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Item 2. Management’s Discussion and Analysis

2026-04-30 compared with 2025-10-23 · 79 added, 202 removed, 168 unchanged (63% 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, 2025.

for the three months ended March 31, 2026.

Executive Summary

During the third quarter of 2025, we continued to navigate macro-economic challenges.

Increased demand in light vehicle gasoline, primarily driven by new program launches in Europe, China, India and North America, was partially offset by decreased demand for Aftermarket off-highway replacement parts in North America, resulting in unfavorable product mix.

Driven by sustainable cost initiatives implemented over the last year and the current year, successful recovery of import tariffs, and a favorable foreign exchange environment, we delivered Net income of $77 million and Adjusted EBIT of $133 million for the quarter.

During the first quarter of 2026, we outperformed the light vehicle industry across all verticals.

This was driven by growth in diesel and gasoline volumes from new program launches, increased commercial vehicle demand in all key regions, as well as continued industrial strength.

Aftermarket growth further contributed to a favorable product mix.

We continued to deliver productivity year-over-year across both variable and fixed costs;

however, these benefits were offset by the timing of foreign exchange pass-through.

Our financial results were also impacted by the timing of customer recoveries.

As a result, Net income for the quarter was $95 million, and Adjusted EBIT was $151 million.

As the broader macroeconomic and geopolitical conditions evolve, we continue to actively monitor developments and their potential impacts on the industry and our operations.

We continue to have success across our differentiated technologies by winning business in both turbo and zero emission offerings.

We secured light vehicle turbo awards in the US, India and Brazil and continued to win commercial vehicle and industrial business across multiple regions, including turbo technology for data centers.

With respect to our zero-emission offerings, we deepened our strategic collaborations with OEMs by executing additional E-Powertrain proof-of-concept initiatives.

Furthermore, we received favorable feedback related to the efficiency gains for our E-Cooling oil-free compressor from mobility and industrial customers.

These zero-emission technologies lay the foundation for future business growth.

For the three months ended September 30, 2025, we repurchased $84 million of Common Stock under our share repurchase program.

These repurchases include a total of 5 million shares from funds affiliated with Oaktree Capital Management, L.P., a related party, for approximately $62 million.

As of September 30, 2025, we had $114 million of the authorized amount remaining under our share repurchase program.

We secured light vehicle turbo, commercial vehicle and industrial awards across multiple regions, including turbo technology for data centers.

We have also received favorable feedback from mobility and industrial customers related to expected efficiency gains from our E-Cooling oil-free compressor over existing recognized technologies.

For the three months ended March 31, 2026, we repurchased $87 million of Common Stock under our share repurchase program.

These repurchases include a total of 2,500,000 shares from funds affiliated with Oaktree Capital Management, L.P., a related party, for $50 million.

As of March 31, 2026, we had $163 million of the authorized amount remaining under our share repurchase program.

The repurchased shares are held as treasury stock.

On July 24, 2025, the Board of Directors declared a cash dividend of $0.06 per share of Common Stock, payable on September 16, 2025, to shareholders of record as of September 2, 2025.

The total amount of dividends paid on September 16, 2025 amounted to $11 million.

On February 19, 2026, the Board of Directors declared a cash dividend of $0.08 per share of Common Stock, payable on March 16, 2026, to shareholders of record as of March 2, 2026.

The total amount of dividends paid on March 16, 2026 amounted to $16 million.

Disaggregated Revenue

The following tables show our revenues by geographic region and product line for the three and nine months ended September 30, 2025 and 2024, respectively.

The following tables show our revenues by geographic region and product line for the three months ended March 31, 2026 and 2025, respectively.

Three Months Ended

September 30,

Nine Months Ended

September 30,

2025 2024 2025 2024

(Dollars in millions)

3 unchanged sentences

277 28% 257 29%

34 4% 20 2% 78 3% 55 2%

$ 902 $ 826 $ 2,693 $ 2,631

By Product Line

Three Months Ended

September 30,

Nine Months Ended

September 30,

2025 2024 2025 2024

(Dollars in millions)

1 unchanged sentence

Gas 443 45% 403 46%

Commercial Vehicle 164 18% 155 19% 489 18% 477 18%

Commercial Vehicles / Industrial 181 18% 155 18%

Aftermarket 114 12% 98 11%

1 unchanged sentence

Total $ 985 $ 878

Results of Operations for the Three and Nine Months Ended September 30, 2025

Results of Operations for the Three Months Ended March 31, 2026

Three Months Ended

September 30,

Nine Months Ended

September 30,

2025 2024 2025 2024

(Dollars in millions)

1 unchanged sentence

% change compared with prior period 12.2 %

Net Sales for the Three Months Ended September 30, 2025

For the three months ended September 30, 2025, net sales compared to the prior period increased by $76 million or 9% (including a favorable impact of $26 million or 3% due to foreign currency translation primarily driven by higher Euro-to-U.S.

Net Sales for the Three Months Ended March 31, 2026

For the three months ended March 31, 2026, net sales compared to the prior period increased by $107 million or 12% (including a favorable impact of $58 million or 6% due to foreign currency translation primarily driven by higher Euro-to-U.S.

dollar exchange rates).

This increase was primarily related to favorable foreign currency impacts and higher demand in gasoline and diesel, partially offset by weaker demand for replacement parts on aftermarket sales and unfavorable product mix.

Net sales also includes $12 million of recoveries on enacted import tariffs.

Gasoline product sales increased by $45 million or 13% (including a favorable impact of $11 million or 3% due to foreign currency translation), primarily driven by new application launches and program ramp-ups in Europe, China, India and North America.

Diesel product sales increased by $21 million or 12% (including a favorable impact of $9 million or 5% due to foreign currency translation), primarily driven by strong light commercial vehicle performance in Europe combined with sustained demand for pickup trucks in North America, South America and Southeast Asia.

Commercial vehicle sales increased by $9 million or 6% (including a favorable impact of $2 million or 2% due to foreign currency translation), primarily driven by launch of an on-highway program in Europe and partial recovery of prior year softness in the construction and agriculture industries.

Aftermarket sales decreased by $1 million or 1% (including a favorable impact of $3 million or 3% due to foreign currency translation), primarily due to softer demand for off-highway replacement parts in North America.

Net Sales for the Nine Months Ended September 30, 2025

For the nine months ended September 30, 2025, net sales compared to the prior period increased by $62 million or 2% (including a favorable impact of $28 million or 1% due to foreign currency translation, primarily driven by fluctuations in global exchange rates).

This increase was primarily related to favorable foreign currency impacts and higher demand in gasoline and commercial vehicles, partially offset by weaker demand for replacement parts on aftermarket sales and weakness in light vehicle diesel in Europe.

Net sales also include $30 million of recoveries on enacted import tariffs.

Gasoline product sales increased by $83 million or 7% (including a favorable impact of $10 million or 1% due to foreign currency translation), primarily driven by new application launches and program ramp-ups in Europe, North America and India.

Diesel product sales decreased by $15 million or 2% (including a favorable impact of $11 million or 2% due to foreign currency translation), primarily driven by passenger vehicles in Europe pursuing transition to gasoline hybrids, partially offset by sustained demand for pickup trucks in North America, South America and Southeast Asia.

Commercial vehicle sales increased by $12 million or 3% (including a favorable impact of $3 million or 1% due to foreign currency translation), primarily driven by launch of an on-highway program in Europe and partial recovery of prior year softness in the construction and agriculture industries.

Aftermarket sales decreased by $25 million or 7% (including a favorable impact of $3 million or 1% due to foreign currency translation), primarily driven by softer demand for off-highway replacement parts in North America.

The increase was primarily related to higher demand across all verticals, favorable foreign currency impacts and favorable product mix partially offset by price net of inflation pass-through.

Net sales also increased by $5 million driven by recoveries on import tariffs.

Gasoline product sales increased by $40 million or 10% (including a favorable impact of $27 million or 7% due to foreign currency translation), primarily driven by new application launches and program ramp-ups in Europe.

Diesel product sales increased by $24 million or 12% (including a favorable impact of $18 million or 9% due to foreign currency translation), primarily driven by strong demand for light commercial vehicles and pickup trucks in North America, Brazil, Southeast Asia and application launches in India.

Commercial vehicles/industrial sales increased by $26 million or 17% (including a favorable impact of $6 million or 4% due to foreign currency translation), primarily driven by growth in all key regions as well as continued industrial growth.

Aftermarket sales increased by $16 million or 16% (including a favorable impact of $6 million or 6% due to foreign currency translation), primarily driven by stronger demand for commercial vehicle parts in all key regions.

Cost of Goods Sold and Gross Profit

Three Months Ended

September 30,

Nine Months Ended

September 30,

2025 2024 2025 2024

(Dollars in millions)

2 unchanged sentences

Gross profit percentage 19.9 % 20.4 %

Cost of Goods Sold and Gross Profit for the Three Months Ended September 30, 2025

Cost of Goods Sold Gross Profit

(Dollars in millions)

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

Increase/(decrease) due to:

Product mix (9) (28)

Price, net of inflation pass-through — (17)

Commodity, transportation & energy inflation (7) 7

Productivity, net (6) 10

Enacted import tariffs 12 —

Research & development (6) 6

Foreign exchange rate impacts 11 14

Cost of Goods Sold / Gross Profit for the three months ended September 30, 2025

For the three months ended September 30, 2025, cost of goods sold increased by $56 million, primarily driven by $61 million from higher sales volumes, $12 million from enacted import tariffs and $11 million from foreign currency impacts.

These increases were partially offset by $9 million of favorable product mix, $7 million of commodity, transportation and energy deflation, $6 million of productivity net of labor inflation and $6 million of lower R&D costs.

For the three months ended September 30, 2025, gross profit increased by $20 million, primarily driven by $28 million from higher sales volumes, $14 million from foreign currency impacts, $10 million from productivity net of labor inflation, $7 million from commodity, transportation and energy deflation and $6 million of lower R&D costs.

These increases were partially offset by $28 million of unfavorable product mix and $17 million of pricing, net of inflation pass-through.

Cost of Goods Sold and Gross Profit for the Nine Months Ended September 30, 2025

Cost of Goods Sold and Gross Profit for the Three Months Ended March 31, 2026

Cost of Goods Sold Gross Profit

(Dollars in millions)

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

$ 2,108 $ 523

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

Increase/(decrease) due to:

1 unchanged sentence

Price, net of inflation pass-through — (11)

Commodity, transportation & energy inflation (20) 20

Commodity, transportation & energy deflation (2) 2

Productivity, net 7 (21)

Enacted import tariffs 31 (1)

Research & development (7) 7

Import tariffs 6 (1)

Research, development & engineering (7) 7

Foreign exchange rate impacts 40 18

Cost of Goods Sold / Gross Profit for the nine months ended September 30, 2025

$ 2,147 $ 546

For the nine months ended September 30, 2025, cost of goods sold increased by $39 million, primarily driven by $52 million from higher sales volumes, $31 million from enacted import tariffs, $12 million from foreign currency impacts and $1 million from unfavorable product mix.

These increases were partially offset by $30 million of productivity net of labor inflation, $20 million of commodity, transportation and energy deflation and $7 million of lower R&D costs.

For the nine months ended September 30, 2025, gross profit increased by $23 million, primarily driven by $35 million of productivity, net of labor inflation, $22 million of higher sales volumes, $20 million of commodity, transportation and energy deflation, $15 million from foreign currency impacts and $7 million of lower R&D costs.

These increases were

partially offset by $60 million from unfavorable product mix and $15 million of price net of inflation pass through.

We also had a $1 million impact to gross profit from newly enacted import tariffs due to the timing of negotiated recoveries.

Cost of Goods Sold / Gross Profit for the three months ended March 31, 2026

For the three months ended March 31, 2026, cost of goods sold increased by $90 million, primarily driven by $42 million from higher sales volumes, $40 million from foreign currency impacts, $7 million of lower productivity net of labor inflation and repositioning costs, $6 million from import tariffs and $4 million of unfavorable product mix.

These increases were partially offset by $7 million of lower RD&E costs and $2 million of commodity, transportation and energy deflation.

For the three months ended March 31, 2026, gross profit increased by $17 million, primarily driven by $19 million from higher sales volumes, $18 million from foreign currency impacts, $7 million of lower RD&E costs, $4 million of favorable product mix and $2 million from commodity, transportation and energy deflation.

These increases were partially offset by $21 million of lower productivity net of labor deflation and repositioning costs, $11 million of pricing, net of inflation pass-through and $1 million from import tariffs.

Selling, General and Administrative Expenses

Three Months Ended

September 30,

Nine Months Ended

September 30,

2025 2024 2025 2024

(Dollars in millions)

1 unchanged sentence

% of sales 5.9 % 6.7 %

Selling, general and administrative (“SG&A”) expenses for the three months ended September 30, 2025, increased by $4 million compared with the prior period, primarily driven by $4 million unfavorable foreign currency impacts and $2 million of higher bad debt expense.

These increases were partially offset by a $3 million reduction in personnel costs, driven by sustainable cost measures implemented in the current and prior years.

SG&A expenses for the nine months ended September 30, 2025, decreased by $3 million compared with the prior period, primarily driven by a $5 million reduction in personnel costs related to cost measures implemented in current and prior years and $3 million of lower outsourced activities partially offset by $6 million primarily related to acquisition and divestiture expenses.

Selling, general and administrative (“SG&A”) expenses for the three months ended March 31, 2026, decreased by $1 million compared with the prior period, primarily driven by $3 million of lower professional services, $2 million of bad debt recovery and $1 million of lower personnel costs, partially offset by $5 million of unfavorable foreign currency impacts.

Other Expense, Net

Three Months Ended

September 30, Nine Months Ended

September 30,

2025 2024 2025 2024

(Dollars in millions)

Other expense, net $ 1 $ 7

Other expense, net for the three months ended September 30, 2025 was consistent with the prior period.

Other expense, net for the nine months ended September 30, 2025 increased by $4 million compared to the prior period, primarily driven by $6 million in third-party costs related to our Restatement Agreement partially offset by $2 million of professional fees associated with our 2032 Senior Notes in the prior year.

Other expense, net for the three months ended March 31, 2026 decreased by $6 million compared to the prior period, primarily driven by $6 million in professional fees incurred in the prior year related to our Restatement Agreement.

Interest Expense

Three Months Ended

September 30,

Nine Months Ended

September 30,

2025 2024 2025 2024

(Dollars in millions)

Interest expense $ 27 $ 29

For the three months ended September 30, 2025, interest expense decreased by $8 million compared to the prior period.

This decrease was primarily due to $3 million in lower interest expense resulting from the Amendment and Restatement of our Credit Agreement.

Additionally, we did not record any net gains on designated and undesignated interest rate derivatives in the current year, in comparison to net gains of $5 million in the prior year.

For the nine months ended September 30, 2025, interest expense decreased by $47 million compared to the prior period.

This decrease was primarily due to a $30 million reduction in debt issuance cost amortization, driven by accelerated amortization in the prior year, and $22 million of lower interest expense resulting from the Amendment and Restatement of our Credit Agreement.

In addition, we recorded net gains of $4 million on our designated and undesignated interest derivatives in the current year, in comparison to net gains of $9 million in the prior year.

For the three months ended March 31, 2026, interest expense decreased by $2 million compared to the prior period.

This decrease was primarily due to $3 million in lower interest expense due to a different notional amount of debt outstanding during the period.

Non-Operating Income, Net

Three Months Ended

September 30,

Nine Months Ended

September 30,

2025 2024 2025 2024

(Dollars in millions)

Non-operating income, net $ (8) $ (1)

For the three months ended September 30, 2025, we had non-operating income of $3 million versus $1 million in the prior period.

The increase in non-operating income was primarily driven by higher interest income.

For the nine months ended September 30, 2025, we had non-operating income of $10 million versus $7 million in the prior period.

The increase in non-operating income was primarily driven by higher foreign exchange transactional gains, partially offset by lower equity income due to the prior year sale of an equity interest in an unconsolidated joint venture.

For the three months ended March 31, 2026, we had non-operating income of $8 million versus $1 million in the prior period.

The increase in non-operating income was primarily driven by the resolution of certain environmental liabilities and foreign exchange transactional gains.

Three Months Ended

September 30,

Nine Months Ended

September 30,

2025 2024 2025 2024

(Dollars in millions)

1 unchanged sentence

Effective tax rate 19.5 % 27.1 %

The effective tax rates for the three months ended September 30, 2025 and 2024 were 24.5% and 31.6%, respectively.

The effective tax rates for the nine months ended September 30, 2025 and 2024 were 21.8% and 25.4%, respectively.

The change in the effective tax rate for the three months ended September 30, 2025, compared to the prior period is primarily related to a decrease in U.S.

taxes on international operations and the global mix of earnings.

The change in the effective tax rate for the nine months ended September 30, 2025 , compared to the prior period is primarily related to a one-time benefit attributable to the revaluation of deferred tax assets in China.

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.

On July 4, 2025, the United States enacted H.R.

1, comprehensive legislation that introduced changes to federal tax law, among other things.

We are currently evaluating the implications of the new tax law and its impact on our Consolidated Interim Financial Statements.

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

The effective tax rates for the three months ended March 31, 2026 and 2025 were 19.5% and 27.1%, respectively.

The change in the effective tax rate for the three months ended March 31, 2026, compared to the prior period is primarily related to a decrease in U.S.

taxes on international operations, the global mix of earnings, and deductions related to employee share-based compensation.

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,

2025 2024 2025 2024

(Dollars in millions)

1 unchanged sentence

Net income margin 9.6 % 7.1 %

Net income for the three months ended September 30, 2025, increased by $25 million compared with the prior period, primarily due to $20 million of increased gross profit, $8 million of lower interest expense, and a $2 million increase in non-operating income.

These were partially offset by $4 million of increased SG&A expense and $1 million of higher tax expense.

Net income for the nine months ended September 30, 2025, increased by $44 million compared with the prior period, primarily due to $47 million of lower interest expense, $23 million of increased gross profit, $3 million of lower SG&A expense, and a $3 million increase in non-operating income.

These were partially offset by $4 million of higher other expense, net and the prior year gain of $27 million on the sale of an equity interest in an unconsolidated joint venture.

Net income for the three months ended March 31, 2026, increased by $33 million compared with the prior period, primarily due to $17 million of higher gross profit, $7 million of higher non-operating income, $6 million of lower other expense, net, $2 million of lower interest expense and $1 million of lower SG&A expense.

Non-GAAP Measures

4 unchanged sentences

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.

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, and (vii) debt refinancing and redemption costs, 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.

Certain adjustment items, while periodically affecting our results, may also vary significantly from period to period and have disproportionate effect in a given period, which affects 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,

2025 2024 2025 2024

(Dollars in millions)

2 unchanged sentences

Tax expense 23 23

EBIT 130 113 369 371

Repositioning costs (2)

1 unchanged sentence

Factoring and notes receivables discount fees

Gain on sale of equity investment

Other non-operating income (3)

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

Debt refinancing and redemption costs (4)

1 unchanged sentence

Adjusted EBIT $ 151 $ 131

(1) Reflects interest income of $1 million and $0 million for the three months ended September 30, 2025 and 2024, respectively, and $3 million and $3 million for the nine months ended September 30, 2025 and 2024, respectively.

(1) Reflects interest income of $1 million and $0 million for the three months ended March 31, 2026 and 2025, 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.

(3) Reflects the non-service component of net periodic pension income and, for the three months ended March 31, 2026, also includes $5 million related to the resolution of certain environmental liabilities not directly related to the Company's operations.

(4) Reflects third-party costs directly attributable to the refinancing of our credit facilities and any amendments.

Adjusted EBIT for the Three Months Ended September 30, 2025

For the three months ended September 30, 2025 , net income increased by $25 million versus the prior period as discussed above within Results of Operations for Three and Nine Months Ended September 30, 2025 .

Adjusted EBIT increased by $16 million compared to the prior period, driven by $28 million of higher sales volumes, $11 million of productivity, net of labor inflation and higher stock based compensation, $9 million of foreign currency impacts, $7 million of commodity, transportation and energy deflation and $6 million lower R&D costs.

These increases were partially offset by $28 million of unfavorable product mix and $17 million of lower pricing net of inflation pass-through.

During the three months ended September 30, 2025, we saw growth in gasoline from new application launches and program ramp-ups in Europe, China, India and North America.

Volumes for diesel and commercial vehicles also increased due to higher demand in Europe and North America, and the launch of an on-highway program in Europe, respectively.

Aftermarket volumes, however, showed continued softness primarily due to lower demand for off-highway replacement

parts in North America.

The combination of these volume dynamics, led by the strong growth in gasoline, resulted in an unfavorable product mix.

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 higher stock based compensation.

Gains in foreign currency from translational, transactional, and hedging effects in the three months ended September 30, 2025, primarily driven by a higher Euro-to-U.S.

dollar versus the prior period, accounted for a $9 million increase in Adjusted EBIT.

Adjusted EBIT for the Nine Months Ended September 30, 2025

For the nine months ended September 30, 2025 , net income increased by $44 million versus the prior period as discussed above within Results of Operations for Three and Nine Months Ended September 30, 2025 .

Adjusted EBIT increased by $27 million compared to the prior year, mainly from $40 million of productivity, net of labor inflation and higher stock based compensation, $22 million of higher sales volumes from gasoline and commercial vehicles, $20 million of commodity, transportation, and energy deflation, $13 million of favorable foreign exchange impacts and $7 million of lower R&D costs.

These increases were partially offset by $60 million of unfavorable product mix and $15 million of pricing net of inflation pass through.

During the nine months ended September 30, 2025, we saw growth in gasoline from new application launches and program ramp-ups in Europe, North America and India.

Volumes for commercial vehicles also increased due to a launch of an on-highway program in Europe and partial recovery of prior year softness in the construction and agriculture industries .

Aftermarket volumes, however, showed continued softness primarily due to lower demand for off-highway replacement parts in North America.

The combination of these volume dynamics resulted in an unfavorable product mix.

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.

Gains in foreign currency from translational, transactional, and hedging effects in the nine months ended September 30, 2025, primarily driven by a higher Euro-to-U.S.

Adjusted EBIT for the Three Months Ended March 31, 2026

For the three months ended March 31, 2026 , net income increased by $33 million versus the prior period as discussed above within Results of Operations for Three Months Ended March 31, 2026 .

Adjusted EBIT increased by $20 million compared to the prior period driven by $19 million of higher volumes, $13 million of benefit from foreign currency impacts, $7 million of lower RD&E costs, $4 million of favorable impacts from product mix and $2 million of commodity, transportation and energy deflation.

This increase was partially offset by $14 million of lower productivity and $11 million of pricing net of inflation pass-through.

During the three months ended March 31, 2026, we saw volume growth across all verticals.

Gasoline growth was driven by new application launches and program ramp-ups in Europe.

Diesel growth was due to strong demand for light commercial vehicles and pickup trucks in North and South America, Southeast Asia and application launches in India.

Commercial vehicles/industrial growth was driven by strong demand for commercial vehicles in all key regions, as well as continued industrial growth.

Aftermarket volumes also increased across all regions for commercial vehicle parts, resulting in a favorable product mix.

The increased productivity from our ability to flex our variable cost structure while driving sustained fixed cost productivity was more than offset by year-over-year labor inflation, higher stock based compensation and the timing of our productivity actions.

Our overall financial results for the three months ended March 31, 2026 were also impacted by the timing of customer recoveries.

Gains in foreign currency from translational, transactional, and hedging effects in the three months ended March 31, 2026, primarily driven by a higher Chinese Yuan-to-U.S.

dollar versus the prior period, accounted for a $13 million increase in Adjusted EBIT.

Liquidity and Capital Resources

September 30,

2026 December 31,

7 unchanged sentences

Bilateral letter of credit facility - utilized capacity 10 10

On January 30, 2025, we entered into the Restatement Agreement, which amends and restates the Existing Credit Agreement, under which we refinanced in full our $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 initially bore interest at a spread equal to, at our 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.

We also replaced our 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.

On August 6, 2025, we entered into the First Amendment to the Restatement Agreement, which reduced the Applicable Rate to the Adjusted Term SOFR Rate plus 2.00% per annum in the case of Term Benchmark Loans and the Alternate Base Rate plus 1.00% per annum in the case of ABR Loans.

During the nine months ended September 30, 2025, we paid cash dividends of $36 million.

On October 23, 2025, we declared a cash dividend of $0.08 per share of Common Stock, payable on December 15, 2025, to shareholders of record as of December 1, 2025.

During the three months ended March 31, 2026, we paid cash dividends of $16 million.

On April 30, 2026, we declared a cash dividend of $0.08 per share of Common Stock, payable on June 15, 2026, to shareholders of record as of June 1, 2026.

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.

3 unchanged sentences

On December 3, 2025, the Board of Directors authorized a $250 million share repurchase program valid from January 1, 2026, until December 31, 2026.

During the nine months ended September 30, 2025, we repurchased $136 million of Common Stock, with $114 million remaining under the share repurchase program as of that date.

These repurchases include a total of 5 million shares repurchased from funds affiliated with Oaktree Capital Management, L.P., a related party, for approximately $62 million.

During the three months ended March 31, 2026, we repurchased $87 million of Common Stock, with $163 million remaining under the share repurchase program as of that date.

These repurchases include a total of 2,500,000 shares repurchased from funds affiliated with Oaktree Capital Management, L.P., a related party, for $50 million.

We 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.

3 unchanged sentences

Unregistered Sales of Equity Securities and Use of Proceeds .

Cash Flow Summary for the Nine Months Ended September 30, 2025

Nine Months Ended

September 30,

Cash Flow Summary for the Three Months Ended March 31, 2026

Three Months Ended

(Dollars in millions)

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

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

$ 106 $ (163)

Cash provided by operating activities increased by $37 million for the nine months ended September 30, 2025, versus the prior year.

The increase was primarily driven by $44 million of higher net income and $39 million of favorable impacts from working capital changes, partially offset by a decrease of $34 million of non-cash charges and $12 million of unfavorable impacts from changes in other assets and liabilities.

Cash flow used for investing activities decreased by $28 million for the nine months ended September 30, 2025, compared to the same period in the prior year.

The decrease was primarily driven by $46 million in proceeds from the sale of our unconsolidated joint venture realized in the prior year, along with $3 million in reduced proceeds from the cross currency swap.

These impacts were partially offset by $18 million in lower capital expenditures on property, plant and equipment and $3 million received for the first deferred payment on the sale of our unconsolidated joint venture.

Cash used for financing activities was $187 million for the nine months ended September 30, 2025, compared with $439 million in the prior year.

During the nine months ended September 30, 2025, we made debt repayments of $87 million, payments of $136 million for the repurchase of Common Stock under our share repurchase program and payments of $36 million for dividends on our Common Stock.

These payments were partially offset by proceeds of $80 million from the Credit Facilities.

In comparison, cash used for financing activities was $439 million for the nine months ended September 30, 2024 primarily driven by aggregate debt repayments of $991 million on our credit 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.

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

Cash provided by operating activities incr eased by $42 million for the three months ended March 31, 2026, versus the prior year.

The increase was primarily driven by $21 million of higher net income net of non-cash charges, $18 million of favorable impacts from working capital changes and $3 million of favorable impact from changes in other assets and liabilities.

Cash flow used for investing activities increased by $4 million for the three months ended March 31, 2026, compared to the same period in the prior year.

The increase was driven by $3 million in higher capital expenditures on property, plant and equipment versus the prior year and $1 million in reduced proceeds from our cross currency swaps.

Cash used for financing activities was $105 million for the three months ended March 31, 2026, compared with $31 million in the prior year.

During the three months ended March 31, 2026, we made payments of $87 million for the repurchase of Common Stock under our share repurchase program, payments of $16 million for dividends on our Common Stock and debt repayments of $2 million.

In comparison, cash used for financing activities was $31 million for the three months ended March 31, 2025 primarily driven by debt repayments of $71 million, payments of $30 million for Common Stock repurchases 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.

Off-Balance Sheet Arrangements

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(22) environmental matters and liabilities;

(23) third-party licensing arrangements;

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

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(27) our pension funding obligations;

(29) concentration of ownership of our equity securities;

or (28) payment of dividends and share repurchases.

6 unchanged sentences

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