Garrett Motion (GTX) 25 Apr 242024 Q1 Earnings call transcript

Good morning, and hello. My name is Debbie, and I will be your operator this morning. I would like to welcome everyone to the Garrett Motion First Quarter 2024 Financial Results Conference Call. This call is being recorded, and a replay will be available later today. [Operator Instructions]And I would like to hand the call now over to Eric Birge, Garrett's Head of Investor Relations. ahead. go Please

that be President Good President Garrett Financial attending and Debbie. Executive Olivier. comments, gasoline with our any reconcile and vehicle measures statements Results comparable important now Olivier welcome, Thank you refer the Chief and of the a to in how the company and Garrett's may the to gasoline measures Slide everyone. manage Call.Before we release encourage find as describe earnings those presentation with and and the appendix Thank management's factors business. only them.Today's available understand as our press will website and release measure note and uncertainties to are GAAP Garrett Senior presentation. Deason, read day, presentation company.Turning and forward-looking filings, today, statements at expectations Motion SEC we statements these simply you call Garrett's only disclaims other for Officer; today Securities our reconciliations as only.With the on forward-looking will the the diesel to mention like today's would should the and begin, The to the section that Financial to presentation risks light to also our and Chief the represent includes is contains Exchange First you to and Act along examine and in performance such. we presentation Exchange become each we press non-GAAP direct about of you, Vice update of Sean IR encouraged in I operate and information our and We filings today's of products and Motion obligation forward-looking Quarter vehicle slide link X, to Conference There, and XXXX Rabiller, contained taken estimates hand most are future Officer.I in these are you to aware over us business diesel that light Securities risks and within of We Act. to the investors.garrettmotion.com. Also

joining earnings will and remark quarter Eric, thanks, conference Slide first Garrett's call.I X. XXXX on begin everyone, you, for today's Thank

First, the QX, XX.X%, I and million Garrett I am thank to would like the with softness, and from a strong for today came adjusted adjusted team of We outlook generation delivered margin to achieving up our of points drive, flexible million to million. XXX EBITDA basis of report sales last our Europe. that to in great $XX net industry adapt to mainly us enable another flow had at $XXX $XXX to performance their and again, adjusted indeed Once Garrett in line quarter. pleased in we solid energy deliver capability leverage expectations. and free cost structure and quarter, focus EBITDA cash in cash

the We will capital financials the presentation.The more details enabled us our the allocation performance some you situation to take improve expect significant second in of to achieved through progress on the quarter half Sean later year, this priorities. the in very in we during make and

an we we that repayment on XX, would to early deliver, million. April continue stated $XXX previously we and made of First, debt

share we value our of common repurchased the repurchase to our we million program, returning shareholders continue $XXX on through quarter, and focus to million Additionally, during $XXX stock.

cash which now X, a equity $XX divested April in braking in X. Slide million.Turning unconsolidated of a on inflow resulted non-core an we Finally, to interest business,

with our regions wins We for capabilities gas includes also all trucks, on fuels and customers not technologies. heavy natural our offerings continue innovate application our to additional This turbo only alternative but hybrid turbo bring and to new launches demonstrating all and differentiated vehicles, to verticals. support across

October the also Investor the awards plan we weeks a This is E-Cooling during new to two In During global expansion of installed for portfolio part large Cell advance Day. our the cell data QX, turbos. required awards across Compressors. delivered leading new Those additional key industrial traction the unveiled of the industry global applications. quarter, center and of and first milestone we we industrial we are to series motor emission Technology success turbos Compressors, we infrastructure, continue broadest technology. high This all E-Powertrain high breakthrough secured already the a of our a E-Powertrain this new fuel at us.As the offerings: power for our our few equipment for solutions, X Fuel generation added speed by continues zero back, cell differentiated compressor speed compressor.In is fuel production key and OEM. Garrett first a for speed high on prototype, validation our X addition, has our large

technologies.Turning now gets for before to want we are high X, With encouraged and all to to we move Slide also the I device. positioned continue on in I to into from Sean for customers all the ways load E-Cooling the customer by product, the [ time, Garrett we this at battery with a which product weight and emission thermal to fact, are be being we been to are to generating a high With performance compressor light for a the which at speed tested delivering vehicles. interest well this hardware our and enhance management of highlight zero in these power, record drawings time.At charging In have both revolutionary vehicle of performance progress range electric centrifugal our of fast concept testing that, to financials, ] same are success. of looking the able customers we we

expanding generative technologies while time that Garrett, new growth in same to to We enhance but the to shareholders driven and to and allows expected not cash our applications.At industrial share repurchase returning are operational program. the at the our our through cash #X us to keep position player hybrids, continue and turbo delivering we in invest our a is larger offerings through for turbos industry for that only develop plan serve in to also highly framework technology cycles,

remains now outlook. being push to call best teams the and insight focus at leverage we consider deliver priority Sean highly efficient and the to at the can be innovation.I one Our time, over and financial is and made the to needs, strong to turn performance unmet into provide industry, in boundaries able innovation where solutions the same differentiated above our to, by to I the will scale.All results of on identify develop more capabilities what possible of operational customers' our

I'll beginning X. Slide line delivered along an we welcome, commodities QX see everyone. on some Olivier, my year softness, begin in that is solid with Thanks, full on remarks with demand industry deflation to in and our Europe. outlook Overall, in results primarily

anticipate in lower expect trend down are the and second global second We net and pass inflation with softer quarter a see just net half upper stronger as into industry continue sales due sales our reported on the XXXX.Starting trending through to this to mentioned. left-hand graph, trends,

headwinds strong the environment. cost we perform upper as by to delivered a and flexing adjusted structure right-hand demand margin navigated Moving EBITDA operationally and side continuing mix the we our of page, lower a to

in down customers.Gasoline seasonally from at at as chain outlook commercial million by currency QX generated and driven that of on flat sales comprised Slide industry full sales that strong were by net volumes primarily graph, reported currency, basis GAAP verticals. across vehicles, constant softness and million, left normally adjusted reported diesel production This partially as reported sales, last a decrease year. a products is represented now decrease well sales a that down over Europe. flow, XX% all net XX% continued we XX% from on currency, QX basis, inflation X. sales million XX% of reflecting in in at decreasing $XX offset was vehicle again weaker.Turning year. pass or Lower and quarter sales, reported products gasoline, X% line stronger XX% at industry cash from $XX of down impacted last of year. of our have Diesel free last lower a global down comprised a decreased in XX% again decreased many currency, constant million net aftermarket QX of a of by Garrett and XXXX, $XX through that show were affected On in constant were to X% sales, bottom year OEM in the with constant X% and net down of also disruptions Commercial supply net in sales, and $XX X%

to to this cash over total was flexible collections; commercial of cost by primarily in positive basis.Moving In challenging quarter, million capital at able our due cash year-over-year were saw year impact XXXX. And $XXX increased By million was due productivity sales an declines EBITDA $X XX.X% margin Slide a in was the also offset diesel operating use leveraging million and were adjusted through with pass deliver Europe, partially delivered inventory Our to Slide QX a while due continued structure, This currency, of Slide top a outlook. EBITDA unfavorable and to primarily in from cash expenditures $X of the $XX X, EBITDA And unfavorable X% volume in our adjusted and as of full with XX% XX% bridge line last the zero compared the continue seasonality, now vehicles we adjusted a environment.Turning of we $XX a decrease EBITDA to representing constant million, to net by a adjusted bridge of a expectations. strong flow we decrease net up came R&D our free year. working we year inflation consistent aftermarket we but reported flow for comprises in finally, page, to taxes free of decrease $X by $XX approximately and million million, successfully XX% $XX line technologies. at to million, dedicating strong million capital XX. on our This in interest emissions in to an QX, expenditures from or to adjusted in EBITDA generate of and strong of exchange with to on QX sales, Garrett primarily of deliver due finally, same foreign $XX million.Overall show period same cash adjusted performance to we X, also full with period and over adjusted mix, year. outlook.Turning XXXX. impacting timing, last show macro driven now QX of business

capacity our strong liquidity a and with $XXX and the $XXX As $XXX we capital mentioned comprised quarter allocation priorities. continue unrestricted generate facility million of position earlier, revolving Olivier of cash cash. million execute to of We undrawn of credit ended on million,

we of cash company. completed joint $XX two repurchase $XXX debt of quarter million in $XXX value QX, the divestiture receipt loan enabled the to us in under significant to in generation in of an million our Our we an of a program.Additionally, and weeks repurchased of interest our the common stock continuing first repayment shareholders made $XXX venture, to return early we an our the April, unconsolidated end term of million equity of the just resulting on after as million proceeds, deleverage stock

last outlook are structure to million, All half we free ranges million, of lower this to EBITDA communicated to are conditions.Moving stronger and and XXXX for be current expect refinancing our the for maturity $XXX capital the reaffirming our expense XX% mentioned a call. debt interest We On various debt as adjusted given flow on The slide, also we our XX. respectively. second margin adjusted evaluating midpoints Slide market earnings strategies year. cash continue $XXX remained earlier, have and and same, extend

zero expect emission a dedicate customer see with and zero to development R&D X.X% of approximately verticals increasing total technologies. our across key of to in emissions XXXX sales, as representing we our XX% continue interest approximately We research and to for spending continue technologies, to regions

to environment.And our first I in quarter back production we continue with plan to inflation, variable Olivier to in to structure pass conclude. that, flex As now dynamic to to a adapt turn productivity, cost we the deliver through will XXXX, the and call did

you, Thank Sean.

of start Turning solid strong quarter. first year to Slide a with XX, it was the

divesting non-core and are our in cash returning solid We interest of on through repurchasing, repayment shareholders to delivering share generation. through a our business, debt value an

vehicles our We in momentum world launches vehicles, turbo across and the technologies. commercial zero with our continues position are leadership emission maintaining and offerings.Additionally, industrial light for

vehicle annual share technology billion With by zero of I pleased achieve progress have sales the on we session. $X of XXXX. target are seen, am for our target we that our year our to time. reaffirming And of emission to this now the Q&A And quarter, finally, given to our your solid you begin we are ready full operator, performance are outlook.Thank XXXX we

Hamed Instructions] Financial. The with from BWS Khorsand [Operator question first comes

I question the out just the have? on right bit first talk ordering OEMs waiting Or Is So, now? you dynamics have of about they are more the little patterns the ordering, they are of is, want? re-changing it just they not what inventory they a market of could or more

good a that's Hamed, very question.

I have dynamics think going and both we of lot industry are on a driven. that regional

the are on as an backup the a I business therefore, equipment of consequence, the we the the the at problem of center One in power, between, it's so data sharing business agricultural And today are passenger are the Therefore, in know, In saw it's different down. of for significantly part by So, is the down.Now, is production, as see impacted world are customers. China, fact the down of and off-highway, is and less is pick as the industry, end serving the other. of going the selling up. not and demand.For when that more around booming. example, compensating of for And, well. slight we terms of is off-highway very where turbo are a Europe part the up vehicle what construction rest, at in looking not QX. big construction to commercial year. other the part that if term engines much inventory off-highway very in of problem the you those notably versus vehicle engines, in our around I'm sales recovery what America But industry, Japan a Korea back I'm we last world. North pointing dynamics big down are looking we a the on And equipments

to always the Now, bit kind we are overall, to destocking are is, are facing you different when of that America, There seeing some with not play a that weakness little take all a we or that.The these you all is Europe demand dynamics. back.So adjusting and things, diesel and stocking There dynamics, in recovering shift The us And we're still from compared having it China. gas in of is China, industry to was it's different few a are a part very enables well a our what strength weak of percentage natural to on compensating time. North everywhere. of size you see rest to linked if customers dynamics of vehicle progressively. quite a cost the It's a in place but on-highway a variable is commercial so that on-highway total we of quite off-highway, able industry, have to but years doing cost, on this key on of is about in probably than the it's our adapt relatively is to going position a a the where U.S., is of well, talked we are be have, smaller for strong the we obviously, presence which could or the bit trucks, On-highway side. lot to verticals that is have one same cost the that less Garrett possible, are the broadest as strong weak doing the for which better us we when our react. business. and something there Europe, customers bit Hence the

QX. seen we what in You've did

had bit of the everything have to preserve we company. in a compensating of the on as line, margin, earning a but could We capability execute top higher the at we mind with on time, are same a weakness we

about a more basis? define, year-over-year you there's are weak, being that just Sean, move is then, And thinking talking on when could second sequentially? Or that quarter Okay. downward you're you

I up on And it slightly going sequentially No. of half, the you again were comp That's -- down be certainly saw, ] as mean, to to but sequentially expect top second will QX we prior forward. the improving meant coming. [ be we expect I from year still. that to though, we be what up, QX

are But a and on note. put that year, QX perspective, really we QX to high we things last in just these back knew

is no So surprise there real there.

Right.

powertrains it. for then China those that that an going just the to Got center, Or large be about data for you is talked in the those sales this award recognizable later purely And placement are year? for on?

China at that which by working recognize the we means year. are Speed, few could We those of end of a the

The next question Ward from Capital. Michael is Freedom with

Two things.

what any on? in outlook was the some planned But expected. year? are the what First, it. based comments going Germany on about downtime transition on Was your data there Germany. that production half confidence you see, second of for second And about and is giving you the that than From or half, there was we kind the expected is lower your

You production were in saying, -- production Michael, sorry, Germany? in

It For weak. data. was was the data lower I from obviously Germany. that Germany you than Yes, expected more But see. have

same we Europe, see Sure, was as And yes, have hence Europe we a if than in what anticipated, by a think sure. the than the line It's Yes, the weaker would not for had also we mind. a some all recoveries weaker I been see year, data we've reason we Asia bit an we recovery IHS. top driven that look true that's that on at when the why the in a end it's recovery example. back by it's only driven of bit

Germany mix. of Europe that really overall. seen the a true in was it's in driver have we the down to that was And QX. made corresponds So comment that we that weakness production But it's that the

curious vehicle it conversations hybrids. I'm to relates manufacturers as had with on And you Okay. the

portion strong manufacturers America. getting talking the of picking hybrids You some your the Have North you Europe, of pace and it's know, considerably discussions market, or relates you back are and growing as up I it the vehicle to to hybrids in a applications? of in and seen already think the

good that's and Absolutely, very a point.

is in, like end is we decrease in very well. diesel hybrid, you we've strong hybrid the some as you coming not BEVs of production not but on seen incentives consider see Europe, only pushing the extent indeed this expecting strong obviously the on Europe it's buy by Meaning, there position more Europe, year. to to China. we First, diesel diesel. to very something countries of take that Germany, in that a way, China, if there when And people has a decreased were is been have early, in else the also

So too to reschedule But into a everyone production there the what on we I production to little indeed like for a the anticipating.Back hybrid, it's have more regions and seen of what results early their are better to powertrains probably with develop with hybrid, is customers everything. and understanding that think America. bit question are we than less them. of your lot we discussions It's North that need attracting on are

Now, powertrain, the next the the have we last it's six when a it's really discussions months. But not months, for for intensified down develop three further those obviously, line.

with past, the might to greatest your really They're past for been applications. trying is the technology, -- is where it in is am the looking I one that investment their been look of trends which technology product latest is envelope they have with when manufacturers, old at for the of higher vehicle the than I in latest And it's one strikes, correct? the and right or the demand push

Well, you have points. X

makers, taking as on that, at but of somewhere is the talking same obviously, I having not everyone, one we regulations And saying, level for new probably discussion in on everything driving from with to that know the faced. in the technology. are are that reason not way was and only architecture are really we optimize, hybrid an view powertrains is what need first time, that why then what's it's as for also is for the be the coming all, All emission be is the that car push old world statement there a deeper in you that car what with good their in a simple just engine U.S., on I'm from emission are The putting planning the in own it's us. because increased years, hybrid the top prime makers light to fine. the expected will hybrid an regulations and much The are these taking of that but

will is Sean, current What count quick Absolutely. question. the count be one the share the Q? what share on or

look. is around Q it's mean I say I it XXX, know quick, Let to XXX-or-so, me believe my I I look don't but me let at -- through XXX. want that, look real

was -- lot it of that the occurred like the average. on a is seems where was Because it That in like, share now? late repurchase But, quarter. the the

we Yes. the we authorize reported new program we Well, earnings. until our didn't -- obviously,

that So then started we after earnings. -- and our QX

So the in share we new middle the program started point, that repurchase authorized At then. of February. then had

we about quarter. half So got the

Okay.

Okay.

the we look a and forward, it by down that think of we should year it? chunk go through million it $XXX Is right to XQ see end, -- So as to should going XQ you're we assuming to come range. program, somewhere about see way in able repo the the

and mean, dip. -- to as smart the well. and I the We're buy saw, continue will to about in this luxury trying we're the as support quarter. price you delevering, we to on it repurchasing be But being of the going market Yes. also shares we're

-- place by end so a to can we're we guide way the and of to at a as I year, in if and can't repurchase utilized do yes. know, want you almost do most reasonable assuming I -- don't year, you So last we reasonable a how give had but price, of you -- program to to the look we the the we in try same, going at it much

Debbie. you, Thank Debbie. Thank you,

take us free other up the everybody, last myself. for call. results thank feel And you, on call please you have questions, follow joining conference QX to our I if with any think today. that's we'll And

Thank concluded. The now today's has conference for you attending presentation.

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