Garrett Motion: The Turbocharger Maker Powering the Data Center Boom
Q2 industrial turbo sales point to ~$200M full-year total, first MEG 200 award for AI infrastructure, and margin expansion that pushed 2026 guidance higher.
GTX · Earnings Call · 2026-07-29
Industrial Turbo: From Niche to Growth Engine
Garrett Motion delivered another strong quarter, with revenue up 7% and adjusted EBIT margin at a record 15.6%. The standout is the industrial segment, where turbocharger sales are tracking toward air compressor applications far beyond traditional automotive. CEO Olivier Rabiller noted that year-to-date industrial turbo sales exceed $80 million and full-year expectations have more than doubled to about $200 million. “So far this year, we sold over $80 million of turbos for industrial applications, and we expect further growth in the second half with a view that is now about $200 million of sales in industrial for the full year.” — Olivier Rabiller, CEO · 2026-07-29
The catalyst is data center power generation. The company secured the first award for its largest-ever turbo, the Garrett MEG 200, and continues to see demand from engine makers across North America, Europe, and Asia. On the Q&A call, Rabiller described the broad-based nature of the opportunity:
the trajectory is the result of all the applications that you are accumulating over time. I'm very excited about this 200 MEG, but we should not expect that it represents a high share of our revenue next year.
Cooling Compressors and the Zero-Emission Pivot
Beyond turbos, Garrett's high-speed bearing technology is breaking into industrial cooling. The company's Cooling compressors business, anchored by the Trane partnership, now has multiple OEMs in active dialogue for HVAC and data center applications. Rabiller reaffirmed the production timeline: “We are working with a full scope of customers that go beyond what we've announced so far for very various applications. And indeed, we like speed... the first production will be 2027, not 2028.” — Olivier Rabiller, CEO · 2026-07-29
This pivot into zero-emission and industrial verticals is a continuation of a strategy that has been building for over a year. On the prior earnings call, the focus was on establishing the technology: “we would be in production from 2027... it's on a fast pace.” — Olivier Rabiller, Chief Executive Officer · 2026-04-30 And in the fall of 2025, management had already flagged rising industrial interest: “we have seen an increasing interest from the industrial world... up to some of the systems that are used in some data centers.” — Olivier Rabiller, Chief Executive Officer · 2025-10-23
Margins, Free Cash Flow, and Capital Returns
The financials confirm the improvement. Reported revenue rose to $985M in Q1 2026 (quarter ending April 24), up 12% YoY, and adjusted EBIT margin hit 12% operating margin, with strong volume conversion. Sean Deason reiterated the strength on the call: “Adjusted EBIT was $152 million, which equates to an adjusted EBIT margin of 15.6%...” — Sean Deason, CFO · 2026-07-29 The company raised its full-year outlook to 15.3% adjusted EBIT margin and $430M free cash flow, while maintaining disciplined capital returns—$28M buyback plus $15M dividend in Q2.
Conclusion
Garrett is riding a structural wave in power generation and cooling that the market is beginning to price in. With the data centers theme dominating global corporate calls—from Trane, Vertiv, and others—Garrett's unique position in high-speed turbomachinery gives it an edge. The power generation story is now company-specific and accelerating.