Garrett Motion Inc.

Ladies and gentlemen, please stand by. Once again, ladies and gentlemen, please stay on the line. Thank you. Ladies and gentlemen, thank you for standing by and welcome to the Garrett in Motion fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 1 on your telephone. If you require any further assistance, please press star 0. I would now like to turn the call over to your host, Paul Blalock. You may begin.

Thank you, Kevin. Good day, everyone, and welcome. And thank you for joining Garrett Motion's fourth quarter and full year 2021 financial results conference call. Before we begin, I'd like to mention that today's presentation and earnings press release are available on the Garrett Motion website at garrettmotion.com, where you will also find links to our SEC filings, along with other important information about our company. Turning to slide two, we note that this presentation contains forward-looking statements within the meaning of the Securities Exchange Act. We encourage you to read the risk factors contained in our filings with the SEC, become aware of the risks and uncertainties in our business, and understand that forward-looking statements are only estimates of future performance and should be taken as such. The forward-looking statements represent management's expectations only as of today and the company disclaims any obligation to update them. Today's presentation also includes non-GAAP measures to describe the way in which we manage and operate our business. We reconcile each of these measures to the most directly comparable GAAP measure, and you're encouraged to examine those reconciliations, which are found in the appendix to both the press release and the slide presentation. Also in today's presentation and comments, we may refer to light vehicle diesel and light vehicle gasoline products using the terms diesel and gasoline only. With us today is Olivier Rabier, Garrett's President and Chief Executive Officer, and Shawn Deason, Garrett's Senior Vice President and Chief Financial Officer. I will now hand it over to Olivier.

Thanks, Paul, and welcome everyone to Garrett's fourth quarter and full year 2021 results conference call. I will begin my remarks on slide three, where we start with highlights for the year. 2021 was a remarkably challenging and successful year for Garrett. Various waves of COVID combined with the semiconductor shortage created numerous difficulties for our employees, supply chain partners, and customers. Even in this volatile environment, Garrett delivered strong results across all key metrics. I would like to thank our employees for their hard work and dedication in these extreme circumstances as they successfully executed in the face of fluctuating demand, component shortages, COVID-related disruptions, and emerging cost pressures. Our employees are a key differentiator and critical for the long-term success of Garrett. This past year was easily one of the most dynamic years in the automotive industry. Even with all the headwinds I mentioned earlier, the strength of our leadership position across light vehicles, commercial vehicles, and aftermarket, combined with robust execution, allowed us to deliver net sales of $3.6 billion, an increase of 15% at constant currency, outpacing global auto companies, production by approximately 12.5 percentage points. Global light vehicle production was up only slightly from 2020 with an estimated growth of only 2.5%, a historical low for the past 10 years. And in this environment, Garrett is well positioned for prolonged growth as turbo technology continues to penetrate on internal combustion engines and hybrid powertrain. and we continue to grow our share of demand through new business wins. Obviously, pent-up demands from customers for vehicles will drive global industry volumes higher in the coming years, and our increasing share of demand will remain a major growth catalyst for Garrett. This flow recovery in 2021 of light vehicle production was enhanced by a 25% net sales growth in our commercial vehicle vertical and a 21% growth in our aftermarket business. These two high margin businesses comprised approximately 30% of our net sales in 2021 and an even greater proportion of our earnings. This growth in aftermarket and commercial vehicles, coupled with the improved mix of the light vehicle sales, allowed Garrett to increase our adjusted EBITDA by 38% and our adjusted EBITDA margin by 220 basis points to 16.7%. Finally, adjusted free cash flow was $367 million in 2021 as we nicely converted our earnings growth into cash. This solid cash flow generation allowed us to accelerate our deleveraging activities and repay $211 million of the Series B preferred stock in Q4 2021. Furthermore, we have agreed to a second repayment of the Series B preferred stock of $197 million in the first quarter of 2022. In addition, We launched a pro-rata $100 million stock buyback program, and Sean will update you in a few moments on the progress made in Q4. Lastly, we increased the capacity of our revolving credit facility by $124 million to $424 million in January of 2022. Taken together, these transactions further optimize our capital structure and enhance our ability to create long-term shareholder value. On slide four, we outline our growth strategy as we continue to execute in the near and mid-term while investing and delivering differentiated solutions to our customers as the automotive industry continues to evolve. First, our core business continues to strengthen as we capitalize on a new business win rate of greater than 50%, which has positioned Garrett in the number one and number two position across all of our core business verticals. This achievement was driven by Garrett's rich portfolio of differentiated technologies, such as the variable nozzle turbine technology used in gasoline powertrains and the new electric boosting technologies used for hybrids, just to name a few. This is also one of the key factors that allows us to continue to outperform automotive production growth even in a volatile macro environment. This differentiated technology will continue to drive our success in 2022 in our core light vehicle and commercial vehicle verticals, and will increase our penetration on hybrid electric vehicle programs as we serve our customers' growing needs in these existing and new areas. I should also highlight again that the turbo business is in a long-term, technologically driven industry consolidation with improving competitive dynamics. We expect, as such, to continue competing and win an increasing share of demand as our customers consolidate their global engine platforms, resulting in larger awarded program volumes. Next. We are excited for the upcoming launch of our award-winning eTurbo on the Mercedes-AMG new hybrid platform. This industry-first technology won the prestigious 2021 Automotive News Space Award for innovation and is a powerful example of Garrett's in-house developed technologies moving from its roots in Formula 1 to leading-edge hybrid development. The eTurbo draws upon Garrett's advanced in-house capabilities in high-speed motors, power electronics and control, as well as our software capabilities, which are highly relevant and required for the electrification of the powertrain. As OEMs continue to increase the electrification of their vehicle offerings, we have accelerated the development of our fuel cell compressor technology and continue to offer market-leading, differentiated products in this space. In 2022, we have several second-generation fuel cell compressor launches planned with key customers, and we are actively designing our third-generation product portfolio to meet our customers' future fuel cell needs. On the software side, we will launch our in-house developed industry-first cybersecurity software this year in Asia, along with the first deployment of our predictive control software offerings. Our objective is clear. We are continuing to develop and launch new technologies in our core business while accelerating our deployment to support our new electrified offerings. We are pivoting our development capabilities and focus as we increase our new talent pool for the acceleration of new technologies aimed at sustaining and enhancing our differentiation in the electrification of powertrains. This clear technology and customer focus, supported by the strengths in our commercial vehicle and aftermarket businesses, allowed Garrett to not only sustain strong margins, but also improve them during the various crises in 2021. As such, we expect to use our strong operational cash flow to continue investing approximately 50% of our R&D into new technologies in 2022, up from 40% in 2021, which, in fact, includes non-traditional internal combustion engine projects used in applications for hybrid platforms, fuel cell compressor applications, and other projects for electrified drivetrains. Lastly, despite gradual improvement in the persistent headwind in early 2022, we currently anticipate global light vehicle production to increase by 7% versus 2021, and we expect strong adjusted free cash flow generation between $400 to $500 million for 2022. In summary, we expect Garrett's proven track records of pioneering new and differentiated technologies will drive our success in the marketplace while we continue to increase our investment for the future for the benefit of the company and our shareholders. With that, I will now turn it over to Shen to provide us with more insights on our results. And after a while, they will provide some additional closing remarks.