Garrett Motion Inc. · NASDAQ:GTX
Garrett Motion — Investor Presentation (April 2023)
28 slides from Garrett Motion's investor presentation, Apr 13, 2023
Slide 1: The Next Step in Our Transformation Journey
THE NEXT STEP IN OUR TRANSFORMATION JOURNEY APRIL 13, 2023
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains “forward-looking statements” within the Private Securities Litigation Reform Act of 1995. All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or
Slide 3: Today's Presenters
Today’s Presenters Olivier Rabiller President & CEO (Since 2016) 21 Years at Garrett / Honeywell 28 Years Industry Experience Sean Deason CFO (Since 2020) 3 Years at Garrett 23 Years Industry Experience
Slide 4: Transaction Overview: Key Updates & Transaction Rationale
Transaction Overview Key Updates & Transaction Rationale • Garrett has consistently delivered strong performance over the past two years, through a volatile macroeconomic environment ‒ Redeemed ~$620M of Series B Preferred Stock (“Series B”) rapidly over three quarters ‒ Initiated Series A Preferred
Slide 5: Key Transaction Benefits
Reduces Ownership Concentration and Investor Rights of Large Shareholders • Reduced concentration, moving toward an equity base more typical of a public company • Centerbridge and Oaktree will continue to be significant holders with strong conviction in Garrett; they will collectively own ~30% of th
Slide 6: Repurchase and Investor Rights Summary
Repurchase and Investor Rights Summary Repurchase Price • $8.10 per share in cash, which will be adjusted to equal the volume-weighted average price of the Common Stock for the fifteen trading days following announcement, subject to a minimum price of $7.875 per share and a maximum price of $8.50 pe
Slide 7: Transformation of Capitalization and Cash Flows
Centerbridge 15% Oaktree 15% Others 70% Common 100% % Outstanding Shares Transformation of Capitalization and Cash Flows Share Classes Ownership Series A Dividend Obligation Today Pro Forma for Transaction Two classes of equity: Series A Preferred Stock Common Stock Substantial concentration of owne
Slide 8: Proven Ability to Generate Cash and Rapidly De-Lever
$367 $313 $300 - $400 2021 2022 2023 Proven Ability to Generate Cash and Rapidly De-Lever Adjusted Free Cash Flow1 Over Time $M 1 See Appendix for reconciliations of the Non-GAAP measures 2 Includes Series B 3 Negatively impacted ($28M) by interest payment due to early, full redemption of Series B 4
Slide 9: 2023 Outlook
• Garrett expects to achieve financial results in the upper end of the full year 2023 outlook published on February 14, 2023 • Full year 2023 outlook will be updated during Garrett’s next earnings conference call • Year to date, better than expected financial performance has been primarily driven by
Slide 10: Garrett Motion: The Next Chapter
GARRETT MOTION THE NEXT CHAPTER
Slide 11: Garrett Snapshot
26% 41% 19% 12% 2% Technologies Offering2022 Revenue Breakdown Garrett Snapshot Key Statistics 13 State-of-the-art Manufacturing Facilities ~1,250 Engineers 40+ OEMs Served Globally 1,600+ Patents Issued or Pending North America Diesel Gas Aftermarket By Geography 19% 31% 48% 2% Asia Europe Other By
Slide 12: Leader in a Consolidating Industry with Exceptional Cash Flow Generation
Leader in a Consolidating Industry with Exceptional Cash Flow Generation A Unique Company at the Forefront of Innovation 1 2 3 4 Strong Earnings Visibility and Resilience Optimized Capital Allocation to Enable Share Repurchases, Potential Future Dividends, and M&A Technology Innovator and Targeted I
Slide 13: Leader in a Consolidating Industry with Exceptional Cash Flow Generation
#1 Position Achieved and Strengthened by >50% Average New Business Win Rate Trusted Partner to Customers Globally Leader in a Consolidating Industry with Exceptional Cash Flow Generation Expanding Leadership Across Turbo Verticals Served Attractive Financial Profile 1 2018 Rank 2023 Rank1 LV Diesel
Slide 14: Strong Earnings Visibility and Resilience
Strong Earnings Visibility and Resilience 80% of OEM Revenue Awarded 4 Years in Advance Meaningful Contribution from High-Margin, Resilient Non-Light Vehicle Verticals 2 Awarded Non-awarded 99% 95% 88% 80% 1% 5% 12% 20% 2023 2024 2025 2026 OEM Revenue Awarded for Future % CV, Industrial & AM 31% Oth
Slide 15: Technology Innovator: Shift to Electrification Technologies
400 Engineers Dedicated to Electrification Today Successful Innovation Shift to Technologies for Electrified Vehicles, Leveraging Core Competencies Core Competencies Enabling Advanced Electrification Solutions 3 2015 2016 2017 2018 2019 2020 2021 2022 >50% Of Engineering Investment In-House Design H
Slide 16: Zero Emission Technology Gains Relevance in Portfolio
Zero Emission Technology Gains Relevance in Portfolio, Delivered with Attractive Profitability Strong Zero Emission Vehicle Technology Pipeline and Active Customer Engagement Zero Emission Technology Targets 3 Margin Impact of New Zero Emission Vehicle ContractsAccretive Already Awarded Lifetime Rev
Slide 17: Optimized Capital Allocation
Optimized Capital Allocation to Enable Share Repurchases, Potential Future Dividends, and M&A 4 ✓ Ability to rapidly de-lever with robust cash flow generation further enhanced by elimination of Series A dividend ✓ De-lever to 2.0x target net leverage following the Transaction Net Leverage ✓ Potentia
Slide 18: Key Takeaways
Key Takeaways Milestone Transaction Simplifies and Normalizes Garrett’s Capital Structure ✓ Builds upon Garrett’s ongoing strategy and multi-year initiative to normalize its capital structure ✓ Broadens addressable investor base through a larger market capitalization and enhanced liquidity ✓ Improve
Slide 19: Appendices
Appendices Investors Eric Birge +1 (734) 228-9529 Eric.Birge@garrettmotion.com Media Christophe Mathy +41 78 643 7194 Christophe.Mathy@garrettmotion.com
Slide 20: Garrett Delivers Best-in-Class Profitability and Free Cash Flow
84% 60% 77% 48% 58% NasdaqGS:GTX PV Powertrain Focused Median CV Powertrain Focused Median Diversified with PT Exposure Median Non-PT Supply Median 13% 7% 8% 4% 8% NasdaqGS:GTX PV Powertrain Focused Median CV Powertrain Focused Median Diversified with PT Exposure Median Non-PT Supply Median (Adjuste
Slide 21: Reconciliation of Net Income to Adjusted EBITDA and Adjusted EBIT
($ in millions) FY 2022 FY 2021 FY 2020 Net income - GAAP $390 $495 $80 Interest expense, net of interest income 6 82 76 Tax (benefit) expense 106 43 39 Depreciation 84 92 86 EBITDA (Non-GAAP) $586 $712 $281 Reorganization items, net 3 (125) 73 Stock compensation expense 11 7 10 Repositioning costs
Slide 22: Reconciliation of Operating Cash Flow to Adjusted Free Cash Flow
($ in millions) FY 2022 FY 2021 FY 2020 Net cash provided by (used for) operating activities (GAAP) $375 ($310) $25 Expenditures for property, plant and equipment (91) (72) (80) Net cash provided by (used for) operating activities less expenditures for property, plant and equipment (Non-GAAP) $284 (
Slide 23: Quarterly Reconciliation of Net Income to Adjusted EBITDA
($ in millions) Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q4 2022 Q2 2021 Net income - GAAP $11 $26 ($105) $409 $63 $128 $88 $85 $105 $112 $390 $341 Interest expense, net of interest income 19 23 20 23 24 15 (4) 8 (9) 11 6 85 Tax (benefit) expense (1) 28 24 30 2
Slide 24: Reconciliation of Liquidity, Long-Term Debt to Net Debt
($ in millions) Q4 2022 Q2 2021 Cash and cash equivalents $246 $401 Undrawn revolver credit facility 475 261 Total Liquidity (Non-GAAP) $721 $662 Long-term term debt $1,148 $1,204 Short-term term debt 7 5 Deferred financing costs 31 38 Gross Debt $1,186 $1,247 Series B Preferred Stock - 585 Less: Ca
Slide 25: Reconciliation of Net Sales Growth to Constant Currency
2023 Full Year Low End 2023 Full Year High End Reported net sales (% change) (1%) 7% Foreign currency translation (2%) 1% Net Sales Growth at Constant Currency (Non-GAAP) 1% 6% Full Year 2023 Outlook Reconciliation of Net Sales Growth to Net Sales Growth at Constant Currency
Slide 26: Full Year 2023 Outlook: Net Income to Adjusted EBITDA
($ in millions) 2023 Full Year Low End 2023 Full Year High End Net Income (GAAP) $255 $300 Net interest expense 103 103 Tax expense 80 95 Depreciation 89 89 EBITDA (Non-GAAP) $527 $587 Non-operating income 1 1 Stock compensation expense 19 19 Repositioning charges 8 8 Adjusted EBITDA (Non-GAAP) $555
Slide 27: Full Year 2023 Outlook: Cash Flow to Adjusted Free Cash Flow
($ in millions) 2023 Full Year Low End 2023 Full Year High End Net cash provided by operating activities (GAAP) $390 $490 Expenditures for property, plant and equipment (90) (90) Adjusted free cash flow (Non-GAAP) $300 $400 Operating cash flow conversion 153% 163% Adjusted free cash flow conversion
Slide 28: Copyrights
Copyrights © 2021 Garrett Motion Inc.