Garrett Motion Delivers Strong 2024 Financial Performance, Issues 2025 Outlook

Fourth Quarter 2024 Financial Highlights

   -- Net sales totaled $844 million, down 11% on a reported basis, down 10% at 
      constant currency* 
 
   -- Net income totaled $100 million; Net income margin 11.8% 
 
   -- Adjusted EBITDA* totaled $153 million; Adjusted EBITDA margin* of 18.1% 
 
   -- Net cash provided by operating activities totaled $131 million 
 
   -- Adjusted free cash flow* totaled $157 million 

Full Year 2024 Financial Highlights

   -- Net sales totaled $3,475 million, down 11% on a reported basis, down 10% 
      at constant currency* 
 
   -- Net income totaled $282 million; Net income margin 8.1% 
 
   -- Adjusted EBITDA* totaled $598 million; Adjusted EBITDA margin* of 17.2% 
 
   -- Net cash provided by operating activities totaled $408 million 
 
   -- Adjusted free cash flow* totaled $358 million 
 
   -- Repurchased $296 million of common shares; 13% share reduction 
      year-over-year 

Full Year 2024 Business Highlights

   -- Continuing to win in turbo across all geographies, including with new 
      players and across all hybrid types 
 
   -- Secured contracts for marine and back-up power with our largest 
      turbocharger for start of production in 2026 
 
   -- Entered into letter of intent with SinoTruk to co-develop e-powertrain 
      systems for light and heavy trucks by 2027 
 
   -- Recognized with 2024 Stellantis Innovation Award for our differentiated 
      zero-emission technologies 
 
   -- OEM customers validated our proprietary 3-in-1 E-powertrain high-speed 
      technology, revolutionary refrigerant compression technology and broad 
      range of highly efficient fuel cell compressors 

PLYMOUTH, Mich. and ROLLE, Switzerland, Feb. 20, 2025 (GLOBE NEWSWIRE) -- Garrett Motion Inc. (Nasdaq: GTX) ("Garrett" or the "Company"), a leading differentiated automotive technology provider, today announced its financial results for the three and twelve months ended December 31, 2024.

"Garrett Motion delivered strong financial performance in 2024, while navigating a challenging industry environment. We expanded adjusted EBITDA margin by 90 basis points year-over-year to 17.2% and generated $358 million in adjusted free cash flow, a testament to our solid operating performance and ability to deliver across industry cycles. We continued to strengthen our leading industry position by expanding our turbo offerings and advancing our differentiated zero-emission technologies," said Olivier Rabiller, President and CEO of Garrett.

"We also made meaningful progress in validating the strength of our zero-emission technologies, securing additional partnerships and new business wins for Garrett's automotive and industrial applications with major customers around the world. Further, these products are actively being tested by customers with launches planned for as early as 2027."

"Garrett's 2024 adjusted free cash flow of $358 million enabled us, once again, to return significant value to our shareholders. In the year, we repurchased $296 million of common shares, equivalent to 13% of our share count at the beginning of the year. We also announced in the fourth quarter a new capital allocation plan which includes the initiation of a $50 million annual dividend, to be declared and paid quarterly, and a new $250 million share repurchase program for 2025. We look forward to continuing to prudently invest in our portfolio of innovative and differentiated products, secure significant customer wins and deliver strong financial performance once again in 2025."

 
$ millions (unless 
 otherwise noted)     Q4 2024  Q4 2023  Full Year 2024  Full Year 2023 
-------------------   -------  -------  --------------  -------------- 
     Net sales            844      945           3,475           3,886 
--------------------  -------  -------  --------------  -------------- 
 Cost of goods sold       662      756           2,770           3,130 
--------------------  -------  -------  --------------  -------------- 
    Gross profit          182      189             705             756 
--------------------  -------  -------  --------------  -------------- 
   Gross profit %       21.6%    20.0%           20.3%           19.5% 
--------------------  -------  -------  --------------  -------------- 
Selling, general and 
   administrative 
      expenses             62       69             240             247 
--------------------  -------  -------  --------------  -------------- 
Income before taxes        99       68             343             347 
--------------------  -------  -------  --------------  -------------- 
     Net income           100       52             282             261 
--------------------  -------  -------  --------------  -------------- 
 Net income margin      11.8%     5.5%            8.1%            6.7% 
  Adjusted EBITDA*        153      145             598             635 
--------------------  -------  -------  --------------  -------------- 
  Adjusted EBITDA 
       margin*          18.1%    15.3%           17.2%           16.3% 
--------------------  -------  -------  --------------  -------------- 
Net cash provided by 
      operating 
     activities           131      135             408             465 
--------------------  -------  -------  --------------  -------------- 
 Adjusted free cash 
        flow*             157      137             358             422 
--------------------  -------  -------  --------------  -------------- 
 

* See reconciliations to the nearest GAAP measure in Appendix

Results of Operations

Net sales for the fourth quarter of 2024 were $844 million, representing a decrease of 11% (including an unfavorable impact of $9 million or 1% due to foreign currency translation) compared with $945 million in the fourth quarter of 2023. This decrease was driven by lower diesel production volumes primarily in Europe and soft gasoline demand in China and North America. These declines were partially offset by a recovery in commercial vehicles from sustained demand in China and North America.

Cost of goods sold for the fourth quarter of 2024 was $662 million compared with $756 million in the fourth quarter of 2023, primarily driven by lower sales volumes, higher productivity net of labor inflation and repositioning costs and commodity, transportation and energy deflation. These decreases were partially offset by unfavorable mix and higher Research and Development ("R&D") costs, reflecting Garrett's continued investment in new technology development.

Gross profit totaled $182 million for the fourth quarter of 2024 as compared to $189 million in the fourth quarter of 2023, with a gross profit percentage for the fourth quarter of 2024 of 21.6% as compared to 20.0% in the fourth quarter of 2023. This decrease in gross profit was driven by lower volumes, unfavorable impact from foreign currency and higher R&D costs as described above. These declines were partially offset by commodity, transportation and energy deflation, a favorable product mix and productivity net of labor inflation and repositioning costs.

Selling, general and administrative ("SG&A") expenses for the fourth quarter of 2024 decreased to $62 million from $69 million in the fourth quarter of 2023. The decrease compared with the prior year was driven by lower professional services and legal fees, lower IT related costs and lower repositioning costs. These decreases were partially offset by higher stock-based compensation expense.

Interest expense in the fourth quarter of 2024 was $26 million as compared to $55 million in the fourth quarter of 2023. The decrease was primarily driven by $10 million of lower interest expense due to a different notional amount of debt outstanding during the period. We also recognized $19 million less of marked-to-market remeasurement losses during the quarter on our undesignated interest rate swap contracts, in comparison to the prior year.

Non-operating income for the fourth quarter of 2024 was $6 million as compared to $5 million in the fourth quarter of 2023, mainly driven by an increase in the non-service components of net periodic pension benefits, partially offset by lower equity income due to the sale of an equity interest in an unconsolidated joint venture.

Tax (benefit) expense for the fourth quarter of 2024 was a benefit of $1 million as compared to an expense of $16 million in the fourth quarter of 2023, mainly driven by release of reserves due to statute of limitation expirations and release of valuation allowance related to deferred tax assets in Brazil (net of US branch taxes), partially offset by the Company's change in assertion of undistributed foreign earnings in China.

Net income for the fourth quarter of 2024 was $100 million as compared to $52 million in the fourth quarter of 2023 primarily due to $29 million of lower interest expense, $17 million of lower tax expenses and $7 million of lower SG&A partially offset by $7 million of lower gross profit, as discussed above.

Net cash provided by operating activities totaled $131 million in the fourth quarter of 2024 as compared to $135 million in the fourth quarter of 2023, primarily due to $27 million unfavorable changes in working capital and $2 million in lower net income excluding the effects of non-cash items, partially offset by $25 million of favorable impacts from changes in other assets and liabilities.

Non-GAAP Financial Measures

Adjusted EBITDA increased to $153 million in the fourth quarter of 2024 as compared to $145 million in the fourth quarter of 2023. The increase was mainly due to variable and fixed cost productivity, commodity, transportation and energy deflation and favorable product mix. These increases were partially offset by lower volumes and unfavorable foreign exchange impact.

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