Garrett Motion Inc.

Hello, my name is Jason and I will be your operator this morning. I would like to welcome everyone to the Garrett Motion first quarter financial results conference call. This call is being recorded and a replay will be available later today. After the company's presentation, there will be a question and answer session. I would now like to hand the call over to Eric Bursch, Garrett's Head of Investor Relations. Please go ahead.

Thank you, Jason. Good day and welcome everyone. Thank you for attending the Garrett Motion First Quarter Financial Results Conference Call. Before we begin, I would like to mention that today's presentation and earnings press release are available on the IR section of the Garrett Motion website at investors.garrettmotion.com. There 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 filings with the Security and Exchange Commission, be aware of our risks and uncertainties in our business, and understand the forward-looking statements are only estimates of future performance and should be taken as such. The forward-looking statements represented 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 direct gap measure, and you are encouraged to examine these reconciliations, which are found in the appendix of both the press release and slide presentation today. 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 on today's call is Olivier Rebillet, Garrett's President and Chief Executive Officer, and Shawn Deason, Garrett's Senior Vice President and Chief Financial Officer. I will now hand the call over to Olivier.

Thanks Eric, and thanks everyone for joining Garrett's first quarter results conference call. I will begin my remark on slide three, where we start with highlights for the quarter. I am very pleased with our results this quarter, which provide an excellent foundation for meeting the elevated 2023 guidance we announced last week. I want to thank the entire Garrett team for their flexibility and prolapse execution to support the better than planned volume ramp up in the first quarter. While we see an improving macro environment, there is still supply chain volatility and high levels of inflation. Despite this, Garrett was able to optimize performance and deliver enhanced profitability. We started the year strong with Q1 2023 net sales of $970 million, up 8% on the reported basis and up 13% on the constant currency basis. This was driven by our share of demand gains from new launches and product ramp-ups, mainly in our gasoline and commercial vehicle businesses. We also saw signs of industry stabilization and recovery this quarter when compared to last year's supply chain disruptions, especially related to semiconductor shortages. We benefited from this stabilization as well as the end of COVID restrictions in China. Adjusted EBITDA this quarter was $168 million versus $146 million in the same period last year. This increase was primarily due to higher sales for the reasons mentioned above and favorable mix, which boosted our adjusted EBITDA margin up to 17.3%. Once again, the Garrett team flexed our variable operating structure to maximize the conversion from incremental volume and revenue upside in the quarter. All these factors enabled us to finish the quarter with solid adjusted free cash flow of $88 million, up from $38 million in the same quarter a year prior. This highlights one of the core strengths of Garrett, strong cash flow generation on increasing revenues and our ability to operate with low working capital. On April the 13th, we've announced an agreement to normalize our capital structure. This is a truly exciting achievement and represents the beginning of a new chapter for Garrett. As part of the transaction, we will convert all Series A preferred stock into a single class of common stock in an orderly manner. This will eliminate the uncertainty of the automatic Series A conversion process and normalize our capital structure. Our new structure will allow us to broaden our shareholder base, enhance our flexibility to return capital to shareholders, and provide additional cash for targeted organic reinvestment in the business, as well as inorganic opportunities. As part of this agreement, we will repurchase $570 million of Series A from Centerbridge and Oak Tree. Both will continue to remain large shareholders and maintain one seat each on the board of directors. And we clearly appreciate both firms' commitment to our business. In connection with this announcement, the board's preferred conversion committee and our entire board of directors approved an increase in our existing share repurchase authorization to $250 million. In order to fund these share repurchases, we have launched syndication of a new $700 million term loan B. Our robust operating cash flow along with increased liquidity after we eliminate the Series A preferred dividend will allow us to quickly deliver. We will also continue investing in our organic and inorganic growth initiatives while maintaining our commitment to return capital to shareholders. Last but not least, we ended up the quarter with a strong liquidity position of $760 million and are well positioned to maintain stability regardless of any volatility ahead. Turning now to slide four, I want to discuss the central part of Garrett's business transformation, the expansion of our technology to serve the electric vehicle market. Our proactive strategy in developing and marketing these solutions will position Garrett for success as the automotive landscape continues to shift. This is not a defensive strategy, but an offensive one, future-proofing Garrett's offering and taking advantage of synergies in electric vehicle applications. What makes Garrett Electric Vehicle Arms different is our talent, the 400 industry-leading engineers who bring significant expertise across co-electrification competencies. This has driven innovation in Garrett's best-in-class product for the electric market. We master high-speed balancing and optimized aerodynamics with our turbo that also operates at very high temperatures. The Garrett high-speed motors provide best-in-class power density, operating at 10 times typical automotive speeds with a compact format. Our power electronics operate at an industry-leading 30 kHz switching frequency with a unique compact design for high-power motor control. And our software operates six times faster than our closest competitors, optimizing energy efficiency. We are continuing to build out our electrification team to accelerate the development of these solutions, and we are allocating greater than 50% of our annual R&D budget to these growth efforts. Turning to slide five, our innovation focus allows us to design and build vertically integrated electrification solutions that are technologically superior to other products on the market. We offer leading solutions that customers are excited about across fuel cell, e-powertrain, and e-cooling. Let me focus a minute on our two new zero-emission vehicle offerings, high-speed, high-power density e-axle and high-power refrigerant compressor for electric vehicle thermal management. We have demonstrated the benefits of this technology and are engaged in the pre-development phase with customers. With the growing need for smaller, lighter, and more powerful traction and cooling systems in electric vehicle, we expect successful introduction of those products and a ramp up starting at the end of a decade. Our focus on operational excellence and proven track records of launching technology innovation at scale, we that help us maintain very attractive profitability levels for the company. In fact, we expect zero emissions vehicle, battery electric vehicle, and fuel cell electric vehicle, excluding hybrids, product sales to be up to $1 billion of revenue by 2030. We already have $350 million of these lifetime revenue awarded mostly in hydrogen fuel cell compressor, where we are bringing the differentiated solutions that our customers need. This, along with an unmatched portfolio related to fuel stack power, has led to strong wind performance in the past year. I will not turn things back to Sean to provide more insight on our financial results.