Garrett Motion (GTX) Q2 FY26 earnings call: guidance and Q&A

Asked about the timeline for improved European CV order books to flow through, and an update on off-highway in North America for 2026 and 2027.

Management noted that H1 CV growth was driven by on-highway in China and off-highway industrial globally. If Europe picks up, it would balance China. Off-highway (construction and agriculture) demand is stable and in line with expectations. The significant growth in industrial sales (gensets) is a key driver.

“I would say on on-highway in H1, that was not entirely driven by Europe. We've seen that coming up from China. So if Europe now picks up, balances China, I think all that is a good signal for us, and we'll see the way it develops in the second half.”

asked by James Mulholland · answered by Olivier Rabiller

Inquired about the sustainability of light vehicle share gains that drove the raised outlook, asking if it's a temporary function of launches or a more lasting trend.

Management stated that the share gains are a result of strong H1 performance and are not expected to collapse in H2. They are confident in translating these demonstrated gains into H2 performance, despite being prudent about the underlying macroeconomic and geopolitical situation.

“No, I would say this is also the result of what the strong performance we did in H1 as well. If you look at it, we [indiscernible], we had a strong performance in H1. And indeed, we are not expecting that performance to collapse in H2.”

asked by James Mulholland · answered by Olivier Rabiller

Asked about Garrett's positioning on diesel vs. natural gas generators, the revenue impact of new awards for 2027, and the size of generators supported by the MEG 200.

Garrett has traditionally been strong in diesel and has gained share in gas over recent years, now competitive in both. A single new award is unlikely to be a significant contributor to 2027 revenue, as development cycles take time. The current industrial sales trajectory (towards $200M for FY26) is due to accumulated applications over time. The MEG 200 is one of the largest turbos made by Garrett.

“When we win a business on those big engines, clearly, even if the time line is getting shorter and shorter because of the demand growing up, if we get significant revenue in 1 year, that's a little bit of a stretch. Usually, it's taking a little bit longer than that.”

asked by Thomas Scholl · answered by Olivier Rabiller

Asked about the types of opportunities being pursued for the E-Compressor beyond cooling, given the Ingersoll Rand program.

Management explained that cooling itself has a full spectrum of applications, from small industrial to large data center needs. They use an innovation process to screen technology building blocks against various industry needs, leading to new verticals like air compressors. They are exploring other potential verticals but will only discuss them publicly once a clear offering is committed.

“When we get to air compressor, we are indeed pleased we have an innovation process in the company that helps us screen the match of the technology building blocks that we have versus the needs of the different industries.”

asked by Thomas Scholl · answered by Olivier Rabiller

Followed up on the HVAC opportunity, specifically for data centers, and asked for an update on the 2028 start of production timeline.

Management clarified that the first product shipments for E-Cooling will be in 2027, and for data centers specifically, production is expected between the end of 2027 and the beginning of 2028. They confirmed commitment to bringing these technologies to market and are pleased with the progress.

“I would say it's between the end of 2027 for data centers and beginning of 2028. But the first product we'll ship will be in 2027, that's for sure.”

asked by Rajat Gupta · answered by Olivier Rabiller

Asked if the company is being forced to lower prices in light vehicle due to weakness, or how they compete to maintain volume.

Management stated that in their industry, discounting turbos does not lead to increased sales, as car production is limited by OEM capacity. They do not engage in short-term price reductions for volume. The focus is on performance and productivity.

“There is a good thing in our industry that even if we -- even if we were to make a discount on the turbo, we will not sell more, because if a car is made to have one turbo, I cannot put one at the front on the engine and one at the back in the trunk.”

asked by Hamed Khorsand · answered by Olivier Rabiller

Asked what it would take for margins to improve further, beyond the strong progress already made.

Management emphasized a relentless focus on performance, including internal cost, fixed cost, and material cost. They noted the variable cost structure means strong volume conversion when volumes increase. A stable macroeconomic environment with predictable demand would allow them to push margins even higher, but they acknowledge this is currently a challenge.

“If we could have a stable macroeconomic environment with a demand that would be having a shape that everybody knows for the next not only quarters, but next 2, 3 years for the automotive industry, which I realize is a dream because it has never been working that way, we would be able probably to push the bar even higher right away.”

asked by Hamed Khorsand · answered by Olivier Rabiller