Garrett Motion Inc. · NASDAQ:GTX
Garrett Motion — Debt Investor Presentation (February 2021)
45 slides from Garrett Motion's debt investor presentation, Feb 23, 2021
Slide 1: February 2021 Lender Presentation
Exhibit 99.1 February 2021 LENDER PRESENTATIONExhibit 99.1 February 2021 LENDER PRESENTATION
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may contain “forward-looking statements” within the meaning of Section 21E of the Exchange Act, as amended. All statements, other than statements of fact, that address activities, events or developments that the Company or the Company’s management intend,
Slide 3: Today's presenters
Today’s presenters Olivier Rabiller Sean Deason CEO, Garrett CFO, Garrett Copyrights © 2021 Garrett Motion Inc.Today’s presenters Olivier Rabiller Sean Deason CEO, Garrett CFO, Garrett Copyrights © 2021 Garrett Motion Inc.
Slide 4: Transaction overview
1 Transaction overview1 Transaction overview
Slide 5: Transaction highlights
Transaction highlights • Garrett Motion Inc. (“Garrett” or the “Company”) designs, manufactures and sells highly engineered turbocharger and electric-boosting technologies for light and commercial vehicle OEMs and the aftermarket. Garrett’s leading technology infrastructure is a competitive differen
Slide 6: Transaction overview: sources and uses, pro forma capitalization
Transaction overview Sources and uses Sources ($mm) Amount Uses ($mm) Amount 1 Unrestricted Cash on Balance Sheet $432 DIP Repayment $200 2 3 Restricted Cash on Balance Sheet 226 Prepetition 1L Debt 1,487 4 RCF - Senior Notes 457 5 New 1L Term Loan B 1,250 Cash Out Offer to Electing Shareholders 98
Slide 7: Summary term sheet – Senior Secured Credit Facilities
Summary term sheet – Senior Secured Credit Facilities Garrett LX I S.à.r.l. (the “Lux Borrower”), Garrett Motion Holdings Inc. (the “US Co-Borrower” and, together with the Lux Borrower, the Borrower: “TLB Borrowers”) and Garrett Motion S.à.r.l. (the “Swiss Borrower” and together with the TLB Borrowe
Slide 8: Indicative timetable
Indicative timetable February 2021 March 2021 April 2021 S M T W T F S S M T W T F S S M T W T F S Key Dates 1 2 3 4 5 6 1 2 3 4 5 6 1 2 3 7 8 9 10 11 12 13 7 8 9 10 11 12 13 4 5 6 7 8 9 10 Market Holiday 14 15 16 17 18 19 20 14 15 16 17 18 19 20 11 12 13 14 15 16 17 21 22 23 24 25 26 27 21 22 23 24
Slide 9: Business overview
2 Business overview 2 Business overview
Slide 10: Garrett is the global leader in automotive turbochargers
Garrett is the global leader in automotive turbochargers Company overview Technology Leadership and Broad Portfolio of Products with Breakthrough Capabilities § Global leader in highly-engineered turbocharger technologies § 60+ years of technology leadership and product innovation § Global scale wit
Slide 11: 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 12: Industry Dynamics | Turbo market continues to grow
Industry Dynamics | Turbo market continues to grow Updated STRAP (Jan 2021) Comments Global light & commercial vehicle production, 2015-24 (M units) – July BP • 22% drop for vehicle production in 2020, V-shape 0% 99 97 recovery, but uncertainty for end of year 96 Vehicle & engine 92 production • Tur
Slide 13: Industry Dynamics | High visibility of contracted revenues
Industry Dynamics | High visibility of contracted revenues Core turbo business (OEM) 79 awarded % 88 95 99 non awarded % 21 12 1 5 2021 2023 2024 2022 Core revenue 2024: ~$3.8B Copyrights © 2021 Garrett Motion Inc. Turbo chargers are one of the first components sourced for a new light vehicleIndustr
Slide 14: Powertrain Electrification & Hybridization
Powertrain Electrification & Hybridization Key Powertrains for 2025 and Beyond CO Benefit & On Cost in 2025 Examples of Hybrid Vehicles 2 Baseline Entry-level MHEV : VW Golf 8 – Launch in 2019 Significant CO efficiency improvement expected 2 Engine : 1.5L 110kW Internal Combustion Engine (ICE) eMoto
Slide 15: Shifting the engineering portfolio
Shifting the engineering portfolio Engineering spend evolution Driving the shift 180 Total RDE Sustainable core turbo productivity 5% per year 160 140 $29M Core turbo transformation roadmap BTI & pipeline 120 $78M spend $49M Transfer engineers to new domains with relevant skills 100 Core Re-skill en
Slide 16: Expanding our product portfolio
Expanding our product portfolio Pipeline Breakthrough Technology Initiative Routine NPI new concept incubation first wins & launches, developing business mature business ර�� NOx Sensor Internal Combustion Engine Advanced controls Gas, LVD, CV turbo Traction Drive Hybrids (with ICE) E-Compressor, E-T
Slide 17: BTI and pipeline technology development
BTI and pipeline technology development ELECTRIFICATION & SOFTWARE PIPELINE TECHNOLOGIES Electric A/C E-Boosting solutions E-Boosting solutions Advanced software Electric Pipeline NOx sensor for hybrids for H2 fuel cells solutions Traction Drive Compressor feeding E-Compressor & E- FC-Compressor Adv
Slide 18: Estimated Leverage and Payments to Honeywell
Estimated Leverage and Payments to Honeywell Before Business Acceleration After Business Acceleration $3,383 Est. HON legal $609 Costs* $1,341 HON** $411 5.3X*** $1,512 $362 $584 HON**** 2.9X*** $1,433 $928 $100 $100 Net $107 Net Debt $35 Debt $19 Q2 2020 Debt Post 2021 2022 2023 2024 2021 2022 2023
Slide 19: Key credit highlights
Key credit highlights 1 Global leadership in turbochargers and electric-boosting: technologies with high barriers to entry 2 Technology leadership and broad portfolio of products with breakthrough capabilities 3 Long-term co-development with global OEMs and a worldwide aftermarket platform 4 Global
Slide 20: Global scale and broad product portfolio
Global scale and broad product portfolio 1 LIGHT MANUFACTURER LIGHT VEHICLE DIESEL COMMERCIAL VEHICLE E-BOOSTING VEHICLE GAS llll MAJOR GLOBAL PLAYERS llll llll llll MEDIUM SIZE GLOBAL – – PLAYERS ll (1) – – ll – – ll LOCAL PLAYERS – lll LEADER PARTICIPANT Source: Garrett Motion Notes: (1) Phase out
Slide 21: Technology leadership and broad portfolio of products with breakthrough capabilities
Technology leadership and broad portfolio of products 2 with breakthrough capabilities • Reduce fuel usage • Optimize fuel economy • Protect vehicles against cyber attacks • Reduce exhaust emissions • Step towards a zero • Diagnose and predict anomalies emissions future • Enhance engine performance
Slide 22: Long-term co-development with global OEMs and a worldwide aftermarket platform
Long-term co-development with global OEMs and a 3 worldwide aftermarket platform Pre-Development Product Development Vehicle Production Aftermarket 4 Years 2 Years 3-5 Years 10-15 Years KEY INNOVATION CUSTOMIZATION MANUFACTURING REPLACEMENT ACTIVITIES SINGLE SUPPLIER PER ENGINE 20+ YEARS CYCLE Weifa
Slide 23: Global footprint; local player
Global footprint; local player 4 RD&E Centers 5 “Close-to-Customer” Engineering Centers 12 Manufacturing Plants 13 Copyrights © 2021 Garrett Motion Inc. 22 Sales, R&D and Engineering close-to-customers | global manufacturing presenceGlobal footprint; local player 4 RD&E Centers 5 “Close-to-Customer”
Slide 24: Operational excellence driving outstanding KPIs
Operational excellence driving outstanding KPIs 5 Optimized processes Optimized manufacturing footprint Optimized supplier base • 400 Suppliers, 70% of Spend in HGR • Global and scalable footprint, 75%+ in high • Garrett Excellence Model (GEM) drives growth regions. Closed Atessa (IT) in 2018 operat
Slide 25: Proven track record to bring technologies at scale to the market
Proven track record to bring technologies at scale to the 6 market TODAY Patents Issued or Pending 1,400+ 2018:E-Turbo Boost controls 2018: Proof of concepts of 2000’s production award IVHM with several OEMs SOFTWARE 2018: Virtual EGR sensor 2018: Collaboration with Aptiv, production award LGE, Lear
Slide 26: Pro forma capitalization promotes robust FCF profile
Pro forma capitalization promotes robust FCF profile 7 ($ in millions) Free Cash Flow $385 $369 Adj. FCF $318 $310 $267 $88 Adj. EBITDA 583 701 680 596 520 440 Change in NWC 59 (2) (10) (8) 5 Cash Interest (43) (54) (42) (42) (63) (135) (91) (68) Taxes (93) (104) (105) (12) (30) (30) (75) (30) Other
Slide 27: Experienced leadership team with proven track record
Experienced leadership team with proven track record 8 Olivier Rabiller President and CEO Functions Peter Bracke Craig Balis Sean Deason Fabrice Spenninck Jerome Maironi Jean- Philippe Bedu VP Sr VP Sr VP Sr VP Sr VP VP M&A Chief Transformation Chief Technology Chief Finance Chief Human General Coun
Slide 28: Updated Outlook and Business Plan
3 Updated Outlook and Business Plan 273 Updated Outlook and Business Plan 27
Slide 29: Light Vehicle Powertrain Macro Deep-Dive
Light Vehicle Powertrain Macro Deep-Dive LV-Gas Turbo penetration LV-Diesel mix-% BEV mix-% Aligned to IHS until 2022, more conservative thereafter IHS expecting slower drop Raised global BEV pen-% assumptions in Dec STRAP LVG T-pen-%, 2019-24 LVD mix, 2019-24 BEV mix, 2019-24 (%) (%) (%) IHS IHS 55
Slide 30: Volume Forecast By Product Line
Volume Forecast By Product Line Total Volumes LV Gasoline LV Diesel Commercial Vehicles Global GTX production (M units, excl. e-Boost & FCC) 17.6 10.9 17.0 0.9 10.0 0.9 15.0 0.8 8.2 13.4 13.1 12.0 0.7 AM 0.8 6.9 0.6 5.6 5.4 11.8 5.2 4.4 18.1 4.3 17.3 10.6 4.3 4.0 4.3 15.3 8.7 13.4 OEM 12.3 7.2 11.3
Slide 31: Focus On Garrett Gasoline Volume Growth
Focus On Garrett Gasoline Volume Growth | 2013-2027 15 Munits VNT 10 5 WG 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 % awarded 100% 100% 89% 88% 84% 75% 62% 41% Copyrights © 2021 Garrett Motion Inc. 30 Projected growth of gasoline turbochargers and increased penetra
Slide 32: Updated STRAP (Jan 2021): Volume and Revenue Build Up
Updated STRAP (Jan 2021): Volume and Revenue Build Up ($ in million and volumes in thousands) Volume Evolution by Product Revenue Evolution by Product (1) Light Vehicle Diesel Light Vehicle Gas Commercial Vehicle Aftermarket Fuel Cell Light Vehicle Diesel Light Vehicle Gas Commercial Vehicle Afterma
Slide 33: Updated STRAP (Jan 2021): Key Financial Metrics
Updated STRAP (Jan 2021): Key Financial Metrics ($ in millions) Total Revenue / Annual Growth % Gross Profit / Margin % 26% 24% 24% 24% $4,340 24% $4,226 23% $3,833 $1,061 $3,485 $1,031 $3,248 $927 $3,033 15% $847 $828 10% 10% $694 3% (4%) (7%) 2019A 2020A 2021E 2022E 2023E 2024E 2019A 2020A 2021E 2
Slide 34: Updated STRAP (Jan 2021): Key Credit Metrics
Updated STRAP (Jan 2021): Key Credit Metrics ($ in millions) Adj. EBITDA / Margin % Adj. EBITDA – Capex / Conversion % 18% 16% 16% 16% 82% 82% 82% 81% 80% 15% 78% 14% $701 $680 $596 $583 $568 $555 $520 $481 $477 $440 $405 $360 2019A 2020A 2021E 2022E 2023E 2024E 2019A 2020A 2021E 2022E 2023E 2024E (
Slide 35: December STRAP: Adj. EBITDA YoY Walk
December STRAP: Adj. EBITDA YoY Walk ($ in millions) Adj. EBITDA Walk 2020A 2021E 2022E 2023E 2024E BoP Adj. EBITDA $583 $440 $520 $596 $680 FX 3 33 Volume @ VC% (93) 114 112 137 45 Pricing (17) (60) (67) (74) (76) Material Productivity 55 79 85 95 98 Non Material Productivity 3 35 30 26 27 Mix (47)
Slide 36: Resilient Business Model - 2020 Financials By Quarter
Resilient Business Model - 2020 Financials By Quarter Q1 Q2 Q3 Q4 FY Comments Revenue $745 $477 $804 $1,008 $3,034 • Revenue impacted significantly by COVID19 crisis Growth % YOY (9%) (39%) 0% 15% (8%) Variable Costs 517 321 562 729 2,129 • Revenue down (9%) organic in Q1 2020; (39%) in Q2 2020 Vari
Slide 37: Financial policy
Financial policy Financial policy will be set by a New Board, which assuming a 7-member board will consist of: • 1 Honeywell-nominated director • 1 director nominated by the Additional Investors (parties to the PSA outside of Centerbridge, Oaktree, and Honeywell) • 1 Board member from the Management
Slide 38: Appendix
Appendix ADVANCING MOTION
Slide 39: Summary Income Statement
Summary Income Statement ($ in millions) 2020A / 2021E Quarterly 2019A – 2024E Annually 2020A by Quarter 2021E 2019A 2020A 2021E 2022E 2023E 2024E (USDM, except per share data) Q1 Q2 Q3 Q4 Q1 Apr May-Jun Q3 Q4 FY FY FY FY FY FY Total Volume (in '000s Units) 2,941 1,859 3,163 4,021 3,299 1,061 2,311
Slide 40: Adj. EBITDA Walkdown
Adj. EBITDA Walkdown ($ in millions) 2020A / 2021E Quarterly 2019A – 2024E Annually 2020A by Quarter 2021E 2019A 2020A 2021E 2022E 2023E 2024E (USDM, except per share data) Q1 Q2 Q3 Q4 Q1 Apr May-Jun Q3 Q4 FY FY FY FY FY FY GAAP Net Income $52 ($9) $11 $26 ($95) $300 $55 $66 $74 $313 $80 $400 $343 $
Slide 41: Summary Cash Flow Statement
Summary Cash Flow Statement ($ in millions) 2019A 2020A by Quarter 2021E 2022E 2023E 2024E (USDM, except per share data) FY Q1 Q2 Q3 Q4 Q1 Apr Emer. May-Jun Q3 Q4 FY FY FY Adjusted EBITDA $583 $108 $63 $120 $149 $129 $37 $96 $124 $135 $596 $680 $701 (+) Decrease (Increase) in Accounts Receivable 58
Slide 42: Summary Balance Sheet
Summary Balance Sheet PF Balance Sheet post emergence subject ($ in millions) to appropriate accounting and legal review 2019A 2020A by Quarter 2021E 2022E 2023E 2024E (USDM, except per share data) FY Q1 Q2 Q3 Q4 Q1 Apr Emer. May-Jun Q3 Q4 FY FY FY (1) Cash and cash equivalents 187 254 139 314 592 3
Slide 43: Summary term sheet – Convertible Series A Preferred Equity
Summary term sheet – Convertible Series A Preferred Equity Term Description n Approximately $1,251MM Amountn Approximately $1,051MM to be provided by the Plan Sponsors and the Additional Investors n $200MM rights offering fully backstopped by the Plan Sponsors and the Additional Investors n 11% per
Slide 44: Summary term sheet – Series B Preferred Equity
Summary term sheet – Series B Preferred Equity Term Description n Initial Cash Payment $375MM n $34.8MM payment in 2022 Amortization Payments n 8 annual payments of $100MM beginning in 2023 and ending in 2030 n If annual adjusted EBITDA falls below $425MM, the Amortization Payments for the subsequen
Slide 45: Garrett
Garrett Confidential | Copyrights © 2019 Garrett Motion Inc.Garrett Confidential | Copyrights © 2019 Garrett Motion Inc.
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