Garrett Motion Inc.

Second-quarter net sales were $976 million, up 7% year over year on a reported basis and 5% at constant currency. Adjusted EBIT was a record $152 million, up $28 million, and adjusted EBIT margin was 15.6%, up 200 basis points year over year, though with an 80 basis point unfavorable foreign currency impact. Adjusted free cash flow was $122 million, with 80% conversion, and year-to-date repurchases totaled $115 million. For the full year 2026, management raised the outlook to $3.8 billion of net sales, $580 million of adjusted EBIT, a 15.3% margin, and $430 million of adjusted free cash flow.

Olivier Rabiller struck a confident tone, calling the quarter another strong one with growth, solid operating performance, and margin expansion across all verticals. He emphasized share gains in light vehicle, recovery in commercial vehicle, and especially industrial strength, saying industrial sales are now expected to be about $200 million for the full year. He also highlighted continued progress in zero-emission technologies, multiple gasoline and power generation awards, and what he described as strong alignment with the strategy laid out at the Technology and Investor Day.

Sean Deason focused on the mechanics behind the outperformance: volumes across all verticals, favorable mix from commercial vehicle, industrial, and aftermarket, and $14 million of operating performance contribution from productivity actions. He cited $122 million of adjusted free cash flow, $788 million of total liquidity, $158 million of unrestricted cash, and a voluntary early $50 million term-loan repayment, with net leverage down to 1.8x. On capital return, he noted $15 million of dividends, $28 million of buybacks in the quarter, $115 million repurchased year to date, and reiterated the policy of returning about 75% of adjusted free cash flow to shareholders over time.

Analysts pressed on commercial vehicle demand, especially Europe versus China and North America, and management said H1 growth was not entirely Europe-driven; China was important, and industrial/off-highway demand was a major contributor. Questions also focused on the genset turbo awards and whether they would materially affect 2027, with management saying the announced award is with a long-time customer and will not be a significant 2027 contributor, though it is part of a broader industrial trajectory. On HVAC/data center timing, Olivier clarified that first product shipment should be in 2027, with data-center-related timing around the end of 2027 to beginning of 2028.