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What changed in Garrett Motion Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Garrett Motion Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+344 added−377 removedSource: 10-K (2026-02-19) vs 10-K (2025-02-20)

Top changes in Garrett Motion Inc.'s 2025 10-K

344 paragraphs added · 377 removed · 276 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

96 edited+25 added−22 removed25 unchanged
Biggest changeThis continued investment into differentiated technology, coupled with our relentless focus on customer relationships and our global capabilities, allows us to drive the following business strategies: • Strengthen our leadership in the turbocharger industry within the light vehicle, commercial vehicle and industrial space; • Leverage our differentiated technology to solve key challenges for zero-emission vehicles; and • Grow our aftermarket business Strengthen our leadership in the turbocharger industry within the light vehicle, commercial vehicle and industrial space We are focused on strengthening our industry position in the light vehicle, commercial vehicle and industrial turbocharger industries: • Light vehicle gasoline turbochargers, which have historically lagged the adoption of diesel turbochargers, after reaching a peak in 2024, are now expected to decrease at a roughly 2% annual CAGR from 2024 to 2027, according to S&P.
Biggest changeThis continued investment in differentiated technology, coupled with our relentless focus on customer relationships and our global capabilities, allows us to drive the following business strategies: • Strengthen our leadership in the turbocharger industry within the light vehicle, commercial vehicle and industrial space, including product expansion to larger turbocharger frames (Garrett MEG). • Leverage our differentiated technology to solve key challenges for zero-emission vehicles and energy efficiency needs beyond the mobility space. • Grow our aftermarket business.
We have launched the first modern 1.5L VNT gasoline application with a major OEM and expect to see increasing adoption of this technology in the future years.
We have launched the first modern 1.5L VNT gasoline application with a major OEM and expect to see increasing adoption of this technology in future years.
We maintain a culture of continuous product innovation, introducing about ten new technologies per year and upgrading our existing key product lines approximately every three years. At the end of 2023, we announced an expansion of our 9 turbocharger portfolio to serve large bore engines used in industrial applications, including marine, power generation and other machinery.
We maintain a culture of continuous product innovation, introducing about ten new technologies per year and upgrading our existing key product lines approximately every three years. At the end of 2023, we announced an expansion of our turbocharger portfolio to serve large bore engines used in industrial applications, including marine, power generation and other machinery.
Source: S&P, KGP 7 Electrification and hybrids In order to address stricter fuel economy standards, OEMs also have been increasing the electrification of their vehicle offerings, primarily with the addition of hybrid powertrains equipped with a gasoline or diesel internal combustion engine in combination with an electric motor.
Source: S&P, KGP Electrification and hybrids In order to address stricter fuel economy standards, OEMs also have been increasing the electrification of their vehicle offerings, primarily with the addition of hybrid powertrains equipped with a gasoline or diesel internal combustion engine in combination with an electric motor.
The dollar amount of such purchase order releases on hand and not processed at any point in time is not believed to be significant based upon the time frame involved. Regulatory and Environmental Compliance We are subject to the requirements of environmental and health and safety laws and regulations in each country in which we operate.
The dollar amount of such purchase order releases on hand and not processed at any point in time is not believed to be significant based upon the time frame involved. 12 Regulatory and Environmental Compliance We are subject to the requirements of environmental and health and safety laws and regulations in each country in which we operate.
We invest significant time and resources in establishing compensation programs that are both competitive and equitable. We constantly evaluate our positions for market competitiveness and adjust, when necessary, with the goal of ensuring the retention of top talent and continuation of equitable pay practices.
We invest significant time and resources in establishing compensation programs that are both 15 competitive and equitable. We constantly evaluate our positions for market competitiveness and adjust, when necessary, with the goal of ensuring the retention of top talent and continuation of equitable pay practices.
We are also working to broaden our portfolio with our Remanufactured (REMAN) offering in Europe, the Middle East and Africa and North America which so far has increased our portfolio with over 300 additional applications, and at the same time provides the additional benefit of utilizing recovered parts while maintaining our required quality standards (by using original components and original assembly processes in our REMAN workshops).
We are also working to broaden our portfolio with our Remanufactured ("REMAN") offering in Europe, the Middle East and Africa and North America which so far has increased our portfolio by over 400 additional applications, and at the same time provides the additional benefit of utilizing recovered parts while maintaining our required quality standards (by using original components and original assembly processes in our REMAN workshops).
Garrett has developed a full set of actions to maximize retention that are carried out at both a global and local level, with line managers as well as functional leaders held accountable for their employee turnover performance. We intend to continue to work diligently on this area to mitigate against the challenges of a highly competitive global marketplace for talent.
Garrett has developed a full set of actions to maximize retention, carried out at both a global and local level, with line managers as well as functional leaders held accountable for their employee turnover performance. We intend to continue to work diligently on this area to mitigate against the challenges of a highly competitive global marketplace for talent.
We do not currently possess sufficient information to reasonably estimate the amounts of environmental liabilities to be recorded upon future completion of studies, litigation or settlements, and we cannot determine either the timing or the amount of the ultimate costs associated with environmental matters, which could be material to our consolidated results of operations and operating cash flows in the periods recognized or paid.
We do not currently have sufficient information to reasonably estimate the amounts of environmental liabilities to be recorded upon future completion of studies, litigation or settlements, and we cannot determine either the timing or the amount of the ultimate costs associated with environmental matters, which could be material to our consolidated results of operations and operating cash flows in the periods recognized or paid.
Firm orders are generally limited to specific and authorized customer purchase order releases placed with our manufacturing and distribution centers for actual production and order fulfilment. Firm orders are typically fulfilled as promptly as possible from the conversion of available raw materials, sub-components and work-in-process inventory for OEM orders and from current on-hand finished goods inventory for aftermarket orders.
Firm orders are generally limited to specific and authorized customer purchase order releases placed with our manufacturing and distribution centers for actual production and order fulfillment. Firm orders are typically fulfilled as promptly as possible from the conversion of available raw materials, sub-components and work-in-process inventory for OEM orders and from current on-hand finished goods inventory for aftermarket orders.
Twice per year, we hold succession planning meetings up to and including the executive level, during which the bench-strength of teams are scrutinized and development plans for their talent are reviewed. Ahead of both annual and mid-year performance reviews, leaders hold calibration meetings to ensure that assessment ratings are consistent and fair amongst peer groups.
At least twice per year, we hold succession planning meetings up to and including the executive level, during which the bench-strength of teams are scrutinized and development plans for their talent are reviewed. Ahead of both annual and mid-year performance reviews, leaders hold calibration meetings to ensure that assessment ratings are consistent and fair amongst peer groups.
TCIR is measured as the number of recordable injuries multiplied by 200,000 and then divided by the total number of hours worked by employees. Compensation and benefits 15 Garrett’s rewards programs are rooted in our “Be well, work well” principle, and aim to support employees in achieving the right work-life balance.
TCIR is measured as the number of recordable injuries multiplied by 200,000 and then divided by the total number of hours worked by employees. Compensation and benefits Our rewards programs are rooted in our “Be well, work well” principle, and aim to support employees in achieving the right work-life balance.
Certain environmental laws assess liability on current or previous owners or operators of real property for the cost of removal or remediation of hazardous substances. At this time, we are involved in various stages of investigation and clean-up related to environmental remediation matters at certain of our present and former facilities.
Certain environmental laws assess liability on current or previous owners or operators of real property for the cost of removal or remediation of hazardous substances. We are involved in various stages of investigation and clean-up related to environmental remediation matters at certain of our present and former facilities.
Our Sustainability Committee, composed of the CEO and several members of Garrett’s senior leadership team, is sponsored by our Chief Technology Officer and oversees our sustainability strategy development, definition and deployment. Our Board of Directors, including through its committees, provides oversight of our environment, social and governance ("ESG") activities, corporate responsibility and sustainability strategy.
Our Senior Executive Sustainability Committee, composed of the CEO and several members of Garrett’s senior leadership team, is sponsored by our Chief Technology Officer and oversees our sustainability strategy development, definition and deployment. Our Board of Directors, including through its committees, provides oversight of our environment, social and governance activities, corporate responsibility and sustainability strategy.
A key to our strategy for gasoline growth is thus to leverage our technological leadership in high-temperature materials and variable geometry, as well as our scale, global footprint and in-market capabilities to meet the technological demands of global OEMs. • Diesel: We have a long history of technology leadership in diesel engine turbochargers.
A key to our strategy for gasoline growth is thus to leverage our technological leadership in high-temperature materials and variable geometry, as well as our scale and global footprint to meet the demands of global OEMs. • Diesel: We have a long history of technology leadership in diesel engine turbochargers.
With over 60 years in the turbocharger industry, we have developed strong capabilities working with major OEMs around the world. We consistently meet their stringent design, performance and quality standards while achieving capacity and delivery timelines that are critical for customer success.
With over 70 years in the turbocharger industry, we have developed strong capabilities working with major OEMs around the world. We consistently meet their stringent design, performance and quality standards while achieving capacity and delivery timelines that are critical for customer success.
Garrett’s strategy is to build positive, direct, business-focused working relationships with all employees in order to drive business results. The Company respects employees’ rights and their wish to be part of employee representative bodies including unions, work councils and employee forums.
Our strategy is to build positive, direct, business-focused working relationships with all employees in order to drive business results. The Company respects employees’ rights and their wish to be part of employee representative bodies including unions, work councils and employee forums.
In all regions where we operate, we leverage low-cost sourcing through our robust supplier development program, which continually works to develop new suppliers that are able to meet our specific quality, productivity and cost requirements. We now source more than two-thirds of our materials from low-cost countries and believe our high-quality, low-cost supplier network to be a significant competitive advantage.
In all regions where we operate, we leverage low-cost sourcing through our robust supplier development program, which continually works to develop new suppliers that can meet our specific quality, productivity and cost requirements. We now source more than two-thirds of our materials from low-cost countries and believe our high-quality, low-cost supplier network to be a significant competitive advantage.
Strong and collaborative relationships with leading OEMs globally We supply our products to more than 60 OEMs globally. Our top ten customers accounted for approximately 62% of net sales and our largest customer represented approximately 12% of our net sales in 2024.
Strong and collaborative relationships with leading OEMs globally We supply our products to more than 60 OEMs globally. Our top ten customers accounted for approximately 62% of net sales and our largest customer represented approximately 12% of our net sales in 2025.
Our track record of successful collaborations, as demonstrated by our strong client base and our ability to successfully launch multiple product applications annually, is well recognized. Our regional research, development and manufacturing capabilities are a key advantage in helping us to supply OEMs as they expand geographically and shift towards standardized engines and vehicle platforms.
Our track record of successful collaborations, as demonstrated by our strong client base and our ability to successfully launch multiple product applications every year, is well recognized. Our regional research, development and manufacturing capabilities are a key advantage in helping us to supply OEMs as they expand geographically and shift towards standardized engines and vehicle platforms.
The Company published its fiscal year 2023 Sustainability Report in 2024, the content of which is not incorporated by reference into this Annual Report or in any other report or document we file with the SEC.
The Company published its fiscal year 2024 Sustainability Report in 2025, the content of which is not incorporated by reference into this Annual Report or in any other report or document we file with the SEC.
In addition, many of our OEM customers have the option to terminate for convenience on certain programs, which permits our customers to impose pressure on pricing during the life of the vehicle program, and issue purchase contracts for less than the duration of the vehicle program, potentially reducing our profit margins and increasing the risk of losing future sales under those purchase contracts.
In addition, many of our OEM customers have the option to terminate for convenience on certain programs, which allows them to impose pressure on pricing during the life of the vehicle program, and issue purchase contracts for less than the duration of the vehicle program, potentially reducing our profit margins and increasing the risk of losing future sales under those purchase contracts.
Environmental requirements are complex, change frequently and have tended to become more stringent over time. Accordingly, we cannot assure that environmental requirements will not change or become more stringent over time or that our eventual environmental costs and liabilities will not be material.
Environmental requirements are complex, change frequently and have tended to become more stringent over time. Accordingly, we cannot ensure that environmental requirements will not change or become more stringent over time or that our eventual environmental costs and liabilities will not be material.
Our Competitive Strengths We believe that we differentiate ourselves through the following competitive strengths: • Differentiated and innovative technology in, and beyond, mobility • Strong and collaborative relationships with leading OEMs globally • Global and low-cost manufacturing footprint with operational excellence Differentiated and innovative technology in, and beyond, mobility We have led the revolution in turbocharging technology over the last 60 years and maintain a leading technology portfolio of approximately 1,300 patents and patents pending.
Our Competitive Strengths We believe that we differentiate ourselves through the following competitive strengths: • Differentiated and innovative technology in, and beyond, mobility • Strong and collaborative relationships with leading OEMs globally • Global and low-cost manufacturing footprint with operational excellence Differentiated and innovative technology in, and beyond, mobility We have led the revolution in turbocharging technology over the last 70 years and maintain a leading technology portfolio of approximately 1,350 patents and patents pending.
Garrett sponsored the Formula SAE event in the U.S., the Formula Student race in Hungary and the Formula Student race in the Czech Republic, where our experts worked as technical judges, provided technical support and awarded 3 EV Formula Student University teams with the Garrett E-Powertrain Innovation award.
Garrett sponsored the Formula SAE event in the U.S. and the Formula Student race in the Czech Republic, where our experts worked as technical judges, provided technical support and awarded 2 EV Formula Student University teams with the Garrett E-Powertrain Innovation award.
The timely development and implementation of process improvement and corrective action plans, including any improvements identified through our local regulatory compliance audits, are closely monitored. Our safety incident numbers remain low compared to industry when measured by our Total Case Incident Rate (“TCIR”) at 0.11 for 2024.
The timely development and implementation of process improvement and corrective action plans, including any improvements identified through our local regulatory compliance audits, are closely monitored. Our safety incident numbers remain low compared to industry when measured by our Total Case Incident Rate (“TCIR”) at 0.04 for 2025.
In parallel, the share of pure electric vehicles is expected to continue to increase, with short-term dynamics, such as significant vehicle price gaps between electric vehicles and ICE-powered vehicles, and slower than anticipated charging infrastructure proliferation, limiting the pace of adoption.
In parallel, the share of full battery electric vehicles ("BEVs") is expected to continue to increase, with short-term dynamics, such as significant vehicle price gaps between BEVs and ICE-powered vehicles, and slower than anticipated charging infrastructure proliferation, limiting the pace of adoption.
We have invested heavily to bring differentiated local capabilities to our customers in high-growth regions, including China and India. In 2024, we manufactured more than 87% of our products in low-cost countries, including seven manufacturing facilities in China, India, Mexico, Brazil, Romania and Slovakia. We have a long-standing culture of lean manufacturing excellence and continuous productivity improvement.
We have invested heavily to bring differentiated local capabilities to our customers in high-growth regions, including China and India. 10 In 2025, we manufactured more than 89% of our products in low-cost countries, including in seven manufacturing facilities in China, India, Mexico, Brazil, Romania and Slovakia. We have a long-standing culture of lean manufacturing excellence and continuous productivity improvement.
In addition, there may be soil or groundwater contamination at several of our properties resulting from historical, ongoing or nearby activities. As of December 31, 2024, the undiscounted reserve for environmental investigation and remediation was $16 million.
In addition, there may be soil or groundwater contamination at several of our properties resulting from historical, ongoing or nearby activities. As of December 31, 2025, the undiscounted reserve for environmental investigation and remediation was $14 million.
We have a globally deployed team of approximately 1,400 engineers across five R&D centers and nine close-to-customer engineering centers. Our engineers have led the mainstream commercialization of several leading turbocharger innovations, including variable geometry turbines, dual-boost compressors, ball-bearing rotors, electrically actuated controls, and air-bearing electric compressors for hydrogen fuel cells.
We have a globally deployed team of approximately 1,330 engineers across six R&D centers and ten close-to-customer engineering centers. Our engineers have led the mainstream commercialization of several leading turbocharger innovations, including variable geometry turbines, dual-boost compressors, ball-bearing rotors, electrically actuated controls, and air-bearing electric compressors for hydrogen fuel cells.
Item 1. Business Our Company 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 for original equipment manufacturers ("OEMs") and distributors within the mobility and industrial space.
Item 1. Business Our Company 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 for original equipment manufacturers ("OEMs") and independent aftermarket distributors in the mobility and industrial fields.
Employee feedback, representation, and retention Garrett’s Performance and Talent Management system aims to ensure that two-way dialogue is ongoing between employees and managers, punctuated by both an annual and a mid-year review, which provides employees the opportunity to express their opinions and ideas in terms of their development goals and career aspirations.
Employee feedback, representation, and retention Our Performance and Talent Management system aims to ensure that two-way dialogue is ongoing between employees and managers, punctuated by both an annual and a mid-year review, which provides employees the opportunity to express their opinions and ideas for development goals and career aspirations.
Compliance with our standards and local regulatory requirements is monitored through a company-wide self-assessment process assured through annual audits. In 2024 we continued a rolling 4-year compliance audit against local regulations by a global service provider.
Compliance with our standards and local regulatory requirements is monitored through a company-wide self-assessment process assured through annual audits. In 2025, we continued a rolling 4-year audit of compliance with local regulations, conducted by a global service provider.
Our learning environment offers employees access to approximately 3,200 online trainings that address a wide range of functional competencies, technical skills, and human skills. Learning can be self-paced, while the Company’s growing online peer-to-peer learning communities also allow employees to easily access courses specific to their function and to share materials and ideas on topics of interest.
Our learning environment offers employees access to approximately 3,300 online training programs that address a wide range of functional competencies, technical skills, and human skills. Learning can be self-paced, while our growing online peer-to-peer learning communities also allow employees to easily access courses specific to their function and to share materials and ideas on topics of interest.
Global and low-cost manufacturing footprint with operational excellence Our geographic footprint locates R&D, engineering and manufacturing capabilities close to our customers, enabling us to tailor technologies and products for the specific vehicle types sold in each geographic industry.
Global and low-cost manufacturing footprint with operational excellence Our geographic footprint locates RD&E and manufacturing capabilities close to our customers, enabling us to tailor technologies and products for the specific vehicle types sold in each geographic industry.
Turbocharger penetration The utilization of turbochargers and electric-boosting technologies on vehicle powertrain systems is one of the most cost-effective solutions to address stricter standards, and OEMs are increasing their adoption of these technologies.
Turbocharger penetration Use of turbochargers and electric-boosting technologies on vehicle powertrain systems is one of the most cost-effective solutions to address stricter fuel economy and emissions standards, and OEMs are increasing their adoption of these technologies.
In addition to the volume growth, tightening of CO2 regulations is driving a technology shift, moving away from standard waste gate technology to variable geometry turbo ("VNT") which is a premium technology that offers us technological competitive advantages.
In addition to the volume growth, tightening of CO2 regulations is driving a technology shift, moving away from standard waste gate technology to variable geometry turbo ("VNT"), which is a premium technology where we hold technological competitive advantages.
The Company continues to enhance the engagement with 16 global organizations with a focus on growing diversity interest in STEM and automotive engineering as well as intern and full time recruiting. Garrett works closely with leading Universities globally on over 20 collaboration projects that push the envelope of technical innovation. Seasonality Our business is typically moderately seasonal.
The Company continues to engage with global organizations with a focus on growing diversity interest in STEM and automotive engineering as well as intern and full time recruiting. Garrett works closely with leading universities globally on over 20 collaboration projects at the forefront of technical innovation. Seasonality Our business is typically moderately seasonal.
In 2024, the Company sponsored 6 Formula SAE and Formula Student teams in several countries providing the students in the racing team with over 8 technical workshops in electrical powertrain, leadership coaching, parts for the racing vehicle and financial support.
In 2025, the Company sponsored 4 Formula SAE and Formula Student teams in several countries providing the students in the racing team with technical workshops in electrical powertrain, leadership coaching, parts for the racing vehicle and financial support.
A variety of instructor led virtual programs were deployed during 2024 to support employees' development and a number of dedicated programs for emerging and experienced leaders were successfully held. More than 86,200 hours of training were delivered during 2024. We use regular talent reviews to strengthen the Company’s internal development processes and to calibrate assessment of individual performance.
A variety of instructor-led virtual programs were deployed during 2025 to support employees' development and a number of dedicated programs for emerging and experienced leaders were successfully held. More than 94,500 hours of training were delivered during 2025. We use regular talent reviews to strengthen our internal development processes and to calibrate assessment of individual performance.
In 2024, we delivered the first prototypes of our new industrial applications to a key OEM. Outside of our turbocharger product lines, we apply this culture of continuous innovation to meet the needs of our customers in new areas.
In 2024, we delivered the first prototypes of our new industrial applications to a key OEM, and in 2025 we sold our first "MEG" (very large) turbochargers. Outside of our turbocharger product lines, we apply this culture of continuous innovation to meet the needs of our customers in new areas.
OEMs are required to evaluate and adopt various solutions to address these stricter standards. Turbochargers allow OEMs to reduce engine size without sacrificing vehicle performance, thereby increasing fuel efficiency and decreasing harmful emissions. Furthermore, turbochargers allow more precise “air control” over both engine intake and exhaust conditions such as gas pressures, flows and temperatures, enabling optimization of the combustion process.
Turbochargers allow OEMs to reduce engine size without sacrificing vehicle performance, thereby increasing fuel efficiency and decreasing harmful emissions. Furthermore, turbochargers allow more precise “air control” over both engine intake and exhaust conditions, such as gas pressures, flows and temperatures, enabling optimization of the combustion process.
Moreover, significant uncertainty remains around global economic growth, as the macroeconomic landscape continues to experience supply 6 chain disruptions, geopolitical tensions and economic uncertainties. The shift from pure gasoline and diesel ICE to hybridized powertrains is expected to continue in response to increasingly strict fuel efficiency and regulatory standards.
Moreover, there continues to be significant uncertainty around global economic growth, as the macroeconomic landscape continues to experience supply chain disruptions, geopolitical tensions and economic uncertainties. The shift from pure gasoline and diesel ICE to hybridized powertrains is expected to continue in response to increasingly strict fuel efficiency and regulatory standards in many of the regions in which we operate.
As part of our commitment to the well-being of our employees, the Company offers an Employee Assistance Program. It is an external counselling service designed to assist employees with personal, family, or workplace matters. This service is confidential and is also available to each employee’s dependents.
As part of our commitment to the well-being of our employees, we offer an external counselling service designed to assist employees with personal, family, or workplace matters. This service is confidential and is also available to each employee’s dependents.
In 2016, we launched our first high-volume VNT gasoline application, and this technology is expected to experience increased adoption in years to come. According to a forecast by S&P, VNT represented 38% of global turbo gasoline production in 2024, and is expected to reach 60% by 2029.
In 2016, we launched our first high-volume VNT gasoline application, and this technology is expected to experience increased adoption in the years to come. According to a forecast by S&P, VNT represented 21% of global turbo gasoline production in 2025 and is expected to reach 29% by 2030.
Internal combustion light vehicle products • Gasoline: The global adoption of turbochargers by OEMs on gasoline engines has increased rapidly from approximately 14% in 2013 to approximately 49% in 2024 and is forecasted by S&P to increase to 51% by 2025.
Products for light vehicle ICE • Gasoline: The global adoption of turbochargers by OEMs on gasoline engines has increased rapidly from approximately 14% in 2013 to approximately 51% in 2025 and is forecasted by S&P to increase to 53% in 2026.
The Company closely monitors employee turnover to measure retention and define improvement actions as and where necessary. As of December 31, 2024, the Company’s annual voluntary turnover for 2024 was 10.1%, which reflects the trends of the current global marketplace for talent.
The Company closely monitors employee turnover to measure retention and define improvement actions as and where necessary. The Company’s annual voluntary turnover for 2025 was 8.3%, which reflects the trends of the current global marketplace for talent.
Our corporate sustainability framework starts from our mission by spearheading technology development and continuing to deliver industry-first innovations for mobility and beyond. It is built on two main pillars - investing in a culture of innovation and operating responsibly to ensure long-term impact. Sustainability is embedded in our governance structure.
Our corporate sustainability framework starts from our corporate mission of spearheading technology development and continuing to deliver industry-first innovations. It relies on two main pillars - fostering a culture of innovation and operating responsibly to ensure our actions have a meaningful and long-term impact. Sustainability is embedded in our corporate governance structure.
However, considering our past experience and existing reserves, we do not expect that environmental matters will have a material adverse effect on our consolidated financial position. Corporate Responsibility Our sustainability approach Garrett is a cutting-edge technology leader delivering differentiated solutions for emission reduction and energy efficiency. We are passionate about innovating for mobility and beyond.
However, considering our past experience and existing reserves, we do not currently expect that environmental matters will have a material adverse effect on our consolidated financial position. Corporate Responsibility Our sustainability approach We are a global innovator and technology leader delivering differentiated solutions for emission reduction and energy efficiency.
Prices are negotiated with respect to each business award, which may be subject to adjustments under certain circumstances, such as commodity or foreign exchange escalation/de-escalation clauses or for cost reductions achieved by us. The terms and conditions typically provide that we are subject to a warranty on the products supplied.
These relationships typically extend over the life of the related engine platform. Prices are negotiated with respect to each business award, which may be subject to adjustments under certain circumstances, such as commodity or foreign exchange escalation/de-escalation clauses, or cost reductions achieved by us. The terms and conditions typically include a warranty on the products supplied.
Electric (battery electric and hydrogen fuel cell electric) vehicles & industrial products Leveraging a set of unique technological building blocks, we are now offering to our customers disruptive solutions for electric traction (E-Powertrain) and electric thermal management (E-Cooling compressor) that can enhance an application’s energy efficiency in a reduced packaging space and with significant weight savings.
Leveraging a set of unique technological building blocks, we now offer disruptive solutions for electric traction (E-Powertrain) and electric thermal management (E-Cooling compressor) that can enhance an application’s energy efficiency in a reduced packaging space and with significant weight savings.
As of December 31, 2024, we have not experienced any significant shortage of raw materials and we or our suppliers (on our behalf) do not typically carry inventories of such raw materials in excess of those reasonably required to meet our production and shipping schedules.
As of December 31, 2025, we have not experienced any significant shortage of raw materials and we or our suppliers (on our behalf) do not typically carry inventories of such raw materials in excess of those reasonably required to meet our production and shipping schedules. Our Customers Our global customer base includes most light and commercial vehicle OEMs.
From annual goal setting and performance reviews to learning opportunities for employees and leaders, the Company helps its people align their professional experience with the Company’s business objectives and encourages them to take ownership of their development and career paths.
Talent management We encourage our employees to develop their skills and capabilities through a comprehensive Performance and Talent Management system. From annual goal setting and performance reviews to learning opportunities for employees and leaders, the Company helps its people align their professional experience with the Company’s business objectives and encourages them to take ownership of their development and career paths.
S&P estimates that the global production of electrified vehicles (battery and fuel cell electric) will increase from approximately 12 million vehicles in 2024 to approximately 26 million vehicles by 2028, representing an annualized growth rate of approximately 20%.
S&P estimates that the global production of electrified vehicles (battery and fuel cell electric) will increase from approximately 15 million vehicles in 2025 to approximately 28 million vehicles by 2030, representing an annualized growth rate of approximately 13%.
Garrett articulates its commitments to social, environmental and governance considerations in the communities in which it operates in the Company’s Code of Business Conduct, which can be found on our website at www.garrettmotion.com.
We articulate our commitments to environmental, social and governance considerations in the communities in which we operate in our Code of Business Conduct, which can be found on our website at www.garrettmotion.com.
We operate through a distribution network of more than 340 distributors covering 165 countries. Our aftermarket business has historically provided a stable stream of revenue supported by our large installed base, currently estimated at nearly 140 million vehicles. As turbocharger penetration rates continue to increase, we expect that our installed base and aftermarket opportunities will continue to grow.
Our aftermarket business has historically provided a stable stream of revenue supported by our large installed base, currently estimated at nearly 150 million vehicles. As turbocharger penetration rates continue to increase, we expect that our installed base and aftermarket opportunities will continue to grow.
As of 2024, our primary source of sales is associated with the global turbocharger industry for gasoline, diesel and natural gas engines across light vehicle, commercial vehicle and industrial applications. Sales also come from E-Boosting solutions and hydrogen fuel cell compression solutions, already manufactured at scale.
As of 2025, our primary source of sales comes from the global turbocharger industry for gasoline, diesel and natural gas engines across light vehicle, on- and off-highway commercial vehicles and industrial applications as well as the aftermarket for these products. Sales also come from E-Boosting and hydrogen fuel cell air compression solutions, already manufactured at scale.
Diesel also remains essential for OEMs to meet their CO2 fleet average regulatory targets going forward, as diesel vehicles produce less CO2 on average than gasoline vehicles. • Hybrid vehicles: We provide a comprehensive portfolio of turbocharger and electric-boosting technologies to manufacturers of hybrid-electric powertrains. OEMs have increased their adoption of hybrid technologies in 8 light of stricter regulatory standards.
Diesel also remains essential for OEMs to meet their CO2 fleet average regulatory targets going forward, as diesel vehicles produce less CO2 on average than gasoline vehicles. • Hybrid vehicles: We offer a comprehensive portfolio of turbocharger and electric-boosting technologies (including E-Turbo and E-Compressor solutions) to manufacturers of hybrid-electric powertrains.
Battery electric and fuel cell technologies OEMs are investing in full battery electric vehicles ("BEVs") to comply with increasingly tight regulatory targets across regions. S&P and KGP expect that BEVs will comprise 22% of total light and commercial vehicle production globally by 2027.
Battery electric and fuel cell technologies OEMs are investing in BEVs in part to comply with regulatory targets across regions. S&P expects that BEVs will comprise 28% of total light vehicle production globally by 2030.
For example, we are expanding the application of our turbochargers to power generation, marine applications, and data centers. Hydrogen fuel cell electric vehicles & industrial products We provide a comprehensive range of electric air compressors to manufacturers of fuel cell systems. Our system consists of efficient, powerful, and lightweight air compressors using leading automotive technologies to boost fuel cell vehicles.
Electric (battery electric and hydrogen fuel cell electric) vehicles & industrial products We provide a comprehensive range of electric air compressors to manufacturers of fuel cell systems. Our system consists of efficient, powerful, and lightweight air compressors using leading automotive technologies to boost fuel cell vehicles.
Grow our aftermarket business We have an opportunity to strengthen our global network of more than 340 distributors in 165 countries by deepening our channel penetration, by leveraging our well-recognized Garrett brand, by utilizing new online technologies for customer engagement and sales, like our Installer Connect program (a global web-based platform providing self-service tools for garage technicians which generated nearly 16,000 additional technicians certified in 2024), and by widening our product portfolio with an expansion initiative on large industrial turbos, for which we plan to onboard certified Service Centers to support these Industrial End customers in the years to come.
Grow our aftermarket business We have an opportunity to strengthen our global network of more than 370 distributors in 165 countries by deepening our channel penetration, by leveraging our well-recognized Garrett brand, by using new online technologies for customer engagement and sales, like our Installer Connect program (a global web-based platform providing self-service tools for garage technicians, which helped generate nearly 25,000 additional certified technicians in 2025), and by widening our product portfolio with an expansion initiative on large industrial turbos, for which we plan to onboard certified Service Centers to support these industrial end-customers in the years to come. 11 Research, Development, Engineering and Intellectual Property We maintain technical engineering centers in major automotive production regions of the world to develop and provide advanced products, processes and manufacturing support to all of our manufacturing sites, and to provide our customers with local engineering capabilities and design developments on a global basis.
Our engineering expertise and transformative technologies help optimize fuel efficiency, reduce emissions and manage growing vehicle complexity, all of which are critical areas on the road to a clean transportation future. Garrett's technologies enable sustainable automotive and industry transformation.
Our mission to deliver differentiated solutions for emission reduction and energy efficiency is at the heart of our contribution to society. Our engineering expertise and transformative technologies help optimize fuel and energy efficiency, reduce emissions and manage growing vehicle complexity, all of which are critical to a clean transportation future. Our technologies enable sustainable automotive and industry transformation.
We are developing solutions and increasing our R&D spend, focusing almost 60% of total research, development and engineering expenditures in 2024, on zero-emission technologies for mobility and beyond, such as fuel cell compressors for a broad range of cell stack power (40kW to 250kW) and high-value electric products including E-Powertrain and E-Cooling compressor technologies.
We are developing solutions for zero-emission technologies for mobility and beyond, such as fuel cell compressors for a broad range of cell stack power (40kW to 250kW) and high-value electric products including E-Powertrain and E-Cooling compressor technologies, with approximately 50% of total RD&E spend focused on these new solutions.
S&P forecasts turbocharger penetration on ICE-based powertrains to grow in light vehicles from 54% in 2022 to approximately 58% in 2028 and to then come back to approximately 54% in 2032. Medium-Term Powertrain Trends Note: Years 2022 - 2024 represent actual data and years 2025 - 2029 represent forecasted data.
S&P forecasts turbocharger penetration on ICE-based powertrains to grow in light vehicles from 54% in 2022 to approximately 57% in 2026, stabilizing around 56% up to 2033. 7 Medium-Term Powertrain Trends Note: Years 2023 - 2025 represent actual data and years 2026 - 2030 represent forecasted data.
Continuous product innovation to bring innovative and differentiated technologies for electric vehicles (E-Powertrain and E-Cooling compressors), fuel cell compressors and solutions beyond automotive are the new challenges we are embracing and pursuing.
We believe we will continue to benefit from global technology leadership in the turbocharger industry through our deep relationships with global OEMs. Continuous product innovation to bring innovative and differentiated technologies for electric vehicles (E-Powertrain and E-Cooling compressors), fuel cell compressors and solutions beyond automotive are the new challenges we are embracing and pursuing.
Global vehicle fuel efficiency and emissions standards OEMs are facing increasingly strict constraints for vehicle fuel efficiency and emissions standards globally. Regulatory authorities in key regions such as the United States, the European Union, China, Japan, and Korea have instituted regulations that require sustained and significant reductions in greenhouse gas (including CO2 and NOx) and particulate matter vehicle emissions.
Despite recent revisions, mostly still ongoing, regulatory authorities in key regions such as the United States, the European Union, China, Japan, and Korea have instituted regulations that require sustained and significant reductions in greenhouse gas (including CO2 and NOx) and particulate matter vehicle emissions. OEMs are required to evaluate and adopt various solutions to address these stricter standards.
Embracing diverse thoughts and ideas through inclusion leads to a competitive advantage in the market, increased innovation as we generate new and better ideas, and customer-centric decision making.
We strive to ensure that each of our employees are involved, supported, respected and connected. Embracing diverse thoughts and ideas through an inclusive work environment leads to a competitive advantage in the market, increased innovation as we generate new and better ideas, and customer-centric decision making.
We pride ourselves that diversity is represented from the top of the organization, for example 26 different nationalities are represented in our senior management team and they bring with them a wide variety of different backgrounds and experiences. Overall, in our global workforce we have representation of approximately 60 different nationalities.
We pride ourselves on the diversity at the top of the organization, with 25 different nationalities represented in our senior management team, bringing with them a wide variety of different backgrounds and experiences. Overall, we have representation of approximately 60 different nationalities in our global workforce. In 2025, the Company continued to advance its commitment to creating an inclusive workplace.
Our customers have taken note of these products, and we are engaged in a number of pre-development programs with OEMs in all regions. Aftermarket and performance products Our Garrett aftermarket brand has strong recognition across distributors and garages globally, and is known for boosting performance, quality and reliability.
We are engaged in several pre-development programs with OEMs in various regions, both within mobility and industrial applications. 9 Aftermarket and performance products Our Garrett aftermarket brand has strong recognition across distributors and garages globally, and is known for quality, reliability and boosting engine performance. We operate through a network of more than 370 distributors covering 165 countries.
Total turbocharger production decreased globally from approximately 50 million units in 2023 to 49 million units in 2024 and is expected to further decrease in 2025 and onward based on current expectations of electric vehicle penetration, gradually decreasing to 2022 volume levels by 2028.
Total turbocharger production increased globally from approximately 49 million units in 2024 to close to nearly 50 million units in 2025, increasing by more than half a million units year-over-year, and is expected to decrease in 2026 and onward (based on current expectations for BEV penetration), gradually declining to 2022 volume levels by 2030.
A major key to our strategy for gasoline growth is our plan to leverage our strengths in high temperature materials and variable geometry technologies as well as our scale, global footprint and in-region capabilities to meet the volume demands of global OEMs.
A major key to our strategy for gasoline growth is our plan to leverage our strengths in high temperature materials, variable geometry technologies, and E-Boosting solutions, as well as our scale, global footprint and in-region capabilities, to meet the volume demands of global OEMs. • The commercial vehicle (including both on- and off-highway applications) and industrial spaces remain a focus for us, considering their slower shift to electrification, and the increasing need for increased energy efficiency and productivity.
On turbocharger side, we keep investing to support our customers, especially for hybrids, while also expanding our portfolio range with the development of larger turbocharger aimed at off-highway applications.
On the turbocharger side, we continue investing to support our customers, especially for hybrids, while also expanding our portfolio with the development of larger turbochargers, including the new Garrett MEG product line, aimed at marine and industrial applications, including backup power generation for data centers.
While no individual patent or group of patents, taken alone, is considered material to our business, taken in the aggregate, these patents provide meaningful protection for our intellectual property. Materials The most significant raw materials we use to manufacture our products are grey iron, aluminum, stainless steel and a nickel-, iron- and chromium-based alloy.
Our current patents are expected to expire between 2026 and 2044. While no individual patent or group of patents, taken alone, is considered material to our business, taken in the aggregate, these patents provide meaningful protection for our intellectual property.
The Garrett student programs hires over 120 students globally to support challenging projects in multiple engineering fields providing an enriching growth experience for potential future Garrett employees. The Company also supports local Universities globally with master thesis projects, class speakers and technical sharing events.
During 2025, the Company shared its growth vision with over 2,000 students and over 200 female engineers and automotive enthusiasts. Every year, the Garrett engineering student programs hires over 120 students globally to support challenging projects in multiple engineering fields providing an enriching growth experience for potential future Garrett employees.
Energy efficiency increases (including how to best address thermal management challenges), battery price (and consequently vehicle price), weight reduction through increases in power density, and shorter recharging times are all critical problems to solve.
Critical issues include energy efficiency increases (including how to best address thermal management challenges), battery price (and consequently vehicle price), weight reduction through increases in power density, and shorter recharging times. As OEMs strive to solve these issues, they are also investing in hydrogen fuel cell-powered electric vehicles for demanding applications requiring longer ranges, especially for commercial vehicles.
Actions during the year included: • Holding regular reviews of our diversity initiatives in each of the countries where we operate • Supporting our team comprised of Diversity and Inclusion Champions to help them develop local diversity and inclusion initiatives.
Key actions during the year included: 14 • Conducting regular reviews of diversity initiatives in every country where we operate to help promote alignment and inclusiveness. • Empowering our network of Diversity and Inclusion Champions to drive local initiatives.
The hydrogen fuel cell also requires advanced electric-boosting technology to run efficiently and optimize range and cost of ownership. We are investing to address selected opportunities, raised by the electrification trend, where our differentiated technology can bring benefits related to lighter, more compact and more energy efficient components for electric vehicles.
We are investing to address selected opportunities, sparked by the electrification trend, where our differentiated technology can bring benefits related to lighter, more compact and more energy efficient components for electric vehicles. Our Products 8 We are a global leader in the $10 billion OEM turbocharger industry.
We have significant expertise in delivering products at scale for internal combustion engines ("ICE") using gasoline, diesel, natural gas and hydrogen, as well as for zero-emission technologies using hydrogen fuel cell systems, both for mobility and industrial use.
We have significant expertise in delivering highly engineered products at scale for internal combustion engines ("ICE") using gasoline, diesel, natural gas and hydrogen, as well as zero-emission vehicles ("ZEV"). Our products are key enablers for fuel economy, energy efficiency, thermal management, and compliance with greenhouse gas and other emission-reduction targets.
We also are expanding our portfolio with the launch of new frame sizes aimed at serving larger engines, mostly used in marine and power generation verticals. Leverage our differentiated technology to solve key challenges for zero emission vehicles We stand to benefit from the increased adoption of electric (battery or fuel cell) vehicles.
We continue to invest in turbocharger technology upgrades, including for new types of fuels for ICE applications, like hydrogen. We also are expanding our portfolio with the launch of new frame sizes aimed at serving larger engines, mostly used in marine and power generation verticals.
Human Capital At Garrett, we place a high value on developing the right working environment and skill sets to advance our performance culture, support our growth strategy and ensure that the world at large can continue to benefit from breakthroughs in sustainable mobility.
Human Capital We place a high value on developing the right working environment and skill sets to advance our performance culture and support our growth strategy. We invest in creating an inclusive, stimulating and safe work environment where our employees can deliver their workplace best every day.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we are unable to respond to changes in the technological needs of our customers, if a transition to battery electric vehicles is pursued more broadly or is implemented more rapidly than we have anticipated, or if we overestimate the turbocharger penetration rate in ICE, hybrid, or fuel-cell-based vehicles in the medium-term, our results of operations and financial condition could be adversely affected. 17 In addition, in response to the ongoing evolution in the automotive industry and the anticipated shift toward zero-emission vehicles, we have made, and we expect to continue to make, significant investments in technologies supporting zero-emission vehicles, including fuel cell compressors and high value electric vehicle components, including E-Powertrain and E-Cooling Compressor technologies.
Biggest changeIn addition, in response to the ongoing evolution in the automotive industry and the anticipated shift toward zero-emission vehicles, we have made, and we expect to continue to make, significant investments in electrification technologies, including fuel cell compressors and high value electric vehicle components, including E-Powertrain and E-Cooling compressor technologies.
See "Our debt agreements contain restrictions that limit our flexibility in operating our business ." Further, if we issue additional equity securities, existing holders of our securities may experience dilution, and preferred equity securities would also have rights senior to holders of our Common Stock.
See "Our debt agreements contain restrictions that limit our flexibility in operating our business ." Further, if we issue additional equity securities, existing holders of our equity securities may experience dilution, and preferred equity securities would also have rights senior to holders of our Common Stock.
Our substantial indebtedness could, for example: limit our ability to borrow money for our working capital, capital expenditures, debt service requirements, strategic initiatives or other purposes; make it more difficult for us to satisfy our obligations with respect to our indebtedness and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under our debt instruments; require us to dedicate a substantial portion of our cash flow from operations to the payment of interest and the repayment of our indebtedness, thereby reducing funds available to us for other purposes; limit our flexibility in planning for, or reacting to, changes in our operations or business; make us more highly leveraged than some of our competitors, which may place us at a competitive disadvantage; impact our rent expense on leased space and interest expense from financing leases, which could be significant; make us more vulnerable to downturns in our business, our industry or the economy; restrict us from making strategic acquisitions, engaging in development activities, introducing new technologies or exploiting business opportunities; cause us to make non-strategic divestitures; limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds or dispose of assets; or expose us to the risk of increased interest rates, as certain of our borrowings are at variable rates of interest.
Our substantial indebtedness could, for example: limit our ability to borrow money for our working capital, capital expenditures, debt service requirements, strategic initiatives or other purposes; make it more difficult for us to satisfy our obligations with respect to our indebtedness and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants and borrowing conditions, could result in an event of default under our debt instruments; 26 require us to dedicate a substantial portion of our cash flow from operations to the payment of interest and the repayment of our indebtedness, thereby reducing funds available to us for other purposes; limit our flexibility in planning for, or reacting to, changes in our operations or business; make us more highly leveraged than some of our competitors, which may place us at a competitive disadvantage; impact our rent expense on leased space and interest expense from financing leases, which could be significant; make us more vulnerable to downturns in our business, our industry or the economy; restrict us from making strategic acquisitions, engaging in development activities, introducing new technologies or exploiting business opportunities; cause us to make non-strategic divestitures; limit, along with the financial and other restrictive covenants in our indebtedness, among other things, our ability to borrow additional funds or dispose of assets; or expose us to the risk of increased interest rates, as certain of our borrowings are at variable rates of interest.
If actual production orders from our customers are significantly lower than the projections we use in calculating the amount of our awarded business, we could realize substantially less revenue over the life of these projects than the projected estimate, and if we are unable to mitigate the resulting underutilization of our manufacturing lines, the increased fixed costs relative to our revenues could have an adverse effect on our profitability and results of operations.
If actual production orders from our customers are significantly lower than the projections we use in calculating the amount of our awarded business, we could realize substantially less revenue over the life of these projects than the projected estimate, and if we are unable to mitigate the 21 resulting underutilization of our manufacturing lines, the increased fixed costs relative to our revenues could have an adverse effect on our profitability and results of operations.
If we face increased competition or if any of our competitors more accurately respond to market developments, develop products that are superior to our products, produce similar products at a cost that is lower than our cost, or adapt more quickly than we do to new technologies or evolving customer needs, we may not be able to compete successfully and our business, financial condition, and results of operations may be materially adversely affected.
If we face increased competition or if any of our competitors more accurately respond to market developments, develop products that are superior to our products, produce similar products at a cost that is lower than our cost, or adapt more quickly to new technologies or evolving customer needs, we may not be able to compete successfully and our business, financial condition, and results of operations may be materially adversely affected.
The automotive industry relies heavily on “just-in-time” delivery of components during the assembly and manufacture of vehicles, and when we fail to make timely deliveries to our customers in accordance with our contractual obligations, we generally have to absorb our own costs for identifying and solving the “root cause” of the problem as well as expeditiously producing replacement components or products.
The automotive industry, in particular, relies heavily on “just-in-time” delivery of components during the assembly and manufacture of vehicles, and when we fail to make timely deliveries to our customers in accordance with our contractual obligations, we generally have to absorb our own costs for identifying and solving the “root cause” of the problem as well as expeditiously producing replacement components or products.
Furthermore, an escalation of geopolitical tensions due to the ongoing conflict, such as increased sanctions or restrictions on global trade, could result in further supply chain disruptions, reduced customer demand, state-sponsored cyberattacks or increased volatility in the financial markets, all of which could have a materially adverse impact on our business and operations.
Furthermore, an escalation of geopolitical tensions due to the ongoing conflict, such as increased sanctions or restrictions on global trade or otherwise, could result in further supply chain disruptions, reduced customer demand, state-sponsored cyberattacks or increased volatility in the financial markets, all of which could have a materially adverse impact on our business and operations.
When we win a bid to provide products and services to an OEM customer, the customer typically does not commit to award us its business until a separate contract has been negotiated, generally with a term ranging from one year to the life of the model (usually three to seven years).
When we win a bid to provide products and services to an automotive OEM customer, the customer typically does not commit to award us its business until a separate contract has been negotiated, generally with a term ranging from one year to the life of the model (usually three to seven years).
There can be no assurance that we will not experience any material warranty or product liability claim losses in the future or that we will not incur significant costs to defend such claims. 24 We cannot predict with certainty the outcome of litigation matters, government proceedings and other contingencies and uncertainties.
There can be no assurance that we will not experience any material warranty or product liability claim losses in the future or that we will not incur significant costs to defend such claims. We cannot predict with certainty the outcome of litigation matters, government proceedings and other contingencies and uncertainties.
A further prolonged or intensified conflict could result in acute shortages of raw materials and price inflation on transportation costs, materials, and energy, which in turn may adversely impact our supply chain. If the conflict expands beyond Ukraine, it could negatively impact 22 our operations in neighboring countries.
A further prolonged or intensified conflict could result in acute shortages of raw materials and price inflation on transportation costs, materials, and energy, which in turn may adversely impact our supply chain. If the conflict expands beyond Ukraine, it could negatively impact our operations in neighboring countries.
International technical export control regulations and trade conflicts may limit our ability to use certain intellectual property in our products in some regions of the world, or customers may require assured access to intellectual property through open source-code, joint ownership of intellectual property, free license, or other measures.
International technical export control regulations and trade conflicts may limit our ability to use certain intellectual property in our products in some regions of the world, or customers may require assured access to intellectual property 23 through open source-code, joint ownership of intellectual property, free license, or other measures.
We may not be able to employ any of these alternatives on desirable terms or at all, which could 26 result in a default on our indebtedness and could have a material adverse effect on our results of operations, financial condition and business.
We may not be able to employ any of these alternatives on desirable terms or at all, which could result in a default on our indebtedness and could have a material adverse effect on our results of operations, financial condition and business.
If we were required to make such payments, these payments could be significant and could exceed the amounts we have therefore accrued for such matters, adversely affecting our business, financial condition and results of operations.
If we were required to make such payments, these payments could be significant and could exceed the amounts we have accrued for such matters, adversely affecting our business, financial condition and results of operations.
Based on these factors, our status as a Tier I supplier (one that supplies vehicle components directly to manufacturers) and the fact that our customers’ product programs typically last several years and are anticipated to encompass large volumes, our customers are often able to negotiate favorable pricing and other terms, and any cost-cutting initiatives that our customers adopt generally will result in increased downward pressure on our pricing.
Based on these factors, our status as a Tier I supplier (one that supplies vehicle components directly to OEMs) and the fact that our customers’ product programs typically last several years and are anticipated to encompass large volumes, our customers are often able to negotiate favorable pricing and other terms, and any cost-cutting initiatives that our customers adopt generally will result in increased downward pressure on our pricing.
Furthermore, a significant portion of our supply chain is concentrated in mainland China and, as a result, our ability to continue filling our supply needs may be adversely affected by changes in, or our failure to comply with, Chinese laws, regulations and standards, and by political risks beyond our control, including but not limited to, trade policies, treaties, government regulations and new or higher tariffs.
Furthermore, a significant portion of our supply chain is concentrated in mainland China and, as a result, our ability to continue filling our supply needs may be adversely affected by changes in, or our failure to comply with, Chinese laws, regulations and standards, and by political risks beyond our control, including but not limited to, trade policies, treaties, government regulations, customer needs and preferences, and new or higher tariffs.
Although the impact of these tariffs on our business is subject to a number of unknown factors, including the size, effective date and duration of such tariffs, future changes in the scope and nature of the tariffs, any retaliatory responses to such tariffs taken by the target countries, and the effectiveness of any mitigating actions that may be available to us, due to our meaningful operations in China and Mexico, the impact may be significant.
Although the impact of such measures on our business is subject to a number of unknown factors, including the size, effective date and duration of such measures, future changes in the scope and nature of the tariffs, any retaliatory responses to such tariffs taken by the target countries, and the effectiveness of any mitigating actions that may be available to us, due to our meaningful operations in China and Mexico, the impact may be significant.
This could subject the Company to the risks of local currency devaluation and business disruption. We regularly monitor our foreign currency exchange exposure and often seek to reduce such foreign currency risk through hedging activities; however, foreign exchange hedging activities bear a financial cost and may not always be available to us or be successful in eliminating such volatility.
This could subject us to the risks of local currency devaluation and business disruption. We regularly monitor our foreign currency exchange 22 exposure and often seek to reduce such foreign currency risk through hedging activities; however, foreign exchange hedging activities bear a financial cost and may not always be available to us or be successful in eliminating such volatility.
Our tax expense includes 27 estimates of tax reserves and reflects other estimates and assumptions, including assessments of our future earnings, which could impact the valuation of our deferred tax assets.
Our tax expense includes estimates of tax reserves and reflects other estimates and assumptions, including assessments of our future earnings, which could impact the valuation of our deferred tax assets.
If we issue new debt securities and debt holders would have rights senior to our equity holders, and the terms of additional debt could restrict our operations.
If we issue new debt securities, the debt holders would have rights senior to our equity holders and the terms of such additional debt could restrict our operations.
The risks associated with cyber security incidents include the risks of financial loss, reputational damage resulting in the loss of business, litigation with third parties, theft of intellectual property, fines levied by governmental entities, diminution in the value of our investment in research, development and engineering, and costs associated with incident remediation.
The risks associated with cyber or other security incidents include the risks of financial loss, reputational damage resulting in the loss of business, litigation with third parties, theft of intellectual property, fines levied by governmental entities, diminution in the value of our investment in research, development and engineering, and costs associated with incident remediation.
Further, continued trade tensions and other geopolitical concerns, particularly in China, may require us to shift our operations away from these countries. All of the foregoing could have adverse effect on our business, results of operations, cash flows and financial condition.
Further, continued trade tensions and other geopolitical concerns, particularly in China, may require us to shift our operations away from these countries. All of the foregoing could have a material adverse effect on our business, results of operations, cash flows and financial condition.
Trade tensions have in the past, and may in the future, negatively impact our business. We may not be able to mitigate the impacts of any new or higher tariffs, and our business, results of operations and financial position would be materially adversely affected by such tariffs.
Trade tensions have in the past, and may in the future, negatively impact our business. We may not be able to mitigate the impacts of any new or higher tariffs, and our business, results of operations and financial position could be materially adversely affected by such tariffs.
In particular, to the extent we are not able to timely and successfully launch new programs and product lines, our customers may be required to delay or shut down vehicle production, which could result in significant financial penalties to the Company, a diversion of personnel and financial resources and/or our customers awarding business to a competitor, any of which could have an adverse effect on our profitability and cash flows.
In particular, to the extent we are not able to timely and successfully launch new programs and product lines, our customers may be required to delay or shut down production, which could result in significant financial penalties to us, a diversion of personnel and financial resources and/or our customers awarding business to a competitor, any of which could have an adverse effect on our profitability and cash flows.
Additionally, our Board of Directors has approved a share repurchase program, pursuant to which we may repurchase up to $250 million of shares of Common Stock from time to time during the fiscal year ended December 31, 2025.
Additionally, our Board of Directors has approved a share repurchase program, pursuant to which we may repurchase up to $250 million of shares of Common Stock from time to time during the fiscal year ended December 31, 2026.
The timing, as well as the number and value of shares repurchased under the program, will be determined by the Board of Directors or an authorized committee of the Board of Directors its discretion and will depend on a variety of factors, including our assessment of the intrinsic value of our Common Stock, the market price of our Common Stock, general market and economic conditions, available liquidity, compliance with the Company's debt and other agreements, applicable legal requirements, the nature of other investment opportunities available to the Company, and other considerations.
The timing, as well as the number and value of shares repurchased under the program, will be determined by the Board of Directors or an authorized committee of the Board of Directors in its discretion and will depend on a variety of factors, including our assessment of the intrinsic value of our Common Stock, the market price of our Common Stock, general market and economic conditions, available liquidity, compliance with our debt and other agreements, applicable legal requirements, the nature of other investment opportunities available to us, and other considerations.
There can be no assurance that we will be able to mitigate any potential material adverse impacts on our earnings and cash flows caused by fluctuations in interest rates. In addition, we have unfunded obligations under certain of our defined benefit pension and other postretirement benefit plans.
There can be no assurance that we will be able to mitigate any potential material adverse impacts on our earnings and cash flows caused by fluctuations in interest rates. In addition, we have unfunded obligations under certain of our defined benefit pension and other post-retirement benefit plans.
For example, Russia’s invasion of Ukraine and the global response, including the imposition of financial and economic sanctions by the United States and other countries, has led to supply constraints that have impacted, and may continue to impact, our business. It has also led to energy shortages globally, especially in Europe.
For example, Russia’s invasion of Ukraine and the global response, including the imposition of financial and economic sanctions by the United States and other countries, have led to supply constraints that have impacted, and may continue to impact, our business. They have also led to energy shortages globally, especially in Europe.
Our profitability and margin growth are dependent upon, among other things, our ability to drive efficiency improvements throughout our organization. In addition, we seek productivity and cost savings benefits through repositioning actions and projects, such as consolidation of manufacturing facilities, transitions to cost-competitive regions, workforce reductions, asset impairments, product line rationalizations and other cost-saving initiatives.
Our profitability and margin growth are dependent upon, among other things, our ability to drive efficiency improvements throughout our organization. In addition, we seek productivity and cost savings benefits through repositioning actions and projects, such as consolidation of manufacturing facilities, transitions to cost-competitive regions, workforce reductions, asset impairments, product line rationalizations, implementation of artificial intelligence tools and other cost-saving initiatives.
This international geographic footprint subjects us to many risks, including those related to: exchange control regulations; wage 21 and price controls; intellectual property protections; antitrust and environmental regulations; employment regulations; data privacy and data protection regulations; foreign investment laws; monetary and fiscal policies and protectionist measures that may prohibit acquisitions or joint ventures, establish local content requirements, or impact trade volumes; import, export and other trade restrictions (such as embargoes) and tariffs; anti-corruption and anti-bribery laws; transactions with state-owned enterprises; nationalization of private enterprises; natural and man-made disasters, hazards and losses; global health risks and pandemics; backlash from foreign labor organizations related to our repositioning actions; violence, civil and labor unrest; acts of terrorism; and our ability to hire and maintain qualified staff and maintain the safety of our employees throughout our operations.
Our international geographic footprint subjects us to many risks, including those related to: exchange control regulations; wage and price controls; intellectual property protections; antitrust and environmental regulations; employment regulations; data privacy and data protection regulations; foreign investment laws; monetary and fiscal policies and protectionist measures that may prohibit acquisitions or joint ventures, require local content, or impact trade volumes; import, export and other trade restrictions (such as embargoes) and tariffs; anti-corruption and anti-bribery laws; transactions with state-owned enterprises; nationalization of private enterprises; natural and man-made disasters, hazards and losses; global health risks and pandemics; disputes with labor organizations related to our repositioning actions; violence, civil and labor unrest; acts of terrorism; and our ability to hire and maintain qualified staff and maintain the safety of our employees throughout our operations.
These and other instabilities and uncertainties arising from the global geopolitical environment and the recent U.S. elections, along with the cost of compliance with increasingly complex and often conflicting regulations worldwide, can impair our flexibility in modifying product, marketing, pricing or other strategies for growing our businesses, as well as our ability to improve productivity and maintain acceptable operating margins.
These and other instabilities and uncertainties arising from the global geopolitical environment, along with the cost of compliance with increasingly complex and often conflicting regulations worldwide, can impair our flexibility in modifying product, marketing, pricing or other strategies for growing our businesses, as well as our ability to improve productivity and maintain acceptable operating margins.
We require working capital to meet our projected operating needs and fund ongoing R&D activities, capital expenditures, and other cash requirements, and may require additional capital in the future to finance our growth and development, upgrade and improve our manufacturing capabilities, implement further marketing and sales activities, fund additional R&D activities, satisfy regulatory and environmental compliance obligations, fund acquisitions or expansion, and meet varied working capital needs.
We require working capital to meet our projected operating needs and fund ongoing RD&E activities, capital expenditures, and other cash requirements, and may require additional capital in the future to finance our growth and development, upgrade and improve our manufacturing capabilities, implement further marketing and sales activities, fund additional RD&E activities, satisfy regulatory and environmental compliance obligations, fund acquisitions or expansion, and meet varied working capital needs.
We have identified certain countries, such as China and India, as key high-growth geographic markets. We believe these markets are likely to experience substantial long-term growth, and accordingly have made and expect to continue to make substantial investments in manufacturing operations, technical centers, R&D activities and other infrastructure to support anticipated growth in these areas.
We have identified certain countries, such as China and India, as key high-growth geographic markets. We believe these markets are likely to experience substantial long-term growth and accordingly, have made and expect to continue to make substantial investments in manufacturing operations, technical centers, RD&E activities and other infrastructure to support anticipated growth in these areas.
Any declaration and payment of dividends on our 28 Common Stock will depend on our earnings, financial condition, liquidity and capital requirements, the general economic climate, the terms of our equity securities, contractual restrictions, our ability to service our debt obligations and other factors deemed relevant by the Board of Directors from time to time.
Any declaration and payment of dividends on our Common Stock is subject to the approval of our Board of Directors and will depend on our earnings, financial condition, liquidity and capital requirements, the general economic climate, the terms of our equity securities, contractual restrictions, our ability to service our debt obligations and other factors deemed relevant by the Board of Directors from time to time.
Any failure, or perceived failure, by the Company to achieve these goals, further these initiatives, adhere to its public statements, comply with federal, state or international environmental, social and governance laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against the Company and materially adversely affect the Company’s business, reputation, results of operations and financial condition.
Any failure, or perceived failure, by us to achieve these goals, further these initiatives, adhere to its public statements, comply with federal, state or international environmental, social and governance laws and regulations, or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations and financial condition.
Global cybersecurity threats and incidents can range from uncoordinated individual attempts to gain unauthorized access to IT systems to sophisticated and targeted measures known as advanced persistent threats, directed at the Company, our products, our customers and/or our third-party service providers, including cloud providers.
Global cybersecurity threats and incidents can range from uncoordinated individual attempts to gain unauthorized access to IT systems to sophisticated and targeted measures known as advanced persistent threats, directed at us, our products, our customers, our suppliers and/or our third-party service providers, including cloud providers.
If our third-party manufacturers fail to deliver products, parts and components of sufficient quality on time and at reasonable prices, we could have difficulties fulfilling our orders on similar terms or at all, sales and profits could decline, and our commercial reputation could be damaged.
If our suppliers fail to deliver products, parts and components of sufficient quality on time and at reasonable prices, we could have difficulties fulfilling our orders on similar terms or at all, sales and profits could decline, and our commercial reputation could be damaged.
Volatility in the cost and availability of raw materials, components, energy, transportation and other inputs has increased, and may continue to increase, our costs. 20 We have experienced, and may continue to experience, volatility in the cost and availability of raw materials, components, energy, transportation and other inputs as a result of a broad range of factors beyond our control, including, but not limited to, global pandemics, disruptions in the global supply chain, persistently high inflation and interest rates, new or higher tariffs and geopolitical tensions.
We have experienced, and may continue to experience, volatility in the cost and availability of raw materials, components, energy, transportation, labor and other inputs as a result of a broad range of factors beyond our control, including, but not limited to, global pandemics, disruptions in the global supply chain, persistently high inflation and interest rates, new or higher tariffs and geopolitical tensions.
Once business has been awarded, the OEM customer typically retains the ability to terminate the arrangement without penalty and does not commit to purchase a minimum volume of products while the contract is in effect.
Once business has been awarded, the OEM customer typically retains the ability to terminate the agreement for convenience and without penalty and does not commit to purchase a minimum volume of products while the contract is in effect.
In particular, there is increased public awareness and concern regarding global climate change and climate-related risks, which has resulted, and is expected to continue to result, in increased local, regional and global regulations concerning environmental practices, including requirements to reduce and/or mitigate the effects of greenhouse gas emissions, as well as requirements to make disclosures regarding greenhouse gas emissions, climate-related matters such as enterprise risks, climate-related targets and otherwise, such as those recently adopted in California and Europe, including the Carbon Border Adjustment Mechanism and the Corporate Sustainability Reporting Directive.
In particular, over the past several years, there has been increased public awareness and concern in various jurisdictions in which we operate regarding global climate change and climate-related risks, which has resulted, and is expected to continue to result, in increased local, regional and global regulations concerning environmental practices, including requirements to reduce and/or mitigate the effects of greenhouse gas emissions, as well as requirements to make disclosures regarding greenhouse gas emissions, climate-related matters such as enterprise risks, climate-related targets and otherwise, such as those recently adopted in California and Europe, including the Carbon Border Adjustment Mechanism and the Corporate Sustainability Reporting Directive.
If our cash flows were to become insufficient to cover our capital requirements or our access to capital were to become constrained, or if costs of capital increased significantly, whether due to lowered credit ratings, prevailing industry conditions, the solvency of our customers, a material decline in demand for our products, the volatility of the capital markets or other factors, our cash flows and financial condition could be materially adversely affected.
If our cash flows were to become insufficient to service our indebtedness or cover our capital requirements or our access to capital were to become constrained, or if costs of capital increased significantly, whether due to prevailing industry conditions, the solvency of our customers, a material decline in demand for our products, the volatility of the capital markets or other factors, our financial condition and results of operations could be materially adversely affected.
These conditions may negatively impact our credit ratings, which could reduce our ability to access new capital and increase our cost of capital, which would negatively impact our financial condition and results of operations. Our debt agreements contain restrictions that limit our flexibility in operating our business.
These conditions may negatively impact our credit ratings, which could reduce our ability to access new capital and further increase our cost of capital, which would negatively impact our financial condition and results of operations. Our debt agreements contain restrictions that limit our financial and operational flexibility.
Our results of operations and financial condition could be adversely affected by these trends, including if we fail to respond in a timely and appropriate manner to changes in the demand for our aftermarket products. Additionally, we rely upon a network of independent dealers to manage the distribution of our aftermarket products.
Our results of operations and financial condition could be adversely affected by these trends, including if we fail to timely and effectively respond to changes in the demand for our aftermarket products. Additionally, we rely upon a network of independent dealers to distribute our aftermarket products.
The Company is not obligated to purchase any shares under the share repurchase program, and the program may be suspended, modified, or discontinued at any time without prior notice. Item 1B. Unresolved Staff Comments None.
We are not obligated to purchase any shares under the share repurchase program, and the program may be suspended, modified, or discontinued at any time without prior notice. Item 1B. Unresolved Staff Comments None. 28
Many customers, regulators, investors, employees, and other stakeholders are increasingly focused on sustainability practices, including environmental and social considerations, relating to our businesses and industry, particularly with regards to climate change and greenhouse gas emissions, human and civil rights, and diversity, equity and inclusion.
Many customers, regulators, investors, employees, and other stakeholders in various jurisdictions in which we operate are increasingly focused on sustainability practices, including environmental and social considerations, relating to our businesses and industry, particularly with regards to climate change and greenhouse gas emissions, human and civil rights, 19 and diversity, equity and inclusion.
There is no guarantee that we will be able to pass through these increased costs to our customers, or are otherwise unable to mitigate these cost increases, it could have an adverse effect on our results of operations and financial condition.
There is no guarantee that we will be able to pass through these increased costs to our customers, and if we are otherwise unable to mitigate these cost increases, such cost increases could have a material adverse effect on our results of operations and financial condition.
Furthermore, a significant source of the funds attributable to Garrett Motion Inc. are derived from distributions from our non-U.S. subsidiaries. Certain countries in which we operate have adopted or could institute currency exchange controls that limit or prohibit the Company’s local subsidiaries' ability to convert local currency into U.S. Dollars or to make payments outside the country.
Furthermore, a significant source of the funds attributable to our parent company is from distributions from our non-U.S. subsidiaries. Certain countries in which we operate have adopted or could institute currency exchange controls that limit or prohibit our local subsidiaries' ability to convert local currency into U.S. dollars or to make payments outside the country.
Conversely, if emissions regulations are weakened, postponed or repealed, demand for emissions-reducing technologies, such as turbochargers, may be negatively impacted.
Conversely, if emissions regulations are weakened, postponed or repealed, demand for emissions-reducing technologies, such as turbochargers, may decline.
We are therefore subject to risks inherent in operating in various jurisdictions at a local level. In particular, a work stoppage or other disruption at any of our facilities in a given region could have a material adverse effect on our business, especially insofar as it impacts our ability to serve our customers.
We are therefore subject to risks inherent in operating in various jurisdictions at a local level. In particular, a work stoppage or other disruption at any of our facilities in a given region could have a material adverse effect on our business.
We are dependent on the continued growth, viability and financial stability of our customers, a substantial portion of whom are OEMs in the automotive industry, which is sensitive to general economic conditions and other factors, such as consumer confidence and preferences, inflation, tax rates, interest rates and fuel costs, as well as industry-specific conditions, such as rapid technological change often driven by regulatory changes, vigorous competition, short product life cycles, supplier stability, factory transitions and capacity concerns.
We are dependent on the continued growth and financial stability of our customers, a substantial portion of whom are OEMs in the automotive industry, which is cyclical and influenced by general economic conditions and other factors, such as consumer confidence and preferences, inflation, tax policies, interest rates and fuel costs, as well as industry-specific factors, such as rapid technological change, regulatory changes, vigorous competition, product life cycles, supplier stability, and capacity constraints.
Increased public awareness and concern regarding global climate change may result in even more local, regional and/or federal requirements to reduce or mitigate the effects of greenhouse gas emissions further, and several markets in which we operate are already undertaking efforts to ban internal combustion vehicles altogether.
Over the past several years, there has been increased public awareness and concern in various regions in which we operate regarding global climate change, which has resulted, and may continue to result, in even more local, regional and/or federal requirements to reduce or mitigate the effects of greenhouse gas emissions further, and several regions in which we operate are already undertaking efforts to ban internal combustion vehicles altogether.
Economic and industry conditions have had, and will continue to have, an impact on our business, whether directly or indirectly through our customers and suppliers.
Economic and industry conditions have had, and will continue to have, an impact on our business, whether directly or indirectly through our customers and suppliers. Regional concentration could amplify these affects.
The automotive industry is increasingly focused on improved vehicle efficiency and reduced emissions, including through the development of hybrid and full-battery electric vehicles, largely driven by increasingly stringent government regulations related to emissions and changing consumer preferences, and we expect this trend to continue.
The automotive industry is increasingly focused on improved vehicle efficiency and reduced emissions, including through the development of hybrid and electric vehicles. This evolution is largely driven by increasingly stringent emissions regulations and changing consumer preferences, and we expect this trend to continue in many of the regions in which we operate.
Sales in our aftermarket operations are directly related to consumer demand and spending for automotive aftermarket products, which may be affected by factors outside of our control, such as the average useful life of OEM parts and components, severity of regional weather conditions, highway and roadway infrastructure deterioration and the average number of miles vehicles are driven by owners.
Sales in our aftermarket operations are directly related to consumer demand for automotive aftermarket products, which may be affected by factors outside of our control, such as the average useful life of OEM parts and components, regional weather conditions, road infrastructure deterioration and average vehicle mileage.
The launch of new programs and product lines is a complex process, the success of which depends on a wide range of factors, including the production readiness of our manufacturing facilities and manufacturing processes and those of our suppliers, as well as factors related to tooling, equipment, employees, product quality and other considerations.
Risks Related to our Operations: Our profitability and results of operations may be adversely affected by program launch difficulties. 20 The launch of new programs and product lines is a complex process, the success of which depends on a wide range of factors, including the production readiness of our manufacturing facilities and manufacturing processes and those of our suppliers, as well as factors related to tooling, equipment, employees, product quality and other considerations.
Any impairment of our intellectual property rights, including due to changes in U.S. or foreign intellectual property laws or the absence of effective legal protections or enforcement measures, could adversely impact our businesses, financial condition and results of operations.
Any impairment of our intellectual property rights, including due to changes in U.S. or foreign intellectual property laws or the absence of effective legal protections or enforcement measures, could adversely impact our businesses, financial condition and results of operations. Adoption of artificial intelligence tools are expected to exacerbate these risks as well.
We rely on sales to major customers, and we could be adversely impacted by the loss of any such major customers, changes in their requirements for our products or changes in their financial condition. In 2024, our top ten customers accounted for approximately 62% of our net sales and our largest customer accounted for approximately 12% of our net sales.
We rely on sales to major customers, and we could be adversely impacted by the loss of any such major customers, changes in their requirements for our products or changes in their financial condition.
The loss of key employees, our inability to attract new qualified employees or adequately train new employees, or any delay in hiring or replacing key personnel, could disrupt our operations and negatively affect our business, financial condition and results of operations. Risks Related to our Operations: Our profitability and results of operations may be adversely affected by program launch difficulties.
The loss of key employees, our inability to attract new qualified employees or adequately train new employees, any delay in hiring or replacing key personnel, could disrupt our operations and negatively affect our business, financial condition and results of operations.
We may not be able to successfully negotiate favorable pricing and other terms with our customers, which may adversely affect our results of operations. There is substantial and continuing pressure on OEMs to reduce costs, including the costs of the products we supply. Our customer supply agreements typically require step-downs in component pricing over the period of production.
We may not be able to successfully negotiate favorable pricing and other terms with our customers, which may adversely affect our results of operations. There is substantial and continuous pressure on OEMs to reduce costs, including the costs of the products we supply.
Furthermore, the publicity we may receive as a result of infringing intellectual property rights may damage our reputation and adversely impact our existing customer relationships and our ability to win new business.
Furthermore, the publicity we may receive as a result of infringing intellectual property rights may damage our reputation and adversely impact our existing customer relationships and our ability to win new business. Work stoppages, other disruptions, or the need to relocate any of our facilities could significantly disrupt our business.
Economic declines that result in significant reductions in automotive sales or production, particularly with respect to light vehicles, or the failure to recover from such economic declines on timelines that we anticipate, would have an adverse effect on our business, results of operations and financial condition. Our aftermarket business is subject to unique risks.
A decline in economic conditions that result in significant reductions in automotive sales or production, particularly with respect to light vehicles, or slower-than-expected recovery from such declines, could have an adverse effect on our business, results of operations and financial condition. 18 Our aftermarket business is subject to unique risks.
Given the relative importance of our off-highway after market business, 18 trends in agriculture, mining, oil and gas and construction can influence our aftermarket demand as well. Improvements in technology and product quality are extending the longevity of vehicle component parts, which may result in delayed or reduced aftermarket sales.
Given the relative importance of our off-highway aftermarket business, trends in agriculture, mining, oil and gas, marine, data centers and construction can also influence our aftermarket demand. Improvements in technology and product quality are extending the longevity of component parts, which may delay or reduce aftermarket sales.
If we are required to make more significant investments than expected, if consumer demand for zero-emission vehicles fails to develop or develops more slowly than expected or if competition for electrification technologies is more intense than we expect, our business, financial condition and results of operations may be materially adversely affected. We operate in a highly competitive market.
Further, if required investments exceed expectations, if consumer demand for our and our customers' new products fails to develop or develops more slowly than expected, or if competition for such technologies is more intense than we expect, our business, financial condition and results of operations may be materially adversely affected. We operate in highly competitive industries.
If we fail to adequately assess the creditworthiness and operational reliability of existing or future suppliers, if our suppliers become insolvent, if there is any unanticipated deterioration in their creditworthiness and operational reliability, or if they do not perform or adhere to our existing or future contractual arrangements, any resulting increase in non-performance by them, our inability to otherwise obtain the supplies or our inability to enforce the terms of the contract or seek other remedies could have a material adverse effect on our financial condition and results of operations.
If we fail to adequately assess the creditworthiness and operational reliability of our suppliers, if our suppliers become insolvent, if there is any unanticipated deterioration in their creditworthiness and operational reliability, or if they do not perform or adhere to contractual arrangements, we may not be able to enforce the terms of the contract or obtain alternative supply on favorable terms, if at all, which could have a material adverse effect on our financial condition and results of operations.
We have substantial consolidated indebtedness. As of December 31, 2024, we had gross outstanding debt of $1,493 million. Our ability to generate sufficient cash flows from operations to service our indebtedness, run our business and execute our growth strategy depends on a range of economic, competitive and business factors, many of which are outside of our control.
Our ability to generate sufficient cash flows from operations to service our indebtedness, run our business and execute our growth strategy depends on a range of economic, competitive and business factors, many of which are outside of our control.
Work stoppages, other disruptions, or the need to relocate any of our facilities could significantly disrupt our business. 23 Our geographic footprint emphasizes locating engineering and manufacturing capabilities in close physical proximity to our customers and in regions with relatively lower costs than more developed markets, thereby enabling us to adopt technologies and products for the specific vehicle types sold in each geographic market and to manage costs.
Our geographic footprint emphasizes locating engineering and manufacturing capabilities in close physical proximity to our customers and in regions with relatively lower costs than more developed markets, thereby enabling us to adapt technologies and products for the specific vehicle types sold in each geographic market in which we operate and to manage costs.
Depending on their nature and scope, these could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (our own or that of third parties) and the disruption of business operations.
We have in the past experienced, and may in the future experience, cyber or other security incidents. Depending on their nature and scope, these could potentially result in the misappropriation, destruction, corruption or unavailability of our third parties' critical data and confidential or proprietary information and the disruption of business operations.
We are subject to the economic, political, regulatory, foreign exchange and other risks of our international operations. We operate within a geographic footprint that emphasizes locating R&D, engineering and manufacturing capabilities in close physical proximity to our customers and in regions with relatively lower costs than more developed markets.
We are subject to the economic, political, regulatory, foreign exchange and other risks of our international operations. We seek to locate RD&E, and manufacturing capabilities close to our customers and in regions with relatively lower costs than more developed markets.
Our capital requirements will depend on many factors, including acceptance of and demand for our products, the extent to which we invest in new technology and R&D projects and the status and timing of these developments. Additional financing may not be available on favorable terms, or at all.
Our capital requirements depend on many factors, including acceptance of and demand for our products, the extent to which we invest in new technology and RD&E projects and the status and timing of these developments.
The actual declaration and payment of any dividend is subject to the approval of our Board of Directors. There can be no assurance that we will declare and pay dividends in the future at any level, or at all.
There can be no assurance that we will continue to declare and pay dividends in the future at any level, or at all.
We may also be required to expend significant costs and resources to protect against security incidents. The costs related to cyber or other security incidents may not be fully insured or indemnified by other means. The successful assertion of a large claim against us with respect to a cyber or other security incident could seriously harm our business.
We may also be required to expend significant costs and resources to protect against cyber or other security incidents. The costs related to cyber or other security incidents may not be fully insured or indemnified by other means.
In addition, our customers often reserve the right to terminate their supply contracts at any time, which enhances their ability to obtain price reductions. OEMs have also exercised significant influence over their suppliers, including us, because the automotive component supply industry is highly competitive and serves a limited number of customers.
OEMs have also exercised significant influence over their suppliers, including us, particularly because in the automotive component supply industry, which is highly competitive and serves a limited number of customers.
System or service failures, including as a result of cyber or other security incidents, could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations.
System or service failures, including as a result of cyber or other security incidents, could disrupt business operations, result in the loss of critical and confidential information, and adversely impact our reputation and results of operations. 25 We rely upon information technology systems to manage or support a variety of our business processes, activities and products, many of which involve sensitive information.
Many of these new technologies are in the pre-development stage and there is no guarantee that they will be successful. Further, investment in these new technologies is dependent on the profits generated from our turbocharger business; reduced demand for our turbochargers could impact our ability to invest in these new technologies.
Investment in these new technologies is dependent on the profits generated from our turbocharger business, and reduced demand for our turbochargers could impact our ability to invest in these new technologies.
We compete with start-ups, which may be well-funded with more operational and financial flexibility than we have, and with competitors that are larger than we are, which may have greater financial and other resources than we do.
Our competitors include independent regional and multi-regional suppliers as well as vertically integrated internal business units of major automotive OEMs. We also compete with start-ups, which may be well-funded with more operational and financial flexibility than we have, and with competitors that are larger than we are, which may have greater financial and other resources than we do.
We compete globally with several other manufacturers and distributors that produce and sell turbochargers, and we face intense competition in the development of technologies for electrification and other zero-emission solutions. Our competitors include independent regional and international suppliers as well as vertically integrated units of major OEMs.
We compete in various regions of the world with several other manufacturers and distributors that produce and sell turbochargers and other products that we sell, and we face intense competition in the development of technologies for electrification and other zero-emission solutions.
We may incur material losses as a result of warranty claims, product recalls or field actions, as well as product liability actions that may be brought against us or our customers.
We may incur material losses as a result of warranty claims, product recalls or field actions, as well as product liability actions that may be brought against us or our customers. 24 We face the risk of warranty and product liability claims, as well as product recalls and field actions, if our products actually or allegedly fail to perform to specifications or cause property damage or personal injury or death.
There has been an increase in the frequency and sophistication of cyber threats our industry faces, and our customers, partners and regulators are increasingly requiring cyber and other security protections and mandating security standards. We have in the past experienced, and may in the future experience, cyber or other security incidents.
There has been an increase in the frequency and sophistication of cybersecurity threats our industry faces, particularly in light of the proliferation of artificial intelligence technologies, which is expected to continue, and our customers, partners and regulators are increasingly requiring cyber and other security protections and mandating security standards.
Additionally, certain organizations have developed rating systems for evaluating companies on their approach to sustainability, and unfavorable ratings may lead to negative customer and/or investor sentiment. Furthermore, our practices may be judged against sustainability standards that are continually evolving and not always clear, and prevailing sustainability standards, 19 expectations and regulations may also reflect contrasting or conflicting values or agendas.
Furthermore, our practices may be judged against sustainability standards that are continually evolving and not always clear, and prevailing sustainability standards, expectations and regulations across jurisdictions may also reflect contrasting or conflicting values or agendas.
Even if not successful, these claims could result in significant legal and other costs, may be a distraction to our management and harm our customer relationships, as well as our reputation. Risks Related to Our Capital Structure Our substantial indebtedness and other obligations could adversely affect our financial health and our ability to execute our business strategy.
The successful assertion of a large claim against us with respect to a cyber or other security incident could seriously harm our business. Even if not successful, these claims could result in significant legal and other costs, may be a distraction to our management and harm our customer relationships, as well as our reputation.
Such declines could lead to a material increase in the unfunded obligations of these plans, which could require us to make significant additional contributions to our pension plans and increase our pension expense. Ownership positions of certain of our major stockholders may lead to conflicts of interest and could negatively impact the price of our securities.
Such declines could lead to a material increase in the unfunded obligations of these plans, which could require us to make significant additional contributions to our pension plans and increase our pension expense. There can be no assurance that we will pay dividends or repurchase shares of our Common Stock under our share repurchase program.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Cyber Risk Governance Council meets monthly to review cybersecurity risks and related risk management methodologies. Cybersecurity risks are included in the Company’s ERM as appropriate based on potential impact and vulnerability assessed according to certain set criteria and defined ERM materiality thresholds.
Biggest changeCybersecurity risks are included in the Company’s ERM as appropriate based on potential impact and vulnerability assessed according to certain set criteria and defined ERM materiality thresholds. Regular discussions of cybersecurity developments and risk mitigation approaches are held by the CDIO & CISO with the Chief Executive Officer and the senior leadership team.
Role of the Board The Board of Directors is responsible for overseeing overall risk management for the Company, including review and approval of the enterprise risk management approach and processes implemented by management to identify, assess, manage and mitigate risk. The Board has delegated responsibility for oversight of the Company's cybersecurity framework and risk management to the Audit Committee.
Role of the Board The Board of Directors is responsible for overseeing overall risk management for the Company, including review and approval of the enterprise risk management approach and processes implemented by management to identify, assess, 29 manage and mitigate risk. The Board has delegated responsibility for oversight of the Company's cybersecurity framework and risk management to the Audit Committee.
The Company also engages in cyber crisis response simulation to assess our incident response ability and effectiveness. No cybersecurity incidents have occurred that materially affected, or are reasonably likely to materially affect, the Company, including its business strategy, results of operations or financial condition during the year ended December 31, 2024.
The Company also engages in cyber crisis response simulation to assess our incident response ability and effectiveness. No cybersecurity incidents have occurred that materially affected, or are reasonably likely to materially affect, the Company, including its business strategy, results of operations or financial condition during the year ended December 31, 2025.
The SOC provides visibility across all information technology assets and includes proactive cyber security threat detection technology to facilitate the identification of misconfigurations to mitigate threats and prevent data loss. As part of the Company’s holistic approach to cybersecurity, we have implemented programs and technology associated with threat hunting, vulnerability scanning, and threat detection and response technology.
The Security Operations Center ("SOC") provides visibility across all information technology assets and includes proactive cyber security threat detection technology to facilitate the identification of misconfigurations to mitigate threats and prevent data loss. As part of the Company’s holistic approach to cybersecurity, we have implemented programs and technology associated with threat hunting, vulnerability scanning, and threat detection and response technology.
Item 1C. Cybersecurity Risk Management and Strategy The Company's cybersecurity objective is to protect Garrett against data privacy breaches, information theft, and external and insider cyber threats through the use of a combination of leading technologies, policies, and procedures.
Item 1C. Cybersecurity Risk Management and Strategy Our cybersecurity objective is to protect against data privacy breaches, information theft, and external and insider cyber threats through the use of a combination of cyber technologies, policies, and procedures.
Notwithstanding the extensive approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us in the future. See Item 1A.
Notwithstanding the extensive approach we take to cybersecurity, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us in the future. See Item 1A. " Risk Factors " for a discussion of cybersecurity risks.
The Company leverages third-party expertise for periodic effectiveness testing of its prevention, detection, and response capabilities. The Company also requires all third-party service providers to meet certain cybersecurity requirements, including risk assessment and monitoring activities. In addition, third-party service providers with access to the Company's network are also required to undertake cybersecurity training.
The Company uses third-party expertise for periodic effectiveness testing of its prevention, detection, and response capabilities. The Company also requires all third-party service providers to meet specific cybersecurity requirements, including risk assessment and monitoring activities. In addition, third-party service providers with access to the Company's network have additional obligations including a requirement to undertake cybersecurity training.
"Risk Factors" for a discussion of cybersecurity risks. 29 Governance Role of Management The Company has a Cyber Risk Governance Council consisting of the Senior Vice President Chief Digital and Information Officer (“CDIO”), the CISO, the IT leadership team, and the legal and cybersecurity teams that focuses on cybersecurity and compliance risks.
Governance Role of Management The Company has a Cyber Risk Governance Council consisting of the Senior Vice President Chief Digital and Information Officer (“CDIO”), the CISO, the IT leadership team, and the cybersecurity team that focuses on cybersecurity and compliance risks. The Cyber Risk Governance Council meets periodically to review cybersecurity risks and related risk management methodologies.
The Company has processes in place to identify, assess and monitor material risks from cybersecurity threats, which are part of the Company’s overall enterprise risk management ("ERM") process and have been embedded in the Company’s operating procedures, internal controls and information systems.
We have processes to identify, assess, monitor and mitigate material risks from cybersecurity threats, which are part of the Company’s overall enterprise risk management ("ERM") process and have been embedded in the Company’s operating procedures, internal controls and information systems. To that end, we take a holistic approach to securing our data and business systems from attack, compromise or loss.
To that end, we take a holistic approach to securing our data and business systems from attack, compromise or loss. The Company has cybersecurity capability, including a Security Operations Center ("SOC") that is managed by a dedicated Chief Information Security Officer (“CISO”) whose team is responsible for leading the Company-wide cybersecurity strategy, policy, standards, architecture, and processes.
The Company has cybersecurity capability that is managed by a dedicated Chief Information Security Officer (“CISO”) whose team is responsible for leading the Company-wide cybersecurity strategy, policy, standards, architecture, and processes.
Regular discussions over cybersecurity developments and risk mitigation approaches are held by the Cyber Risk Governance Council with the Chief Executive Officer and the senior leadership team. The CISO has over 27 years of experience in IT in various capacities with over 21 years in cybersecurity, reporting into the CDIO, who has over 20 years of IT related experience.
The CISO has over 28 years of experience in IT in various capacities with over 22 years in cybersecurity, reporting to the CDIO, who has over 20 years of IT related experience.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also have many smaller sales offices, warehouses, cybersecurity and integrated vehicle health management sites and other investments strategically located throughout the world.
Biggest changeAs of December 31, 2025, we owned or leased 13 manufacturing sites, six R&D centers and ten close-to-customer engineering sites, all of which are subject to liens pursuant to the Credit Agreement (as defined herein). We also have many smaller sales offices, warehouses, cybersecurity and integrated vehicle health management sites and other investments strategically located throughout the world.
The following table shows the ownership and regional distribution of our manufacturing sites, R&D centers and customer engineering sites: Ownership Regional distribution Owned Leased North America Europe, Middle East & Africa South Asia & Asia Pacific South America Total Manufacturing Sites 9 4 2 5 5 1 13 R&D Centers 1 4 1 2 2 — 5 Close-to-Customer Engineering Sites 4 5 2 3 3 1 9 We continually and proactively review our real estate portfolio and develop footprint strategies to support our customers’ global plans, while at the same time supporting our technical needs and optimizing operating cost base.
The following table shows the ownership and regional distribution of our manufacturing sites, R&D centers and customer engineering sites: Ownership Regional distribution Owned Leased North America Europe, Middle East & Africa South Asia & Asia Pacific South America Total Manufacturing Sites 9 4 2 5 5 1 13 R&D Centers 1 5 1 2 3 — 6 Close-to-Customer Engineering Sites 4 6 2 4 3 1 10 We continually and proactively review our real estate portfolio and develop footprint strategies to support our customers’ global plans, while at the same time supporting our technical needs and optimizing operating cost base.
We expect our evolving portfolio will meet current and anticipated future needs. Item 3. Legal Proceedings The discussion under Note 25, Commitments and Contingencies of the Notes to the Consolidated Financial Statements is incorporated by reference into this Part I, Item 3. Item 4. Mine Safety Disclosures 30 Not Applicable. 31 PART II
We expect our evolving portfolio will meet current and anticipated future needs. Item 3. Legal Proceedings The discussion under Note 23, Commitments and Contingencies of the Notes to the Consolidated Financial Statements is incorporated by reference into this Part I, Item 3. Item 4. Mine Safety Disclosures Not Applicable. 30 PART II
Item 2. Properties We have created a geographic footprint that emphasizes locating R&D, engineering and manufacturing capabilities in close physical proximity to our customers, thereby enabling us to manage our environmental footprint and to adopt technologies and products for the specific vehicle types sold in each geographic market.
Item 2. Properties We have created a geographic footprint that emphasizes locating RD&E and manufacturing capabilities in close physical proximity to our customers, thereby enabling us to manage our environmental footprint and to adopt technologies and products for the specific vehicle types sold in each geographic market.
Over the past several years, we have invested heavily to be close to our Chinese, Indian and other high-growth region OEM customers to be able to offer world-leading technologies, localized engineering support and unparalleled manufacturing productivity. As of December 31, 2024, we owned or leased 13 manufacturing sites, five R&D centers and nine close-to-customer engineering sites.
Over the past several years, we have invested heavily to be close to our Chinese, Indian and other high-growth region OEM customers to be able to offer world-leading technologies, localized engineering support and unparalleled manufacturing productivity.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividend Policy In December 2024, the Board of Directors announced that it intends to declare and pay quarterly dividends on our Common Stock in an aggregate amount of approximately $50 million in 2025.
Biggest changeDividends In January 2025, we began paying a quarterly dividend on our Common Stock and we anticipate that we will continue to declare and pay dividends on our common stock quarterly.
The comparisons reflected in the graph and table are not intended to forecast the future performance of our Common Stock and may not be indicative of our future performance. 32 Recent Sales of Unregistered Securities During the period covered by this Annual Report on Form 10-K, we did not offer or sell any equity securities that were not registered under the Securities Act.
The comparisons reflected in the graph and table are not intended to forecast the future performance of our Common Stock and may not be indicative of our future performance. 31 Recent Sales of Unregistered Securities During the period covered by this Annual Report on Form 10-K, we did not offer or sell any equity securities that were not registered under the Securities Act.
The following graph and table illustrate the total return from April 30, 2021, the date of the Company's emergence from Chapter 11 bankruptcy proceedings ("Emergence") through December 31, 2024, for (i) our Common Stock, (ii) the Standard and Poor’s (“S&P”) Small Cap 600 Index, and (iii) the average stock performance of a group of peer companies consisting of Adient plc, Allison Transmission Holdings, Inc., American Axle & Manufacturing Holdings, Inc., Aptiv PLC, Autoliv Inc., BorgWarner Inc., Dana Incorporated, Gentex Corporation, Lear Corporation, Magna International Inc., Tenneco Inc., Veoneer, Inc., and Visteon Corporation (the "Peer Group").
The following graph and table illustrate the total return from April 30, 2021, the date of the Company's emergence from Chapter 11 bankruptcy proceedings ("Emergence") through December 31, 2025, for (i) our Common Stock, (ii) the Standard and Poor’s (“S&P”) Small Cap 600 Index, and (iii) the average stock performance of a group of peer companies consisting of Adient plc, Allison Transmission Holdings, Inc., American Axle & Manufacturing Holdings, Inc., Aptiv PLC, Autoliv Inc., BorgWarner Inc., Dana Incorporated, Gentex Corporation, Lear Corporation, Magna International Inc., Tenneco Inc., Veoneer, Inc., and Visteon Corporation (the "2022 Peers").
(2) The share repurchase program expired on December 31, 2024, with an unused balance of $54 million. Other than the amounts repurchased as part of our share repurchase program, there were no purchases of equity securities by the issuer or affiliated purchasers during the quarter ended December 31, 2024.
(2) The share repurchase program expired on December 31, 2025, with an unused balance of $42 million. Other than the amounts repurchased as part of our share repurchase program, there were no purchases of equity securities by the issuer or affiliated purchasers during the quarter ended December 31, 2025.
The timing, declaration, amount and payment of dividends to stockholders on shares of our Common Stock falls within the discretion of the Board and will depend on our earnings, financial condition, liquidity and capital requirements, the general economic climate, the terms of our equity securities, contractual restrictions, our ability to service our debt obligations and other factors deemed relevant by the Board.
However, the timing, declaration, amount and payment of any dividends to stockholders on shares of our Common Stock falls within the sole discretion of the Board of Directors and will depend on various factors, including our earnings, financial condition, liquidity and capital requirements, the general economic climate, the terms of our equity securities, contractual restrictions, our ability to service our debt obligations and other factors deemed relevant by the Board of Directors.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The Common Stock trades on the Nasdaq Global Select Market under the ticker symbol "GTX". Holders of Record As of February 14, 2025, there were 26,859 stockholders of record of our Common Stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information The Common Stock trades on the Nasdaq Global Select Market under the ticker symbol "GTX". Holders of Record As of February 13, 2026, there were 24,855 stockholders of record of our Common Stock.
On December 5, 2024, the Board of Directors declared a cash dividend of $0.06 per share of our Common Stock, payable on January 31, 2025, to shareholders of record as of January 15, 2025.
On December 5, 2024, the Board of Directors declared a cash dividend of $0.06 per share of our Common Stock, payable on January 31, 2025, to shareholders of record as of January 15, 2025. The total amount of dividends paid on January 31, 2025 amounted to $12 million.
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. The share repurchase program expired on December 31, 2024.
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. Item 6. Reserved Not applicable.
On December 4, 2024, the Board of Directors authorized a new $250 million share repurchase program valid from January 1, 2025, until December 31, 2025. Item 6. Reserved Not applicable.
Issuer Purchases of Equity Securities On December 4, 2024, the Board of Directors authorized a $250 million share repurchase program valid January 1, 2025 until December 31, 2025.
The following table summarizes our share repurchase activity for the three months ended December 31, 2024, and additional information regarding our share repurchase program. 33 Period Total Number of Common Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Program October 1, 2024 - October 31, 2024 2,284,922 $ 7.92 2,284,922 106,284,643 November 1, 2024 - November 30, 2024 2,150,475 $ 7.89 2,150,475 89,324,715 December 1, 2024 - December 31, 2024 3,963,585 $ 8.95 3,963,585 — (2) Total 8,398,982 $ 8.40 8,398,982 (1) Excludes shares withheld to satisfy tax withholding obligations in connection with the vesting of equity awards.
The following table summarizes our share repurchase activity for the three months ended December 31, 2025, and additional information regarding our share repurchase program. 32 Period Total Number of Common Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Program Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Program October 1, 2025 - October 31, 2025 905,464 $ 12.80 905,464 102,713,494 November 1, 2025 - November 30, 2025 3,058,977 $ 16.38 3,058,977 52,617,358 December 1, 2025 - December 31, 2025 612,940 $ 17.04 612,940 — (2) Total 4,577,381 $ 15.76 4,577,381 (1) Excludes shares withheld to satisfy tax withholding obligations in connection with the vesting of equity awards.
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.
On December 3, 2025, the Board of Directors authorized a new $250 million share repurchase program valid from January 1, 2026, until December 31, 2026. The timing, as well as the number and value of shares repurchased under the program, will depend on a variety of factors.
Removed
Issuer Purchases of Equity Securities On February 15, 2024, the Company announced that the Board of Directors had authorized a $350 million share repurchase program valid from February 13, 2024, until December 31, 2024.
Added
On May 1, 2025, the Board of Directors declared a cash dividend of $0.06 per share of our Common Stock, payable on June 16, 2025, to shareholders of record as of June 2, 2025. The total amount of dividends paid on June 16, 2025 amounted to $13 million.
Added
On July 24, 2025, the Board of Directors declared a cash dividend of $0.06 per share of our Common Stock, payable on September 16, 2025, to shareholders of record as of September 2, 2025. The total amount of dividends paid on September 16, 2025 amounted to $11 million.
Added
On October 23, 2025, the Board of Directors declared a cash dividend of $0.08 per share of our Common Stock, payable on December 15, 2025, to shareholders of record as of December 1, 2025. The total amount of dividends paid on December 15, 2025 amounted to $16 million.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

3 edited+0 added−0 removed0 unchanged
Biggest changeFinancial Statements and Supplementary Data 49 Report of Independent Registered Public Accounting Firm ( PCAOB ID No. 1235 ) 49 Consolidated Statements of Operations 52 Consolidated Statements of Comprehensive Income 53 Consolidated Balance Sheets 54 Consolidated Statements of Cash Flows 55 Consolidated Statements of Equity (Deficit) 56 Notes to the Consolidated Financial Statements 57 Item 9 .
Biggest changeFinancial Statements and Supplementary Data 46 Report of Independent Registered Public Accounting Firm ( PCAOB ID No. 1235 ) 46 Consolidated Statements of Operations 49 Consolidated Statements of Comprehensive Income 50 Consolidated Balance Sheets 51 Consolidated Statements of Cash Flows 52 Consolidated Statements of Equity (Deficit) 53 Notes to the Consolidated Financial Statements 54 Item 9 .
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 96 Item 9A. Controls and Procedures 96 Item 9B. Other Information 96
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 94 Item 9A. Controls and Procedures 94 Item 9B. Other Information 94
Item 6. Reserved 34 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 34 Item 7A. Quantitative and Qualitative Disclosures About Market Risks 47 Item 8.
Item 6. Reserved 33 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risks 44 Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

56 edited+26 added−62 removed33 unchanged
Biggest changeBy Region Year Ended December 31, 2024 2023 2022 (Dollars in millions) United States $ 700 20 % $ 744 19 % $ 694 19 % Europe 1,642 47 % 1,874 48 % 1,734 48 % Asia 1,056 31 % 1,201 31 % 1,102 31 % Other International 77 2 % 67 2 % 73 2 % $ 3,475 $ 3,886 $ 3,603 By Product Line Year Ended December 31, 2024 2023 2022 (Dollars in millions) Diesel $ 827 24 % $ 992 25 % $ 949 26 % Gas 1,505 43 % 1,720 44 % 1,485 41 % Commercial Vehicle 629 18 % 656 17 % 673 19 % Aftermarket 459 13 % 456 12 % 442 12 % Other 55 2 % 62 2 % 54 2 % $ 3,475 $ 3,886 $ 3,603 Results of Operations for the Years Ended December 31, 2024, 2023 and 2022 Net Sales 35 Year Ended December 31, 2024 2023 2022 (Dollars in millions) Net sales $ 3,475 $ 3,886 $ 3,603 % change compared with prior period (10.6) % 7.9 % (0.8 %) The change in net sales compared to the prior year is attributable to the following: For the year ended December 31, 2024, net sales decreased compared to prior year by $411 million or 11%, including an unfavorable impact of $34 million or 1% due to foreign currency translation driven by lower Chinese Yuan-to-US dollar and lower Japanese Yen-to-US dollar exchange rates, partially offset by higher Euro-to-US dollar exchange rates.
Biggest changeBy Region Year Ended December 31, 2025 2024 (Dollars in millions) United States $ 694 19 % $ 700 20 % Europe 1,745 49 % 1,642 47 % Asia 1,044 29 % 1,056 31 % Other International 101 3 % 77 2 % $ 3,584 $ 3,475 By Product Line Year Ended December 31, 2025 2024 (Dollars in millions) Diesel $ 837 23 % $ 827 24 % Gas 1,592 45 % 1,505 43 % Commercial Vehicle 654 18 % 629 18 % Aftermarket 438 12 % 459 13 % Other 63 2 % 55 2 % $ 3,584 $ 3,475 Results of Operations Year Ended December 31, 2025 Compared with Year Ended December 31, 2024 Net Sales Year Ended December 31, 2025 2024 (Dollars in millions) Net sales $ 3,584 $ 3,475 % change compared with prior period 3.1 % (10.6) % 34 The change in net sales compared to the prior year is attributable to the following: For the year ended December 31, 2025, net sales increased compared to prior year by $109 million or 3%, including a favorable impact of $62 million or 2% due to foreign currency translation primarily driven by fluctuations in global exchange rates.
The pension cost and liabilities for these plans are developed from actuarial valuations. Inherent in these valuations are key assumptions including discount rates, expected return on plan assets, mortality rates, and compensation increases. The Company is required to consider current market conditions, including changes in interest rates, and employee demographics such as retirement patterns, in making its assumptions.
The pension cost and liabilities for these plans are developed from actuarial valuations. Inherent in 42 these valuations are key assumptions including discount rates, expected return on plan assets, mortality rates, and compensation increases. The Company is required to consider current market conditions, including changes in interest rates, and employee demographics such as retirement patterns, in making its assumptions.
We continually assess the likelihood of any adverse judgments or outcomes to our contingencies, as well as potential amounts or ranges of probable losses, and recognize a liability, if any, 45 for these contingencies based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts.
We continually assess the likelihood of any adverse judgments or outcomes to our contingencies, as well as potential amounts or ranges of probable losses, and recognize a liability, if any, for these contingencies based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts.
When an uncertain tax position is identified, we consider and interpret complex tax laws and regulations in order to determine the need for recognizing a provision in our financial statements. Significant judgment is required in determining the timing and measurement of uncertain tax positions. We utilize internal and external expertise in interpreting tax laws to support our tax 46 positions.
When an uncertain tax position is identified, we consider and interpret complex tax laws and regulations in order to determine the need for recognizing a provision in our financial statements. Significant judgment is required in determining the timing and measurement of uncertain tax positions. We utilize internal and external expertise in interpreting tax laws to support our tax positions.
These estimates are adjusted from time to time based on facts and circumstances that impact the status of existing claims. See Note 25, Commitments and Contingencies of the Notes to the Consolidated Financial Statements included herein for additional information. Pension Benefits — We sponsor defined benefit pension plans covering certain employees, primarily in Switzerland, the U.S. and Ireland.
These estimates are adjusted from time to time based on facts and circumstances that impact the status of existing claims. See Note 23, Commitments and Contingencies of the Notes to the Consolidated Financial Statements included herein for additional information. Pension Benefits — We sponsor defined benefit pension plans covering certain employees, primarily in Switzerland, the U.S. and Ireland.
See Note 25, Commitments and Contingencies of the Notes to the Consolidated Financial Statements for a discussion of management’s judgment applied in the recognition and measurement of our most significant contingencies. Warranties and Guarantees — Expected warranty costs for products sold are recognized based on an estimate of the amount that eventually will be required to settle such obligations.
See Note 23, Commitments and Contingencies of the Notes to the Consolidated Financial Statements for a discussion of management’s judgment applied in the recognition and measurement of our most significant contingencies. Warranties and Guarantees — Expected warranty costs for products sold are recognized based on an estimate of the amount that eventually will be required to settle such obligations.
Trends, Uncertainties and Opportunities Current global economic conditions due to geopolitical conflicts, high inflation in Europe, and China's slow pace of recovery, all have adversely affected and may continue to adversely affect many industries, including the automotive industry. We believe a global increase in BEV production will persist into 2025.
Trends, Uncertainties and Opportunities Current global economic conditions due to geopolitical conflicts, high inflation in Europe, and China's slow pace of recovery, all have adversely affected and may continue to adversely affect many industries, including the automotive industry. We believe a global increase in BEV production will persist into 2026.
Off-Balance Sheet Arrangement The Company did 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 as of December 31, 2024 and 2023.
Off-Balance Sheet Arrangement The Company did 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 as of December 31, 2025 and 2024.
A change in judgment related to the expected ultimate resolution of uncertain tax positions will be recognized in earnings in the quarter in which such change occurs. Other Matters Litigation and Environmental Matters See Note 25, Commitments and Contingencies of the Notes to the Consolidated Financial Statements for a discussion of litigation matters.
A change in judgment related to the expected ultimate resolution of uncertain tax positions will be recognized in earnings in the quarter in which such change occurs. Other Matters Litigation and Environmental Matters See Note 23, Commitments and Contingencies of the Notes to the Consolidated Financial Statements for a discussion of material litigation and environmental matters.
For more information, see Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Issuer Purchases of Equity Securities. During the year ended December 31, 2024, the Company repurchased $296 million of its Common Stock. The share repurchase program expired on December 31, 2024.
For more information, see Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities - Issuer Purchases of Equity Securities. During the year ended December 31, 2025, the Company repurchased $208 million of its Common Stock. The share repurchase program expired on December 31, 2025.
We also made payments of $296 million for the repurchase of Common Stock under our share repurchase program, $8 million for debt issuance costs, $8 million for excise taxes related to Common Stock repurchases and $9 million for other financing activities during the current year.
We also made payments of $296 million for the repurchase of Common Stock under our share repurchase program, $8 million for debt issuance costs, $8 million for excise taxes related to Common Stock repurchases and $9 41 million for other financing activities during 2024.
These declines were partially offset by operational productivity, net of labor inflation and repositioning costs, and commodity, transportation, and energy deflation year-over-year. During 2024, we saw a decline in demand for our gasoline, diesel, and commercial vehicle applications, partially offset by favorable demand in aftermarket for replacement parts in North America, China and Europe.
These declines were partially offset by operational productivity, net of labor inflation and repositioning costs, commodity, transportation, and energy deflation year-over-year and lower RD&E costs net of customer reimbursements. 39 During 2024, we saw a decline in demand for our gasoline, diesel, and commercial vehicle applications, partially offset by favorable demand in aftermarket for replacement parts in North America, China and Europe.
Recent Accounting Pronouncements See Note 3, Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for a discussion of recent accounting pronouncements.
Recent Accounting Pronouncements See Note 2, Summary of Significant Accounting Policies of the Notes to the Consolidated Financial Statements for a discussion of recent accounting pronouncements. 43
Adjusted EBITDA decreased by $37 million compared to the prior year, mainly from soft demand across all product lines except aftermarket, net of favorable product mix. Additionally, price net of inflation pass-through, higher R&D investment, and unfavorable foreign exchange impacts further reduced Adjusted EBITDA versus prior year.
Adjusted EBIT decreased by $46 million compared to the prior year, mainly from soft demand across all product lines except aftermarket, net of favorable product mix. Additionally, price net of inflation pass-through and unfavorable foreign exchange impacts further reduced Adjusted EBIT versus prior year.
We expect to pay approximately $42 million related to purchase obligations which were entered into with various vendors in the normal course of business and are consistent with our expected requirements. We expect to make contributions of approximately $5 million to our non-U.S. pension plans.
We expect to make net repayments of $7 million on our term loan borrowings and contributions of approximately $5 million on our non-U.S. pension plans. We expect to pay approximately $45 million related to purchase obligations which were entered into with various vendors in the normal course of business and are consistent with our expected requirements.
On December 4, 2024, the Board of Directors authorized a new $250 million share repurchase program valid January 1, 2025 until December 31, 2025.
On December 3, 2025, the Board of Directors authorized a new $250 million share repurchase program valid from January 1, 2026, until December 31, 2026.
Non-operating income, net Year Ended December 31, 2024 2023 2022 (Dollars in millions) Non-operating income, net $ (13) $ (2) $ (47) For the year ended December 31, 2024, non-operating income, net amounted to $13 million compared to $2 million in the prior year.
Non-operating income, net Year Ended December 31, 2025 2024 (Dollars in millions) Non-operating income, net $ (19) $ (13) For the year ended December 31, 2025, non-operating income, net amounted to $19 million compared to $13 million in the prior year.
We believe the combination of expected cash flows, the term loan borrowings and the 43 revolving credit facilities being committed until 2030, will provide us with adequate liquidity to support the Company's operations. Share Repurchase Program On February 13, 2024, the Board of Directors authorized a $350 million share repurchase program valid until December 31, 2024.
We believe the combination of expected cash flows, the term loan borrowings and the revolving credit facilities that are committed until 2030, will provide us with adequate liquidity to support the Company's operations. 40 Share Repurchase Program On December 4, 2024, the Board of Directors authorized a $250 million share repurchase program valid from January 1, 2025, until December 31, 2025.
Cash Flow Summary for the Years Ended December 31, 2024, 2023 and 2022 Our cash flows from operating, investing and financing activities for the years ended December 31, 2024, 2023 and 2022, as reflected in the Consolidated Financial Statements included in this Annual Report, are summarized as follows: Year Ended December 31, 2024 2023 2022 (Dollars in millions) Cash provided by (used for): Operating activities $ 408 $ 465 $ 375 Investing activities (14) (55) (91) Financing activities (520) (403) (482) Effect of exchange rate changes on cash (8) 5 (18) Net (decrease) increase in cash and cash equivalents $ (134) $ 12 $ (216) Cash Flow Summary for the year ended December 31, 2024 Cash provided by operating activities decreased by $57 million for the year ended December 31, 2024 versus the prior year.
Cash Flow Summary for the Years Ended December 31, 2025 and 2024 Our cash flows from operating, investing and financing activities for the years ended December 31, 2025 and 2024, as reflected in the Consolidated Financial Statements included in this Annual Report, are summarized as follows: Year Ended December 31, 2025 2024 (Dollars in millions) Cash provided by (used for): Operating activities $ 413 $ 408 Investing activities (41) (14) Financing activities (326) (520) Effect of exchange rate changes on cash 7 (8) Net increase (decrease) in cash and cash equivalents $ 53 $ (134) Cash Flow Summary for the year ended December 31, 2025 Cash provided by operating activities increased by $5 million for the year ended December 31, 2025 versus the prior year.
Adjusted EBITDA for the year ended December 31, 2023 compared with year ended December 31, 2022 For the year ended December 31, 2023, net income decreased by $129 million versus the prior year as discussed above within the Results of Operations section.
Adjusted EBIT for the year ended December 31, 2024 compared with year ended December 31, 2023 For the year ended December 31, 2024, net income increased by $21 million versus the prior year as discussed above within " Results of Operations ".
EBITDA and Adjusted EBITDA (non-GAAP) Year Ended December 31, 2024 2023 2022 (Dollars in millions) Net income — GAAP $ 282 $ 261 $ 390 Interest expense, net of interest income (1) 153 152 6 Tax expense 61 86 106 Depreciation 90 90 84 EBITDA (Non-GAAP) $ 586 $ 589 $ 586 Factoring and notes receivables discount fees 4 4 2 Other non-operating income (2) (12) (6) (41) Reorganization items, net (3) — — 3 Stock compensation expense (4) 23 14 11 Repositioning costs 21 13 4 Foreign exchange gain on debt, net of related hedging gain — (1) — Capital structure transformation expenses (5) — 22 — Gain on sale of equity investment (27) — — Acquisition and divestiture expenses (6) 1 — — Debt refinancing and redemption costs (7) 2 — — Loss on extinguishment of debt — — 5 Adjusted EBITDA (Non-GAAP) $ 598 $ 635 $ 570 (1) Reflects interest income of $3 million, $7 million and $2 million for the year ended December 31, 2024, 2023 and 2022, respectively.
EBIT and Adjusted EBIT (non-GAAP) Year Ended December 31, 2025 2024 2023 (Dollars in millions) Net income — GAAP $ 310 $ 282 $ 261 Interest expense, net of interest income (1) 104 153 152 Tax expense 82 61 86 EBIT (Non-GAAP) $ 496 $ 496 $ 499 Repositioning costs 12 21 13 Foreign exchange gain on debt, net of related hedging gain — — (1) Factoring and notes receivables discount fees 3 4 4 Capital structure transformation expenses (2) — — 22 Gain on sale of equity investment — (27) — Other non-operating income (3) (14) (12) (6) Debt refinancing and redemption costs (4) 7 2 — Acquisition and divestiture expenses 6 1 — Adjusted EBIT (Non-GAAP) $ 510 $ 485 $ 531 (1) Reflects interest income of $4 million, $3 million and $7 million for the year ended December 31, 2025, 2024 and 2023, respectively.
(2) The adjustment for other non-operating income reflects the non-service component of net periodic pension costs and other income that are not considered directly related to the Company's operations.
(3) The adjustment for other non-operating income reflects the non-service component of net periodic pension costs and other income that are not considered directly related to the Company's operations. 38 (4) Reflects the third-party costs directly attributable to the refinancing of our credit facilities and any amendments.
While we foresee continued growth in BEV adoption, we believe it will be somewhat constrained in the short term due to the price disparity compared to ICE vehicles, geopolitical risks, and the slower-than-expected development of charging infrastructure.
While we foresee continued growth in BEV adoption, we believe it will be somewhat constrained in the short term due to the price disparity compared to ICE vehicles, geopolitical risks, and the slower-than-expected development of charging infrastructure. Disaggregated Revenue The following tables show our revenues by geographic region and product line for the years ended December 31, 2025 and 2024.
Finally, we also expect to declare and pay quarterly dividends on our Common Stock in an aggregate amount of approximately $50 million in 2025, of which $12 million was paid on January 31, 2025. We fund our operations primarily through cash flows from operating activities, borrowings from our credit facilities and cash and cash equivalents.
Finally, we also expect to continue to declare and pay quarterly dividends on our Common Stock. We fund our operations primarily through cash flows from operating activities, borrowings from our credit facilities and cash and cash equivalents.
(5) Includes the loss on remeasurement of the Series A Preferred Stock Agreements as well as third-party legal and advisory fees that are directly attributable to the Transaction. (6) Reflects third-party costs incurred for the sale of an equity interest in an unconsolidated joint venture.
(2) Includes the loss on remeasurement of the Series A Preferred Stock Agreements as well as third-party legal and advisory fees that are directly attributable to the Transaction.
Diesel product sales decreased by $165 million or 17% (including an unfavorable impact of $6 million or 1% due to foreign currency translation), primarily driven by passenger vehicles in Europe, partially offset by sustained demand for pickup trucks in North and South America.
Diesel product sales increased by $10 million or 1% (including a favorable impact of $24 million or 3% due to foreign currency translation), primarily driven by passenger vehicles in Europe pursuing transition to gasoline hybrids, partially offset by demand for pickup trucks in North America, South America and Southeast Asia.
Additionally, the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company’s operating results as reported under GAAP. We believe that EBITDA and Adjusted EBITDA are important indicators of operating performance and provide useful information for investors. 1.
Additionally, the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of the Company’s operating results as reported under GAAP. In 2025, we revised our non-GAAP reporting metric, transitioning from Adjusted EBITDA to Adjusted EBIT.
The decrease is due to $46 million of proceeds from the sale of an equity investment, $3 million of higher proceeds from our cross-currency swap contracts which have been designated as net investment hedges of our Euro-denominated operations versus the prior year, and $8 million of lower expenditures for property, plant and equipment versus the prior year.
The increase is due to $46 million of proceeds received in the prior year from the sale of our unconsolidated joint venture, and $3 million of lower proceeds from cross currency swap contracts that have been designated as net investment hedges of our Euro-denominated operations.
Cost of Goods Sold and Gross Profit Year Ended December 31, 2024 2023 2022 (Dollars in millions) Cost of goods sold $ 2,770 $ 3,130 $ 2,920 % change compared with prior period (11.5) % 7.2 % (0.2 %) Gross profit percentage 20.3 % 19.5 % 19.0 % Cost of Goods Sold Gross Profit (Dollars in millions) Cost of Goods Sold / Gross Profit for year ended December 31, 2023 $ 3,130 $ 756 Volume (290) (122) Product mix 104 7 Price, net of inflation pass-through — (50) Commodity, transportation and energy deflation (81) 81 Productivity, net (98) 72 Research & development 12 (12) Foreign exchange rate impacts (7) (27) Cost of Goods Sold / Gross Profit for year ended December 31, 2024 $ 2,770 $ 705 For the year ended December 31, 2024, cost of goods sold decreased by $360 million, primarily driven by lower sales volumes which contributed a decrease of $290 million.
Cost of Goods Sold and Gross Profit Year Ended December 31, 2025 2024 (Dollars in millions) Cost of goods sold $ 2,853 $ 2,770 % change compared with prior period 3.0 % (11.5) % Gross profit percentage 20.4 % 20.3 % 35 Cost of Goods Sold Gross Profit (Dollars in millions) Cost of Goods Sold / Gross Profit for year ended December 31, 2024 $ 2,770 $ 705 Volume 65 29 Product mix 12 (70) Price, net of inflation pass-through — (30) Commodity, transportation and energy deflation (24) 24 Productivity, net (24) 24 Import tariffs 41 (1) Research, development & engineering (20) 20 Foreign exchange rate impacts 33 30 Cost of Goods Sold / Gross Profit for year ended December 31, 2025 $ 2,853 $ 731 For the year ended December 31, 2025, cost of goods sold increased by $83 million, primarily driven by higher sales volumes which contributed to an increase of $65 million.
Aftermarket sales increased by $3 million or 1% (including an unfavorable impact of $3 million or 0% due to foreign currency translation), primarily driven by favorable aftermarket conditions and continued high demand for replacement parts in China, Europe, India, Brazil and Japan, partially offset by softer sales in Australia.
Aftermarket sales decreased by $21 million or 5% (including a favorable impact of $7 million or 1% due to foreign currency translation), primarily driven by softer demand for off-highway replacement parts in North America, partially offset by stronger demand in Europe and China.
Tax Expense Year Ended December 31, 2024 2023 2022 (Dollars in millions) Tax expense $ 61 $ 86 $ 106 Effective tax rate 17.8 % 24.8 % 21.4 % The effective tax rate decreased by 7.0 percentage points in 2024 compared to 2023.
Tax Expense Year Ended December 31, 2025 2024 (Dollars in millions) Tax expense $ 82 $ 61 Effective tax rate 20.9 % 17.8 % The effective tax rate increased by 3.1 percentage points in 2025 compared to 2024.
Cash used for financing activities increased by $117 million for the year ended December 31, 2024 compared with the prior year. During 2024, we made an aggregate of $992 million in debt repayments on our term loan facilities.
In comparison, cash used for financing activities in the prior year was primarily related to an aggregate of $992 million in debt repayments on our term loan facilities.
The increase in non-operating income was primarily driven by a $13 million loss on remeasurement of the Series A Preferred Stock Agreements (as defined below) during the prior year and a $6 million increase in the non-service cost components of net periodic pension benefits, partially offset by $6 million of lower equity income due to the sale of an equity interest in an unconsolidated joint venture.
The increase was primarily driven by $5 million in higher foreign exchange transactional gains, a $2 million increase in the non-service cost components of net periodic pension benefits and a $1 million increase in interest income, partially offset by $2 million of lower equity income due to the sale of an equity interest in an unconsolidated joint venture in the second quarter of 2024.
Capital Expenditures We believe our capital spending in recent years has been sufficient to maintain efficient production capacity, to implement important product and process redesigns and to expand capacity to meet increased demand.
Capital Expenditures We believe our recent capital spending has been sufficient to maintain efficient production capacity, support key product and process redesigns and expand capacity to meet increased demand. For 2026, we expect capital expenditures to increase relative to 2025, primarily due to new or additional investments in our zero emissions technology portfolio.
This, coupled with commodity, transportation, and energy deflation of $81 million versus prior year, partially offset the impact of volume declines and allowed us to expand our Adjusted EBITDA margin while funding a $12 million increase in R&D expenses, net of customer reimbursements.
This, coupled with commodity, transportation, and energy deflation of $81 million versus prior year, partially offset the impact of volume declines and allowed us to expand our Adjusted EBIT margin. Losses in foreign currency from translational, transactional, and hedging effects accounted for $23 million of the decrease in Adjusted EBIT.
(7) Reflects the third-party costs directly attributable to the repricing of our 2021 Dollar Term Facility. 41 Adjusted EBITDA for the year ended December 31, 2024 compared with year ended December 31, 2023 For the year ended December 31, 2024, net income increased by $21 million versus the prior year as discussed above within the Results of Operations section.
Adjusted EBIT for the year ended December 31, 2025 compared with year ended December 31, 2024 For the year ended December 31, 2025, net income increased by $28 million versus the prior year as discussed above within " Results of Operations ".
Cost of goods sold further declined from $81 million of commodity, transportation and energy deflation, as well as a $98 million decrease from productivity, net of labor inflation and repositioning costs, and foreign currency impacts from transactional, translational, and hedging effects of $7 million.
Gross profit further increased from $30 million of foreign currency impacts from transactional, translational, and hedging effects, $24 million of commodity, transportation and energy deflation, $24 million of productivity, net of labor inflation and repositioning costs, and $20 million of lower RD&E costs, net of customer reimbursements.
Interest expense Year Ended December 31, 2024 2023 2022 (Dollars in millions) Interest expense $ 156 $ 159 $ 8 For the year ended December 31, 2024, interest expense decreased by $3 million compared to prior year.
Other Expense, Net Year Ended December 31, 2025 2024 (Dollars in millions) Other expense, net $ 10 $ 6 For the year ended December 31, 2025, other expense, net amounted to $10 million compared to $6 million in the prior year.
Selling, General and Administrative Expenses Year Ended December 31, 2024 2023 2022 (Dollars in millions) Selling, general and administrative expense $ 240 $ 247 $ 216 % of sales 6.9 % 6.4 % 6.0 % For the year ended December 31, 2024, selling, general and administrative (“SG&A”) expenses decreased by $7 million compared with the prior year, primarily driven by $4 million of lower repositioning costs, $8 million of lower professional service and legal fees and $3 million of lower IT-related costs.
Selling, General and Administrative Expenses Year Ended December 31, 2025 2024 (Dollars in millions) Selling, general and administrative expense $ 240 $ 240 % of sales 6.7 % 6.9 % Selling, general and administrative (“SG&A”) expenses remained at the same level compared with the prior year.
Gasoline product sales decreased by $215 million or 13% (including an unfavorable impact of $16 million or 1% due to foreign currency translation) driven by soft demand in China and North America, partially offset by program ramp-ups in Europe, the rest of Asia and South America.
Gasoline product sales increased by $87 million or 6% (including a favorable impact of $24 million or 2% due to foreign currency translation), primarily driven by new application launches and program ramp-ups in Europe, North America, South America and India.
Liquidity and Capital Resources Overview December 31, 2024 2023 2022 (Dollars in millions) Cash and cash equivalents $ 125 $ 259 $ 246 Restricted cash 1 1 2 Revolving Facility - available borrowing capacity 600 570 475 Revolving Facility - borrowings or letters of credit outstanding — — — Term Loan Facilities - principal outstanding 692 1,696 1,186 Senior Notes - principal outstanding 800 — — Bilateral letter of credit facility - utilized capacity 8 12 14 On May 21, 2024, our wholly owned subsidiaries, Garrett Motion Holdings Inc. and Garrett LX I S.a.r.l., completed an offering of $800 million in aggregate principal amount of the 2032 Senior Notes.
Liquidity and Capital Resources Overview December 31, 2025 2024 (Dollars in millions) Cash and cash equivalents $ 177 $ 125 Restricted cash 2 1 Revolving Facility - available borrowing capacity 630 600 Revolving Facility - borrowings or letters of credit outstanding — — Term Loan Facilities - principal outstanding 637 692 Senior Notes - principal outstanding 800 800 Bilateral letter of credit facility - utilized capacity 10 8 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 by and among the Company, Garrett Motion Holdings Inc., Garrett Motion Sàrl and Garrett LX I S.à.r.l., as borrowers, the lenders and issuing banks party thereto from time to time, and JPMorgan Chase Bank, N.A., as administrative agent.
The decrease was primarily due to releases of reserves due to statute of limitation expirations and settlements with taxing authorities and release of valuation allowance related to deferred tax assets in Brazil (net of US branch taxes).
The increase was primarily due to additional unrecognized tax benefits in Switzerland and China as well as prior year benefits associated with the release of valuation allowance related to deferred tax assets in Brazil (net of U.S. branch taxes) and prior year benefits associated with statute of limitation expiration and settlement of audits in Switzerland and Korea.
We have significant expertise in delivering products at scale for ICE-powered vehicles using gasoline, diesel, natural gas and hydrogen, as well as for zero-emission technologies using hydrogen fuel cell systems, both for mobility and industrial use.
We design, manufacture, and sell highly engineered turbocharging, air and fluid compression, and high-speed electric motor technologies for 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.
Net Income Year Ended December 31, 2024 2023 2022 (Dollars in millions) Net Income $ 282 $ 261 $ 390 For the year ended December 31, 2024, net income increased by $21 million compared with the prior year, primarily due to a $27 million gain on the sale of an equity interest in an unconsolidated joint venture, $7 million of lower SG&A expenses, $3 million of lower interest expense, $11 million of higher non-operating income, and lower income tax expense of $25 million as discussed above.
Net Income Year Ended December 31, 2025 2024 (Dollars in millions) Net Income $ 310 $ 282 For the year ended December 31, 2025, net income increased by $28 million compared with the prior year, primarily due to $48 million of lower interest expense, $26 million of increased gross profit and $6 million of increased non-operating income.
We also made payments of $213 million for the repurchase of Common Stock under our share repurchase program and debt repayments of $207 million.
We also made payments of $208 million for the repurchase of Common Stock under our share repurchase program, $52 million for dividends, $3 million for excise taxes related to Common Stock repurchases, $2 million for debt issuance costs and $2 million for other financing activities during the current year.
We define “EBITDA” as our net income calculated in accordance with U.S. GAAP, plus the sum of interest expense net of interest income, tax expense, depreciation and amortization.
This change is intended to better reflect our core operating performance and align with industry practices. We believe this change will provide investors with a clearer understanding of our operational performance. We define “EBIT” as our net income calculated in accordance with U.S. GAAP, plus the sum of (i) interest expense net of interest income and (ii) tax expense.
During the year ended December 31, 2024, we repaid $500 million on our 2023 Dollar Term Facility, $485 million (€450 million) on our Euro Term Facility and $7 million on our 2021 Dollar Term Facility. For 2025, we expect capital spending to increase slightly as compared to 2024.
During the year ended December 31, 2025, we repaid $50 million on our 2025 Dollar Term Facility and paid cash dividends of $52 million. For more information, see Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities – Dividends . For 2026, we expect capital spending to increase as compared to 2025.
We define “Adjusted EBITDA” as EBITDA, plus the sum of stock compensation expense, repositioning costs, foreign exchange (gain) loss on debt net of related hedging (gain) loss, discounting costs on factoring, gain on sale of equity investment, acquisition and divestiture expenses, other non-operating income, capital structure transformation expense s, debt refinancing and redemption costs, net reorganization items and loss on extinguishment of debt (if any); a nd 2. 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. 40 For 2024, we revised our definition of Adjusted EBITDA to exclude acquisition and divestiture expenses, and debt refinancing and redemption costs.
We define “Adjusted EBIT” as EBIT, plus the sum of (i) repositioning costs, (ii) foreign exchange (gain) loss on debt net of related hedging (gains) losses, (iii) discounting costs on factoring, (iv) gain on sale of equity investment, (v) acquisition and divestiture expenses, (vi) other non-operating income, (vii) capital structure transformation expenses, (viii) debt refinancing and redemption costs, and (ix) loss on extinguishment of debt (if any).
The increase was driven by $63 million of working capital contribution related primarily to build-ups of inventory in the prior year. An increase of $32 million in net income, excluding the effects of non-cash items, also contributed to the increase in cash provided by operating activities, partially offset by a decrease in other assets and liabilities of $5 million.
The increase was driven by a $28 million increase in net income, a $8 million increase in non-cash charges and a $6 million change in working capital. These increases were partially offset by an unfavorable change in other assets and liabilities of $37 million.
This decrease was mainly driven by soft demand in gasoline, diesel, and commercial vehicle applications, partially offset by demand for replacement parts on aftermarket sales. Net sales further decreased due to price, net of inflation pass-through driven by commodity deflation and partially offset by favorable product mix.
This increase was primarily related to favorable foreign currency impacts, and higher demand in gasoline and commercial vehicles, partially offset by weaker demand for replacement parts on aftermarket sales. Net sales also includes $40 million of recoveries on import tariffs, partially offset by unfavorable product mix.
These decreases were partially offset by $73 million of increased gross profit. Non-GAAP Measures Management provides non-GAAP financial information, including EBITDA and Adjusted EBITDA, to supplement the understanding of our business operations and performance, and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP.
Year Ended December 31, 2024 Compared with Year Ended December 31, 2023 For a discussion of our results of operations for the year ended December 31, 2024 compared with the year ended December 31, 2023, refer to our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC on February 20, 2025, under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations . 37 Non-GAAP Measures Management provides non-GAAP financial information to supplement the understanding of our business operations and performance, and it should be considered in addition to, but not instead of, the financial statements prepared in accordance with GAAP.
Diesel product sales increased by $43 million or 5% (including a favorable impact of $10 million or 2% due to foreign currency translation), driven by strong performance in Europe where diesel remains essential to meet fleet CO2 targets in addition to strong light commercial vehicle performance on existing platforms.
Commercial vehicle sales increased by $25 million or 4% (including a favorable impact of $6 million or 1% due to foreign currency translation), primarily driven by growth in off-highway programs across regions.
Losses in foreign currency from translational, transactional, and hedging effects accounted for $23 million of the decrease in Adjusted EBITDA.
Gains in foreign currency from translational, transactional, and hedging effects in the year ended December 31, 2025, primarily driven by a higher Euro-to-U.S. dollar and CNY-to-U.S. dollar versus the prior period, accounted for a $23 million increase in Adjusted EBIT.
Our effective management allowed us to achieve Net income of $282 million and Adjusted EBITDA of $598 million for the year. We continue to achieve success in our turbocharging, hybrid, and zero-emission technology applications.
We continue to achieve success in our turbocharging, hybrid, and zero-emission technology applications. This year, we secured additional pre-production contracts for both light vehicle (including hybrid and range extended electric vehicle technologies), and commercial vehicle applications.
In 2024, turbocharger production decreased globally from approximately 50 million units in 2023 to 49 million units in 2024 and is expected to further decrease from 2025 onward based on current expectations of electric vehicle penetration. We effectively navigated through macroeconomic and geopolitical challenges by implementing strategic permanent and variable cost measures, as well as leveraging commodity deflation pass-through.
Our products are key enablers for fuel economy, energy efficiency, thermal management, and compliance with greenhouse gas and other emission reduction targets. In 2025, turbocharger production increased globally from approximately 49 million units in 2024 to nearly 50 million units in 2025, and is expected to decrease from 2026 onward based on current expectations of electric vehicle penetration.
Cash used for financing activities decreased by $79 million for the year ended December 31, 2023 compared with the prior year. Cash flows used for financing activities included $667 million from the 2023 Dollar Term Facility net of debt financing costs.
Cash used for investing activities increased by $27 million for the year ended December 31, 2025 versus the prior year.
Removed
We design, manufacture, and sell highly engineered turbocharging, air and fluid compression, and high-speed electric motor technologies for OEMs and distributors within the mobility and industrial space.
Added
We effectively navigated through macroeconomic and geopolitical challenges, including a very dynamic trade environment as a result of tariff actions, by implementing strategic permanent and variable cost measures, as well as leveraging commodity deflation pass-through. Our effective management allowed us to achieve Net income of $310 million and Adjusted EBIT of $510 million for the year.
Removed
As our customers continue to progress on electrification, we are applying our technological pillars to develop highly engineered E-Powertrain and E-Cooling compressor products to support their ambition. These products are key enablers for fuel economy, energy efficiency, thermal management, and compliance with emissions standards and overall greenhouse gas and other emission reduction targets.
Added
Additionally, we were awarded our first E-Powertrain application in early 2025 and have made significant progress in our air and cooling compression technologies, as evidenced with various partnerships and pre-development contracts throughout 2025 and into early 2026. 33 During 2025, we repaid $50 million on our 2025 Dollar Term Facility and paid cash dividends of $52 million.
Removed
This year, we secured additional pre-production contracts for both light vehicle and commercial vehicle applications, were awarded our first turbo application for a Range Extended Electric Vehicle with a leading Chinese technology company, and made significant progress in testing our new turbo off-highway applications. 34 On April 3, 2024, we divested our equity interest in an unconsolidated joint venture for approximately $58 million, subject to customary debt and working capital adjustments.
Added
We also repurchased $208 million of Common Stock under our share repurchase program. These repurchases include a total of 7.5 million shares of Common Stock for $103 million from funds affiliated with Oaktree Capital Management, L.P., a related party. The repurchased shares are held as treasury stock.
Removed
We received cash consideration on the divestiture date of $46 million, with an additional $7 million still to be received, and recognized a gain of $27 million related to this divestiture.
Added
Cost of goods sold further increased from $41 million of import tariffs, $33 million of foreign currency impacts from transactional, translational, and hedging effects and $12 million of unfavorable product mix.
Removed
During the second quarter of 2024, we completed an offering of $800 million in aggregate principal amount of 7.75% Senior Unsecured Notes due 2032 (the "Senior Notes") and made early debt repayments totaling $985 million on our €450 million secured first-lien Euro Term Facility (the "Euro Term Facility") and $500 million secured first-lien U.S.
Added
These increases were partially offset by $24 million of commodity, transportation and energy deflation, $24 million of productivity, net of labor inflation and repositioning costs, and $20 million of lower RD&E costs, net of customer reimbursements. Gross profit increased by $26 million, mainly driven by higher sales volumes which contributed an increase of $29 million.
Removed
Dollar term loan facility (the "2023 Dollar Term Facility"), both of which were fully repaid as of June 30, 2024. In December 2024, the Board of Directors announced that it intends to declare and pay quarterly dividends on our Common Stock in an aggregate amount of approximately $50 million in 2025.
Added
These increases were partially offset by $70 million of unfavorable impact from product mix, $30 million of price, net of inflation pass-through and $1 million of import tariffs.
Removed
The first quarter dividend of $0.06 per share was declared on December 5, 2024, payable to holders of our Common Stock as of January 15, 2025, and was settled in cash for $12 million on January 31, 2025.
Added
A $7 million reduction in personnel costs related to cost measures implemented in current and prior years and $5 million of lower outsourced activities were offset by $7 million of unfavorable foreign currency impacts and $6 million in professional fees related to merger and acquisition activity.
Removed
Disaggregated Revenue The following tables show our revenues by geographic region and product line for the years ended December 31, 2024, 2023 and 2022.
Added
This increase was primarily due to professional fees incurred related to the Restatement Agreement (as defined herein). 36 Interest expense Year Ended December 31, 2025 2024 (Dollars in millions) Interest expense $ 108 $ 156 Interest expense decreased by $48 million in 2025 compared to prior year.
Removed
Commercial vehicle sales decreased by $27 million or 4% (including an unfavorable impact of $8 million or 1% due to foreign currency translation), primarily driven by soft demand in the construction and agriculture industries due to high interest rates and lower crop prices, partially offset by sustained demand in the on-highway industry, especially in China and North America.
Added
This reduction was primarily due to a $30 million reduction in debt issuance cost amortization, driven by accelerated amortization in the prior year, and $25 million of lower interest expense resulting from the amendment and restatement and repricing of our Credit Agreement.
Removed
For the year ended December 31, 2023, net sales increased compared to prior year by $283 million or 8%, including an unfavorable impact of $14 million or 0% due to foreign currency translation driven by lower Chinese Yuan-to-US dollar, partially offset by higher Euro-to-US dollar exchange rates.
Added
In addition, we recorded net gains of $7 million on our designated and undesignated interest derivatives in the current year, in comparison to net gains of $14 million in the prior year.
Removed
This increase was driven by higher volumes with growth of both global light vehicles and the turbocharger industry, and faster than expected recovery from China Covid-19 pressures and semiconductor shortages experienced in the prior year.
Added
These increases were partially offset by the revaluation of deferred tax assets related to intellectual property transferred within China which was subject to tax at different rates.
Removed
Strong demand for new product launches and ramp-ups along with inflation recoveries net of pricing across all product lines also contributed to the net sales growth. 36 Gasoline product sales increased by $235 million or 16% (including an unfavorable impact of $20 million or 1% due to foreign currency translation) driven by industry recovery from prior year’s global semiconductor shortages and Covid-related lockdown measures in China, combined with new product launches and ramp-ups across all regions.
Added
These were partially offset by $21 million of higher tax expenses, the prior year gain of $27 million on the sale of an equity interest in an unconsolidated joint venture and $4 million of higher other expense, net.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

11 edited+0 added−0 removed7 unchanged
Biggest changeGains and losses on the derivatives qualifying as net investment hedges are recorded in Accumulated other comprehensive income within the Consolidated Balance Sheet until the net investment is liquidated or sold. The Company also uses fixed-to-fixed cross-currency swap contracts to mitigate the foreign currency risk on its 2032 Senior Notes.
Biggest changeGains and losses on the derivatives qualifying as net investment hedges are recorded in AOCI until the net investment is liquidated or sold. The Company also uses fixed-to-fixed cross-currency swap contracts to mitigate the foreign currency risk on its 2032 Senior Notes.
Under our cash flow hedging program, we designate certain foreign currency forward contracts as cash flow hedges of underlying foreign currency forecasted purchases and sales, with gains and losses on the qualifying derivatives recorded in Accumulated other comprehensive income in the Consolidated Balance Sheet until the underlying forecasted transactions are recognized in earnings.
Under our cash flow hedging program, we designate certain foreign currency forward contracts as cash flow hedges of underlying foreign currency forecasted purchases and sales, with gains and losses on the qualifying derivatives recorded in Accumulated other comprehensive income ("AOCI") in the Consolidated Balance Sheet until the underlying forecasted transactions are recognized in earnings.
The assumption that currency exchange rates change in a parallel fashion may overstate the impact of changing currency exchange rates on assets and liabilities denominated in currencies other than the U.S. dollar. 47 Interest Rate Risk Our exposure to risk based on changes in interest rates relates primarily to our Credit Agreement. The Credit Agreement bears interest at floating rates.
The assumption that currency exchange rates change in a parallel fashion may overstate the impact of changing currency exchange rates on assets and liabilities denominated in currencies other than the U.S. dollar. Interest Rate Risk Our exposure to risk based on changes in interest rates relates primarily to our Credit Agreement. The Credit Agreement bears interest at floating rates.
For additional information regarding our Credit Agreement, see Note 16, Long-term Debt and Credit Agreements of the Notes to the Consolidated Financial Statements. Commodity Price Risk We do not utilize derivative contracts to manage commodity price risk and are subject to changes in our cost of sales caused by movements in underlying commodity prices.
For additional information regarding our Credit Agreement, see Note 15, Long-term Debt and Credit Agreements of the Notes to the Consolidated Financial Statements. Commodity Price Risk We do not utilize derivative contracts to manage commodity price risk, and we are subject to changes in our cost of sales caused by movements in underlying commodity prices.
These contracts have varying terms that extend through 2026. We also utilize undesignated foreign currency forward contracts to partially offset gains and losses on the foreign currency remeasurement of balance sheet positions.
These contracts have varying terms that extend through 2027. We also utilize undesignated foreign currency forward contracts to partially offset gains and losses on the foreign currency remeasurement of balance sheet positions.
Approximately 83% of our cost of sales consists of purchased components with significant raw material content. A substantial portion of the purchased parts are made of nickel, aluminum and steel alloys. We have index-based escalators in place with most of our suppliers for raw material inflation / deflation.
Approximately 79% of our cost of sales consists of purchased components with significant raw material content. A substantial portion of the purchased parts are made of nickel, 44 aluminum and steel alloys. We have index-based escalators in place with most of our suppliers for raw material inflation / deflation.
For our outstanding borrowings under the Credit Agreement as of December 31, 2024, a 50 basis point increase (decrease) in interest rates would have increased (decreased) our interest expense by $4 million and ($4) million, respectively, compared to the amount of interest that would have been incurred in such period based on the rates of interest in effect at December 31, 2024.
For our outstanding borrowings under the Credit Agreement as of December 31, 2025, a 50 basis point increase (decrease) in interest rates would have increased (decreased) our interest expense by $3 million and ($3) million, respectively, compared to the amount of interest that would have been incurred in such period based on the rates of interest in effect at December 31, 2025.
The potential loss or gain in fair value for such financial instruments from a hypothetical 10% adverse or favorable change in quoted currency exchange rates would be $196 million and $(196) million, respectively, at December 31, 2024 exchange rates. The model assumes a parallel shift in currency exchange rates; however, currency exchange rates rarely move in the same direction.
The potential loss or gain in fair value for such financial instruments from a hypothetical 10% adverse or favorable change in quoted currency exchange rates would be $225 million and $(229) million, respectively, at December 31, 2025 exchange rates. The model assumes a parallel shift in currency exchange rates; however, currency exchange rates rarely move in the same direction.
Assuming current levels of commodity purchases, a 10% variation in the commodity prices could impact our cost of sales by up to approximately $43 million per year prior to any price recovery from customers. 48
Assuming current levels of commodity purchases, a 10% variation in the commodity prices could impact our cost of sales by up to approximately $39 million per year prior to any price recovery from customers. 45
We manage this risk by entering into interest rate swap contracts to convert floating rate debt to fixed rate debt to reduce market risk associated with changes in interest rates. As of December 31, 2024, the net fair value of all financial instruments with exposure to interest rate risk was a $6 million asset.
We manage this risk by entering into interest rate swap contracts to convert floating rate debt to fixed rate debt to reduce market risk associated with changes in interest rates. As of December 31, 2025, the net fair value of all financial instruments with exposure to interest rate risk was a $16 million liability.
As of December 31, 2024, the net fair value of all financial instruments with exposure to currency risk was a $87 million asset.
As of December 31, 2025, the net fair value of all financial instruments with exposure to currency risk was a $163 million liability.

Other GTX 10-K year-over-year comparisons