Garrett Motion Inc. 10-Q

Item 1. Financial Statements GARRETT MOTION INC. CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 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 Gross profit 212 181 408 360 Selling, general and administrative expenses 63 59 121 118 Other expense, net 1 1 2 8 Interest expense 24 25 51 54 Non-operating income, net ( 2 ) ( 6 ) ( 10 ) ( 7 ) Income before taxes 126 102 244 187 Tax expense (Note 5) 25 15 48 38 Net income $ 101 $ 87 $ 196 $ 149 Earnings per common share (Note 19) Basic $ 0.54 $ 0.43 $ 1.04 $ 0.73 Diluted 0.53 0.42 1.02 0.72 Weighted average common shares outstanding Basic 187,252,451 202,672,945 188,244,787 203,886,530 Diluted 190,594,777 205,255,033 191,970,322 206,433,975 The Notes to the Consolidated Interim Financial Statements are an integral part of this statement. 2 GARRETT MOTION INC. CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (Dollars in millions) Net income $ 101 $ 87 $ 196 $ 149 Foreign exchange translation adjustment 43 ( 59 ) 38 ( 88 ) 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 (loss) $ 145 $ ( 83 ) $ 280 $ ( 83 ) The Notes to the Consolidated Interim Financial Statements are an integral part of this statement. 3 GARRETT MOTION INC. CONSOLIDATED INTERIM BALANCE SHEETS (Unaudited) June 30, 2026 December 31, 2025 (Dollars in millions) ASSETS Current assets: Cash and cash equivalents $ 158 $ 177 Restricted cash 2 2 Accounts, notes and other receivables – net (Note 6) 836 703 Inventories – net (Note 8) 350 339 Other current assets (Note 9) 124 98 Total current assets 1,470 1,319 Investments and long-term receivables 10 11 Property, plant and equipment – net 426 462 Goodwill 193 193 Deferred income taxes 207 210 Other assets (Note 10) 167 172 Total assets $ 2,473 $ 2,367 LIABILITIES Current liabilities: Accounts payable $ 1,135 $ 1,061 Current maturities of long-term debt (Note 15) 7 7 Accrued liabilities (Note 12) 325 295 Total current liabilities 1,467 1,363 Long-term debt (Note 15) 1,360 1,411 Deferred income taxes 35 32 Other liabilities (Note 13) 286 363 Total liabilities $ 3,148 $ 3,169 COMMITMENTS AND CONTINGENCIES (Note 20) EQUITY (DEFICIT) Common Stock, par value $ 0.001 ; 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 Retained deficit ( 1,220 ) ( 1,384 ) Accumulated other comprehensive loss (Note 18) ( 54 ) ( 138 ) Treasury Stock, at cost; 58,666,936 and 51,993,388 shares as of June 30, 2026 and December 31, 2025, respectively (Note 16) ( 655 ) ( 520 ) Total deficit ( 675 ) ( 802 ) Total liabilities and deficit $ 2,473 $ 2,367 The Notes to the Consolidated Interim Financial Statements are an integral part of this statement. 4 GARRETT MOTION INC. CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Unaudited) Six Months Ended June 30, 2026 2025 (Dollars in millions) Cash flows from operating activities: Net income $ 196 $ 149 Adjustments to reconcile net income to net cash provided by operating activities Deferred income taxes 10 ( 3 ) Depreciation 49 45 Amortization of deferred issuance costs 3 3 Foreign exchange loss (gain) 17 ( 65 ) Stock compensation expense 14 13 Pension expense — 1 Unrealized (gain) loss on derivatives ( 37 ) 81 Other 8 4 Changes in assets and liabilities: Accounts, notes and other receivables ( 137 ) 8 Inventories ( 23 ) 20 Other assets 5 ( 7 ) Accounts payable 109 ( 13 ) Accrued liabilities 12 ( 44 ) Other liabilities 17 22 Net cash provided by operating activities $ 243 $ 214 Cash flows from investing activities: Expenditures for property, plant and equipment ( 46 ) ( 41 ) Proceeds from cross-currency swap contracts 8 15 Net cash used for investing activities $ ( 38 ) $ ( 26 ) Cash flows from financing activities: Proceeds from issuance of long-term debt, net of debt financing costs 56 68 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 ) Other ( 1 ) ( 2 ) Net cash used for financing activities $ ( 222 ) $ ( 89 ) Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash ( 2 ) 8 Net (decrease) increase in cash, cash equivalents and restricted cash ( 19 ) 107 Cash, cash equivalents and restricted cash at beginning of the period 179 126 Cash, cash equivalents and restricted cash at end of the period $ 160 $ 233 Supplemental cash flow disclosure: Income taxes paid (net of refunds) $ 34 $ 37 Interest paid 50 46 Supplemental disclosure of non-cash investing activities: Expenditures for property, plant and equipment in accounts payable 38 24 The Notes to the Consolidated Interim Financial Statements are an integral part of this statement 5 GARRETT MOTION INC. CONSOLIDATED INTERIM STATEMENTS OF EQUITY (DEFICIT) (Unaudited) Common Stock Treasury Stock Additional Paid-in Capital Retained Deficit Accumulated Other Comprehensive (Loss) / Income Total Deficit Shares (1) Amount Shares Amount (in millions) Balance at December 31, 2025 243 $ — 52 $ ( 520 ) $ 1,240 $ ( 1,384 ) $ ( 138 ) $ ( 802 ) Net income — — — — — 95 — 95 Share repurchases — — 4 ( 87 ) — — — ( 87 ) Excise tax on share repurchases — — — ( 1 ) — — — ( 1 ) Shares issued under stock plan, net of shares withheld for employee taxes 2 — 1 ( 17 ) — — — ( 17 ) Other comprehensive income, net of tax — — — — — — 40 40 Dividends — — — — — ( 16 ) — ( 16 ) Stock-based compensation — — — — 7 — — 7 Balance at March 31, 2026 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 Paid-in Capital Retained Deficit Accumulated Other Comprehensive Income / (Loss) Total Deficit Shares (1) Amount Shares Amount (in millions) Balance at December 31, 2024 241 $ — 35 $ ( 306 ) $ 1,213 $ ( 1,653 ) $ 73 $ ( 673 ) Net income — — — — — 62 — 62 Share repurchases — — 3 ( 30 ) — — — ( 30 ) Excise tax on share repurchases — — — — — — — — Shares issued under stock plan, net of shares withheld for employee taxes 1 — — ( 3 ) — — — ( 3 ) Other comprehensive loss, net of tax — — — — — — ( 62 ) ( 62 ) Stock-based compensation — — — — 6 — — 6 Balance at March 31, 2025 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 The Notes to the Consolidated Interim Financial Statements are an integral part of this statement. 6 GARRETT MOTION INC. NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited) (Dollars in millions, except per share amounts) Note 1. Background and Basis of Presentation Background Garrett Motion Inc. (the “Company” or “Garrett”) is a cutting-edge technology leader delivering differentiated solutions for emission reduction and energy efficiency. We design, manufacture, and sell highly engineered turbocharging, air and fluid compression, and high-speed electric motor technologies to original equipment manufacturers (“OEMs”) and independent aftermarket distributors in the mobility and industrial fields. We have significant expertise in delivering highly engineered products at scale for internal combustion engines using gasoline, diesel, natural gas, and hydrogen, as well as for zero-emission vehicles. Our products are key enablers for fuel economy, energy efficiency, thermal management, and compliance with greenhouse gas and other emission-reduction targets. Basis of Presentation The accompanying unaudited Consolidated Interim Financial Statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission ("SEC") applicable to interim financial statements. While these statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by United States generally accepted accounting principles (“GAAP”) for complete financial statements. 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 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. We evaluate segment reporting in accordance with ASC 280, Segment Reporting . We concluded that Garrett operates in a single operating segment and a single reportable segment based on the operating results available and evaluated regularly by the chief operating decision maker (“CODM”), which is our Chief Executive Officer, to make decisions about resource allocation and performance assessment. The CODM makes operational performance assessments and resource allocation decisions on a consolidated basis, inclusive of all of the Company’s products across channels and geographies. The preparation of the financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases these estimates on assumptions that it believes to be reasonable under the circumstances. Actual results could differ from the original estimates, requiring adjustments to these balances in future periods. Note 2. Summary of Significant Accounting Policies The accounting policies of the Company are set forth in Note 2 to the Consolidated Financial Statements for the year ended December 31, 2025 included in our 2025 Form 10-K. Accounting Standards Issued But Not Yet Adopted In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this update require disclosure of specified information about certain costs and expenses. In January 2025, the FASB issued ASU 2025-01, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date . The guidance, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026 on a prospective basis, with early adoption permitted. The Company is currently evaluating the guidance to determine the impact on its disclosures. In September 2025, FASB issued ASU 2025-06, Intangibles — Goodwill and Other — Internal Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments revise the capitalization 7 criteria for internal-use software costs and eliminate stage-based development guidance. The update is effective for fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the guidance to determine the impact on its accounting policies and disclosures. In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities . The amendments in this update establish the accounting for a government grant received by a business entity. The guidance is effective for fiscal years beginning after December 15, 2029, with early adoption permitted. The Company is currently evaluating the guidance to determine the impact on its accounting policies and disclosures. There are no other recently issued, but not yet adopted, accounting pronouncements that are expected to have a material impact on the Company's Consolidated Interim Financial Statements and related disclosures. Note 3. Revenue Recognition and Contracts with Customers Disaggregated Revenue Net sales by region (determined based on country of shipment) and product line is included in Note 22, Segments and Concentrations . Contract Balances The following table summarizes our contract assets and liabilities balances: 2026 2025 (Dollars in millions) Contract assets—January 1 $ 48 $ 40 Contract assets—June 30 53 51 Change in contract assets—Increase/(Decrease) $ 5 $ 11 Contract liabilities—January 1 $ ( 10 ) $ ( 8 ) Contract liabilities—June 30 ( 16 ) ( 15 ) Change in contract liabilities—Decrease/(Increase) $ ( 6 ) $ ( 7 ) Note 4. Research, Development and Engineering Garrett conducts research, development, and engineering (“RD&E”) activities, which consist primarily of the development of new products and product applications. RD&E costs are included in Cost of goods sold. Customer reimbursements are netted against gross RD&E expenditures as they are considered a recovery of cost. RD&E costs are charged to expense as incurred unless the Company has a contractual guarantee of reimbursement from the customer, in which case the related costs are capitalized. Total RD&E expenses, net of customer reimbursements, amounted to the following: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (Dollars in millions) Research, development and engineering costs $ 44 $ 45 $ 81 $ 85 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. 8 Note 5. Income Taxes Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (Dollars in millions) Tax expense $ 25 $ 15 $ 48 $ 38 Effective tax rate 19.8 % 14.7 % 19.7 % 20.3 % 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. Note 6. Accounts, Notes and Other Receivables—Net June 30, 2026 December 31, 2025 (Dollars in millions) Trade receivables $ 698 $ 533 Notes receivable 71 113 Other receivables 75 66 844 712 Less—Allowance for expected credit losses ( 8 ) ( 9 ) $ 836 $ 703 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. See Note 3 , Revenue Recognition and Contracts with Customers . Notes receivable is related to guaranteed bank notes without recourse that the Company receives in settlement of accounts receivables, primarily in the Asia Pacific region. See Note 7, Factoring and Notes Receivable . Other receivables includes VAT receivables of $ 45 million and $ 47 million as of June 30, 2026 and December 31, 2025, respectively. Note 7. Factoring and Notes Receivable The Company enters into arrangements with financial institutions to sell eligible trade receivables. The receivables are sold without recourse and the Company accounts for these arrangements as true sales. The Company also receives guaranteed bank notes without recourse, in settlement of accounts receivables, primarily in the Asia Pacific region. The Company can hold the bank notes until maturity, exchange them with suppliers to settle liabilities, or sell them to third-party financial institutions in exchange for cash. Bank notes sold to third-party financial institutions without recourse are likewise accounted for as true sales. 9 Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (Dollars in millions) Eligible receivables sold without recourse $ 205 $ 190 $ 391 $ 342 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 June 30, 2026 and 2025, respectively, and $ 2 million and $ 2 million for the six months ended June 30, 2026 and 2025, respectively . June 30, 2026 December 31, 2025 (Dollars in millions) Receivables sold but not yet collected by the bank from the customer $ 16 $ — Guaranteed bank notes sold but not yet collected by the bank from the customer 31 — As of June 30, 2026 and December 31, 2025, the Company had no guaranteed bank notes pledged as collateral . Note 8. Inventories—Net June 30, 2026 December 31, 2025 (Dollars in millions) Raw materials $ 274 $ 268 Work in process 19 20 Finished products 100 93 393 381 Less—Reserves ( 43 ) ( 42 ) $ 350 $ 339 Note 9. Other Current Assets June 30, 2026 December 31, 2025 (Dollars in millions) Prepaid expenses $ 27 $ 18 Taxes receivable 26 31 Advanced discounts to customers, current 13 13 Customer reimbursable engineering 13 18 Foreign exchange forward contracts 45 16 Other — 2 $ 124 $ 98 10 Note 10. Other Assets June 30, 2026 December 31, 2025 (Dollars in millions) Advanced discounts to customers, non-current $ 27 $ 31 Operating right-of-use assets (Note 14) 49 49 Income tax receivable 21 21 Pension and other employee related 28 28 Customer reimbursable engineering costs 32 34 Designated and undesignated derivatives (Note 17) 3 — Other 7 9 $ 167 $ 172 Note 11. Supplier Financing The Company has supplier financing arrangements with two third-party financial institutions under which certain suppliers may factor their receivables from Garrett. The Company also enters into arrangements with banking institutions to issue bankers acceptance drafts in settlement of accounts payables, primarily in the Asia Pacific region. The bankers acceptance drafts, or guaranteed bank notes, have a contractual maturity of six months or less, and may be held by suppliers until maturity, transferred to their suppliers, or discounted with financial institutions in exchange for cash. The supplier financing obligations and guaranteed bank notes outstanding are recorded within Accounts payable in our Consolidated Interim Balance Sheet. June 30, 2026 December 31, 2025 (Dollars in millions) Supplier financing obligations outstanding with financial institutions $ 77 $ 69 Guaranteed bank notes outstanding 188 158 Note 12. Accrued Liabilities June 30, 2026 December 31, 2025 (Dollars in millions) Customer pricing reserve $ 96 $ 88 Compensation, benefit and other employee related 75 81 Repositioning 7 6 Product warranties and performance guarantees - short-term (Note 20) 13 13 Income and other taxes 27 32 Customer advances and deferred income (1) 25 17 Accrued interest 9 12 Short-term lease liability (Note 14) 13 13 Accrued freight 11 9 Designated and undesignated derivatives (Note 17) 17 11 Derivatives designated as net investment hedges (Note 17) 14 — Environmental reserve 1 3 Other (primarily operating expenses) 17 10 $ 325 $ 295 (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 . 11 The Company accrues repositioning costs related to projects to optimize its product costs and right-size our organizational structure. Expenses related to the repositioning accruals are included in Cost of goods sold and Selling, general and administrative expenses in our Consolidated Interim Statements of Operations. The following tables summarize the activity in our repositioning accrual: Severance Costs Other Costs Total (Dollars in millions) Balance at December 31, 2025 $ 6 $ — $ 6 Charges 13 — 13 Usage—cash ( 12 ) — ( 12 ) Balance at June 30, 2026 $ 7 $ — $ 7 Severance Costs Other Costs Total (Dollars in millions) Balance at December 31, 2024 $ 12 $ — $ 12 Charges 5 — 5 Usage—cash ( 6 ) — ( 6 ) Balance at June 30, 2025 $ 11 $ — $ 11 Note 13. Other Liabilities June 30, 2026 December 31, 2025 (Dollars in millions) Income taxes $ 93 $ 90 Derivatives designated as net investment hedges (Note 17) 75 124 Designated and undesignated derivatives (Note 17) 36 61 Pension and other employee related 8 9 Long-term lease liability (Note 14) 37 38 Product warranties and performance guarantees – long-term (Note 20) 8 8 Environmental remediation – long term 8 11 Long-term accounts payable 4 4 Asset retirement obligation 8 8 Other (1) 9 10 286 363 (1) Certain prior period amounts have been reclassified to conform to current period presentation. This reclassification had no effect on previously reported total Other liabilities. Note 14. Leases We have operating leases that primarily consist of real estate, machinery, and equipment. 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. 12 The components of lease expense are as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (Dollars in millions) Operating lease cost $ 4 $ 5 $ 9 $ 9 Short-term lease cost 1 1 2 1 Total lease cost $ 5 $ 6 $ 11 $ 10 Supplemental cash flow information related to operating leases is as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (Dollars in millions) Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflows from operating leases $ 4 $ 4 $ 8 $ 8 Right-of-use assets obtained in exchange for lease obligations: Operating leases 2 2 7 4 Supplemental balance sheet information related to operating leases is as follows: June 30, 2026 December 31, 2025 (Dollars in millions) Other assets $ 49 $ 49 Accrued liabilities 13 13 Other liabilities 37 38 June 30, 2026 December 31, 2025 Weighted-average remaining lease term (in years) 6.19 6.43 Weighted-average discount rate 5.95 % 6.25 % Maturities of operating lease liabilities as of June 30, 2026 were as follows: (Dollars in millions) 2026 $ 9 2027 14 2028 10 2029 6 2030 4 Thereafter 16 Total lease payments 59 Less imputed interest ( 9 ) $ 50 13 Note 15. Long-Term Debt and Credit Agreements Senior Notes On May 21, 2024, Garrett Motion Holdings Inc. 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 2032 Senior Notes mature on May 31, 2032. The Company incurred $ 12 million of debt issuance costs, which have been capitalized and are being amortized on a straight-line basis. The 2032 Senior Notes are guaranteed by the Company and each of the Company's wholly owned subsidiaries that guarantee obligations under the Credit Agreement (as defined below), subject to certain exceptions. The proceeds from the sale of the 2032 Senior Notes, together with cash on hand, were used to repay approximately $ 800 million of term loan indebtedness and to pay related fees and expenses. The 2032 Senior Notes bear interest at a rate of 7.75 % per annum. Interest on the 2032 Senior Notes is payable semi-annually in arrears on May 31 and November 30 of each year, commencing on November 30, 2024. The 2032 Senior Notes indenture contains certain covenants that limit the ability of the Company and its restricted subsidiaries to incur certain additional debt, incur certain liens securing debt, pay certain dividends or make other restricted payments, make certain investments, make certain asset sales, and enter into certain transactions with affiliates. These covenants are subject to a number of exceptions, limitations, and qualifications as set forth in the 2032 Senior Notes indenture. Additionally, the indenture contains certain change of control provisions that, under certain conditions, would require the Company to make an offer to repurchase all of the outstanding 2032 Senior Notes at a price equal to 101 % of the aggregate principal amount, plus accrued and unpaid interest. The indenture also contains customary events of default. 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 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 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). 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 2025 Dollar Term Facility, the "Credit Facilities"). 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. 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 14 (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: (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, 2025 2025 Dollar Term Facility 1/30/2032 SOFR plus 175 bps $ 583 $ 637 2032 Senior Notes 5/31/2032 7.75 % 800 800 Other 3 2 Total principal outstanding 1,386 1,439 Less: unamortized deferred financing costs ( 19 ) ( 21 ) Less: current portion of long-term debt ( 7 ) ( 7 ) 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 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 June 30, 2026 are as follow: June 30, 2026 (Dollars in millions) 2026 $ 3 2027 7 2028 10 2029 7 2030 7 Thereafter 1,352 Total debt payments $ 1,386 Note 16. Equity Common Stock 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 2026 2025 Per Share Total Per Share Total First quarter $ 0.08 $ 16 $ 0.06 $ 12 Second quarter 0.08 15 0.06 13 15 Treasury Stock Treasury stock represents shares of the Company's Common Stock that have been issued and subsequently repurchased by the Company or withheld to satisfy withholding tax obligations in connection with the vesting of equity awards, and that have not been retired or cancelled. The Company accounts for treasury stock under the cost method and includes treasury stock as a component of Equity (Deficit) on the Consolidated Interim Balance Sheet. 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 and six months ended June 30, 2026. 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. The Company may repurchase shares from time to time under the program through various methods, including in open market transactions, block trades, privately negotiated transactions, and otherwise. The timing, as well as the number and value of shares repurchased under the program, will depend on a variety of factors. The Company is not obligated to purchase any shares under the repurchase program, and the program may be suspended, modified, or discontinued at any time without prior notice. 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. The repurchased shares are held as treasury stock. Note 17. Financial Instruments and Fair Value Measures 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 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. Fair Value of Financial Instruments The FASB’s accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). 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 June 30, 2026 and December 31, 2025: Fair Value Notional Amounts Assets Liabilities June 30, 2026 December 31, 2025 June 30, 2026 December 31, 2025 June 30, 2026 December 31, 2025 Designated instruments: 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 1,134 737 19 2 (c) 4 3 (e) Total undesignated instruments 1,134 737 19 2 4 3 Total designated and undesignated instruments $ 4,557 $ 3,774 $ 48 $ 17 $ 142 $ 196 (a) Recorded within Other current assets and Other assets 16 (b) Recorded within Other assets (c) Recorded within Other current assets (d) Recorded within Accrued liabilities and Other liabilities (e) Recorded within Accrued liabilities (f) Recorded within Other liabilities Cash Flow Hedges 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 $ 1,088 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. The gains and losses on the forward currency exchange contracts are recorded in AOCI and reclassified to Cost of goods sold in the Consolidated Interim Statement of Operations when the underlying transactions are recognized in earnings. In order to mitigate foreign currency risk on its 2032 Senior Notes, the Company entered into fixed-to-fixed cross-currency swap contracts with an aggregate notional amount of € 507 million ($ 550 million) and notional exchanges occurring in May 2027, May 2028, May 2029, and May 2030. Changes in the fair value of the cross-currency swap contracts are recognized in AOCI and reclassified to Non-operating (income) expense in the Consolidated Interim Statement of Operations, based upon changes in the spot rate remeasurement of the underlying debt. The net interest settlements on the cross-currency swap contracts are recorded in Interest expense in the Consolidated Interim Statements of Operations. All of the Company's cash flow hedges are assessed as highly effective. Net Investment Hedges The Company has designated cross-currency swaps with aggregate notional amounts of € 1,157 million ($ 1,225 million) as net investment hedges of its Euro-denominated operations. 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 $ 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 $ 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. The Company had float-to-fixed interest rate swap contracts that were early settled in 2025. Changes in the fair value of the undesignated interest rate swap contracts were recorded in Interest expense in the Consolidated Interim Statements of Operations. Effect of Derivatives on the Statements of Operations and Statements of Comprehensive Income (Loss) 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: 17 Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (Dollars in millions) Cash flow hedges (Gain) loss reclassified from AOCI to income: Cost of goods sold $ ( 5 ) $ — $ ( 8 ) $ — Interest expense ( 1 ) ( 4 ) ( 1 ) ( 4 ) 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) 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 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 six months ended June 30, 2025. There were no undesignated interest rate swaps outstanding during 2026. Fair Value Measurement The foreign currency exchange, interest rate swap and cross-currency swap contracts are valued using market observable inputs. As such, these derivative instruments are classified within Level 2. The assumptions used in measuring the fair value of the cross-currency swap are considered Level 2 inputs, which are based upon market-observable interest rate curves, cross-currency basis curves, credit default swap curves, and foreign exchange rates. The carrying value of Cash, cash equivalents, and restricted cash, Account receivables and Notes and Other receivables contained in the Consolidated Interim Balance Sheet approximates fair value. The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value: June 30, 2026 December 31, 2025 Carrying Value Fair Value Carrying Value Fair Value (Dollars in millions) Term Loan Facilities $ 573 $ 582 $ 626 $ 639 2032 Senior Notes 791 839 790 850 The Company determined the fair value of its Term Loan Facilities and related current maturities utilizing transactions in the listed markets for similar liabilities. As such, the fair value of the Term Loan Facilities and related current maturities is considered Level 2. The fair value of the 2032 Senior Notes was determined using quoted prices from exchange traded markets and is classified as a Level 1 measurement. 18 Note 18. Accumulated Other Comprehensive Income The changes in AOCI by component are set forth below: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (Dollars in millions) Foreign Exchange Translation Adjustment Balance at beginning of period $ ( 115 ) $ ( 56 ) $ ( 110 ) $ ( 27 ) 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 — — — — Balance at end of period ( 72 ) ( 115 ) ( 72 ) ( 115 ) Pension Adjustments 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 reclassifications — — — — Balance at end of period ( 16 ) ( 15 ) ( 16 ) ( 15 ) Changes in Fair Value of Effective Cash Flow Hedges Balance at beginning of period 8 ( 8 ) ( 6 ) ( 10 ) 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 ) Income taxes associated with reclassifications from AOCI ( 1 ) 5 ( 3 ) 7 Balance at end of period 7 9 7 9 Changes in Fair Value of Net Investment Hedges Balance at beginning of period 25 90 ( 6 ) 125 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 $ ( 54 ) $ ( 159 ) $ ( 54 ) $ ( 159 ) 19 Reclassifications from AOCI to income were as follows: Three Months Ended June 30, Six Months Ended June 30, 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 $ 5 $ — $ 8 $ — Reclassification cross-currency swaps to Interest expense 1 4 1 4 Reclassification cross-currency swaps to Non-operating (income) expense 5 ( 45 ) 17 ( 64 ) Tax effect on reclassification to income ( 1 ) 5 ( 3 ) 7 Amounts reclassified from AOCI, net 10 ( 36 ) 23 ( 53 ) Total reclassifications for the period $ 10 $ ( 36 ) $ 23 $ ( 53 ) Note 19. Earnings Per Share Basic earnings per share ("EPS") is computed using the two-class method. The deferred stock units ("DSUs") related to our stock-based compensation plan contain non-forfeitable rights to dividends and are considered as participating securities. The two-class method requires an allocation of earnings to all securities that participate in dividends with common shares to the extent that each such security may share in the Company's earnings. 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 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 June 30, 2026 2025 2026 2025 (Dollars in millions except per share) Basic earnings per share: Net income $ 101 $ 87 $ 196 $ 149 Weighted average common shares outstanding – Basic 187,252,451 202,672,945 188,244,787 203,886,530 EPS – Basic $ 0.54 $ 0.43 $ 1.04 $ 0.73 Diluted earnings per share: Weighted average common shares outstanding – Basic 187,252,451 202,672,945 188,244,787 203,886,530 Dilutive effect of unvested RSUs and other contingently issuable shares 3,342,326 2,582,088 3,725,535 2,547,445 Weighted average common shares outstanding – Diluted 190,594,777 205,255,033 191,970,322 206,433,975 EPS – Diluted $ 0.53 $ 0.42 $ 1.02 $ 0.72 20 Note 20. Commitments and Contingencies We are involved in various lawsuits, claims, and proceedings incident to the operation of our businesses, including those pertaining to product liability, product safety, environmental, health and safety, intellectual property, employment, commercial and contractual matters and various other matters. We regularly assess the likelihood of adverse judgments or outcomes in these matters, as well as potential ranges of possible losses based on a careful analysis of each matter. 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. 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. Brazilian Tax Matter 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 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. Accordingly, no accrual is required at this time. Warranties and Guarantees In the normal course of business, we issue product warranties and product performance guarantees. We accrue for the estimated cost of product warranties and performance guarantees based on contract terms and historical experience at the time of sale to the customer. Adjustments to initial obligations for warranties and guarantees are made as changes to the obligations become reasonably estimable. Product warranties and product performance guarantees are included in Accrued liabilities and Other liabilities. The following table summarizes information concerning our recorded obligations for product warranties and product performance guarantees. Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (Dollars in millions) Warranty and product performance guarantees at beginning of period $ 21 $ 22 $ 21 $ 23 Accruals for warranties/guarantees issued during the period 4 4 7 6 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 We are subject to other lawsuits, investigations, and disputes arising out of the conduct of our business, including matters relating to commercial transactions, government contracts, product liability, prior acquisitions and divestitures, employment and employee benefit plans, intellectual property, and environmental, health and safety matters. We recognize a liability for any contingency that is probable of occurring and reasonably estimable. We regularly assess the likelihood of adverse judgments or outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. Note 21. Pension Benefits We sponsor several funded U.S. and non-U.S. defined benefit pension plans. Significant plans outside the U.S. are in Switzerland and Ireland. Other pension plans outside the U.S. are not material to the Company, either individually or in the aggregate. 21 Our general funding policy for qualified defined benefit pension plans is to contribute amounts at least sufficient to satisfy regulatory funding standards. We are not required to make any contributions to our U.S. pension plan in 2026. 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, 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 June 30, Six Months Ended June 30, U.S. Plans Non-U.S. Plan U.S. Plans Non-U.S. Plan 2026 2025 2026 2025 2026 2025 2026 2025 (Dollars in millions) Service cost $ — $ — $ 2 $ 2 $ — $ — $ 4 $ 4 Interest cost 2 2 1 1 4 4 2 2 Expected return on plan assets ( 3 ) ( 2 ) ( 2 ) ( 2 ) ( 5 ) ( 4 ) ( 4 ) ( 4 ) Amortization of prior service (credit) — — ( 1 ) — — — ( 1 ) ( 1 ) Total $ ( 1 ) $ — $ — $ 1 $ ( 1 ) $ — $ 1 $ 1 For both our U.S. and non-U.S. defined benefit pension plans, we estimate the service and interest cost components of net periodic benefit (income) cost by utilizing a full yield curve approach in the estimation of these cost components by applying the specific spot rates along the yield curve used in the determination of the pension benefit obligation to their underlying projected cash flows. This approach provides a more precise measurement of service and interest costs by improving the correlation between projected cash flows and their corresponding spot rates. Note 22. Segments and Concentrations The Company has identified our CODM as the Chief Executive Officer. The CODM reviews consolidated net income when assessing the Company's performance, allocating resources, and establishing management's compensation. In addition to consolidated net income, the CODM receives discrete information for net sales by product and by geographical location. Consolidated net income is used to monitor budget versus actual results. The accounting policies of our operating segment are the same as those described in the Company's summary of significant accounting policies. The Company derives revenues from customers through sales of turbocharging, air and fluid compression, and high-speed electric motor technologies for OEMs and independent aftermarket distributors in the mobility and industrial fields. Sales concentration - Net sales by region (determined based on country of shipment) and product line are as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (Dollars in millions) United States $ 174 $ 178 $ 353 $ 354 Europe Germany 116 86 209 175 United Kingdom 88 92 183 177 Rest of Europe 305 283 620 534 Asia China 159 151 326 304 Rest of Asia 102 99 212 203 Other International 32 24 58 44 $ 976 $ 913 $ 1,961 $ 1,791 22 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 June 30, Six Months Ended June 30, 2026 2025 2026 2025 (Dollars in millions) Net sales $ 976 $ 913 $ 1,961 $ 1,791 Less: Material costs 552 513 1,115 1,014 Variable manufacturing costs (1) 108 123 225 221 Fixed manufacturing costs (2) 60 51 133 110 RD&E costs 44 45 81 85 Selling, general and administrative costs 63 59 121 118 Interest expense 24 25 51 54 Income tax expense 25 15 48 38 Other segment items (3) ( 1 ) ( 5 ) ( 9 ) 2 Consolidated net income $ 101 $ 87 $ 196 $ 149 (1) Variable manufacturing costs include freight, duties and tariffs, direct and indirect labor costs, repairs and maintenance, and variable overhead costs. (2) Fixed manufacturing costs include depreciation and amortization, rent, overhead labor costs, repositioning costs, utilities, and other fixed costs. (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 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. Note 23. Subsequent Events 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. 23