Garrett Motion Reports Third Quarter 2024 Financial Results; Updates Full Year 2024 Outlook
Garrett Motion (GTX) reported Q3 2024 financial results with net sales of $826 million, down 14% year-over-year. The company achieved a net income of $52 million with a 6.3% margin and Adjusted EBITDA of $144 million with a 17.4% margin. Operating cash flow was $67 million with adjusted free cash flow of $71 million. Key business developments include new marine and auxiliary power awards, a partnership with SinoTruk for e-powertrain systems, and recognition with the 2024 Stellantis Innovation Award. The company updated its full-year 2024 outlook, reducing net sales guidance to $3.40-3.50 billion from $3.50-3.65 billion previously.
Garrett Motion (GTX) ha riportato i risultati finanziari del terzo trimestre 2024, con vendite nette di 826 milioni di dollari, in calo del 14% rispetto all'anno precedente. L'azienda ha realizzato un utile netto di 52 milioni di dollari, con un margine del 6,3%, e un EBITDA rettificato di 144 milioni di dollari, con un margine del 17,4%. Il flusso di cassa operativo è stato di 67 milioni di dollari, con un flusso di cassa libero rettificato di 71 milioni di dollari. Sviluppi aziendali chiave includono nuovi riconoscimenti per il potere marino e ausiliario, una partnership con SinoTruk per sistemi di e-powertrain e il riconoscimento con il Premio Innovazione Stellantis 2024. L'azienda ha aggiornato le previsioni per l'intero anno 2024, riducendo le stime sulle vendite nette a 3,40-3,50 miliardi di dollari rispetto ai 3,50-3,65 miliardi precedentemente previsti.
Garrett Motion (GTX) informó los resultados financieros del tercer trimestre de 2024, con ventas netas de 826 millones de dólares, una disminución del 14% en comparación con el año anterior. La compañía logró un ingreso neto de 52 millones de dólares con un margen del 6,3% y un EBITDA ajustado de 144 millones de dólares con un margen del 17,4%. El flujo de caja operativo fue de 67 millones de dólares, con un flujo de caja libre ajustado de 71 millones de dólares. Desarrollos empresariales clave incluyen nuevos premios para energía marina y auxiliar, una asociación con SinoTruk para sistemas de e-powertrain, y el reconocimiento con el Premio Innovación Stellantis 2024. La compañía actualizó su perspectiva para todo el año 2024, reduciendo la guía de ventas netas a 3,40-3,50 mil millones de dólares desde 3,50-3,65 mil millones previamente.
가렛 모션 (GTX)는 2024년 3분기 재무 실적을 발표했으며, 순매출은 8억 2600만 달러로 전년 대비 14% 감소했습니다. 회사는 5200만 달러의 순이익을 달성했으며, 마진은 6.3%였습니다. 조정된 EBITDA는 1억 4400만 달러로 마진은 17.4%입니다. 운영 현금 흐름은 6700만 달러이며, 조정된 자유 현금 흐름은 7100만 달러입니다. 주요 사업 개발로는 새로운 해양 및 보조 전력 수주, SinoTruk과의 전기 파워트레인 시스템 파트너십, 2024 스텔란티스 혁신상 수상이 포함됩니다. 회사는 2024년 전체 연도 전망을 업데이트하여 순매출 지침을 34억-35억 달러로 기존의 35억-36.5억 달러에서 하향 조정했습니다.
Garrett Motion (GTX) a annoncé les résultats financiers du troisième trimestre 2024, avec des ventes nettes de 826 millions de dollars, en baisse de 14 % par rapport à l'année précédente. L'entreprise a réalisé un bénéfice net de 52 millions de dollars avec une marge de 6,3 % et un EBITDA ajusté de 144 millions de dollars avec une marge de 17,4 %. Le flux de trésorerie opérationnel était de 67 millions de dollars, avec un flux de trésorerie libre ajusté de 71 millions de dollars. Développements commerciaux clés incluent de nouvelles récompenses pour les énergies marines et auxiliaires, un partenariat avec SinoTruk pour des systèmes de e-powertrain, et la reconnaissance avec le Prix de l'Innovation Stellantis 2024. L'entreprise a mis à jour ses prévisions pour l'année 2024, réduisant la prévision de ventes nettes à 3,40-3,50 milliards de dollars, contre 3,50-3,65 milliards de dollars précédemment.
Garrett Motion (GTX) hat die finanziellen Ergebnisse für das dritte Quartal 2024 bekannt gegeben, mit Nettoumsätzen von 826 Millionen Dollar, was einem Rückgang von 14% im Vergleich zum Vorjahr entspricht. Das Unternehmen erreichte einen Nettogewinn von 52 Millionen Dollar mit einer Marge von 6,3% und ein bereinigtes EBITDA von 144 Millionen Dollar mit einer Marge von 17,4%. Der operative Cashflow betrug 67 Millionen Dollar, der bereinigte freie Cashflow lag bei 71 Millionen Dollar. Wichtige Unternehmensentwicklungen umfassen neue Auszeichnungen für Marine- und Hilfsstrom, eine Partnerschaft mit SinoTruk für E-Powertrain-Systeme und die Anerkennung mit dem Stellantis Innovationspreis 2024. Das Unternehmen hat seine Umsatzprognose für 2024 aktualisiert und die Nettoumsatzprognose auf 3,40-3,50 Milliarden Dollar von zuvor 3,50-3,65 Milliarden Dollar gesenkt.
- Adjusted EBITDA margin expanded by 160 basis points to 17.4%
- Gross profit margin improved to 20.1% from 18.3% year-over-year
- Interest expense decreased by $11 million to $37 million
- Strong liquidity position with $696 million available
- Continued share repurchase program with $226 million executed YTD
- Net sales declined 14% to $826 million
- Net income decreased to $52 million from $57 million YOY
- Operating cash flow reduced to $67 million from $74 million YOY
- Lowered full-year 2024 net sales guidance
- Reduced net income guidance range to $240-255 million from $245-285 million
Insights
The Q3 results reveal concerning trends with net sales down 14% to
The company's updated FY2024 guidance shows significant downward revisions, with net sales now expected at
The automotive supplier market faces structural challenges, evidenced by Garrett's report of industry softness and increased competitive pressure on global OEMs. The company's strategic pivot toward zero-emission technologies, with
The
Third Quarter 2024 Financial Highlights
- Net sales totaled
$826 million , down14% on a reported and constant currency* basis - Net income totaled
$52 million ; Net income margin of6.3% - Adjusted EBITDA* totaled
$144 million ; Adjusted EBITDA margin* of17.4% - Net cash provided by operating activities totaled
$67 million - Adjusted free cash flow* totaled
$71 million
Third Quarter 2024 Business Highlights
- Won new marine and auxiliary power awards for our largest turbocharger with start of production in 2026
- Entered into a partnership with SinoTruk to co-develop e-powertrain systems for light and heavy trucks by 2027
- Recognized with the 2024 Stellantis Innovation Award for our differentiated zero-emission technologies
ROLLE, Switzerland and PLYMOUTH, Mich., Oct. 24, 2024 (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 nine months ended September 30, 2024.
“Garrett delivered solid financial performance in the third quarter amid industry softness, increased competitive pressure on global OEMs, compounded by some impact from short-term customer vehicle platform mix.” said Olivier Rabiller, President and CEO of Garrett. “Our outstanding operating performance allowed us to expand our adjusted EBITDA margin by 160 basis points year-over-year to
“In the quarter, we continued to win across all turbo vehicle verticals. More specifically, our new range of large turbos enabled us to secure critical wins on gen-sets to serve the growing need for backup power generation equipment for data centers. Additionally, we continue to see increased momentum with our customers for our differentiated, zero-emission high-speed electric solutions. We have achieved significant progress this quarter with our high-speed electric powertrain solution, including closing important partnership agreements in the commercial vehicle space that will lead to mass production as early as 2027.”
| $ millions (unless otherwise noted) | Q3 2024 | Q3 2023 | 2024 YTD | 2023 YTD | ||||
| Net sales | 826 | 960 | 2,631 | 2,941 | ||||
| Cost of goods sold | 660 | 784 | 2,108 | 2,374 | ||||
| Gross profit | 166 | 176 | 523 | 567 | ||||
| Gross profit % | ||||||||
| Selling, general and administrative expenses | 53 | 59 | 178 | 178 | ||||
| Income before taxes | 76 | 70 | 244 | 279 | ||||
| Net income | 52 | 57 | 182 | 209 | ||||
| Net income margin | ||||||||
| Adjusted EBITDA* | 144 | 152 | 445 | 490 | ||||
| Adjusted EBITDA margin* | ||||||||
| Net cash provided by operating activities | 67 | 74 | 277 | 330 | ||||
| Adjusted free cash flow* | 71 | 57 | 201 | 285 |
* See reconciliations to the nearest GAAP measures below.
Results of Operations
Net sales for the third quarter of 2024 were
Cost of goods sold for the third quarter of 2024 decreased to
Gross profit totaled
Selling, general and administrative (“SG&A”) expenses for the third quarter of 2024 decreased to
Interest expense in the third quarter of 2024 was
Non-operating income for the third quarter of 2024 was
Tax expense for the third quarter of 2024 was
Net income for the third quarter of 2024 was
Net cash provided by operating activities totaled
Non-GAAP Financial Measures
Adjusted EBITDA decreased to
Adjusted free cash flow was
Liquidity and Capital Resources
As of September 30, 2024, Garrett had
As of September 30, 2024, total principal amount of debt outstanding was
During the third quarter of 2024, we repurchased
Full Year 2024 Outlook
Garrett is updating its outlook for the full year 2024 for certain GAAP and Non-GAAP financial measures.
| Full Year 2024 Outlook | Prior Outlook | |
| Net sales (GAAP) | ||
| Net sales growth at constant currency (Non-GAAP)* | - | - |
| Net income (GAAP) | ||
| Adjusted EBITDA (Non-GAAP)* | ||
| Net cash provided by operating activities (GAAP) | ||
| Adjusted free cash flow (Non-GAAP)* |
* See reconciliations to the nearest GAAP measures below.
Garrett’s full year 2024 outlook, as of October 24, 2024, includes the following expectations:
- 2024 light vehicle production down
3% vs. 2023 - 2024 commercial vehicle production down
1% including on- and off-highway - RD&E of ~
4.7% of sales, with greater than50% on zero-emission technologies - Capital expenditures ~
2.5% of sales, with greater than30% on zero-emission technologies - Stable FX environment (EUR/$ at 1.08)
Conference Call
Garrett will hold a conference call at 8:30 am EDT / 2:30 pm CET on Thursday, October 24, 2024, to discuss its results. To participate on the conference call, please dial +1-877-883-0383 (US) or +1-412-902-6506 (international) and use the passcode 4470754.
The conference call will also be broadcast over the internet and include a slide presentation. To access the webcast and supporting material, please visit the investor relations section of the Garrett Motion website at http://investors.garrettmotion.com. A replay of the conference call will be available by dialing +1-877-344-7529 (US) or +1-412-317-0088 (international) using the access code 8577986. The webcast will also be archived on Garrett’s website.
Forward-Looking Statements
This communication and related comments by management may include “forward-looking statements” within the meaning of the U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact and can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will,” and similar expressions. Forward-looking statements represent our current judgment about possible future activities, events, or developments that we intend, expect, project, believe, or anticipate will or may occur in the future. In making these statement, we rely upon assumptions and analysis based on our experience and perception of historical trends, current conditions, and expected future developments, as well as other factors we consider appropriate under the circumstances. We believe these judgments are reasonable, but these statements are not guarantees of any future performance, events, or results, and actual performance, events, or results may differ materially from those envisaged by our forward-looking statements due to a variety of important factors, many of which are described in our most recent Annual Report on Form 10-K and our other filings with the U.S. Securities and Exchange Commission, including risks related to the automotive industry, the competitive landscape and our ability to compete, and macroeconomic and geopolitical conditions, among others. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made, and we undertake no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events, or other factors that affect the subject of these statement, except where we are expressly required to do so by law.
Non-GAAP Financial Measures
This communication includes the following non-GAAP financial measures, which are not calculated in accordance with generally accepted accounting principles in the United States (“GAAP”): constant currency sales growth, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin and Adjusted free cash flow. We believe these measures are useful to investors and management in understanding our ongoing operations and analysis of ongoing operating trends and are important indicators of operating performance because they exclude the effects of certain non-operating items, therefore making them more closely reflect our operational performance. Our calculation of these non-GAAP measures, including a reconciliation of such measures to the most closely related GAAP measure, are set forth in the Appendix to this presentation. These non-GAAP measures may not be comparable to similarly titled measures of other companies due to potential differences between companies in the method of calculation. As a result, the use of these non-GAAP measures has limitations and should not be considered superior to, in isolation from, or as a substitute for, related GAAP measures. For additional information regarding our non-GAAP financial measures, see our most recent Annual Report on Form 10-K and our other filings with the U.S. Securities and Exchange Commission.
About Garrett Motion Inc.
Garrett Motion is a differentiated technology leader, serving automotive customers worldwide for close to 70 years. Known for its global leadership in turbocharging, the company develops transformative technologies for vehicles to become cleaner and more efficient. Its advanced technologies help reduce emissions and reach zero emissions via passenger and commercial vehicle applications – for on and off-highway use. Its portfolio includes turbochargers, electric turbos (E-Turbo) and electric compressors (E-Compressor) for both ICE and hybrid powertrains. In the zero-emissions vehicle category, it offers fuel cell compressors for hydrogen fuel cell vehicles (FCEVs) as well as electric propulsion and thermal management systems for battery electric vehicles (BEVs). It boasts five R&D centers, 13 manufacturing sites and a team of 9,300 located in more than 20 countries. Its mission is to further advance motion through unique, differentiated innovations. More information at www.garrettmotion.com.
| Contacts: | |
| INVESTOR RELATIONS | MEDIA |
| Eric Birge | Amanda Jones |
| +1.734.392.5504 | +41.79.601.0787 |
| Eric.Birge@garrettmotion.com | Amanda.Jones@garrettmotion.com |
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
| For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (Dollars in millions, except per share amounts) | |||||||||||||||
| Net sales | $ | 826 | $ | 960 | $ | 2,631 | $ | 2,941 | |||||||
| Cost of goods sold | 660 | 784 | 2,108 | 2,374 | |||||||||||
| Gross profit | 166 | 176 | 523 | 567 | |||||||||||
| Selling, general and administrative expenses | 53 | 59 | 178 | 178 | |||||||||||
| Other expense, net | 1 | 1 | 5 | 3 | |||||||||||
| Interest expense | 37 | 48 | 130 | 104 | |||||||||||
| Gain on sale of equity investment | — | — | (27 | ) | — | ||||||||||
| Non-operating (income) expense | (1 | ) | (2 | ) | (7 | ) | 3 | ||||||||
| Income before taxes | 76 | 70 | 244 | 279 | |||||||||||
| Tax expense | 24 | 13 | 62 | 70 | |||||||||||
| Net income | 52 | 57 | 182 | 209 | |||||||||||
| Less: preferred stock dividends | — | — | — | (80 | ) | ||||||||||
| Less: preferred stock deemed dividends | — | — | — | (232 | ) | ||||||||||
| Net income (loss) available for distribution | $ | 52 | $ | 57 | $ | 182 | $ | (103 | ) | ||||||
| Earnings (loss) per common share | |||||||||||||||
| Basic | $ | 0.24 | $ | 0.23 | $ | 0.80 | $ | (0.73 | ) | ||||||
| Diluted | 0.24 | 0.23 | 0.80 | (0.73 | ) | ||||||||||
| Weighted average common shares outstanding | |||||||||||||||
| Basic | 217,283,749 | 250,888,716 | 226,057,803 | 141,745,701 | |||||||||||
| Diluted | 218,403,681 | 252,381,719 | 227,649,747 | 141,745,701 | |||||||||||
CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (Dollars in millions) | |||||||||||||||
| Net income | $ | 52 | $ | 57 | $ | 182 | $ | 209 | |||||||
| Foreign exchange translation adjustment | (30 | ) | 14 | (12 | ) | 8 | |||||||||
| Defined benefit pension plan adjustment, net of tax | 1 | — | 4 | — | |||||||||||
| Changes in fair value of effective cash flow hedges, net of tax | 4 | (2 | ) | 5 | (3 | ) | |||||||||
| Changes in fair value of net investment hedges, net of tax | (31 | ) | 20 | (4 | ) | 18 | |||||||||
| Total other comprehensive income (loss), net of tax | (56 | ) | 32 | (7 | ) | 23 | |||||||||
| Comprehensive income | $ | (4 | ) | $ | 89 | $ | 175 | $ | 232 | ||||||
CONSOLIDATED INTERIM BALANCE SHEETS
| September 30, 2024 | December 31, 2023 | ||||||
| (Dollars in millions) | |||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 96 | $ | 259 | |||
| Restricted cash | 1 | 1 | |||||
| Accounts, notes and other receivables – net | 698 | 808 | |||||
| Inventories – net | 267 | 263 | |||||
| Other current assets | 81 | 75 | |||||
| Total current assets | 1,143 | 1,406 | |||||
| Investments and long-term receivables | 12 | 29 | |||||
| Property, plant and equipment – net | 450 | 477 | |||||
| Goodwill | 193 | 193 | |||||
| Deferred income taxes | 198 | 216 | |||||
| Other assets | 159 | 206 | |||||
| Total assets | $ | 2,155 | $ | 2,527 | |||
| LIABILITIES | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 896 | $ | 1,074 | |||
| Current maturities of long-term debt | 7 | 7 | |||||
| Accrued liabilities | 319 | 293 | |||||
| Total current liabilities | 1,222 | 1,374 | |||||
| Long-term debt | 1,464 | 1,643 | |||||
| Deferred income taxes | 25 | 27 | |||||
| Other liabilities | 222 | 218 | |||||
| Total liabilities | $ | 2,933 | $ | 3,262 | |||
| COMMITMENTS AND CONTINGENCIES | |||||||
| EQUITY (DEFICIT) | |||||||
| Common Stock, par value | — | — | |||||
| Additional paid – in capital | 1,207 | 1,190 | |||||
| Retained deficit | (1,740 | ) | (1,922 | ) | |||
| Accumulated other comprehensive loss | (10 | ) | (3 | ) | |||
| Treasury Stock, at cost; 26,242,790 and 0 shares as of September 30, 2024 and December 31, 2023, respectively | (235 | ) | — | ||||
| Total deficit | (778 | ) | (735 | ) | |||
| Total liabilities and deficit | $ | 2,155 | $ | 2,527 | |||
| CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS | Nine Months Ended September 30, | ||||||
| 2024 | 2023 | ||||||
| (Dollars in millions) | |||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 182 | $ | 209 | |||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||||
| Deferred income taxes | 16 | 13 | |||||
| Depreciation | 67 | 66 | |||||
| Amortization of deferred issuance costs | 35 | 17 | |||||
| Loss on remeasurement of forward purchase contract | — | 13 | |||||
| Gain on sale of equity investment | (27 | ) | — | ||||
| Foreign exchange gain | (10 | ) | — | ||||
| Stock compensation expense | 17 | 12 | |||||
| Pension expense | 1 | 1 | |||||
| Unrealized loss on derivatives | 39 | 21 | |||||
| Other | 2 | 7 | |||||
| Changes in assets and liabilities: | |||||||
| Accounts, notes and other receivables | 110 | (76 | ) | ||||
| Inventories | (10 | ) | (30 | ) | |||
| Other assets | 2 | 2 | |||||
| Accounts payable | (154 | ) | 57 | ||||
| Accrued liabilities | 8 | 26 | |||||
| Other liabilities | (1 | ) | (8 | ) | |||
| Net cash provided by operating activities | $ | 277 | $ | 330 | |||
| Cash flows from investing activities: | |||||||
| Expenditures for property, plant and equipment | (69 | ) | (57 | ) | |||
| Proceeds from cross-currency swap contracts | 24 | 9 | |||||
| Proceeds from sale of equity investment | 46 | — | |||||
| Net cash provided by (used for) investing activities | $ | 1 | $ | (48 | ) | ||
| Cash flows from financing activities: | |||||||
| Proceeds from issuance of long-term debt, net of deferred financing costs | 794 | 667 | |||||
| Payments of long-term debt | (991 | ) | (205 | ) | |||
| Repurchases of Series A Preferred Stock | — | (580 | ) | ||||
| Repurchases of Common Stock | (226 | ) | (178 | ) | |||
| Payments of Additional Amounts for conversion of Series A Preferred Stock | — | (25 | ) | ||||
| Payments for preference dividends | — | (42 | ) | ||||
| Payments for debt and revolving facility financing costs | (7 | ) | (2 | ) | |||
| Other | (9 | ) | (1 | ) | |||
| Net cash used for financing activities | $ | (439 | ) | $ | (366 | ) | |
| Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash | (2 | ) | (1 | ) | |||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (163 | ) | (85 | ) | |||
| Cash, cash equivalents and restricted cash at beginning of the period | 260 | 248 | |||||
| Cash, cash equivalents and restricted cash at end of the period | $ | 97 | $ | 163 | |||
| Supplemental cash flow disclosure: | |||||||
| Income taxes paid (net of refunds) | 43 | 38 | |||||
| Interest paid | 49 | 45 | |||||
Reconciliation of Net Income to Adjusted EBITDA(1)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (Dollars in millions) | |||||||||||||||
| Net income | $ | 52 | $ | 57 | $ | 182 | $ | 209 | |||||||
| Interest expense, net of interest income(2) | 37 | 47 | 127 | 98 | |||||||||||
| Tax expense | 24 | 13 | 62 | 70 | |||||||||||
| Depreciation | 23 | 23 | 67 | 66 | |||||||||||
| EBITDA | 136 | 140 | 438 | 443 | |||||||||||
| Stock compensation expense(3) | 4 | 4 | 17 | 12 | |||||||||||
| Repositioning costs | 4 | 6 | 16 | 14 | |||||||||||
| Foreign exchange gain on debt, net of related hedging loss | — | — | (1 | ) | — | ||||||||||
| Discounting costs on factoring | 1 | 1 | 3 | 3 | |||||||||||
| Gain on sale of equity investment | — | — | (27 | ) | — | ||||||||||
| Other non-operating income(4) | (1 | ) | (1 | ) | (4 | ) | (4 | ) | |||||||
| Acquisition and divestiture expenses(5) | — | — | 1 | — | |||||||||||
| Capital structure transformation expenses(6) | — | 2 | — | 22 | |||||||||||
| Debt refinancing and redemption costs(7) | — | — | 2 | — | |||||||||||
| Adjusted EBITDA | $ | 144 | $ | 152 | $ | 445 | $ | 490 | |||||||
| Net sales | $ | 826 | $ | 960 | $ | 2,631 | $ | 2,941 | |||||||
| Net income margin | 6.3 | % | 5.9 | % | 6.9 | % | 7.1 | % | |||||||
| Adjusted EBITDA margin(8) | 17.4 | % | 15.8 | % | 16.9 | % | 16.7 | % | |||||||
(1) We evaluate performance on the basis of EBITDA and Adjusted EBITDA. We define “EBITDA” as our net income calculated in accordance with U.S. GAAP, plus the sum of interest expense net of interest income, tax expense and depreciation. We define “Adjusted EBITDA” as EBITDA, plus the sum of stock compensation expense, repositioning costs, foreign exchange (gain) loss on debt net of related hedging gains (loss), discounting costs on factoring, gain on sale of equity investment, other non-operating income, capital structure transformation expenses, net reorganization items and loss on extinguishment of debt (if any). Adjusted EBITDA now also adjusts for acquisition and divestiture expenses, and debt refinancing and redemption costs, but no adjustments were made to the prior period as there were no similar adjustments in the prior period. We believe that EBITDA and Adjusted EBITDA are important indicators of operating performance and provide useful information for investors because:
- EBITDA and Adjusted EBITDA exclude the effects of income taxes, as well as the effects of financing and investing activities by eliminating the effects of interest-related charges and depreciation expenses and therefore more closely measure our operational performance; and
- certain adjustment items, while periodically affecting our results, may vary significantly from period to period and have disproportionate effect in a given period, which affects the comparability of our results.
In addition, our management may use Adjusted EBITDA in setting performance incentive targets to align performance measurement with operational performance.
(2) Reflects interest income of
(3) Stock compensation expense includes only non-cash expenses.
(4) Reflects the non-service component of net periodic pension income.
(5) Reflects the incremental third-party costs incurred for the sale of an equity interest in an unconsolidated joint venture.
(6) Reflects the third-party incremental costs that were directly attributable to the transformation of the Company's capital structure through the partial repurchase and subsequent conversion of the remaining outstanding Series A Preferred Stock into a single class of common stock in June 2023.
(7) Reflects the third-party costs directly attributable to the repricing of our 2021 Dollar Term Facility.
(8) Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of net sales.
Reconciliation of Constant Currency Sales % Change(1)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Garrett | |||||||||||||||
| Reported sales % change | (14 | )% | 2 | % | (11 | )% | 9 | % | |||||||
| Less: Foreign currency translation | 0 | % | 3 | % | (1 | )% | (1 | )% | |||||||
| Constant currency sales % change | (14 | )% | (1 | )% | (10 | )% | 10 | % | |||||||
| Gasoline | |||||||||||||||
| Reported sales % change | (19 | )% | 10 | % | (14 | )% | 17 | % | |||||||
| Less: Foreign currency translation | 0 | % | 1 | % | (1 | )% | (2 | )% | |||||||
| Constant currency sales % change | (19 | )% | 9 | % | (13 | )% | 19 | % | |||||||
| Diesel | |||||||||||||||
| Reported sales % change | (21 | )% | (4 | )% | (15 | )% | 3 | % | |||||||
| Less: Foreign currency translation | 1 | % | 5 | % | (1 | )% | 0 | % | |||||||
| Constant currency sales % change | (22 | )% | (9 | )% | (14 | )% | 3 | % | |||||||
| Commercial vehicles | |||||||||||||||
| Reported sales % change | 0 | % | (13 | )% | (6 | )% | 2 | % | |||||||
| Less: Foreign currency translation | 0 | % | 1 | % | (1 | )% | (1 | )% | |||||||
| Constant currency sales % change | 0 | % | (14 | )% | (5 | )% | 3 | % | |||||||
| Aftermarket | |||||||||||||||
| Reported sales % change | (1 | )% | 3 | % | 2 | % | 4 | % | |||||||
| Less: Foreign currency translation | 0 | % | 3 | % | (1 | )% | 0 | % | |||||||
| Constant currency sales % change | (1 | )% | 0 | % | 3 | % | 4 | % | |||||||
| Other Sales | |||||||||||||||
| Reported sales % change | (13 | )% | 23 | % | (5 | )% | 2 | % | |||||||
| Less: Foreign currency translation | (1 | )% | 4 | % | (2 | )% | (1 | )% | |||||||
| Constant currency sales % change | (12 | )% | 19 | % | (3 | )% | 3 | % | |||||||
(1) We define constant currency sales growth as the year-over-year change in reported sales relative to the comparable period, excluding the impact on sales from foreign currency translation. We believe this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.
Reconciliation of Cash Flow from Operations to Adjusted Free Cash Flow(1)
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| (Dollars in millions) | |||||||||||||||
| Net cash provided by operating activities | $ | 67 | $ | 74 | $ | 277 | $ | 330 | |||||||
| Expenditures for property, plant and equipment | (20 | ) | (24 | ) | (69 | ) | (57 | ) | |||||||
| Net cash provided by operating activities less expenditures for property, plant and equipment | 47 | 50 | 208 | 273 | |||||||||||
| Capital structure transformation expenses | — | 5 | 1 | 7 | |||||||||||
| Acquisition and divestiture expenses | — | — | 1 | — | |||||||||||
| Cash payments for repositioning | 2 | 5 | 15 | 9 | |||||||||||
| Proceeds from cross currency swap contracts | 3 | — | 11 | — | |||||||||||
| Factoring and P-notes | 19 | (3 | ) | (35 | ) | (4 | ) | ||||||||
| Adjusted free cash flow(1) | $ | 71 | $ | 57 | $ | 201 | $ | 285 | |||||||
(1) Adjusted free cash flow reflects an additional way of viewing liquidity that management believes is useful to investors in analyzing the Company’s ability to service and repay its debt. The Company defines adjusted free cash flow as cash flow provided from operating activities less capital expenditures and additionally adjusted for other discretionary items including cash flow impacts for capital structure transformation expenses, factoring and guaranteed bank notes activity.
Full Year 2024 Outlook Reconciliation of Reported Net Sales to Net Sales Growth at Constant Currency
| 2024 Full Year | |||||||
| Low End | High End | ||||||
| Reported net sales (% change) | (12 | )% | (10 | )% | |||
| Foreign currency translation | — | % | — | % | |||
| Full year 2024 Outlook Net sales growth at constant currency | (12 | )% | (10 | )% | |||
Full Year 2024 Outlook Reconciliation of Net Income to Adjusted EBITDA
| 2024 Full Year | |||||||
| Low End | High End | ||||||
| (Dollars in millions) | |||||||
| Net income | $ | 240 | $ | 255 | |||
| Interest expense, net of interest income * | 151 | 151 | |||||
| Tax expense | 82 | 87 | |||||
| Depreciation | 90 | 90 | |||||
| Full year 2024 Outlook EBITDA | 563 | 583 | |||||
| Other non-operating income | (28 | ) | (28 | ) | |||
| Discounting costs on factoring | 3 | 3 | |||||
| Stock compensation expense | 21 | 21 | |||||
| Acquisition and divestiture expenses | 1 | 1 | |||||
| Debt refinancing and redemption costs | 2 | 2 | |||||
| Repositioning costs | 23 | 23 | |||||
| Full Year 2024 Outlook Adjusted EBITDA | $ | 585 | $ | 605 | |||
* Excludes the effects of marked-to-market fluctuations from our interest rate swap contracts
Full Year 2024 Outlook Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow
| 2024 Full Year | |||||||
| Low End | High End | ||||||
| (Dollars in millions) | |||||||
| Net cash provided by operating activities | $ | 348 | $ | 398 | |||
| Expenditures for property, plant and equipment | (86 | ) | (86 | ) | |||
| Net cash provided by operating activities less expenditures for property, plant and equipment | 262 | 312 | |||||
| Cash payments for repositioning | 21 | 21 | |||||
| Proceeds from cross currency swap contracts | 15 | 15 | |||||
| Acquisition and divestiture expenses | 1 | 1 | |||||
| Capital structure transformation costs | 1 | 1 | |||||
| Full Year 2024 Outlook Adjusted free cash flow | $ | 300 | $ | 350 | |||
FAQ
What was Garrett Motion's (GTX) revenue in Q3 2024?
What is Garrett Motion's (GTX) updated sales guidance for 2024?
How much cash did Garrett Motion (GTX) generate from operations in Q3 2024?
What was Garrett Motion's (GTX) Adjusted EBITDA margin in Q3 2024?
