--- ----------- --- ----------
Cash, cash equivalents and
restricted cash at end of the
period $ 97 $ 163
=== =========== === ==========
Supplemental cash flow
disclosure:
Income taxes paid (net of
refunds) 43 38
Interest paid 49 45
Reconciliation of Net Income to Adjusted EBITDA(1)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- ----------------------
2024 2023 2024 2023
---- -----
(Dollars in millions)
Net income $ 52 $ 57 $ 182 $ 209
Interest
expense, net
of interest
income(2) 37 47 127 98
Tax expense 24 13 62 70
Depreciation 23 23 67 66
---- ---- ----- -----
EBITDA 136 140 438 443
Stock
compensation
expense(3) 4 4 17 12
Repositioning
costs 4 6 16 14
Foreign
exchange gain
on debt, net
of related
hedging loss -- -- (1) --
Discounting
costs on
factoring 1 1 3 3
Gain on sale of
equity
investment -- -- (27) --
Other
non-operating
income(4) (1) (1) (4) (4)
Acquisition and
divestiture
expenses(5) -- -- 1 --
Capital
structure
transformation
expenses(6) -- 2 -- 22
Debt
refinancing and
redemption
costs(7) -- -- 2 --
Adjusted EBITDA $ 144 $ 152 $ 445 $ 490
Net sales $ 826 $ 960 $2,631 $2,941
Net income margin 6.3% 5.9% 6.9% 7.1%
Adjusted EBITDA
margin(8) 17.4% 15.8% 16.9% 16.7%
(1) We evaluate performance on the basis of EBITDA and Adjusted EBITDA. We define "EBITDA" as our net income calculated in accordance with U.S. GAAP, plus the sum of interest expense net of interest income, tax expense and depreciation. We define "Adjusted EBITDA" as EBITDA, plus the sum of stock compensation expense, repositioning costs, foreign exchange (gain) loss on debt net of related hedging gains (loss), discounting costs on factoring, gain on sale of equity investment, other non-operating income, capital structure transformation expenses, net reorganization items and loss on extinguishment of debt (if any). Adjusted EBITDA now also adjusts for acquisition and divestiture expenses, and debt refinancing and redemption costs, but no adjustments were made to the prior period as there were no similar adjustments in the prior period. We believe that EBITDA and Adjusted EBITDA are important indicators of operating performance and provide useful information for investors because:
-- EBITDA and Adjusted EBITDA exclude the effects of income taxes, as well
as the effects of financing and investing activities by eliminating the
effects of interest-related charges and depreciation expenses and
therefore more closely measure our operational performance; and
-- certain adjustment items, while periodically affecting our results, may
vary significantly from period to period and have disproportionate effect
in a given period, which affects the comparability of our results.
In addition, our management may use Adjusted EBITDA in setting performance incentive targets to align performance measurement with operational performance.
(2) Reflects interest income of $0 million and $1 million for the three months ended September 30, 2024 and 2023, respectively, and $3 million and $6 million for the nine months ended September 30, 2024 and 2023, respectively.
(3) Stock compensation expense includes only non-cash expenses.
(4) Reflects the non-service component of net periodic pension income.
(5) Reflects the incremental third-party costs incurred for the sale of an equity interest in an unconsolidated joint venture.
(6) Reflects the third-party incremental costs that were directly attributable to the transformation of the Company's capital structure through the partial repurchase and subsequent conversion of the remaining outstanding Series A Preferred Stock into a single class of common stock in June 2023.
(7) Reflects the third-party costs directly attributable to the repricing of our 2021 Dollar Term Facility.
(8) Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of net sales.
Reconciliation of Constant Currency Sales % Change(1)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
2024 2023 2024 2023
---- --- ----
Garrett
---------------------
Reported sales %
change (14)% 2% (11)% 9%
Less: Foreign
currency
translation 0% 3% (1)% (1)%
---- ---- ---- ----
Constant
currency sales
% change (14)% (1)% (10)% 10%
==== ==== ==== ====
Gasoline
---------------------
Reported sales %
change (19)% 10% (14)% 17%
Less: Foreign
currency
translation 0% 1% (1)% (2)%
---- ---- ---- ----
Constant
currency sales
% change (19)% 9% (13)% 19%
==== ==== ==== ====
Diesel
---------------------
Reported sales %
change (21)% (4)% (15)% 3%
Less: Foreign
currency
translation 1% 5% (1)% 0%
---- ---- ---- ----
Constant
currency sales
% change (22)% (9)% (14)% 3%
==== ==== ==== ====
Commercial vehicles
---------------------
Reported sales %
change 0% (13)% (6)% 2%
Less: Foreign
currency
translation 0% 1% (1)% (1)%
---- ---- ---- ----
Constant
currency sales
% change 0% (14)% (5)% 3%
==== ==== ==== ====
Aftermarket
---------------------
Reported sales %
change (1)% 3% 2% 4%
Less: Foreign
currency
translation 0% 3% (1)% 0%
---- ---- ---- ----
Constant
currency sales
% change (1)% 0% 3% 4%
==== ==== ==== ====
Other Sales
---------------------
Reported sales %
change (13)% 23% (5)% 2%
Less: Foreign
currency
translation (1)% 4% (2)% (1)%
---- ---- ---- ----
Constant
currency sales
% change (12)% 19% (3)% 3%
==== ==== ==== ====
(1) We define constant currency sales growth as the year-over-year change in reported sales relative to the comparable period, excluding the impact on sales from foreign currency translation. We believe this measure is useful to investors and management in understanding our ongoing operations and in analysis of ongoing operating trends.
Reconciliation of Cash Flow from Operations to Adjusted Free Cash Flow(1)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------------
2024 2023 2024 2023
------ -----
(Dollars in millions)
Net cash
provided by
operating
activities $ 67 $ 74 $ 277 $ 330
Expenditures
for property,
plant and
equipment (20) (24) (69) (57)
----- ------ ------ -----
Net cash
provided by
operating
activities
less
expenditures
for property,
plant and
equipment 47 50 208 273
Capital
structure
transformation
expenses -- 5 1 7
Acquisition and
divestiture
expenses -- -- 1 --
Cash payments
for
repositioning 2 5 15 9
Proceeds from
cross currency
swap
contracts 3 -- 11 --
Factoring and
P-notes 19 (3) (35) (4)
----- ------ ------ -----
Adjusted free
cash flow(1) $ 71 $ 57 $ 201 $ 285
(MORE TO FOLLOW) Dow Jones Newswires
October 24, 2024 06:56 ET (10:56 GMT)
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