Garrett Motion Inc.

Hello and welcome to the Q1 2022 Garrett Motion Earnings Conference Call. All participants will be in the Synony mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note, today's event is being recorded. I would now turn the conference over to Paul Blaylock. Mr. Blaylock, please go ahead.

Thank you, Operator. Good day and welcome, everyone, and thank you for joining the Garrett Motion First Quarter 2022 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 and Exchange Act. We encourage you to read the risk factors contained in our SEC filings, 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 those 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 by 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 first quarter conference call. I will begin my remarks on slide 3, where we start with highlights for the first quarter. Garrett achieved strong first quarter performance in a challenging near-term environment, highlighted by a slower than anticipated light vehicle production recovery, stronger inflationary pressure, and supply chain constraints impacting OEM production volumes. This created numerous difficulties for our employees and supply chain partners. And I would like to thank everyone for their hard work and dedication in these circumstances. Our employees did a great job in managing through these challenges. I would like to particularly thank our employees in China and specifically in Shanghai as we maintain production near capacity through great personal sacrifice during the ongoing lockdowns. This again demonstrates that our people are a key differentiator to our performance and the long-term success of Garrett. Compared with last year, Q1 of 2022 net sales of 901 million were down 10% on the GAAP basis and 6% on the constant currency basis. The constant currency decline of 6% in Q1 2022 sales is approximately equal to or flat with estimated light vehicle production versus Q1 of 2021. This is driven by the ongoing semiconductor shortage and other supply chain challenges impacting vehicle production globally, but even more in China. These short-term constraints do not impact the strengths of underlying pent-up demand for light vehicles or the increased pace of turbo penetration. Adjusted EBITDA of 146 million and the resulting adjusted EBITDA margin of 16.2% are also down from Q1 2021 due to the factors mentioned above, but trended upward from Q4 of last year as pricing pass-through initiatives and additional productivity offset inflation and increased supply chain costs. And this, even considering our increased R&D investment into new technology for the future. Indeed, I'm proud of the performance we achieved as we have managed to upset the impact of lower vehicle production due to supply chain constraints and disruptions, but more importantly, of higher cost driven by additional inflation. This is the result of candid discussions with our customers to find business solutions to recognize increasing costs, but also the result of additional productivity initiatives that we have implemented. Garrett continues to improve its financial flexibility in the first quarter by prepaying an additional $197 million in Series B preferred stock, as previously anticipated, and we increased the capacity of our revolving credit facility to $475 million, adding to our liquidity position, which increased to $788 million from $720 million in Q4 2021. including the remaining Serings B preferred balance, Garrett ended up the first quarter with a net debt to consolidated EBITDA coverage ratio of 1.88 times, down from 1.95 times in Q4 2021. Turning now to slide four. I first want to reemphasize the point that the short-term OEM supply chain challenges do not impact the strong underlying pent-up demand for light vehicles that, combined with increasing turbo penetration driven by toughening emission standards and technology-driven turbo industry consolidation, paves the way for robust growth in revenue and share of demand for the highly cash-generative core business of Garrett. This quarter, we are also happy to signal the first commercial launch of our industry-first e-turbo technology on the Mercedes-AMG SL43. This award-winning and innovative device highlights Garrett's remarkable progress in developing unmatched in-house capabilities in high-speed motors, power electronics and controls, as well as our software capabilities inherent in electrified powertrain. This initial eTurbo deployment is indeed expected to be followed by additional ones. I am also very proud to report a very important business win that underlines both the advances we have made in the development of critical electric systems for fuel cell powertrains and the growing focus of our customers on hydrogen electric vehicles. We were just awarded a third generation fuel cell compressor program from a major global OEM for a light commercial vehicle program that is expected to launch within the next two, three years. The strength of the cash flow generation of our core business enables us to continue to invest in the future of our technologies for growth, offering potential technology differentiation and addressing the industry transformation. As mentioned during our prior earnings release, we plan to invest 50% of our 2022 R&D spend to new non-culturable technologies. To support this effort, this quarter we have opened additional electric lab capabilities in our main development hubs, but more importantly, we have recruited more than 150 new engineers that are experts in electrification technologies. This hiring success confirms the attractiveness of Garrett as a new technology provider, but also validates the credibility of the technology capabilities we have developed in the eyes of these electric experts joining our company. With that, I will now turn it over to Sean to provide more insight on our results.