Garrett Motion's Q2 2025: Navigating Contradictions in Tariff Recovery, Share Buybacks, and Market Dynamics

Tariff recovery expectations, share repurchase strategy, sales mix and market conditions, stock repurchase strategy, and tariff recovery expectations are the key contradictions discussed in Garrett Motion's latest 2025Q2 earnings call.



Strong Financial Performance:
- Garrett Motion reported net sales of $913 million for Q2, remaining flat at constant currency, and delivered adjusted EBIT of $124 million, with an adjusted EBIT margin of 13.6%.
- The solid financial performance was driven by strong sales in a soft environment, with gasoline turbo sales growing by 4%, and a robust adjusted free cash flow of $121 million.

Gasoline Turbo Sales Outperformance:
- Gasoline turbo sales grew by 4% in the quarter, outperforming the industry, despite a decline in diesel sales and aftermarket demand in North America.
- The growth was attributed to share of demand gains and new product launches across regions.

Capital Allocation and Shareholder Returns:
- During the quarter, Garrett repurchased $22 million of common stock and paid a $12 million quarterly dividend, contributing to a total of $52 million in such activities in the first half of the year.
- This reflects the company's commitment to returning at least 75% of adjusted free cash flow to shareholders, achieved through dividends and share repurchases.

Zero-Emission Technologies and Business Wins:
- Garrett secured significant business wins, including over $1 billion in light vehicle turbo program extensions and awards for zero-emission technologies.
- These wins provide strong revenue visibility, reinforce the company's position in differentiated technologies, and demonstrate demand for its high-speed E-Powertrain, E-Cooling, and Fuel Cell Compressor offerings.

Tariff Recovery and Currency Impacts:
- Garrett recovered $14 million of tariffs within the quarter and benefited from $11 million or 80 basis points of contribution from favorable foreign exchange impacts year-over-year.
- The company continues to adapt to changing tariff situations and currency fluctuations, ensuring consistent operating performance.