Hello. My name is Megan and I will be your operator this morning. I would like to welcome everyone to the Garrett Motion Fourth Quarter and Full Year 2024 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. I would now like to turn the conference over to Cyril Grandjean, Garrett's Vice President, Investor Relations and Treasurer.

Thank you, Megan. Good day and welcome everyone. Thank you for attending the Garrett Motion fourth quarter and full year 2024 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 Garrett Motion's website at investors.garrettmotion.com. There you will also find links to our SEC filings along with other important information about the company. We note that this presentation contains forward-looking statements within the meaning of the U.S. federal securities laws. These statements, which can be identified by words such as anticipate, intend, plan, believe, estimate, expect, likely, may, should, will or similar expressions represents management's current expectations and are subject to various risks and uncertainties that could cause our actual results to differ materially from such expectations. These risks and uncertainties include the factors identified in our annual report on Form 10-K and other filings with the Securities and Exchange Commission and includes risks related to the automotive industry, competitive landscape and macroeconomic and geopolitical conditions, among others. Please review the disclaimers on Slide 2 of our presentation as the content of our call will be governed by this language. Today's presentation also includes certain non-GAAP measures, which we use to help describe how we manage and operate our business. We reconcile each of these measures to the most directly comparable GAAP measure in the appendix of our presentation and related press release. Finally, in today's presentation and comments, we may refer to light vehicle diesel and light vehicle gasoline products by using the terms diesel and gasoline only. With us today are 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 Ollie.

Thanks, Grandjean, and thank you everyone for joining today's call. As you can see on Slide 3, Garrett delivered strong results in the fourth quarter, thanks to an outstanding operating performance delivering adjusted EBITDA of $153 million with a margin of 18.1%, an increase of 280 basis points compared to Q4 2023. And we achieved that despite the continuous sales softness that the company experienced, thanks to its exposure to light vehicle industry weakness in Europe and in China, as well as the competitive pressure certain OEMs are facing. At the same time we kept winning new business across all applications, demonstrating the strength of our technology called leadership. But let's get back to operational performance. Our strong operational performance enabled us as well to generate $157 million of adjusted free cash flow in the quarter, allowing us to buy back stock under our share repurchase program, repurchasing a total of $296 million of common stock in 2024. This resulted in a reduction of 13% of our share count at the end of 2024 compared to the end of 2023. Our full year results continue to demonstrate our ability to flex our variable cost structure and proactively implement permanent cost actions which allowed us to deliver a 17.2% adjusted EBITDA margin for the full year. When you adjust for foreign exchange and the sales of our unconsolidated joint venture in Australia, we delivered an adjusted EBITDA near the midpoint of our initial 2024 guidance and thus despite the softness we experienced, this is quite remarkable. We believe the actions we have taken in 2024 position the company to deliver solid performance in 2025, offsetting again the impact of expected weak global industry production. Excluding foreign exchange, we also expect to deliver similar adjusted EBITDA to 2024. We also expect to…

Thanks Olivier, and good morning, everyone. I will begin on Slide 6. As Olivier highlighted, once again we delivered strong financial results in a soft industry environment driven by our continuous focus on variable cost management and the implementation of structural cost productivity actions. Fourth quarter net sales were $844 million, slightly up sequentially stabilizing after declines over the past four quarters as new program ramp ups offset continued softness in Europe and declines in gasoline and diesel light vehicle production. We recorded fourth quarter adjusted EBITDA of $153 million, up $8 million from $145 million last year. This improvement was driven by variable and fixed cost productivity, deflation and favorable product mix, partially offset by lower volumes and an unfavorable foreign exchange impact. The performance this quarter once again demonstrated our ability to deliver strong financial performance across industry cycles, as can be seen in the upper right graph. Adjusted EBITDA margin was 18.1% for the quarter, up from 15.3% last year and up sequentially, benefiting from the actions just mentioned. We generated very strong adjusted free cash flow of $157 million in the quarter, up from $137 million in Q4 2023, as we converted our adjusted EBITDA into cash and benefited from a positive working capital contribution. We expect to continue to deliver a 60% adjusted free cash flow conversion on adjusted EBITDA annually in line with our capital allocation framework. Moving now to Slide 7. We show our Q4 and full year net sales bridge by product category as compared with the same period last year. For Q4, we continue to experience gasoline softness in China and North America, which was partially offset by ramp ups in Europe comprising 45% of net sales flat from last year. The diesel decline we saw in Q4 year-over-year was mainly…

Thanks, Sean. Let's turn now to Slide 14. Garrett continues to be well positioned for long-term success. We are strengthening our leadership position in the turbo industry while developing new technologies and expanding into industrial applications. Our operational framework is highly cash generative, allowing us to invest in new technologies while reducing debt and returning cash to shareholders. Let's now turn to Slide 15. In 2024, we have proven once again the resilience of our financial framework, delivering strong financial results and achieving a 17.2% adjusted EBITDA margin. Our financial performance positions us well to continue to deliver strong margin and free cash flow in similar industry conditions in 2025. These financial results enabled us to return value to our shareholders through share repurchases totaling $296 million. And we expect to continue returning significant value to shareholders in 2025 through a combination of additional share repurchase under our new $250 million share repurchase program and $50 million in dividends paid quarterly. In addition, the structural cost actions that we drove in 2024 in anticipation of a softer [ph] industry outlook for 2025 will enable us to continue to deliver strong margin and free cash flow. Once again, we made significant progress this past year across existing and new differentiated technologies, setting the stage for another successful year. Our recent awards and customer recognition for our high-speed solutions for zero emission platforms prove that we are developing the right solution for the next generation of electric vehicles. Lastly, obviously, I want to take the opportunity to thank the entire Garrett team for delivering an outstanding performance in the first quarter and the full year and position well the company for success in 2025. Thank you for your time. And operator, we are now ready for Q&A.

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

Hi. So I just wanted to ask you was, how are you managing the year given a lot of the geopolitics and tariffs? And how does that affect your business going into 2025 and 2026?

Hamed, you're asking a very, very interesting question. Quite frankly, what we are doing is to stay as flexible as possible. It's true that today it's difficult to predict exactly what will happen and when it will happen. We tend to be very fast at reacting. We have already engaged in discussions with customers and we tend to be very fast at reacting to that kind of events. For lack of a better words, we've been facing a lot of unplanned events for the past years as an industry and we tend to be much more flexible and reactive now than we were probably five years ago. But yes, we are trying to anticipate as much as we can, but it's difficult to anticipate in a vacuum. We need to understand what we face.

The next question comes from Michael Ward with Freedom Capital. Please go ahead.

Thank you. Good morning, everyone. Olivier, you mentioned in your presentation China and I wonder if you could just expand on that a little bit. I saw that – I saw on the 10-K, the revenue was down and it sounds like you have some new business with some of the local Chinese based manufacturers. Can you give a little more detail on what you're looking at in China?

Yes, absolutely. So China is still an important region for us. This is the biggest automotive industry in the world. And we play a significant role in China, both in commercial vehicle and in Passenger Vehicle. And what we have seen over the last few years is there has been not only a shift towards more local Chinese players, but I would say a shift towards more local new Chinese players that have come to the market sometimes through the battery electric vehicle angle and now that are pushing some other solution to the marketplace, whether it's plug-in hybrid vehicles or range extended electric vehicle that we are calling REEVs. So what we have been doing is that for some time now, we've been working with these companies that have come with new brands and new products to the marketplace. And I would say we are starting to get good traction and good success with these new players. And in some regions of the world, we tend to move from ICE to hybrid to battery electric vehicle. It seems that in China, we are seeing it moving from battery to plug-in hybrids and range extended vehicle because I think there is probably a good understanding that you need several solutions in order to satisfy the needs of the consumers. So we are very active. We are seeing a lot of pursuits on these technologies and we have been developing specific products to address the needs of those platforms. And we're trying to be quite active on the vehicle side.

Okay. Are there any customers you can point to? Or it sounded like you're alluding to some new business that's kicking-in in 2026 and 2027. Did I hear that correctly?

You heard that correctly and I will not mention names of customers.

Okay.

That's usually not the practice we have in the industry. It's confidential with the customers. But I would point at successful and new brands in China.

Okay, perfect. Sean, on two things. First, could you on the release you talked about adjusted free cash flow of $157 million. Can you define how you're getting there?

Sure. It's a very strong EBITDA performance, but then we did have quite a nice lift from working capital, which had been at use through...

No, no, no, I see that, but how are you defining it? Like is it operating cash flow less CapEx?

Yes, sorry. You have a rec table in the back of the deck that Olivier plays that out, but in very high level terms, it's operating cash flow less CapEx and then we exclude repositioning and other one-time charges. But that can all be found in the rec table. But at a high level – at a high level that…

Okay. So when you look at your 2025 outlook, when you're talking about adjusted free cash flow, that's what you're alluding to. You're excluding any of the repositioning or the other things that are in there? I see $157 million [ph]. So they're. Okay, so there was a factoring in P notes. That was the big number, the $39 million.

Right. And so with that what we do is, when we factor, we don't give ourselves the benefit for that. So if we actually sell receivables, even though it's a true sale, we don't look at that as a free cash flow benefit for that quarter. So it just gets. So we would add it back in a member versus out the number four.

Yes, I see it for the year. It's nothing. So. Okay. The second thing is on M&A, I never hear you talk about M&A and I'm just or I should say rarely. And are there M&A opportunities out there in your segment? Is it something you're just staying away from? Is, do you feel like you can build it internally just because of the strength on the R&D side? How do you view M&A on the overall capital allocation scheme?

So the way we look at that, first we need to get back to our organic growth strategy. We have an organic growth strategy that we think is very strong. Leveraging the two legs of the company. On the one hand, it's the strengthening of the turbo business. The turbo business. We are seeing the world consolidating, we are expanding our portfolio. You've seen the big turbos we are launching on industrial. And then the second leg of the company is the development of the zero emission vehicle solutions. With the three that I've explained today, this is where resource and this is the base of our organic growth strategies. Recognizing that there are obviously some segments that we want to push more and it's quite obvious in everything we've said so far that we want to expand further on commercial vehicle, on highway, off-highway and industrial. So if you put that together, obviously a good M&A strategy should reinforce that organic growth. So like any company, we are active, we are looking. But for the time being, we have not committed to anything on the M&A side.

Yes. And I would just add that we are active but you don't hear us talk about it that often. Just because we have a very high bar, we do not want to take an action that will be dilutive to our shareholders. So the bar is quite high. And that's, we obviously are always looking at opportunity.

Perfect. Thank you very much.

This concludes our question-and-answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.