GTX - Earnings call transcript Q2 2019

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Operator

Hello, my name is Nichole and I will be your operator this morning. I would like to welcome everyone to the Garrett Motion's Earnings 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. I would now like to hand over the call to Paul Blalock, Vice President of Investor Relations. ahead. go Please

Paul Blalock

Good Garrett Nichole. call. and for thanks Thank second day quarter to Motion's conference XXXX listening you, everyone financial results

Before other on to press we links to where like today's filings find about begin, and along Garrett. SEC presentation with you'll mention also release information Garrett the that available our Motion important website are I’d

obligations today's in are to financial Turning to performance risks terms business. this in comments, the statements our reconcile our filings, risk forward-looking aware understand and and and also of to The In financial Slide and found X, gasoline liability Indemnification XX, combined vehicle and business, additional in which be slide of such reconciliations accounts the the historical taken which the both liability to only non-GAAP in using Indemnification diesel as gasoline on post-spin in release with based each examine term as of terms Also the describe to uncertainties with in of in light its operate balance assessment future presentation Honeywell accordance nature presentation. us to read we numerous by the Indemnification closest presentation. a and calculated notice the We are to of June that disclaimers information X encouraged understand presentation reflects financial factors and Today's claims Reimbursement should with presentation please estimates consolidated payable Indemnification products factors. and this those be press our we and Honeywell payable amount our Agreement to asbestos-related accordance the in is Agreement. financial and encourage information estimates basis payments related of a slide we our with the of of referring of based the Reimbursement you're today. the those to manage way on the our of become in terms our and carve-out only. appendix date you light diesel future $X,XXX and the is and the million as provided and to uses reported by Honeywell's in Liability results vehicle asbestos-related GAAP respect of The XXXX of terms such. its Honeywell standalone contained and sheet number and Honeywell, of for to terms will liability Liability. own On

As previously our for related weakness Agreement. in disclosed has evidence XX, the liability supporting to Form in XXXX, under statements our and Indemnification over and management and XX consolidated financial there was December a financial that our to the control for our determined Honeywell reporting material our internal combined Reimbursement

and unable to actuary the were independently Honeywell's we the Honeywell values provided information insurance of amounts of of we the verify amount accuracy information our Liability receivables. to in and to calculate us including reported Specifically, Indemnification that settlement used certain provided

not independent through obtain remain these Honeywell. advisors our For consultation and receivables insurance we are That the issues. a with whether with not recoverable. probable additional and continues, information information assessment the did working to communication material make with are process of example, with This to our the and process certain asbestos In advisors, Honeywell an weakness outcome proceedings sufficient outside been underlying Liability iterative about provide us Honeywell has dialogue remediated. we of in Indemnification on and yet

to Rabiller, today I’ll and of Vice Alessandro today's Olivier. our to President turn it With call. and it's comments Olivier CFO. is Senior Gili, President those over the CEO; Following to our purpose us now and time now main hand

Olivier Rabiller

slow respectively. $X.XX about QX. expectations to of a Paul, basis of to challenging Garrett's Garrett's in and X% overall has compared earnings Net the and reflect income call. due solid margin $X.XX of market down for with from per acceleration in was and welcome Net environment. perspective be on quarter decline maintaining were and $XX Thanks, share with This on quarter Beginning and shift as profile our XXXX sales declined, $XXX success to a global obviously the industry auto our the production earnings second second automotive were to X% they everyone in the products. continued X% in put million in-line conference second of X, off quarter diesel results and million basic XXXX diluted the Slide global gasoline organically our and in reported

and We at XX% as would anticipated and now also communicated detail in which this portfolio from last reached versus diesel net our as XX% up products parity approaching between acceleration And stands XX% rebalancing next revenue gasoline sales, QX products, about and saw of more of an we XX%. in gasoline the on share year slide. XX% QX. I in are earlier,

we short-term attractive XXXX. our the products an in in negative we margin more to depth unchanged internally and suppliers. our We of ability more EBITDA and of China foreign XXXX light vehicle Europe. on outlook again adjusted and with the of profile we point revised exchange QX results. ramp-up adjusted high-level XX.X%, launched light remain margin up and margin weather vehicle also achieved from lower and $XXX The debt reported impact XX% gasoline rebalancing both our to highlights basis in with reflect This in in total from XXXX QX second driving million getting quarter, the both in flexibility and achieved XX we have macros but our EBITDA During of maintain QX slower points towards the by portfolio and in and our our shortly an China more XXXX recently productivity discussed production

Garrett quarter, solid market a margin maintained profile challenging second more the in despite Although, environments.

portfolio. progress product ongoing our we Slide illustrate to Turning X, in rebalancing the

left two Asia in see On experiencing slide the you due makeup slowdown China. net last to with of the year, points is hand geographic the the percentage in that compared the sales industry of our side declined

On a from percentage as remain be gasoline second revenue of up of the sales gasoline side, points launches. we of to successful I grew the six from gasoline percentage accelerate to mentioned XXXX. percentage Based product parity we of vehicle XX% by XXXX light and a on our we progress to-date, new moment our quarter products our end our the revenue track as to product diesel to at ago, continue on as

gasoline the ongoing are volume launches compensate forward demand and gains decline and full-year light-vehicle diesel basis. expected in programs going to more We continue ramp-ups to a expect strong than share of the on in for

market quarter after accounts sales. impotent sales. products of vertical Lastly, and commercial, not These the correlated for to generate continue with are net generally combination XX% and short-term positive of returns

profiles a offer the X. Turning are growth electrified the platforms, believe combustion driving production to margin key applicable engine advanced unique, solutions increasingly meet through core for technology our of sustain in Slide the only automotive pursue success supply long-term company. strategy technology is where those air-loop Garrett enable for here lowest-cost our our remains and to to These sourcing. leading systems priority high-level operating a a use and relentless technology we strategy stringent can our opportunities business key innovations customers chain and emission our industry which discipline turbo growth approach pursuit technology cutting we we of our to is the for and the On edge solution standards. company depicted led multi-stage makers

or electrified to a with and hybrids provide. directly the engine We strengthening the or also to past. of without turbo New directly the Indeed significantly the trend expected engines, platforms content a to on slated combustion expected our as of OEs production solutions we in they controls advanced ramp-up gasoline the penetration result software, the launches reduction we of engine plug-in used product see powertrains. for combustion pushing are technology The engines their plan of geometry internal milestones our model-based whether mainly have China. slower pure see hybrids. the in shelved internal pure largely electrified/hybrid which of are volumes as a adoption [indiscernible] HX already COX higher again part technology platform variable are being Globally, increase increased due platform have the

launching for E-Turbo in first we for the just XXXX, around application into communicated vehicle interest are As is will and larger And corner. currently building be we platforms. pushing E-Turbos us which earlier, the customer engagement

for activity what strong saw QX. second particularly in we addition, the commented Fuel increasing from as commented Cell and on quarter China in we In applications,

great the quality return Health will to to of warranty was value China Management issue program service for a Lastly, car quarter a help pilot first drastically add have improve diagnosis them for during the Integrated the the in we with in because an began vehicle. that for done done diagnosis the when right service place. that on occurs and makers application reduce not Vehicle any customers major These cost the OEM in new

financial really as Alessandro now discuss a get As over complex, key will detail. this of OEMs. for to perceived call our differentiation the in vehicles more turn more to and is point more the I

Alessandro Gili

will Thank of Slide my on you, review start welcome Olivier financials everyone. X. I and the

was Net we on currency last withholding was earnings. XXXX, as a As million to impacts one-time compared [second] from the X% gasoline X% the the quarter and products. of attributable of net shift quarter in reported in income the and a million, of million XXXX QX to $XXX the global had down in $XX primarily accelerated year due benefit Olivier slowdown auto to $XX on diesel before, undistributed from foreign tax sales were organically down when second with and mentioned basis production quarter for taxes

debt. interest QX QX addition, debt the had capital to In whereas million XXXX had interest XXXX expenses of on on due structure, long-term no different long-term $XX expenses

XX%. call, tax the items from As we QX, in quarter-to-quarter due our QX in our rate discrete was vary to might it and mentioned effective

in quarter continue $X or forward, and Adjusted million a Going quarter we decline year of versus second in the X% is totaled a expect of DTR. decline EBITDA of versus which second last million QX. million XXXX $XXX potential sequential to $XX fluctuations

a As million $XX points represented full was HX second XXXX. XXXX to sales, last XXXX and quarter were year Capital EBITDA year levered by in quarter the QX in was of million flow XX.X% cash of and of tax the down with adjustments transactions Adjusted free Overall, but is XXXX of sales. the tracking as slowdown not second in consistent interest and with the well in quarter timing year of expectations. strong last and from XXXX solid EBITDA margin up expenditures Olivier mentioned, carve-out payments and the expectations. party similar margin net therefore adjusted EBIT impacted QX line and global still million, our impacted basis from X% was a and related up the CapEx. comparable. in quarter, with both $XXX from adjusted as XX with was Adjusted net our $XX XX.X% had Garrett by light auto QX was

million bridge million, $XX Slide at or X, primarily is to a this versus our this to Turning currency. gasoline growth. of In last $XX organic decline And down is year showing breaking due grew lower representing net XX% sales constant performance, shipments. products X%

North and While result applications. and was This by side $XX of or business was market declined and million a $XX in certain a decline the declined Asia decline. Vehicles the Commercial of in driven diesel the products off-highway softer on by XX% representing other million, by X% America. overall organic runoff

the organic North driven offset aftermarket Europe by Lastly, by partially America. in and decline was

X, see walk you EBIT for our compared XXXX, adjusted our and QX EBITDA to Slide adjusted to as now XXXX. Turning QX

This EBIT R&D $X related which performance quarter down XXXX. $XXX by million adjusted partially million, volumes, million quarter, last $XX by price, SG&A, government lower to was $X was $X customer year. $XX higher and million of The professional and improvement mix lower the by service funding million in during million For was in driven productivity driven from offset of was fees. second primarily the favorability from

FX lower depiction and productivity highly was in On structure, QX impact taxes. our of to was are volumes weaker an variable providing control driven euro impact last mostly margin by currency attractive impacts contributed a by rate cost before and profile. more cost constant with Overall, year-over-year. hedging to our on exchange offset initiatives XX, to detailed and we our ongoing related negative the dollar versus coupled XXXX our continuous year Slide focus maintain ability income mitigate the Lastly,

declined to important Honeywell can $XX see, to year-over-year capital that the expenses note in you million QX also the structure QX versus basis, a and higher XXXX, post-spin to million last year. expense in were income asbestos prior are interest post-spin $XX XXXX. a spin, the which which XXXX, As due on comparison different is due $XX expense. pre in indemnification higher compared million reflects before $XX basis the taxes It to million largely is to the On lower to QX net of in to interest

Turning since March depiction are graphical providing our XX, XXXX. debt of to a we Slide XX, walk net

As by was quarter gross for at earlier Olivier, unchanged $X.XXX billion. mentioned debt the

was from the $X remainder million transition of quarter. within which versus million on on full tax from variances. was other of our a in obligation $XX and $XX $XX debt of is quarterly QX items million, cash cash our million interest million nature to annual year, last we assets tax year depicted coupled liabilities higher total QX last QX for conference million, when QX, of here of The $XX in due million Seasonally $XX this QX interest the which combination cost, paid the $XX Semi-annual million mentioned bonds payment and versus expense. XXXX included QX Honeywell of includes CapEx the in million including similar spin-off and April. And our million a of $XX of cash $XX liabilities conference with rose in million which by accrued $XX second accounts However, various in call, Other the in net call. HX of Honeywell and $XX to payments to $XX mandatory our expectations; as and HX to indemnity $XX in million anticipated million other $XX is the on of we payment payments non-linear in million,

due the once year, a annually as reminder, Just obviously. is a MTT

quarter, So anticipatory repayment $X one second of an XXXX. debt of the mandatory payment this $X the and was $XX repayment payment was for million the in Total million. that million required of includes

adjusted was cash $XX For cash negative the of fully flow generated result Honeywell. and million. cash unlevered the million as flow quarter, we of $XX payments flow positive levered The adjusted $XX free free levered a million to free after

mandatory of of $X offset And the foreign U.S. in just to by due of by components the swap, debt Lastly, positive as reminder, repayments as just on debt U.S. unchanged euro quarter, exchange to debt FX a euro currency as translation which XX, in And is remain re-couponing our debt, the million impact March, $XX the combination the from $XX of million, by revaluation million the $XX our of June $XX the positive a for compared million a euro was close weakening our loop dollar. cross includes weakening due result prepaid to as versus denominated. debt to offset which gross primarily million the debt of versus dollar. were gross gross

million $XXX increased by cash the quarter just net million repayment $XX debt million Slide Moving million. Overall, cash decreased by to and the liquidity of in $XX including the $XXX million cash and On and discussed. slide. are next debt available $XX which XX, equivalents showing we is in

Honeywell. X.X net that have XX. June near-term June note Slide debt-to-consolidated Our XXXX maturities. times items ratio EBITDA as cash are to to utilizing balance no And remain generation to our We our related debt was the we that sheet we deleverage on XX, balance focused sheet. XX, On of continue

denominated. of obligation well impact by $XX in $X.XXX FX indemnity the reduced XXXX indemnity a were XXXX, payments euro liabilities HX and Our billion, our of being million to as QX as result in the QX obligation as

with now a cash which capped $XXX $X.XX at payment year. stands the any indemnification respect to is As given million at reminder, and obligation, billion

stands in tax transition we tax however, of X% respectively the payment make balance mentioned three As and transition the but and is five QX mandatory to million. in XX% now $XXX mandatory was at then there earlier, it's payment each of the annual did unchanged. XX%, our the in years. eight-year total the no XX% It remains and schedule years Overall, April Honeywell transition in first last payment mandatory we tax

we where to see outlook initial organic down which net providing are can from to sales X%, positive Slide moved X% color guidance was growth XXXX, Turning the XX, for to you revised our we down in to to million, minus $XXX million. $XXX EBITDA time, from same the of million lowered $XXX have X% our to to adjusted positive original now X%. at million And target $XXX to

a range for some and light China As key from softer automotive in in has a higher cash demand slightly with the levered XX% a X%; driven flow in impacting slower result of adjustments a inventory to ramp-up light collections revised as China. of minus sales have HX free following demand chain. HX due the Adjusted assumption global assumptions, which to XX% X% our in of for in to to X% we vehicle supply a conversion impacting in of And macros well gasoline key lowered product production levels launches regulatory primarily been initial range level the HX, primarily vehicles persistent lower now commercial China. minus volatility China; new higher given

outlook call in that, original year, X.XX. as XXXX February, And a performance assumption a is line of the with to also we hand now final that of was euro recent at dollar I which Olivier comments. most X.XX, with been based the guidance will result performance lowered time for this Our when released at the back upon

Olivier Rabiller

on Thanks market we a the XX, successful Alessandro. Slide that our environment. for in key In quarter is challenging had results takeaway summary, financial

now we adjusted and organic from to as growth short-term as adjusted X% positive towards to anticipate And conditions been million has of the XXXX for million slightly The to outlook $XXX minus of our our EBITDA. fundamentals lower X% maintain $XXX sales we and intact. business in even we While profile full accelerated remain shift as discussed, in volumes long-term products. margin plus just macro year gasoline were Alessandro due increase our

XX% We our remarks exclude core XXXX, our acceleration rates in our will it turbo our win interest Honeywell. cash and in indemnity continue This conversion I with charger but rate to between And by and I we continued vehicle significant to which target an our generation remain future vectors by payment ongoing over and now back we electrification the hand formal business the tax strong earlier. adjusted XX% concludes includes to prospects. excited connected free discussed Paul. today, flow am for encouraged and growth

Paul Blalock

Olivier. Thanks

we Before to material of future not to reporting that in Obligation questions now we be our open today course taking line, related Agreement. will the on I we're our Operator, for questions. need actions financial mention Indemnification our weakness the under ready

Operator

you. Thank

David We from go will Please [Operator session. now first Jefferies. begin Instructions] ahead. Our comes Kelley the question of question-and-answer

David Kelley

more Good questions. some the morning taking able well levers and quarter? work how see And just guys. Thanks about to Can if margin at there. my then pretty lower industry continue opportunities, pull think details horizon go-forward your if on also down period I'd customer cost we the are up we the about talk in there for tough thought the some here? you inventory the some love level held A, you the macro. I to cost on were volumes

Olivier Rabiller

Well, the question. answering start David, little I'll granularity. more Alessandro a sure will – provide bit I’ll start I'm

– the cost industry quarter. reduction invent are where you We an the in into the on cannot go

you long to for So in plan need advance. them

You work need your base. to with supply

the those cost targets. the with And that certainty before of work into they as need achieving production. get product multiyear to into supplier the You contracts your margin provided

then a discipline company a obviously quarter, we all say quarter, your very, those there the is would there higher you're it's That's that quarter work executing long are And the look have point the starts. within I at long on is all cost. valuable for the this lot we before long before And are, the sustaining mean, and what within margins. I you managing say actually we time. very at programming about obviously of having when obviously, you a the program that valuable would when piece costs, is easier. I So managing

its it, Although, but to easier adjust effect volume of we see shutdown negative the variation. the obviously to

quarter the valuations a peers think reported important, were lot volatility. I of our of quite are of that volumes during some the

a know to better. we but and that a you chain If very overall did is you adjust from a had quite both cost can supply good impact an have adjust on job capital reactive, that inventory, standpoint. a to we of little that from working We a bit

David Kelley

go – Great Okay. ahead.

Alessandro Gili

go David, ahead. okay. It’s

David Kelley

either as cost your incremental going I – any more guess, can was customers quick level? downs the pass to price at in you your the your and chain. Tier change also change at just follow-up, to ability supply ask, are seeing any X I the in I X, to mentioned environment you suppliers from on Tier aggressive a pricing

Alessandro Gili

I the don't pricing even again have your see have contracts No, result or suppliers we in that your mean, the you respect. significant any see the those with don't of change customers we – once is multiyear ongoing for with are negotiations. you

on supplier result is supply keep the then processes. possible, base the So side lowest and the that you developments environment the and cost cost cost of to supplier order country in lowest lowest do the is all into

as have for As we and years. working that people on before, same pays what customer work result point. we just say on But the seeing we XX suppliers trend are some of the we've I that at the off therefore, seen mentioned would side, developing are about

David Kelley

great. you. I'll Okay, Thank pass along. it

Operator

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

Joseph Spak

because front one clearly structure, competitors cost and your in cost nature was afternoon mentioned the upstream right. morning Good about there, major of previous seeing line the Thanks. supply on of reduction if bankruptcies think you've you increased but I I volatility wanted are not what Alessandro, you're follow-up chain. impacting or Europe variable on talking maybe some weighed questioning. guess, there. to on to higher good your that's has wondering of efforts. I you sure And I'm touted the or supplier talked I downstream that

to if from suppliers. volume I great diesel them. if come down, continues costs from external And But think your of like are XX% you've productivity get low, been stays the sort of to able see that the need like, you incrementally off your is there foot that to your bit you make harder to stay healthy? take be gas little maybe supplier that do sure to risk a going

Olivier Rabiller

and Olivier. diesel is the first, is the I base using not will will much different we end supply for in to keep things the my in this two at Alessandro day. at Joseph, There maybe are that that. that complete versus mind, the answer view of are gasoline start

So is in the shift not that that respect. relevance

we've time supplier, second in the bankruptcies. point we away that is impact The those doing we've exposed are significant much point is our very, years Europe of big suffer from would to don't that, high been that for long And But our monitoring if true we about the products very we result so moving that so already health supplier we closely obviously the financial a had for from see a farther more. are to base. is far thinking stayed internally India, and growth any regions source It Eastern been recording what we push being thinking about China, significantly Western Europe. of

Joseph Spak

Okay. Thank you.

Alessandro Gili

the add comment And was volatility X% that previous reason the guidance the we to one. the maybe compared to generation. just on And cash by comment, why revised focusing on

volatility our certainly level ability some could it to at best supply in chain the is So additional short-term demand manage be. inventory and creating the tension

cash potentially translating flow. which higher So then inventory some that into lower is translates levels,

Olivier Rabiller

of working the more it's true and that, and add to it's in level capital its where of just rotation visible. on at operating when operate you as we obviously such high that term a biased are And

Joseph Spak

for Thank that. you

compliance have I we sort of more guess from regulatory And with see cost I come it. think again, you on thinking pretty just as COX really have second that thought in And color for this you that the the then RDE be importantly, is think year, more your question customers there perspective playing are OE. a we front a could up any across in portfolio. if The next sort I back half, here of the disastrous how about about how your Europe about there's out as

about make navigate transition? customers you how to the broadly, potentially do sure your think can supporting they just So through

Olivier Rabiller

it. quite answers discussion the So to point of feedback negative had more your RDE, QX in from to far are element same I frankly, know like about first not about QX, customers. get we in much so be the the did unfortunately, I'd any smart we same, the But

the are all to the having difficult the of they've last most so complex any of obviously that, frankly, ones day, We the expecting know news their on have front that situation potentially in/vehicle year. that that end susceptible ones don't the but platform, far. issues, that learned we safety quite of the from portfolio are lessons And are we at

to quite the usually I So is conditions. challenging good industry think adapt to these

So we’ll it see far this adapted how has been rate year. to each the

So first point. the that’s

the of so you for have, timeframe points COX you or So do the can is just a so. within year there much

developing the platform years working in pre-development and Let's step you're two technology engine back a bit. usually are three reaches for I mean, when we bring then production. before new to you it the marketplace, years

you one customers. much you're anything So, do that the technology to make about you new thing of The can providing is by just sure there the a do can start before that is so year not you portfolio cost that movements the of can product that have flexible supply our this would movements. market chain, your And they some adapt has always as been to enough your consequence with and focus. a only

Joseph Spak

I'll pass on. Thank you.

Operator

question of America Bank Please from Merrill ahead. next comes of Aileen go Lynch. Our Smith

Aileen Smith

everyone. morning Good

and color ramp-up standards? launches. China? China use might function pull have of in a of bit Turbos therefore X drive emissions vehicle of you of the question, forward faster launches thought products some maybe driven X like a this would've of OEM that slower the around China a I customers little Was to more provide First gas efficient light can fuel ramp-up

different more macro-environment deteriorating for technologies seeing in quarter? you opt are customers a So function the is just of the or this

Olivier Rabiller

No. some the your a of little bit It's forecast use air obviously to into of creating words.

second HX question they have makers with inventory doesn't to half that in planning at the when much cautious, X, more the quite more how and true, that, is the And frankly, car much the the much into are change you are So, look first half. way ramp-up. how forecasting the China they their

So therefore the as ramp-ups is middle is they're half the of of the a right second is that well. forecasting in This ramp that (X:XX:XX) and ups lower. a consequence

Aileen Smith

fob And question, apologies at I it outlook and ramp-up by launches gas way, Okay. in revenue and in of is of your year-end? slower Or any if change reach this to gas as to a prepared China missed remarks, parity XXXX between in story the diesel a point? this more does your this

Alessandro Gili

in compared the, by X%, exposure higher at Not that when because you comparison. penetration the to China. in the know we the gasoline are geographic we when of you really at point look had is Asia previous a we obviously fact decrease it, And in

example America. it in what For is North

things China at So, fact which gasoline as the would have gasoline. that we are all would equal, speed in the on accelerating we inside. in have said expected But in are impacted, we before, the the you being ramping-up faster slowdown on

the doesn't So, of point we're the year. the that parity expecting that of change end by

Aileen Smith

way, is global around management there how the right already as But And things then supply question kind quickly think shift earlier, diligently and are suppliers base of you it's sure sophisticated fit the macro base last worked Great. a now can pretty for see follow-up the shift is your to another understood is maybe I you to that have you asked suppliers for pretty to not how that being Okay. And and of as make mitigate industry opportunity the change? future, the remaining think sticky right pressure. supply in some partnered that environment of tough with we well you've of more in about future? questioning the your a substantial you Joe's line you event suppliers to

Olivier Rabiller

I with shift is you've performance management. seen the just need one themselves them. will and into they now little of your management to way to always based not supply dovetailing the they for be because most cost It's margin then, will as will level more Supply never Well, and is someone would technical shifting bit time, the with it's, keep supplier supplier to partner a the some give all vendors best to sticks based another some them to because the you a to point. lowest from best that give if that get efficient at they

commodity the of there So their our than that is competitiveness more into giving them cost, supplier is optimizing obviously cost into suppliers, chain, forecast. given another to their some some optimizing healthiness commodities, we is shifting just enough It element from on we preserving sourcing of level more a, have strategies and an the design their into to of call supply visibility it's the element and complex there cost, getting because so are competition, optimizing understanding but an meaning that. one what

productivity So that some they can then are ones. actions, that engage in medium-to-long term

we your A So, only supplier I of would that, the doing the to with are quick. end, are still to a interested say investment ammunition because do presenting rest extent, are B, on macros into survivable we it's not just industry compared we supplier of a are But on from that other to would to off that shifting run betting – certain extremely true if there industry. that's very an number suppliers

Aileen Smith

Great. questions. detail. Thanks I for the appreciate the

Operator

comes from ahead. Langan go Please UBS. Colin Our next question of [Operator Instructions]

Colin Langan

Oh, great. Thanks taking for my question.

challenging Just the follow-up the R&D there on mean, kind the margins have of and that, that? on that talking very saying is are we about I more new there's product dynamic Turbos. come environment, we or is comments. to a Competitors business, down being that should established involved, about business you should on of how competitor expect new low pricing been think

Olivier Rabiller

the been, have Turbo you not the has most of two expensive, if the frankly, top engine. most on quite that function an Well, always expensive one

always from risen the the optimized using. They that lot level that have so would been that new of change. attention price order everything that make many a sure in competitors of doesn't to it they've on have in pushing be customers attracted that past So, has the some

way, every we So, see much. program I And we quite by reviewing program. our, environment, don't just, that, that changing completed year frankly, the are by

at for important a us time a five not in both, horizon is but the in-line Our on basis had pretty and obviously really horizon term year, not we recruit one-year [indiscernible]. much what's last with today, the of view we’re same basis,

ago. you industry into five electric you not and not to And look technologies your I’m else. a the in having way, to and everything talking stage in And is have so gasoline, can you the two that that question, pressure competitive electrification only of years is geometry than to less the about you significant past, had sure today stable. by three boosting valuable technologies, even deliver a probably in on we and with you’ve And very that's about suppliers for shared I you when of some new that came see would I that we've mean diesel, the I'm something there respect small change. number to that. suppliers the seen were

Colin Langan

China? What outlook current region. prior guidance Okay. of decline it already thought the digit sort Is in for than worse or? reflected your that is much low-double now full-year I your

Olivier Rabiller

forecast of I reflecting and we Well, and was was we just have XX%. we is into bit our are down our that minus change think around on minus we probably little around more for consensus our from adjusted minus pessimistic forecast industry. the new QX mature. But coming customers. the than, sustainable XX%, forecast And But the full-year X% the demand see the are here with

I cautious a is think minus one. the XX%

Colin Langan

is the mean, at flat, or what sales And the the you're about I X.X%. growth half driving year-to-date midpoint second X% organically. at the look I is full-year improved, organically guidance, in when around down is

Olivier Rabiller

mostly products. before, launches, It's said mostly as of new launches we

we a we're only guidance environment idea are when all we coming reason fact they is are running The time. we far to that's launches July, lower, an the as being the reviewed were are launches mainly that those expecting, macro launches, on But that as start with one into are uncertainty and [indiscernible]. have of primarily of it's So of that that in so And having the good that. happening these the lower.

Colin Langan

right. for the question. taking Got it. Thanks All

Operator

presentation. This the conference you session attending and for Thank concludes question-and-answer call. concludes today's our

may now You disconnect.

Garrett Motion (GTX) 30 Jul 192019 Q2 Earnings call transcript