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Item 2. Management’s Discussion and Analysis

2025-05-01 compared with 2024-10-24 · 140 added, 230 removed, 112 unchanged (77% of the section changed)

4 unchanged sentences

The following MD&A is intended to help you understand the results of operations and financial condition of Garrett Motion Inc.

for the three and nine months ended September 30, 2024.

for the three months ended March 31, 2025.

Executive Summary

During the third quarter of 2024, we were exposed to challenges within the light vehicle (diesel and gasoline) vertical, including industry softness in Europe and China, competitive pressure faced by global OEMs and short-term headwinds from customer vehicle platform mix.

In response, we efficiently adjusted our variable cost structure and proactively implemented sustainable cost actions to drive operational performance.

This enabled us to achieve Net income of $52 million and Adjusted EBITDA of $144 million for the quarter.

We continue to achieve success in our turbocharging, hybrid, and zero-emission technology applications.

This quarter, we secured significant industrial contracts in the marine and power generation sectors with our large-size turbochargers.

Additionally, we received a letter of intent for our E-Powertrain from a major truck manufacturer in the commercial vehicle industry.

Our E-Cooling technology won further pre-development awards from an electric bus manufacturer and we were awarded new series production awards for use of our Fuel Cell technologies for commercial vehicle application.

For the three and nine months ended September 30, 2024, we repurchased $52 million and $226 million, respectively, of Common Stock under our share repurchase program.

As of September 30, 2024, we had $124 million of the authorized amount remaining under our share repurchase program.

As previously disclosed, on April 3, 2024, we divested our equity interest in an unconsolidated joint venture for approximately $58 million, subject to customary debt and working capital adjustments.

We received cash consideration on the divestiture date of $46 million, with an additional $7 million still to be received, and recognized a gain of $27 million related to this divestiture.

Also as previously disclosed, during the second quarter, we completed an offering of $800 million in aggregate principal amount of 7.75% 2032 Senior Notes and made early debt repayments totaling $985 million on our Euro Term Facility and 2023 Dollar Term Facility, both of which were fully repaid as of June 30, 2024.

During the first quarter of 2025, we faced significant geopolitical and macro-environmental challenges, including declines in light vehicle diesel volumes, particularly in Europe, and decreased demand for replacement parts in North America.

These challenges were partially offset by growth in light vehicle gasoline volumes, primarily driven by new program launches in North America and volume recovery in Japan.

Our operating margin performance was robust, largely due to the sustainable fixed and variable cost measures implemented in 2024.

We continue to strengthen our global leadership position in turbo, winning business across all regions and verticals, including plug-in hybrids and range extended vehicles, as well as natural gas applications for heavy trucks.

We also secured new awards for our largest turbos used on industrial applications, significantly expanding our presence in Asia in that segment.

On the zero-emission differentiated solutions side we are building positive momentum, having reached a major milestone by receiving our first series production award for our high-speed electric motor for an on-highway application.

Additionally, we received another award for our Fuel Compressor technology and positive testing feedback on the application of our E-Cooling Compressor, laying the foundation for future business growth.

On January 30, 2025, we entered into a Restatement Agreement, which amended and restated our Existing Credit Agreement.

Under the Restatement Agreement, we refinanced in full our 2021 Dollar Term Facility and replaced it with the 2025 Dollar Term Facility in an aggregate principal amount of $692 million.

The 2025 Dollar Term Facility will mature on January 30, 2032.

At the same time, we also replaced our existing $600 million revolving facility with the New Revolving Facility in an aggregate principal amount of $630 million.

The maturity date of the New Revolving Facility is January 30, 2030.

For the three months ended March 31, 2025, we repurchased $30 million of Common Stock under our share repurchase program.

As of March 31, 2025, we had $220 million of the authorized amount remaining under our share repurchase program.

Disaggregated Revenue

The following tables show our revenues by geographic region and product line for the three and nine months ended September 30, 2024 and 2023, respectively.

The following tables show our revenues by geographic region and product line for the three months ended March 31, 2025 and 2024, respectively.

Three Months Ended

September 30,

Nine Months Ended

September 30,

2024 2023 2024 2023

(Dollars in millions)

3 unchanged sentences

257 29% 252 28%

20 2% 16 2% 55 2% 52 2%

$ 826 $ 960 $ 2,631 $ 2,941

By Product Line

Three Months Ended

September 30,

Nine Months Ended

September 30,

2024 2023 2024 2023

(Dollars in millions)

5 unchanged sentences

Total $ 878 $ 915

Results of Operations for the Three and Nine Months Ended September 30, 2024

Results of Operations for the Three Months Ended March 31, 2025

Three Months Ended

September 30,

Nine Months Ended

September 30,

2024 2023 2024 2023

(Dollars in millions)

1 unchanged sentence

% change compared with prior period (4.0) %

For the three months ended September 30, 2024, net sales compared to prior year decreased by $134 million or 14% (including a favorable impact of $1 million or 0% due to foreign currency translation primarily driven by higher Euro-to-US dollar).

This decrease was primarily driven by lower sales in gasoline and diesel applications due to industry softness in Europe and China, competitive pressure on global OEMs and short-term customer vehicle platform mix impacts.

Net sales also decreased due to pricing, net of inflation pass-through, driven by commodity deflation, partially offset by favorable product mix.

Gasoline product sales decreased by $81 million or 19% (including a favorable impact of $1 million or 0% due to foreign currency translation), primarily driven by lower demand in China and North America, partially offset by sustained demand in the rest of Asia and South America.

Diesel product sales decreased by $49 million or 21% (including a favorable impact of $1 million or 1% due to foreign currency translation), primarily driven by lower passenger vehicle sales in Europe, partially offset by sustained demand for pickup truck in South America.

Commercial vehicle sales are consistent year over year (with no foreign currency translation impact), primarily driven by construction and agriculture industry softness, offset by strong demand and favorable product mix in China with natural gas programs applications.

Aftermarket sales decreased by $1 million or 1% (including a favorable impact of $1 million or 0% due to foreign currency translation), primarily due to softer sales in North America, partially offset by favorable aftermarket conditions and demand for replacement parts in Asia and Europe.

For the nine months ended September 30, 2024, net sales compared to prior year decreased by $310 million or 11% (including an unfavorable impact of $25 million or 1% due to foreign currency translation primarily driven by lower Chinese Yuan-to-US dollar and Japanese Yen-to-US dollar exchange rates, partially offset by higher Euro-to-US dollar exchange rates) primarily due to demand softness in gasoline, diesel, and commercial vehicle applications across all regions and pricing decreases, net of inflation pass-through, driven by commodity deflation, partially offset by higher demand for replacement parts on aftermarket sales and favorable product mix.

Gasoline product sales decreased by $176 million or 14% (including an unfavorable impact of $13 million or 1% due to foreign currency translation), primarily driven by soft demand in China and North America partially offset by program ramp-ups in Europe, Japan, and India.

Diesel product sales decreased by $110 million or 15% (including an unfavorable impact of $3 million or 1% due to foreign currency translation), primarily driven by passenger vehicles in Europe, partially offset by sustained demand for pickup trucks in North and South America.

Commercial vehicle sales decreased by $30 million or 6% (including an unfavorable impact of $7 million or 1% due to foreign currency translation), primarily driven by construction and agriculture industry softness due to high interest rates and lower crop prices, partially offset by sustained demand in the on-highway industry, especially in China, with natural gas programs applications.

Aftermarket sales increased by $8 million or 2% (including an unfavorable impact of $1 million or 1% due to foreign currency translation), primarily due to favorable aftermarket conditions and continued high demand for replacement parts in Europe, China, and North America, partially offset by softer sales in other Asian countries.

For the three months ended March 31, 2025, net sales compared to the prior period decreased by $37 million or 4% (including an unfavorable impact of $21 million or 2% due to foreign currency translation), primarily driven by lower Euro-to-US dollar exchange rates, soft demand in diesel and commercial vehicle applications, and lower demand for replacement parts on aftermarket sales.

These decreases were partially offset by increased demand in gasoline products.

Gasoline product sales increased by $15 million or 4% (including an unfavorable impact of $10 million or 2% due to foreign currency translation), primarily driven by new application launches and program ramp-ups in North America, program launches in India, and recovery in Japan from prior year volume softness.

Diesel product sales decreased by $33 million or 14% (including an unfavorable impact of $6 million or 3% due to foreign currency translation), primarily driven by passenger vehicles in Europe transitioning to gasoline hybrids, partially offset by sustained demand for pickup trucks in South America.

Commercial vehicle sales decreased by $6 million or 4% (including an unfavorable impact of $3 million or 2% due to foreign currency translation), primarily driven by volume softness in China and Europe, partially offset by off-highway product launches in India.

Aftermarket sales decreased by $14 million or 13% (including an unfavorable impact of $2 million or 3% due to foreign currency translation), primarily due to softer demand in North America for off-highway and lower demand in the North America independent aftermarket.

Cost of Goods Sold and Gross Profit

Three Months Ended

September 30,

Nine Months Ended

September 30,

2024 2023 2024 2023

(Dollars in millions)

4 unchanged sentences

(Dollars in millions)

Cost of Goods Sold / Gross Profit for the three months ended September 30, 2023

Increase/(decrease) due to:

Volume (113) (46)

Product mix 32 10

Price, net of inflation pass-through — (13)

Commodity, transportation & energy inflation (16) 16

Productivity, net (38) 33

Research & development 6 (6)

Foreign exchange rate impacts 5 (4)

Cost of Goods Sold / Gross Profit for the three months ended September 30, 2024

For the three months ended September 30, 2024, cost of goods sold decreased by $124 million, primarily driven by $113 million of lower sales volumes, $16 million of commodity, transportation, and energy deflation, and $38 million of productivity, net of labor inflation.

These decreases were partially offset by $32 million of unfavorable product mix, $6 million of higher R&D costs, reflecting Garrett's continued investment in new technologies, and $5 million from foreign currency impacts.

For the three months ended September 30, 2024, gross profit decreased by $10 million, primarily driven by $46 million of lower sales volumes, $13 million from commodity deflation impacts on pricing, net of inflation pass-through, $6 million of higher R&D costs, and $4 million from foreign currency impacts.

These decreases were partially offset by $16 million of commodity, transportation, and energy deflation, $33 million of productivity, net of labor inflation, and $10 million of favorable product mix.

Cost of Goods Sold Gross Profit

(Dollars in millions)

Cost of Goods Sold / Gross Profit for the nine months ended September 30, 2023

$ 2,374 $ 567

Cost of Goods Sold / Gross Profit for the three months ended March 31, 2024

Increase/(decrease) due to:

4 unchanged sentences

Productivity, net (16) 16

Enacted import tariffs 4 —

Research & development — —

Foreign exchange rate impacts (14) (8)

Cost of Goods Sold / Gross Profit for the nine months ended September 30, 2024

$ 2,108 $ 523

For the nine months ended September 30, 2024, cost of goods sold decreased by $266 million, primarily driven by lower sales volumes of $220 million, $60 million of commodity, transportation, and energy deflation, $67 million of productivity, net of labor inflation and repositioning costs, and $4 million from foreign currency impacts.

These decreases were partially offset by $75 million unfavorable product mix and $10 million of higher R&D costs, reflecting Garrett's continued investment in new technologies.

For the nine months ended September 30, 2024, gross profit decreased by $44 million, primarily driven by $92 million of lower sales volumes, $51 million from commodity deflation impact on pricing net of inflation pass-through, $21 million favorable foreign currency impact, and $10 million of higher R&D costs.

These decreases were partially offset by $60 million of commodity, transportation, and energy deflation and $69 million of higher productivity, net of labor inflation and repositioning costs and $1 million of favorable product mix.

Cost of Goods Sold / Gross Profit for the three months ended March 31, 2025

For the three months ended March 31, 2025, cost of goods sold decreased by $44 million, primarily driven by $15 million of lower sales volumes, $9 million of commodity, transportation and energy deflation, $14 million from foreign currency impacts, and $16 million of productivity net of labor inflation.

These decreases were partially offset by $6 million of higher cost of goods sold due to unfavorable product mix and $4 million from the impact of enacted import tariffs.

For the three months ended March 31, 2025, gross profit increased by $7 million, primarily driven by $16 million of productivity, net of labor inflation, $9 million of commodity, transportation and energy deflation, and $4 million of pricing, net of inflation pass-through.

These increases were partially offset by $7 million from lower sales volumes, $7 million from unfavorable product mix, and $8 million from foreign currency impacts.

There was no impact to gross profit from enacted import tariffs as we managed to fully pass through the costs of the tariffs.

Selling, General and Administrative Expenses

Three Months Ended

September 30,

Nine Months Ended

September 30,

2024 2023 2024 2023

(Dollars in millions)

1 unchanged sentence

% of sales 6.7 % 7.0 %

Selling, general and administrative (“SG&A”) expenses for the three months ended September 30, 2024 decreased by $6 million compared with the prior year, mainly driven by $5 million of lower professional service and legal fees, $2 million of lower bad debt expense and $2 million of lower IT-related costs.

These decreases were partially offset by $2 million of higher repositioning costs and $1 million of unfavorable foreign exchange impact.

SG&A expenses for the nine months ended September 30, 2024 were consistent with the prior year.

Year over year variances are primarily related to $5 million of higher stock-based compensation expense and $2 million of higher repositioning costs.

These increases were offset by $6 million of lower professional service and legal fees and $2 million of lower IT-related costs.

SG&A expenses also increased due to $1 million of unfavorable exchange impact.

Selling, general and administrative (“SG&A”) expenses for the three months ended March 31, 2025, decreased by $5 million compared with the prior period, mainly driven by $2 million of lower stock-based compensation expense, $2 million of favorable foreign exchange impacts, and $1 million of lower personnel related costs.

Other Expense, Net

Three Months Ended

(Dollars in millions)

Other expense, net $ 7 $ 1

Other expense, net for the three months ended March 31, 2025 increased by $6 million compared to the prior period, primarily driven by debt financing costs related to the Restatement Agreement.

Interest Expense

Three Months Ended

September 30,

Nine Months Ended

September 30,

2024 2023 2024 2023

(Dollars in millions)

Interest expense $ 29 $ 31

For the three months ended September 30, 2024, interest expense decreased by $11 million compared to the prior year, primarily driven by $10 million lower of debt issuance cost amortization and $9 million of lower interest expense due to a different notional amount of debt outstanding during the period.

For the three months ended March 31, 2025, interest expense decreased by $2 million compared to the prior period, primarily driven by $10 million of lower interest expense due to a different notional amount of debt outstanding during the period and $1 million of lower debt issuance cost amortization.

In addition, we recorded $6 million of gains on our interest derivatives in the current year, in comparison to $8 million of gains in the prior year.

We also recognized $9 million of marked-to-market remeasurement losses during the three months ended September 30, 2024 on our undesignated interest rate swap contracts, in comparison to $5 million of marked-to-market remeasurement losses in the prior year.

For the nine months ended September 30, 2024, interest expense increased by $26 million compared to the prior year, primarily driven by $17 million of higher accelerated debt issuance cost amortization, and $10 million of higher interest expense related to our 2032 Senior Notes partially offset by lower interest expense related to our 2023 Dollar Term Facility.

In addition, we recorded $23 million of gains, net of settlements of $18 million, on our interest derivatives in the current year, in comparison to $18 million of gains in the prior year.

We also recognized $33 million of marked-to-market remeasurement losses during the nine months ended September 30, 2024 on our undesignated interest rate swap contracts, in comparison to $12 million of marked-to-market remeasurement losses in the prior year.

Non-operating (income) expense

We also recognized $6 million of marked-to-market remeasurement losses during the three months ended March 31, 2025, on our undesignated interest rate swap contracts, in comparison to no marked-to-market remeasurement losses in the prior year.

Non-operating income, net

Three Months Ended

September 30,

Nine Months Ended

September 30,

2024 2023 2024 2023

(Dollars in millions)

Non-operating (income) expense $ (1) $ (2) $ (7) $ 3

For the three months ended September 30, 2024, we had non-operating income of $1 million versus $2 million in the prior year, primarily driven by lower equity income due to the sale of an equity interest in an unconsolidated joint venture.

For the nine months ended September 30, 2024, we had non-operating income of $7 million versus an expense of $3 million in the prior year, primarily driven by foreign exchange transactional gains, partially offset by $2 million of lower equity income due to the sale of an equity interest in an unconsolidated joint venture.

Non-operating income, net $ (1) $ (5)

For the three months ended March 31, 2025, we had non-operating income of $1 million versus $5 million in the prior period.

The decrease in non-operating income was primarily driven by lower equity income due to the prior year sale of an equity interest in an unconsolidated joint venture and a decrease in foreign exchange transactional gains.

Three Months Ended

September 30,

Nine Months Ended

September 30,

2024 2023 2024 2023

(Dollars in millions)

1 unchanged sentence

Effective tax rate 27.1 % 18.5 %

The effective tax rates for the three months ended September 30, 2024 and 2023 were 31.6% and 18.6% , respectively.

The effective tax rates for the nine months ended September 30, 2024 and 2023 were 25.4% and 25.1%, respectively.

The change in the effective tax rate for the three months ended September 30, 2024 compared to the prior period is primarily related to global mix of earnings, partially offset by adjustments to tax reserves due to expiration of statute of limitations.

The change in the effective tax rate for the nine months ended September 30, 2024 compared to the prior period is primarily related to global mix of earnings and tax expense related to the sale of an equity interest in an unconsolidated joint venture, partially offset by reversal of tax reserves and lower non-deductible transaction costs.

In January 2019, the Organization for Economic Co-operation and Development (“OECD”) announced further work in continuation of its Base Erosion and Profit Shifting project, focusing on two “pillars.” Pillar One provides a framework for the reallocation of certain residual profits of multinational enterprises to market jurisdictions where goods or services are used or consumed.

Pillar Two consists of two interrelated rules referred to as Global Anti-Base Erosion (“GloBE”) Rules, which operate to impose a minimum tax rate of 15% calculated on a jurisdictional basis.

On December 20, 2021, the OECD published GloBE model rules and released multiple rounds of commentary on those rules over the subsequent months.

More than 135 OECD member countries have agreed to the key parameters of the model rules, which allow those OECD member countries to begin implementing the GloBE rules in a manner consistent with the agreement reached.

The rules were adopted by a number of countries, with an effective date for fiscal years beginning after December 31, 2023.

We do not expect that Pillar One will have an impact on our operations or effective tax rate.

Based on currently enacted legislation, we do not expect Pillar Two to have a material impact to our 2024 effective tax rate.

However, further enactment of legislation by countries in which we do business could have an impact on our 2024 effective tax rate.

The effective tax rates for the three months ended March 31, 2025 and 2024 were 27.1% and 18.5%, respectively.

The change in the effective tax rate for the three months ended March 31, 2025, compared to the prior period is primarily related to higher U.S.

taxes on international operations and reversal of tax reserves in 2024.

The Organization for Economic Cooperation and Development reached agreement among over 140 countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as Pillar Two.

Many countries we operate in continue to announce changes in their tax laws and regulations based on the Pillar Two framework.

While we continue to evaluate the impact of these legislative changes as additional guidance becomes available, uncertainty remains regarding the timing and interpretation by tax authorities in affected jurisdictions.

For 2025, Pillar Two is not expected to have a material impact to our effective tax rate.

However, further enactment of legislation by jurisdictions in which we do business could have an impact on our future effective tax rate, tax liabilities, and cash tax.

The effective tax rate can vary from quarter to quarter due to changes in the Company’s global mix of earnings, the resolution of income tax audits, changes in tax laws (including updated guidance on U.S.

1 unchanged sentence

Three Months Ended

September 30,

Nine Months Ended

September 30,

2024 2023 2024 2023

(Dollars in millions)

1 unchanged sentence

Net income margin 7.1 % 7.2 %

Net income for the three months ended September 30, 2024 decreased by $5 million compared with the prior year, primarily due to $10 million of decreased gross profit and $11 million of higher tax expense.

These decreases were partially offset by $11 million of lower interest expense and $6 million of lower SG&A expense.

Net income for the nine months ended September 30, 2024 decreased by $27 million compared with the prior year, primarily due to $44 million of decreased gross profit and $26 million of higher interest expense.

These decreases were partially offset by a $27 million gain on the sale of an equity interest in an unconsolidated joint venture, $10 million of higher non-operating income, and $8 million of lower tax expense.

Net income for the three months ended March 31, 2025, decreased by $4 million compared with the prior period, primarily due to $8 million of higher tax expense, $6 million of higher other expense, net, and a $4 million decrease in non-operating income.

These increases were partially offset by $7 million of increased gross profit and $5 million of lower SG&A expense.

Non-GAAP Measures

3 unchanged sentences

Additionally, the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, an analysis of the Company’s operating results as reported under GAAP.

EBITDA and Adjusted EBITDA

We evaluate performance on the basis of EBITDA and Adjusted EBITDA.

We define “EBITDA” as our net income calculated in accordance with U.S.

GAAP, plus the sum of interest expense net of interest income, tax expense and depreciation.

We define “Adjusted EBITDA” as EBITDA, plus the sum of stock compensation expense, repositioning costs, foreign exchange (gain) loss on debt net of related hedging gains, discounting costs on factoring, gain on sale of equity investment, acquisition and divestiture expenses, other non-operating income, capital structure transformation expenses, debt refinancing and redemption costs, net reorganization items and loss on extinguishment of debt (if any).

Adjusted EBITDA now also adjusts for acquisition and divestiture expenses, and debt refinancing and redemption costs, but no adjustments were made to the prior period as there were no similar adjustments in the prior periods.

We believe that EBITDA and Adjusted EBITDA are important indicators of operating performance and provide useful information for investors because:

• EBITDA and Adjusted EBITDA exclude the effects of income taxes, as well as the effects of financing and investing activities by eliminating the effects of interest and depreciation expenses and therefore more closely measure our operational performance;

• certain adjustment items, while periodically affecting our results, may vary significantly from period to period and have disproportionate effect in a given period, which affects the comparability of our results.

In addition, our management may use Adjusted EBITDA in setting performance incentive targets to align performance measurement with operational performance.

The following table reconciles Net income under GAAP to EBITDA and Adjusted EBITDA:

EBIT and Adjusted EBIT

In 2025, we revised our non-GAAP reporting metric, transitioning from Adjusted EBITDA to Adjusted EBIT.

This change is intended to better reflect our core operating performance and align with industry practices.

We believe this change will provide investors with a clearer understanding of our ongoing operational performance.

We define “EBIT” as our net income calculated in accordance with U.S.

GAAP, plus the sum of (i) interest expense net of interest income and (ii) tax expense.

We define “Adjusted EBIT” as EBIT, plus the sum of (i) repositioning costs, (ii) foreign exchange (gain) loss on debt net of related hedging (gains) losses, (iii) discounting costs on factoring, (iv) gain on sale of equity investment, (v) acquisition and divestiture expenses, (vi) other non-operating income, (vii) capital structure transformation expenses, (viii) debt refinancing and redemption costs, and (ix) loss on extinguishment of debt, if any.

We believe that EBIT and Adjusted EBIT are important indicators of operating performance and provide useful information for investors because:

• EBIT and Adjusted EBIT exclude the effects of income taxes, as well as the effects of financing activities by eliminating the effects of interest and therefore more closely measure our operational performance;

• certain adjustment items, while periodically affecting our results, may vary significantly from period to period and could therefore have a disproportionate effect in a given period, affecting the comparability of our results.

The following table reconciles Net income under GAAP to Adjusted EBIT:

Three Months Ended

September 30,

Nine Months Ended

September 30,

2024 2023 2024 2023

(Dollars in millions)

2 unchanged sentences

Tax expense 23 15

Depreciation 23 23 67 66

EBITDA 136 140 438 443

Stock compensation expense (2)

Repositioning costs (2)

Foreign exchange gain on debt, net of related hedging loss 1 —

Discounting costs on factoring

Gain on sale of equity investment

Factoring and notes receivables discount fees

Other non-operating income (3)

(1) (1) (4) (4)

Acquisition and divestiture expenses (5)

Capital structure transformation expenses (6)

Debt refinancing and redemption costs (4)

Adjusted EBITDA $ 144 $ 152 $ 445 $ 490

(1) Reflects interest income of $0 million and $1 million for the three months ended September 30, 2024 and 2023, respectively, and $3 million and $6 million for the nine months ended September 30, 2024 and 2023, respectively.

(2) Stock compensation expense includes only non-cash expenses.

Acquisition and divestiture expenses 3 —

Adjusted EBIT $ 131 $ 121

(1) Reflects interest income of $0 million and $2 million for the three months ended March 31, 2025 and 2024, respectively.

(2) Repositioning costs includes severance costs related to restructuring projects to improve future productivity.

(3) Reflects the non-service component of net periodic pension income.

(5) Reflects the incremental third-party costs incurred for the sale of an equity interest in an unconsolidated joint venture.

(6) Reflects the third-party incremental costs that were directly attributable to the transformation of the Company's capital structure through the partial repurchase and subsequent conversion of the remaining outstanding Series A Preferred Stock into a single class of common stock in June 2023.

(7) Reflects the third-party costs directly attributable to the repricing of our 2021 Dollar Term Facility.

Adjusted EBITDA for the Three Months Ended September 30, 2024

For the three months ended September 30, 2024 , net income decreased by $5 million versus the prior year as discussed above within Results of Operations for Three and Nine Months Ended September 30, 2024 .

Adjusted EBITDA decreased by $8 million compared to the prior year, mainly due to lower volumes, as discussed above, commodity deflation impact on pricing net of inflation pass-through as well as unfavorable foreign exchange impacts.

These decreases were partially offset by strong operational performance through productivity, net of labor inflation, as well as commodity, transportation, and energy deflation, and a favorable product mix.

During the three months ended September 30, 2024, we saw soft demand for gasoline and diesel, driven by regional industry and customer mix headwinds, partially offset by favorable demand in aftermarket for replacement parts.

Net sales also decreased due to pricing, net of inflation pass-through, driven by commodity deflation.

The increased productivity from our ability to flex our variable cost structure, while driving sustained fixed cost productivity, was partially offset by year-over-year labor inflation and lower equity income following prior quarter's sale of an equity interest in an unconsolidated joint venture.

R&D expenses increased $6 million, reflecting our continued investment in new technologies and increased hiring to accelerate growth in the zero emission technologies.

Losses in foreign currency from translational, transactional, and hedging effects in the three months ended September 30, 2024, primarily driven by lower Euro-to-US dollar, Chinese Yuan-to-US dollar and Japanese Yen-to-US dollar exchange rates versus the prior year period, accounted for a $4 million decrease in Adjusted EBITDA.

Adjusted EBITDA for the Nine Months Ended September 30, 2024

For the nine months ended September 30, 2024 , net income decreased by $27 million versus the prior year as discussed above within Results of Operations for Three and Nine Months Ended September 30, 2024 .

Adjusted EBITDA decreased by $45 million c ompared to the prior year, mainly due to soft demand across all product lines except aftermarket, pricing net of inflation pass-through, and unfavorable foreign exchange impacts.

These decreases were partially offset by strong operational performance through productivity, net of labor inflation, as well as commodity, transportation, and energy deflation.

During the nine months ended September 30, 2024 , we saw demand softness for gasoline, diesel, and commercial vehicle applications, driven by challenging regional dynamics and customer mix headwinds, partially offset by favorable demand in aftermarket for replacement parts.

Net sales also decreased due to pricing decreases, net of inflation pass-through, driven by commodity price decreases.

The increased productivity from our ability to flex our variable cost structure while driving sustained fixed cost productivity was partially offset by year-over-year labor inflation.

R&D expenses increased $10 million, reflecting our continued investment in new technologies and increased hiring to accelerate growth in the zero emission technologies.

Losses in foreign currency from translational, transactional, and hedging effects in the nine months ended September 30, 2024 , primarily driven by lower Chinese Yuan-to-US dollar and Japanese Yen-to-US dollar exchange rates and partially offset by higher Euro-to-US dollar exchange rates versus the prior year period, accounted for a $18 million decrease in Adjusted EBITDA.

(4) Reflects the third-party costs directly attributable to the Restatement Agreement.

Adjusted EBIT for the Three Months Ended March 31, 2025

For the three months ended March 31, 2025 , net income decreased by $4 million versus the prior period as discussed above within Results of Operations for Three Months Ended March 31, 2025 .

Adjusted EBIT increased by $10 million compared to the prior period, driven by productivity and lower stock based compensation, commodity, transportation and energy deflation, and pricing net of inflation pass-through.

This increase was partially offset by lower volumes across all product lines, except gasoline, driving an unfavorable product mix.

During the three months ended March 31, 2025, we saw diesel volume softness, mainly due to passenger vehicles in Europe transitioning to gasoline hybrids and Aftermarket soft demand primarily in North America Off-highway.

These volume decreases were partially offset by favorable demand in gasoline driven by new application launches and program ramp-ups in North America, program launches in India, and recovery in Japan from prior year volume softness.

The increased productivity from our ability to flex our variable cost structure while driving sustained fixed cost productivity was partially offset by year-over-year labor inflation and lower equity income following the prior year sale of an equity interest in an unconsolidated joint venture.

R&D expenses were flat, reflecting a shift in investment from turbo technology to zero-emission technologies.

Losses in foreign currency from translational, transactional, and hedging effects in the three months ended March 31, 2025, primarily driven by a lower Euro-to-US dollar versus the prior period, accounted for a $7 million decrease in Adjusted EBIT.

Liquidity and Capital Resources

September 30,

2025 December 31,

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Senior Notes - principal outstanding 800 800

Bilateral letter of credit facility - available capacity 3 3

Bilateral letter of credit facility - utilized capacity 9 8

On May 21, 2024, our wholly owned subsidiaries, Garrett Motion Holdings Inc.

and Garrett LX I S.a.r.l., completed an offering of $800 million in aggregate principal amount of the 2032 Senior Notes.

The 2032 Senior Notes mature on May 31, 2032 and bear interest at a rate of 7.75% per annum.

We incurred $12 million of debt issuance costs, which have been capitalized and will be amortized on a straight-line basis.

On May 21, 2024, we also entered into the Fourth and Fifth Amendments to the Credit Agreement, which (i) removed the credit spread adjustment with respect to certain US dollar denominated term loan borrowings that are Term Benchmark Loans, (ii) reduced the Applicable Rate on certain US dollar denominated term loans to 2.75% for Term Benchmark Loans and 1.75% for ABR Loans, and (iii) increased the maximum borrowings available under the Revolving Facility by $30 million.

During the nine months ended September 30, 2024, we repaid $500 million on our 2023 Dollar Term Facility, $485 million (€450 million) on our Euro Term Facility and $6 million on our 2021 Dollar Term Facility.

We employ several means to manage our liquidity, and our sources of financing include cash flows from operations, cash and cash equivalents, the 2032 Senior Notes, our Term Loan Facilities, and our Revolving Facility.

We expect to continue investing in our facilities as we expand our manufacturing capacity for new product launches and invest in new technologies and strategic growth opportunities, in particular in the electrification of drivetrains.

We believe the combination of expected cash flows, the term loan borrowings, the 2032 Senior Notes, and the Revolving Facility being committed until 2028, will provide us with adequate liquidity to support the Company's operations.

On January 30, 2025, the Company entered into the Restatement Agreement, which amends and restates the Existing Credit Agreement, under which the Company refinanced in full its $692 million 2021 Dollar Term Facility with a new 2025 Dollar Term Facility in an aggregate principal amount of $692 million.

The 2025 Dollar Term Facility will mature on January 30, 2032, and bear interest at a spread equal to, at the Company's option, the Adjusted Term SOFR Rate plus 2.25% per annum in the case of Term Benchmark Loans and the Alternate Base Rate plus 1.25% per annum in the case of ABR Loans.

The Company also replaced its existing $600 million revolving facility under the Existing Credit Agreement with the New Revolving Facility under the Credit Agreement in an aggregate principal amount of $630 million.

The maturity date of the New Revolving Facility is January 30, 2030.

We employ several means to manage our liquidity, and our sources of financing include cash flows from operations, cash and cash equivalents on hand, the 2032 Senior Notes, and our Credit Agreement, including our 2025 Dollar Term Facility and our New Revolving Facility.

We believe the combination of expected cash flows, the term loan borrowings, the 2032 Senior Notes, and the New Revolving Facility being committed until 2030, will provide us with adequate liquidity to support the Company's operations.

Share Repurchase Program

On February 13, 2024, the Board of Directors authorized a $350 million share repurchase program valid until December 31, 2024.

During the nine months ended September 30, 2024, the Company repurchased $226 million of Common Stock, with $124 million remaining under the share repurchase program as of that date.

On December 4, 2024, the Board of Directors authorized a $250 million share repurchase program valid from January 1, 2025, until December 31, 2025.

During the three months ended March 31, 2025, the Company repurchased $30 million of Common Stock, with $220 million remaining under the share repurchase program as of that date.

The Company may repurchase shares from time to time under the program through various methods, including in open market transactions, block trades, privately negotiated transactions, and otherwise.

The timing, as well as the number and value of shares repurchased under the program, will depend on a variety of factors.

The Company is not obligated to purchase any shares under the repurchase program, and the program may be suspended, modified, or discontinued at any time without prior notice.

The Company is not obligated to purchase any shares under the share repurchase program, and the program may be suspended, modified, or discontinued at any time without prior notice.

For more information, see Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds .

Cash Flow Summary for the Nine Months Ended September 30, 2024

Nine Months Ended

September 30,

Cash Flow Summary for the Three Months Ended March 31, 2025

Three Months Ended

(Dollars in millions)

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Effect of exchange rate changes on cash and restricted cash 2 (7)

Net decrease in cash, cash equivalents and restricted cash

$ (163) $ (85)

Cash provided by operating activities decreased by $53 million for the nine months ended September 30, 2024 versus the prior year.

The decrease was primarily driven by a decrease of $37 million in net income, excluding the effects of non-cash items, as well as $11 million of unfavorable impacts from changes in other assets and liabilities and $5 million of unfavorable impacts from working capital changes.

Cash flow from investing activities increased by $49 million for the nine months ended September 30, 2024 versus t he prior year, mainly due to $46 million of proceeds from the sale of equity interest in an unconsolidated joint venture and a $15 million increase in proceeds on our cross currency swap contracts which have been designated as net investment hedges of our Euro-denominated operations.

This was partially offset by $12 million of increased expenditures for property, plant and equipment.

Cash used for financing activities was $439 million for the nine months ended September 30, 2024 compared with $366 million in the prior year.

During 2024, we made an aggregate of $991 million in debt repayments on our term loan facilities.

We also made payments of $226 million for Common Stock repurchases, $7 million for debt issuance costs and $9 million for other financing activities.

These payments were partially offset by proceeds of $794 million, net of deferred financing costs, from the issuance of our 2032 Senior Notes.

In comparison, cash used for financing activities for the nine months ended September 30, 2023 was primarily driven by payments of $605 million in aggregate to holders of the Series A Preferred Stock related to the Transaction, including conversion of the Series A Preferred Stock, and $42 million for dividends declared on our Series A Preferred Stock.

We also made payments of $178 million for the repurchase of Common Stock under our share repurchase program and debt repayments of $205 million including a $200 million early debt repayment on the 2023 Dollar Term Facility and quarterly payments for our 2021 Dollar Term Facility.

These uses of cash were partially offset by proceeds of $667 million from the 2023 Dollar Term Facility net of debt financing costs.

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash provided by operating activities decreased by $28 million for the three months ended March 31, 2025, versus the prior year.

The decrease was primarily driven by $54 million of unfavorable impacts from working capital changes and $4 million of lower net income, partially offset by an increase of $21 million of non-cash charges, as well as $9 million of favorable impacts from changes in other assets and liabilities.

Cash flow from investing activities decreased by $6 million for the three months ended March 31, 2025, versus t he prior year, mainly due to $6 million of decreased expenditures for property, plant and equipment.

Cash used for financing activities was $31 million for the three months ended March 31, 2025, compared with $112 million in the prior year.

During the three months ended March 31, 2025, we made debt repayments of $71 million, payments of $30 million for the repurchase of Common Stock under our share repurchase program and payments of $12 million for dividends on our Common Stock.

These payments were partially offset by proceeds of $68 million from the Credit Facilities and $17 million of bank overdrafts.

In comparison, cash used for financing activities in the prior year was primarily related to $107 million for the repurchase of Common Stock under our share repurchase program.

Off-Balance Sheet Arrangements

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Critical Accounting Policies

The preparation of our Consolidated Interim Financial Statements in accordance with generally accepted accounting principles is based on the selection and application of accounting policies that require us to make significant estimates and assumptions about the effects of matters that are inherently uncertain.

The preparation of our Consolidated Interim Financial Statements in accordance with GAAP is based on the selection and application of accounting policies that require us to make significant estimates and assumptions about the effects of matters that are inherently uncertain.

Actual results could differ from our estimates and assumptions, and any such differences could be material to our financial statements.

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Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements.

We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including without limitation statements regarding the following, are forward-looking statements:

statements regarding our future results of operations and financial position, expectations regarding the growth of the turbocharger and electric vehicle markets and other industry trends, the sufficiency of our liquidity and capital resources, anticipated impacts of changes in legislation and government policy relating to taxation or otherwise, anticipated sources and uses of cash, anticipated investments in our business, our business strategy, pending litigation, anticipated interest expense, and the plans and objectives of management for future operations and capital expenditures are forward-looking statements .

These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions.

We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations.

These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including:

• increases in the costs and availability of raw materials, components, energy and transportation and our ability to offset inflation;

• sales to major customers as well as a network of independent dealers to manage the distribution of our products, and we could be adversely impacted by the loss of any of our such major customers or dealers, changes in their requirements for our products or changes in their financial condition.

• the negotiating positions of our customers and our ability to negotiate favorable pricing terms;

• risks associated with changes in the automotive industry and our inability, or a perception that we are unable, to respond appropriately to such changes, our financial condition and results of operations could be adversely impacted;

• risks associated with any program launch difficulties and inaccuracies in estimates of volumes of awarded business;

• changes in the automotive industry and economic or competitive conditions;

• risks related to economic, political, regulatory and foreign exchange;

This Quarterly Report on Form 10-Q and the other reports filed by us with the SEC from time to time, as well as statements incorporated by reference herein and related comments by our management, contain forward-looking statements within the meaning of the U.S.

federal securities laws.

All statements other than statements of historical fact, including without limitation statements regarding our future results of operations and financial position, expectations regarding the growth of the turbocharger and electric vehicle markets and other industry trends, the sufficiency of our cash and cash equivalents, anticipated sources and uses of cash, anticipated investments in our business, our business strategy, pending

litigation, anticipated interest expense, and the plans and objectives of management for future operations and capital expenditures are forward-looking statements .

In many cases, you can identify forward-looking statements by terms such as “aim,” “anticipate,” “appears,” “approximately,” “believe,” “continue,” “could,” “designed,” “effect,” “estimate,” “evaluate,” “expect,” “forecast,” “goal,” “initiative,” “intend,” “may,” “objective,” “outlook,” “plan,” “potential,” “priorities,” “project,” “pursue,” “seek,” “should,” “target,” “when,” “will,” “would,” or the negative of these terms or other similar expressions.

In making these forward-looking statements, we rely on our current expectations and projections about possible future events and financial trends that we believe may affect our business, financial condition and results of operations.

We believe these judgments are reasonable, but these statements are not guarantees of any future events or financial results, and our actual results may differ materially due to a variety of important factors, many of which are beyond our control.

These factors, which may be revised or supplemented in subsequent reports we file with the SEC, include, among other things, risks related to the following:

(1) the ongoing evolution of the automotive industry;

(2) the highly competitive markets in which we operate;

(3) our reliance on sales to major customers;

(4) changing industry and economic conditions;

(5) the unique aspects of our aftermarket business;

(6) pricing pressures from our original equipment manufacturer customers;

(7) the foreign markets in which we operate;

(8) climate change and increased scrutiny from customers, investors, regulators and other stakeholders;

(9) recruitment, development, and retention of qualified personnel;

(10) program launch difficulties;

(11) volatility in the cost of raw materials, components, energy, transportation, and other inputs;

(12) supply shortages or supplier distress leading to a disruption of our operations;

(13) realization of sales from awarded business;

(14) economic, political, regulatory, foreign exchange and other risks of our international operations;

(15) geopolitical conditions, catastrophic events and pandemics;

• risks related to international operations and our investment in foreign markets;

• risks of increased scrutiny from customers, investors, regulators and others regarding sustainability/ESG practices, as well as the climate-related risks we may face, each of which could expose us to liabilities, including reputational harm, impact demand for our products, lead to increased costs and have other adverse effects on our business, supply chain and results of operations;

• risks associated with joint venture partnerships and joint development projects;

• any failure to protect our intellectual property or allegations that we have infringed the intellectual property of others, and our ability to license necessary intellectual property from third parties;

• work stoppages, other disruptions or the need to relocate any of our facilities;

• inability to recruit and retain qualified personnel;

• any failure to increase productivity or successfully execute repositioning projects or manage our workforce;

• potential material losses and costs as a result of any warranty claims and product liability actions brought against us;

• the commencement of any lawsuits, investigations and disputes arising out of our current and historical businesses, and the consequences thereof;

• potential material environmental liabilities and hazards;

• risks of changes in the effective tax rates;

• the effects of any deterioration on industry, economic or financial conditions on our ability to access the capital markets on favorable terms;

• quality control and creditworthiness of the suppliers on which we rely;

• risks for system or service failures, including cyber or other security incidents, each of which could disrupt business operations, result in loss of critical and confidential information and adversely impact our reputation and results of operations;

• the other factors described under the caption “Risk Factors” in our 2023 Form 10-K, as updated in this Quarterly Report on Form 10-Q and our other filings with the SEC.

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein completely and with the understanding that our actual future results may be materially different from what we expect.

(16) joint venture partnerships, joint development projects and other strategic opportunities;

(17) intellectual property rights;

(18) work stoppages or other disruptions at our facilities;

(19) realization of productivity and efficiency improvements and repositioning projects;

(20) warranty claims, product recalls, field actions or product liability actions;

(21) litigation, government proceedings and other contingencies and uncertainties;

(22) environmental matters and liabilities;

(23) third-party licensing arrangements;

(24) information technology and data privacy considerations, including cybersecurity and other security concerns;

(25) our substantial indebtedness and restrictive covenants related to such indebtedness;

(26) tax considerations;

(27) our ability to raise capital;

(28) our pension funding obligations;

(29) concentration of ownership of our equity securities;

or (30) payment of dividends and share repurchases.

For a further discussion of these and other risks, refer to Part I, Item 1A.

"Risk Factors" of our 2024 Form 10-K.

You should read this Quarterly Report and the documents that we reference herein completely and with the understanding that our actual future results may be materially different from those envisioned by these forward-looking statements.

We qualify all of our forward-looking statements by these cautionary statements.

These forward-looking statements speak only as of the date of this Quarterly Report.

Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances, or otherwise.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis