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 the 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 Birge, 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 Securities and Exchange Commission. Be 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 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 those measures to the most direct GAAP measure and you are encouraged to examine those reconciliations, which are found in the appendix of both the press release and the 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 Rabiller, Garrett's President and Chief Executive Officer; and Sean 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 remarks on Slide 3, 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 flawless 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 a reported basis and up 13% on a 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 valuable 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 the year prior. This highlights one of the core strengths…

Thanks, Olivier, and welcome, everyone. I will begin my remarks on Slide 6. Looking at the upper left hand graph, you will see reported net sales for the last nine quarters with Q1 2023 at $970 million up from Q1 of 2022 by 8% on a GAAP basis and 13% on a constant currency basis. This growth was driven by volume upside and favorable mix resulting from shared demand gains as new products launch and ramp up primarily in our gasoline and commercial vehicle businesses. Looking at the upper right hand side of the page. Q1 2023 adjusted EBITDA of $168 million was up 15% from $146 million last year. The adjusted EBITDA margin in the period was 17.3%, up from 16.2% last year, mainly due to productivity, leveraging our fixed cost structure and the timing of cost recoveries. On the bottom left graph, we show that Garrett generated positive adjusted free cash flow of $88 million in Q1 2023 up from $38 million in Q1 2022. Compared to last year, this favorability is driven by timing of capital expenditure payments, lower performance based incentive payouts and lower cash interest this quarter compared to the same period last year. In summary, the three graphs on this slide highlight the resilience and flexibility of Garrett. Over the past nine quarters in an extremely volatile macro and demand environment, Garrett was able to continuously deliver solid results as we flex our variable cost structure to adapt to rapid changes across the supply chain and industry. Turning now to Slide 7, we show our Q1 net sales bridge by product category as compared with the same period last year. Again, net sales were up 8% on a GAAP basis and 13% on a constant currency basis. All verticals improved compared to the prior…

Thank you, Sean. Wrapping up with a summary of Q1 on Slide 12. We delivered net sales of $970 million, up 8% on a GAAP basis and up 13% in constant currency basis versus Q1 of 2022. We achieved strong operating performance, generating $168 million of adjusted EBITDA with an adjusted EBITDA margin of 17.3%. Adjusted free cash flow for the quarter was up $50 million from Q1 2022 at $88 million. Our ability to generate cash has contributed to our Q1 strong liquidity position of $766 million. And as we look ahead to the rest of the year, we have raised the midpoint of our adjusted EBITDA guidance to $610 million for adjusted free cash flow for an adjusted free cash flow up to $365 million. We are at an exciting inflection point for Garrett. Our recently announced agreement with Centerbridge and Oaktree will enable us to normalize our capital structure by creating a single class of common stock. It will also enable greater liquidity and a multi-billion dollar market capitalization and diversify our shareholder base. Equally important, our normalized structure will allow us to accelerate investments in our growth, both organic and inorganic. We continue to be a competitive force in the industry due to our new launches and increasing share of demand, and we are well positioned for further growth into the future. Our 2030 revenue target of $1 billion of revenue from zero emission technologies will add to our already growing traditional turbo business. We are indeed in the vanguard of the transformation of our industry. Thank you for your time. And operator, we are now ready to begin the Q&A session.

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question comes from Hamed Khorsand from BWS Financial. Please go ahead.

Good morning. This is Vahid for Hamed. I appreciate you taking the questions. First question, in the past, the volume increases in China where lower and turbos has a product mix improved yet as the volume is ramping in the region?

So I think you had two questions there. It was penetration of turbo in China and our volumes in China increasing for turbo. Is that correct?

Yes.

Okay. So, yes, we do see volumes increasing in China as the lifting of COVID restrictions has allowed the market to return to a more normalized state. We are looking for forward to more growth in China in the back half of the year as well. And again just monitoring all the global macroeconomic factors hopefully that -- with the hopes that growth will continue as we have forecasted. With regard to turbo penetration in China, we see turbo is increasing in penetration across the globe and we don't necessarily comment on specific regions.

Okay. But it's healthy, by the way, you need to combine that with the point that Sean was mentioning before, which is in China, we are also seeing significant ramp ups of some programs that we won for the past few years.

Okay. Well, thank you for that. That's a good segue into my next question, which is you're mentioning across the back half of the year and turbo growth across the globe. How much clarity do you have in this year as far as order stability is concerned?

I think it's, as we've said in the -- on the call and previous quarters that the volatility of the industry remains high. We are seeing signs of normalization of the demand from customers. We are seeing demand signal being much more stable. It seems that there are still constraints into the automotive supply chain, but probably not as big as what we were, not as unpredictable as what we have seen at the end of last year. So this is a good signal. As you have seen, we have increased our guidance because we are confident that we can already do so. Thanks to the ramp up of the specific programs that are driving our share of demand gain. This we can see that there remains as for all the players in the industry, a question mark about the second half of the year. And so far we have been cautiously planning the back end of the year in that guidance.

And I would just add on to that and I would just add on and reiterate that basically 100% of our business is booked for this year and we have a very strong visibility for the next five years. So really what we're monitoring isn't so much new business that is booked per se, but it's really the production environment of our customers because up to five years out, we're 80% certain of what our OEM revenues are going to be based on our long lead time of winning new business.

Final question. You've mentioned ramp up a few times now. I'm just wondering if you could share the specific product ramp that you saw that led to the growth in the quarter.

A number of programs that we had won for the past few years, I would say more specifically on the gasoline side. And as you can see, over the years, we've been becoming from number three into the industry to number one this year on the gasoline side with also a ramp up of variable geometry. That would be very difficult for us to point you at specific applications, but especially on this call because we are not disclosing application by application. But this is really the result of all the win rates that we've communicated for the last few years.

Right. And so we talk a lot about the greater than 50% new business win rate, and that's been happening since 2018. So you're really starting to see the traction and the benefit of that. On Garrett's business model that's allowing us to take share of demand naturally as product - new products ramp up and we launch our turbos on these new platforms.

I mean this is a discussion we had already on previous calls. There is a consolidation going on in our industry that's driven by, on the one hand, technology and on the other hand the fact that the engine programs are getting bigger and bigger and are consolidating as well. And we are benefiting from that trend obviously.

Okay. That was it. Thank you very much.

Thank you.

Thank you.

[Operator Instructions] There are no more questions in the queue. This concludes our question-and-answer session. I would like to turn the conference back over to Olivier Rabiller for any closing remarks.

Thank you. We are all very pleased with the performance we've achieved in Q1, which enabled us to already increase our view for the full year. The company is on the one hand executing very well on this increased growth and on the other hand is getting more and more confident about the impact we are bringing to the industry with the new technologies that we have been developing and that are really driving more and more success with our customers. So now we are looking forward to the rest of the year obviously, but we are very, very happy with what we've done so far.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.