Second Quarter 2026 Financial Highlights
-- Net sales totaled $976 million, up 5% on a constant currency* basis vs
prior year, driven by share of demand gains in passenger vehicles and
strong performance in commercial vehicle and industrial
-- Net income totaled $101 million; net income margin of 10.3%
-- Adjusted EBIT* totaled $152 million; adjusted EBIT margin* of 15.6%
-- Net cash provided by operating activities totaled $145 million
-- Adjusted free cash flow* totaled $122 million
-- Increased 2026 full-year outlook
Second Quarter 2026 Business Highlights
-- Secured multiple turbo wins, including a large light vehicle program in
North America and several on- and off-highway commercial vehicle
applications in China and India
-- Won a major award for Garrett MEG used in gensets for data centers, along
with several additional genset awards in different regions
-- Kicked off pre-development of a commercial vehicle e- powertrain with a
Japanese truck maker
-- Secured a production award for industrial air compression, using
Garrett's centrifugal compressor technology
PLYMOUTH, Mich. and ROLLE, Switzerland, July 29, 2026 (GLOBE NEWSWIRE) -- Garrett Motion Inc. (Nasdaq: GTX) ("Garrett" or the "Company"), a leading automotive and industrial technology provider, today announced its financial results for the three months ended June 30, 2026. Additionally, the Company's 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.
"Garrett delivered a strong second quarter, highlighting the power of our differentiated technology portfolio and continued share-of-demand gains," said Olivier Rabiller, President and CEO of Garrett. "Net sales were $976 million, up 5% at constant currency, and adjusted EBIT margin expanded 200 basis points to 15.6%, driven by disciplined execution across the business.
"We also secured multiple turbo wins in industrial for power generation, as well as in passenger and commercial vehicle, while advancing our e-compressor and e-powertrain offerings. Combined with strong profitability and cash generation, these results reinforce our confidence in Garrett's long-term growth trajectory."
$ millions (unless otherwise
noted) Q2 2026 Q2 2025 YTD 2026 YTD 2025
------------------------------- ------- ------- -------- --------
Net sales 976 913 1,961 1,791
-------------------------------- ------- ------- -------- --------
Cost of goods sold 764 732 1,553 1,431
-------------------------------- ------- ------- -------- --------
Gross profit 212 181 408 360
-------------------------------- ------- ------- -------- --------
Gross profit % 21.7% 19.8% 20.8% 20.1%
-------------------------------- ------- ------- -------- --------
Selling, general and
administrative expenses 63 59 121 118
-------------------------------- ------- ------- -------- --------
Income before taxes 126 102 244 187
-------------------------------- ------- ------- -------- --------
Net income 101 87 196 149
-------------------------------- ------- ------- -------- --------
Net income margin 10.3% 9.5% 10.0% 8.3%
-------------------------------- ------- ------- -------- --------
Adjusted EBIT* 152 124 303 255
-------------------------------- ------- ------- -------- --------
Adjusted EBIT margin* 15.6% 13.6% 15.5% 14.2%
-------------------------------- ------- ------- -------- --------
Adjusted EBITDA* 183 154 366 313
-------------------------------- ------- ------- -------- --------
Adjusted EBITDA margin* 18.8% 16.9% 18.7% 17.5%
-------------------------------- ------- ------- -------- --------
Net cash provided by operating
activities 145 158 243 214
-------------------------------- ------- ------- -------- --------
Adjusted free cash flow* 122 121 171 157
-------------------------------- ------- ------- -------- --------
* See reconciliations to the nearest GAAP measures below.
Results of Operations
Net sales for the second quarter of 2026 were $976 million, representing an increase of 7% (including a favorable impact of $15 million or 2% due to foreign currency translation) compared with $913 million in the second quarter of 2025. This increase was driven by higher 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 industrial growth was driven by strong on-highway demand in China following program launches and North America Genset for data centers. Aftermarket volumes increased in Europe, China and Australia resulting in a favorable product mix.
Cost of goods sold for the second quarter of 2026 increased to $764 million from $732 million in the second quarter of 2025, primarily driven by $35 million from higher sales volumes, $18 million of unfavorable product mix, $15 million from foreign currency impacts and $8 million from 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.
Gross profit totaled $212 million for the second quarter of 2026 as compared to $181 million in the second quarter of 2025, with a gross profit percentage for the second quarter of 2026 of 21.7% as compared to 19.8% in the second quarter of 2025. This increase in gross profit was 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.
Selling, general and administrative ("SG&A") expenses for the second quarter of 2026 increased to $63 million from $59 million in the second quarter of 2025. This increase was 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.
Other expense in the second quarter of 2026 was consistent with the the second quarter of 2025.
Interest expense in the second quarter of 2026 was $24 million as compared to $25 million in the second quarter of 2025. 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 offsetting 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.
Non-operating income for the second quarter of 2026 was $2 million as compared to $6 million in the second quarter of 2025, with the decrease driven by a decrease in foreign exchange transactional gains.
Tax expense for the second quarter of 2026 was $25 million as compared to $15 million in the second quarter of 2025, primarily because of 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.
Net income for the second quarter of 2026 was $101 million as compared to $87 million in the second quarter of 2025 primarily driven by $31 million of increased 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 cash provided by operating activities totaled $145 million in the second quarter of 2026 as compared to $158 million in the second quarter of 2025, representing a decrease of $13 million. The decrease was primarily driven by $84 million of unfavorable impacts from working capital changes, partially offset by $60 million of favorable impacts from changes in other assets and liabilities and $11 million of higher net income net of non-cash charges.
Non-GAAP Financial Measures
Adjusted EBIT increased to $152 million in the second quarter of 2026 as compared to $124 million in the second quarter of 2025. The increase of $28 million was driven by $16 million from higher sales 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 impact. This increase was partially offset by $8 million of commodity, transportation and energy inflation and $5 million unfavorable foreign currency impact.
Adjusted free cash flow was $122 million in the second quarter of 2026 as compared to $121 million in the second quarter of 2025. The increase was driven by $30 million from other assets and liabilities, $28 million from higher Adjusted EBIT, $4 million from lower cash taxes and $1 million from higher depreciation, and were partially offset by $60 million of unfavorable impact from working capital (net of factoring) and $2 million of higher capital expenditures.
Liquidity and Capital Resources
As of June 30, 2026, Garrett had $788 million in available liquidity, including $158 million in unrestricted cash and cash equivalents and $630 million of undrawn commitments under its revolving credit facility. As of December 31, 2025, Garrett had $807 million in available liquidity, including $177 million in unrestricted cash and cash equivalents and $630 million of undrawn commitments under its revolving credit facility.
As of June 30, 2026, total principal amount of debt outstanding was $1,386 million, compared to $1,439 million as of December 31, 2025.
During the second quarter of 2026, we repurchased $28 million of our common stock under our authorized share repurchase program and we had remaining repurchase capacity of $135 million as of June 30, 2026.
Full Year 2026 Outlook
Garrett is providing the following outlook for the full year 2026 for certain GAAP and Non-GAAP financial measures.
Full Year 2026 Outlook Prior Outlook
$3.7 billion to $3.9 $3.6 billion to $3.9
Net sales (GAAP) billion billion
------------------------- ------------------------ -------------------------
Net sales growth at
constant currency
(Non-GAAP)* +1% to +7% -2% to +6%
------------------------- ------------------------ -------------------------
Net income (GAAP) $330 million to $360 $300 million to $360
million million
------------------------- ------------------------ -------------------------
Adjusted EBIT $560 million to $600 $520 million to $600
(Non-GAAP)* million million
------------------------- ------------------------ -------------------------
Net cash provided by $435 million to $525 $407 million to $522
operating activities million million
(GAAP)
------------------------- ------------------------ -------------------------
Adjusted free cash flow $385 million to $475 $355 million to $475
(Non-GAAP)* million million
------------------------- ------------------------ -------------------------
* See reconciliations to the nearest GAAP measures below.
Garrett's full year 2026 outlook, as of July 29, 2026, includes the following expectations:
-- 2026 light vehicle industry production down 2% to 4% from 2025;
-- 2026 commercial vehicle industry, including both on- and off-highway, up
1% to 2% from 2025;
-- 2026 average light vehicle battery electric vehicle penetration of 19%;
-- 2026 Euro/dollar exchange rate of 1.16 USD (down from 1.17 in prior
outlook)
-- RD&E investment at 4.1% of sales;
-- Capital expenditures at 2.4% of sales
Conference Call
Garrett will hold a conference call at 8:30 am EDT / 2:30 pm CET on Thursday, July 29, 2026, to discuss its results. To participate on the conference call, please dial +1-877-883-0383 (US) or +1-412-902-6506 (international) and use the passcode 7065303.
The conference call will also be broadcast over the internet and include a slide presentation. To access the webcast and supporting material, please visit the investor relations section of the Garrett Motion website at http://investors.garrettmotion.com. A replay of the conference call will be available by dialing +1-855-669-9658 (US) or +1-412-317-0088 (international) using the access code 2467399. The webcast will also be archived on Garrett's website.
Forward-Looking Statements
This communication and related comments by management may include "forward-looking statements" within the meaning of the U.S. federal securities laws. Forward-looking statements are any statements other than statements of historical fact and can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will," and similar expressions. Forward-looking statements represent our current judgment about possible future activities, events, or developments that we intend, expect, project, believe, or anticipate will or may occur in the future. In making these statement, we rely upon assumptions and analysis based on our experience and perception of historical trends, current conditions, and expected future developments, as well as other factors we consider appropriate under the circumstances. We believe these judgments are reasonable, but these statements are not guarantees of any future performance, events, or results, and actual performance, events, or results may differ materially from those envisaged by our forward-looking statements due to a variety of important factors, many of which are described in our most recent Annual Report on Form 10-K and our other filings with the U.S. Securities and Exchange Commission, including risks related to the automotive industry, the competitive landscape and our ability to compete, and macroeconomic and geopolitical conditions, among others. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date they are made, and we undertake no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events, or other factors that affect the subject of these statement, except where we are expressly required to do so by law.
Non-GAAP Financial Measures
This communication includes the following non-GAAP financial measures, which are not calculated in accordance with generally accepted accounting principles in the United States ("GAAP"): Constant currency sales growth, Adjusted EBIT, Adjusted EBITDA, Adjusted EBIT margin, Adjusted EBITDA margin and Adjusted free cash flow. We believe these measures are useful to investors and management in understanding our ongoing operations and analysis of ongoing operating trends and are important indicators of operating performance because they exclude the effects of certain non-operating items, therefore making them more closely reflect our operational performance. Our calculation of these non-GAAP measures, including a reconciliation of such measures to the most closely related GAAP measure, are set forth in the Appendix to this presentation. These non-GAAP measures may not be comparable to similarly titled measures of other companies due to potential differences between companies in the method of calculation. As a result, the use of these non-GAAP measures has limitations and should not be considered superior to, in isolation from, or as a substitute for, related GAAP measures. For additional information regarding our non-GAAP financial measures, see our most recent Annual Report on Form 10-K and our other filings with the U.S. Securities and Exchange Commission.
About Garrett Motion Inc.
A differentiated technology leader, Garrett Motion has a 70-year history of innovation in the automotive sector (cars, trucks) and beyond (off-highway equipment, marine, power generators). Its well-recognized expertise in turbocharging has enabled significant reductions in engine size, fuel consumption, and CO2 emissions. Garrett is committed to advancing turbo applications while leveraging its unique technology solutions, such as fuel cell compressors for hydrogen fuel cell vehicles, as well as electric propulsion and thermal management systems for automotive and industrial applications. Garrett has six R&D centers, 13 manufacturing facilities and a team of more than 8,700 employees in more than 20 countries. For more information, please visit www.garrettmotion.com.
Contacts:
INVESTOR RELATIONS
Cyril Grandjean
+1.734.392.5504
investorrelations@garrettmotion.com
CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS
For the Three Months Ended For the Six Months Ended
June 30, June 30,
---------------------------- ------------------------------
2026 2025 2026 2025
------------- ------------- ------------- ---------------
(Dollars in millions, except per share amounts)
Net sales $ 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 25 15 48 38
----------- ----------- ----------- -----------
Net income $ 101 $ 87 $ 196 $ 149
=========== =========== =========== ===========
Earnings per
common share
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
CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended Six Months Ended
June 30, 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 (1) 17 13 19
Changes in
fair value of
net
investment
hedges, net
of tax 2 (128) 33 (163)
----- ------ ----- ------
Total other
comprehensive
income
(loss), net
of tax 44 (170) 84 (232)
----- ------ ----- ------
Comprehensive
income
(loss) $ 145 $ (83) $ 280 $ (83)
===== ====== ===== ======
CONSOLIDATED INTERIM BALANCE SHEETS
June 30, December 31,
2026 2025
---------------- ----------------
(Dollars in millions)
ASSETS
Current assets:
Cash and cash equivalents $ 158 $ 177
Restricted cash 2 2
Accounts, notes and other receivables
-- net 836 703
Inventories -- net 350 339
Other current assets 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 167 172
-------- ---------
Total assets $ 2,473 $ 2,367
======== =========
LIABILITIES
Current liabilities:
Accounts payable $ 1,135 $ 1,061
Current maturities of long-term debt 7 7
Accrued liabilities 325 295
-------- ---------
Total current liabilities 1,467 1,363
Long-term debt 1,360 1,411
Deferred income taxes 35 32
Other liabilities 286 363
-------- ---------
Total liabilities $ 3,148 $ 3,169
-------- ---------
COMMITMENTS AND CONTINGENCIES
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)
income (54) (138)
Treasury Stock, at cost; 58,666,936 and
51,993,388 shares as of June 30, 2026
and December 31, 2025, respectively (655) (520)
-------- ---------
Total deficit (675) (802)
-------- ---------
Total liabilities and deficit $ 2,473 $ 2,367
======== =========
CONSOLIDATED INTERIM STATEMENTS OF CASH
FLOWS 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 deferred 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
Reconciliation of Net Income to Adjusted EBIT(1) and Adjusted EBITDA(1)
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ----------------------
2026 2025 2026 2025
------------ --------- ---------- ----------
(Dollars in millions)
Net income $ 101 $ 87 $ 196 $ 149
Interest
expense, net
of interest
income(2) 25 23 51 52
Tax expense 25 15 48 38
---- ---- ----- -----
EBIT 151 125 295 239
Repositioning
costs 1 (2) 13 5
Foreign
exchange gain
on debt, net
of related
hedging loss -- (1) -- --
Factoring and
notes
receivables
discount
fees 1 1 2 2
Other
non-operating
income(3) (2) (2) (8) (3)
Debt
refinancing
and
redemption
costs(4) 1 -- 1 6
Acquisition
and
divestiture
expenses -- 3 -- 6
---- ---- ----- -----
Adjusted EBIT 152 124 303 255
Depreciation 24 23 49 45
Stock
compensation
expense(5) 7 7 14 13
---- ---- ----- -----
Adjusted EBITDA $ 183 $ 154 $ 366 $ 313
==== ==== ===== =====
Net sales $ 976 $ 913 $1,961 $1,791
Net income margin 10.3% 9.5% 10.0% 8.3%
Adjusted EBIT
margin(6) 15.6% 13.6% 15.5% 14.2%
Adjusted EBITDA
margin(7) 18.8% 16.9% 18.7% 17.5%
(1) We evaluate performance on the basis of Adjusted EBIT
and Adjusted EBITDA. We define "EBIT" as our net income
calculated in accordance with U.S. GAAP, plus the
sum of (i) interest expense net of interest income
and (ii) tax expense. We define Adjusted EBIT as EBIT,
plus the sum of (i) repositioning costs, (ii) foreign
exchange (gain) loss on debt net of related hedging
gain/loss, (iii) discounting costs on factoring, (iv)
gain on sale of equity investment, (v) acquisition
and divestiture expenses, (vi) other non-operating
income, and (vii) debt refinancing and redemption
costs, if any. We define Adjusted EBITDA as EBIT,
plus the sum of (i) repositioning costs, (ii) foreign
exchange (gain) loss on debt net of related hedging
gain/loss, (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, plus (viii) depreciation and (ix) stock
compensation expense. We believe that Adjusted EBIT
and Adjusted EBITDA are important indicators of operating
performance and provide useful information for investors
because:
-- Adjusted EBIT and Adjusted EBITDA exclude the effects
of income taxes, as well as the effects of financing
activities by eliminating the effects of interest;
-- certain adjustment items, while periodically
affecting our results, may vary significantly from
period to period and have disproportionate effect in
a given period, which affects the comparability of
our results; and
-- Adjusted EBITDA also excludes the effects of
investing activities by eliminating the effects of
depreciation.
In addition, our management may use Adjusted EBIT
and Adjusted EBITDA in setting performance incentive
targets to align performance measurement with operational
performance.
(2) 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.
(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.
(5) Stock compensation expense includes only non-cash
expenses.
(6) Adjusted EBIT margin represents Adjusted EBIT as a
percentage of net sales.
(7) Adjusted EBITDA margin represents Adjusted EBITDA
as a percentage of net sales.
Reconciliation of Constant Currency Sales % Change(1)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ----------------------
2026 2025 2026 2025
---------- ------------ ---------- ----------
Garrett
----------------------
Reported sales %
change 7% 3% 9% (1)%
Less: Foreign
currency
translation 2% 3% 4% 0%
---- --- ------ --- ---- --- -----
Constant
currency sales
% change 5% 0% 5% (1)%
==== === ====== === ==== === =====
Gasoline
----------------------
Reported sales %
change 5% 6% 7% 5%
Less: Foreign
currency
translation 2% 2% 4% 0%
---- --- ------ --- ---- --- -----
Constant
currency sales
% change 3% 4% 3% 5%
==== === ====== === ==== === =====
Diesel
----------------------
Reported sales %
change 8% (1)% 10% (8)%
Less: Foreign
currency
translation 2% 4% 6% 0%
---- --- ------ --- ---- --- -----
Constant
currency sales
% change 6% (5)% 4% (8)%
==== === ====== ==== === =====
Commercial vehicle /
Industrial
----------------------
Reported sales %
change 10% 6% 14% 1%
Less: Foreign
currency
translation 0% 2% 2% 0%
---- --- ------ --- ---- --- -----
Constant
currency sales
% change 10% 4% 12% 1%
==== === ====== === ==== === =====
Aftermarket
----------------------
Reported sales %
change 8% (8)% 11% (10)%
Less: Foreign
currency
translation 1% 2% 3% 0%
---- --- ------ --- ---- --- -----
Constant
currency sales
% change 7% (10)% 8% (10)%
==== === ====== ==== === =====
Other Sales
----------------------
Reported sales %
change 6% 31% 6% 19%
Less: Foreign
currency
translation 0% 5% 3% 1%
---- --- ------ --- ---- --- -----
Constant
currency sales
% change 6% 26% 3% 18%
==== === ====== === ==== === =====
(1) We define constant currency sales growth as the year-over-year
change in reported sales relative to the comparable
period, excluding the impact on sales from foreign
currency translation. We believe this measure is useful
to investors and management in understanding our ongoing
operations and in analysis of ongoing operating trends.
Reconciliation of Cash Flow from Operations to Adjusted Free Cash Flow(1)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
2026 2025 2026 2025
-------------- ---------- ------------- -----------
(Dollars in millions)
Net cash
provided by
operating
activities $ 145 $ 158 $ 243 $ 214
Expenditures
for property,
plant and
equipment (17) (15) (46) (41)
------ ----- ----- ----
Net cash
provided by
operating
activities
less
expenditures
for property,
plant and
equipment 128 143 197 173
Acquisition
and
divestiture
expenses -- 4 -- 5
Cash payments
for
repositioning 4 3 12 6
Proceeds from
cross
currency swap
contracts 5 11 8 15
Cash payments
for debt
refinancing
costs 1 -- 1 6
Factoring and
P-notes (16) (40) (47) (48)
------ ----- ----- ----
Adjusted free
cash flow
(1) $ 122 $ 121 $ 171 $ 157
====== ===== ===== ====
(1) Adjusted free cash flow reflects an additional way
of viewing liquidity that management believes is useful
to investors in analyzing the Company's ability to
service and repay its debt. The Company defines adjusted
free cash flow as cash flow provided from operating
activities less capital expenditures and additionally
adjusted for other discretionary items including cash
flow impacts for capital structure transformation
expenses, acquisition and divestiture expenses, debt
refinancing costs, and factoring and guaranteed bank
notes activity.
Full Year 2026 Outlook Reconciliation of Reported Net Sales to Net Sales Growth at Constant Currency
2026 Full Year
-------------------------
Low End High End
------------- ----------
Reported net sales (% change) 3% 9%
Foreign currency translation 2% 2%
----- ----- --- ----
Full year 2026 Outlook Net sales growth at
constant currency 1% 7%
===== ===== === ====
Full Year 2026 Outlook Reconciliation of Net Income to Adjusted EBIT and Adjusted EBITDA
2026 Full Year
--------------------------------
Low End High End
------------------ ------------
(Dollars in millions)
Net income $ 330 $ 360
Interest expense, net of interest income * 99 99
Tax expense 111 121
Other non-operating income (8) (8)
Factoring and notes receivables discount
fees 2 2
Debt refinancing and redemption costs 1 1
Repositioning costs 25 25
---- -------- -----
Full Year 2026 Outlook Adjusted EBIT $ 560 $ 600
==== ======== =====
Depreciation 100 100
Stock compensation expense 28 28
---- -------- -----
Full Year 2026 Outlook Adjusted EBITDA $ 688 $ 728
==== ======== =====
* Excludes the effects of marked-to-market fluctuations from our interest rate swap contracts
Full Year 2026 Outlook Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow
2026 Full Year
--------------------------------
Low End High End
------------------ ------------
(Dollars in millions)
Net cash provided by operating activities $ 435 $ 525
Expenditures for property, plant and
equipment (90) (90)
---- -------- -----
Net cash provided by operating activities
less expenditures for property, plant and
equipment 345 435
Cash payments for repositioning 25 25
Proceeds from cross currency swap
contracts 14 14
Cash payments for debt refinancing costs 1 1
---- -------- -----
Full Year 2026 Outlook Adjusted free cash
flow $ 385 $ 475
==== ======== =====