Garrett Motion Inc. · NASDAQ:GTX
Garrett Motion — Investor Day (October 2023)
63 slides from Garrett Motion's investor day presentation, Oct 24, 2023
Slide 1: Garrett Motion: The Next Chapter
GARRETT MOTION: THE NEXT CHAPTER 24TH OCTOBER, 2023
Slide 2: Forward Looking Statements
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Forward Looking Statements This presentation contains “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 19 95. All statements, other than statements of fact, that address activities, events or deve
Slide 3: Today's Agenda
Confidential | Copyrights © 2022 Garrett Motion Inc.3 10 am Welcome to Garrett Eric Birge Head of Investor Relations Introduction & Next Chapter Olivier Rabiller President & Chief Executive Officer Strategy & Growth Roadmap Pierre Barthelet SVP Strategy & Advanced Technology Craig Balis SVP & Chief
Slide 4: Today's Presenters
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Pierre Barthelet SVP Strategy & Advanced Technology 25 Years Industry Experience 22 Years at Garrett / Honeywell Today’s Presenters Olivier Rabiller President & Chief Executive Officer 28 Years Industry Experience 21 Years at Garrett / Honeywell
Slide 5: Confidential | Copyrights © 2022 Garrett Motion Inc.3
Confidential | Copyrights © 2022 Garrett Motion Inc.3
Slide 6: Introduction & Next Chapter
INTRODUCTION & NEXT CHAPTER Olivier Rabiller
Slide 7: Our Mission
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Our Mission Garrett is a cutting-edge technology leader delivering differentiated solutions for emission reduction and energy efficiency. We are passionate about innovating for mobility and beyond.
Slide 8: Garrett: Global Leader and Innovation Powerhouse
Confidential | Copyrights © 2022 Garrett Motion Inc.3 26% 41% 19% 12% 2% Technologies Offering2022 Revenue Breakdown Garrett: Global Leader and Innovation Powerhouse Key Statistics 13 State-of-the-art Manufacturing Facilities ~1,250 Engineers ~1,700 Patents Issued or Pending North America Diesel Gas
Slide 9: We Contribute to a Sustainable Future
Confidential | Copyrights © 2022 Garrett Motion Inc.3 We Contribute to a Sustainable Future… We develop differentiated solutions for sustainable mobility Cleaner, More Efficient vehicles Culture of Innovation Our professional global team is at the heart of our success Responsible Operations We opera
Slide 10: Decarbonizing Mobility for 40+ Global OEMs & Aftermarket
Confidential | Copyrights © 2022 Garrett Motion Inc.3 …Decarbonizing Mobility for 40+ Global OEMs & Aftermarket All images are embedding Garrett products currently in production Light Vehicles On-highway commercial vehicles Off-highway commercial vehicles & Industrials Large bore engines for PowerGe
Slide 11: Leader in Turbo, a more resilient industry than ICE
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Leader in Turbo, a more resilient industry than ICE Turbo tech: longer tail than ICE Garrett leadership expansion • #1 Turbo Industry Leader • >50% new business win rate on average since 2018 • Broadest portfolio of Turbo technologies for Light V
Slide 12: Consistently generating strong cash flow
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Consistently generating strong cash flow $367 $313 $350 - $400 2021 2022 2023 Robust and predictable Adjusted Free Cash1 Flow Annual Adjusted Free Cash Flow ($M)1 and Adjusted Free Cash Flow Conversion (%)1 Outlook 60% 55% ~60%2 16.7% Adj. EBITDA
Slide 13: Leveraging key capabilities to focus on high-value ZEV products
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Leveraging key capabilities to focus on high-value ZEV products High-speed Oil-less Fuel Cell Compressor High-speed E-Powertrain Turbomachine High speed motor High switching speed power electronics Controls Software High-speed Oil-less E-Cooling
Slide 14: Garrett right to win in ZEV: why we are different
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Garrett right to win in ZEV: why we are different High-speed Oil-less Fuel Cell Compressor High-speed E-Powertrain High-speed Oil-less E-Cooling Compressor Why Customers are excited Why it is difficult to replicate for others • Need multi-domain
Slide 15: Garrett best in class financial metrics
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Garrett… best in class financial metrics Source: Capital IQ as of September 8, 2023 and Garrett 2023 Outlook 1 See Appendix for reconciliations of the Non-GAAP measures 2 Based on midpoint 2023 guidance 3 PV Focused Auto Suppliers Peers include B
Slide 16: Investor Takeaways
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Investor Takeaways #1 Turbo player, leader in a technology-driven industry, consolidating and more resilient than ICE overall; Still investing in new Turbo technology and expanding to industrial app’s Industry Leadership Resilient & highly profit
Slide 17: Strategy & Growth Roadmap
STRATEGY & GROWTH ROADMAP Pierre Barthelet Craig Balis
Slide 18: The Automotive Industry, Transforming: one tech does not fit all
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Turbo Industry solutions Zero Emission Vehicle Industry solutions The Automotive Industry, Transforming: one tech does not fit all Internal Combustion Engine Vehicles Zero Emission Vehicles H y b ri d s (“ E le c tr if ie d ” ) B a tt e ry E le c
Slide 19: From ICE to Zero Emission Vehicle: adoption curve
Confidential | Copyrights © 2022 Garrett Motion Inc.3 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Jefferies (H2 2022) S&P Mobility (09/2023) Garrett Industry model McKinsey (2023) PWC (H2 2023) Goldman Sachs (H2 2022) Morgan Sta
Slide 20: Garrett targeted industries revenue pool evolution
Confidential | Copyrights © 2022 Garrett Motion Inc.3 $5B $6B $6B $6B $8B $8B $6B $4B $9B $30B $47B 2022 2027 2030 2033 Commercial Vehicle, Industrial, Aftermarket Light Vehicle Turbo ZEV products Not addressable/ not targeted Turbo industry more resilient than “ICE”; ZEV growth ramp-up Garrett targ
Slide 21: Garrett strategic growth framework
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Garrett strategic growth framework Grow Commercial Vehicles, Industrial, Aftermarket 67% 33% 2022 2027 2030 34% 32% 34% 2033 ZEV products Light Vehicle Turbo Products Commercial Vehicle, Industrial, Aftermarket Turb, Other Apply technology for el
Slide 22: Light Vehicle Diesel, Gas & Hybrid technology
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Variable Nozzle Turbine (VNT) Wastegate E-Turbo E-Compressor Light Vehicle Diesel, Gas & Hybrid technology • Light Vehicles Turbo industry starting to “polarize” ▸ ICE/hybrid engines still being designed & launched ▸ Few “partners” can deliver te
Slide 23: CV & Industrial Turbo Business Importance & Runway for Growth
Confidential | Copyrights © 2022 Garrett Motion Inc.3 31% Commercial Vehicle, Industrial & Aftermarket contribution to sales in 2022 • Commercial vehicle, industrial & aftermarket products are Higher margin & contribute to earnings on an outsized basis ▸ Stable earnings stream ▸ Long lifespan projec
Slide 24: Investing Efficiently to Drive Long-Term Profitable Growth
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Investing Efficiently to Drive Long-Term Profitable Growth 400+ Engineers Dedicated to Electrification Today 2015 2016 2017 2018 2019 2020 2021 2022 >50% Of Engineering Investment In-House Design High-Speed Motors, Inverters, Software Overview of
Slide 25: E-Boosting: the capability bridge
Confidential | Copyrights © 2022 Garrett Motion Inc.3 E-Boosting: the capability bridge • Our core technologies enable us to bring disruptive solutions, hard to replicate by others • We have launched ZEV products & components and continue improving our cost base ▸ We developed in-house inverters and
Slide 26: Successful Innovation Shift to Electrification Technologies
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Successful Innovation Shift to Electrification Technologies Turbomachines for Air Compression High precision design & assembly, high speed balancing, and ability to operate in harsh environments across multiple use cases Withstands temperatures u
Slide 27: Unique Capabilities & IP Pushing Innovation Boundaries
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Unique Capabilities & IP Pushing Innovation Boundaries 1st to Introduce Fuel Cell Compressor Technology to the Industry, now Delivering 3rd Generation Rotor rides on an air film 20 times thinner than human hair Advanced Controls calculates rotor
Slide 28: Garrett Technologies for Zero Emission Vehicles
Confidential | Copyrights © 2022 Garrett Motion Inc.3 E-Cooling Compressor for Electric Vehicles Crucial component in EV thermal management; circulates refrigerant fluid to cool the battery, E-Powertrain and cabin Garrett Technologies for Zero Emission Vehicles Fuel Cell Compressor for Hydrogen Vehi
Slide 29: Fuel Cell Compressor: efficient and durable
Confidential | Copyrights © 2022 Garrett Motion Inc.3 -10% Power Consumption 40% Downsizing Fuel Stack -30% Weight Reduction 2x220-800V Power architecture compatible More durable Fuel Cell Compressor (FCC): efficient and durable To drive100 km a Fuel Cell Electric Vehicle consumes …1kg of Hydrogen …
Slide 30: Fuel Cell Compressor Results so far
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Fuel Cell Compressor (FCC)... Results so far 5 Series Production Contracts Won PORTFOLIO: 4 FC COMPRESSOR FAMILIES FCC15 for cars & light commercial vehicle FCC22 for buses & medium-duty trucks FCC25 for heavy duty trucks FCC32 for off highway &
Slide 31: High Speed E-Powertrain: Higher Power, Smaller Package
Confidential | Copyrights © 2022 Garrett Motion Inc.3 High Speed E-Powertrain: Higher Power, Smaller Package Existing E-Powertrain Technology Garrett High Speed E-Powertrain -50% Packaging Size Reduction -40% Weight Reduction -35% Rare Earth (magnet & copper) Content Reduction Best In Class60% Conti
Slide 32: High Speed E-Powertrain Results so far
Confidential | Copyrights © 2022 Garrett Motion Inc.3 High Speed E-Powertrain... Results so far 2 Pre-development Contracts Won PORTFOLIO: 3 E-POWERTRAIN FAMILIES 130kW for small SUVs, compact sedan 250kW for SUV, Premium, Light Commercial Vehicles ~400kW for High Performance & Pick-up 15+ Customers
Slide 33: E-Cooling Compressor: step change in cooling & heating power
Confidential | Copyrights © 2022 Garrett Motion Inc.3 E-Cooling Compressor: step change in cooling & heating power -20 -15 -10 -5 0 5 10 15 20 25 30 35 40 45 0 10 15 20 25 30 GTX compressor 30 mm wheel dia Scroll compressor 60 cc Heat pump Cooling +160% +70% … bringing breakthrough in performanceA n
Slide 34: E-Cooling Compressor Results so far
Confidential | Copyrights © 2022 Garrett Motion Inc.3 E-Cooling Compressor... Results so far 3 Pre-development Contracts Won PORTFOLIO: 3 E-COOLING COMPRESSOR FAMILIES 15-25kW for Light Vehicles 25-35kW / 45000h durability for Commercial Vehicles 40-60kW / 15 years for industrial usage 20+ Customers
Slide 35: Confidential | Copyrights © 2022 Garrett Motion Inc.3
Confidential | Copyrights © 2022 Garrett Motion Inc.3
Slide 36: In short: Our solutions are designed to disrupt the industry
Confidential | Copyrights © 2022 Garrett Motion Inc.3 In short: Our solutions are designed to disrupt the industry If you can achieve this power density at reasonable price, it will be a game changer. Asian OEM ” Garrett is most advanced in high speed, we strongly believe in this solution to reduce
Slide 37: Garrett's Robust & Differentiated Zero Emission Pipeline
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Garrett’s Robust & Differentiated Zero Emission Pipeline Fuel Cell Compressor E-Powertrain E-Cooling Compressor Garrett Technology Advantage… • Unique high-speed motor & controls electronics technology • Best in class aerodynamics, including turb
Slide 38: Founded on unique set of capabilities & IP difficult to acquire
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Founded on unique set of capabilities & IP difficult to acquire 65y exp. with air compression turbomachine Unique ultra high-speed electric motor High switching freq. power electronics Unique high- speed sensor- less controls High speed and oil-l
Slide 39: Boosting Attractive Zero Emission Business
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Boosting Attractive Zero Emission Business 1 Includes pure EV and hydrogen fuel cell electric vehicles ~$350M Already Awarded Lifetime Revenue of Zero Emission Vehicle Contracts ~$1B 1 2030E Zero Emission Vehicle Revenue % Margin At or Higher tha
Slide 40: Financial Outlook
FINANCIAL OUTLOOK Sean Deason
Slide 41: Delivering better profitability & cash flow performance vs. peers
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Delivering better profitability & cash flow performance vs. peers 14% 9% 8% 11% 7% GTX PV Focused Auto Suppliers CV Powertrain Focused Broader Industrials Garrett Proxy Filing Peers Set 87% 55% 73% 75% 60% GTX PV Focused Auto Suppliers CV Powertr
Slide 42: Significant opportunity for appreciation of valuation
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Significant opportunity for appreciation of valuation • Garrett is >30% CV, Industrial, and Aftermarket in sales • Leverage comparable to peer groups and reducing quickly • Active buyback program ongoing Sources: Capital IQ as of October 17, 2023
Slide 43: Strong future sales visibility drives predictable core earnings
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Strong future sales visibility drives predictable core earnings Projected OEM Sales Already Awarded 1 Strong future OEM sales line of sight Key business attributes enable resilience Diversified Customer Base, with >30% of sales in Commercial Vehi
Slide 44: Track Record of Attractive Profitability and Cash Flow Generation
Confidential | Copyrights © 2022 Garrett Motion Inc.3 $583 $440 $607 $570 $615 - $645 Adjusted EBITDA1 Adj. EBITDA Margin1 Track Record of Attractive Profitability and Cash Flow Generation 16.7% 15.8%17.9% ~16.0% 14.5% 1 See Appendix for reconciliations of the Non-GAAP measures Adjusted EBITDA1 $M 2
Slide 45: Technology-driven mission provides long term profitable growth
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Technology-driven mission provides long term profitable growth Garrett Sales2 …While Growing Beyond LV TurboApplying Our Financial Framework… Capex as % of Net Sales< 3% Adj. EBITDA Margin1> 16% R&D as % of Net Sales< 5% Free Cash Flow Conversion
Slide 46: Industry Transition Driving Greater Content & Higher ASP
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Industry Transition Driving Greater Content & Higher ASP x2 E-Turbo x2 Variable Nozzle Technology (VNT) x1.2-1.3 New ZEV TechnologiesAdvanced Turbo Technologies Waste Gate (WG) technology Core Tech x1-2 x2-3 x5-10 100-400$ x1-5+ x2 E-Cooling Comp
Slide 47: Strong Liquidity and Capital Structure
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Strong Liquidity and Capital Structure $732M Total Liquidity incl. undrawn revolver Stable Ba2 (Moody’s) BB- (Fitch) BB- (S&P) Ratings 2.3x Net Leverage Ratio1 $72M Remaining Share Buy Back Program $1.7B Total Debt consisting of our Term Loan B O
Slide 48: Building blocks for value creation
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Building blocks for value creation 1 See Appendix for reconciliations of the Non-GAAP measures • 2023 Outlook of ~16% Adjusted EBITDA margins1, $350M+ adjusted FCF1, even after $100M+ electrification investment • Track record of consistently deli
Slide 49: Closing Remarks
CLOSING REMARKS Olivier Rabiller
Slide 50: Investor Takeaways
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Investor Takeaways #1 Turbo player, leader in a technology-driven industry, consolidating and more resilient than ICE overall; Still investing in new Turbo technology and expanding to industrial app’s Industry Leadership Resilient & highly profit
Slide 51: Q&A and Booth Visits
Q&A AND BOOTH VISITS Meet the team!
Slide 52: What You Can See During The Break-out Session
Confidential | Copyrights © 2022 Garrett Motion Inc.3 E-Powertrain Nils Martens, Hamid Bouaita E-Cooling Fred Gerard, Rob Cadle Aftermarket Eric Fraysse, Anthony Lodato Turbo CV & Industrial David Degrange, Geoff Duff Fuel Cell Compressor Lutz Glaeser, Martin Murray Turbo LV, E-Turbo Lorrain Sausse,
Slide 53: Appendices
Appendices Investors Media Eric Birge Maria Santiago Enchandi +1 (734) 228-9529 +1 (734) 386-6593 Eric.Birge@garrettmotion.com Maria.SantiagoEnchandi@garrettmotion.com
Slide 54: Industry size: Turbo, ZEV and selected ZEV products
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Zero Emission Vehicle Total Industry >$1.6T3 ZEV Industry on selected products >$100B4 Turbo Total Industry ~$18B1 1) Including captive Turbos and Low-speed Turbo in non-automotive industries (https://www.vantagemarketresearch.com/industry-report
Slide 55: Reconciliations
Reconciliations Investors Media Eric Birge Maria Santiago Enchandi +1 (734) 228-9529 +1 (734) 386-6593 Eric.Birge@garrettmotion.com Maria.SantiagoEnchandi@garrettmotion.com
Slide 56: Reconciliation of Net Income to Adjusted EBITDA and Related Ratios
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Reconciliation of Net Income to Adjusted EBITDA and Related Ratios ($ in millions) YTD Q3 2023 FY 2022 FY 2021 FY 2020 FY 2019 Net income $209 $390 $495 $80 $313 Interest expense, net of interest income 98 6 82 76 61 Tax expense 70 106 43 39 33 D
Slide 57: Reconciliation of Cash Flow from Operations to Adjusted Free Cash Flow
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Reconciliation of Cash Flow from Operations to Adjusted Free Cash Flow and Related Ratios ($ in millions) YTD Q3 2023 FY 2022 FY 2021 FY 2020 FY 2019 Net cash provided by (used for) operating activities $330 $375 ($310) $25 $242 Expenditures for
Slide 58: Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Consolidated EBITDA LTM
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Reconciliation of Net Income to EBITDA, Adjusted EBITDA and Consolidated EBITDA Last Twelve Months (LTM) ($ in millions) Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q3 2023 Net income - GAAP $112 $81 $71 $57 $321 Interest expense, net of interest income 11 2
Slide 59: Reconciliation of Cash to Liquidity, Debt to Net Debt
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Reconciliation of Cash and Cash Equivalents to Liquidity, Long-Term Debt to Net Debt and Related Ratios ($ in millions) Q3 2023 Cash and cash equivalents $162 Undrawn revolver credit facility 570 Total liquidity $732 Long-term term debt $1,622 Sh
Slide 60: Full Year 2023 Outlook Reconciliation of Net Income to Adjusted EBITDA
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Full Year 2023 Outlook Reconciliation of Net Income to Adjusted EBITDA and Related Ratios
Slide 61: Full Year 2023 Outlook Reconciliation of Cash Flow to Adjusted Free Cash Flow
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Full Year 2023 Outlook Reconciliation of Cash Flow from Operating Activities to Adjusted Free Cash Flow and Related Ratios (1) Based on 243,011,280 shares of Common Stock outstanding as of September 30, 2023, and the Common Stock closing share pr
Slide 62: Full Year 2023 Outlook Reconciliation of Market Capitalization, Enterprise Value
Confidential | Copyrights © 2022 Garrett Motion Inc.3 Full Year 2023 Outlook Reconciliation of Market Capitalization, Enterprise Value and Related Ratios ($ in millions) Low End Midpoint High End Net income $252 $264 $272 Adjusted EBITDA 615 630 645 Adjusted EBIT 526 541 556 Market capitalization (1
Slide 63: Confidential | Copyrights © 2022 Garrett Motion Inc.3
Confidential | Copyrights © 2022 Garrett Motion Inc.3