Garrett Motion Inc. (NYSE: GTX), a cutting-edge technology provider that
enables vehicles to become safer, more connected, efficient and
environmentally friendly, today announced its financial results for the
first quarter of 2019.
| Q1 2018** | $ Millions (unless otherwise noted) | Q1 2019 | ||||
| 915 | Net sales | 835 | ||||
| 704 | Cost of goods sold | 639 | ||||
| 211 | Gross profit | 196 | ||||
| 23.1% | Gross profit % | 23.5% | ||||
| 63 | Selling, general and administrative | 60 | ||||
| 177 | Adjusted EBITDA* | 159 | ||||
| 19.3% | Adjusted EBITDA margin* | 19.0% | ||||
| 113 | Income before taxes | 97 | ||||
| 58 | Net income | 73 | ||||
| 28 | Expenditures for property, plant and equipment | 21 | ||||
|
Dec. 31, 2018 |
$ Millions (unless otherwise noted) |
March 31, 2019 |
||||
|
1,432 |
Net debt* |
1,392 |
||||
|
2.96x |
Net debt to Consolidated EBITDA ratio* |
3.00x |
||||
|
* |
See reconciliations to the nearest GAAP measure in pages 5-12. |
|
|
** |
For the periods prior to the spin-off from Honeywell, the |
“We are off to a strong start in 2019,” said Olivier Rabiller, President
and CEO. “During the first quarter, we maintained our attractive margin
profile, thanks in part to our highly variable cost structure, amid
challenging market conditions which began late last year and continued
at the onset of 2019. We continue to achieve significant productivity
gains while rebalancing our passenger vehicle portfolio as the
percentage of gasoline sales climbed to 29% in the quarter, up 400 basis
points from the prior year. In addition, we increased our aftermarket
and commercial vehicle businesses to 33% of net sales, further
mitigating the impact of short-term fluctuations in auto sales. Going
forward, we expect modest improvement in global automotive demand and
remain on track to meet our previously stated targets for the full year
as we continue to deliver leading vehicle technologies for our global
customers.”
Results of Operations
Net sales for the first quarter of 2019 were $835 million
compared to $915 million in the first quarter of 2018, a decrease of
8.7%. On an organic basis, net sales for the quarter declined 3.2%. The
decrease was primarily driven by lower net sales for light vehicles OEM
products by $68 million ($39 million of which was due to foreign
currency translation). Lower diesel volumes in Europe were partially
offset by higher gasoline volumes stemming from increased turbocharger
penetration in gasoline engines and new product launches. During the
quarter, net sales of commercial vehicles OEM products decreased
slightly by $4 million and aftermarket products net sales declined
approximately $2 million.
Cost of goods sold for the first quarter of 2019 was $639
million, compared to $704 million in the first quarter of 2018. The
decline was primarily driven by decreases in direct material costs and
labor expenses stemming from lower volumes. In addition, research and
development expenses in the quarter were $32 million versus $31 million
in Q1 2018.
Gross profit percentage for the first quarter of 2019 of 23.5%
increased from 23.1% in the first quarter of 2018, primarily due to
higher productivity, partially offset by the impact from product mix and
pricing.
Selling, general and administrative (SG&A) expenses
for the first quarter of 2019 totaled $60 million, compared to $63
million in Q1 2018. As a percentage of net sales, SG&A for the quarter
was 7.2% versus 6.9% in the first quarter of 2018, primarily due to
lower sales.
Other expenses – net for the first quarter of 2019
declined to $19 million from $42 million in the first quarter of 2018.
During the first quarter of 2019, the company recognized $15 million in
legal fees related to its Indemnification and Reimbursement Agreement
with Honeywell.
Net income for the first quarter of 2019 was $73 million,
compared to net income of $58 million in the first quarter of 2018.
Earnings per basic and diluted share were $0.98 and $0.97,
respectively, in the first quarter of 2019, compared to $0.78 per basic
and diluted share in the first quarter of 2018. The weighted average
number of basic and diluted common shares outstanding was 74,229,627 and
75,379,228, respectively, in the first quarter of 2019, and 74,070,852
for both basic and diluted shares in the first quarter of 2018.
Expenditures for Property, Plant and Equipment for the first
quarter of 2019 totaled $21 million, or 2.5% of net sales, compared to
$28 million, or 3.1% of net sales, in the first quarter of 2018.
Q1 2019 Non-GAAP Financial Measures
Adjusted EBITDA for the first quarter of 2019 was $159 million versus
$177 million in the same period in 2018, primarily due to lower revenue,
partially offset by productivity. The Adjusted EBITDA margin was 19.0%
in the quarter versus 19.3% in the first quarter of 2018. For the first
quarter of 2019, cash flow provided by operations minus capital
expenditures was $15 million.
Liquidity and Capital Resources
As of March 31, 2019, Garrett had approximately $689 million in
available liquidity, including $207 million in cash and cash equivalents
and $483 million available under its revolving credit facility.
As of March 31, 2019, net debt totaled $1,392 million compared to $1,432
million as of December 31, 2018, a reduction of approximately $40
million. Net Debt to Consolidated EBITDA (as defined in the Credit
Agreement) was 3.00x as of March 31, 2019 compared to 2.96x as of
December 31, 2018. Garrett’s weighted average stated interest rate was
3.1% as of March 31, 2019, and the company has no significant debt
maturities until 2023.
2019 Outlook
Garrett’s previously stated outlook for the full year 2019 remains
unchanged. The company anticipates between 2% and 4% in organic growth
in net sales, and between $630 million and $650 million in Adjusted
EBITDA, (compared to Adjusted EBITDA of $618 million in 2018 on a
comparable basis) assuming current foreign exchange rates. Garrett is
also targeting Adjusted Levered Free Cash Flow conversion in 2019
between 55% and 60%. The rebalancing of Garrett’s portfolio towards
gasoline products continues and our gasoline business is expected to be
at similar levels as diesel by the end of 2019.
Conference Call
Garrett will host a conference call on Tuesday, May 7, 2019 at 8:30 am
Eastern Time / 2:30 pm Central European Time. The dial-in number for
callers in the U.S. is +1-844-835-9983 and the dial-in number for
international callers is +1-412-317-5268. The access code for all
callers is 10130150. A live webcast and related slide presentation will
also be available at http://investors.garrettmotion.com/.
A replay of the conference call can be accessed through May 21, 2019 by
dialing +1-877-344-7529 in the U.S. and +1-412-317-0088 outside the
U.S., and then entering the access code 10130150. The webcast will also
be archived on Garrett’s website.
Material Weakness in Internal Control Over
Financial Reporting
In accordance with the terms of our Indemnification and Reimbursement
Agreement with Honeywell, our Consolidated and Combined Balance Sheets
reflect a liability of $1,196 million in Obligations payable to
Honeywell as of March 31, 2019, (the “Indemnification Liability”). The
amount of the Indemnification Liability is based on information provided
to us by Honeywell with respect to Honeywell’s assessment of its own
asbestos-related liability payments and accounts payable as of such date
and is calculated in accordance with the terms of the Indemnification
and Reimbursement Agreement. Honeywell estimates its future liability
for asbestos-related claims based on a number of factors.
As previously disclosed in our Annual Report on Form 10-K and our
Consolidated and Combined Financial Statements for the year ended
December 31, 2018, our management determined that there was a material
weakness in our internal control over financial reporting relating to
the supporting evidence for our liability to Honeywell under the
Indemnification and Reimbursement Agreement. Specifically, we were
unable to independently verify the accuracy of the certain information
Honeywell provided to us that we used to calculate the amount of our
Indemnification Liability, including information provided in Honeywell’s
actuary report and the amounts of settlement values and insurance
receivables. For example, Honeywell did not provide us with sufficient
information to make an independent assessment of the probable outcome of
the underlying asbestos proceedings and whether certain insurance
receivables are recoverable. This material weakness has not yet been
remediated.
In consultation with our outside advisors, we are working to obtain
additional information about the Indemnification Liability through a
dialogue and iterative process with Honeywell. We are still engaged in
that process, and it remains a high priority for the company.
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,
expect, project, believe or anticipate will or may occur in the future
are forward-looking statements including without limitation our
statements regarding our anticipated financial performance, expectations
regarding global automotive demand, anticipated growth of our gasoline
business, and projections and explanations regarding our technology
solutions. Although we believe forward-looking statements are based upon
reasonable assumptions, such statements involve known and unknown risks,
uncertainties, and other factors, which may cause the actual results or
performance of the company to be materially different from any future
results or performance expressed or implied by such forward-looking
statements. Such risks and uncertainties include, but are not limited to
those described in our annual report on Form 10-K for the year ended
December 31, 2018, as well as our other filings with the Securities and
Exchange Commission, under such headings “Risk Factors” and “Cautionary
Statement Concerning Forward-Looking Statements.” You are cautioned not
to place undue reliance on these forward-looking statements, which speak
only as of the date of this document. Forward-looking statements are not
guarantees of future performance, and actual results, developments and
business decisions may differ from those envisaged by our
forward-looking statements.
Non-GAAP Financial Measures
This presentation includes EBIT, EBITDA, Adjusted EBITDA, Adjusted
EBITDA minus CAPEX, Adjusted EBIT, Net Debt, Net Debt to Consolidated
EBITDA, Consolidated Debt to Consolidated EBITDA, Adjusted Unlevered
Free Cash Flow, Adjusted Levered Free Cash Flow, Levered Free Cash Flow,
Consolidated EBITDA, Consolidated EBITDA excluding Honeywell indemnity
obligation; Adjusted EBITDA Margin, Consolidated EBITDA Margin, Adjusted
EBIT Margin, Consolidated EBITDA excluding Honeywell indemnity
obligation Margin, Cash flow from operations minus capital expenditures,
organic sales growth and other financial measures not compliant with
generally accepted accounting principles in the United States (“GAAP”).
The Non-GAAP financial measures provided herein are adjusted for certain
items as presented in the Appendix containing Non-GAAP Reconciliations
and may not be directly comparable to similar measures used by other
companies in our industry, as other companies may define such measures
differently. Management believes that, when considered together with
reported amounts, these measures are useful to investors and management
in understanding our ongoing operations and in analysis of ongoing
operating trends. Garrett believes that Adjusted EBITDA, Adjusted EBITDA
Margin, Consolidated EBITDA, Consolidated EBITDA Margin, and Adjusted
EBIT are important indicators of operating performance because they
exclude the effects of income taxes and certain other expenses, as well
as the effects of financing and investing activities by eliminating the
effects of interest and depreciation expenses and therefore more closely
measures our operational performance. These metrics should be considered
in addition to, and not as replacements for, the most comparable GAAP
measure. For additional information with respect to our Consolidated and
Combined Financial Statements, see our annual report on Form 10-K for
the year ended December 31, 2018.
Additional disclaimers
Prior to Garrett’s spin-off from Honeywell on October 1, 2018, Garrett’s
historical financial statements were prepared on a stand–alone basis and
derived from the consolidated financial statements and accounting
records of Honeywell. Accordingly, for periods prior to October 1, 2018,
our financial statements are presented on a combined basis and for the
periods subsequent to October 1, 2018 are presented on a consolidated
basis (collectively, the historical financial statements for all periods
presented are referred to as “Consolidated and Combined Financial
Statements”). The Consolidated and Combined Financial Statements have
been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”). The historical
consolidated and combined financial information may not be indicative of
our future performance and does not necessarily reflect what our
consolidated and combined results of operations, financial condition and
cash flows would have been had the business operated as a separate,
publicly traded company during the periods presented, particularly
because of changes that we have experienced and expect to continue to
experience in the future as a result of our separation from Honeywell,
including changes in the financing, cash management, operations, cost
structure and personnel needs of our business.
About Garrett Motion Inc.
Garrett Motion (www.garrettmotion.com)
is a differentiated technology leader, serving customers worldwide for
more than 65 years with passenger vehicle, commercial vehicle,
aftermarket replacement and performance enhancement solutions. Garrett’s
cutting-edge technology enables vehicles to become safer, more
connected, efficient and environmentally friendly. Our portfolio of
turbocharging, electric boosting and automotive software solutions
empowers the transportation industry to redefine and further advance
motion. For more news and information on Garrett, please visit www.garrettmotion.com/news.
|
GARRETT MOTION INC. CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS |
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|
($ in millions, except per share data) |
For the Three Months |
||||||
| 2019 | 2018 | ||||||
| Net sales | $ | 835 | $ | 915 | |||
| Cost of goods sold | 639 | 704 | |||||
| Gross profit | $ | 196 | $ | 211 | |||
| Selling, general and administrative expenses | 60 | 63 | |||||
| Other expense, net | 19 | 42 | |||||
| Interest expense | 16 | 2 | |||||
| Non-operating expense (income) | 4 | (9 | ) | ||||
| Income before taxes | $ | 97 | $ | 113 | |||
| Tax expense | 24 | 55 | |||||
| Net income | $ | 73 | $ | 58 | |||
| Earnings per common share | |||||||
| Basic | $ | 0.98 | $ | 0.78 | |||
| Diluted | $ | 0.97 | $ | 0.78 | |||
| Weighted average common shares outstanding | |||||||
| Basic | 74,229,627 | 74,070,852 | |||||
| Diluted | 75,379,228 | 74,070,852 | |||||
|
GARRETT MOTION INC. CONSOLIDATED AND COMBINED STATEMENTS OF COMPREHENSIVE INCOME |
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| ($ in millions) |
For the Three Months |
||||||
| 2019 | 2018 | ||||||
| Net income | $ | 73 | $ | 58 | |||
| Foreign exchange translation adjustment | 59 | (177 | ) | ||||
|
Defined benefit pension plan adjustment, net of tax |
1 | — | |||||
| Changes in fair value of effective cash flow hedges, net of tax | 3 | (7 | ) | ||||
| Total other comprehensive (loss) income, net of tax | 63 | (184 | ) | ||||
| Comprehensive income (loss) | $ | 136 | $ | (126 | ) | ||
|
GARRETT MOTION INC. CONSOLIDATED AND COMBINED BALANCE SHEETS |
||||||||
| March 31, | December 31, | |||||||
| 2019 | 2018 | |||||||
| ($ in millions) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 207 | $ | 196 | ||||
| Accounts, notes and other receivables—net | 790 | 750 | ||||||
| Inventories—net | 181 | 172 | ||||||
| Other current assets | 61 | 71 | ||||||
| Total current assets | 1,239 | 1,189 | ||||||
| Investments and long-term receivables | 35 | 39 | ||||||
| Property, plant and equipment—net | 424 | 438 | ||||||
| Goodwill | 193 | 193 | ||||||
| Deferred income taxes | 159 | 165 | ||||||
| Other assets | 122 | 80 | ||||||
| Total assets | $ | 2,172 | $ | 2,104 | ||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | 881 | 916 | ||||||
| Current Maturities of long-term debt | 23 | 23 | ||||||
| Obligations payable to Honeywell, current | 124 | 127 | ||||||
| Accrued liabilities | 433 | 426 | ||||||
| Total current liabilities | 1,461 | 1,492 | ||||||
| Long-term debt | 1,542 | 1,569 | ||||||
| Deferred income taxes | 29 | 27 | ||||||
| Obligations payable to Honeywell | 1,350 | 1,399 | ||||||
| Other liabilities | 242 | 210 | ||||||
| Total liabilities | $ | 4,624 | $ | 4,697 | ||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| EQUITY (DEFICIT) | ||||||||
|
Common stock, par value $0.001; 400,000,000 shares authorized; 74,634,286 and 74,070,852 issued and 74,583,259 and 74,019,825 outstanding as of March 31, 2019 and December 31, 2018, respectively |
— | — | ||||||
| Additional paid-in capital | 10 | 5 | ||||||
| Retained Earnings | (2,598 | ) | (2,671 | ) | ||||
| Accumulated other comprehensive income | 136 | 73 | ||||||
| Total stockholders’ deficit | (2,452 | ) | (2,593 | ) | ||||
| Total liabilities and stockholders’ deficit | $ | 2,172 | $ | 2,104 | ||||
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GARRETT MOTION INC. CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS |
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Three Months |
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| ($ in millions) | 2019 | 2018 | ||||||
| Cash flows from operating activities: | ||||||||
| Net (loss) income | $ | 73 | $ | 58 | ||||
|
Adjustments to reconcile net (loss) income to net cash provided by
operating activities: |
||||||||
| Deferred income taxes | 3 | 28 | ||||||
| Depreciation | 19 | 18 | ||||||
| Amortization of deferred issuance costs | 2 | — | ||||||
| Foreign exchange (gain) loss | 7 | (8 | ) | |||||
| Stock compensation expense | 5 | 7 | ||||||
| Pension expense | 1 | 2 | ||||||
| Other | 4 | 1 | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts, notes and other receivables | (43 | ) | (113 | ) | ||||
| Receivables from related parties | — | 2 | ||||||
| Inventories | (14 | ) | 4 | |||||
| Other assets | 13 | (29 | ) | |||||
| Accounts payable | (24 | ) | 27 | |||||
| Payables to related parties | — | (19 | ) | |||||
| Accrued liabilities | 12 | 27 | ||||||
| Obligations payable to Honeywell | (21 | ) | — | |||||
| Asbestos-related liabilities | — | 2 | ||||||
| Other liabilities | (1 | ) | 5 | |||||
| Net cash provided by (used for) operating activities | $ | 36 | $ | 12 | ||||
| Cash flows from investing activities: | ||||||||
| Expenditures for property, plant and equipment | (21 | ) | (28 | ) | ||||
| Increase in marketable securities | — | (21 | ) | |||||
| Decrease in marketable securities | — | 202 | ||||||
| Other | 1 | 2 | ||||||
| Net cash provided by (used for) investing activities | $ | (20 | ) | $ | 155 | |||
| Cash flows from financing activities: | ||||||||
| Net increase in Invested deficit | — | 812 | ||||||
| Proceeds from revolving credit facility | 140 | — | ||||||
| Payments of revolving credit facility | (140 | ) | — | |||||
| Payments of long-term debt | (6 | ) | — | |||||
| Payments related to related party notes payable | — | (493 | ) | |||||
| Net change to cash pooling and short-term notes | — | (482 | ) | |||||
| Other | 1 | — | ||||||
| Net cash provided by (used for) financing activities | (5 | ) | (163 | ) | ||||
| Effect of foreign exchange rate changes on cash and cash equivalents | — | 7 | ||||||
| Net increase (decrease) in cash and cash equivalents | 11 | 11 | ||||||
| Cash and cash equivalents at beginning of period | 196 | 300 | ||||||
| Cash and cash equivalents at end of period | $ | 207 | $ | 311 | ||||
|
Reconciliation of Net Income to Adjusted EBITDA and |
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| ($ in millions) |
For the Three Months |
LTM Ended |
LTM Ended |
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| 2019 | 2018 | 2019 | 2018 | |||||||||||||||
| Net income —GAAP | $ | 73 | $ | 58 | $ | 1,195 | $ | 1,180 | ||||||||||
| Tax expense | 24 | 55 | (815 | ) | (784 | ) | ||||||||||||
| Profit before taxes | 97 | 113 | 380 | 396 | ||||||||||||||
| Net interest expense (income) | 15 | (1 | ) | 29 | 13 | |||||||||||||
| Depreciation | 19 | 18 | 73 | 72 | ||||||||||||||
| EBITDA (Non-GAAP) | 131 | 130 | 482 | 480 | ||||||||||||||
| Other operating expenses, net (asbestos and environmental expenses) (2) | 19 | 42 | 97 | 120 | ||||||||||||||
| Non-operating (income) expense (3) | — | (4 | ) | — | (4 | ) | ||||||||||||
| Stock compensation expense (4) | 5 | 7 | 19 | 21 | ||||||||||||||
| Repositioning charges (5) | 1 | 2 | 1 | 2 | ||||||||||||||
| Non-recurring Spin-Off Costs (6) | 3 | — | 9 | 6 | ||||||||||||||
|
Foreign exchange (gain) loss on debt, net of related hedging (gain) loss |
— | — | (7 | ) | (7 | ) | ||||||||||||
| Adjusted EBITDA (Non-GAAP) | $ | 159 | $ | 177 | $ | 601 | $ | 618 | ||||||||||
| Adjusted EBITDA Margin (Non-GAAP) % (1) | 19.0 | % | 19.3 | % | 18.2 | % | 18.3 | % | ||||||||||
| FX Hedging (gain) / loss (net) | 7 | 13 | 31 | 38 | ||||||||||||||
| Adjusted EBITDA Excluding FX Hedging (gain) / loss net (Non-GAAP) | $ | 166 | $ | 190 | $ | 632 | $ | 656 | ||||||||||
| Adjusted EBITDA Margin, Excl FX Hedging (Non-GAAP) % (1) | 19.9 | % | 20.8 | % | 19.2 | % | 19.4 | % | ||||||||||
| Honeywell Indemnity Obligation payment | (38 | ) | (44 | ) | (167 | ) | (172 | ) | ||||||||||
| Additional pro forma standalone costs (7) | — | (2 | ) | 1 | (1 | ) | ||||||||||||
|
Pro Forma impact on cash paid to customers to be capitalized vs expensed |
— | — | — | — | ||||||||||||||
| Other non-recurring, non-cash expense | — | 4 | (2 | ) | 2 | |||||||||||||
| Consolidated EBITDA | $ | 128 | $ | 148 | $ | 464 | $ | 484 | ||||||||||
| Add. Honeywell Indemnity Obligation Payment | 38 | 44 | 167 | 172 | ||||||||||||||
|
Consolidated EBITDA (excl. Honeywell indemnity obligation) (non-GAAP) |
$ | 166 | $ | 192 | $ | 631 | $ | 656 | ||||||||||
|
Consolidated EBITDA % margin (excl. Honeywell indemnity obligation) (non-GAAP) (1) |
19.9 | % | 21.0 | % | 19.2 | % | 19.4 | % | ||||||||||
| (1) |
Adjusted EBITDA Margin, Adjusted EBITDA Margin Excluding FX hedging and Consolidated EBITDA % margin (excluding Honeywell indemnity obligation) represent Adjusted EBITDA, Adjusted EBITDA Excluding FX hedging and Consolidated EBITDA (excluding Honeywell indemnity obligation) as a percentage of net sales, respectively. |
|
| (2) |
For periods prior to the Spin-Off, we reflect an estimated liability for resolution of pending and future asbestos related and environmental liabilities primarily related to the Bendix legacy Honeywell business, calculated as if we were responsible for 100% of the Bendix asbestos-liability payments. We recognized a liability for any asbestos related contingency that was probable of occurrence and reasonably estimable. In connection with the recognition of liabilities for asbestos-related matters, we recorded asbestos-related insurance recoveries that are deemed probable. In periods subsequent to the Spin-Off, the accounting for the majority of our asbestos-related liability payments and accounts payable reflect the terms of the Indemnification and Reimbursement Agreement with Honeywell entered into on September 12, 2018, under which we are required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. See Note 17, Commitments and Contingencies of Notes to the Consolidated and Combined Interim Financial Statements. |
|
| (3) |
Non-operating expense (income) adjustment excludes net interest (income), the non-service components of pension expense, equity income of affiliates, and the impact of foreign exchange. |
|
| (4) |
Stock compensation expense adjustment includes only non-cash expenses. |
|
| (5) |
Repositioning charges adjustment primarily includes severance costs related to restructuring projects to improve future productivity. |
|
| (6) |
Non-recurring Spin-Off costs primarily include one-time costs incurred for the set-up of the IT, Legal, Finance, Communications and Human Resources functions after the Spin-Off from Honeywell on October 1, 2018. |
|
| (7) |
Incremental costs above Corporate allocations already included in Adjusted EBITDA based on standalone assessment. |
|
Reconciliation of Adjusted EBITDA Minus Capital Expenditures as |
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For the Three Months |
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| 2019 | 2018 | |||||||
| Adjusted EBITDA | $ | 159 | $ | 177 | ||||
| CAPEX (Expenditures for property, plant and equipment) | $ | (21 | ) | $ | (28 | ) | ||
| Adjusted EBITDA minus CAPEX | $ | 138 | $ | 149 | ||||
| Adjusted EBITDA minus CAPEX as % of Adjusted EBITDA | 87 | % | 84 | % | ||||
|
Reconciliation of Net Income to Adjusted EBIT |
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|
For the Three Months |
||||||||
| 2019 | 2018 | |||||||
| Net income – GAAP | $ | 73 | $ | 58 | ||||
| Tax expense | 24 | 55 | ||||||
| Profit before taxes | 97 | 113 | ||||||
| Net interest (income) expense | 15 | (1 | ) | |||||
| EBIT (Non-GAAP) | 112 | 112 | ||||||
| Other operating expenses, net (asbestos and environmental expenses) | 19 | 42 | ||||||
| Non-operating (income) expense | — | (4 | ) | |||||
| Stock compensation expense | 5 | 7 | ||||||
| Repositioning charges | 1 | 2 | ||||||
| Non-recurring Spin-Off Costs | 3 | — | ||||||
|
Foreign exchange (gain) loss on debt, net of related hedging (gain) loss |
— | — | ||||||
| Adjusted EBIT | $ | 140 | $ | 159 | ||||
| Adjusted EBIT Margin % (1) | 16.8 | % | 17.4 | % | ||||
| FX Hedging (gain) / loss (net) | 7 | 13 | ||||||
| Adjusted EBIT Excluding FX Hedging (gain) / loss net (Non-GAAP) | $ | 147 | $ | 172 | ||||
| Adjusted EBIT Excluding FX Hedging Margin (Non-GAAP) % (1) | 17.6 | % | 18.8 | % | ||||
|
Reconciliation of Organic Sales % Change |
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|
For the Three Months |
||||||||
| 2019 | 2018 | |||||||
| Garrett | ||||||||
| Reported sales % change | (9 | %) | 19 | % | ||||
| Less: Foreign currency translation | (6 | %) | 11 | % | ||||
| Organic sales % change | (3 | %) | 8 | % | ||||
| Gasoline | ||||||||
| Reported sales % change | 8 | % | 38 | % | ||||
| Less: Foreign currency translation | (7 | %) | 13 | % | ||||
| Organic sales % change | 15 | % | 25 | % | ||||
| Diesel | ||||||||
| Reported sales % change | (22 | %) | 12 | % | ||||
| Less: Foreign currency translation | (6 | %) | 13 | % | ||||
| Organic sales % change | (16 | %) | (1 | %) | ||||
| Commercial vehicles | ||||||||
| Reported sales % change | (2 | %) | 24 | % | ||||
| Less: Foreign currency translation | (4 | %) | 7 | % | ||||
| Organic sales % change | 2 | % | 17 | % | ||||
| Aftermarket and other sales | ||||||||
| Reported sales % change | (6 | %) | 5 | % | ||||
| Less: Foreign currency translation | (3 | %) | 7 | % | ||||
| Organic sales % change | (3 | %) | (2 | %) | ||||
|
Reconciliation of Cash flow from operations less Expenditures |
||||||||
|
For the Three Months |
||||||||
| ($ in millions) | 2019 | 2018 | ||||||
| Net cash provided by (used for) operating activities | $ | 36 | $ | 12 | ||||
| Expenditures for property, plant and equipment | $ | (21 | ) | $ | (28 | ) | ||
|
Cash flow from operations less Expenditures for property plant and
equipment |
$ | 15 | $ | (16 | ) | |||
|
Reconciliation of Net Debt and Consolidated Debt, and Related |
|||||||
| ($ in millions) |
March 31, |
December 31, |
|||||
| Secured Debt | $ | 1,205 | $ | 1,227 | |||
| Revolving Cash Facility | — | — | |||||
| Unsecured Debt | 393 | 401 | |||||
| Term Debt | 1,598 | 1,628 | |||||
| Net Debt Related Hedge Obligations | (26 | ) | (19 | ) | |||
| Consolidated Debt | 1,572 | 1,609 | |||||
| Term Debt | 1,598 | 1,628 | |||||
| Related Party Note | — | — | |||||
| Cash and Cash Equivalent | (207 | ) | (196 | ) | |||
| Net Debt | 1,392 | 1,432 | |||||
| Consolidated EBITDA (last 12 months) | $ | 464 | $ | 484 | |||
| Net Debt to Consolidated EBITDA | 3.00x | 2.96x | |||||
| Consolidated Debt to Consolidated EBITDA | 3.39x | 3.33x | |||||
|
Reconciliation of Net Income – GAAP to EBITDA and Adjusted |
||||
| ($ in millions) |
For the |
|||
| Net Income — GAAP | $ |
73 |
||
| Tax expense | 24 | |||
| Profit Before Taxes | 97 | |||
| Net interest (income) expense | 15 | |||
| Depreciation | 19 | |||
| EBITDA (Non-GAAP) | 131 | |||
| Other operating expenses, net (asbestos and environmental expenses) | 19 | |||
| Non-operating (income) expense | — | |||
| Stock compensation expense | 5 | |||
| Repositioning charges | 1 | |||
|
Foreign exchange (gain) loss on debt, net of related hedging (gain) loss |
— | |||
| Non-recurring Spin-Off Costs | 3 | |||
| Adjusted EBITDA (Non-GAAP) included in Form 10-Q | 159 | |||
| Change in working capital | (81 | ) | ||
| Taxes (without MTT) | (12 | ) | ||
| Capital Expenditures | (21 | ) | ||
| Other | 16 | |||
| Adjusted Unlevered FCF | 61 | |||
| Interests | (8 | ) | ||
| Adjusted Levered FCF | 53 | |||
| Indemnity Obligation & MTT to HON | (38 | ) | ||
| Levered FCF | $ | 15 | ||
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