Garrett's Q1 2025: Market Dynamics, Currency Fluctuations, and Tariff Challenges Uncovered

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Operating Performance and Margin Expansion:
- Garrett Motion reported net sales of $878 million for Q1, slightly down year-over-year, yet outperforming the industry in light vehicle turbo sales for both gasoline and diesel applications with gasoline growing 6% in the quarter.
- The company achieved an adjusted EBIT of $131 million and an adjusted EBIT margin of 14.9%, up 170 basis points compared to Q1 2024.
- This strong margin performance was primarily driven by sustainable fixed and variable cost actions implemented in 2024.

Geographic Sales Distribution and Tariff Management:
- Garrett Motion has a well-balanced sales split across geographies with only 20% of its sales in North America, which helps mitigate risks from tariffs and other regional challenges.
- The company has been able to implement pass-through with its customers for existing tariffs and remains alert to adapt to future changes in customer demand.

Innovation and Market Expansion:
- Garrett showcased its innovative turbo and hybrid offerings at the Shanghai Auto Show, securing three new wins in China and North America for turbocharged range-extended electric vehicles and plug-in hybrids.
- The company also expanded into new on-highway commercial vehicle programs and natural gas applications for heavy trucks, indicating a growing presence in alternative fuel solutions.

Cash Generation and Shareholder Returns:
- Garrett achieved an adjusted free cash flow of $36 million in line with expectations for the quarter.
- The company continued to return capital to shareholders by repurchasing $30 million of common stock and paying a $12 million quarterly dividend, with plans for another $12 million dividend in June 2025.