Garrett Motion Inc. Q1 2026 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 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 | Q1 2026 | Q1 2025 |
|---|---|---|
| Net Sales | $985 million | $878 million |
| Gross Profit | $196 million | $179 million |
| Gross Margin | 19.9% | 20.4% |
| Net Income | $95 million | $62 million |
| Diluted EPS | $0.49 | $0.30 |
| Operating Cash Flow | $98 million | $56 million |
| Adjusted EBIT | $151 million | $131 million |
| Total Debt (Principal) | $1,437 million | $1,439 million |
| Cash & Equivalents | $142 million | $177 million |
Material Changes vs. Prior Period
- Revenue Growth: Net sales increased 12.2% ($107 million) driven by higher demand across all verticals (Gasoline, Diesel, Commercial/Industrial, Aftermarket), favorable foreign currency translation ($58 million impact), and favorable product mix.
- Profitability: Net income rose 53% ($33 million) due to higher gross profit, lower interest expense, and reduced other expenses. However, gross margin compressed slightly to 19.9% from 20.4% due to pricing net of inflation pass-through and lower productivity benefits offsetting volume gains.
- Cost Structure: Cost of Goods Sold (COGS) increased 12.9%, primarily due to volume ($42 million) and foreign exchange ($40 million). SG&A expenses decreased slightly to $58 million.
- Tax Rate: The effective tax rate decreased to 19.5% from 27.1%, attributed to a decrease in U.S. taxes on international operations and share-based compensation deductions.
Outlook, Commentary, and Risks
- Management Commentary: Management reported outperforming the light vehicle industry across all verticals. Growth was driven by new program launches and increased commercial vehicle demand. Productivity gains were partially offset by labor inflation and the timing of foreign exchange pass-through.
- Capital Allocation: The company repurchased $87 million of common stock (including $50 million from an affiliated Oaktree fund) under a $250 million program authorized in late 2025. $163 million remains available. A quarterly dividend of $0.08 per share was paid, with another declared for June 2026.
- Liquidity: The company maintains $630 million in available revolving credit capacity and $142 million in cash. Total debt remains stable with a 7.75% Senior Note due 2032 and a Term Loan facility.
- Risks & Contingencies:
- Legal: A Brazilian tax matter involves a potential loss contingency of $28 million; management believes liability is not probable.
- Market: Risks include raw material volatility, supply chain disruptions, and geopolitical conditions affecting international operations.
- Operational: Productivity improvements are being weighed against labor inflation and the timing of customer recoveries.
Investor Verification Checklist
- Verify the sustainability of the 12% revenue growth rate given the significant impact of foreign currency translation ($58 million).
- Monitor the trend in gross margin compression (19.9% vs 20.4%) and the company's ability to pass through inflation costs.
- Review the status of the Brazilian tax infraction notice ($28 million exposure) for any updates on probability of loss.
- Assess the impact of the $87 million share repurchase on future liquidity and the remaining $163 million authorization.
- Confirm the realization of productivity gains against rising labor costs and stock-based compensation expenses.