Garrett Motion Inc. GTX, a leading provider of automotive technology, has introduced a long-term capital allocation framework aimed at returning at least 75% of its Adjusted Free Cash Flow to shareholders over time. This will be achieved through share buybacks and a regular quarterly cash dividend. As part of this initiative, the board of directors has approved a new dividend policy, targeting a total payout of approximately $50 million in 2025. 

The first dividend under this plan, set at 6 cents per share, will be paid on Jan. 31, 2025, to shareholders on record as of Jan. 15, 2025. Moreover, the board has authorized a 2025 share repurchase program of up to $250 million. Per Olivier Rabiller, president and CEO of Garrett, these measures are designed to provide a competitive dividend yield while emphasizing Garrett's commitment to creating shareholder value and investing strategically in its turbo and zero-emission technologies. 

The framework leverages Garrett’s robust cash generation and flexible cost structure and aligns with its existing capital priorities. The company remains focused on balanced R&D investments, particularly in zero-emission solutions and expanding turbo technologies for hybrid and industrial applications. This initiative builds on Garrett's previous repurchase of $438 million in stock since the conversion of its Series A Preferred Stock through the third quarter of 2024 and its efforts to reduce debt by approximately $400 million during the same period.

While Garrett aims to return 75% or more of Adjusted Free Cash Flow to shareholders, actual returns will depend on market conditions, stock prices and alternative capital uses. Dividends and share repurchases will be managed at the board’s discretion and subject to applicable regulations. The repurchase program allows flexibility in timing and methods, including open market transactions, block trades, or private negotiations, and can be suspended or terminated as needed.

In the third quarter of 2024, Garrett reported net sales of $826 million, which declined from $960 million in the third quarter of 2023. As of Sept. 30, 2024, the company’s cash and cash equivalent amounted to $96 million, down from $259 million as of Dec. 31, 2024. Long-term debt totaled $1.46 billion, down from $1.64 billion as of Dec. 31, 2024.

GTX’s Zacks Rank & Key Picks

Garrett currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the auto space are Dorman Products, Inc. DORM, Tesla, Inc. TSLA and Blue Bird Corporation BLBD, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for DORM’s 2024 sales and earnings suggests year-over-year growth of 3.66% and 51.98%, respectively. EPS estimates for 2024 and 2025 have improved 75 cents and 88 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for TSLA’s 2024 sales suggests year-over-year growth of 2.97%. EPS estimates for 2024 have improved 22 cents in the past 60 days. EPS estimates for 2025 have improved 7 cents in the past seven days.

The Zacks Consensus Estimate for BLBD’s fiscal 2025 sales and earnings suggests year-over-year growth of 10.97% and 12.14%, respectively. EPS estimates for fiscal 2025 have improved 18 cents in the past 30 days.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Tesla, Inc. (TSLA) : Free Stock Analysis Report

Dorman Products, Inc. (DORM) : Free Stock Analysis Report

Blue Bird Corporation (BLBD) : Free Stock Analysis Report

Garrett Motion Inc. (GTX) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research