Second Quarter 2020 Highlights
- Net sales totaled $477 million, a decrease of 40.5% on a
reported basis and 39.2% at constant currency*
- Net loss totaled $9 million, or ($0.12) per basic and diluted
share
- Adjusted net income* was $5 million, or $0.07 per basic and
diluted share
- Adjusted EBITDA* decreased to $63 million; Adjusted EBITDA
margin* was 13.2%
- Adjusted free cash flow* totaled ($174) million
- Secured net debt to consolidated EBITDA ratio* was 3.07x at
June 30, 2020
First Half 2020 Highlights
- Net sales totaled $1,222 million, a decrease of 25.4% on a
reported basis and 23.6% at constant currency*
- Net income totaled $43 million, or $0.57 per basic and diluted
share
- Adjusted net income* was $73 million, or $0.97 per basic share
and $0.96 per diluted share
- Adjusted EBITDA* decreased to $171 million; Adjusted EBITDA
margin* was 14.0%
- Adjusted free cash flow* totaled ($117) million
Garrett Motion Inc. (NYSE: GTX), a leading differentiated
technology provider for the automotive industry, today announced
its financial results for the second quarter and six months ended
June 30, 2020.
Q2 2020
Q2 2019
$ millions (unless otherwise
noted)
H1 2020
H1 2019
477
802
Net sales
1,222
1,637
393
620
Cost of goods sold
996
1,259
84
182
Gross profit
226
378
17.6%
22.7%
Gross profit %
18.5%
23.1%
51
58
Selling, general and
administrative
112
118
2
87
Income before taxes
55
184
(9)
66
Net (loss) income
43
139
5
83
Adjusted net income*
73
175
63
154
Adjusted EBITDA*
171
313
13.2%
19.2%
Adjusted EBITDA margin*
14.0%
19.1%
24
30
Expenditures for property, plant
and equipment
63
51
* See reconciliations to the nearest GAAP measure in pages
5-13.
“Our performance for the second quarter and first half of 2020
reflects the various effective actions we have taken flexing our
global operating structure and executing strict cost controls to
confront the COVID-19 pandemic,” said Olivier Rabiller, Garrett
President and CEO. “All of our manufacturing facilities have safely
resumed operations with plants in China producing at pre-crisis
levels while Europe and North America are slowly improving in-line
with demand. I am proud of the dedication and resolve our employees
have demonstrated during this challenging period, teaming together
to maintain business continuity and support our local
communities.”
“We also successfully amended our credit agreement and further
postponed payments to our former parent in the second quarter,” Mr.
Rabiller added. “As we gradually implement a comprehensive
return-to-work program that adheres to best practices, we continue
to focus on meeting customer commitments. We remain concerned
however of a return to lower production levels, plant shutdowns and
a challenging demand environment extending into 2021, which could
further challenge our capital structure and limit our ability to
expand on our strategy now and in the future. Garrett’s proven
track record in operational excellence has helped us navigate the
current pandemic-induced downturn. Although the market environment
remains highly uncertain, we continue to benefit from our robust
infrastructure and agile working capabilities as we execute on our
long-term strategy and lead the evolution of advanced
turbocharging, electric-boosting, and software solutions for the
global automotive industry.”
Results of Operations
Net sales for the second quarter of 2020 were $477
million compared to $802 million in the second quarter of 2019, a
decrease of 40.5%. Net sales at constant currency decreased 39.2%.
During the second quarter of 2020, Garrett’s manufacturing
facilities in Mexico and India were shut down for approximately
five weeks due to the COVID-19 pandemic before gradually restarting
operations. Additionally, facilities across Europe reduced
production in response to lower demand and local government
mandates stemming from the pandemic. Reported net sales in the
second quarter for light vehicles OEM products decreased $231
million due to lower diesel volumes in Europe and Asia as well as
lower gasoline volumes in Europe and North America. This decline
was partially offset by higher gasoline volumes in China due to
increased turbocharger penetration in gasoline engines and new
product launches. Reported net sales for commercial vehicles and
aftermarket products declined by $62 million and $28 million,
respectively, mainly as a result of lower volumes in Europe and
North America.
For the six months ended June 30, 2020, reported net sales
totaled $1,222 versus $1,637 million for the six months ended June
30, 2019. Net sales at constant currency decreased 23.6% for the
six months ended June 30, 2020.
Cost of goods sold for the second quarter of 2020 was
$393 million versus $620 million in the second quarter of 2019
primarily due to lower volumes stemming from the impact of
COVID-19. Research and development expenses in the quarter
decreased to $25 million from $29 million in the second quarter of
2019.
For the six months ended June 30, 2020, cost of goods sold was
$996 million, compared to $1,259 million for the same period in
2019. Research and development expenses were $52 million for the
six months ended June 30, 2020 versus $61 million for the same
period in 2019.
Gross profit percentage for the second quarter of 2020
declined to 17.6% from 22.7% in the second quarter of 2019
primarily due to lower volume leverage.
For the six months ended June 30, 2020, gross profit percentage
was 18.5% compared to 23.1% for the six months ended June 30,
2019.
Selling, general and administrative (“SG&A”) expenses
for the second quarter of 2020 decreased to $51 million from $58
million in the prior year period due to the implementation of cost
controls to mitigate the impact of the COVID-19 pandemic on
Garrett’s performance, partially offset by higher professional
service fees. As a percentage of net sales, SG&A for the
quarter was 10.7% versus 7.2% in the second quarter of 2019.
For the six months ended June 30, 2020, SG&A totaled $112
million compared to $118 million for the same period in 2019. As a
percentage of net sales, SG&A increased to 9.2% from 7.2% for
the six months ended June 30, 2019, primarily due to lower net
sales.
Other expenses - net for the second quarter of
2020 decreased to $15 million versus $17 million in the second
quarter of 2019 due to a decrease in legal fees in connection with
Garrett’s indemnification and reimbursement agreement with
Honeywell (the “Subordinated Indemnity Agreement”).
Other expenses - net for the six months ended June 30, 2020
totaled $31 million versus $36 million for the same period in
2019.
Interest expense for the second quarter of 2020 was $20
million versus $18 million in the second quarter of 2019 mainly due
to the higher fees related to drawdowns on the company’s revolving
credit facility and amendments to Garrett’s credit agreement. For
the six months ended June 30, 2020, interest expense totaled $36
million versus $34 million for the same period in 2019.
Net loss for the second quarter of 2020 was $9 million,
or ($0.12) per basic and diluted share, compared to net income of
$66 million, or $0.88 per basic share and $0.86 per diluted share,
in the second quarter of 2019.
Adjusted net income, which excludes Honeywell indemnity
obligation expenses and litigation fees, for the second quarter of
2020 was $5 million, or $0.07 per basic and diluted share. This
compares to adjusted net income of $83 million, or $1.11 per basic
share and $1.08 per diluted share, in the second quarter of
2019.
For the six months ended June 30, 2020, net income was $43
million, or $0.57 per basic and diluted share, compared to net
income of $139 million, or $1.87 per basic share and $1.83 per
diluted share, for the same period in 2019. Adjusted net income for
the six months ended June 30, 2020 was $73 million, or $0.97 per
basic share and $0.96 per diluted share, versus $175 million, or
$2.35 per basic share and $2.30 per diluted share, for the same
period in 2019.
Expenditures for property, plant and equipment (capital
expenditures) for the second quarter of 2020 totaled $24
million, or 5.0% of net sales, compared to $30 million, or 3.7% of
net sales, in the second quarter of 2019. For the six months ended
June 30, 2020, capital expenditures were $63 million, or 5.2% of
net sales, compared to $51 million, or 3.1% of net sales, for the
six months ended June 30, 2019.
Additional Non-GAAP Financial
Measures
Adjusted EBITDA for the second quarter of 2020 was $63 million
versus $154 million for the same period in 2019. The Adjusted
EBITDA margin decreased to 13.2% in the quarter from 19.2% in the
second quarter of 2019 primarily due to lower volumes stemming from
the impact of COVID-19. Adjusted free cash flow, which excludes
Indemnity-related payments and mandatory transition tax (“MTT”)
payments to Honeywell, was ($174) million for the second quarter of
2020 versus $27 million for the same period in 2019.
For the six months ended June 30, 2020, Adjusted EBITDA and
Adjusted EBITDA margin were $171 million and 14.0%, respectively,
compared to $313 million and 19.1% for the same period in 2019. For
the six months ended June 30, 2020, adjusted free cash flow was
($117) million versus $80 million for the same period in 2019.
Liquidity and Capital
Resources
As of June 30, 2020, Garrett had $482 million in available
liquidity, including $139 million in cash and cash equivalents and
approximately $347 million undrawn commitments under its revolving
credit facility, partially offset by $4 million in uncommitted
debt.
As of June 30, 2020, consolidated debt was $1,572 million, an
increase of approximately $88 million compared to March 31, 2020.
As of June 30, 2020, net debt totaled $1,433 million, an increase
of approximately $203 million compared to March 31, 2020. Secured
Net Debt to Consolidated EBITDA (as defined in Garrett’s amended
credit agreement) was 3.07x as of June 30, 2020 versus 2.44x as of
March 31, 2020. During the second quarter of 2020, Garrett reached
an agreement with its senior lenders under the credit agreement to,
among other items, amend certain covenants and conditions,
including a modified maximum leverage ratio and a waiver of the
interest coverage ratio requirements for up to a two-year period
through June 30, 2022. Garrett’s weighted average stated interest
rate was approximately 3.6% as of June 30, 2020, and the company
has no significant debt maturities before September 2023.
Conference Call
Garrett will host a conference call on Thursday, July 30, 2020
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 10146088. 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 August
13, 2020 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 10146088. The
webcast will also be archived on Garrett’s website.
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 the anticipated impact
of the COVID-19 pandemic on our business, financial results and
financial condition, expectations regarding global automotive
demand and execution of our strategy. 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 risks related to the COVID-19 pandemic and its impact on
our business, financial results and financial condition, risks
related to our debt and those risks described in our annual report
on Form 10-K for the year ended December 31, 2019, as updated by
our quarterly report on Form 10-Q for the period ended June 30,
2020, as well as our other filings with the Securities and Exchange
Commission, under the 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 EBITDA, Adjusted EBITDA, Net Debt,
Consolidated Debt, Secured Net Debt, Net Debt to Consolidated
EBITDA ratio, Consolidated Debt to Consolidated EBITDA ratio,
Secured Net Debt to Consolidated EBITDA ratio, Adjusted Free Cash
Flow, Consolidated EBITDA, Adjusted EBITDA Margin, Adjusted Net
Income, Adjusted Earnings Per Share (“EPS”), Cash flow from
operations minus capital expenditures, Free Cash Flow, Adjusted
Free Cash Flow Conversion, constant currency 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 and Consolidated EBITDA are
important indicators of operating performance because they exclude
the effects of income taxes and certain other items, 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 Non-GAAP financial measures, see our annual report on Form 10-K
for the year ended December 31, 2019 and our quarterly report for
the period ended June 30, 2020.
About Garrett Motion
Inc.
Garrett Motion 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 information, please visit www.garrettmotion.com.
GARRETT MOTION INC.
CONSOLIDATED AND COMBINED
STATEMENTS OF OPERATIONS
For the Three Months
Ended June 30,
For the Six Months Ended June
30,
($ in millions, except per share
data)
2020
2019
2020
2019
Net sales
$
477
$
802
$
1,222
$
1,637
Cost of goods sold
393
620
996
1,259
Gross profit
$
84
$
182
$
226
$
378
Selling, general and administrative
expenses
51
58
112
118
Other expense, net
15
17
31
36
Interest expense
20
18
36
34
Non-operating (income) expense
(4
)
2
(8
)
6
Income before taxes
$
2
$
87
$
55
$
184
Tax expense
11
21
12
45
Net (loss) income
$
(9
)
$
66
$
43
$
139
Earnings (loss) per common share
Basic
$
(0.12
)
$
0.88
$
0.57
$
1.87
Diluted
$
(0.12
)
$
0.86
$
0.57
$
1.83
Weighted average common shares
outstanding
Basic
75,595,991
74,591,478
75,316,827
74,414,450
Diluted
75,845,511
76,900,544
75,837,459
76,129,821
GARRETT MOTION INC.
CONSOLIDATED AND COMBINED
STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
For the Three Months
Ended June 30,
For the Six Months Ended June
30,
($ in millions)
2020
2019
2020
2019
Net (loss) income
$
(9
)
$
66
$
43
$
139
Foreign exchange translation
adjustment
(50
)
(34
)
(11
)
25
Defined benefit pension plan adjustment,
net of tax
—
—
—
1
Changes in fair value of effective cash
flow hedges, net of tax
(2
)
(1
)
(2
)
2
Total other comprehensive (loss) income,
net of tax
$
(52
)
$
(35
)
$
(13
)
$
28
Comprehensive (loss) income
$
(61
)
$
31
$
30
$
167
GARRETT MOTION INC.
CONSOLIDATED AND COMBINED
BALANCE SHEETS
June 30,
December 31,
2020
2019
($ in millions)
ASSETS
Current assets:
Cash and cash equivalents
$
139
$
187
Accounts, notes and other
receivables—net
554
707
Inventories—net
234
220
Other current assets
77
85
Total current assets
1,004
1,199
Investments and long-term receivables
34
36
Property, plant and equipment—net
457
471
Goodwill
193
193
Deferred income taxes
272
268
Other assets
106
108
Total assets
$
2,066
$
2,275
LIABILITIES
Current liabilities:
Accounts payable
705
1,009
Borrowings under revolving credit
facility
135
—
Current maturities of long-term debt
4
4
Obligations payable to Honeywell,
current
37
69
Accrued liabilities
284
310
Total current liabilities
1,165
1,392
Long-term debt
1,403
1,409
Deferred income taxes
35
51
Obligations payable to Honeywell
1,304
1,282
Other liabilities
262
274
Total liabilities
$
4,169
$
4,408
COMMITMENTS AND CONTINGENCIES
EQUITY (DEFICIT)
Common stock, par value $0.001;
400,000,000 shares authorized, 76,008,388 and 74,911,139 issued and
75,630,561 and 74,826,329 outstanding as of June 30, 2020 and
December 31, 2019 respectively
—
—
Additional paid-in capital
24
19
Retained earnings
(2,244
)
(2,282
)
Accumulated other comprehensive income
117
130
Total stockholders' deficit
(2,103
)
(2,133
)
Total liabilities and stockholders'
deficit
$
2,066
$
2,275
GARRETT MOTION INC.
CONSOLIDATED AND COMBINED
STATEMENTS OF CASH FLOWS
For the Six Months Ended June
30,
($ in millions)
2020
2019
Cash flows from operating
activities:
Net income
$
43
$
139
Adjustments to reconcile net income to net
cash provided by operating activities:
Deferred income taxes
(5
)
—
Depreciation
37
35
Amortization of deferred issuance
costs
3
3
Foreign exchange loss
3
11
Stock compensation expense
6
9
Pension expense
—
3
Other
4
6
Changes in assets and liabilities:
Accounts, notes and other receivables
114
(42
)
Inventories
(23
)
(26
)
Other assets
(11
)
14
Accounts payable
(231
)
(14
)
Accrued liabilities
(16
)
(48
)
Obligations payable to Honeywell
(8
)
(61
)
Other liabilities
(11
)
8
Net cash (used for) provided by
operating activities
$
(95
)
$
37
Cash flows from investing
activities:
Expenditures for property, plant and
equipment
(63
)
(51
)
Other
(1
)
18
Net cash used for investing
activities
$
(64
)
$
(33
)
Cash flows from financing
activities:
Proceeds from revolving credit
facility
1,023
300
Payments of revolving credit facility
(904
)
(300
)
Payments of long-term debt
(2
)
(21
)
Other
(3
)
4
Net cash provided by (used for)
financing activities
114
(17
)
Effect of foreign exchange rate changes on
cash and cash equivalents
(3
)
(1
)
Net decrease in cash and cash
equivalents
(48
)
(14
)
Cash and cash equivalents at beginning
of period
187
196
Cash and cash equivalents at end of
period
$
139
$
182
Reconciliation of Net Income to
Adjusted EBITDA and Consolidated EBITDA(1)
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
For the Twelve Months
Ended June 30,
For the Twelve Months
Ended March 31,
For the Twelve Months
Ended June 30,
($ in millions)
2020
2019
2020
2019
2020
2020
2019
Net (loss) income — GAAP
$
(9
)
$
66
$
43
$
139
$
217
$
292
$
1,137
Tax expense
11
21
12
45
—
10
(777
)
Profit before taxes
2
87
55
184
217
302
360
Net interest expense (income)
19
15
34
30
65
61
46
Depreciation
18
16
37
35
75
73
71
EBITDA (Non-GAAP)
39
118
126
249
357
436
477
Other expense, net (which primarily
consists of indemnification, asbestos and environmental expenses)
(2)
14
17
30
36
34
37
75
Non-operating (income) expense (1),
(3)
(3
)
(3
)
(5
)
(2
)
3
6
—
Stock compensation expense (4)
4
4
6
9
15
15
18
Repositioning charges (5)
1
2
6
3
5
6
3
Spin-Off costs (6)
—
8
—
10
20
22
16
Professional service costs (7)
9
—
9
—
9
—
—
Foreign exchange (gain) loss on debt, net
of related hedging (gain) loss
(1
)
8
(1
)
8
(2
)
7
1
Adjusted EBITDA (Non-GAAP)
$
63
$
154
$
171
$
313
$
441
$
529
$
590
Adjusted EBITDA Margin (Non-GAAP) %
(8)
13.2
%
19.2
%
14.0
%
19.1
%
15.6
%
16.8
%
18.3
%
FX Hedging (gain) / loss (net)
(8
)
—
(2
)
(2
)
—
10
12
Subordinated Indemnity Agreement
(2
)
(38
)
(37
)
(76
)
(114
)
(150
)
(161
)
Add-back of gross interest expense (9)
—
3
2
4
5
3
11
Other non-recurring, non-cash expense
10
—
4
—
14
5
2
Add-back of non-cash pension costs
(10)
—
1
—
2
5
12
2
Consolidated EBITDA
$
63
$
120
$
138
$
241
$
351
$
409
$
456
(1)
We have elected to change our definition
of Adjusted EBITDA and Consolidated EBITDA to exclude the
non-service component of pension expense. Non-service pension
expense is comprised of interest costs, expected return on plan
assets and actuarial gains/losses. The components of non-service
pension expense are primarily tied to financial market performance,
changes in market interest rates and investment performance. The
service cost component of our pension plans remains in Adjusted
EBITDA. We consider the non-service component of pension expense to
be outside the performance of our ongoing core business operations
and believe that presenting Adjusted EBITDA including only the
service component of pension expense, in addition to our GAAP
operating results, provides increased transparency as to the
operating costs of providing pension benefits to our employees and
the underlying trends in our operating business performance. As a
result, the prior periods presented were recast to conform to the
current year presentation.
(2)
The accounting for the majority of our
asbestos-related liability payments and accounts payable reflect
the terms of the Subordinated Indemnity Agreement with Honeywell
entered into on September 12, 2018, under which Garrett ASASCO is
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 Interim
Financial Statements.
(3)
Non-operating (income) expense adjustment
includes the non-service component of pension expense and other
expense, net and excludes interest income, 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)
Spin-Off costs primarily include 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. During the fourth quarter of 2019 additional
spin-off costs related to the first three quarters of 2019 were
identified and included within the adjustment for the three and
twelve months end December 31, 2019 as presented in our 2019 Form
10K. As a result, the three and six months ended June 30, 2019 were
recast to include these additional costs.
(7)
Professional service costs consist of
professional service fees to support strategic planning for the
Company. We consider these costs to be unrelated to our ongoing
core business operations.
(8)
Adjusted EBITDA Margin represents Adjusted
EBITDA as a percentage of net sales.
(9)
Consolidated EBITDA definition permits the
add-back of gross interest expense (i.e. excluding interest
income), vs. net interest expense in Adjusted EBITDA.
(10)
Consolidated EBITDA definition permits the
add-back of non-cash pension service costs.
Reconciliation of Constant Currency
Sales % Change(1)
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
2020
2019
2020
2019
Garrett
Reported sales % change
(41%)
(9%)
(25%)
(9%)
Less: Foreign currency
translation
(2%)
(5%)
(1%)
(5%)
Constant currency sales %
change
(39%)
(4%)
(24%)
(4%)
Gasoline
Reported sales % change
(31%)
14%
(10%)
11%
Less: Foreign currency
translation
(2%)
(7%)
(2%)
(7%)
Constant currency sales %
change
(29%)
21%
(8%)
18%
Diesel
Reported sales % change
(55%)
(23%)
(37%)
(23%)
Less: Foreign currency
translation
(1%)
(4%)
(1%)
(6%)
Constant currency sales %
change
(54%)
(19%)
(36%)
(17%)
Commercial
vehicles
Reported sales % change
(38%)
(7%)
(28%)
(5%)
Less: Foreign currency
translation
(1%)
(3%)
(1%)
(4%)
Constant currency sales %
change
(37%)
(4%)
(27%)
(1%)
Aftermarket
Reported sales % change
(29%)
(6%)
(23%)
(4%)
Less: Foreign currency
translation
(1%)
(3%)
(1%)
(4%)
Constant currency sales %
change
(28%)
(3%)
(22%)
(—%)
Other
Sales
Reported sales % change
(29%)
(15%)
(27%)
(20%)
Less: Foreign currency
translation
(1%)
(4%)
(2%)
(5%)
Constant currency sales %
change
(28%)
(11%)
(25%)
(15%)
1 We previously referred to “constant
currency sales growth” as “organic sales growth.” We define
constant currency sales growth as the year-over-year change in
reported sales relative to the comparable period, excluding the
impact on sales from foreign currency translation. This is the same
definition we previously used for “organic sales growth”. We
believe this measure is useful to investors and management in
understanding our ongoing operations and in analysis of ongoing
operating trends.
Reconciliation of Cash Flow from
Operations less Expenditures for property, plant and
equipment
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
($ in millions)
2020
2019
2020
2019
Net cash (used for) provided by
operating activities
$
(152
)
$
1
$
(95
)
$
37
Expenditures for property, plant and
equipment
$
(24
)
$
(30
)
$
(63
)
$
(51
)
Cash flow from operations less
Expenditures for property plant and equipment
$
(176
)
$
(29
)
$
(158
)
$
(14
)
Reconciliation of Long-Term Debt to Net
Debt
($ in millions)
June 30, 2020
March 31, 2020
June 30, 2019
Long-term debt
$
1,403
$
1,389
$
1,552
Short-term debt
4
4
14
Deferred finance costs
29
25
33
Overdraft on bank accounts
—
—
—
Revolving credit facility
132
66
—
Uncommitted facility
4
—
—
Consolidated debt
1,572
1,484
1,598
Cash and cash equivalents
(139
)
(254
)
(182
)
Net debt
1,433
1,230
1,416
Reconciliation of Net Debt and
Consolidated Debt, and Related Ratios
($ in millions)
June 30, 2020
March 31, 2020
June 30, 2019
Secured debt
$
1,044
$
1,033
$
1,200
Revolving credit facility
132
66
—
Unsecured debt
392
385
398
Uncommitted facility
4
—
—
Consolidated debt*
1,572
1,484
1,598
Cash and cash equivalent
(139
)
(254
)
(182
)
Net debt
1,433
1,230
1,416
Consolidated EBITDA (last 12
months)
$
351
$
409
$
456
Net debt to Consolidated EBITDA
ratio
4.08X
3.01X
3.11X
Consolidated debt to Consolidated
EBITDA ratio*
4.48X
3.63X
3.50X
* Consolidated debt excluding net debt
relating to hedge obligations
Reconciliation of Secured Net Debt and
Related Ratio
($ in millions)
June 30, 2020
March 31, 2020
June 30, 2019
Secured debt
$
1,044
$
1,033
$
1,200
Revolving credit facility
132
66
—
Cash adjustment*
(100
)
(100
)
(100
)
Secured Net debt
1,076
999
1,100
Consolidated EBITDA (last 12
months)
$
351
$
409
$
456
Secured Net debt to Consolidated EBITDA
ratio
3.07X
2.44X
2.41X
* The lesser of Available Unrestricted
Cash on such day and $100,000,000
Reconciliation of Net Income – GAAP to
EBITDA and Adjusted EBITDA, and to Adjusted Free Cash Flow and Free
Cash Flow (FCF)
For the Three Months
Ended June 30,
For the Six Months
Ended June 30,
($ in millions)
2020
2019
2020
2019
Net (loss) income — GAAP
$
(9
)
$
66
$
43
$
139
Tax expense
11
21
12
45
Profit before taxes
2
87
55
184
Net interest expense (income)
19
15
34
30
Depreciation
18
16
37
35
EBITDA (Non-GAAP)
39
118
126
249
Other expense, net (which consists of
indemnification, asbestos and environmental expenses)
14
17
30
36
Non-operating (income) expense
(3
)
(3
)
(5
)
(2
)
Stock compensation expense
4
4
6
9
Repositioning charges
1
2
6
3
Foreign exchange (gain) loss on debt, net
of related hedging (gain) loss
(1
)
8
(1
)
8
Spin-Off costs
—
8
—
10
Professional service costs
9
—
9
—
Adjusted EBITDA (Non-GAAP) included in
Form 10-K
63
154
171
313
Change in working capital and accrued
liabilities
(172
)
(61
)
(156
)
(130
)
Taxes (without MTT)
(3
)
(45
)
(6
)
(57
)
Capital expenditures
(24
)
(30
)
(63
)
(51
)
Other
(8
)
29
(26
)
33
Interests
(30
)
(20
)
(37
)
(28
)
Adjusted FCF
(174
)
27
(117
)
80
Subordinated Indemnity Agreement and
MTT
(2
)
(56
)
(41
)
(94
)
FCF
$
(176
)
$
(29
)
$
(158
)
$
(14
)
Reconciliation of Net Income to
Adjusted Net Income and Adjusted EPS
For the Three Months
Ended June 30,
For the Six Months Ended June
30,
($ in millions)
2020
2019
2020
2019
Net (loss) income - GAAP
$
(9
)
$
66
$
43
$
139
Add back Subordinated Indemnity Agreement
expenses and litigation fees
14
17
30
36
Adjusted net income (Non-GAAP)
$
5
$
83
$
73
$
175
Weighted average common shares outstanding
- basic
75,595,991
74,591,478
75,316,827
74,414,450
Weighted average common shares outstanding
- diluted
75,845,511
76,900,544
75,837,459
76,129,821
Adjusted earnings per common share -
basic (Non-GAAP)
$
0.07
$
1.11
$
0.97
$
2.35
Adjusted earnings per common share -
diluted (Non-GAAP)
$
0.07
$
1.08
$
0.96
$
2.30
Reconciliation of Net Income to
Adjusted FCF Conversion
For the Three Months Ended
June 30,
For the Six Months Ended June
30,
($ in millions)
2020
2019
2020
2019
Net (loss) income - GAAP
$
(9
)
$
66
$
43
$
139
Add back Subordinated Indemnity Agreement
expenses and litigation fees
14
17
30
36
Adjusted net income (Non-GAAP)
$
5
$
83
$
73
$
175
Adjusted free cash flow
$
(174
)
$
27
$
(117
)
$
80
Adjusted free cash flow
conversion
(3,480%)
33
%
(160%)
46
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200730005416/en/
MEDIA Michael Cimini +1 973 216-3986
michael.cimini@garrettmotion.com
INVESTOR RELATIONS Paul Blalock +1 862 812-5013
paul.blalock@garrettmotion.com
Garrett Motion (NYSE:GTX)
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