GTX - Earnings call transcript Q3 2018

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Operator

Hello. My name is Andrew and I will be your operator this morning. I would like to welcome everyone to the Garrett Motion Third Quarter 2018 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 Q&A session. now Vice hand President, would to the I Blalock, Paul Investor Instructions] like over to call [Operator Relations.

Paul Blalock

had you. Paul results Thank Thanks you, at of York held with call. Garrett. financial today, months be in New our for everyone. meeting I’m we I’m conference many we tuning in Exactly City excited Andrew. to the Garrett’s here Good to of Blalock, and day first pleasure ago Day truly two first where Investor

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to our today’s on that and begin, Day Before links presentation where will like as we Garrett webcast the with Garrett. our important also I’d well Investor available to as you information find website about Motion other presentation along filings is SEC mention

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XXXX. of Turning financial XX, and to X-K information previously our presentation related to the on X, filed October disclaimers form Slide our additional to refer please

to our it I’ll On Olivier CEO now and the Gili, and over Rabiller, Olivier. is President Alessandro CFO. call today hand our

Olivier Rabiller

proud Thanks for forecast independent our on is release great to to you results of It long-term you with I as Paul an share I to spinoff and company. an led welcome you we earnings instance first the very Honeywell the Garrett that the October saw investor welcome everyone. of solid share aligned much from conference in with during Xst, some first September. am with [indiscernible]

X% sales basis presented So highlights and number as growth include million started. and by third reported organic million XX of representing driven quarter on organically. growth Net a let’s X X% get were Garrett’s of strong on new product Slide XXX increase an launches.

our product. portfolio As in is we at further discussed September now rebalancing Investor to shift we gasoline product Day, Garrett as its

first For XX from of points months, nine the year. is basis sales up last now our gasoline XXX

is with years in our by this All based last we've got pretty of on of our XXXX. this is three gasoline over portfolio towards bigger the well turbocharging and on forecast track the wins than diesel end

this will decrease with of Alessandro result this on not the in diesel later As business. rebalancing presentation a of you is our share

mix X% the about decreasing impact in EBITDA growth our of in presented mid we nine turbo position the industry-leading in strong off that in quarter, was achieving as maintain an our cost our a adjusted that, debt of X.X% insurance. X.X in we as margin negative company months hedging in robust XX.X% our We million was despite New grew continue well highlighting the of effect EBITDA organic the XXXX industry million. and be new rates. Net To now and to effect GTX. very platform financial our see strong million gasoline in these the XXX average growth estimated overall. Xst sales right With of through cost the cost full impact we win hedging control our listed confirming below fact, sales outlook by Stock between XXX the XXXX year XXX contribution adjusted kicked Exchange X% York on follows. diesel raised results comfortable, our excluding billion In productivity public and first Once also globally and of and on under between an business on of September ticker with completed October X% and initiatives September, excluding X% on and that Garrett

X, our in you that's In weight our exposure basis, while our gasoline diesel rebalancing Slide as weight Turning X% the a our on in now versus our grew in XXXX same exposure progress by is by portfolio European by we our XXXX. our product and Asian will mix, decrease X% nine to X% amount. see grew on months

As plan. XXXX. strategy in we line five our to our continue net diesel and is with from product we with by said portfolio end year of This be in expect will the and sales greater global gasoline geographic diversity September, equivalent that rebalancing

Slide take two Turning I wanted the stage the growth about three come strategy. on to now back to opportunity technology to six. our Again, points

technology turbos on economy while And we driveability. emission makers lot needed business, the traction preserving on seeing of are more car value for to reduce our is by and First, core gasoline plan a geometry fuel to engines. improve

which car larger hybrid makers are XXXX, global for to for OEM e-turbo pleased hybrid vehicle we a OEM production expect first by is XXXX, also for from account be for about more same have will power five to great pure hybrid of be six industry a and we And to in for just equipped that one vehicles. pioneer of a report high for with It European there the turbo XXXX, large XX% projection progress that global will that on And that future the or will while show also At are formed production. remember be hybrid. these to it engine battery that I'm penetration whether and times engine important platform higher of for it trains. we was be the to we hybrid whether train e-compressors the fact, more strategy. cornerstone strategy or of first electrification volume is for larger time, it seeing making application adopting car internal our In is in combustion launched the launch than

additional who We pilots OEMs hand project have with also now I quarter financials. software cover this over secured for our Alessandro the business. digital connected to will and it will

Alessandro Gili

welcome Olivier everyone. Thanks, and

seven, showing Turning key we now are to financial metrics. Slide our

both the increased currency Adjusted hedging XX% million. organically million million currency Our $XXX $XXX but performance. as net the well quarter-over-quarter of a in excluding months impact the our for basis nine led X% year at prior in sales foreign Adjusted EBITDA foreign XXXX impact and on of grew versus as XXXX quarter quarter-over-quarter was year-over-year. excluding $XXX substantially hedging EBIT with at line also

the grow months for at While XX% $XXX by million nine year. last the versus period same

$XXX taxes was of related a months in XXXX the XX% mostly X% historical on which down nine to initiatives. $XX our $XX XXXX down before was productivity line CapEx ahead QX, and versus net with sales quarter long-term ago. The X.X% basis, million is period the year CapEx XXXX. nine third million $XX a performance basis, on and a and in million our was our the same in for our million growth income months from targets. quarter of Our And CapEx was of

quarter a minus Finally, was last in the a million on from months $XXX million year down X% XX% basis third $XXX million nine was representing conversion $X CapEx adjusted an rate. EBITDA up

light average. by R&D Price growth vehicles $XX lower and or the eight, for mix quarters impact of last X% the impact sales growth with light sales or the slightly comprised planned Growth primarily X $X.XXX will million a for And as was of continuous from with same currency Volume organic third versus in products the in by business. months versus Slide impacts without growth the EBITDA by growth for organic and foreign hedging of and million Slide minus XX this primary foreign our $XX period last an line long-term nine and was to foreign In versus of hedging Honeywell last other excluding million growth higher year and from quarter focus year versus Negative transaction were lower by defined versus in a to XX% comprised the hedging vehicle driven strategy negative US place in by for growth nine industry EBIT strong for nine quarter sales growth prior by of same Adjusted driven adjusted growth dollar, products period growth improvements during with or million gasoline growth. performance the a for the net gasoline focus notwithstanding million by EBIT adjusted considering effect one last industry and of the with X the vehicles aftermarket and up bridge points mostly sales million gasoline for products in commercial to weakening the focus in $X basis strong growth year. on products quarter negative driven foreign net bridge months of net the the of partially Net the type $XXX compared previously month-month adjusted $XX in product continuous period of for Slide was its on organic productivity Turning continuous hedging, and hedging. mostly strengthening and was productivity within net in in the months are growth. million diesel notwithstanding mostly currency in set million the strong in total communicated of commercial grew year sales during net from the currency period X% rebalancing prior driven our XXX commercial gasoline foreign period XX% net X September the $XXX line a $XX dollar the XXXX $XXX by quarter was products from diesel. same million $X euro SG&A or Adjusted bridge manufacturing acceleration or organically primarily XX the in the strong or hedging in the gasoline and $XX mix million policy the the $XX impact XX% Volume net shows diesel diesel. we net as by million foreign sales period XX, net the discontinued impact to on show with driven verses shows million million diesel was euro million year. $X sales basis XX Positive $XX the Margins of was organic industry than for sales quarter with $XXX QX currency in quarter other was vehicle XXX same approximately X shows basis or by same rebalancing than pricing currency sales and diesel. of in of related from net year. decline in minus prior the mix our net than industry by driven decline by sales driven the was period lower mostly currency and without and million versus in gasoline to of from XXXX combined sales Garrett of months. $XX currency. reaching XX.X% further the On gasoline the products XXXX hedging. organic million year. the was points million and nine growth highest on minus period. for previous growth. by growth materials Investor of and million Offset the billion. growth vehicles line the above products the rebalancing range its Negative the offset offset in months XX% the in partially with productivity. aftermarket EBITDA growth organic million was XXXX gasoline quarter net approximately guidance XXXX the from slide months on XX the totaled Day. XX% XXXX, excluding the impacts same versus global gasoline euro million X% margins X% in own in nine was and global lower EBITDA sales. US the products effect in in

In in policy impact an as currency the partially performance place before third nine million was profit of tax last months the quarter of foreign lower show nine million result the period. euro that the quarter. $XX and quarter July than for as months we XX, to addition XXXX, X period. a On profit the reduced third In the hedging pre-tax for or positive the our during year

On ended profit FX debt. gains XXXX charges the a other restructuring income asbestos to $XX in largely million losses in the $XXX as of versus of therefore million the of and of expenses are related basis, impact XX% versus charges the the the for pre-tax business XXXX non performance advance our in the Garrett’s nine QX, off. and and of XXXX the both includes future million tax stock $XXX of net the was EBIT. on still and months QX, $XXX environmental repositioning the in versus are operating related in well financial the For ’XX before Profit compensation the XXXX. million million basis. spin growth quarter nine grew by the months charges driven and impact as same XXXX, and was not on a Garrett's $XX year of September or last reflecting And period period $XX nine months indicated And standalone in same million adjusted

on providing of income the we appendix an the an XXXX For $XXX $XXX income reason, the in for $XXX million million net from at include $XX third not quarter metric. was million the million in stage an quarter are third EPS million as benefit. same tax was of increase presented XXXX $XXX and this Net the

provisional tax quarter spin benefit foreign XXXX offset for reform. partially internal this tax third the from adjustments the business by of off, to currency The to related was taxes an of Garrett’s amount on primarily impact for in restructuring attributable earnings withholding advance tax US undistributed

in million first driven of the tax was subsidiaries income benefit nine foreign $X.XXX onetime by to nine months net XXXX $XXX the in billion undistributed an months For XXXX, was increase from earnings. and attributable

our cost. $XX million first senior term million of million in liquidity tranche A the or placed credit of of million On enter cash loan senior month we the in million loan lien denominated XXXX accommodated senior lien million credit year million. B for stronger which the consisting loan in in seven of B XXXX. also facility XX, five Slide an in and in lien we October. notes We aggregate was profile. we spending show targets senior September per agreement $XXX September position estimated $XXX On consist approximately XXXX, $X.XXX completed principal an into repaid of place at achieved annually. the is of secured million to demand debt A, loan and equivalent $XX a Total term euro funded due X.XXX% XX, of US revolving of of on secured billion. its financing from an million amount Turning and $XXX tranche related secured down Honeywell, at A dollar term million total a $XX XX, principal approximately of facility unrated the end a million million first in XXX €XXX denominated aggregate frontend year million. now offering million September of The a X.X% $X.XXX $XXX in The XX, of interest during at of was were maturity million average and and XXXX, amount par a XX% lower of for year of amount senior euro which total XXX of the were be $XXX year with or to our amount notes million term and five around the $XX principal first €XXX at senior period €XXX $XX not notes secured fully European net, this senior lower estimated previously we and the interest for but

the SEC in spin our million the financial targeted Honeywell return. elements in post presented filing shown spin the as off. $X.XXX $X cash XXXX The unchanged we page. targeted to the specific forma with On following distribution obligation at filed sheet reminder, in allocation post Form-XX our remain forma forma September being revised a after to asbestos as balance is related our pro pro substantially reimbursement its from sheet by balance flow will $XXX million result well provided of obligation cash the tax The cash as a XX, show focus our in of from $XXX million pro the spin [indiscernible] information in of million to obligations of result Form-XX. $XX the certain with and following Honeywell tax Honeywell as reduced As was a MTT Slide on the million

the payments will The be the million over, X lower a X been result, contingent cash tax the the by the revised total $XX of on As lower for and in X-year the paid of costs MTT obligation for tax liabilities years million million in updated Honeywell additional anticipation XXX to for have Honeywell spin. million period. X first annually to over slightly certain based tax related

model. launches products. XX, driven by to X, QX We diesel fundamentals a summary and are rebalancing performance. providing first net nine gasoline provide results Garrett’s Turning focus on These months strong a of new of confirm sales and and Slide the our we product business growth versus

our technological flexibility cost margin focus continues for and strong our position our to strong structure. driven and X be of by Our productivity on

is accelerating. portfolio rebalancing product Our

X% of million for first over Our growth year expenditures for is final and asbestos and on are providing XXXX EBITDA, million the and these, for Slide as from $XXX Net year. his minus $XXX of first X% remarks capital cash million And I based $XXX including Olivier follows. related environmental the that $XXX operations, months excluding our XX. strategic full between hedging nine million XXXX. between and time the as we which hand adjusted With sales outlook was impacts to organic flow will on presented payments for

Olivier Rabiller

you, Thank Alessandro.

So and all-in-all but win confirms our declining All of organic growing I a pretty as made these it pilots the a rebalancing not very electrification in diesel mass in Paul. by of connected we quarter to back the decrease more the production at hand today. significant move business, that strong launches, also I And positioning for progress gasoline good to with a our of on am kept our as both of securing right primarily expense sales and And that’s a encouraged expected, the by continued platforms. [indiscernible] vehicles driven and and much we launches. rates very will concludes formal our remarks industry. growth preparing

Paul Blalock

Olivier. Thanks

of we Garrett their Before been Q&A the XX, remind Honeywell's agreement regarding that an the Honeywell SEC session. with amended unaware reimbursement Garrett I’d prior unchanged. to action its enforcement SEC XXXX not own begin filed that XX-Q. and September filed has of indemnification disclosure company’s to disclosure Honeywell's The like everyone with X-K on action. was otherwise in remains and

would carve ready on are we’re for financials August filed those with already with these the XXXX. and X-K XX, Operator, from questions. contemplated regarding consistent previous issues company’s regarding questions Form out the SEC XX, restated As the in such, refrain its to revisions Form we asking in Honeywell’s ask disclosure now you or which

Operator

from first will We ahead. Aileen Smith Bank of comes of Please question session. go question-and-answer Instructions] America. The now [Operator the begin

Aileen Smith

revenue Asia and of to quarter, question. revenue broader Europe Good specifically that and other organic Is third look growth able which for yet that growth to mix get regional persist where impressive my and weighted your market your or would down roughly product market. over it CAGR? would to your quarter in that growth X% get to drive I growth next taking implies outsize to to X% equate you to terms morning at potentially few double-digit this market X% X% launches and volume something X% were forward should was of years factors growth the expect the production and there to I you moderate in exposure mix would by guys. to above and above industry particular expect Thanks the we If going

Olivier Rabiller

laid question September launches that our and answer far back I most and our we’ve we that driving that highlighting revenue think get of the we will I in disclosed Investor Before so up the it growth rate out I that in well are win what Day quite to coming see. back

said macros. as that the macroeconomics, enabling we to see quite never are highlighted us can as you We launches to yourself the those you’ve outperform immune have are but

Aileen Smith

XX% financial adjusted is helpful. EBITDA the think And we adjusted housekeeping outlined goal the your XX% relative hedging about That’s margin should better excluding XXXX. target as margin that the you Okay. reported the to loss the to in XX.X% mechanism? in items you EBITDA EBITDA XX.X% that for quarter, is your adjusted Or

Alessandro Gili

adjusted we consistent We, that you is number hedging should Day. presented during the consider we with Investor the way the

the that EBITDA EBITDA key metrics now end FX that provided certain was beginning the going something our of will information, providing policy adjusted in Form-XX and we to hedging in adjusted the EBIT since forward was recorded, clean the EBITDA selected using metric, adjusted are until to our of a way be place elements we’re the to financial consolidated but adjusted the the hedging with previous just in just be Our extend information keeping be to we September. consistent

hedging own detaching starting forward of that from We and going year. from policy the have in for are next will policy place our beginning we

Aileen Smith

they similar during that you your above additional IHS possible timeframe? And growth Can the you assumptions behind for forward and Are at should are your revenue about give last that takes underlying volume of to breakout assumptions can X% X%. to Great. we if the in thinking CAGR any all color be projections Okay. outlook. puts market some What longer-term question on on outlook. the and us

Olivier Rabiller

what that provider and what said we’ve to we sales aligned at look disclosed this you when term is project Day more targets. on the out provided back we When much macros Investor is to are as plan we the long our So, that year, conservative. with in our are tend IHS, very for like looking but we in the at our companies obviously usually base industry obviously we by something again September, on

Aileen Smith

you. penetration Olivier penetration. it Whether the triple the That’s for for the Thank diesel - by or or Great. A Rabiller very for cash way helpful. the is production

Aileen Smith

your estimates from are your So, of an with penetration what also based is are? incremental extent coming to also underlying the own and conservatism IHS cost on assumptions levels some

Olivier Rabiller

are industry, and the go data we big forecast, we comprehensive with macro. track world programs view Where engine of our our maintain enough the then in the we key have we each this the volumes of of that a year. And on we the around each base all pretty programs, the adjust much gone are with that the around with very

in a of gets us that industry that quite the long view accurate the So run. is

Operator

next of The Brian Barclays. comes ahead. from Johnson question Please go

Unidentified Analyst

Hi. for Johnson. This is Stephen Brian [indiscernible] on

year The X% full drill organic running growth. Just XQ X% outlook the X% on XQ been here versus to implied for to for want ’XX you've year-to-date. down the

Just the drivers organic wondering XQ? what of step down in for growth that

Alessandro Gili

slowdown changes That primarily including seen both OEM that commercial noticing also by side and driver that our we primary vehicle China, is on to too in really the you’ve the started market. driven far

Unidentified Analyst

exposure China? have estimate you much have Do you how rough of to

Unidentified Company Representative

that you on Asia, those for as is in exposure the Our see lines, providing basis our other for visible is regional split to regions. as the the deck, China well

to is part a back China. that there's for go XX% in Slide you driven by if X, of period, large months nine the total the Asia, On

Unidentified Analyst

quick just on housekeeping then And that.

low-single-digits. I production IHS are volumes you from seeing a think, a what cutting standpoint? assuming for based like what hair China Is has you’re that out guys down XQ schedule bit you or guys on

Alessandro Gili

with substantially industry that’s overview. the think line I in

Unidentified Analyst

costs did And ditto like on and year-over-year a SG&A. the down R&D for was control then in quarter. guys you good job actually looks R&D CapEx

normally Just expense of that wondering flat being R&D up. held R&D kind what because basically year-over-year, going we’d see the driver of

in XQ. the reimbursement launch especially higher from engineering generally Just there just and wondering kind XQ it’s if activity if was considering, quarter from recovery or standpoint higher there’s of

you how guys were SG&A wondering, in to in hold Just able the and R&D quarter?

Olivier Rabiller

quarter clarify something. to us be me that something managing This are EBITDA do. smart so very Let the we our is not clear, very that not would to make

R&D But quarter to in all have can we over either When like we previous about mix this being the that target look the guidance said on obviously for look X year spend quarter we're extremely did track is other we year the full what a strategy. the the and in expense at as R&D along way a investing pretty our it. for bit nothing of years. for we part comparison year at one the our So of think in R&D is is well to give to quarter next vary according the we R&D quite percentage frankly. spend the the terms we and important of

We are a technology company.

differentiated We are investing technologies.

not X well XX years. We the that will to vectors have XX a next the number years drive next our very of company for funding the launches, only but more are than launches growth we but

Unidentified Analyst

lastly been which new of you as able just strong to guys the then XX% obviously XXXX, pretty kind overall. we on, have intake order And rate, since think about achieve is

moving forward. terms just here growth about wondering, in implied Just market the of

a is sense overall. what market current share have guys Garrett’s You of

of here of to would order rate the imply a trying much intake sense moving Just above how get XX% market for that forward? growth

Olivier Rabiller

Yeah. The good market share growing. are

industry, On our assume can the position on is our growing. that impact so the we demand

Operator

Mr. there follow Was a up Johnson?

Unidentified Analyst

Thanks. it. that’s No,

Operator

of Colin UBS. Langan go The ahead. comes next Please from question

Colin Langan

adjusted and trying Great. in Thanks I the the giving quarter maintenance tax be future, you for adjusting EPS question mean think about model I so should question. a taking how these from want we can we out your will just my out. things

Alessandro Gili

of particular EPS for two in main this I is, QX was reasons. structure. at statement is not are think quarter stage first financial that that we That the one [indiscernible] -- we the under providing said still the part

statement. required that as preparation is the those public income see say financial result [indiscernible] structure. from a not future in So, slightly coming SEC progressing is a we but under obviously, of it And overall are all are the what we no change relevant there the metrics of changes indicative part company numbers becoming that are under upper the structure you the standalone on our our statement U.S. of as might performance

reason just the some our main that’s additional So, profile end on debt visibility coming the September from books the of driven why forma a is standpoint. today planning the is what we changing, to the pro by provide also are will into going at provide are which interest to be changes

which by is the delever information. interest key So, you significant we substantially future. standalone that be outgoing performance. visible providing a describing Taxes, are estimated in said that we are our our we’ve That’s will get we one One normalized this what optimal have our at capital the EPS going EPS changing Day reason indicative target element yet quarterly is are but going to are the second to of to the is our provide other better we debt why on expenses a in structure, we we the believe going Form-XX, to not a not been is the be until Investor that be might in structure element than one actually company, stage, forward. as still not we driven not so one the EPS have they

we’re stage. this why So the providing not reason that is primary at

Colin Langan

Okay.

still Day, you Investor that… there that was your in is on know and rate rate the XX% it going tax said changes forward was right think I some I

Alessandro Gili

full as But out these from the a close the be itself tax elements LMN adjusted The basis, would an that result of tax as the from restructuring because XX%. XX% to the for providing rate, of quarter the the to were Clearly, current for XX%. we’re as to for if prepared again basis fact XX% implied structure well XX% be rate of to itself year, tax reference not spin coming can including under you on back reform implied non will our the that obligation books would tax the implied will around statement. point that consider tax at taxes. you different be financial result rate, spin the rate an be at for is as indemnity The on the deductable a once

Colin Langan

you at Investor Day. a what That’s bit said better little the than

Alessandro Gili

or because on It better, expense itself is. the interest interest deductibility Slightly the mostly of organic. and

Colin Langan

the Is down, are the were and EBIT on issues margins And any China that think tariff, the to is issues impacting is that there in there? diesel points. from other that gas, think How is all? basis I you there, Okay. all at there? adjusted takes from should on we puts in XXX And shift particular then gas, just

Alessandro Gili

No, China. nothing on

the diesel, you into For gasoline itself there’s any are so margin is forward. of providing combination acceleration also quarter that the will and a will a certainly already the per going lower on we will reference that fact see a acceleration that that standpoint. from three be gasoline we out one been our elements progress the as into gasoline amount there versus is We’ve as gasoline impact unit basis rebalancing element calling

terms a was included of door the will be in be going going margin completed And also to quarter, we from the out is is portfolio. also compiling it will perspective the visible So in from the that a forward. technology in that information Until, the of and standpoint. already evolve then visible QX rebalancing governing as are

are the compared to overall how in The of six quarter specific the terms commercial it year. one of first lower vehicle are other is impact it was on driven side, the in slightly by factors for months

commercial the being If vehicles an look XX% they at have back inter quarter. half, organic are on growing while first basis, X% on you at

temporary So be but the after This year. then And there compared situation there’s any, also perspective. recovered period again will quarter, same to the prior a means on of the forward. lower that is which market slightly means slowdown is the it largely is going in side,

already particular everything been think [indiscernible]. I communicating So we’ve is nothing, no issue, there

Colin Langan

And it I sequentially wrong? or down seems is those wasn’t like math, right. my if QX But be also got will that margins I sure just

Alessandro Gili

be of we should that range with the it in line substantially the low-end provide. No,

Operator

comes question Capital The Spak next ahead. Joseph Markets. from of RBC go Please

Joseph Spak

I volume mix commentary XX. the some of margin points at and question were just year-over-year. down In you said minus the XXX guess then be your on first then the commentary provided. basis and was productivity the XXX, There gross XXX would you

are year-over-year factors bring down the other to basis? what gap back bridge on So that the a help gross margins to

Olivier Rabiller

acceleration gasoline before There on the elements on and to growth covered million. at dollar visible basis on XX is a look the change be period. and And driven the as I by metric elements. And the as margin said again there acceleration of driven Volume if well strengthening mix considered, particularly our an the the as the for overall R&D additional are on because then I is The no just in nine for the SG&A is months adjusted basis. nine in a of effects top-line on is basis. is And combination the for that that is by is quarter. in other by, US a comparative particular you mostly negative described the month a fact driven

Joseph Spak

little either in was maybe just XXX productivity. of of this what we that plus forward? points. you specifically, Can Or productivity of really you that what do going the about drove quarter then give quarter the sustainable terms think a basis just how quarter comp much And that what unusual bit of anything is is you whether that, roughly in sort drove about detail said I or there us is in should can think

Olivier Rabiller

productivity The a productivity we way we follow -- look it’s said, we seem at already. amount plan way as have to what we clear in that quite we which because the is, there--,

call quite cost of follow. we with do not there factories that are that the our our system of that braking formally drives during we continuous. own a coming portion to one buyers it’s because Honeywell the we it's is pretty And productivity coming system. result is now big will [Indiscernible] and significant from off track our is continuous This that’s what have well on suppliers the suppliers. And the year. We up the the negotiations

Alessandro Gili

call And we productivity Yeah. to clarify just didn’t out separately.

combined the being was in comment for price, and million. of quarter productivity mix the the on $XX to effect negative So,

So, offset partially. productivity mix by was

Joseph Spak

couple of to versus sort much your said a How what good us texture with would I know the give and domestic top is of China. just is Maybe global color Okay. of Can the other you much mix of you I is XX any sort OEs you helpful. OEs Asia the your portion think sort China. be within is of within how there China any domestics maybe ones -- within and know I

Olivier Rabiller

to have China. strong very not We the quote in we're in going posted results

of a are significant by of of which only proud not customers quotes to set of course by way competitors that are represents best in with that We this we not side the need way the of commercial you we first, customers you close is very what market strong strong share differing quite the years vehicle forward that are sell but the also is to the on in there. that under course be that been why the side our quoting and we case commercial different the five differently. the to the And reason know international vehicle is And with, side. the probably we've vehicle

Joseph Spak

think to I sure before. Maybe was on just follow I up to Colin's want get question number Okay. the make I have it straight. comps

it So, you're to is EBITDA like comparing of sort the XXX year-to-date XXX. the XXX to that guiding think number looks you're to the I

down at or is least look there a does sort a something volume that sequential step and there in Is sequential if seasonality at you it is else? look like just implied lower EBITDA. some So, of margins

Alessandro Gili

it’s of is be acceleration get mix sequential to is is Investor some year the structure be extent the going certain it into there between where at we’ve portfolio clearly Day, the as of the well the rebalance are lower in improve to with the also just a result mentioning as gasoline which just think quarter terms as the and the and evolution guidance. gasoline of the don’t we margins means not we the margin, margin once going as one, that of be the to during diesel And been we to end driving the it And then today, where behind the value margins itself. will transition a 'XX. of forever, just that range technologies to is full better temporary said our low that I forward that we providing technology will a the up as

Olivier Rabiller

of with you as know major, valuable small said on our And time have for comments it's us just that about retranslating reality what one iit future. we geometry it bidding next the the in may we a to that back technology today is generation sharing second think few weeks are whether we is which seen a what as of

Joseph Spak

that’s about One, payment year on million you’re previous MTT, The was so, it’s and frankly now XX I Is a one think million. not the or that just you quick saying cash. about $XX right? say

Alessandro Gili

then and last that years the XX it’s specific the schedule Actually in years X is three X% a and is No. in the first X the under the and XX, years MTT has XX schedule.

total we it’s So what before XXX. XXX that million in now had changes is and

this over X-year So million XXX the period less. is

versus is the calculated For on the of first adjusting X-year on calculated XXX. just XXX elements X% X%

Joseph Spak

So X% the million. or…X I that… thought

Alessandro Gili

for lower the X X million first years.

Joseph Spak

year? that’s high-XXs So about a

Alessandro Gili

of of X% X years. XXX versus X% XXX first the in

Operator

go Muzinich. [Operator Instructions] from of question The Richard Smith next ahead. Please comes

Richard Smith

Hi there.

data flow I at the the out back the is one ’XX the this nine flow from cash if on historic if months cash of Just I’m half a free year-to-date. with of some don’t given I way right know looking first quick forma. kind pro But

in amount absorbing have working of reasonable capital QX. you So

Alessandro Gili

quarter shouldn't reason didn’t We really That's why we provide the do that. number. a

certain provided other a of in are financial had securities, carve including that mechanism Honeywell the months business the out six we actually place other are including transactions unrelated cash in that of the structure structure coming itself. and as as are to within from that first in marketable Form-XX well flow The elements number the

So flow. what we nine proxy is cash cash which to have is provided the metric, a free the flow month

quarter, be Free we debt metric in means we'll same compared provide a soon able cash structure. the for As to flow structure period which the for to flow XXXX. starting to the free net our cash stage XXXX point any get will metric, of as

mechanism way requirements. but do other to to that, compliant is be which there was flow to no There able a not structure, pro cash do is a SEC the Sorry with for it. forma

So we we provide ended providing stage. at with this up what could

Richard Smith

Okay understood.

cash flow? is a operating a net quick Then follow is be the contributor QX. guess, in capital for expect likely you related see, Just I would of up. to to What, to working terms it to what often

Alessandro Gili

because working that positive business we're is with Normally structure type we of And we normally capital. get, contribution, negative of operate the in. the

Operator

of Gupta Pratik Sachs. from comes Goldman go question ahead. next The Please

Pratik Gupta

taking question. for my Thanks

clarification one guidance. around adjusted your had Just EBITDA

adjusted Slide you I’m where a bridge So EBITDA. around detailed XX, looking at provide

at if line number the that that’s to item. provided I’m mentioned year looking right that comparable the guidance LTM XXX. to 'XX this assume correct? you is am full have And So I that Is as

Alessandro Gili

Not That is excluding October precisely. hedging. the guidance

would should you million something few you to got net So backed drive basis. which on closer gain that a out below, lines to $XXX

Pratik Gupta

I That’s you. Thank all Understand. have. Okay.

Alessandro Gili

welcome. You’re

Operator

This concludes the for Thank call. question-and-answer results Garrett attending session the financial Motion today’s and you conference presentation. XXXX quarter third

disconnect. now may You

Garrett Motion (GTX) 7 Nov 182018 Q3 Earnings call transcript