• Adjusted EBITDA (Q4 2024): $153 million, with a margin of 18.1%, up 280 basis points from Q4 2023.
• Adjusted Free Cash Flow (Q4 2024): $157 million.
• Share Repurchase (2024): $296 million, reducing share count by 13% compared to the end of 2023.
• Net Sales (Q4 2024): $844 million.
• Adjusted EBITDA (Full Year 2024): $598 million, with a margin of 17.2%.
• Adjusted Free Cash Flow (Full Year 2024): $358 million, representing a 60% conversion of adjusted EBITDA.
• Total Debt (End of 2024): $1.5 billion, reduced by $203 million from the prior year.
• Liquidity Position (End of 2024): $725 million.
• Net Income (2025 Outlook): $232 million.
• Adjusted EBITDA (2025 Outlook): $575 million.
• Adjusted EBIT (2025 Outlook): $457 million.
• Net Cash Provided by Operating Activities (2025 Outlook): $402 million.
• Adjusted Free Cash Flow (2025 Outlook): $345 million.
• Share Repurchase Program (2025): New $250 million authorized.
• Dividends (2025): $50 million planned, paid quarterly.

• Warning! GuruFocus has detected 6 Warning Signs with GTX.

Release Date: February 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Garrett Motion Inc (NASDAQ:GTX) delivered strong fourth-quarter results with an adjusted EBITDA of $153 million and a margin of 18.1%, an increase of 280 basis points compared to Q4 2023.
• The company generated $157 million of adjusted free cash flow in the quarter, allowing for significant share repurchases, reducing the share count by 13% by the end of 2024.
• Garrett Motion Inc (NASDAQ:GTX) secured new business wins across all applications, reinforcing its technology leadership and expanding its position in the US and China.
• The company continues to make progress in commercial vehicles and has secured new awards for marine and backup power applications, with production expected to start in 2026.
• Garrett Motion Inc (NASDAQ:GTX) is advancing its electrification solutions, with significant progress in fuel cell compressor portfolio and e-powertrain technologies, expecting first production awards by 2027.

Negative Points

• The company experienced softness in the light vehicle industry, particularly in Europe and China, impacting overall sales.
• There was a decline in diesel production primarily due to lower industry production in Europe, affecting Garrett Motion Inc (NASDAQ:GTX)'s performance.
• Foreign exchange fluctuations negatively impacted financial results, contributing to a $34 million headwind for the full year.
• Despite strong operational performance, the company faced volume declines and unfavorable product mix, which were partially offset by cost productivity measures.
• The 2025 outlook anticipates continued softness in the light vehicle industry, with adjusted EBITDA expected to remain flat when excluding foreign exchange impacts.

Q & A Highlights

Q: How is Garrett Motion managing geopolitical and tariff challenges, and how do these affect the business going into 2025 and 2026? A: Olivier Rabiller, President and CEO, explained that the company remains flexible and reactive to geopolitical events. They have engaged in discussions with customers and have become more adaptable over the years to handle unforeseen events, although predicting specific outcomes remains challenging.

Q: Can you provide more details on Garrett Motion's business activities in China, especially with local manufacturers? A: Olivier Rabiller highlighted that China remains a crucial market, with a shift towards local Chinese players, including new entrants focusing on battery electric vehicles and plug-in hybrids. Garrett Motion is gaining traction with these new players and is developing specific products to meet their needs, with new business expected to kick in by 2026 and 2027.

Q: How does Garrett Motion define adjusted free cash flow, and what factors contributed to the $157 million figure? A: Sean Deason, CFO, clarified that adjusted free cash flow is calculated as operating cash flow minus CapEx, excluding repositioning and other one-time charges. The strong EBITDA performance and a positive lift from working capital contributed to the $157 million figure.

Q: What is Garrett Motion's approach to mergers and acquisitions (M&A), and are there opportunities in this area? A: Olivier Rabiller stated that the company focuses on organic growth, leveraging its strengths in turbo and zero-emission vehicle solutions. While they are active in exploring M&A opportunities, they maintain a high bar to ensure any action is not dilutive to shareholders. Sean Deason added that they are always looking at opportunities but prioritize shareholder value.

Q: What is Garrett Motion's outlook for adjusted free cash flow in 2025, and how does it relate to repositioning and other factors? A: Sean Deason confirmed that the 2025 outlook for adjusted free cash flow excludes repositioning and other one-time charges. The company does not consider factoring receivables as a free cash flow benefit, ensuring a clear and consistent financial framework.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.