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Item 2. Management’s Discussion and Analysis

2026-07-29 compared with 2026-04-30 · 153 added, 75 removed, 172 unchanged (57% 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 months ended March 31, 2026.

for the three and six months ended June 30, 2026.

Executive Summary

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.

During the second quarter of 2026, we outperformed the light vehicle industry and saw growth across all verticals.

This was primarily driven by increased gasoline volumes from new program launches, strong demand in light commercial vehicle as well as continued industrial growth.

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.

We delivered strong operating performance year-over-year, resulting in Net income for the quarter of $101 million and Adjusted EBIT (1) of $152 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.

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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.

We also kicked off pre-development of a commercial vehicle E-powertrain with a Japanese truck maker.

For the three months ended June 30, 2026, we repurchased $28 million of Common Stock under our share repurchase program.

As of June 30, 2026, we had $135 million of the authorized amount remaining under our share repurchase program.

The repurchased shares are held as treasury stock.

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.

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.

The total amount of dividends paid on June 15, 2026 amounted to $15 million.

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.

(1) Adjusted EBIT is a non-GAAP measure.

Refer to "Non-GAAP Measures" below for a definition of Adjusted EBIT and a reconciliation of Adjusted EBIT to net income, the most directly comparable GAAP financial measure.

Disaggregated Revenue

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

The following tables show our revenues by geographic region and product line for the three and six months ended June 30, 2026 and 2025, respectively.

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

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261 27% 250 27% 538 27% 507 28%

32 3% 24 3% 58 3% 44 3%

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

By Product Line

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

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

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

Results of Operations for the Three and Six Months Ended June 30, 2026

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

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% change compared with prior period 6.9 % 9.5 %

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).

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.

Net Sales for the Three Months Ended June 30, 2026

For the three months ended June 30, 2026, net sales compared to the prior period increased by $63 million or 7% (including a favorable impact of $15 million or 2% due to foreign currency fluctuation).

The increase was primarily related to higher demand across all verticals, favorable price net of inflation pass-through, and foreign currency impacts, partially offset by lower customer recoveries on import tariffs.

Gasoline product sales increased by $18 million or 5% (including a favorable impact of $7 million or 2% due to foreign currency translation), primarily driven by new application launches and program ramp-ups in Europe, India, and South America.

Diesel product sales increased by $18 million or 8% (including a favorable impact of $6 million or 2% due to foreign currency translation), primarily driven by strong demand for light commercial vehicles and pickup trucks in Europe, Asia, and South America, and program ramp-ups in India.

Commercial vehicle and Industrial sales increased by $18 million or 10% (with no impact from foreign currency translation), primarily driven by volume recovery in China and continued industrial growth in China and North America stationary power generation ("Gensets") for data centers.

Aftermarket sales increased by $8 million or 8% (including a favorable impact of $2 million or 1% due to foreign currency translation), primarily due to stronger demand for replacement parts in Europe, China, and Australia, partially offset by softer demand for off-highway replacement parts in North America.

Net Sales for the Six Months Ended June 30, 2026

For the six months ended June 30, 2026, net sales compared to the prior period increased by $170 million or 9% (including a favorable impact of $73 million or 4% due to foreign currency translation).

The increase was primarily related to higher demand across all verticals, and favorable foreign currency impacts, partially offset by unfavorable price net of inflation pass-through and lower customer recoveries on import tariffs.

Gasoline product sales increased by $58 million or 7% (including a favorable impact of $34 million or 4% due to foreign currency translation), primarily driven by new application launches and program ramp-ups in Europe, India, and South America.

Diesel product sales increased by $42 million or 10% (including a favorable impact of $24 million or 6% due to foreign currency translation), primarily driven by strong demand for light commercial vehicles and pickup trucks in Europe, Asia, and South America and program ramp-ups in India.

Commercial vehicle and Industrial sales increased by $44 million or 14% (including a favorable impact of $6 million or 2% due to foreign currency translation), primarily driven by volume recovery in China and continued industrial growth in China and North America Gensets for data centers.

Aftermarket sales increased by $24 million or 11% (including a favorable impact of $8 million or 3% due to foreign currency translation), primarily due to stronger demand for replacement parts in Europe, India, China, and Australia, while North America remains stable compared with the prior period.

Cost of Goods Sold and Gross Profit

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

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Gross profit percentage 21.7 % 19.8 % 20.8 % 20.1 %

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

Cost of Goods Sold and Gross Profit for the Three Months Ended June 30, 2026

Cost of Goods Sold Gross Profit

(Dollars in millions)

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

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

Increase/(decrease) due to:

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Price, net of inflation pass-through — 8

Commodity, transportation & energy deflation (2) 2

Commodity, transportation & energy inflation 8 (8)

Productivity, net (24) 8

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Foreign exchange rate impacts 15 —

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.

Cost of Goods Sold / Gross Profit for the three months ended June 30, 2026

For the three months ended June 30, 2026, cost of goods sold increased by $32 million, primarily driven by $35 million from higher sales volumes, $18 million of unfavorable mix, $15 million from foreign currency impacts, and $8 million of commodity, transportation, and energy inflation.

These increases were partially offset by $24 million productivity net of labor inflation and repositioning costs, $16 million of lower import tariffs, and $4 million of lower RD&E costs.

For the three months ended June 30, 2026, gross profit increased by $31 million, primarily driven by $16 million from higher sales volumes, $8 million productivity net of labor inflation and repositioning costs, $8 million of price net of inflation pass-through, $4 million of lower RD&E costs, and $3 million of favorable product mix.

These increases were partially offset by $8 million of commodity, transportation, and energy inflation.

There was no impact from import tariffs for the three months ended June 30, 2026.

Cost of Goods Sold and Gross Profit for the Six Months Ended June 30, 2026

Cost of Goods Sold Gross Profit

(Dollars in millions)

Cost of Goods Sold / Gross Profit for the six months ended June 30, 2025

$ 1,431 $ 360

Increase/(decrease) due to:

Product mix 22 7

Price, net of inflation pass-through — (3)

Commodity, transportation & energy inflation 6 (6)

Productivity, net (17) (13)

Import tariffs (10) (1)

Research, development & engineering (11) 11

Foreign exchange rate impacts 55 18

Cost of Goods Sold / Gross Profit for the six months ended June 30, 2026

$ 1,553 $ 408

For the six months ended June 30, 2026, cost of goods sold increased by $122 million, primarily driven by $77 million from higher sales volumes, $55 million of foreign currency impacts, $22 million of favorable mix, and $6 million of commodity, transportation, and energy inflation.

These increases were partially offset by $17 million productivity net of labor inflation and repositioning costs, $11 million of lower RD&E costs, and $10 million of lower import tariffs.

For the six months ended June 30, 2026, gross profit increased by $48 million, primarily driven by $35 million from higher sales volumes, $18 million from favorable foreign currency impacts, $11 million of lower RD&E costs, and $7

million of favorable product mix.

These increases were partially offset by $13 million of lower productivity net of labor inflation and repositioning costs, $6 million of commodity, transportation, and energy inflation, $3 million of price net of inflation pass-through, and $1 million of import tariffs.

Selling, General and Administrative Expenses

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

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% of sales 6.5 % 6.5 % 6.2 % 6.6 %

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.

Selling, general and administrative (“SG&A”) expenses for the three months ended June 30, 2026 increased by $4 million compared with the prior period, primarily driven by $3 million of higher personnel costs and $2 million of unfavorable foreign currency impact, partially offset by $1 million of lower bad debt expense.

SG&A expenses for the six months ended June 30, 2026 increased by $3 million compared with the prior period, primarily driven by $6 million of unfavorable foreign currency impact, partially offset by $3 million of lower bad debt expense.

Other Expense, Net

Three Months Ended

June 30, Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

Other expense, net $ 1 $ 1 $ 2 $ 8

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.

Other expense, net for the three months ended June 30, 2026 was consistent with the prior period.

Other expense, net for the six months ended June 30, 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

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

Interest expense $ 24 $ 25 $ 51 $ 54

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

For the three months ended June 30, 2026, interest expense decreased by $1 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.

In addition, we recorded net gains of $2 million on our interest derivatives in the current year, in comparison to net gains of $4 million in the prior year.

For the six months ended June 30, 2026, interest expense decreased by $3 million compared to the prior period.

This decrease was primarily due to $5 million in lower interest expense due to a different notional amount of debt outstanding during the period and the repricing of our Credit Agreement.

In addition, we recorded net gains of $1 million on our interest derivatives in the current year, in comparison to net gains of $4 million in the prior year.

Non-Operating Income, Net

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

Non-operating income, net $ (2) $ (6) $ (10) $ (7)

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.

For the three months ended June 30, 2026, we had non-operating income of $2 million versus $6 million in the prior period.

The decrease in non-operating income was primarily driven by a decrease in foreign exchange transactional gains.

For the six months ended June 30, 2026, 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 the resolution of certain environmental liabilities, partially offset by a decrease in foreign exchange transactional gains.

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

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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 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 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.

tax reform), deductions related to employee share-based payments, internal restructurings, and pension mark-to-market adjustments.

tax reform), deductions related to employee share-based compensation, internal restructurings, and pension mark-to-market adjustments.

Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

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Net income margin 10.3 % 9.5 % 10.0 % 8.3 %

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.

Net income for the three months ended June 30, 2026 increased by $14 million compared with the prior period, primarily due to $31 million of higher gross profit and $1 million of lower interest expense, partially offset by $10 million of higher tax expense, $4 million of lower non-operating income, and $4 million of higher SG&A expense.

Net income for the six months ended June 30, 2026 increased by $47 million compared with the prior period, primarily due to $48 million of higher gross profit, $6 million lower other expense, net, $3 million lower interest expense, and $3 million higher non-operating income, partially offset by $10 million higher tax expense and $3 million higher SG&A expense.

Non-GAAP Measures

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EBIT and Adjusted EBIT

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 “EBIT” as our net income calculated in accordance with 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, and (vii) debt refinancing and redemption costs, if any.

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Three Months Ended

Six Months Ended

2026 2025 2026 2025

(Dollars in millions)

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Tax expense 25 15 48 38

EBIT 151 125 295 239

Repositioning costs (2)

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Other non-operating income (3)

(2) (2) (8) (3)

Debt refinancing and redemption costs (4)

1 unchanged sentence

Adjusted EBIT $ 152 $ 124 $ 303 $ 255

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

(1) Reflects interest income of $0 million and $2 million for the three months ended June 30, 2026 and 2025, respectively, and $0 million and $2 million for the six months ended June 30, 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 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 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.

(3) Reflects the non-service component of net periodic pension income and, for the six months ended June 30, 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 thereto.

Adjusted EBIT for the Three Months Ended June 30, 2026

For the three months ended June 30, 2026 , net income increased by $14 million versus the prior period as discussed above within Results of Operations for Three and Six Months Ended June 30, 2026 .

For the three months ended June 30, 2026 , Adjusted EBIT increased by $28 million compared to the prior period, driven primarily by $16 million of higher volumes, $10 million of higher productivity, $8 million of pricing net of inflation pass-through, $4 million of lower RD&E costs, and $3 million of favorable product mix.

These increases were partially offset by $8 million of commodity, transportation, and energy inflation and $5 million of unfavorable foreign currency impacts.

During the three months ended June 30, 2026, we saw volume growth across all verticals.

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

Diesel growth was due to strong demand for light commercial vehicles and pickup trucks in Europe, Asia and South America, and program ramp-ups in India.

Commercial vehicle and industrials growth was driven by strong on-highway demand in China following launches and North America Gensets for data centers.

Aftermarket volumes increased in Europe, China, and Australia, resulting in a favorable product mix.

The strong operational 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.

Losses in foreign currency for the three months ended June 30, 2026 were primarily driven by a strong Chinese Yuan and Japanese Yen, partially offset by gains from our derivatives for a $5 million decrease in Adjusted EBIT.

Adjusted EBIT for the Six Months Ended June 30, 2026

For the six months ended June 30, 2026 , net income increased by $47 million versus the prior period as discussed above within Results of Operations for Three and Six Months Ended June 30, 2026 .

For the six months ended June 30, 2026, Adjusted EBIT increased by $48 million compared to the prior period, driven primarily by $35 million of higher volumes, $11 million of lower RD&E costs, $8 million of favorable foreign currency impacts, and $7 million of favorable product mix.

These increases were partially offset by $6 million of

commodity, transportation, and energy inflation, $4 million of lower productivity, and $3 million of pricing net of inflation pass-through.

During the six months ended June 30, 2026, we saw volume growth across all verticals.

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

Diesel growth was due to strong demand for light commercial vehicles and pickup trucks in Europe, Asia, and South America and program ramp-ups in India.

Commercial vehicle volume growth was driven by higher on-highway demand in Asia from new launches and following low volumes in the prior period and strong demand in China and North America for Gensets for data centers.

Aftermarket volumes increased in Europe, India, China, and Australia for commercial vehicle parts, resulting in favorable mix.

The increased productivity from our ability to flex our variable cost structure while driving sustained fixed cost productivity was offset by year-over-year labor inflation, higher stock-based compensation, and one-time expenses.

Gains in foreign currency from translational, transactional, and hedging effects in the six months ended June 30, 2026 were primarily driven by a stronger Chinese Yuan-to-U.S.

dollar versus the prior period, accounting for an $8 million increase in Adjusted EBIT.

Liquidity and Capital Resources

8 unchanged sentences

Bilateral letter of credit facility - utilized capacity 10 10

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.

On May 18, 2026, we entered into the Second Amendment to the Restatement Agreement, which reduced the Applicable Rate to the Adjusted Term SOFR Rate plus 1.75% per annum in the case of Term Benchmark Loans and the Alternate Base Rate plus 0.75% per annum in the case of ABR Loans.

Additionally, the Second Amendment reduced the applicable margin for revolving borrowings to a range of 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.

We also made an early debt repayment of $50 million on our 2025 Dollar Term Facility.

During the six months ended June 30, 2026, we paid cash dividends of $31 million.

On July 29, 2026, we 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.

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 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 connection with our zero-emission technologies.

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

From time-to-time, we may opportunistically access the debt or equity capital markets, or otherwise pursue financing transactions, to supplement our sources of liquidity.

Share Repurchase Program

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 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.

During the six months ended June 30, 2026, we repurchased $115 million of Common

Stock, with $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.

4 unchanged sentences

Unregistered Sales of Equity Securities and Use of Proceeds .

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

Three Months Ended

Cash Flow Summary for the Six Months Ended June 30, 2026

Six Months Ended

(Dollars in millions)

5 unchanged sentences

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.

Cash provided by operating activities increased by $29 million for the six months ended June 30, 2026 compared to the prior period.

The increase was primarily driven by $32 million of higher net income net of non-cash charges and $63 million of favorable impact from changes in other assets and liabilities, partially offset by $66 million of unfavorable impacts from working capital changes.

Cash flow used for investing activities increased by $12 million for the six months ended June 30, 2026 compared to the prior period.

The increase was driven by $5 million in higher capital expenditures on property, plant and equipment versus the prior period and $7 million in reduced proceeds from our cross currency swaps.

Cash used for financing activities was $222 million for the six months ended June 30, 2026 compared with $89 million in the prior period.

During the six months ended June 30, 2026, we made payments of $115 million for the repurchase of Common Stock under our share repurchase program, debt repayments of $110 million, and payments of $31 million for dividends on our Common Stock.

These payments were partially offset by $56 million of proceeds from our Credit Facilities.

In comparison, cash used for financing activities was $89 million for the six months ended June 30, 2025, primarily driven by debt repayments of $73 million, payments of $52 million for Common Stock repurchases, and payments of $25 million for dividends on our Common Stock.

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

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet financial arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.

Critical Accounting Policies

Critical Accounting Policies and Estimates

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.

Our critical accounting policies are summarized in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our 2025 Form 10-K.

Our critical accounting policies and estimates are summarized in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our 2025 Form 10-K.

Recent Accounting Pronouncements

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What changed 10-Q

Item 2. Management’s Discussion and Analysis