Garrett Motion (GTX +2.29%), a key player in advanced automotive turbochargers and zero-emission vehicle components, posted its results for Q2 FY2025 on July 24, 2025. The company reported GAAP revenue of $913 million, edging past analyst expectations of $903.25 million in GAAP revenue. Earnings per share reached $0.42, above estimates of $0.36. Net income rose to $87 million, from $64 million a year ago. While the revenue increase was modest, especially with nearly all growth stemming from foreign currency translation, bottom-line improvements were significant. Though gross margin declined due to a less favorable product mix and ongoing softness in the aftermarket and diesel categories. Overall, the quarter saw Garrett Motion outperform consensus on its top line, and management upgraded its full-year 2025 outlook, primarily due to currency effects and strong execution in new technology segments.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.42 | $0.36 | $0.28 | 50.0% |
| Revenue (GAAP) | $913 million | $903.25 million | $890 million | 2.6% |
| Adjusted EBIT | $124 million | $123 million | 0.8% | |
| Net income (GAAP) | $87 million | $64 million | 35.9% | |
| Adjusted free cash flow | $121 million | $62 million | 95.2% |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Priorities
Garrett Motion specializes in designing and manufacturing turbochargers for cars, trucks, and industrial engines, alongside a growing portfolio of zero-emission and electrified vehicle technologies. The company’s business is built around technological innovation, supplying more than 60 original equipment manufacturers (OEMs) globally with advanced air management products that boost performance and help meet regulations for cleaner vehicles.
Recently, it has focused on expanding its zero-emission solutions. Notable areas include the E-Powertrain (electric drive systems), E-Cooling (electric compressors), and fuel cell air compressors, reflecting investment in hybrid and electric vehicle development. Its competitive edge also comes from a broad patent portfolio, a robust presence in low-cost manufacturing regions, and a diversified approach which includes a substantial automotive aftermarket business. Garrett’s success relies on its ability to innovate, maintain strong OEM relationships, adapt to rapid industry changes like electrification, and support its global supply chain efficiently.
Second Quarter Highlights and Financial Results
During the quarter, Garrett Motion’s financial results reflected strength in profitability and cash flow, but also showed some softness in certain business areas. All reported sales growth was due to currency translation, as Constant currency sales growth was flat. Management highlighted that, while demand for gasoline and commercial vehicle products rose -- with gasoline sales up 6% and commercial vehicles up 6% (both at reported rates) -- these gains were offset by declines in the aftermarket and diesel segments. Aftermarket revenue dropped 8%, and Diesel sales fell 1% on a reported basis.
Gross profit margin contracted to 19.8%, down from 20.8% in the prior-year quarter. This decline in gross profit came largely from a $25 million negative product mix effect and lower pricing, net of inflation, despite offsetting gains from currency, cost improvements, and some productivity measures. Selling, general, and administrative expenses declined slightly, mainly due to lower personnel costs, helping to support operating margins even as top line growth slowed.
Interest expense was sharply lower, dropping to $25 million from $62 million, primarily due to the absence of a one-time charge in the previous year. Net income (GAAP) rose to $87 million, with the margin expanding to 9.5 % from 7.2 %. Adjusted free cash flow increased 95% to $121 million, bolstered by better working capital management. These factors enabled Garrett Motion to repurchase $22 million of stock and pay out a $13 million dividend. Its liquidity position improved to $862 million as of June 30, 2025, including $232 million in cash and an undrawn $630 million credit facility as of June 30, 2025.
On the strategic front, Garrett Motion scored significant wins with new and extended OEM turbocharger programs, securing more than $1 billion in awards. The company achieved new milestones in its fuel cell and electrification projects, including launching its second innovation center in Wuhan, China, to support global demand for electric mobility solutions. These achievements are seen as important steps to offset declining internal combustion engine segments and to position for the electrified future.
The company's product set covers both traditional and next-generation systems. Gasoline turbos and diesel turbochargers remain central products, while the shift comes as customers and regulators push for more zero-emission vehicles and greater efficiency. Garrett’s recent wins in these areas highlight traction, especially as battery-electric vehicle penetration rises to 16% in its full-year 2025 guidance models.
The $0.06 per share quarterly dividend remained consistent, with the most recent payout declared for September 16, 2025.
Outlook and What to Watch
Garrett Motion’s management upgraded its fiscal 2025 outlook following the quarter. The company now expects net sales (GAAP) between $3.4 billion and $3.6 billion for FY2025, compared to the prior forecast of $3.3 billion to $3.5 billion in GAAP net sales for the full year 2025. Net income (GAAP) guidance rose to a range of $233 million to $278 million for FY2025, while adjusted EBITDA (non-GAAP) is now forecast at $590 million to $650 million for FY2025. These upgrades are driven mainly by improved foreign currency rates, not stronger organic volume growth.
Aftermarket and diesel segments are expected to face continued headwinds, which will require successful execution in new technology areas like E-Powertrain systems and fuel cell compressors to counteract declines. Investors should keep an eye on future margin trends, currency effects, OEM program launches, and Garrett Motion’s progress in zero-emission and hybrid product wins. The quarterly dividend was held steady at $0.06 per share. GTX does pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
