Garrett Motion Inc. · NASDAQ:GTX
Garrett Motion — Investor Presentation (September 2019)
32 slides from Garrett Motion's investor presentation, Sep 10, 2019
Slide 1: Garrett Motion Investor Presentation – Q2 2019 Town Hall
Q2 2019 Town Hall September 10, 2019 GARRETT MOTION (NYSE: GTX) INVESTOR PRESENTATION
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 , as amended. All statements, other than statements of fact, that address activities, events or developments that we or our management intend, e
Slide 3: Additional Disclaimers
Additional Disclaimers Prior to Garrett’s spin-off from Honeywell on October 1, 2018, Garrett’s historical financial statements were prepared on a stan d–alone basis and derived from the consolidated financial statements and accounting records of Honeywell. Accordingly, for periods prior to October
Slide 4: Garrett Motion technology provider overview
Garrett Motion is a cutting-edge technology provider that enables vehicles to become safer, more connected, efficient and environmentally friendly. We lead the development of zinnovative and differentiated solutions which empower the transportation industry to redefine and further advance motion.
Slide 5: Garrett at a Glance
Garrett at a Glance $3,375M ~7,500 ~100M 2018 Net Sales Employees Garrett turbos in use globally $618M ~1,200 40 2018 Adjusted EBITDA1 Engineers OEMs served globally 18.3% 5 / 13 ~100 2018 Adjusted EBITDA Margin1 R&D centers Manufacturing plants New applications annually 2019 75%+ 1,400+ Expected re
Slide 6: Garrett Strategic Priorities
Garrett Strategic Priorities Technology leadership and broad portfolio of products with breakthrough capabilities Differentiated Technology Turbochargers Electric boosting Automotive software Pipeline of electric products Best-in-class global manufacturing footprint with operational excellence and a
Slide 7: Accelerating Portfolio Rebalancing
Accelerating Portfolio Rebalancing 6M 2019 Net Sales by Geography1 6M 2019 Net Sales by Product Line 1% +1% to 2018 Commercial Vehicles and Gas products grew to 30% (2%) vs 2018 16% Aftermarket products of net sales totaled 32% of net sales 26% YTD 2018 42% 24% 20% 11% 3% YTD 2019 36% 30% 20% 12% 2%
Slide 8: Compelling Long-Term Turbocharger Growth Trends
Compelling Long-Term Turbocharger Growth Trends Tougher Global CO2 Regulations Annual Production (units in millions) Passenger Vehicle 110 NEDC (WLTP from 2021) Light Vehicle CO2 emission in g/km 100 Production +8M New cars 90 by 2025 Q2 2019 80 70 +16M Tow Hall 57% Turbo Turbocharged cars 60 Passen
Slide 9: Developing a Comprehensive Technology Portfolio
Developing a Comprehensive Technology Portfolio Core Turbo E-Boosting & Controls Connected Vehicle Software Electrification Pipeline Internal Combustion Engine Cybersecurity Electrified Powertrains Hybrids (with ICE) Expertise in high-speed motors, model-based controls and advanced software capabili
Slide 10: Core Turbocharger Technology Differentiation
Core Turbocharger Technology Differentiation Technology Trend Industry Driver GTX Technology st • 1 Gas VNT industry launch 2016 Light Vehicle Industry CO2 fleet average targets • ~60% (~40%) gas VNT in EU (global) 2025 Gasoline transition to VNT • + 30% to 50% $/vehicle Light Vehicle Next-Generatio
Slide 11: Garrett's Leadership Role in a Transforming Auto Industry
Garrett’s Leadership Role in a Transforming Auto Industry Industry Challenge GTX Offering In • Hybrid powertrain CO2 optimization • Gas VNT & Electric Boosting production SOP 2021 Gen 2 Electrified • Fuel Cell powertrain affordability • Fuel cell Compressor Gen2 & 3 SOP 2021 • Efficient & light weig
Slide 12: GTX Solutions for Electrified Hybrid Powertrains
GTX Solutions for Electrified Hybrid Powertrains Winning Hybrid Platforms GTX Technology | Market Potential Hybrids as production volume % (Light Vehicle) - 2023 High efficiency Gas VNT | Industry 2025: ~$2B • High temperature kinematics 36% • Low cost casting materials • Fit for Ultra High volume p
Slide 13: E-Turbo Highlights Garrett's Unique Capabilities
E-Turbo Highlights Garrett’s Unique Capabilities Key Attributes Relevance to Garrett • 250kRPM Ultra high speed motor – 20x faster • Strong turbo hybrid macros driving E-Boosting than Electric Vehicle (EV) traction motor • First mass market E-Turbo to launch in 2021 • Proprietary software enables ra
Slide 14: GTX Solutions for Fuel Cell Powertrains
GTX Solutions for Fuel Cell Powertrains Winning Fuel Cell Platforms GTX Technology | Market Potential Gen 1 & Gen1+ Gen 2 Gen 3 Fuel Cell Compressor | Industry 2030 ~$1B • High speed motors and controllers (up to 150 kRPM) • Oil free bearing and specialized aerodynamics • Development & production ca
Slide 15: GTX Solutions for Vehicle Monitoring Software
GTX Solutions for Vehicle Monitoring Software Winning Software Applications GTX Technology GTX Integrated Vehicle Monitoring Solution Advanced Controls • Non linear model based controls for complex systems • Integration of Health Indicators to enable Vehicle Health Management Cyber Security IVHM* Ad
Slide 16: Robust Win Rate Provides Strong Revenue Visibility
Robust Win Rate Provides Strong Revenue Visibility % Win Rate in $ Revenue* OEM Revenue Visibility (% revenue awarded for future) Sept. 2018 Outlook 4% 9% 13% New business 2015-2017 2018 + H1 2019 24% Replacement (Sept. 2018 Investor Day) 100% 87% 63% Awarded 2018E 2020E 2022E ~50% ~50% Sept. 2019 O
Slide 17: Financial Flexibility and Efficiency
Financial Flexibility and Efficiency ▪ Highly variable cost structure to support the 80% 75% Variable cost Low-cost country business through the cycle structure footprint ▪ Low working capital needs ▪ Well-invested capacity base to support 70% >20x continued growth Low-cost country Working capital s
Slide 18: Unrelenting Focus on Execution
Unrelenting Focus on Execution September 2018 Investor Day September 2019 ▪ GTX set to outperform overall industry Expecting full year organic net sales (1%) to +1% 1 vs (3%) to (5%) 2019 global LV production (IHS) 2 ▪ Maintain top industry margin of 18-20% Adjusted EBITDA margin up to 19.1% in H1 2
Slide 19: Long-Term Financial Targets (2018 - 2022)
Long-Term Financial Targets (2018 - 2022)* REVENUE Expect 4%-6% CAGR CAPITAL EXPENDITURES Approximately 3.0%-3.5% as a percentage of net sales ADJUSTED EBITDA MARGIN Expect 18%-20% Adjusted EBITDA margin (excludes indemnity charges) LIQUIDITY Maintain strong liquidity position with no near-term matu
Slide 20: Key Investor Takeaways
Key Investor Takeaways ▪ Global market leader with positive long-term macro tailwinds ▪ Premier technology innovator with broad portfolio of differentiated solutions ▪ Long-term partnerships with all major OEMs and robust aftermarket program ▪ Extensive geographical footprint and integrated supply c
Slide 21: Appendix
Appendix ADVANCING MOTION
Slide 22: 2019 Outlook
2019 Outlook Original Guidance issued February 20, 2019 What changed? ▪ Organic net sales growth of 2% to 4% ▪ Europe: LV sales down (1%) to (2%) since Q13 ▪ Adjusted EBITDA of $630M - $650M ▪ Global 2019 LV production assumption of (3%) to (5%) versus (2%) before ▪ Adjusted levered free cash flow c
Slide 23: Key Financial Metrics: 6M 2018 – 6M 2019
Key Financial Metrics: 6M 2018 – 6M 2019 ($M) 2018 Net Sales Net Income 2019 $1,792 (9%) (4%) $178 $301 $208 Reported Organic (33%) $1,637 $139 Net sales impacted by slowdown in global auto production 6M 2018 includes $30M tax benefit 1 6M 2019 includes $34M interest expense vs $2M in 6M 2018 Adjust
Slide 24: Liquidity and Capital Resources
Liquidity and Capital Resources Maturity Profile ($M) Cash and Marketable Securities ($M) 800 Mar 31 Jun 30 2019 2019 600 Brazilian Real 12 11 400 Chinese Yuan 115 84 Euro 43 28 200 Indian Rupee 24 39 Korean Won 8 12 0 2019 2020 2021 2022 2023 2024 2025 2026 Other currencies 5 7 EUR TLA USD TLB EUR
Slide 25: Income Statement
Income Statement Q2 2019 Q2 2018 ($ in millions) 6M 2019 6M 2018 $802 $877 Net sales $1,637 $1,792 620 662 Cost of goods sold 1,259 1,366 182 215 Gross profit 378 426 58 63 Selling, general and administrative expenses 118 126 17 39 Other expense, net 36 81 18 0 Interest expense 34 2 2 6 Non-operatin
Slide 26: Reconciliation of Net Income to EBIT and Adjusted EBIT
Reconciliation of Net Income to EBIT and Adjusted EBIT For the periods prior to the Spin-off on ($ in millions) Q2'2018 Q2'2019 6M 2018 6M 2019 1 October 1, 2018 we reflect the expense for resolution of asbestos related and Net income (loss) - GAAP 150 66 208 139 environmental liabilities, net of in
Slide 27: Reconciliation of Net Income to Adjusted EBITDA and Consolidated EBITDA
Reconciliation of Net Income to Adjusted EBITDA and Consolidated EBITDA LTM LTM Full Year ($ in millions) Q2'18 Q1'2019 Q2'2019 Q1'19 Q2'19 2018 Net income (loss) - GAAP 150 73 66 1,195 1,111 1,180 Tax expense (43) 24 21 (815) (751) (784) Removal of FX hedging-related Profit before taxes 107 97 87 3
Slide 28: Reconciliation of Organic Sales % Change
Reconciliation of Organic Sales % Change Q2 2018 Q2 2019 Garrett 6M 2018 6M 2019 13% (9%) Reported sales % change 16% (9%) 6% (5%) Less: Foreign currency translation 9% (5%) 7% (4%) Organic sales % change 7% (4%) Gasoline 40% 14% Reported sales % change 39% 11% 10% (7%) Less: Foreign currency transl
Slide 29: Reconciliation of Net Debt, Consolidated Debt and Related Ratios
Reconciliation of Net Debt, Consolidated Debt and Related Ratios March 31, 2019 (Dollar amounts in millions) June 30, 2019 $1,205 Secured debt $1,200 0 Revolving cash facility 0 393 Unsecured debt 398 1,598 Consolidated debt 1,598 1,598 Total term debt 1,598 0 Related party note 0 (207) Cash and cas
Slide 30: Reconciliation of Net Income to Adjusted Levered and Unlevered Free Cash Flow
Reconciliation of Net Income to Adjusted Levered and Unlevered Free Cash Flow Q2 2019 ($ in millions) 6M 2019 $66 Net income (loss) - GAAP $139 $21 Tax expense $45 $87 Profit before taxes $184 $15 Net interest (income) expense $30 $16 Depreciation $35 $118 EBITDA (Non-GAAP) $249 17 Other operating e
Slide 31: Reconciliation of Net Income – GAAP to EBITDA and Free Cash Flow
Reconciliation of Net Income – GAAP to EBITDA and Adjusted EBITDA, and to Adjusted Unlevered, Adjusted Levered and Levered Free Cash Flow (FCF) 6M 2018 ($ in millions) 6M 2019 $279 Net cash from operating activities $37 (47) Expenditures for plant property and equipment (51) 232 Net operating cash f
Slide 32: Copyrights © 2019 Garrett Motion Inc.
Copyrights © 2019 Garrett Motion Inc.
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