Garrett Motion Inc. (GTX) Cash Flow Statement

Conversion above 1.0x in most quarters suggests reported earnings are not being inflated by non-cash gains, though the ratio dipped below 1.0x in Q1 2025 at 0.90x. The gap is most plausibly explained by working capital movements, which were volatile, including a $46.0M contribution in Q2 2025 and a $60.0M drag in Q1 2025. Investors should monitor whether conversion stays above 1.0x once working capital normalizes, since the current excess may reflect timing rather than structurally higher earnings quality.

The move from low-single-digit FCF margins to roughly 13% appears driven primarily by operating cash flow rebounding rather than by a structural change in capital intensity. Capex has been held to roughly 1.1% to 3.0% of revenue, which suggests the business can generate free cash at reasonable scale without heavy reinvestment. The sustainability of a 13% margin warrants monitoring because the Q1 2026 figure of 7.0% shows the trajectory remains sensitive to quarterly working capital timing.

The magnitude of these swings relative to quarterly operating cash flow suggests that headline OCF in any single period may overstate or understate the underlying run-rate. Repeated Q1 outflows followed by Q2 inflows may point to a seasonal pattern in customer collections or inventory build, though the data alone cannot confirm the cause. Analysts should normalize OCF over trailing twelve-month periods before drawing conclusions about cash conversion.

Capex running below D&A may flatter near-term free cash flow, since asset replacement needs could eventually require higher spending to sustain the installed base of precision turbocharging equipment. The gap between depreciation and capex is most pronounced in 2026, which warrants investigation into whether maintenance requirements are being deferred. Investors should compare this against the company's R&D commitments for next-generation e-boosting technologies to assess whether growth investment is being adequately funded.

Buybacks in Q1 2026 of $87.0M and Q3 2026 of $57.0M consumed a substantial share of quarterly FCF, suggesting management is returning most free cash to shareholders. The absence of dividends in 2024 and the concentration of return in repurchases may indicate flexibility to scale returns with cash generation. Whether these repurchases are offsetting dilution or reducing the share count materially is a question investors should investigate further.