Garrett Motion (NASDAQ:GTX) held its first-quarter earnings conference call on Thursday. Below is the complete transcript from the call.
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
View the webcast at https://event.choruscall.com/mediaframe/webcast.html?webcastid=fTv98mHJ
Summary
Garrett Motion reported strong financial results for Q1 2026 with net sales of $985 million, up 6% at constant currency, and adjusted EBIT of $151 million, representing a 15.3% margin.
The company increased its 2026 full-year financial outlook, driven by strong performance across all verticals, including commercial vehicle, industrial, and aftermarket sectors.
Strategic initiatives included multiple awards for their turbo technology, progress in zero emission technologies with a significant E Powertrain Production award in China, and advancements in industrial cooling systems.
Garrett Motion maintained its capital allocation strategy, repurchasing $87 million in common stock and paying $16 million in dividends during the quarter.
Management highlighted continued productivity measures, disciplined execution, and a robust liquidity position with no near-term debt maturities.
Full Transcript
Cindy (Operator)
Hello, my name is Cindy and I will be your operator this morning. I would like to welcome everyone to the Garrett Motion First Quarter 2026 Financial Results Conference Call. This call is being recorded and a replay will be available later today. After the company’s presentation, there will be a Q and A session. I would now like to hand over the call to Cyril Granjon, Garrett’s Vice President, Investor Relations and Treasurer.
Cyril Granjon (Vice President, Investor Relations and Treasurer)
Thank you Cindy and good day everyone. We appreciate you joining us to review Garrett Motion’s first quarter 2026 financial results. Our presentation and press release are available on the Investor Relations section of our website. Today’s discussion includes forward looking statements that involve risks and uncertainties. Please refer to our SEC filings, including our most recent annual report on Form 10-K, for a discussion of factors that could cause our results to differ materially from these forward looking statements. Today’s presentation also includes certain non-GAAP metrics which we use to help describe how we manage and operate our business. Please review the disclaimers on slide 2 of our presentation as the content of our call will be governed by this language. With me today are Olivier Rabier, our President and Chief Executive Officer, and John Deason, our Senior Vice President and Chief Financial Officer. Olivier will begin by sharing highlights from a very strong quarter both in terms of financial performance and strategic wins. Sean will then review our first quarter financial results and updated 2026 outlook. With that, I’ll turn the call over to Olivier. Thank you Cyril and thank you all for joining the call today. We started the year by delivering another very strong set of financial results in the first quarter, driven by growth in a muted industry and disciplined operational execution. Net sales for the first quarter were $985 million, up 6% at constant currency. We delivered growth across all verticals including commercial vehicles and industrial. Considering that light vehicle production was down in Q1, Garrett’s growth reflects share of demand gains in passenger vehicles and as well as continued strong performance in commercial, off highway and industrial. Through continued productivity actions and disciplined execution, we have been enabled to convert this growth into a very solid operating performance. Adjusted EBIT was $151 million and our adjusted EBIT margin was 15.3%. In addition, we generated an adjusted free cash flow of $49 million in the quarter. Together, these strong results support our decision to increase the upper range of our 2026 full year outlook. Lastly, we continue to allocate capital in line with our stated framework and our commitment to return capital to shareholders. During the first quarter, we maintained our share repurchase activity, buying back $87 million of common stock and we also paid $16 million in quarterly dividends. With that, let me now Turn to Slide 4 to share more on Garrett’s continued success across our differentiated technology. Indeed, we continue to win across our turbo portfolio with multiple gasoline awards including VNT Turbo for hybrids and range electric vehicle applications. At the same time, we kept on the successful trend we have seen in industrial as we secured additional wins including for large power generation applications. Turning now to our zero emission technologies, we have made solid progress in Q1 2026 as we secured our second commercial vehicle E Powertrain Production award in China with startup production planned again for 2027. We also won a major production award for our industrial cooling compressor with Tonfai in China, a leading supplier for battery energy storage system cooling solutions. Overall, I’m very pleased with our progress. These wins demonstrate customer adoption of our differentiated technologies across a broad range of applications, supporting both portfolio expansion and growth while continuing to deliver strong financial results. I will now hand it over to Sean who will talk you through our financial results and outlook.
Olivier Rabier (President and Chief Executive Officer)
Thanks Olivier and good morning everyone. I will begin my remarks on slide 5 as Olivier highlighted We delivered strong financial performance in the first quarter. Our net sales were $985 million driven by sequential growth across all verticals. This was driven by share of demand gains in diesel and gasoline applications, recovery of commercial vehicle volumes and continued demand for industrial applications. We delivered $151 million of adjusted EBIT in the quarter, equating to a 15.3% margin. This represents both a year over year and a sequential improvement driven by strong volume conversion and favorable foreign exchange. Finally, adjusted free cash flow was $49 million as the business continues to convert earnings into cash in line with expectations. Now Moving to Slide 6, we show our Q1 net sales bridge by product category as compared with the same period last year. In the quarter net sales increased by $107 million versus the prior year or 12% on a reported basis and 6% on a constant currency basis. Double digit growth in commercial vehicle, industrial and aftermarket contributed significantly to the strong performance. We also benefited from continued gasoline share of demand gains and new launches in diesel. The sales growth occurred across all key regions. In North America, the key drivers of sales growth were off highway, industrial and aftermarket. In Europe we saw share of demand gains in light vehicle, gasoline and diesel as well as a recovery in off highway applications. And in China, growth was driven primarily by industrial and on highway applications. Turning to Slide 7 during the quarter we generated $151 million of in adjusted EBIT representing a $20 million increase over the same period last year. Our margin rate of 15.3% reflects a 40 basis point improvement year over year, 20 basis points of which are due to favorable foreign exchange currency impacts partially offset by tariff pass throughs. The increase in adjusted EBIT was primarily driven by volume and favorable mix from our strong growth in commercial, vehicle, industrial and aftermarket in the quarter. Year over year operating performance was slightly negative, largely as a result of timing and in line with our expectations. As we begin to execute on our productivity measures, we expect to generate positive operating performance through the balance of this year, continuing to benefit from sustained fixed cost actions and variable cost productivity. Turning now to slide 8, I’ll walk you through the adjusted EBIT to adjusted free cash flow bridge. For the quarter we delivered positive adjusted free cash …
This post was originally published here
