Garrett Motion Reaffirms 2026 Outlook After Third-Quarter Sales

The Tip Desk · November 1, 2026 · 4 min read

Net sales were $930 million, up 3% at constant currency, as commercial vehicle and industrial demand offset a gasoline decline.

Garrett Motion Inc. (GTX), an automotive and industrial technology provider, reported net sales of $930 million for the three months ended September 30, 2026, up 3% on a constant-currency basis from a year earlier, after 5% constant-currency growth in the second quarter and 6% in the first.

The company said the quarter was driven by strong performance in commercial vehicle and industrial. Commercial vehicle and industrial constant-currency sales rose 23%, compared with 16% growth in the nine months ended September 30, 2026. The company attributed the increase to strong demand in North America and China for industrial and off-highway applications, combined with higher on-highway demand in Japan, Korea and India.

Gasoline constant-currency sales declined 5% in the third quarter, reversing 0% constant-currency growth in the nine months ended September 30, 2026. The company said the gasoline decrease was primarily driven by demand softness in China, partially offset by program ramp-ups in Europe, Japan, Korea and India. Diesel constant-currency sales rose 6%, versus 5% in the nine-month period, on light commercial vehicle and pickup demand. Aftermarket constant-currency sales rose 6%. Other sales fell 37% on a constant-currency basis.

Gross profit was $206 million, or 22.2% of sales, compared with 20.6% a year earlier. The company said the increase was driven by $21 million of favorable product mix, $20 million of higher productivity net of labor inflation and repositioning costs, $18 million of price net of inflation pass-through and $1 million of import tariffs, partially offset by $18 million of commodity, transportation and energy inflation, $8 million from lower sales volumes, $8 million of foreign currency impact and $6 million of higher RD&E costs.

Adjusted EBIT was $152 million, matching the second-quarter level, with an adjusted EBIT margin of 16.3%, versus 15.6% in the second quarter and 15.3% in the first. The year-over-year increase of $19 million was driven by $21 million of favorable product mix, $19 million of pricing net of inflation pass-through and $18 million of higher productivity, SG&A net, partially offset by $18 million of commodity, transportation and energy inflation, $8 million of lower sales volume, $7 million of unfavorable foreign currency impact and $6 million of higher RD&E costs.

Net income was $97 million, or $0.51 a share on a diluted basis, compared with $77 million, or $0.38 a share, a year earlier. The company said the increase was primarily driven by $20 million of increased gross profit, $3 million of lower tax expense and $2 million of lower interest expense, partially offset by $4 million of higher non-operating expense (income) and $1 million of higher SG&A expense. Net income margin was 10.4%.

Net cash provided by operating activities was $135 million. Adjusted free cash flow was $136 million, up from $122 million in the second quarter. The company said the year-over-year increase from $107 million was primarily driven by $19 million higher Adjusted EBIT, $8 million lower cash taxes, $5 million lower cash interest and $3 million favorable impact from working capital (net of factoring), partially offset by $5 million higher capital expenditures.

As of September 30, 2026, Garrett had $841 million in available liquidity, including $211 million in unrestricted cash and cash equivalents and $630 million of undrawn revolving commitments. Total principal amount of debt outstanding was $1,384 million. During the third quarter the company repurchased $57 million of common stock, leaving $78 million of remaining capacity as of September 30, 2026.

Garrett reaffirmed its 2026 full-year mid-point outlook. Full-year net sales are expected at $3.75 billion to $3.85 billion, with constant-currency growth of +2% to +6%. Net income is expected at $337 million to $352 million, and adjusted EBIT at $570 million to $590 million. The outlook assumes 2026 light vehicle industry production down 2% to 4% from 2025 and commercial vehicle industry, including on- and off-highway, up 1% to 2%.

The board approved a new share repurchase program for calendar year 2027, authorizing up to $250 million of common stock, commencing January 1, 2027, after the current program expires December 31, 2026. The company also declared a cash dividend of $0.08 a share, payable December 15, 2026, and executed a $50 million voluntary early Term Loan repayment in October.