant milestone with our first major series production award for our high-speed electric traction motor and matched inverter that will be integrated in a fully electric axle for On Highway Heavy Duty truck applications, according to President and CEO, Olivier Rabiller.

Industry Context

Garrett's focus on zero-emission technologies, particularly electric motors and fuel cell compressors, aligns with the automotive industry's shift towards electrification and reduced emissions. The company's success in securing new business in plug-in hybrid and range-extended electric platforms positions it well for future growth.

Comparison to Industry Standards

• Garrett's adjusted EBIT margin of 14.9% is competitive within the automotive supplier industry.
• Companies like BorgWarner and Magna International also operate in similar segments and their financial performance can be used as a benchmark.
• The win of a major series production award for electric motors positions Garrett to compete with companies like Bosch and Continental in the electric vehicle component market.

Stakeholder Impact

• Shareholders will benefit from the cash dividend and share repurchase program.
• Employees may see increased opportunities in the zero-emission technology sector.
• Customers will have access to Garrett's innovative solutions for electric and hybrid vehicles.
• Suppliers may see increased demand for components related to electric motors and other zero-emission technologies.

Next Steps

• The company will hold a conference call on May 1, 2025, to discuss the results.
• Production of electric motors is expected to start in 2027.
• The cash dividend of $0.06 per share will be paid on June 16, 2025.

Key Dates

Keywords

Garrett Motion, financial results, electric motors, turbocharging, automotive technology, Q1 2025, adjusted EBIT, net sales, dividend, share repurchase