Update on Garrett Motion, Q3 Earnings
Lindy Does Not Dress Up - Or: Do Not Judge A Book By Its Cover.
I look like a farmer, but I'm a lover
You can't judge a book by looking at the coverSource: You Can't Judge a Book by Its Cover (lyrics)
Last week, Garrett Motion GTX 0.00%↑ presented Q3 earnings that the market did not like. After a ~10% share price drop, the stock ended the week at $7.44 - ca 10% lower than it was at the time of my initial write-up:
I think the reaction is understandable when investors look only at the headlines (market softness, lowered revenues, lowered guidance). But is it really that grim? I think not. And there is even something positive that I did not have on my bingo card. Let’s dig in.
Outline
TL;DR
Q3 2024
Conclusion
TL;DR
This is a case of “You need to read the entire release and report and also listen to the earnings call” to see past the weak headline data.
I see strong trends in favor of Garrett Motion.
Q3 2024
Lindy Does Not Dress Up
The earnings press release doesn’t read great:
“Net sales totaled $826 million, down 14% on a reported and constant currency* basis
Net income totaled $52 million; Net income margin of 6.3%
Adjusted EBITDA* totaled $144 million; Adjusted EBITDA margin* of 17.4%
Net cash provided by operating activities totaled $67 million
Adjusted free cash flow* totaled $71 million”
Additionally, the company adjusted its outlook downward for the full year. If investors did not like the beginning of the press release, they certainly were even more pessimistic after seeing this:
