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Item 1. Financial Statements

2026-07-29 compared with 2026-04-30 · 167 added, 88 removed, 587 unchanged (30% of the section changed)

3 unchanged sentences

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions, except per share amounts)

Net sales (Note 3)

$ 976 $ 913 $ 1,961 $ 1,791

Cost of goods sold 764 732 1,553 1,431

17 unchanged sentences

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

2 unchanged sentences

Changes in fair value of effective cash flow hedges, net of tax (Note 17)

( 1 ) 17 13 19

Changes in fair value of net investment hedges, net of tax (Note 17)

2 ( 128 ) 33 ( 163 )

Total other comprehensive income (loss), net of tax 44 ( 170 ) 84 ( 232 )

Comprehensive income $ 135 $ —

Comprehensive income (loss) $ 145 $ ( 83 ) $ 280 $ ( 83 )

The Notes to the Consolidated Interim Financial Statements are an integral part of this statement.

28 unchanged sentences

Common Stock, par value $ 0.001 ;

1,000,000,000 and 1,000,000,000 shares authorized, 245,171,744 and 242,549,685 issued and 187,742,822 and 190,556,297 outstanding as of March 31, 2026 and December 31, 2025, respectively

1,000,000,000 and 1,000,000,000 shares authorized, 245,457,621 and 242,549,685 issued and 186,800,685 and 190,556,297 outstanding as of June 30, 2026 and December 31, 2025, respectively

Additional paid–in capital 1,254 1,240

4 unchanged sentences

Treasury Stock, at cost;

57,428,922 and 51,993,388 shares as of March 31, 2026 and December 31, 2025, respectively (Note 16)

58,666,936 and 51,993,388 shares as of June 30, 2026 and December 31, 2025, respectively (Note 16)

( 655 ) ( 520 )

4 unchanged sentences

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(Dollars in millions)

6 unchanged sentences

Stock compensation expense 14 13

Pension expense

Unrealized (gain) loss on derivatives ( 37 ) 81

14 unchanged sentences

Proceeds from issuance of long-term debt, net of debt financing costs 56 68

Bank overdrafts — 17

Payments of long-term debt ( 110 ) ( 73 )

Repurchases of Common Stock ( 115 ) ( 52 )

Excise tax on Common Stock repurchase ( 1 ) ( 3 )

Dividend payments ( 31 ) ( 25 )

Withholdings on shares issued under stock plan ( 20 ) —

Payments for debt and revolving facility financing costs — ( 2 )

31 unchanged sentences

245 $ — 57 $ ( 625 ) $ 1,247 $ ( 1,305 ) $ ( 98 ) $ ( 781 )

Net income — — — — — 101 — 101

Share repurchases — — 1 ( 28 ) — — — ( 28 )

Excise tax on share repurchases — — — 1 — — — 1

Shares issued under stock plan, net of shares withheld for employee taxes — — — ( 3 ) — — — ( 3 )

Other comprehensive income, net of tax — — — — — — 44 44

Dividends — — — — — ( 16 ) — ( 16 )

Stock-based compensation — — — — 7 — — 7

Balance at June 30, 2026

245 $ — 58 $ ( 655 ) $ 1,254 $ ( 1,220 ) $ ( 54 ) $ ( 675 )

Common Stock Treasury Stock Additional

14 unchanged sentences

242 $ — 38 $ ( 339 ) $ 1,219 $ ( 1,591 ) $ 11 $ ( 700 )

Net income — — — — — 87 — 87

Share repurchases — — 3 ( 22 ) — — — ( 22 )

Excise tax on share repurchases — — — — — — — —

Shares issued under stock plan, net of shares withheld for employee taxes — — — ( 1 ) — — — ( 1 )

Other comprehensive loss, net of tax — — — — — — ( 170 ) ( 170 )

Dividends — — — — — ( 13 ) — ( 13 )

Stock-based compensation — — — — 7 — — 7

Balance at June 30, 2025

242 $ — 41 $ ( 362 ) $ 1,226 $ ( 1,517 ) $ ( 159 ) $ ( 812 )

(1) Common shares issued less treasury shares equals common shares outstanding

13 unchanged sentences

The unaudited Consolidated Interim Financial Statements should therefore be read in conjunction with the Consolidated Financial Statements and accompanying notes for the year ended December 31, 2025 included in our Annual Report on Form 10-K, as filed with the SEC on February 19, 2026 (our “2025 Form 10-K”).

The results of operations and cash flows for the three months ended March 31, 2026 should not necessarily be taken as indicative of the entire year.

The results of operations for the three and six months ended June 30, 2026 and cash flows for the six months ended June 30, 2026 should not necessarily be taken as indicative of the entire year.

All amounts presented are in millions, except per share amounts.

29 unchanged sentences

Disaggregated Revenue

Net sales by region (determined based on country of shipment) and channel is included in Note 22, Segments and Concentrations .

Net sales by region (determined based on country of shipment) and product line is included in Note 22, Segments and Concentrations .

Contract Balances

2 unchanged sentences

Contract assets—January 1 $ 48 $ 40

Contract assets—March 31

Contract assets—June 30

Change in contract assets—Increase/(Decrease) $ 5 $ 11

Contract liabilities—January 1 $ ( 10 ) $ ( 8 )

Contract liabilities—March 31

Contract liabilities—June 30

( 16 ) ( 15 )

7 unchanged sentences

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

Research, development and engineering costs $ 44 $ 45 $ 81 $ 85

As of March 31, 2026 and December 31, 2025, $ 53 million and $ 52 million , respectively, of contractually reimbursable costs were capitalized.

As of June 30, 2026 and December 31, 2025, $ 45 million and $ 52 million , respectively, of contractually reimbursable costs were capitalized.

These amounts are recorded within Other current assets and Other assets in the Consolidated Interim Balance Sheet.

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

1 unchanged sentence

Effective tax rate 19.8 % 14.7 % 19.7 % 20.3 %

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 payments.

The effective tax rate for the three months ended March 31, 2026 was lower than the U.S.

federal statutory rate of 21% primarily because of the global mix of earnings, benefits related to research and development expenses, and deductions related to employee share-based compensation.

The effective tax rates for the three months ended June 30, 2026 and 2025 were 19.8 % and 14.7 %, respectively.

The effective tax rates for the six months ended June 30, 2026 and 2025 were 19.7 % and 20.3 %, respectively.

The change in the effective tax rate for the three and six months ended June 30, 2026 compared to the prior period is primarily related to a decrease in U.S.

taxes on international operations during 2026, the global mix of earnings from year-to-year, a one-time benefit related to the revaluation of deferred tax assets in China during 2025, and deductions related to employee share-based compensation during 2026.

The effective tax rate for the three months ended June 30, 2026 was lower than the U.S.

federal statutory rate of 21% primarily because of the global mix of earnings, benefits related to research and development expenses, and the release of audit reserves.

The effective tax rate for the six months ended June 30, 2026 was lower than the U.S.

federal statutory rate of 21% primarily because of the global mix of earnings, benefits related to research and development expenses, deductions related to employee share-based compensation, and the release of audit reserves.

Accounts, Notes and Other Receivables—Net

5 unchanged sentences

Less—Allowance for expected credit losses

Trade receivables include $ 72 million and $ 48 million of unbilled customer contract asset balances as of March 31, 2026 and December 31, 2025, respectively.

Trade receivables include $ 53 million and $ 48 million of unbilled customer contract asset balances as of June 30, 2026 and December 31, 2025, respectively.

These amounts are billed in accordance with the terms of customer contracts to which they relate.

2 unchanged sentences

See Note 7, Factoring and Notes Receivable .

Other receivables includes VAT receivables of $ 42 million and $ 47 million as of March 31, 2026 and December 31, 2025, respectively.

Other receivables includes VAT receivables of $ 45 million and $ 47 million as of June 30, 2026 and December 31, 2025, respectively.

Factoring and Notes Receivable

4 unchanged sentences

Bank notes sold to third-party financial institutions without recourse are likewise accounted for as true sales.

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

(Dollars in millions)

1 unchanged sentence

Guaranteed bank notes sold without recourse 82 80 98 96

The expenses related to the sale of trade receivables and guaranteed bank notes are recognized within Other expense, net in the Consolidated Interim Statements of Operations, and were $ 1 million and $ 1 million for the three months ended March 31, 2026 and 2025, respectively .

2026 December 31,

2 unchanged sentences

Guaranteed bank notes sold but not yet collected by the bank from the customer 31 —

As of March 31, 2026 and December 31, 2025, the Company had no guaranteed bank notes pledged as collateral .

As of June 30, 2026 and December 31, 2025, the Company had no guaranteed bank notes pledged as collateral .

Inventories—Net

43 unchanged sentences

Designated and undesignated derivatives (Note 17)

Derivatives designated as net investment hedges (Note 17)

Environmental reserve 1 3

Other (primarily operating expenses)

(1) Customer advances and deferred inco me inc lude $ 15 million and $ 10 million of contract liabilities as of March 31, 2026 and December 31, 2025, respectively.

(1) Customer advances and deferred inco me inc lude $ 16 million and $ 10 million of contract liabilities as of June 30, 2026 and December 31, 2025, respectively.

See Note 3, Revenue Recognition and Contracts with Customers .

7 unchanged sentences

Usage—cash ( 12 ) — ( 12 )

Balance at March 31, 2026

Balance at June 30, 2026

Severance Costs Other Costs

4 unchanged sentences

Usage—cash ( 6 ) — ( 6 )

Balance at March 31, 2025

Balance at June 30, 2025

$ 11 $ — $ 11

14 unchanged sentences

We have operating leases that primarily consist of real estate, machinery, and equipment.

As of March 31, 2026, the Company does not have any material finance leases.

As of June 30, 2026, the Company does not have any material finance leases.

Our leases have remaining lease terms of up to 12 years, some of which include options to extend the leases for up to two years , and some of which include options to terminate the leases within the year.

1 unchanged sentence

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

4 unchanged sentences

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

1 unchanged sentence

Operating cash outflows from operating leases

$ 4 $ 4 $ 8 $ 8

Right-of-use assets obtained in exchange for lease obligations:

9 unchanged sentences

Weighted-average discount rate 5.95 % 6.25 %

Maturities of operating lease liabilities as of March 31, 2026 were as follows:

Maturities of operating lease liabilities as of June 30, 2026 were as follows:

(Dollars in millions)

5 unchanged sentences

and Garrett LX I S.à.r.l.

(the "Issuers"), wholly owned subsidiaries of the Company, completed an offering of $ 800 million in aggregate principal amount of 7.75 % Senior Unsecured Notes due

2032 (the "2032 Senior Notes").

(the "Issuers"), wholly owned subsidiaries of the Company, completed an offering of $ 800 million in aggregate principal amount of 7.75 % Senior Unsecured Notes due 2032 (the "2032 Senior Notes").

The 2032 Senior Notes mature on May 31, 2032.

9 unchanged sentences

Credit Facilities

On January 30, 2025, the Company entered into a Restatement Agreement (the "Restatement Agreement"), which amends and restates the Credit Agreement, dated as of April 30, 2021 (as amended from time to time, the "Existing Credit Agreement" and as amended and restated by the Restatement Agreement, the "Credit Agreement"), by and among the Company, Garrett Motion Holdings Inc., Garrett Motion S àrl and Garrett LX I S.à.r.l., as borrowers (the "Borrowers"), the lenders and issuing banks part thereto from time to time, and JPMorgan Chase Bank, N.A., as administrative agent.

On January 30, 2025, the Company entered into a Restatement Agreement (the "Restatement Agreement"), which amends and restates the Credit Agreement, dated as of April 30, 2021 (as amended from time to time, the "Existing Credit Agreement" and as amended and restated by the Restatement Agreement and as further amended from time to time, the "Credit Agreement"), by and among the Company, Garrett Motion Holdings Inc., Garrett Motion S àrl and Garrett LX I S.à.r.l., as borrowers (the "Borrowers"), the lenders and issuing banks part thereto from time to time, and JPMorgan Chase Bank, N.A., as administrative agent.

Under the Restatement Agreement, the Company refinanced in full its $ 692 million U.S.

Dollar term loan facility (the "2021 Dollar Term Facility") under the Existing Credit Agreement with a new $ 692 million term loan (the "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 rate equal to, at the Company's option, the Adjusted Term SOFR Rate (as defined in the Restatement Agreement) plus 2.00 % per annum in the case of Term Benchmark Loans (as defined in the Restatement Agreement) and the Alternate Base Rate (as defined in the Restatement Agreement) plus 1.00 % per annum in the case of ABR Loans (as defined in the Restatement Agreement).

Also on January 30, 2025, pursuant to the Restatement Agreement, the Company replaced its existing $ 600 million revolving commitments under the Existing Credit Agreement with new revolving commitments under the Credit Agreement in an aggregate principal amount of $ 630 million (the "New Revolving Facility" and, together with the New Term Loans, the "Credit Facilities").

The 2025 Dollar Term Facility matures on January 30, 2032.

On May 18, 2026, the Company entered into Amendment No.

2 (the "Second Amendment") to the Restatement Agreement, which reduced the Applicable Rate (as defined in the Restatement Agreement) to the Adjusted Term SOFR Rate (as defined in the Restatement Agreement) plus 1.75 % per annum in the case of Term Benchmark Loans (as defined in the Restatement Agreement) and the Alternate Base Rate plus 0.75 % per annum in the case of ABR Loans (as defined in the Restatement Agreement).

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

The New Revolving Facility, when drawn, will bear interest at a rate equal to the applicable benchmark plus an applicable margin that varies based on the Company's leverage ratio.

The applicable margin for revolving borrowings ranges from 2.25 % to 1.75 % per annum in the case of Term Benchmark Loans and 1.25 % to 0.75 % per annum in the case of ABR Loans.

Pursuant to the Second Amendment, the applicable margin for revolving borrowings ranges from 1.75 % to 1.25 % per annum in the case of Term Benchmark Loans and 0.75 % to 0.25 % per annum in the case of ABR Loans.

In addition to paying interest on outstanding borrowings under the New Revolving Facility, the Company must also pay a quarterly commitment fee based on the average daily unused portion of the New Revolving Facility during such quarter, which is determined by its leverage ratio and ranges from 0.25 % to 0.50 % per annum.

Concurrent with the Second Amendment, the Company made an early debt repayment of $ 50 million on its 2025 Dollar Term Facility.

The early repayment resulted in incremental amortization of debt issuance costs of $ 1 million, included within Interest expense in the Consolidated Interim Statement of Operations.

The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type.

The Credit Agreement also contains certain customary events of default.

The New Revolving Facility is subject to a financial covenant requiring the maintenance of a consolidated total leverage ratio of not greater than 4.7 to 1.00 as of the end of each fiscal quarter if, on the last day of any such fiscal quarter, the aggregate amount of loans and letters of credit (excluding backstopped or cash collateralized letters of credit and other letters of credit with an aggregate face amount not exceeding $ 30 million) outstanding under the New Revolving Facility exceeds 35 % of the aggregate commitments in effect thereunder on such date.

(excluding backstopped or cash collateralized letters of credit and other letters of credit with an aggregate face amount not exceeding $ 30 million) outstanding under the New Revolving Facility exceeds 35 % of the aggregate commitments in effect thereunder on such date.

The Credit Facilities are secured on a first-priority basis by:

(1) a perfected security interest in the equity interests of each direct material subsidiary of each guarantor under the Credit Facilities and (ii) perfected security interests in, and mortgages on, substantially all tangible and intangible personal property and material real property of each of the guarantors under the Credit Facilities, subject, in each case, to certain exceptions and limitations, including the agreed guaranty and security principles.

As of March 31, 2026, the Company was in compliance with all covenants under the 2032 Senior Notes indenture and Credit Agreement.

The principal outstanding and carrying amounts of our long-term debt as of March 31, 2026 and December 31, 2025 are as follows:

Due Interest Rate March 31,

(i) a perfected security interest in the equity interests of each direct material subsidiary of each guarantor under the Credit Facilities and (ii) perfected security interests in, and mortgages on, substantially all tangible and intangible personal property and material real property of each of the guarantors under the Credit Facilities, subject, in each case, to certain exceptions and limitations, including the agreed guaranty and security principles.

As of June 30, 2026, the Company was in compliance with all covenants under the 2032 Senior Notes indenture and Credit Agreement.

The principal outstanding and carrying amounts of our long-term debt as of June 30, 2026 and December 31, 2025 are as follows:

Due Interest Rate June 30,

2026 December 31,

5 unchanged sentences

Total long-term debt $ 1,360 $ 1,411

Separate from the New Revolving Facility, the Company has a bilateral letter of credit facility with outstanding letters of credit in the amount of $ 10 million and $ 10 million at March 31, 2026 and December 31, 2025, respectively.

Separate from the New Revolving Facility, the Company has a bilateral letter of credit facility with outstanding letters of credit in the amount of $ 10 million and $ 10 million at June 30, 2026 and December 31, 2025, respectively.

The letters of credit typically support customs arrangements and other obligations at our local affiliates.

Minimum scheduled principal repayments of long-term debt as of March 31, 2026 are as follow:

Minimum scheduled principal repayments of long-term debt as of June 30, 2026 are as follow:

(Dollars in millions)

1 unchanged sentence

Total debt payments $ 1,386

Cash dividends paid to shareholders of our Common Stock for the three months ended March 31, 2026 and 2025 were as follows (in millions, except per share amounts):

Cash dividends paid to shareholders of our Common Stock for the three and six months ended June 30, 2026 and 2025 were as follows (in millions, except per share amounts):

Quarterly Dividends

1 unchanged sentence

First quarter $ 0.08 $ 16 $ 0.06 $ 12

Second quarter 0.08 15 0.06 13

Treasury Stock

2 unchanged sentences

The Company accounts for the reissuance of treasury stock using the average cost method.

The Company did not reissue or retire any shares of treasury stock during the three months ended March 31, 2026.

The Company did not reissue or retire any shares of treasury stock during the three and six months ended June 30, 2026.

Share Repurchase Program

3 unchanged sentences

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.

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

During the six months ended June 30, 2026, the Company repurchased $ 115 million of Common Stock, and had $ 135 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.

2 unchanged sentences

Our credit, market, and foreign currency risk management policies are described in Note 17, Financial Instruments and Fair Value Measures , to the Consolidated Financial Statements for the year ended December 31, 2025 included in our 2025 Form 10-K.

As of March 31, 2026 and December 31, 2025, we had contracts with aggregate gross notional amounts of $ 2,172 million and $ 1,374 million, respectively, to hedge foreign currencies, principally the U.S.

As of June 30, 2026 and December 31, 2025, we had contracts with aggregate gross notional amounts of $ 2,222 million and $ 1,374 million, respectively, to hedge foreign currencies, principally the U.S.

Dollar, Swiss Franc, British Pound, Euro, Chinese Yuan, Japanese Yen, Mexican Peso, New Romanian Leu, Czech Koruna, Australian Dollar, and Korean Won.

2 unchanged sentences

Financial and nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of March 31, 2026 and December 31, 2025:

The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of June 30, 2026 and December 31, 2025:

Notional Amounts Assets Liabilities

3 unchanged sentences

Designated instruments:

Designated forward currency exchange contracts $ 1,235 $ 637 $ 24 $ 15 (a) $ 11 $ 8 (c)

Designated cross-currency swaps 1,775 1,775 — — (b) 114 169 (d)

Designated interest-rate swaps 625 625 — — (b) 11 16 (d)

Designated forward currency exchange contracts $ 1,088 $ 637 $ 29 $ 15 (a) $ 14 $ 8 (d)

Designated cross-currency swaps 1,775 1,775 — — (b) 120 169 (f)

Designated interest-rate swaps 560 625 — — (b) 4 16 (f)

Total designated instruments 3,423 3,037 29 15 138 193

Undesignated instruments:

Undesignated forward currency exchange contracts 937 737 1 2 (a) 4 3 (c)

Undesignated forward currency exchange contracts 1,134 737 19 2 (c) 4 3 (e)

Total undesignated instruments 1,134 737 19 2 4 3

2 unchanged sentences

(b) Recorded within Other assets

(d) Recorded within Other liabilities

(d) Recorded within Accrued liabilities and Other liabilities

(e) Recorded within Accrued liabilities

(f) Recorded within Other liabilities

Cash Flow Hedges

During 2025, the Company entered into float-to-fixed interest rate swap contracts with an aggregate notional amount of $ 625 million and maturities in January 2028, January 2029, January 2030 and January 2031, of which an interest rate swap contract with a notional amount of $ 50 million was early settled during 2025.

Changes in the fair value of the interest

rate swap contracts are recorded in Accumulated Other Comprehensive Income ("AOCI") and will be reclassified to Interest expense in the Consolidated Interim Statement of Operations upon maturity.

As of December 31, 2025, the Company had float-to-fixed interest rate swap contracts with an aggregate notional amount of $ 625 million and maturities in January 2028, January 2029, January 2030 and January 2031, of which an interest rate swap contract with a notional amount of $ 65 million was early settled during 2026.

Changes in the fair value of the interest rate swap contracts are recorded in Accumulated Other Comprehensive Income ("AOCI") and will be reclassified to Interest expense in the Consolidated Interim Statement of Operations upon maturity.

Amounts recognized related to the early settlement of the interest rate swap contract were immaterial.

The Company also has outstanding forward currency exchange contracts with maturities up to 18 months and an aggregate notional amount of $ 1,235 million and $ 637 million as of March 31, 2026 and December 31, 2025, respectively.

The Company also has outstanding forward currency exchange contracts with maturities up to 18 months and an aggregate notional amount of $ 1,088 million and $ 637 million as of June 30, 2026 and December 31, 2025, respectively.

These forward currency exchange contracts have been designated as cash flow hedges to mitigate foreign currency exposures primarily on our inventory purchases and manufacturing costs.

7 unchanged sentences

Changes in the fair value of the net investment hedges are recorded in AOCI until the net investment is liquidated or sold.

The fair values of the net investment hedges were net liabilities of $ 87 million and $ 124 million as of March 31, 2026 and December 31, 2025 , respectively.

The fair values of the net investment hedges were net liabilities of $ 89 million and $ 124 million as of June 30, 2026 and December 31, 2025 , respectively.

No ineffectiveness has been recorded on the net investment hedges.

Non-Designated Derivatives

The Company has outstanding forward currency exchange contracts with maturities generally up to 3 months and an aggregate notional amount of $ 937 million and $ 737 million as of March 31, 2026 and December 31, 2025 , respectively .

The Company has outstanding forward currency exchange contracts with maturities generally up to 3 months and an aggregate notional amount of $ 1,134 million and $ 737 million as of June 30, 2026 and December 31, 2025 , respectively .

Changes in the fair value of the forward currency exchange contracts are recorded in Non-operating (income) expense in the Consolidated Interim Statements of Operations.

3 unchanged sentences

The following tables present the pretax impact that changes in the fair values of derivatives designated as cash flow hedges and net investment hedges had on OCI, AOCI and earnings:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

(Dollars in millions)

3 unchanged sentences

Interest expense ( 1 ) ( 4 ) ( 1 ) ( 4 )

Non-operating (expense) income ( 12 ) 19

Gain (loss) recognized in other comprehensive income (loss) 18 17

Non-operating (income) expense ( 5 ) 45 ( 17 ) 64

Gain (loss) recognized in other comprehensive

income (loss) — ( 8 ) 18 ( 8 )

Net investment hedges

Gain (loss) recognized in other comprehensive income (loss) 39 ( 44 )

Gain (loss) recognized in other comprehensive

income (loss) 3 ( 134 ) 42 ( 178 )

During the next twelve months, $ 14 million of pretax gain on cash flow hedges is expected to be reclassified from AOCI into income.

The following table summarizes the pretax gain (loss) that changes in the fair values of derivatives not designated as hedging instruments had on earnings:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Contract Type Location (Dollars in millions)

Interest rate swaps Interest expense (1)

$ — $ — $ — $ —

Forward currency exchange contracts Non-operating income 19 ( 20 ) 28 ( 26 )

(1) Includes interest income of $ 6 million, partially offset by marked-to-market remeasurement losses of $ 6 million, for the three months ended March 31, 2025.

(1) Includes interest income of $ 6 million, partially offset by marked-to-market remeasurement losses of $ 6 million, for the six months ended June 30, 2025.

There were no undesignated interest rate swaps outstanding during 2026.

5 unchanged sentences

The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value:

March 31, 2026

June 30, 2026

December 31, 2025

10 unchanged sentences

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

1 unchanged sentence

Balance at beginning of period $ ( 115 ) $ ( 56 ) $ ( 110 ) $ ( 27 )

Other comprehensive (loss) income before reclassifications ( 5 ) ( 29 )

Income tax benefit (expense) associated with comprehensive income (loss) before

Other comprehensive (loss) income before

reclassifications 43 ( 59 ) 38 ( 88 )

Income tax benefit (expense) associated with

comprehensive income (loss) before reclassifications — — — —

Amounts reclassified from AOCI — — — —

2 unchanged sentences

Balance at beginning of period ( 16 ) ( 15 ) ( 16 ) ( 15 )

Other comprehensive income (loss) before reclassifications — —

Income tax benefit (expense) associated with comprehensive income (loss) before

Other comprehensive income (loss) before

reclassifications — — — —

Income tax benefit (expense) associated with

comprehensive income (loss) before reclassifications — — — —

Balance at end of period ( 16 ) ( 15 ) ( 16 ) ( 15 )

1 unchanged sentence

Balance at beginning of period 8 ( 8 ) ( 6 ) ( 10 )

Other comprehensive (loss) income before reclassifications 4 17

Income tax benefit (expense) associated with comprehensive income (loss) before

Other comprehensive (loss) income before

reclassifications ( 11 ) 29 ( 7 ) 46

Income tax benefit (expense) associated with

comprehensive income (loss) before reclassifications — 24 ( 3 ) 26

Amounts reclassified from AOCI 11 ( 41 ) 26 ( 60 )

3 unchanged sentences

Balance at beginning of period 25 90 ( 6 ) 125

Other comprehensive (loss) income before reclassifications 39 ( 44 )

Income tax benefit (expense) associated with comprehensive income (loss) before

Other comprehensive (loss) income before

reclassifications 3 ( 133 ) 42 ( 177 )

Income tax benefit (expense) associated with

comprehensive income (loss) before reclassifications ( 1 ) 5 ( 9 ) 14

Balance at end of period 27 ( 38 ) 27 ( 38 )

Accumulated other comprehensive (loss) income, end of period $ ( 98 ) $ 11

Accumulated other comprehensive (loss) income, end of

period $ ( 54 ) $ ( 159 ) $ ( 54 ) $ ( 159 )

Reclassifications from AOCI to income were as follows:

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

Changes in Fair Value of Effective Cash Flow Hedges

Reclassification forward currency exchange contracts to Cost of goods sold $ 3 $ —

Reclassification forward currency exchange contracts to

Cost of goods sold $ 5 $ — $ 8 $ —

Reclassification cross-currency swaps to Interest expense 1 4 1 4

Reclassification cross-currency swaps to Non-operating (income) expense 12 ( 19 )

Reclassification cross-currency swaps to Non-operating

(income) expense 5 ( 45 ) 17 ( 64 )

Tax effect on reclassification to income ( 1 ) 5 ( 3 ) 7

6 unchanged sentences

Basic EPS is then calculated by dividing undistributed earnings allocated to common stock by the weighted average number of common shares outstanding for the period.

Under the two-class method, the impact of these participating securities was immaterial for the three months ended March 31, 2026 and 2025.

Diluted earnings per share is calculated by applying the two-class method for participating securities and then incorporating the dilutive effect of other potential common shares, determined using methods such as the treasury stock method, to arrive at the most dilutive EPS.

The details of the EPS calculations for the three months ended March 31, 2026 and 2025 are as follows:

Under the two-class method, the impact of these participating securities was immaterial for the three and six months ended June 30, 2026 and 2025.

Diluted EPS is calculated by applying the two-class method for participating securities and then incorporating the dilutive effect of other potential common shares, determined using methods such as the treasury stock method, to arrive at the most dilutive EPS.

The details of the EPS calculations for the three and six months ended June 30, 2026 and 2025 are as follows:

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

(Dollars in millions except per share)

13 unchanged sentences

We identify below the individual proceedings where we believe a material loss is reasonably possible or probable, and we accrue for matters when we believe that losses are probable and the amount of the potential loss is reasonably estimable.

It is inherently difficult to determine whether a loss is probable or reasonably possible or to estimate the size or range of any

potential loss.

It is inherently difficult to determine whether a loss is probable or reasonably possible or to estimate the size or range of any potential loss.

Accordingly, while we believe that appropriate accruals have been established for losses that are probable and can be reasonably estimated, it is possible that adverse outcomes from such proceedings could exceed the amounts accrued by an amount that could be material to our financial position, results of operations or cash flows.

1 unchanged sentence

In September 2020, the Brazilian tax authorities issued an infraction notice against Garrett Motion Industria Automotiva Brasil Ltda, challenging the use of certain tax credits between January 2017 and February 2020.

The estimated total amount of the loss contingency arising from this matter as of March 31, 2026 was $ 28 million, including penalties and interest.

The estimated total amount of the loss contingency arising from this matter as of June 30, 2026 was $ 29 million, including penalties and interest.

The Company believes, based on management’s assessment and the advice of external legal counsel, that it has meritorious arguments in connection with the infraction notice and any liability for the infraction notice is currently not probable.

7 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

2 unchanged sentences

Settlement of warranty/guarantee claims

( 4 ) ( 5 ) ( 7 ) ( 8 )

Foreign currency translation — 2 — 2

Warranty and product performance guarantees at end of period

$ 21 $ 23 $ 21 $ 23

Other Commitments and Contingencies

13 unchanged sentences

We expect to make contributions of cash and/or marketable securities of approximately $ 5 million to our non-U.S.

pension plans to satisfy regulatory funding standards in 2026.

There have been no contributions as of March 31, 2026.

pension plans to satisfy regulatory funding standards in 2026, of which $ 2 million has been contributed as of June 30, 2026.

Net periodic benefit costs for our significant defined benefit plans include the following components:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Plans Non-U.S.

2026 2025 2026 2025 2026 2025 2026 2025

16 unchanged sentences

Sales concentration - Net sales by region (determined based on country of shipment) and product line are as follows:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

(Dollars in millions)

1 unchanged sentence

Germany 116 86 209 175

United Kingdom 88 92 183 177

Rest of Europe 305 283 620 534

2 unchanged sentences

Other International 32 24 58 44

Three Months Ended March 31,

$ 976 $ 913 $ 1,961 $ 1,791

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

(Dollars in millions)

Diesel $ 235 $ 217 $ 467 $ 425

Gas 416 398 859 801

Commercial Vehicles / Industrial 188 170 369 325

Aftermarket 119 111 233 209

Other 18 17 33 31

$ 976 $ 913 $ 1,961 $ 1,791

The table below provides segment information about the Company:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

(Dollars in millions)

2 unchanged sentences

Variable manufacturing costs (1)

108 123 225 221

Fixed manufacturing costs (2)

60 51 133 110

RD&E costs 44 45 81 85

3 unchanged sentences

Other segment items (3)

( 1 ) ( 5 ) ( 9 ) 2

Consolidated net income $ 101 $ 87 $ 196 $ 149

2 unchanged sentences

(3) Other segment items consist of non-service components of net periodic pension expense, interest income, equity income and other non-operating income items (if any).

The measure of segment assets is reported on the balance sheet as total consolidated assets.

The Company had capital expenditures of $ 29 million and $ 26 million for the three months ended March 31, 2026 and 2025, respectively.

The measure of segment assets is reported on the Consolidated Interim Balance Sheet as total consolidated assets.

The Company had capital expenditures of $ 17 million and $ 15 million for the three months ended June 30, 2026 and 2025, respectively, and $ 46 million and $ 41 million for the six months ended June 30, 2026 and 2025, respectively.

Subsequent Events

On April 30, 2026, the Board of Directors 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.

On July 29, 2026, the Board of Directors declared a cash dividend of $ 0.08 per share of Common Stock, payable on September 15, 2026, to shareholders of record as of September 1, 2026.

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 1. Financial Statements