Garrett Motion raises full-year outlook as margins expand
The company raised its constant currency sales growth forecast to a range of 1% to 7% after second-quarter net sales reached $976 million.
Garrett Motion (GTX) reported second-quarter net sales of $976 million, representing a 5% increase on a constant currency basis compared to the $913 million recorded in the same period last year.
The turbocharger manufacturer saw a broad recovery across its primary business segments. Constant currency sales for the commercial vehicle and industrial segment rose 10%, an acceleration from the 4% growth seen in the prior year. The diesel segment returned to growth with a 6% increase, compared to a 5% decline a year earlier, while the aftermarket segment rose 7% after falling 10% in the prior-year period.
Profitability improved alongside the revenue growth. The company's gross profit percentage increased to 21.7% from 19.8% in the second quarter of 2024. Adjusted EBIT margin expanded 200 basis points to 15.6%, up from 13.6% in the prior-year quarter. Net income margin also rose to 10.3% from 9.5%.
The company raised its full-year 2024 outlook. Garrett Motion now expects GAAP net sales between $3.7 billion and $3.9 billion, up from a previous range of $3.6 billion to $3.9 billion. The company also raised its constant currency sales growth forecast to between 1% and 7%, compared to the previous guidance of -2% to 6%.
Adjusted EBIT guidance for the full year was increased to a range of $560 million to $600 million, up from the previous lower bound of $520 million.
Cash flow from operations decreased to $145 million from $158 million in the second quarter of 2024, primarily due to $84 million in unfavorable working capital changes.
Garrett Motion reduced its total principal debt outstanding to $1,386 million as of June 30, 2024, down from $1,439 million at the end of 2023. The company repurchased $28 million of common stock during the quarter, a decrease from the $87 million repurchased in the first quarter of 2024.