Garrett Motion Inc., a technology provider that enables vehicles to become safer, more connected, efficient and environmentally friendly, has announced its financial results for the second quarter and six months ended June 30, 2019.

“Our financial results for the second quarter of 2019 reflect Garrett’s success maintaining a solid margin profile in a challenging market environment,” said Olivier Rabiller, Garrett president and CEO. “Our disciplined productivity management, both internally and with our supply base, has enabled us to deliver strong margins despite the slowdown in global auto production and the accelerated rebalancing of our portfolio toward gasoline turbos. In Q2, our gasoline products grew to 31% of total revenue, up 600 basis points from a year ago.

“Garrett remains focused on further developing its technology leadership to benefit from increasing turbo adoption and to provide customers with innovative and differentiated solutions that address the challenges facing the automotive industry. With a strong position in its core turbo activities and a highly productive and flexible global operating platform, Garrett remains well-positioned to help the auto industry’s transformation toward more electrified and connected vehicles and to create long term value for shareholders.”

Results of Operations 

Net sales for the second quarter of 2019 were $802 million compared to $877 million in the second quarter of 2018, a decrease of 8.6%. On an organic basis, net sales for the quarter declined 3.9%. The company said this decrease was primarily driven by lower net sales for light vehicles OEM products by $53 million ($31 million of which was due to foreign currency translation). Lower diesel volumes in Europe and Asia were partially offset by higher gasoline volumes stemming from increased turbocharger penetration in gasoline engines and new product launches. 

For the six months ended June 30, 2019, net sales totaled $1,637 versus $1,792 million for the six months ended June 30, 2018.

Gross profit percentage for the second quarter of 2019 was 22.7% versus 24.5% in the second quarter of 2018, primarily due to the unfavorable impacts from product mix and pricing, partially offset by higher productivity. For the six months ended June 30, 2019, gross profit percentage was 23.1% compared to 23.8% for the six months ended June 30, 2018.

Net income for the second quarter of 2019 was $66 million, compared to net income of $150 million in the second quarter of 2018. Net income for the second quarter of 2018 included a $55 million tax benefit attributable to currency impacts for withholding taxes on undistributed earnings and did not include any interest expense related to the debt raised at the time of its spin-off from Honeywell.

For the six months ended June 30, 2019, net income totaled $139 million versus $208 million for the six months ended June 30, 2018. Net income for the six months ended June 30, 2018 included a $30 million tax benefit attributable to currency impacts for withholding taxes on undistributed earnings and did not include any interest expense related to the debt raised at the time of the spin-off.

Earnings per basic and diluted share were 88 cents and 86 cents, respectively, in the second quarter of 2019, compared to $2.03 per basic and diluted share in the second quarter of 2018. The weighted average number of basic and diluted common shares outstanding was 74,591,478 and 76,900,544, respectively, in the second quarter of 2019, and 74,070,852 for both basic and diluted shares in the second quarter of 2018.

For the six months, earnings per basic and diluted share were $1.87 and $1.83, respectively, compared to $2.81 per basic and diluted share for the same period in 2018. The weighted average number of basic and diluted common shares outstanding was 74,414,450 and 76,129,821, respectively, for the six months ended June 30, 2019, and 74,070,852 for both basic and diluted shares for the six months ended June 30, 2018.

Revised 2019 Outlook

For 2019, the company now anticipates between -1% and +1% in organic net sales growth, and between $600 million and $620 million in Adjusted EBITDA, assuming current foreign exchange rates. The prior 2019 guidance was for organic net sales growth between 2% and 4%, and between $630 million and $650 million in Adjusted EBITDA.