Garrett Motion — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales totaled $930 million for Q3 2026, an increase of 3% on a constant currency basis compared to $902 million in Q3 2025.
• Net income was $97 million for Q3 2026, up from $77 million in Q3 2025, resulting in a net income margin of 10.4% versus 8.5%.
• Adjusted EBIT reached $152 million in Q3 2026, compared to $133 million in Q3 2025, with an adjusted EBIT margin of 16.3% versus 14.7%.
• Adjusted EBITDA was $183 million in Q3 2026, up from $164 million in Q3 2025, yielding an adjusted EBITDA margin of 19.7% versus 18.2%.
• Net cash provided by operating activities totaled $135 million in Q3 2026, an increase from $100 million in Q3 2025.
• Adjusted free cash flow was $136 million in Q3 2026, compared to $107 million in Q3 2025.
• Gross profit was $206 million in Q3 2026 (22.2% margin) compared to $186 million (20.6% margin) in Q3 2025.
• Selling, general and administrative expenses were $58 million in Q3 2026, up from $57 million in Q3 2025.
• Interest expense was $27 million in Q3 2026, down from $29 million in Q3 2025.
• For the nine months ended September 30, 2026, net sales were $2,891 million (up from $2,693 million), net income was $293 million (up from $226 million), and adjusted EBIT was $455 million (up from $388 million).

Guidance and Future Outlook:

• The Company reaffirmed its 2026 full-year mid-point outlook.
• Full-year 2026 net sales guidance is $3.75 billion to $3.85 billion (prior: $3.7 billion to $3.9 billion).
• Full-year 2026 net income guidance is $337 million to $352 million (prior: $330 million to $360 million).
• Full-year 2026 adjusted EBIT guidance is $570 million to $590 million (prior: $560 million to $600 million).
• Full-year 2026 net cash provided by operating activities guidance is $460 million to $500 million (prior: $435 million to $525 million).
• Full-year 2026 adjusted free cash flow guidance is $410 million to $450 million (prior: $385 million to $475 million).
• Industry outlook for 2026 includes light vehicle production down 2% to 4% from 2025, and commercial vehicle production up 1% to 2% from 2025.
• Expected 2026 average light vehicle battery electric vehicle penetration is approximately 19%.
• Expected 2026 exchange rates are 1.15 USD/Euro and 6.8 USD/CNY.
• Expected 2026 R&D investment is approximately 4.2% of sales, and capital expenditures are approximately 2.4% of sales.

Business Segments and Product Lines:

• Commercial vehicle and industrial segments drove growth, with increases primarily in North America and China for industrial/off-highway applications and higher on-highway demand in Japan, Korea, and India.
• Gasoline segment sales decreased, driven by demand softness in China, partially offset by program ramp-ups in Europe, Japan, Korea, and India.
• Diesel segment sales increased, driven by strong demand for light commercial vehicles and pickup trucks in Europe, North and South America, and India.
• Aftermarket sales increased, driven by higher demand for replacement parts in North America off-highway/industrial and stronger passenger vehicle replacement demand in Europe.
• The Company secured multiple turbo wins, including several light vehicle programs for China domestic and export markets.
• The Company secured several on- and off-highway commercial vehicle applications across all regions.
• The Company secured a production award for an industrial E-Cooling compressor in Asia.
• E-Powertrain and E-Cooling compressor programs are on track for start of production in 2027.

Market and Competitive Landscape:

• The Company reported continued growth in industrial applications above previous expectations.
• The Company stated it is growing ahead of the industry.
• The Company noted unfavorable foreign exchange impacts of $3 million (0.3%) on Q3 2026 sales.
• Cost of goods sold increases were driven by product mix ($39 million), commodity/transportation/energy inflation ($18 million), and higher R&D&E costs ($6 million), partially offset by productivity gains ($24 million) and lower import tariffs ($19 million).

Risks and Challenges:

• The press release notes unfavorable foreign exchange impacts on sales and earnings.
• The Company cites commodity, transportation, and energy inflation as cost pressures.
• The Company mentions demand softness in the gasoline segment in China.
• Forward-looking statements caution that actual results may differ due to automotive industry risks, competitive landscape factors, and macroeconomic/geopolitical conditions.

Management Commentary and Tone:

• Olivier Rabiller, President and CEO, stated that Q3 results reflect the strength of Garrett's differentiated portfolio, disciplined execution, and ability to grow ahead of the industry.
• Management highlighted the ability to secure new business in turbo, support growing industrial demand, and advance zero-emission technologies while delivering strong profitability and cash flow.
• Management expressed confidence in offsetting unfavorable foreign exchange and delivering long-term shareholder value.

Other Key Points:

• The Board of Directors approved a new share repurchase program for calendar year 2027, authorizing up to $250 million of common stock repurchases.
• The Company declared a cash dividend of $0.08 per share of common stock, payable on December 15, 2026, to shareholders of record as of December 1, 2026.
• The Company executed a $50 million voluntary early debt repayment on its Term Loan in October 2026.
• During Q3 2026, the Company repurchased $57 million of common stock under its existing program, leaving $78 million in remaining repurchase capacity as of September 30, 2026.
• As of September 30, 2026, total principal debt outstanding was $1,384 million, down from $1,439 million as of December 31, 2025.
• Available liquidity as of September 30, 2026, was $841 million, including $211 million in unrestricted cash and $630 million in undrawn revolving credit facility commitments.
• The new 2027 share repurchase program will commence on January 1, 2027, following the expiration of the current program on December 31, 2026.