Garrett Motion Inc. (GTX) - Q2 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 30, 2026. Garrett Motion Inc. is a technology leader in turbocharging, air and fluid compression, and high-speed electric motor technologies for mobility and industrial applications. The company operates as a single reportable segment.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Net Sales | $976 million | $913 million | $1,961 million | $1,791 million |
| Gross Profit | $212 million | $181 million | $408 million | $360 million |
| Gross Margin | 21.7% | 19.8% | 20.8% | 20.1% |
| Net Income | $101 million | $87 million | $196 million | $149 million |
| Diluted EPS | $0.53 | $0.42 | $1.02 | $0.72 |
| Operating Cash Flow (YTD) | $243 million | $214 million | - | - |
| Adjusted EBIT (Q2) | $152 million | $124 million | $303 million (YTD) | $255 million (YTD) |
| Total Debt (Principal) | $1,386 million | - | - | - |
| Cash & Equivalents | $158 million | - | - | - |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 7% in Q2 and 9% YTD, driven by higher volumes across all verticals (Gasoline, Diesel, Commercial/Industrial, Aftermarket) and favorable foreign currency impacts.
- Margin Expansion: Gross margin improved to 21.7% in Q2 (from 19.8% prior year) due to productivity gains, favorable product mix, and lower import tariffs, partially offset by commodity inflation.
- Profitability: Net income rose 16% in Q2 and 31% YTD. Adjusted EBIT increased 23% in Q2, reflecting operational leverage and cost management.
- Debt Reduction: The company made an early repayment of $50 million on its 2025 Dollar Term Facility in May 2026. Total principal outstanding decreased to $1,386 million from $1,439 million at year-end 2025.
- Shareholder Returns: The company repurchased $115 million of common stock YTD (including $50 million from a related party) and paid $31 million in dividends.
Outlook, Risks, and Management Commentary
- Management Commentary: Management highlighted outperformance relative to the light vehicle industry, driven by new program launches in Europe, India, and South America. Strong demand was noted in light commercial vehicles and industrial sectors, specifically for data center power generation (Gensets).
- Strategic Wins: The company secured awards for turbo technology for data centers and initiated pre-development of a commercial vehicle E-powertrain with a Japanese truck maker. Positive feedback was received on E-Cooling oil-free compressor technology.
- Liquidity: The company maintains $630 million in available revolving credit capacity and believes current cash flows and facilities provide adequate liquidity for the next 12 months.
- Risks & Contingencies:
- Legal: A Brazilian tax matter involving an estimated $29 million loss contingency (including penalties) is ongoing; management believes liability is not probable.
- Market: Risks include raw material volatility, supply chain disruptions, geopolitical conditions, and foreign exchange fluctuations.
- Operational: Potential for warranty claims, product recalls, and realization of productivity improvements.
Key Facts for Investor Verification
- Share Repurchase Program: $135 million remaining under the $250 million program authorized for 2026.
- Dividend Declaration: A quarterly dividend of $0.08 per share was declared on July 29, 2026, payable September 15, 2026.
- Debt Covenants: The company is in compliance with all covenants under its 2032 Senior Notes and Credit Agreement.
- Foreign Exchange Impact: Significant portion of revenue growth (approx. 2% in Q2, 4% YTD) was attributed to favorable foreign currency translation, primarily the Chinese Yuan and Japanese Yen.
- Non-GAAP Reconciliation: Adjusted EBIT excludes repositioning costs, FX gains/losses on debt, and other non-operating items; investors should review the reconciliation table in Note 22.