Garrett Motion Inc (NASDAQ:GTX) posted better-than-expected fourth-quarter and full-year 2025 results, but its shares slid more than 12% in premarket trading to $18.11, retreating from a 52-week high of $21.425 as investors focused on potential headwinds in 2026.
The turbocharger manufacturer reported fourth-quarter revenue of $891 million, topping analyst forecasts of $868.33 million. Earnings per share came in at $0.42, ahead of the $0.37 consensus estimate. Despite the earnings beat, the sharp stock decline suggests concerns about future demand and industry conditions next year.
Solid quarterly and annual performance
Net sales in the fourth quarter rose 6% year over year to $891 million. For the full year, revenue reached $3.58 billion, up 3% compared with 2024.
Profitability remained strong, with fourth-quarter Adjusted EBIT of $122 million, representing a 13.7% margin. For the full year, Adjusted EBIT totaled $510 million, with a 14.2% margin.
Cash flow generation was also robust. Adjusted free cash flow in the fourth quarter amounted to $139 million, equating to a 114% conversion rate. For the full year, adjusted free cash flow reached $403 million, with a 79% conversion rate.
Garrett continued to return capital to shareholders, repurchasing $72 million of stock in the fourth quarter. Over the course of 2025, the company returned $260 million to investors, including $208 million in share buybacks and $52 million in dividends.
Expanding beyond turbochargers
The company is pushing to diversify beyond its core turbocharger operations, investing in zero-emission technologies and industrial markets. It is leveraging its automotive expertise to expand into areas such as industrial cooling systems.
One of the key developments highlighted was its oil-free centrifugal compressor technology designed for HVAC applications. The solution is positioned as offering improved energy efficiency, compatibility with next-generation refrigerants, lower noise levels and more compact designs. Target markets include rooftop and unitary HVAC systems, comfort cooling chillers, large chillers, data center air conditioning and battery energy storage systems.
In its traditional business, Garrett secured new light-vehicle turbocharger awards in several major markets and won 15 new contracts in commercial vehicle and industrial segments. The company also achieved its first two MEG (micro electro-gas) series production awards for marine use and broadened its MEG aftermarket portfolio.
On the zero-emissions front, Garrett announced the launch of industrial HVAC compressors and secured its first series production award for an E-cooling compressor in China, with production set to begin in 2027. Management also cited increasing interest in its high-speed E-Powertrain technologies.
While operational performance in 2025 remained steady and cash flow strong, investors appeared focused on potential sector slowdowns and uncertainty in 2026, overshadowing the latest earnings beat.