Garrett Sales Reach $930 Million; Company Announces $250 Million Share Buyback in 2027
Key Facts
Garrett Motion posted net sales of $930 million in the third quarter of 2026, up 3% on a constant-currency basis from the same period a year earlier, according to results announced by the company on October 29. Net income was $97 million, with a margin of 10.4%, while adjusted operating earnings reached $152 million, with a margin of 16.3%. Operating activities generated $135 million in cash, and adjusted free cash flow totaled $136 million during the quarter. The company reaffirmed the midpoint of its full-year financial outlook, noting that growth in industrial activity continued to exceed its prior expectations. The board also approved a $250 million share repurchase program for 2027.
Garrett’s results follow sales of $976 million in the second quarter of 2026, up 5% on a constant-currency basis from the prior year, when it posted $913 million. The reported growth rate slowed to 3% in the third quarter, while the company continued to point to industrial activity outperforming its prior estimates. Adjusted free cash flow of $136 million in the quarter demonstrates the company’s ability to generate cash alongside an adjusted operating earnings margin of 16.3%. The announced 2027 repurchase program is set to provide a channel for returning capital to shareholders. The company’s shares, GTX, closed at $22.33 on October 28, before the results were announced.
Meanwhile, A. O. Smith is moving operational control of its Chinese business to CPE under an agreement announced on October 27. CPE will acquire an 81% stake, while A. O. Smith will retain a 19% stake and a long-term license to use its brand. The company valued the China business at about $400 million on a cash-free, debt-free basis, and said the expected value exceeds $500 million when the present value of licensing returns over a multi-decade period is added. The deal allows the company to repatriate about $80 million in cash currently held in China. A. O. Smith said it intends to prioritize share repurchases using the after-tax proceeds and cash repatriated after the deal closes.
The deal follows pressure in China that weighed on A. O. Smith’s results in the second quarter of 2026, when sales in its Rest of World segment fell 19% to $194.9 million, while North American sales rose 5% to $820.5 million. The company attributed the decline in the international segment mainly to weak demand in China, while 21% growth in boiler activity supported sales in North America. Total sales for the quarter were $1 billion, down 1% year over year, and diluted earnings per share were $0.91. In October, the company raised its quarterly cash dividend 6% to $0.38 per share. Its shares, AOS, closed at $60.86 on October 28.
The China deal is expected to close in the first half of 2027, subject to regulatory approvals and customary closing conditions. A. O. Smith will remain connected to the business through its 19% stake and brand license, while majority ownership transfers to CPE. In China, the manufacturing Purchasing Managers’ Index stood at 50.1% in September, up 0.3 percentage points from August and entering expansion territory. The National Bureau of Statistics of China’s calendar schedules the October reading for publication on October 31 at 9:30. The upcoming reading offers a near-term economic indicator alongside the companies’ results, after Garrett confirmed growth in industrial activity and A. O. Smith took a step to change its ownership structure in China.