Garrett Motion Inc (GTX) Q4 2025 Earnings Call Transcript
•February 19, 2026
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Why It Matters
Diversifying beyond automotive reduces revenue concentration while strong cash generation fuels shareholder returns and supports growth in high‑margin industrial markets.
Key Takeaways
- •2025 adjusted EBIT hit $510M, 14.2% margin.
- •Free cash conversion reached nearly 80% of earnings.
- •Trane partnership launches oil‑free compressors for HVAC.
- •Industrial cooling targeted >5% revenue by decade end.
- •Share repurchases $208M; dividend $0.08 per share.
Pulse Analysis
Garrett Motion’s 2025 financials underscore a resilient business model anchored in high‑efficiency turbomachinery. The company posted $891 million in Q4 sales and an adjusted EBIT of $122 million, translating to a 13.7% margin. More notable is the near‑80% free‑cash‑flow conversion, which enabled $208 million of share repurchases, a $50 million term‑loan repayment, and a $0.08 dividend per share. This disciplined capital allocation reinforces investor confidence and provides a solid runway for future investments.
The firm’s strategic diversification into industrial cooling marks a pivotal shift. Leveraging its oil‑free foil‑bearing technology, Garrett Motion partnered with Trane Technologies to embed next‑generation compressors into commercial HVAC systems. Early testing shows over 10% energy savings versus incumbent solutions, a compelling value proposition for data‑center operators and large‑scale chillers. By allocating roughly 4.2% of sales to R&D—half of which targets zero‑emission and cooling initiatives—Garrett positions itself to capture a growing market where ultra‑low‑global‑warming‑potential refrigerants are becoming mandatory.
Looking ahead, Garrett’s 2026 outlook projects $3.7 billion in sales, a 14.7% EBIT margin and adjusted free cash flow of $405 million. Margin expansion is expected from volume growth and productivity gains, offsetting pricing pressure and mix challenges. The industrial cooling segment, projected to exceed 5% of revenue by 2030, offers a high‑margin growth vector that could further lift earnings. Investors should monitor commercial‑vehicle recovery trends and the ramp‑up timeline for the Trane collaboration, as these factors will shape the company’s ability to sustain its dividend and share‑repurchase program while delivering incremental shareholder value.
Garrett Motion Inc (GTX) Q4 2025 Earnings Call Transcript
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DATE
Feb. 19, 2026 at 8:30 a.m. ET
CALL PARTICIPANTS
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Chief Executive Officer — Olivier Rabiller
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Chief Financial Officer — Sean Deason
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TAKEAWAYS
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Net Sales -- $891,000,000 in Q4, with $3,580,000,000 for the full year, reflecting commercial vehicle growth and a gasoline share gain, but partially offset by aftermarket weakness.
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Adjusted EBIT -- $122,000,000 in Q4 (13.7% margin), $510,000,000 for the year (14.2% margin); Q4 margin down 100 basis points sequentially due to unfavorable mix and one-time headwinds.
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Adjusted Free Cash Flow -- $139,000,000 in Q4 and $403,000,000 for the year, converting nearly 80% of adjusted EBIT to free cash flow for 2025.
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Capital Returns -- $50,000,000 in voluntary term loan repayment, $208,000,000 in share repurchases, and $52,000,000 in dividends paid during 2025.
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Share Repurchases -- $72,000,000 repurchased in Q4; 189,970,000 shares outstanding as of February 13, 2026.
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Balance Sheet -- $870,000,000 in liquidity at year end; net leverage ratio at 1.9x with no significant debt maturities until 2032.
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2026 Guidance -- Net sales midpoint at $3,700,000,000, net income of $315,000,000, adjusted EBIT of $545,000,000 (14.7% margin), adjusted free cash flow of $405,000,000, and operating cash flow of $455,000,000.
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Margin Outlook -- 2026 guidance includes a 50 basis point margin expansion to 14.7%, expected from higher volumes and continued productivity, offsetting pricing and mix pressures.
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R, D, and E Investment -- 4.2% of sales targeted for research, development, and engineering in 2026, with about 50% allocated to zero-emission and industrial cooling programs.
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Turbocharger Segment -- Secured numerous new light vehicle turbo awards; gasoline now over 44% of sales and diesel more than 23%, showing significant transition from 2018 mix.
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Industrial and Commercial Awards -- Won first series production awards for the MEG turbo product and initial aftermarket retrofit sales.
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Zero-Emission Technologies -- Achieved the first production award in e-cooling compression for a leading Chinese bus and truck HVAC supplier, and executed a strategic collaboration with Trane Technologies to integrate next-generation oil-free compressors into Trane’s commercial HVAC systems.
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Technology Differentiation -- Testing in Trane’s labs showed more than 10% real-world energy savings versus incumbent solutions for oil-free compressors.
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Industrial Cooling Outlook -- Cooling is projected to exceed 5% of total revenue by the end of the decade, driven by ramp-up in industrial applications and zero-emission platforms.
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Share of Industry Awards -- Management stated a business win rate above 50% for light vehicle turbocharger awards over the last five to six years, supporting ongoing share gains.
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2026 Capital Allocation -- Authorized a $250,000,000 share repurchase program and declared a Q1 2026 dividend of $0.08 per share.
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Tariff Recovery -- $10,000,000 in tariffs recovered in Q4 and $40,000,000 in the full year.
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Aftermarket Performance -- Continued weakness in aftermarket sales, mainly due to reduced demand in North America off-highway applications.
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Commercial Vehicle Outlook -- Expected 1.5% recovery in commercial vehicle, including on- and off-highway, for 2026.
SUMMARY
The call revealed strong execution of Garrett Motion(GTX1.95%)'s strategic plan, highlighted by diversification into industrial cooling and robust capital returns. Unique technology collaborations, notably with Trane Technologies, have positioned the company to capture new growth vectors outside traditional automotive markets. Management emphasized disciplined investment in modernization and a focus on maintaining leading share in turbocharger awards, even as the industry mix shifts towards gasoline and electrified applications.
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Olivier Rabiller said, "Cooling is now a tangible vector of growth" alongside turbo and e-powertrain businesses, and projected that cooling revenue will be "expected to scale quickly to more than 5% of our revenue by the end of the decade."
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Sean Deason explained, "We continue to target distribution of approximately 75% of our adjusted free cash flow to shareholders over time through dividends and share repurchases."
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Management confirmed the new Trane partnership is "accretive on start of production," with initial deliveries in 2026 and a ramp-up beginning in 2027.
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The company recovers substantial tariffs, with $40,000,000 in recoveries during 2025 supporting margin protection amidst foreign exchange fluctuations and regional sales variations.
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The win rate above 50% in light vehicle turbocharger awards continues to drive incremental share gains and underpins management’s confidence in outperforming overall industry volumes despite soft macro conditions in select regions.
INDUSTRY GLOSSARY
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BNT applications: Gasoline-based turbocharger configurations chiefly for light vehicle platforms.
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MEG turbo: Garrett Motion’s largest turbo frame size, designed for heavy-duty industrial and commercial applications.
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Oil-free foil bearing: Specialized high-speed bearing technology used in Garrett’s compressors that eliminates the need for oil lubrication, enhancing efficiency and reliability.
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R, D, and E: Research, development, and engineering expenditures supporting innovation pipelines.
Full Conference Call Transcript
Thank you, Cyril. Good morning, everyone, and welcome. 2025 was another fantastic year for Garrett Motion Inc. We delivered strong operational performance in a complex industry environment and at the same time advanced our strategy, increasing share of demand, growing our portfolio, expanding margin, and securing key awards and partnerships across Turbo, zero-emission technologies, and industrial applications. In Q4, net sales were $891,000,000 and adjusted EBIT was $122,000,000 with a 13.7% margin. For the full year, net sales reached $3,580,000,000 and adjusted EBIT was $510,000,000 with a 14.2% margin. Adjusted free cash flow for the year was $403,000,000, once again demonstrating our disciplined execution and operational rigor. These strong results allowed us to stay firmly on track with our capital allocation framework, returning significant capital to shareholders and strengthening our balance sheet. In 2025, we voluntarily repaid $50,000,000 of our term loan, repurchased $208,000,000 of common stock, and paid $52,000,000 in dividends. As you will see later on, we plan for another year of strong execution for 2026, as we anticipate further share of demand gains, margin expansion, and strong free cash flow. Sean will provide additional details on our 2026 outlook later in the presentation, but for now, let me move to Slide four. In 2025, we continued to strengthen our core business while accelerating our zero-emission technologies. We secured a significant number of new light vehicle turbo awards, driving our growing share of demand in gasoline BNT applications and increasing our track in hybrid and range-extended electric vehicle platforms. These wins reinforce how our differentiated technologies remain central to efficiency and emissions reduction for our customers. We also won important awards in diesel applications for our light vehicle and trucks, where diesel remains highly valued for its lower emissions, fuel economy, and high torque. And I want to pause on this point for a moment. Back in 2018, light vehicle diesel represented 41% of our revenue, and many questioned whether Garrett Motion Inc. could sustain its margins through the transition to gasoline. Today, gasoline accounts for over 44% of our sales and diesel remains resilient at more than 23%. And as just mentioned, we delivered 14.2% adjusted EBIT margin, once again demonstrating the strength of our business model grounded in technology leadership and operational excellence. Beyond light vehicles, we also secured numerous commercial vehicle awards across on-highway, off-highway, and industrial applications. This momentum was further supported by our first series production awards for our largest turbo frame size, the MEG, as well as the first aftermarket sales for this product line as a retrofit option in the aftermarket space. Moving now to our zero-emission and industrial technologies. In addition to the wins and progress we have announced in 2025, we made two announcements in February that are very important when it comes to that part of our portfolio. First, we announced a series production award for mobility e-cooling compression with a leading Chinese bus and truck HVAC supplier. Second, and even more important, we launched a strategic collaboration with Trane Technologies to integrate Garrett Motion Inc.’s next-generation oil-free high-speed centrifugal compressors into Trane’s commercial HVAC applications, from unitary rooftop and modular chillers to large-capacity chillers, bringing the maturity, quality, and scale of the products we have developed in the automotive industry into the industrial world. Extensive testing in Trane’s labs confirmed the clear performance benefits versus incumbent solutions. Initial units from Trane will be available to select customers already this year with broader series production across applications beginning in 2027. But let me spend a little bit more time on this cooling opportunity on Slide five. We have developed an oil-free high-speed centrifugal refrigerant compressor for HVAC applications by combining core Garrett Motion Inc. technology: high-efficient turbomachinery, our unique oil-free foil bearing, high-speed electric motors, ultra-high-frequency inverters, and model-based control software. And importantly, all of this comes straight from our technology we have already developed, validated, and industrialized at automotive scale and quality. Our testing has shown that our technology can deliver more than 10% real-world energy savings compared to incumbent solutions. This allows HVAC operators to materially reduce the total cost of ownership and helps limit energy demand in power-intensive environments such as data centers. These benefits are even greater as customers move to ultra-low global warming potential refrigerants. Our e-cooling compressor portfolio, introduced at the AHR HVAC show in Las Vegas earlier this month, has already attracted strong interest from this industry.
The product range spans from 700 to 500 tons, or from 25 to 1,750 kilowatts, of cooling capacity, enabling us to serve applications from rooftop and unitary systems, battery energy storage cooling, computer room air conditioners, through small and large chillers used in comfort cooling and hyperscale data centers. These offerings leverage several of our key differentiated technologies to address the fast-growing needs of a sector that will progressively shift to ultra-low global warming potential refrigerants. Industrial cooling represents a significant growth vector for Garrett Motion Inc., and is expected to scale quickly to more than 5% of our revenue by the end of the decade as programs launch and ramp up.
Taken together, these developments show how Garrett Motion Inc. is executing, diversifying, and expanding outside of the automotive industry, a deliberate part of our strategy. Cooling is now a tangible vector of growth on top of high-speed powertrain, fuel cell compressors, and alongside our core turbo business. With that, I will turn over to Sean to discuss our Q4 and full year 2025 financial results in more detail. Thanks, Olivier, and good morning everyone. I will begin my remarks on Slide six, where we talk about our quarterly financial trends. As Olivier highlighted, we delivered another year of strong financial performance in 2025.
We finished Q4 with net sales of $891,000,000, driven by gasoline share demand gains and a slow recovery of commercial vehicle, partially offset by continued weakness in aftermarket. We delivered $122,000,000 of adjusted EBIT, equating to a 13.7% margin. Adjusted EBIT in Q4 was down sequentially, driven by unfavorable product mix and one-time headwinds, but in line with our 2025 full year outlook midpoint of $510,000,000. Finally, adjusted free cash flow was a very strong $139,000,000 in the quarter as the business continues to efficiently convert earnings into cash. Now moving to Slide seven, we show our net sales bridge by vertical as compared with the prior periods.
In the fourth quarter, net sales increased by $47,000,000 versus the prior year, or 6% on a reported basis and 1% on a constant currency basis, reflecting favorable foreign exchange currency impacts. We experienced growth in commercial vehicle and diesel. Gasoline volumes declined outside of Europe, particularly in Asia. For the full year 2025, we experienced gasoline growth across most regions, through a number of new launches and ramp ups. Our commercial vehicle off-highway sales expanded as well across regions. These gains were partially offset by lower diesel, particularly in Europe, where the industry continued to decline. Aftermarket declines were driven by lower demand for off-highway applications, particularly in North America.
And finally, during Q4 and the full year, we recovered $10,000,000 and $40,000,000 of tariffs, respectively. Turning to Slide eight. As mentioned earlier, during the quarter, we generated $122,000,000 of adjusted EBIT and a margin of 13.7%, which was down 100 basis points. Q4 operating performance was in line with expectations as we absorbed several one-time charges in addition to an unfavorable mix, and a 20 basis point margin dilution due to tariffs. The unfavorable mix was driven mostly by growth in small-engine light vehicle diesel, partially offset by growth in commercial vehicle applications across regions.
For the full year 2025, unfavorable mix was driven by increased light vehicle gasoline and softness in the aftermarket, mostly in North America, partially offset by increased commercial vehicle. Now turning to Slide nine. I will walk you through the full year 2025 adjusted EBIT to adjusted free cash flow bridge. We delivered strong adjusted free cash flow of $403,000,000 for the year. We had a slight working capital benefit, which reflects the very strong fourth quarter working capital recovery of $60,000,000. Capital expenditures came in slightly lower than anticipated due to timing, and cash taxes, depreciation, and cash interest were all in line with our expectations.
Taken all together, these strong results equate to a free cash flow conversion of nearly 80% in 2025. Now moving to Slide 10. We closed the year with strong liquidity of $870,000,000 and a very healthy balance sheet. In Q4, we repaid $50,000,000 of our term loan, bringing our net leverage ratio to approximately 1.9 times as of year end. We continue to have no significant debt maturities until 2032. Moving to Slide 11, we continue to generate strong cash flow and return capital to shareholders. In the fourth quarter, we repurchased $72,000,000 worth of shares for total repurchases of $208,000,000 in 2025, reducing our share count at year end to 190,000,000 or 191,000,000 shares outstanding.
We also increased and paid a dividend in Q4 of $0.08 per share, and authorized a $250,000,000 share repurchase program for 2026. As of 02/13/2026, we had 189,970,000 shares outstanding. Additionally, we just declared our Q1 2026 dividend of $0.08 per share. We continue to target distribution of approximately 75% of our adjusted free cash flow to shareholders over time through dividends and share repurchases, the latter of which will vary over time and will depend on various factors including macroeconomic and industry conditions. I will now turn to Slide 12 to discuss our 2026 outlook.
At the midpoint, industry assumptions for this outlook imply a 2% decline of the global light vehicle industry and average BEV penetration of 19%, and a slight recovery in commercial vehicle, including on- and off-highway, of 1.5%. The financial midpoints implied in this outlook are as follows: net sales of $3,700,000,000, net income of $315,000,000, adjusted EBIT of $545,000,000 implying a 14.7% margin, net cash provided by operating activities of $455,000,000, and finally adjusted free cash flow of $405,000,000. Capital expenditures and R, D, and E expenses are expected to be 2.5% and 4.2% of sales respectively, in line with our financial framework. Approximately 50% of our R, D, and E will be directed towards zero-emission technologies and industrial cooling.
Now turning to Slide 13. We show our 2026 midpoint outlook bridge for adjusted EBIT. For 2026, as discussed on the prior slide, midpoint outlook is $545,000,000 with a 14.7% implied margin, up 50 basis points compared to 2025. This adjusted EBIT improvement is expected mostly from increased volumes and our continuous focus on operating performance and productivity, which offsets unfavorable pricing, net inflation, and product mix. I will now turn the call back to Olivier for closing remarks. Thanks, Sean. Now let us turn to Slide 14. Our strategic priorities remain clear and consistent. We aim to identify and deliver on our customers’ needs by leveraging our capabilities to develop differentiated, high-speed, and highly efficient technologies.
In doing so, we generate robust returns for our shareholders. Let me wrap this up on our final slide, Slide 15, with three takeaways. First, we delivered strong full year 2025 results in line with our guidance, including share of demand gains, margin expansion, and strong cash flows. Second, our pipeline is expanding in Turbo and accelerating in zero-emission technologies and industrial applications. We secured our first production wins for our e-powertrains and e-cooling technologies, and we are now generating meaningful traction in power generation and cooling technologies for industrial applications. Third, we remain disciplined in our capital allocation, investing in what wins and returning capital to shareholders.
We are extremely well positioned to add in 2026 and beyond and look forward to welcoming you to our Investor Day planned for May 20 in New York, where we will provide additional updates on our long-term strategy and outlook. Thank you for your time. And operator, we are now ready for Q&A. Operator: At this time, we will begin the question-and-answer session. If you are using a speakerphone, we ask that you please pick up the handset prior to pressing the keys. Once again, that is star and then one to join the question queue. Our first question today comes from James Mulholland from Deutsche Bank. Please go ahead with your question. James Mulholland: Great, thanks. Good morning, everyone.
So just some questions on the Trane partnership and the use of the high-speed compressor. Could you give us some sense of the economic opportunity here in the shorter term, understanding that it might get 5% of sales in a few years? But what level of contribution would you expect in 2027? And what kind of margins should we expect there? Will it be accretive at start of production? Or will there be a ramp up? And is part of the CapEx this year going to be in preparation for that? Olivier Rabiller: That is a great question, James, and you are giving me the opportunity to clarify a few points there. Yes, it is a very significant opportunity.
We are introducing a technology that is unique with the leader of that space, and with the broad range of portfolio of applications from small cooling to much bigger cooling needs. This is something, and quite frankly, the uniqueness is linked to what has already matured into the automotive space. So we are uniquely positioned to provide that to this industrial sector. So that is just something I wanted to remind everyone again. We see today, too, that we will deliver the first application in 2026 with a number of customers, but the real ramp will come for 2027. Today, we are not giving you numbers on 2027. It will be the start.
But the number we are giving you and that you picked up, the 5%, in excess of 5% of revenue by the end of the decade, shows the magnitude and the speed of the ramp up that will happen between now and then. In terms of CapEx, it is all included in our plan and that is all taken into account in the 2.5% CapEx guidance that we gave for 2026. We are still applying to this new line of product the same discipline in CapEx spend for the new product lines. And there are a number of elements, as I was mentioning before, that are the same or leveraging the scale that we have on the automotive side.
So that limits the CapEx that is just specific for that business pursuit. James Mulholland: Great. Sean Deason: And then quickly on my follow-up. So you are—you are— Olivier Rabiller: Sorry. Go ahead. There is just one point that you did not answer. Your question about margin, yes, it is accretive. Sean Deason: And so accretive on start of production? Essentially? Yes. James Mulholland: Okay, great. And then on my follow-up, your largest competitor announced last week that it is going to be diversifying into power generation for data centers. Now I think in the past you have mentioned you would do about $100,000,000 in sales for 2025 and that should grow, I think, double digits this year.
Outside of the HVAC opportunity, do you see other areas to increase exposure or use your tech stack to further penetrate that data center opportunity and its growth outlook? Would you look to do inorganic acquisitions to tap into that further? Just your thoughts on that. Olivier Rabiller: Well, we are very consistent with what we said about our technology for a long time, saying that we will favor verticals that are valuing the technology that we put in our products. And obviously, when you get into commercial vehicle on-highway, off-highway, and even more in industrial space, these are the spaces where customers are valuing the technology we bring. So it is true.
We have developed—we had already a position on genset, and today, the biggest part of the demand for gensets—big gensets—is data center driven. And we have developed our range. We have developed a new range of product on top, and you may have seen that we just made a few important announcements showing that, in a matter of a very short amount of time, we have been able to secure early wins with these new products, and even get into retrofitting some of the products that were already in the marketplace. So we will keep on pushing that range of product.
And yes, we are seeing a very significant growth above and beyond the $100,000,000 that we mentioned in Q3 2025. And we expect that growth, obviously, to amplify as we get into 2026. The cooling side is very interesting. We will keep on obviously developing our position on the genset side. But the cooling side is very interesting. It is obviously a very dynamic industry, driven by the growth of cooling across many applications and obviously the data center piece. And once again, we have the right building blocks in the company that allow us to propose something that is not existing there.
And the fact that a lot of equipment is being ordered gives us the momentum in the marketplace to adopt our technology. So, yes, overall, the only thing I could say is that, yes, it is very significant. It is probably going a bit faster than what we had anticipated at the beginning, but extremely consistent with everything we have been saying for the last few years, that we would reinforce on power generation and cooling, leveraging the building blocks that we have in the company and that are differentiated versus what is existing out there. James Mulholland: Great. Thank you very much, guys. Operator: Our next question comes from Ryan Brinkman from JPMorgan. Please go ahead with your question.
Ryan Brinkman: Hi, thanks for taking my question. Maybe a similar one, just wanted to ask, following the announcement of the strategic collaboration with Trane, how you would compare and contrast the relative opportunity of, on the one hand, supplying industrial turbochargers for the stationary power gensets located outside of the data centers to provide energy for their operational cooling business, and on the other hand, this newer opportunity to participate in cooling itself.
On the meetings call the other week announcing the sale portion of their business that includes thermal management to the stationary power gensets that you use, it was discussed that while the market for data center stationary power generation is set to grow very quickly, the market for the momentum of the inside of data centers will start to grow quite a bit faster still. So how do you see these two markets growing, and how should we think about the relative margin or content opportunity or competitive edge for Garrett Motion Inc. in these two different relatively related markets? Olivier Rabiller: You were breaking quite a bit on the phone line.
So I think, if I may, to rephrase your question, you were asking us to give a little bit of a comparison of the growth that we are seeing on the one hand with the power gen and the big turbo space, and on the other hand, the cooling, both of them being more directly or less directly linked to the growth that we see in the data space. Is it your question? Ryan Brinkman: Yes. Thank you. Olivier Rabiller: Okay. So I would say it is difficult to compare. Both of them are growing fast. And you see that for the players that we are dealing with.
On the one hand, it is Trane, obviously, that we talked about, but not only. And on the other hand, with the biggest customers we are having today on the big engines, and you know all the big names out there, whether they are in the U.S. or in Asia. So it is difficult to compare the two. They are all driven by this. They are all driven, I would say, on the power gen side by other fundamentals that are not only directly linked to data centers when it comes to increased needs for power generation.
There is a need for energy all around the world, and that is not only—it is partly driven by data centers, but not only driven by that. And then on the cooling side, I would say not everything is driven by data centers either. You have a lot of macros that are driving the demand, and also in that space, driving people to refresh the technologies that they are using. Because when we announce that with the equipment that we are putting in the marketplace with Trane, we can save up to 10% energy compared to incumbent applications.
That is very significant when you combine the two: need for energy—this is an underlying macro—and on the other hand, there is a need for cooling that is much more energy efficient, and this is where we play. So I think we are addressing very well those two. I will not oppose the two. I mean, quite frankly, when we say that cooling, we forecast it to be quickly above 5% of our revenue, and you know that the world is not ramping up exactly at the speed of the automotive industry. That means a very quick ramp up by industrial standard anyway. And we are seeing today very quick ramp up as well on the industrial side for turbos.
So we are very pleased with that. We are very pleased with the growth, and we will keep on funding that with our disciplined approach so that we are successful with it. Ryan Brinkman: Great. Thank you. And I apologize for the connection. Just lastly from me, relative to the new light vehicle turbo awards and key geographies, including diesel for light commercial vehicles and hybrid gas applications. Is the pace of new wins relatively consistent with your past aggregations in recent years?
You have been winning on the order of magnitude of roughly one half of industry turbocharger awards, and given that your current revenue share of turbochargers might be closer to a third and a half, what does this imply, do you think, for your future growth versus market in light vehicle turbos? Olivier Rabiller: So, Ryan, we are very clear. We have been keeping on winning, and the way we measure that is we measure our business win rate, and we publish that once a year. It has been very consistent above 50% when you look at the last five, six years.
When we win at that level, it means that we are increasing our share of demand in the industry. And if you do the math, and I am sure you are doing that very carefully, you will see that with the guide we have on revenue, and the results we have on the revenue for 2025, versus what the industry is doing, we are, obviously, winning shares, and we will keep on winning shares with what we have. The underlying drivers for that are what we explained in the past, being a technology-driven consolidation. The industry needs a wide portfolio of technologies and advanced technologies, especially as we get to hybrid vehicles.
We need more variable geometry turbos, there we need more electric boosting solutions, and we are launching a number of those this year. And therefore, not everyone can provide that. And there is also another consolidation that has happened: the carmakers and the truckmakers want to make sure that they work with players that are relevant today and will be relevant tomorrow as the industry keeps on shifting towards more electrified solutions. So I think we are well positioned on those two, and that drives shares that are growing for the leaders of the industry. And there is absolutely no change. When you look at our revenue guide, it is a good illustration of that.
Operator: Our next question comes from Thomas Scholl from BNP. Please go ahead with your question. Thomas Scholl: Hey guys. One more question on the Trane e-compressor wins. Now that you have had a chance to see how the compressor performs as part of a total system, can you talk a little bit about the efficiency gains you are seeing, especially against competing oil-free compressors using magnetic bearing technology instead of your foil bearings? Thank you. Olivier Rabiller: Well, a few things. I will not get into a lot of technical details today on this call, and I am sure we can have a very detailed technical discussion when we meet for the Investor Day in May.
But what we see is that our solution first is proven at scale. I mean, the industry has been looking for the most effective and efficient solutions that are oil-free. And today, we are having a lot of traction even from people that are using magnetic bearing towards our type of bearing. It is less difficult to control. In other words, it is difficult for me to get in five minutes into why it is less difficult to control and the efficiency gain, but clearly we have efficiency gains. We have controllability. We have maintenance.
We have all of that plays in favor of our solution, both for where you have magnetic bearings that are the big stuff, but also where we are smaller compressors that are coil compressors and that are much less efficient from an energy standpoint. Thomas Scholl: Got it. Thank you. And then I just wanted to double click on your SG&A cost savings this year. That is a pretty impressive number. Can you talk a little bit about where those are coming from? And if you see additional cost savings opportunities going forward? Sean Deason: Yeah. But as we have always said, we are always working on the efficiency of the company.
We are always leveraging everything we can to make the company faster, more nimble, more agile, more reactive. Today, we have a number of tools at our disposal, whether it is fine-tuning the organization, developing systems—and I would not get on the famous AI stuff that everybody is using—but we are obviously having an agenda to transform the company to make it even more efficient in the future. So we are pleased with the results we are having on SG&A. But in all fairness, because we like performance, we are looking for a step improvement versus that in the coming years. Thomas Scholl: Thanks, guys. Operator: Our next question comes from Nathan Jones from Stifel.
Please go ahead with your question. Nathan Jones: Good morning, everyone. I have got one on the Trane partnership as well. You talked about 5% of sales by 2030. Can you confirm that is all coming from the Trane partnership? And then is there any exclusivity in the product with them, or are you able to market and sell this to other suppliers in other areas? And if so, can you just comment on what the overall addressable market would be for the product?
Olivier Rabiller: So first, we are very pleased to work with Trane, which are the leaders in terms of equipment, but they are also a technology leader in that industry, and a company that is setting the trend. So for us, it is very important to work very closely together in the coming years. And we are very pleased with this agreement, obviously, because that is giving us very quickly the scale and the understanding of the marketplace. Frankly, in the long run, we will keep on leveraging that partnership. And as opportunities are coming with other players and other segments of the cooling industry, we will certainly develop relationships with some other players.
We already have a ton of people coming to us asking questions at the show. I think—I do not want to be too proud of it—but I think we had a turnout from the rest of the industry that we were not expecting. Nathan Jones: So is it fair to say then that, by that 2030 target, the product is going to generate more than 5% of revenue? It is 5% of revenue with Trane, but there will be other opportunities as well. Olivier Rabiller: There will be opportunities by 2030 that go beyond Trane, that is for sure.
And we are giving that as a view and that purely depends on the speed at which the industry is ramping up. That could be, depending on the take of the industry, that could go very, very quickly, and even potentially quicker. Nathan Jones: Thanks for that. I guess my follow-up question is going to be on your other zero-emission progress. You have had a number of predevelopment contracts ongoing for the last few years. Can you talk about progress towards getting those to awards and plans for start of production on that? And then is the $1,000,000,000 of revenue from all of this portfolio of products still a target for 2030? Thanks.
Olivier Rabiller: So, clear, we are seeing a lot of—it is not because we talk about Trane today that we are not seeing traction with the rest. We have an accelerated number of predevelopment programs that we are working on. Today, we are working on many more predevelopment programs than what we were doing a year ago, to give you an idea, both passenger vehicle, commercial vehicle, and industrial applications. We have talked a lot this year about the award we got for e-powertrain for commercial vehicle, heavy duty. We will be in production already next year at this time. So it is not just a PowerPoint kind of discussion that we are having.
We are talking product for heavy duty electric axle 2027. 2027. And then from there, obviously, it is bringing interest about programs that we have not communicated about yet that are leveraging what we do on those vehicles and apply that to other vehicles. I am talking about commercial vehicle space. On the passenger vehicle side, we are making very good progress now on the testing of our solutions, and we are confirming benefits of our solution versus incumbent solutions in the industry even greater than what we had seen and communicated initially. Now, it depends on the speed at which decision-making is happening at our customers.
But quite frankly, the benefits have been confirmed and if anything, they are greater than what we and our customers were expecting, both in the passenger vehicle and in the commercial vehicle space. On the e-cooling, we just confirmed the first few wins for e-cooling for mobile applications. Same again. Obviously, it is not a surprise that we tend to win earlier in China because the industry tends to move faster than in the rest of the world. We all know that. But at the same time, it is very positive for us because it shows that we can win in the most competitive markets you have out there.
So we take it like we are moving at China speed on a lot of that stuff. And we are delivering the performance at the cost customers are willing to pay in the toughest industry around the world. Thanks very much for taking—in all fairness, long answer—yes. We are making progress. And yes, I am very pleased with it. More to come. Operator: Next question comes from Hamed Khorsand from BWS Financial. Please go ahead with your question. Hamed Khorsand: Hi. Olivier Rabiller: First question was— Sean Deason: Could you just reconcile the two comments you made?
Sean, you said that you are expecting EBIT margin to expand because unit volume would increase, but then you are giving guidance with the expectation that global units will be down this year. So could you just reconcile that, please? Olivier Rabiller: I mean, maybe before Sean picks that up, the comment we made on industry down is for the light vehicle industry. And in the light vehicle industry that is down, we are expecting to be up despite the growth of battery electric vehicle. So that means significant share of demand gains for Garrett Motion Inc. Hamed Khorsand: You want to comment— Sean Deason: No. That was exactly what I was going to say, Olivier.
And also, obviously, there is growth in commercial vehicle as well. So we are quite pleased with the guide. And of course, it is underlined by our strong productivity performance that we have demonstrated over the cycles, over various cycles, and we will continue to do so in 2026 and going forward. Hamed Khorsand: Okay. And then you have reported that commercial went up this quarter, and it looks like it is going to go up again 6% in your forecast. Is that because of what is happening in off-highway? Or is that because of the commercial on-road aspect? Olivier Rabiller: It is because of off-highway and specifically industrial turbos.
So back to the question of one of your peers before, Hamed, we are seeing the growth on the industrial turbo side driven by genset. Hamed Khorsand: Okay, great. Thank you. Operator: And our next question comes from Eric Gregg from Four Tree Island Advisory. Please go ahead with your question. Eric Gregg: First up, congratulations on a really strong Q4 and 2025 to the whole team there at Garrett Motion Inc. First question following up on the caller two people ago, but one is, is Trane exclusive or is it exclusive for a few years in commercial HVAC? And does that exclusivity fall away after that?
And then second of all, is that oil-free centrifugal compressor technology going to be additive in HVAC to your $1,000,000,000 2030 zero-emission sales target? Or is that—given that zero-emission vehicle penetration seems to have slowed a bit—is this just the way to kind of meet that $1,000,000,000 target that you laid out a year or two ago for 2030 zero-emission revenues? Thank you. Olivier Rabiller: So first of all, just to counter your point, we are not developing a new line of projects just to patch a weakness that we would have on the other side of the portfolio. We make decisions on the portfolio to go where we have differentiated technology and where we see growth moving forward.
So it is not like we have one investment that comes at the expense of the other or the other way around. Yes, it is part of our ambition towards the $1,000,000,000, and that is obviously counted as part of that. Now, we will update you on that during our next investor meeting, and we will give you more clarity about the way it goes. But we are very pleased to have not only one driver that gets us there, but several drivers, and they are depending on different industries, which is the best option and the best way that we can strengthen towards our ambition.
Then your point: it is obvious that when you work with someone like Trane, you place a lot of eggs in the basket that helps you be successful in the marketplace. So at the beginning, it is true that we will dedicate a lot of attention with Trane. But over time, that does not prevent us from developing ourselves with other players. Operator: Thank you very much. And with that, we will be concluding today’s question and answer session, as well as today’s presentation. We do thank you for joining. You may now disconnect your lines.
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