Q3 2025 Garrett Motion Inc Earnings Call

Speaker #4: Hello , my name is Megan and I will be your operator this morning . I would like to welcome everyone to the Garrett Motion Inc third quarter 2020 financial results conference call .

This call is being recorded and a replay will be available later today after.

After the company's presentation, there will be a Q&A session I would now like to hand, the call over to see your old graduating Garrett's Vice President Investor Relations and Treasurer.

Speaker #4: This call is being recorded and a replay will be available later today after the company's presentation . There will be a Q&A session .

Thank you Megan and good day and welcome everyone. Thank you for attending the Garrett motion third quarter 2020 financial results Conference call.

Speaker #4: I would now like to hand the call over to Cyril Grandjean, Garrett's Vice President, Investor Relations and Treasurer.

Before we begin I would like to mention that today's presentation and earnings press release are available on the IR section of Garrett motion website at investors the Garrett motion Dot com.

Speaker #5: Thank you , Megan . Good day and welcome , everyone . Thank you for attending the Garrett Motion Inc Third Quarter 2020 Financial Results conference call .

Speaker 4: Thank you, Megan. Good day and welcome, everyone. Thank you for attending the Garrett Motion Inc. Third Quarter 2025 Financial Results Conference Call. Before we begin, I would like to mention that today's presentation and earnings press release are available on the IR section of Garrett Motion Inc.'s website at investors.garrettmotion.com. There, you will also find links to our SEC filings along with other important information about the company. We note that this presentation contains forward-looking statements within the meaning of the U.S. Federal Securities Laws. These statements, which can be identified by words such as anticipate, intend, plan, believe, expect, may, should, or similar expressions, represent management's current expectations and are subject to various risks and uncertainties that could cause our actual results to differ materially from such expectations.

Speaker #5: Before we begin, I would like to mention that today's presentation and earnings press release are available on the IR section of the Garrett website at investors.

There you will also find links to our SEC filings along with other important information about the company.

We note that this presentation contains forward looking statements within the meaning of the U S. Federal Securities laws. These statements, which can be the amplified by words, such as anticipate intend plan believe expect may should or similar expression.

Speaker #5: There you will also find links to our SEC filings , along with other important information about the company . We note that this presentation contains forward looking statements within the meaning of the US Federal securities laws .

Speaker #5: These statements , which can be identified by words such as anticipate , intend , plan , believe , expect , may , should , or similar expressions represent management's current expectations and are subject to various risks and uncertainties that could cause our actual results to differ materially from such expectations .

<unk> represents management's current expectations and are subject to various risks and uncertainties that could cause our actual results to differ materially from such expectations.

These risks and uncertainties include the factors identified in our annual report on Form 10-K, and other filings with the Securities and Exchange Commission and include risks related to the automotive industry competitive landscape and macroeconomic and geopolitical conditions among others.

Speaker #5: These risks and uncertainties include the factors identified in our annual Report on Form 10-K and other filings with the Securities and Exchange Commission , and include risks related to the automotive industry , competitive landscape and macroeconomic and geopolitical conditions , among others .

Speaker 4: These risks and uncertainties include the factors identified in our annual report on Form 10-K and all the filings with the Securities and Exchange Commission and include risks related to the automotive industry, competitive landscape, and macroeconomic and geopolitical conditions, among others. Please review the disclaimers on slide two of our presentation as the content of our call will be governed by this language. Today's presentation also includes certain non-GAAP measures, which we use to help describe how we manage and operate our business. We reconcile each of these measures to the most directly comparable GAAP measure in the appendix of our presentation and related press release. Finally, in today's presentation and comments, we may refer to light vehicle diesel and light vehicle gasoline products by using the terms diesel and gasoline only.

Please review the disclaimers on slide two of our presentation as the contents of our call will be governed by this language. Today's presentation also includes certain non-GAAP measures, which we use to help describe how we manage and operate our business.

Speaker #5: Please review the disclaimer on slide two of our presentation . As the content of our call will be governed by this language . Today's presentation also includes certain non-GAAP measures , which we use to help describe how we manage and operate our business .

We reconcile each of these measures to the most directly comparable GAAP measure in the appendix of our presentation and related press release.

Finally in today's presentation and comments, we may refer to light vehicle diesel and light vehicle gasoline products by using the terms diesel and gasoline on.

Speaker #5: We reconcile each of these measures to the most directly comparable GAAP measure in the appendix of our presentation , and related press release .

Speaker #5: Finally , in today's presentation and comments , we may refer to light vehicle , diesel and light vehicle , gasoline products . By using the terms diesel and gasoline only .

With us today are <unk>, <unk>, President and Chief Executive Officer, and shoulder season, Garrett Senior Vice President and Chief Financial Officer, I will now hand, the call over to Eddie.

Speaker #5: With us today are Olivier Rabiller Garrett , President and Chief Executive Officer and Sean Deason Garrett , senior vice president and chief financial officer .

Speaker 4: With us today are Olivier Rabiller, Garrett's President and Chief Executive Officer, and Sean Deason, Garrett's Senior Vice President and Chief Financial Officer. I will now hand the call over to Olivier.

Thank you.

Thank you all for joining the call today.

I am pleased to report that Garrett they developed and those offset of strong financial results in the third quarter. Thanks to increased sales in a more stable production environment and disciplined operational execution.

Speaker #5: I will now hand the call over to Olivier .

Speaker #3: Thank you . Cyril . Thank you all for joining the call today . I am pleased to report that Garrett delivered another set of strong financial results in the third quarter .

Speaker 5: Thank you, Cyril. Thank you all for joining the call today. I am pleased to report that Garrett delivered another set of strong financial results in the third quarter, thanks to increased sales in a more stable production environment and disciplined operational execution. Net sales for the third quarter were $902 million, up 6% at constant currency. This growth reflects outperformance over the industry in light vehicle turbo sales for both gasoline and diesel applications. In fact, our gasoline sales grew by 10% in the quarter, driven by our share of demand gains. Thanks to continued productivity and higher volumes, we achieved another quarter of very solid operating performance. Adjusted EBIT was $133 million, and our adjusted EBIT margin was 14.7%, which includes a 20 basis point dilution of the margin rate from tariff recoveries. We also delivered strong adjusted free cash flow of $107 million for the quarter.

Net sales for the third quarter were $902 million at all up 6% at constant currency.

Speaker #3: Thanks to increased sales in a more stable production environment and disciplined operational execution, net sales for the third quarter were $902 million, up 6% at constant currency.

This growth reflects our performance, although the industry in light vehicle turbo sales for both gasoline and diesel applications.

In fact, our gasoline sales grew by 10% in the quarter driver driven by our share of demand gains.

Speaker #3: This growth reflects outperformance over the industry in light vehicle sales for both gasoline and diesel applications . In fact , our gasoline sales grew by 10% in the quarter , driving driven by our share of demand gains thanks to continued productivity and higher volumes .

Thanks to continued productivity in iron ore volumes, we achieved another quarter of very solid operating performance.

Adjusted EBITDA was $133 million and our adjusted EBIT margin was 14, 7%, which includes a 20 basis point dilution of the margin rate from tariff recoveries.

Speaker #3: We achieved another quarter of very solid operating performance . Adjusted Ebit was $133 million , and our adjusted Ebit margin was 14.7% , which includes a 20 basis point dilution of the margin rate from tariff recoveries .

We also delivered strong adjusted free cash flow of $107 million for the quarter.

These results combined with an improved forecast for the automotive industry for the second half of the year.

Speaker #3: We also delivered strong adjusted free cash flow of $107 million for the quarter. These results, combined with an improved forecast for the automotive industry for the second half of the year, have enabled us to raise our 2025 outlook midpoint.

Enabled us to raise our 2025 hour could lead points.

Speaker 5: These results, combined with an improved forecast for the automotive industry for the second half of the year, have enabled us to raise our 2025 outlook midpoint. In addition, we continue to allocate capital in line with our stated framework and our commitment to delivering value to shareholders. During the third quarter, we accelerated our share repurchase activity, buying back $84 million of common stock. We also paid a $12 million quarterly dividend. Moreover, our board of directors just approved a 33% increase in our dividend, raising it to $0.08 per share for the fourth quarter. Now, let me move to slide four to share more about Garrett's continued success across our differentiated technologies. We continue to see growing interest in developing turbochargers for hybrids and range-extended electric vehicles. This quarter, we secured several additional awards for these technologies.

In addition, we continue to allocate capital in line with our stated framework and our commitment to delivering value to shareholders.

Speaker #3: In addition , we continue to allocate capital in line with our stated framework and our commitment to delivering value to shareholders . During the third quarter , we accelerated our share repurchase activity , buying back $84 million of common stock .

During the third quarter, we accelerated our share repurchase activity buying back $84 million of common stock.

We also paid a $12 million quarterly dividend.

Moreover, our board of directors, just approved a 33% in our dividend raising it to 0.0 $8 a share for the fourth quarter.

Speaker #3: We also paid a $12 million quarterly dividend . Moreover , our board of directors just approved a 33% in our dividend , raising it to $0.08 per share for the fourth quarter .

Now, let me move to slide four to share more about Gary its continued success across our differentiated technologies.

We continue to see growing interest in developing chocolate charterers for hybrids and range extended electric vehicles.

Speaker #3: Now , let me move to slide four to share more about Garrett's continued success across our differentiated technologies . We continue to see growing interest in developing turbochargers for hybrids and range extended electric vehicles .

This quarter, we secured several additional awards for these technologies.

In addition, we obtained several awards for commercial vehicles and industry level Showboat charterers in various regions, including although 40 million dollar products supporting Cessionary our generation of Gen sets.

Speaker #3: This quarter , we secured several additional awards for this technologies . In addition , we obtained several awards for commercial vehicles and industrial turbochargers .

Speaker 5: In addition, we obtained several awards for commercial vehicles and industrial turbochargers in various regions, including over $40 million for products supporting stationary power generation or gensets. Demand for such units continues to grow, fueled by the global expansion of data centers in which gensets are installed for backup power generation. Sales of these products are expected to exceed $100 million in 2025 and represent an important growth opportunity for Garrett. This quarter, we also continue to make progress in developing our differentiated zero-emission products. We secured additional proof of concepts with two OEMs in Japan and China for our high-speed three-in-one E-Powertrain. In addition, on the EcoLink side, we progress with the development of our oil-free centrifugal high-speed compressor technology for industrial and mobility applications. We see strong momentum with customers for our e-compressor technology, which is driving significant efficiency gains when tested against current industrial technologies.

Demand for such units continues to grow fueled by the global expansion of data centers in which Gen set are installed for backup power generation.

Speaker #3: In various regions , including over $40 million for products supporting stationary power generation or gensets . Demand for such units continues to grow , fueled by the global expansion of data centers in which genset are installed for backup power generation .

Sales of these products.

<unk> to exceed $100 million in 2025 and represent an important growth opportunity for Garrett.

Speaker #3: Sales of these products are expected to exceed $100 million in 2025 , and represent an important growth opportunity for Garrett this quarter , we also continued to make progress in developing our differentiated zero emission products .

This quarter. We also continued to make progress in developing our differentiated zero emission products we.

We secured additional proof of concepts with two Oems in Japan, and China for high speed three in one IPOH off train.

In addition on the including side, we progress with the development of our oil free centrifugal ISP copper soft technology for industrial and mobility applications.

Speaker #3: We secured additional proof of concepts with two OEMs in Japan and China for our high speed three . In one powertrain . In addition , on the cooling side , we progressed with the development of our oil free centrifugal high speed compressor technology for industrial and mobility applications .

We see strong momentum with customers for our <unk> technology, which is driving significant efficiency gains when tested against current industry old technologies.

Speaker #3: We see strong momentum with customers for our compressor technology , which is driving significant efficiency gains when tested against current industrial technologies . All in all , I'm extremely pleased with our ability to deliver strong financial results while continuing to position the company for years of growth .

All in all I'm extremely pleased with our ability to deliver strong financial results, while continuing to position the company for years of growth.

No Andy talk option, we will provide more details on our financial results and outlook.

Speaker 5: All in all, I'm extremely pleased with our ability to deliver strong financial results while continuing to position the company for years of growth. I will now hand it over to Sean, who will provide more details on our financial results and outlook.

Thanks, Olivier and good morning, everyone I will begin my remarks on slide five.

Speaker #3: I will now hand it over to Chen , who will provide more details on our financial results and outlook .

As Olivier highlighted we delivered strong financial performance in the third quarter. Our net sales were $902 million driven by new gasoline launches and ramp ups across key regions favorable foreign currency impacts and tariff recoveries, partially offset by continued weakness in aftermarket.

Speaker #6: Thanks , Olivier , and good morning everyone . I will begin my remarks on slide five . As Olivier highlighted , we delivered strong financial performance in the third quarter .

Speaker 6: Thanks, Olivier, and good morning, everyone. I will begin my remarks on slide five. As Olivier highlighted, we delivered strong financial performance in the third quarter. Our net sales were $902 million, driven by new gasoline launches and ramp-ups across key regions, favorable foreign currency impacts, and tariff recoveries, partially offset by continued weakness in aftermarket. We delivered $133 million of adjusted EBIT in the quarter, equating to a 14.7% margin. This represents both a year-over-year and a sequential increase resulting from ongoing operational productivity gains that help to offset an unfavorable product mix. Finally, adjusted free cash flow was $107 million as the business continues to convert earnings into cash. Now moving to slide six, we show our Q3 net sales bridge by product category as compared with the same period last year.

Speaker #6: Our net sales were $902 million , driven by new gasoline launches and ramp ups across key regions . Favorable foreign currency impacts and tariff recoveries , partially offset by continued weakness in aftermarket .

We delivered $133 million of adjusted EBIT in the quarter equating to a 14, 7% margin. This represents both a year over year and a sequential increase resulting from ongoing operational productivity gains that helped to offset an unfavorable product mix.

Speaker #6: We delivered $133 million of adjusted Ebit in the quarter , equating to a 14.7% margin . This represents both a year over year and a sequential increase resulting from ongoing operational productivity gains .

And finally, adjusted free cash flow was $107 million as the business continues to convert earnings into cash.

Speaker #6: That helped to offset an unfavorable product mix . And finally , adjusted free cash flow was $107 million as the business continues to convert earnings into cash .

Now moving to slide six.

We show our Q3 net sales bridge by product category as compared with the same period last year.

In the quarter net sales increased by $76 million versus the prior year or 9% on a reported basis and 6% on a constant currency basis, reflecting favorable foreign currency impacts.

Speaker #6: Now moving to slide six . We show our Q3 net sales bridge by product category as compared with the same period last year .

Speaker #6: In the quarter , net sales increased by $76 million versus the prior year , or 9% on a reported basis . And 6% on a constant currency basis , reflecting favorable foreign currency impacts .

Speaker 6: In the quarter, net sales increased by $76 million versus the prior year, or 9% on a reported basis and 6% on a constant currency basis, reflecting favorable foreign currency impacts. We continue to experience strong gasoline growth, outperforming the industry. This growth is driven by continued share of demand gains and new launches and ramp-ups across Europe, China, India, and Brazil. Within diesel, we experienced strong performance in both Europe and North America. This was partially offset by lower demand for aftermarket applications, primarily in North America. Additionally, we recovered $12 million of tariffs within the quarter. Turning to slide seven, during the quarter, we generated $133 million in adjusted EBIT, representing a $16 million increase from the same period last year. This represents a margin rate of 14.7%, which is a 50 basis point improvement year over year.

We continue to experience strong gasoline growth outperforming the industry.

This growth is driven by continued share of demand gains and new launches and ramp ups across Europe, China, India and Brazil.

Speaker #6: We continued to experience strong gasoline growth , outperforming the industry . This growth is driven by continued share of demand gains and new launches and ramp ups across Europe , China , India and Brazil .

Within diesel we experienced strong performance in both Europe and North America.

This was partially offset by lower demand for aftermarket applications, primarily in North America. Additionally.

Speaker #6: Within diesel , we experienced strong performance in both Europe and North America . This was partially offset by lower demand for aftermarket applications , primarily in North America .

Additionally, we recovered $12 million of tariffs within the quarter.

Turning to slide seven.

During the quarter, we generated $133 million and adjusted EBIT, representing a $16 billion increase from the same period last year.

Speaker #6: Additionally , we recovered $12 million of tariffs within the quarter . Turning to slide seven . During the quarter , we generated $133 million in adjusted Ebit , representing $16 million increase from the same period last year .

This represents a margin rate of 14, 7%, which is a 50 basis point improvement year over year. The increase in adjusted EBIT was primarily driven by increased volumes and the continued benefits of sustained fixed cost actions and variable cost productivity taken in the current and prior year.

Speaker #6: This represents a margin rate of 14.7% , which is a 50 basis point improvement year over year . The increase in adjusted Ebit was primarily driven by increased volumes , and the continued benefits of sustained fixed cost actions and variable cost productivity taken in the current and prior year .

Speaker 6: The increase in adjusted EBIT was primarily driven by increased volumes and the continued benefits of sustained fixed cost actions and variable cost productivity taken in the current and prior year. These increases were partially offset by an unfavorable mix driven by the strength in light vehicle gasoline applications. In the quarter, the impact of newly implemented tariffs drove a 20 basis point decline in the margin rate. Additionally, we benefited from a $9 million contribution, or 60 basis points, from favorable foreign currency impacts year over year. Turning now to slide eight, I'll walk you through the adjusted EBIT to adjusted free cash flow bridge for the quarter. We delivered a strong adjusted free cash flow of $107 million.

These increases were partially offset by an unfavorable mix driven by the strength in light vehicle gasoline applications.

In the quarter the impact of newly implemented tariffs tariffs drove a 20 basis point decline in the margin rate.

Speaker #6: These increases were partially offset by an unfavorable mix driven by the strength in light vehicle gasoline applications in the quarter . The impact of newly implemented tariffs .

Additionally, we benefit benefited from a $9 million contribution or 60 basis points from favorable foreign currency impacts year over year.

Speaker #6: Tariffs drove a 20 basis point decline in the margin rate . Additionally , we benefited benefited from a $9 million contribution or 60 basis points from favorable foreign currency impacts year over year .

Turning now to slide eight.

I'll walk you through the adjusted EBIT to adjusted free cash flow bridge for the quarter.

We delivered a strong adjusted free cash flow of $107 million.

Speaker #6: Turning now to slide eight. I'll walk you through the adjusted EBIT to adjusted free cash flow bridge for the quarter. We delivered a strong adjusted free cash flow of $107 million.

This was.

Due primarily to increased volumes and efficient conversion of earnings into cash, which was partially offset by changes in working capital driven by timing of payables and higher inventory due to increased volumes.

Speaker #6: This was due primarily to increased volumes and efficient conversion of earnings into cash, which was partially offset by changes in working capital driven by the timing of payables and higher inventory due to increased volumes.

Speaker 6: This was due primarily to increased volumes and efficient conversion of earnings into cash, which was partially offset by changes in working capital, driven by timing of payables and higher inventory due to increased volumes. Cash taxes, capital expenditures, depreciation, and cash interest were all in line with our expectations. Now moving to slide nine, we ended the quarter with a liquidity position of $862 million, consisting of $630 million in undrawn capacity from our revolving credit facility and $232 million in unrestricted cash. I am pleased to report that during the quarter, both Fitch and S&P have upgraded Garrett Motion Inc.'s ratings by one notch for their corporate family rating, considering not only our reduced net leverage but also acknowledging the substantial reduction in private equity ownership due to recent selldowns by some of our top equity shareholders.

Cash taxes capital expenditures depreciation and cash interest were all in line with our expectations.

Now moving to slide nine we ended the quarter with a liquidity position of $862 million consisting of $630 million in undrawn capacity from our revolving credit facility and $232 million in unrestricted cash.

Speaker #6: Cash taxes . Capital expenditures , depreciation and cash interest were all in line with our expectations . Now moving to slide nine . We ended the quarter with a liquidity position of $862 million , consisting of $630 million in undrawn capacity from our revolving credit facility .

I am pleased to report that during the quarter, both Fitch and S&P have upgraded guaranty ratings by one notch for their corporate family rating, considering not only our reduced net leverage but also acknowledging the substantial reduction in private equity ownership due to recent sell downs by some of our top equity.

Speaker #6: And $232 million in unrestricted cash . I am pleased to report that during the quarter , both Fitch and S&P have upgraded Garrett's ratings by one notch for their corporate family rating , considering not only our reduced net leverage , but also acknowledging the substantial reduction in private equity ownership due to recent sell downs by some of our top equity shareholders .

Shareholders.

Additionally, as announced today, we made an early and voluntary repayment of $50 million on our term loan reducing gross leverage.

Speaker #6: Additionally , as announced today , we made an early voluntary repayment of $50 million on our term loan , reducing gross leverage . Moving to slide ten .

Speaker 6: Additionally, as announced today, we made an early voluntary repayment of $50 million on our term loan, reducing gross leverage. Moving to slide 10, in the third quarter, our strong cash generation allowed us to repurchase $84 million worth of shares, including 5 million shares directly from OakTree, our largest shareholder. We continue to target distribution of 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. As Olivier mentioned earlier today, given our strong financial position, our board approved an increase to our quarterly dividend for the fourth quarter, rising 33% from $0.06 to $0.08 per share, which will be payable in December of 2025. I'll now transition to slide 11 to discuss our 2025 outlook.

Moving to slide 10.

In the third quarter, our strong cash generation allowed us to repurchase $84 million worth of shares, including 5 million shares directly from Oaktree, our largest shareholder.

Speaker #6: In the third quarter , our strong cash generation allowed us to repurchase $84 million worth of shares , including 5 million shares directly from Oak Tree , our largest shareholder .

We continue to target distribution of 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.

Speaker #6: We continue to target distribution of 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.

As Olivier mentioned earlier today, given our strong financial position our board approved an increase to our quarterly dividend for the fourth quarter rising 33% from <unk> two eight per share which will be payable in December of 2025.

Speaker #6: As Olivier mentioned earlier today . Given our strong financial position , our board approved an increase to our quarterly dividend for the fourth quarter , rising 33% from $0.06 to $0.08 per share , which will be payable in December of 2025 .

I'll now transition to slide 11 to discuss our 2025 outlook.

We are raising our midpoint outlook for 2025 to reflect the improved forecast for the automotive industry in the second half and the impact of tariff tariffs on sales and adjusted EBIT margin net of recovery.

Speaker #6: I'll now transition slide 11 to discuss our 2025 outlook . We are raising our midpoint outlook for 2025 to reflect the improved forecast for the automotive industry and the second half , and the impact of tariff tariffs on sales and adjusted Ebit margin , net of recovery .

Speaker 6: We are raising our midpoint outlook for 2025 to reflect the improved forecast for the automotive industry in the second half and the impact of tariffs on sales and adjusted EBIT margin net of recovery. This revised outlook now implies the following midpoints: net sales of $3.55 billion, flat to plus 1% constant currency, net income of $280 million, adjusted EBIT of $510 million, net cash provided by operating activities of $415 million, and adjusted free cash flow of $385 million. With that, I'll now turn the call back to Olivier for his closing remarks.

This provides revised outlook now implies the following mid points.

Net sales of 355 billion.

Flat to plus 1% at constant currency.

Speaker #6: This revised , revised outlook now implies the following midpoint net sales of $3.55 billion , flat to plus 1% constant currency net income of $280 million .

Net income of $280 million adjusted EBIT of $510 million.

Net cash provided by operating activities of $415 million and adjusted free cash flow of $385 million.

Speaker #6: Adjusted Ebit of $510 million , net cash provided by operating activities of $415 million , and adjusted free cash flow of $385 million .

With that I'll now turn the call back to Olivier for his closing remarks.

Thanks Shannon.

Now, let's turn to slide 12.

Our strategic priorities remain clear and consistent.

Speaker #6: With that , I'll now turn the call back to Olivier for his closing remarks .

We aim to identify and deliver on customer needs by leveraging our capabilities to develop differentiated high speed and highly efficient technologies in doing so we generate robust returns for our shareholders.

Speaker #3: Thanks , Shen . Now let's turn to slide 12 . Our strategic priorities remain clear and consistent . We aim to identify and deliver on customer needs by leveraging our capabilities to develop differentiated , high speed and highly efficient technologies .

Speaker 5: Thanks, Sean. Now let's turn to slide 12. Our strategic priorities remain clear and consistent. We aim to identify and deliver on customer 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 13. First, we delivered strong Q3 results fueled by share of demand gains in gasoline, outperforming the industry, and this coupled with disciplined operational execution. We also generated $107 million of adjusted free cash flow in the quarter and $264 million year to date. This strong cash flow generation allowed us to invest in growing our turbo and zero-emission technologies. To date, we continue to win greater than 50% of our new turbo business awards, as we have done over the last five years.

Let me wrap this up on our final slide.

Speaker #3: In doing so , we generate robust returns for our shareholders . Let me wrap this up on our final slide . Slide 13 .

Slide 13.

First we did he built strong Q3 results fueled by show of demand gains in gasoline outperforming the industry.

And this coupled with disciplined operational execution.

Speaker #3: First , we delivered strong Q3 results fueled by share of demand gains in gasoline , outperforming the industry . And this , coupled with disciplined operational execution .

We also generated 107 million due at all vendors to free cash flow in the quarter and $264 million year to date.

This strong cash flow generation, although those to invest in growing our <unk> and zero emission technologies too.

Speaker #3: We also generated $107 million of adjusted free cash flow in the quarter . And $264 million year to date . This strong cash flow generation allowed us to invest in growing our turbo and zero emission technologies .

To date, we continue to win greater than 50% of our mutual business the walls.

As we have done over the last five years.

Speaker #3: To date , we continue to win greater than 50% of our new turbo Business Awards as we have done over the last five years .

Additionally, we see increased interest in stationary power generation and we are expecting over $100 million sales. This year from these industry applications.

Speaker #3: Additionally , we see increased interest in stationary power generation and we are expecting over $100 million of sales this year from these industrial applications .

Speaker 5: Additionally, we see increased interest in stationary power generation, and we are expecting over $100 million of sales this year from these industrial applications. I am also very pleased with the progress we have made this year on our zero-emission technologies, with the first series production award for our high-speed E-Powertrain, which demonstrates the substantial potential of this technology. Momentum and interest continue to build for our high-speed oil-free EcoLink centrifugal compressor with customer testing, demonstrating significant efficiency gains compared to current technologies. This year, we refinanced and repriced our term loan, lowering our interest by 75 basis points, and repaid $50 million of this debt this month. We also initiated a quarterly dividend of $0.06 per share in Q1 and announced an increase to $0.08 per share for Q4. In addition, we repurchased $136 million of our common shares through Q3.

I am also very pleased with the progress we have made this year on our zero emission technologies with our first series production of wealth, our ICD for train, which demonstrate the substantial potential of this technology.

Speaker #3: I am also very pleased with the progress we have made this year on our zero emission technologies . With the first series Production award for our high speed powertrain , which demonstrates the substantial potential of this technology .

Momentum and interest continues to build for our ISP oil free including centrifugal compressor system of testing demonstrating significant efficiency gains compared to current technologies.

Speaker #3: Momentum and interest continues to build for our high speed , oil free cooling . Centrifugal compressor with customer testing demonstrating significant efficiency gains compared to current technologies .

This year, we refinanced and repriced our term loan lowering our inventories by 75 basis points and repaid $50 million of this debt this months.

Speaker #3: This year , we refinanced and reprice our term loan , lowering our interest by 75 basis points and repaid $50 million of this debt this month .

We also initiated a quarterly dividend of 0.0 $6 a share in Q1 and announced an increase to 0.0 $8 per share for Q4.

Speaker #3: We also initiated a quarterly dividend of $0.06 per share in Q1, and announced an increase to $0.08 per share for Q4. In addition, we repurchased $136 million of our common shares through Q3. These actions demonstrate our continued commitment to return capital to shareholders.

In addition, we rebuilt chase 136 million common shares for Q3.

These actions demonstrate our continued commitment to return capital to shareholders.

I am very proud to highlight these achievements positioning us extremely well for the remainder of 2025 and beyond.

Speaker 5: These actions demonstrate our continued commitment to return capital to shareholders. I am very proud to highlight these achievements, positioning us extremely well for the remainder of 2025 and beyond. Thank you for your time, and operator, we are now ready for Q&A.

Thank you for your time and operator, we are now ready for Q&A.

Speaker #3: I am very proud to highlight these achievements, positioning us extremely well for the remainder of 2025 and beyond. Thank you for your time, and operator.

We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.

Speaker #3: We are now ready for Q&A .

We're using speakerphone, please pick up your handset before pressing the keys.

Speaker #4: We will now begin the question and answer session . To ask a question , you may press star , then one on your telephone keypad .

Speaker 7: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Edison Yu with Deutsche Bank. Please go ahead.

If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker #4: If you are using a speakerphone , please pick up your handset before pressing the keys . If at any time your question has been addressed and you would like to withdraw your question , please press star then two .

At this time, we will pause momentarily to assemble our roster.

Our first question comes from Edison <unk> with Deutsche Bank. Please go ahead.

Speaker #4: At this time, we will pause momentarily to assemble our roster. Our first question comes from Edison Yu with Deutsche Bank. Please go ahead.

Good morning, guys Jameson Hollander on for Edison Congrats on the good quarter.

Just looking at the volumes for the quarter. They were good but they were fully offset by the mix I was wondering if you could double click on what youre seeing in there is it geographic based or is it something you expect to continue as diesel penetration falls relative to gas.

Speaker #7: Good morning guys . James Mulholland on for Edison . Congrats on the good quarter . Just looking at the volumes for the quarter .

Speaker 8: Morning, guys. James Mulholland on for Edison. Congrats on the good quarter. Just looking at the volumes for the quarter, they were good, but they were fully offset by the mix. I was wondering if you could double-click on what you're seeing in there. Is it geographic-based, or is it something you're expecting to continue as diesel penetration falls relative to gas? Is there anything we should be specifically thinking about there?

Speaker #7: They were good but they were fully offset by the mix . I was wondering if you could double click on what you're seeing in there .

Anything we should be specifically thinking about there.

Speaker #7: Is it geographic-based, or is it something you're expecting to continue? Is diesel penetration falling relative to gas? Is there anything we should be specifically thinking about?

Let me pick that up.

Good question and Super Bowl and opportunity for us to quantify.

Uh huh.

Speaker #7: There ?

The mix that we see the impact.

Speaker #3: So let me pick that up . That's a very good question . It's an opportunity for us to clarify . The mix that we see , the impact is much more coming by .

Speaker 5: That is a very good question. It's an opportunity for us to clarify. The mix that we see, the impact, is much more coming by two things. First, commercial vehicle versus growth on gasoline and gasoline turbos. Second, some weakness we keep on seeing on the aftermarket. Let me explain that. We are seeing, as we have said, a huge growth on the gasoline side, 10%. Obviously, we know that those products, especially when they come from China, when they go for China, are not exactly at the same margin as the rest of the business. This is the first mix impact. We keep on seeing continued weakness on the commercial vehicle side in some regions, although I would say it's stabilizing. We are seeing some green shoots, which makes us a bit more confident for the future.

He is much more coming by two things first.

Sure Jonathan.

Absolute growth on gasoline.

You guys are in in Jumbos and second.

Speaker #3: Two things . First , commercial vehicle versus growth on gasoline . And gasoline . Turbos . And second , some weakness . We keep on seeing on the aftermarket .

Some weakness we keep on seeing on the aftermarket.

So let me explain that.

We are seeing as we have said a huge growth on the gasoline side, 10%.

Obviously, we know that those those products, especially when they come from China.

Speaker #3: So let me explain that we are seeing as we have said , a huge growth on the side , 10% , obviously , we know that those those products , especially when they come from China , when they go from China , are not exactly at the same margin as the rest of the business .

Gulfport, China almost exactly the same margin as the rest of the business. So this is the first mix impact.

We are we keep on seeing continued that's on the commercial vehicle side.

In some regions, although I would say, it's stabilizing we are seeing some green shoots.

Speaker #3: So this is the first mix impact . We are we keep on seeing continued on the commercial vehicle side in some regions , although I would say it's stabilizing .

Which makes us a bit more confidence for the future and last but not least we said that ethanol market was also subject to some weakness in international markets.

Speaker #3: We are seeing some green shoots , which makes us a bit more confident for the future . And last but not least , we said that aftermarket was also subject to some weakness and in aftermarket , the piece that so far has been weak .

Is that so far has been weakness sure is commercial vehicle off highway aftermarket.

Speaker 5: Last but not least, we said that aftermarket was also subject to some weakness. In aftermarket, the piece that so far has been weak this year is commercial vehicle off-highway aftermarket, where there is some destocking going on at some of our customers. As the activity stabilizes, we expect that this will still go on for some time and then at some point recover. These are the three drivers. The first driver, at the end of the day, is a very good driver for us because it means that we are quite successful versus the rest of the industry, especially in a region that is extremely demanding in terms of competitiveness. The two others, obviously, for us, are much more cyclical effects that are impacting ourselves. Obviously, like any cycle, at some point, they will recover.

Well there is some destocking going on at some of our customers.

Speaker #3: This year is commercial vehicle off highway aftermarket , where there is some distorting going on at some of our customers . And as the activity stabilize , we expect that this will still go on for some time .

And as GE.

Activity stabilize.

We.

Expect that this will still go on for some time and then at some point to recover. So these are the three drivers. The first driver at the end of the day is a very good driver for us because it's <unk>.

<unk>, we are quite successful versus the rest of the industry, especially in a region that is extremely demanding in terms of competitiveness.

Speaker #3: And then at some point recover . So these are the three drivers . The first driver , at the end of the day is a very good driver for us because it's it's meaning that we have we are quite successful versus the rest of the industry , especially in a region that is extremely demanding in terms of competitiveness .

It was also obviously.

For us it's much more cyclical.

He could affect that we are at that time backing ourselves and obviously like any cycle at some point they will recover.

Speaker #3: The two others obviously are . For us , it's much more cyclical cyclical effect that we are that are impacting ourselves . And obviously , like any cycle , at some point they will recover .

Got it okay. Thank you very much and then just as a quick second question and then I'll hop back in line.

On that commercial vehicle Green shoots comment is that going to be cheap graphic based is it are you seeing some strength in certain areas or on off highway versus class eight is there any more detail that you can give there or is the outlook.

Speaker #7: Got it . Okay . Thank you very much . And then just as a quick second question and then I'll hop back in line on that commercial vehicle .

Speaker 8: Got it. Okay. Thank you very much. Just as a quick second question, I'll hop back in the line. On that commercial vehicle green shoots comment, is that going to be geographic-based? Are you seeing some strengths in certain areas or on off-highway versus Class 8? Is there any more detail that you can give there, or is the outlook still pretty soft, broad-based? Just some high-level thoughts on that, if you wouldn't mind.

Speaker #7: Green shoots comment . Is that going to be geographic based . Is it are you seeing some strength in certain areas or on off highway versus class eight ?

Still pretty soft broad based just some high level thoughts on that if you wouldn't mind.

It's pretty broad based but we have seen some signs of stabilization in China.

Speaker #7: Is there any more detail that you can give there , or is the outlook still pretty soft , broad based ? Just some high level thoughts on that .

Which is a big region for us.

Speaker #7: If you wouldn't mind .

Speaker #3: It's pretty soft , broad based , but we have seen some signs of stabilization in China , which is a big region for us .

Speaker 5: It's pretty soft, broad-based, but we have seen some signs of stabilization in China, which is a big region for us. We should expect some stabilization, although at a low level. At some point, I guess it's marking the bottom of the cycle on off-highway. When I say off-highway, it's mostly agricultural and construction equipment.

And.

We should expect some stabilization although it.

Low level and then at some point I guess, its marking the bottom of the cycle on the off highway and when I say off highway it's mostly agricultural.

Speaker #3: And we should expect some stabilization . Although at at a low level . And then at some point , I guess it's marking the the bottom of the cycle on off highway .

Construction equipment's.

Okay. Thanks, guys.

As we said so far the commercial vehicle piece that we just saw industry all of which are the largest total we produce.

Speaker #3: And when I say off highway , it's mostly agricultural and construction equipment .

Speaker #7: Okay . Thanks guys .

He is doing quite well in comparison to the rest.

Speaker 8: Okay, thanks, guys.

Speaker #3: I see , as we said so far , the commercial vehicle piece that we count for industrial , which are the largest turbo we produce , is going quite well in comparison to the rest .

Speaker 5: I see, as we said so far, the commercial vehicle piece that we count for industrial, which are the largest turbochargers we produce, is going quite well in comparison to the rest.

Our next question comes from Nathan Jones with Stifel. Please go ahead.

Good morning, everyone.

Hi, Nathan.

I'd like to I'd like to talk a bit about the zero emission.

Speaker #4: Our next question comes from Nathan Jones with Stifel. Please go ahead.

Speaker 7: Our next question comes from Nathan Jones with Stifel. Please go ahead.

Technologies and the progress there I know you guys have targeted $1 billion of revenue in 2030.

Speaker #8: Good morning everyone .

Speaker 9: Good morning, everyone.

Speaker #6: Hi , Nathan .

Speaker 6: Hi, Nathan.

Speaker #8: I'd like to I'd like to talk a bit about the zero emissions technologies and the progress there . I know you guys have targeted $1 billion of revenue in 2030 .

Speaker 9: I'd like to talk a bit about the zero-emission technologies and the progress there. I know you guys have targeted $1 billion of revenue in 2030. Obviously, that number is quite low these days or today as you're in development. Can you maybe talk about the path that you're expecting to take from here to that $1 billion of revenue in 2030 and how we should think about you announcing project wins that actually turn into the platform revenues and just how we view the path of that over the next few years?

Obviously that number is quite lot of eight days or today as you are in development can you maybe talk about the path that you are expecting to take from from here to that $1 billion of revenue in 2030, and how we should think about kind of view announcing project wins that actually turn into.

Speaker #8: Obviously , that number is quite low . These days or today . You're in development . Can you maybe talk about the path that you're expecting to take from from here to that billion dollars of revenue in 2030 , and how we should think about kind of you announcing project wins that actually turn into the platform revenues and just kind of how we view the path of that over the next few years .

The platform revenues and just kind of how we view the path of that over the next few years.

So.

That's a good question and giving me an opportunity to one more time, explaining what we do there.

First.

We have three technologies that are counting towards our goal of zero emission.

Speaker #3: So that's a that's a good question . And giving me an opportunity to one more time . Re-explain what we do there . First , we have three technologies that are counting towards that goal of zero emission technology revenue .

Speaker 5: That's a good question and giving me an opportunity to one more time re-explain what we do there. First, we have three technologies that are counting towards that goal of zero-emission technology revenue. The first one is fuel cell compressors. Although the fuel cell compressor industry is impacted by the slowdown that we've seen on fuel cell compressors in terms of ramp-up, that's already something that we are doing. Quite frankly, it was not the major part of the $1 billion that we had announced. Therefore, the slowdown that we have seen so far is just having a marginal impact on that. Most of the $1 billion is coming from the two other technologies. The first one, E-Powertrain. As you have seen, we have announced wins, and the biggest one being Honda. I say Honda and not Hyundai for some people that would make the confusion.

Energy revenue. The first one is a huge cell compressors. So although the <unk> industry is impacted by the slowdown that we've seen on fuel cell compressor in terms of ramp up that's already something that we are doing quite frankly, it was not that it was not the major thoughts.

Speaker #3: The first one is fuel cell compressors . So although the fuel cell compressor industry is impacted by the slowdown that we've seen on compressor in terms of ramp up , that's already something that we are doing , quite frankly , it was not of the it was not the major part of the 1 billion that we had announced .

Of the $1 billion that we got announced.

While the slowdown that we've seen so far is just having a margin impact on that.

Most of the 1 billion is coming from the towards off technologies. The first one equal our train as you have seen them.

Speaker #3: And therefore, the slowdown that we have seen so far is just having a marginal impact on that. Most of the $1 billion is coming from the two other technologies.

We have announced wins.

And the biggest one being the on the and I say on the end of June therefore, some people that would make the confusion.

Speaker #3: The first one , E-powertrain , as you have seen , we have announced wins and the biggest one being the on the and I say under and not Hyundai for some people that would make the confusion on the ease of commercial vehicle player that belongs to the Wagi Galaxy .

<unk> is a commercial vehicle field that belongs to the which is <unk> is the biggest metro of axles founded a tweak ourselves not only for China, but also for export.

Speaker 5: Honda is a commercial vehicle player that belongs to the Weichai Galaxy. It's the biggest maker of axles and electric axles, not only for China but also for exports. In China, the industry already exists for electric trucks and is growing. We are not subject to the slowdown of BEV passenger vehicles that we have seen in North America and the slowdown of the growth that we have seen in Europe. We are pleased with that. It keeps on growing. We have more to come for both passenger vehicle and commercial vehicle, knowing that the first launch, which is associated to the first award, will come in 2027 and then ramp up from there. From the beginning, we've said that on E-Powertrain, we would start in 2027 and ramp up from there. We are fully aligned at this stage with the trajectory that we had laid out.

Speaker #3: It's the biggest maker of axles and electric axles , not only for China , but also for exports . In China , the industry already exists for electric trucks and is growing , so we are not subject to the slowdown of Bev passenger vehicle that we have seen in North America .

In China, the industry already exist for electric trucks and is growing.

So we are not subject to the slowdown of BG best on Java, and ensure that we have seen in North America and the slowdown of the growth that we've seen in Europe.

So we are pleased with that it.

It keeps on growing we have more to come.

Speaker #3: And the slowdown of the growth that we have seen in Europe. So we are pleased with that. It keeps on growing.

For both passenger vehicles and commercial vehicle.

Knowing that the first launch which is associated to the filter world will come in 2027.

Speaker #3: We have more to come for both passenger vehicle and commercial vehicle , knowing that the first launch , which is associated to the first award , will come in 2027 and then ramp up from there from the beginning , we've said that on E-powertrain , we would start in 2027 and ramp up from there .

And then ramp up from there from the beginning we've said that on April of train we would start in 2027 that ramp up from there. So we are fully online at this stage with the trajectory that we laid out obviously, we are monitoring very closely the developments of <unk>.

Speaker #3: So we are fully online at this stage with the trajectory that we had laid out. Obviously, we are monitoring very closely the developments of the penetration in different countries.

The attrition in countries subject, obviously to the market in which we operate.

Speaker 5: Obviously, we are monitoring very closely the developments of the penetration in different countries, subject, obviously, to the end market in which we are playing. The last one, which is EcoLink centrifugal compressors, we are quite positive about. At the beginning, we are really betting a lot on what we call mobile application, which is EcoLink centrifugal compressors for electric vehicles, mostly commercial vehicles, for both battery cooling and also vehicle cooling. When you think about buses, we are still seeing a strong traction there. What we have seen over the last few months, and that's what we wanted to highlight in our earnings today, is that we've seen an increasing interest from the industrial world.

And then last one which is equaling compressors, which we are quite positive about.

Speaker #3: Subject . Obviously to the end market in which we are playing , and then the last one , which is equal in compressors , which we are quite positive about at the beginning , we are really betting a lot on what we call mobile application , which is equally compressors for electric vehicles , mostly commercial vehicle for both battery cooling and also vehicle cooling .

At the beginning we are really betting a lot on what we call mobile application, which is equaling compressors.

Electric vehicles, mostly commercial with H L.

For both battery cooling and also vehicle, including when you think about <unk>.

We are seeing strong traction there, but what we have seen them.

Although the last few months.

Speaker #3: When you think about buses , we are still seeing a strong traction there . But what we have seen over the last few months , that's what we wanted to highlight in our earnings today , is that we've seen an increasing interest from the industrial world , so think about air conditioning systems that are on rooftop up to some of the systems that are used in some data centers where we have demonstrated that the technology we bring is having superior performance to what is existing and is using some innovation that are quite unique for us because we leverage the maturity that we have achieved on fuel cell to address fuel cell compressor , to address a new a new vertical .

What we wanted to highlight our needs today is that we have seen an increasing the rest from the industry well so seem to Volta <unk>.

Conditioning systems, that's all on the rooftop.

<unk>.

Some of the systems that are used in some data centers.

Speaker 5: Think about air conditioning systems that are on rooftop up to some of the systems that are used in some data centers, where we have demonstrated that the technology we bring is having superior performance to what is existing and is using some innovations that are quite unique for us because we leverage the maturity that we have achieved on fuel cell to address fuel cell compressors to address a new vertical. We are coming with the strengths of the size of the auto industry, and we are coming from the strengths of the maturity that you need to achieve in the auto industry when you start production. I'm extremely positive about this one, which is getting us into the industrial world out of the automotive world. We cannot say much more than that at this stage, but results are extremely promising, and the interest of customers is quite high.

Well, we have demonstrated that the technology, we bring either being a superior performance to what is existing and is using some innovation.

That's a quite unique.

For us because we leverage to maturity.

That we have achieved on <unk> sell to address <unk>, Brazil to address a new a new vertical.

So we are coming with the strengths of <unk>.

The size of deal to industry and welcoming from the strengths of the maturity that you need to achieving between industry. When you stopped production. So I'm extremely positive about this one which is getting us to.

Speaker #3: So we are coming with the strengths of the size of the auto industry, and we are coming from the strengths of the maturity that you need to achieve in the auto industry.

The industrial World, our Tokyo automotive World.

Speaker #3: When you start production . So I'm extremely positive about this one , which is getting us into the industrial world out of the automotive world and we cannot say much more than that at this stage .

We cannot say much more than that at this stage, but the results are extremely promising and interest of customized quite high.

Thanks for that in terms of.

Speaker #3: But results are extremely promising and the interest of customers is quite high .

Of the pre development contracts that you've got going on in there is there any color you can give us on timing of when you.

Speaker #8: Thanks for that . In terms of of the pre-development contracts that you've got going on in there , is there any color you can give us on timing of when you expect those to to become , you know , actual awards and what the timing might be on the start of production on those kinds of things .

I expect those too.

Speaker 9: Thanks for that. In terms of the pre-development contracts that you've got going on in there, is there any color you can give us on timing of when you expect those to become actual awards, and what the timing might be on the start of production on those kinds of things?

To become.

Actual awards and what the timing might be on the startup production on those kinds of things.

Mhm.

The usual timing when you start on the on pre production.

<unk>, yes.

It's it's about <unk>.

I would say it depends on the guest a number it can be a few months to one year two years before we decide to go into production.

Speaker #3: Usual timing when you start on on pre-production . Pre-production . Yes , it's it's about , I would say it depends on the customer , but it can be a few months to one year and a half , two years before we decide to go into production .

Speaker 5: Usual timing when you start on pre-production, yes. It's about, I would say, it depends on the customer, but it can be a few months to one year and a half, two years before we decide to go into production. You may remember that we've announced already some pre-production awards already some time ago. Obviously, there are some of them that are getting now much more mature, although we are not ready to announce anything. For the rest, it will come later on. What's important is that when customers get into these programs with you, they are already committing energy, resources, and money to help you assess and develop the technology. That's already a first very good sign of confidence.

You may remember that we've announced already some are pre production on that well.

Already some time ago. So obviously dial some of them that are getting now much more Mitchell.

Speaker #3: You may remember that we've announced already some pre-production award already some time ago . So obviously there are some of them that are getting now much more mature , although we are not ready to announce anything and obviously for the rest , it will come .

Although we all know trade it went on offense.

And for the rest it would come it will come later on.

What's important is that when customers get into these programs with you they are already committing and LG resources and money to.

Speaker #3: It will come later on . What what's important is that when customers get into these programs with you , they are already committing energy , resources and money to help you assess and develop the technology .

And to assess and develop the technology. So that's already built.

First a very good sign of confidence.

And maybe just one more on that.

The margin profile for these products as they ramp up.

Speaker #3: So that's already first . Very good sign of confidence .

Did they start off maybe below corporate average and as volume improves you get them to a higher level or will they be immediately accretive to the company. Just any color you can give us on the margin profile of base zero emission products. Thanks.

Speaker #8: And it may be just one more on that . The the margin profile for these products as they ramp up . Do they start off maybe below corporate average .

Speaker 9: The margin profile for these products as they ramp up, do they start off maybe below corporate average and as volume improves, you get them to a higher level, or will they be immediately accretive to the company? Just any color you can give us on the margin profile of these zero-emission products. Thanks.

Speaker #8: And as volume improves , you you get them to a higher level or will they they be immediately accretive to to the company .

So the way we measure on US is what we call a meta one margin.

Speaker #8: Just any color you can give us on the margin profile of these zero emission products . Thanks .

The dimension we make between.

The cost of the products on the price.

Speaker #3: So the way we measure that is what we call a material margin . So the margin we make between the cost of the product and the price and what we have always said , and we'll keep on repeating that because we have more and more proof points around it , is that on average , it's about the same .

Speaker 5: The way we measure that is what we call a material margin. The margin we make between the material cost of the product and the price. What we have always said, and we'll keep on repeating that because we have more and more proof points around it, is that on average, it's about the same or accretive to what we have on the turbo side.

And with we have always said that we'll keep on repeating that because we are more and more proof points around it.

On average it's about the same or accretive to what we have on the total site.

Thanks, very much for taking my questions.

Our next question comes from Amit <unk> with VW as financial please go ahead.

Speaker #3: Or accretive to what we have on the turbo side .

Speaker #8: Thanks very much for taking my questions .

Speaker 9: Thanks very much for taking my questions.

Hi could you just elaborate on.

Speaker #4: Our next question comes from Ahmed Chorusand with BW financial . Please go ahead .

Speaker 7: Our next question comes from Hamed Khorsand with BWS Financial. Please go ahead.

The recovery you saw in diesel please.

Speaker #9: Hi . Could you just elaborate on , you know , the recovery you saw and diesel , please .

Speaker 10: Hi. Could you just elaborate on the recovery you saw in diesel, please?

So, yes that was a year over year recovery, mainly in Europe, and Europe and then.

And in North America, but again diesel still overall is trending down slowly over time, but not nearly to the magnitude we saw it back in.

Speaker #6: So yeah , that was a year over year recovery mainly in Europe . In Europe and in and in North America . But again , diesel still overall is trending down slowly over time .

Speaker 6: That was a year-over-year recovery, mainly in Europe and in North America. Diesel, still overall, is trending down slowly over time, but not nearly to the magnitude we saw back a few years ago. Diesel still is a very strong business for us. We will be last man standing on the turbos for diesel. It's a vertical that has basically 100% penetration on turbo, and it's a business we like very much.

You know a few years ago. So these will still have a very strong business for us and again, we will be last man standing on the turbos for diesel.

Speaker #6: But not nearly to the magnitude we saw back in , you know , a few years ago . So diesel still is a very strong business for us .

It's a vertical that has.

Basically 100% penetration on turbot, and it's a business we like.

Speaker #6: And again , we will be last man standing on the turbos for diesel . It's a it's a vertical that has basically 100% penetration on turbo .

Very much so.

Let me add.

To what Shang thing.

Yeah.

Speaker #6: And it's a business we like very much.

The big decrease we've seen on diesel.

Basically linked to the shift.

Speaker #3: So let me let me add to what Sean is saying . The the big decrease we've seen on diesel was basically linked to the shift on passenger vehicle from diesel to other technologies like gasoline and hybrid .

Speaker 5: Let me add to what Sean is saying. The big decrease we've seen on diesel was basically linked to the shift on passenger vehicles from diesel to other technologies like gasoline and hybrid. We are more and more, as we have been reducing that share of the business, coming to the end of it. With volumes of diesel remaining, much more focused on what I would call light commercial vehicle application, think about delivery vans, pickup trucks, especially in Asia. All these vehicles are diesel, even in China. Today, the trend is that most of it will stay in diesel for the long run due to the specifics of diesel, which are associated with range, gas consumption, as well as the torque that you need to move these.

Passenger vehicle from diesel to <unk> technologies like gasoline and hybrid.

We are more and more as we have been reducing that charter business.

We are being more and more coming to the end of it and we use a volumes of diesel remaining much more focus on what we call light commercial vehicle application. So it's each of our delivery vans pickup trucks, especially in Asia.

Speaker #3: We are more and more, as we have been reducing that share of the business. We have been more and more coming to the end of it, and with volumes of diesel remaining, we are much more focused on what I would call light commercial vehicle applications.

All these visuals aldys L even in China.

Speaker #3: So think about delivery vans . Pickup trucks , especially in Asia . All these vehicles are deserved even in China . And today the trend is that most of it will stay in this for the long run due to the specifics of diesel , which are associated with range gas consumption as well as I would say , the torque that you need to move this vehicle .

And today.

The trend is that most of it will stay in the run due to the specifics of diesel which are associated with wrench guest consumption.

As well as.

I would say the talk that you need to move digitally.

Okay, and then Olivia if I heard you right you said it was better.

$100 million this year from industrial use.

Is that going into data center, not when windows that gets implemented and open yourself.

Speaker #9: Okay . And then , Olivier , if I heard you right , you said there's about 100 million this year from industrial use .

Speaker 10: Okay. Olivier, if I heard you right, you said there's about $100 million this year from industrial use. Is that going into data center? If not, when does that get implemented and open your sales?

So that's a good one because we introduced at the that's information for this quarter are solid.

Speaker #9: Is that going into the data center? And if not, when? When does that get implemented? And is it helping your sales?

<unk>.

Yeah.

What we mean by that even before we launched the line of Turbo Chargers that big line that we launched about one year.

Speaker #3: So that's a good one because we introduced that that information for this quarter . So let me let me explain what we mean by that .

Speaker 5: That's a good one because we introduced that information for this quarter. Let me explain what we mean by that. Even before we launched the meg line of turbochargers, the big line that we launched about one year and a half ago, we were already doing a lot of very big turbochargers according to our range that were fitted on gensets. What we've isolated this quarter is this number to give people a little bit of a view that already today, even at the start of the meg ramp-up, we are already doing $100 million in that field, supplying those turbos that are on gensets, that most of them are going already today to the backup power for data centers. We are not just venturing into something from scratch.

We were already doing a lot of very big Turbo Chargers. According to our orange that were seated.

Speaker #3: Even before we launch The Meg line of turbochargers , the big line that we launched about a year and a half ago , we were already doing a lot of very big turbochargers , according to our range , that were fitted on genset , and we have to revise .

On Gen sets.

And with <unk>.

Is it a cheetah this quarter is.

This number to give people a little bit of a view that's already today, even at the start of the gym ramp.

Speaker #3: This quarter is this number to give people a little bit of a view that already today , even at the start of the GM ramp , the the Meg ramp up , we are already doing $100 million in that field , supplying those turbos that are ingested that most of them are going already today to the backup power for data centers .

Demand ramp up.

We are already doing $100 million that shield supplying dose jumbos, that's all and just that most of them are going already today too.

The backup power for data centers.

So we are not just venturing into something from scratch, we are extending our orange.

<unk>, which we are already doing a significant business in depth to our customers.

Speaker #3: So we are not just venturing into something from scratch . We are extending our range with bigger turbos , but we are already doing a significant business in that field through our customers , whether in China , Europe or the US .

Whether in China, Europe, probably use speculate.

Speaker 5: We are extending our range with bigger turbos, but we are already doing a significant business in that field to our customers, whether in China, Europe, or the U.S., by the way.

Okay I appreciate it thank you.

And if you have a question. Please press Star then one our next question comes from Jake <unk> with BNP Paribas. Please go ahead.

Speaker #3: By the way .

Speaker #9: Okay , I appreciate it . Thank you .

Speaker 10: Okay, I appreciate it. Thank you.

Speaker #4: Ken , if you have a question , please press star then one . Our next question comes from Jake Shull with BNP Paribas .

Hey, guys congrats on a great quarter.

Speaker 7: Ken, if you have a question, please press star, then one. Our next question comes from Jake Scholl with BNP Paribas. Please go ahead.

I appreciate you guys, providing the color on your stationary power revenue.

Speaker #4: Please go ahead .

Speaker #10: Hey guys . Congrats on a great quarter . I appreciate you guys providing the color on your stationary power revenue . So as that business continues to ramp for you guys , especially as you know , we see more demand of things like data centers and you roll out the potential industrial applications of your cooling compressor .

Speaker 10: Hey, guys. Congrats on the great quarter. I appreciate you guys providing the color on your stationary power revenue. As that business continues to ramp for you guys, especially as we see more demand in things like data centers and you roll out the potential industrial applications of your EcoLink centrifugal compressor, what could that business look like if we look out to 2030 or even 2035?

So as that business continues to ramp for you guys, especially as.

See more demand and things like data centers and you roll outs.

The potential industrial applications that are equally compressor.

And what could that business look like.

If we go out to 2030 or even 2035.

Speaker #10: What could that business look like ? If we go out to 20 , 30 or even 2035 ?

That's a very good question.

I may not give you right away.

So with a number on this one but let's let's keep in mind that first is growing and it's growing fast obviously from a small base.

Speaker #3: That's a very good question . I may not give you right away an answer with a number on this one , but let's let's keep in mind that first , it's growing and it's growing fast , obviously , from a smaller base .

Speaker 5: That's a very good question. I may not give you right away an answer with a number on this one, but let's keep in mind that first, it's growing and it's growing fast, obviously, from a smaller base. We've mentioned the $100 million for stationary power application. It's already a significant increase. It's already a double-digit increase versus last year. More to come. EcoLink, that's also a little bit premature to tell you exactly the numbers as we are really working on that with our customers. If we work on something, we expect it to be significant. I don't think it will represent 50% of the sales of the company by any means, but that will be significant in the grand scheme of things. Yeah.

We've mentioned the 100 meter cessionary polar obligation.

A significant increase.

So really a double digit increase versus last year.

Speaker #3: We've mentioned the 100 million for stationary power application . It's already a significant increase . So already a double digit increase versus last year .

And more to come and the including the Tulsa would it would be premature to tell you exactly the numbers as we already working on that with our customers.

But if we work on something we expected to be.

Speaker #3: And more to come . And that's also a little bit premature to tell you exactly the numbers as we are really working on that with our customers .

Significant.

I don't think it will represent 50% of the south of the company by any means but that would be seen as sensitive block scheme of things.

Speaker #3: But if we work on something , we expect it to be significant . I don't think it will represent 50% of the sales of the company by any means , but that will be significant in the grand scheme of things .

Got it thank you and.

Hey, you guys delivered some very impressive capital returns this quarter.

Speaker #3: Yeah .

Between dividends and buybacks totaling nearly $100 million.

Speaker #10: Got it . Thank you . And you guys delivered some very impressive capital returns this quarter . You know , between dividends and buybacks totaling nearly $100 million , you know , is that what we should expect .

Speaker 10: Thank you. You guys delivered some very impressive capital returns this quarter, between dividends and buybacks totaling nearly $100 million. Is that what we should expect to see going forward, obviously with some quarter-to-quarter variability? Thank you.

Is that what we should expect.

Expect to see going forward, obviously with some from quarter to quarter variability.

Yes.

Yeah again as I highlighted in.

Speaker #10: You know , expect to see going forward . Obviously with some some quarter to quarter variability . Thank you .

In my prepared remarks.

We remain committed to 75% or more over time, but again that will vary as you noted, especially on share buybacks fourth quarter, depending upon.

Speaker #6: Yeah . Again as I as I highlighted in in my prepared remarks , you know we we remain committed to 75% or more over time .

Speaker 6: Yeah. As I highlighted in my prepared remarks, we remain committed to 75% or more over time. That will vary, as you noted, especially on share buybacks quarter to quarter, depending upon macroeconomic and industry conditions. We continue to focus in on returning the cash that we're generating to shareholders. That's a core part of our financial framework.

Macroeconomic and industry conditions, but that we continue to focus on returning the cash that we're generating to shareholders.

Speaker #6: But again that will vary . As you noted , especially on share buybacks quarter quarter depending upon macroeconomic and industry conditions . But that's we continue to focus in on returning the cash that we're generating to shareholders .

Core part of our financial framework.

But the answer is yes.

Speaker #6: That's a core part of our financial framework.

Thank you.

Our next question comes from Eric Greg with Forestry Island Advisory. Please go ahead.

Speaker #3: So the answer is yes .

Speaker 10: The answer is yes.

Speaker 6: Thank you.

Speaker #10: Thank you .

<unk> ended the quarter everyone.

Speaker #4: Our next question comes from Eric Gregg with Four Tree Island Advisory . Please go ahead .

Two questions.

Speaker 7: Our next question comes from Eric Birge with Four Tree Island Advisory. Please go ahead.

One is on the equaling technologies for data center and industrial what are the performance for form factor potential.

Speaker #11: Tremendous quarter everyone . Two questions . One is on the cooling technologies for data center . And industrial . What are the performance or form factor potential pricing attributes you think will make this technology potentially very appealing to potential customers ?

Speaker 10: Tremendous quarter, everyone. Two questions. One is on the EcoLink centrifugal compressors technologies for data center and industrial. What are the performance or form factor potential pricing attributes that you think will make this technology potentially very appealing to potential customers? The second question is, forgive this, but a little bit more on capital allocation. I echo the points made by the prior caller about how strong a quarter it was. This year, you're down a little bit year to date on stock purchase versus last year, and you have a lot more liquidity than you did last year. Should we be looking forward to potentially another very strong quarter in stock or purchase specifically, or more weighted towards debt payback, even with this $50 million debt paydown? Thank you.

The attributes you think we will make this.

Technology potentially.

Very appealing.

Potential customers and the second question is.

Forgive us, but a little bit more on capital allocation I Echo the point made by the prior caller about.

Speaker #11: And the second question is forgive this , but a little bit more on capital allocation . I echo the points made by the prior caller about how strong a quarter it was , but you know , this year you're down a little bit year to date on soccer purchases versus last year .

<unk> quarter it was.

But.

This year, you're down a little bit year to date on stock repurchase versus last year.

And you.

You have a lot more liquidity than you did last year or so.

Should we be looking forward to potentially another very strong quarter in stock repurchase specifically or more weighted towards debt payback, even with this $50 million debt paydown. Thank you.

Speaker #11: And you have a lot more liquidity than you did last year . So should we be looking forward to potentially another very strong quarter in stock repurchase , specifically or more weighted towards debt payback ?

So.

Eric The island. So your first question and I am sure Schon Williams Cellulosic anyone.

Speaker #11: Even with this $50 million debt , Paydown . Thank you .

So back to the equity question, what makes our product differentiated versus what's already.

Speaker #3: Okay , so I'll Eric , I'll answer your first question and I'm sure Sean will answer your second one . So back to the cooling question .

Speaker 5: Yeah. I'll, Eric, I answered your first question, and I'm sure Sean will answer your second one. Back to the EcoLink question, what makes our product differentiated versus what already exists? A few things. First, we are using high-speed electric motors. We are compressing at a high speed. With high speed in compression comes efficiency. We have an expertise into high speed, and our concept shows an extremely low level of noise. At the end of the day, weight, efficiency, noise, and we are leveraging a technology. Now I'm getting a little bit technical, where the system rotates on a cushion of air that we call airfoil bearing that we have developed for the automotive industry. We have developed that for fuel cell compressors. We are uniquely positioned in the industry because we have the scale of the automotive industry. We have the maturity from a manufacturing standpoint.

Are you seeing.

First we are using a high speed electric motors, we're compressing it to ice feed them with.

Speaker #3: What makes our product differentiated versus what already exists ? A few things . First , we are using high speed electric motors . We are compressing at a high speed with high speed in compression comes efficiency .

Speed and compression comes efficiency.

Are we.

And <unk> into <unk>, and our concept shows extremely low level of noise.

So at the end of the day weight efficiency noise.

Speaker #3: We have an expertise into high speed and our concept shows extremely low level of noise . So at the end of the day , weight efficiency , noise and we are leveraging a technology .

And we are leveraging our technology now I'm getting a little bit technical.

Well the system rotates on a cushion of air that we call airfoil bearing here.

Speaker #3: Now I'm getting a little bit technical where the the system rotates on a cushion of air that we call airfoil bearing that we have developed for the automotive industry .

That we have developed for the automotive industry, we have developed that for fuel cell compressors.

And we are uniquely positioned in the industry because we have the scale of the automotive industry. We have the maturity from manufacturing standpoint, it's a very complex high volume.

Speaker #3: We have developed that for fuel cell compressors , and we are uniquely positioned in the industry because we have the scale of the automotive industry , we have the maturity from a manufacturing standpoint .

Manufacturing to achieve that.

So from a design from a manufacturing standpoint, we have an edge.

Speaker #3: It's a very complex , high volume manufacturing to achieve that . So from a design , from a manufacturing standpoint , we have an edge with this system .

Speaker 5: It's a very complex, high-volume manufacturing to achieve that. From a design, from a manufacturing standpoint, we have an edge with this system. If you think about the capabilities of the company, high speed, high-speed electric motors, and then everything that revolves around rotating technology, in this case, this famous air cushion bearing, are key points for our product. That is, as to provide a benefit to our customers at the end. Back to what I've said, it's weight. Sometimes these systems are on the roof of buildings, so weight is important. More importantly, efficiency. Any kind of % you can save on electric consumption, especially nowadays with the pressure that everybody has to reduce their energy consumption, is a big deal.

With the system. So if you think about the capabilities of the company I speed up.

I speed electric motors.

And then ever seeing that revolves around rotating technology in this case these famous S cushion bearing.

Speaker #3: So if you think about the capabilities of the company , high speed , high speed electric motors and then everything that revolves around rotating technology , in this case , this famous air cushion bearing are key points for our product that is has to provide a benefit to our customers at the end .

Our key points for our product that is as to provide have been issued to our customers at the Ana and back to what Ive said its weight some of them. Some time. This is stems are on the on the roof buildings, which is important.

Importantly efficiency any kind of percentage you can save.

Speaker #3: And back to what I said . It's weights . Some of them sometime these systems are on the on the roof building . So weight is important .

On the electric consumption, especially nowadays with the pressure on the tumor with yards to reduce their energy consumption.

Speaker #3: More importantly , efficiency . Any kind of percentage you can save on electric consumption , especially nowadays with the pressure that everybody has to reduce their energy consumption is a little and the maturity of our product are some others .

And the maturity of our product versus some others, which you hold that into.

In the context of the world that is evolving when it comes to.

Speaker 5: The maturity of our product versus some others, putting all that in the context of a world that is evolving when it comes to low global warming refrigerants that need to be used moving forward. We are coming at the right point in time where the industry is looking for improvements in the face of a change that is driven by this low global warming refrigerant. It feels that the benefits that we bring to mobile applications are obviously extremely applicable to the buildings and the industrial applications as well. Now, on the question about capital allocation.

Low global warming refrigerants that needs to be used in control well.

Speaker #3: Putting all that in the in in the context of a world that is evolving when it comes to low global warming , refrigerants that need to be used moving forward .

So we are coming at the right points in time, where the industry is looking for improvements in the face of a change that is driven by the global overwhelming refrigerant.

Speaker #3: So we are coming at the right point in time where the industry is looking for improvements in the face of a change that is driven by these low global warming refrigerants , and it shows that the benefits that we bring to mobile application are obviously extremely applicable to to the buildings and the industrial applications as well .

She also benefits that we bring to mobile application.

Extremely happy cable.

Two two of the buildings and industrial applications as well.

Now on the Cushing and about 53rd allocation, Okay, Eric So.

Look as everyone knows there are some.

Volatile industry that we're in right now with the New news every day.

Speaker #3: Now , the question about capital allocation .

Both from governments and the supply chain, but we are committed to returning capital to shareholders, but we're not going to commit to any specific number.

Speaker #6: Okay , Eric . So look , as everyone knows , there are some it's a volatile industry that we're in right now with new news every day , both from governments and supply chain .

Speaker 6: Okay, Eric. As everyone knows, it's a volatile industry that we're in right now with new news every day, both from governments and the supply chain. We are committed to returning capital to shareholders. We're not going to commit to any specific number. We've just raised our dividend, we had a very strong quarter of share buyback, and we repaid a little bit of debt. Those are our three levers, and we expect to continue to use them going forward over time.

But again, we just raised our dividend we had a very strong quarter of share buyback and we repaid a little bit of debt. So those are the those are our three levers and then we expect to continue to use them going forward over time.

And to get to our goal on average on its own 75% correct.

Thank you very much.

Speaker 5: To get to our goal, on average, long term, 75%.

Thank you for joining Garett Q3 earnings call. This concludes todays <unk> session.

Speaker 6: Correct.

Speaker 5: Thank you very much.

Speaker 7: Thank you for joining Garrett's Q3 earnings call. This concludes today's session.