Garrett Motion Inc (GTX) 2024 Q3 法說會逐字稿

Hello, my name is Andrea, and I will be your operator this morning. I would like to welcome everyone to the Garrett Motion third quarter, 2024 financial results conference call. This call is being recorded and a replay will be available later today.

您好，我叫安德里亞，今天早上我將擔任您的接線生。歡迎大家參加 Garrett Motion 2024 年第三季財務業績電話會議。此通話正在錄音，今天晚些時候將提供重播。

(Operator Instructions)

（操作員說明）

I would now like to hand over the call to Eric Burge, Garrett's Head of Investor Relations. Please go ahead.

我現在想將電話轉給 Garrett 投資者關係主管 Eric Burge。請繼續。

Thank you, Andrea. Good day and welcome everyone. Thank you for attending the Garrett Motion third quarter, 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.

謝謝你，安德里亞。美好的一天，歡迎大家。感謝您參加 Garrett Motion 2024 年第三季財務業績電話會議。在開始之前，我想提一下，今天的簡報和收益新聞稿可在 Garrett Motion 網站 Investors.garrettmotion.com 的 IR 部分取得。在那裡，您還可以找到我們向 SEC 提交的文件的連結以及有關該公司的其他重要資訊。

You look at the second slide in [the deck. Today], we note that this presentation contains forward-looking statements within the meaning of the US Federal securities law. The statements which can be identified by words, such as anticipate intend, plan, believe, estimate, expect, likely, may, should, will or similar expressions represent management's current expectations and are subject to various risks and uncertainties that could cause our actual results to differ materially from such expectations.

您查看[幻燈片中的第二張投影片。今天]，我們注意到本簡報包含美國聯邦證券法含義內的前瞻性陳述。可以透過文字識別的陳述，例如預期、計劃、相信、估計、期望、可能、可能、應該、將或類似表達，代表管理層當前的期望，並受到可能導致我們實際結果的各種風險和不確定性的影響與此類期望有重大差異。

These risks and uncertainties include the factors identified in our annual report on form 10-K and other filings within the securities and exchange commission and includes risks related to the automotive industry and competitive landscapes and macroeconomic and geopolitical conditions, among others.

這些風險和不確定性包括我們在 10-K 表格年度報告和向證券交易委員會提交的其他文件中確定的因素，還包括與汽車行業、競爭格局、宏觀經濟和地緣政治條件等相關的風險。

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 to manage how we manage and operate our business. We reconcile each of these measures to the most direct comparable GAAP measure in the appendix of our presentation and related press release.

請查看我們簡報投影片 2 上的免責聲明，因為我們的通話內容將受此語言管轄。今天的演示還包括某些非公認會計準則衡量標準，我們用這些衡量標準來幫助描述如何管理和經營我們的業務。我們在簡報和相關新聞稿的附錄中將這些衡量標準與最直接可比較的公認會計準則衡量標準進行了協調。

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.

最後，在今天的演示和評論中，我們可能僅使用術語「柴油」和「汽油」來指稱輕型車輛、柴油和輕型車輛、汽油產品。今天與我們在一起的有 Olivier Rabiller Garrett 的總裁兼執行長和 Sean Deason Garrett 的高級副總裁兼財務長。

In addition, I would like to introduce Cyril Grande, Vice President and treasurer for Garrett, who will be responsible for investor relations going forward. I will remain with Grande through November to ensure a smooth transition. I would like to thank everyone for your time and support and wish you and Garrett a very successful future. I will now hand the call over to Olivier.

此外，我想介紹蓋瑞特副總裁兼財務主管西里爾·格蘭德（Cyril Grande），他將負責未來的投資者關係。我將在 11 月留在 Grande，以確保順利過渡。我要感謝大家的時間和支持，並祝福您和加勒特有一個非常成功的未來。我現在將電話轉交給奧利維爾。

Thanks Eric and thanks everyone for joining Garrett's so quarter 2024 earnings conference call. Before we start, I would like to thank Eric for his support and wish him all the best for his next steps. I will now begin today's remarks on slide 3. I am pleased to report Garrett's outstanding operational performance in the third quarter. We delivered a strong address to the margin of 17.4% up 160 basis points over last year. Despite difficult industry conditions indeed this quarter, we have seen the impact of our exposure to softness in the light vehicle industry in Europe and China. Some global OE is facing competitive pressure and some short-term customer vehicle platforms mix shift.

感謝 Eric 並感謝大家參加 Garrett 的 2024 年第四季財報電話會議。在我們開始之前，我要感謝埃里克的支持，並祝他下一步一切順利。我現在開始對幻燈片 3 進行今天的發言。我很高興地向大家報告蓋勒特第三季出色的營運表現。我們的利潤率達到了 17.4%，比去年提高了 160 個基點。儘管本季行業情況確實困難，但我們已經看到了歐洲和中國輕型汽車行業疲軟的影響。一些全球整車廠面臨競爭壓力，一些短期客戶車輛平台發生混合轉移。

At the same time, we continue to enjoy a strong new business win rate in a consolidating industry which helps to ensure that our share of demand will continue to progress. I'd like to take this opportunity to remind you that approximately 30% of our revenue comes from commercial vehicle aftermarket and industrial. This is a source of resilience for Garrett. As you can see once again this quarter. As our revenue in this category was stable despite further degradation of the on highway commercial vehicle industry in Europe and continuing weakness of some verticals like agriculture. We are also encouraged by the early signs of recovery in the China commercial vehicle industry.

同時，我們在產業整合中持續享有強勁的新業務贏得率，這有助於確保我們的需求份額持續成長。我想藉此機會提醒您，我們約30%的收入來自商用車售後市場和工業。這是加勒特韌性的泉源。正如您在本季度再次看到的那樣。儘管歐洲公路商用車產業進一步惡化，農業等一些垂直產業持續疲軟，但我們在這一類別的收入保持穩定。我們也對中國商用車產業復甦的早期跡象感到鼓舞。

Let me know again, highlighted our outstanding operating performance in Q3. During the quarter, we implemented sustainable fixed cost actions and flexed our valuable cost structure giving us significant margin increase and a decremental margin of less than 6% in a soft sales environment.

再次讓我知道，強調了我們在第三季的出色經營業績。本季度，我們實施了可持續的固定成本行動，並調整了寶貴的成本結構，使我們的利潤率顯著增加，在疲軟的銷售環境中，利潤率下降幅度低於 6%。

Our strong operational performance also allowed us to generate $71 million of adjusted free cash flow. We continue to buy back stock under our share repurchase program, repurchasing $52 million of common stock in the quarter, bringing our total repurchases for the year to $226 million.

我們強勁的營運業績也使我們能夠產生 7,100 萬美元的調整後自由現金流。我們繼續根據股票回購計畫回購股票，本季回購了 5,200 萬美元的普通股，使全年回購總額達到 2.26 億美元。

All of this was while continuing to invest in Turbo and our differentiated technologies for zero emission solutions. Let me now move to the next slide to share more about the increasing momentum we have with our customers. Turning now to slide 4 this quarter, we continue to see Garrett winning across all Turbo verticals. Specifically, I'd like to focus on the large size Turbos where we have been dedicating a significant amount of energy since we first introduced them a year ago.

所有這一切都是在繼續投資 Turbo 和我們零排放解決方案的差異化技術的同時實現的。現在讓我轉到下一張投影片，並更多地分享我們與客戶的不斷增長的勢頭。現在轉向本季的幻燈片 4，我們繼續看到 Garrett 在所有 Turbo 垂直領域獲勝。具體來說，我想專注於大型渦輪增壓器，自從一年前首次推出以來，我們一直投入大量精力。

We are building on the strong progress we achieved in Q2 with a number of new wins this quarter. The demand for large turbos is expected to grow, quickly driven in part by the booming demand for data centers where a significant portion of all backup power generators are fitted with multiple large turbos and each data center requires dozens of these machines.

我們在第二季度取得的強勁進展的基礎上，在本季度取得了許多新的勝利。對大型渦輪機的需求預計將快速增長，部分原因是資料中心需求的蓬勃發展，其中所有備用發電機的很大一部分都配備了多個大型渦輪機，每個資料中心都需要數十台此類機器。

I am very pleased with the speed at which we have been making this progress in just one year. This quarter, we have also started to see an acceleration of the development activities with our customers relative to the introduction of more plug-in hybrid powertrains, especially in North America.

我對我們在短短一年內取得這項進展的速度感到非常滿意。本季度，我們也開始看到與客戶的開發活動相對於推出更多插電式混合動力系統的加速，特別是在北美。

This helps validate the trend that we were anticipating and is a positive development for the Turbo industry and for Garrett. Now let's turn to slide 5 and talk about the accelerating momentum we see with our zero emission vehicle technologies. It was indeed a very active quarter for our E-Powertrain high speed technology.

這有助於驗證我們預期的趨勢，對於渦輪增壓行業和蓋瑞特來說都是一個積極的發展。現在讓我們轉向幻燈片 5，討論我們在零排放汽車技術中看到的加速勢頭。對於我們的電動動力總成高速技術來說，這確實是一個非常活躍的季度。

We are seeing more and more customers not only showing interest but taking concrete steps towards introducing these technologies in production, the more power our customers need, the higher the benefits associated with our high-power density solutions which we bring with our high-speed electric motors. And this is a trend that many of our customers are considering for the next generation of electric vehicles, whether cars, light commercial vehicles or heavy-duty truck.

我們看到越來越多的客戶不僅表現出興趣，而且採取具體步驟將這些技術引入生產中，我們的客戶需要的功率越多，我們透過高速電動帶來的高功率密度解決方案帶來的好處就越高馬達。這是我們的許多客戶正在考慮下一代電動車的趨勢，無論是轎車、輕型商用車還是重型卡車。

We are therefore quite happy to have signed a letter of intent to jointly develop a leading next generation electric powertrain with SinoTruk, which contemplates a startup production as early as 2027. This quarter, we were also presented with the 2024 Tenant Innovation Award, recognizing the advanced capabilities and products that Garrett has developed and that are key for the next generation of electric vehicles.

因此，我們很高興與中國重汽簽署了共同開發領先的下一代電動動力總成的意向書，並計劃最早於 2027 年啟動生產。本季度，我們還獲得了 2024 年租戶創新獎，表彰蓋瑞特開發的先進功能和產品，這些功能和產品對於下一代電動車至關重要。

I am quite happy to see this tangible progress and associated recognition validating our strategic focus on bringing differentiated technologies to the electrification transition. I will now turn the call over to Sean to provide more insight into our financial results and full year outlook.

我很高興看到這一切實進展和相關認可驗證了我們將差異化技術引入電氣化轉型的策略重點。我現在將把電話轉給肖恩，以提供有關我們的財務表現和全年展望的更多見解。

Thanks Olivier and welcome everyone. Please turn to slide 6. Overall, as Olivier just mentioned, we find ourselves in a softer top line environment. But the team delivered excellent operational performance which translated into an adjusted but the margin of 17.4% a 160 basis points increase compared to Q3 last year.

感謝奧利維爾並歡迎大家。請翻到幻燈片 6。總的來說，正如奧利維爾剛才提到的，我們發現自己處於一個更加疲軟的營收環境中。但該團隊實現了出色的營運績效，調整後的利潤率為 17.4%，與去年第三季相比增加了 160 個基點。

Consistent operational execution in line with our financial framework allowed us to continue to increase margin this year. As we flex our variable cost structure and implement sustainable fixed cost actions while still investing in new technologies. This can be seen in the graph on the upper right-hand side with our adjusted EBITDA margin trending higher across each quarter this year and demonstrates our ability to deliver strong financial performance across industry cycles.

與我們的財務框架一致的營運執行使我們今年能夠繼續提高利潤率。當我們靈活可變成本結構並實施可持續的固定成本行動時，同時仍投資於新技術。這可以從右上角的圖表中看出，今年每季我們調整後的 EBITDA 利潤率都呈上升趨勢，這表明我們有能力在整個產業週期中提供強勁的財務表現。

In addition, we also continue to operate with our capital light approach with capital expenditures of 2.4% of sales in the quarter which when combined with the operational performance, I mentioned earlier resulted in a healthy adjusted free cash flow of $71 million. Turning now to slide 7, you can see how we are experiencing some industry softness in Europe and China along with competitive pressures on some of our customers and short-term mix impacts which can be seen in gasoline and diesel.

此外，我們還繼續以輕資本方式運營，本季度資本支出佔銷售額的 2.4%，與我之前提到的營運業績相結合，帶來了 7,100 萬美元的健康調整後自由現金流。現在轉向幻燈片 7，您可以看到我們在歐洲和中國正在經歷一些行業疲軟，以及我們的一些客戶面臨的競爭壓力以及汽油和柴油中可以看到的短期組合影響。

Our revenue from commercial vehicle and aftermarket, which represents approximately 30% of total annual revenue was stable despite further degradation on the on highway commercial vehicle industry in Europe and continuing weakness of some verticals, such as AGRI. We also experienced commodity deflation which is marginally creative as we continue to pass through 100% of the impact of commodity price changes to our customers and which primarily affected gasoline this quarter. Please now turn to slide 8 and I will walk you through our adjusted even up.

儘管歐洲公路商用車行業進一步惡化以及農業等一些垂直行業持續疲軟，但我們來自商用車和售後市場的收入（約佔年度總收入的 30%）保持穩定。我們也經歷了大宗商品通貨緊縮，這種通貨緊縮具有一定的創造性，因為我們繼續將大宗商品價格變化的影響 100% 轉嫁給我們的客戶，本季度主要影響汽油。現在請翻到投影片 8，我將引導您完成調整後的調整。

We delivered an excellent operational performance in a soft macro environment which we achieved by leveraging our variable cost structure and delivering fixed cost productivity. Demonstrating our ability to quickly adapt to industry volatility adjusted EBITDA was $144 million in Q3 representing an $8 million decrease over the same period last year with reported net sales decreasing $134 million. This equates to a detrimental margin of less than 6% and highlights the strength of Garrett across industry cycles.

我們在軟宏觀環境中實現了卓越的營運績效，這是透過利用我們的可變成本結構和提供固定成本生產率來實現的。展現了我們快速適應產業波動的能力，第三季調整後的 EBITDA 為 1.44 億美元，比去年同期減少 800 萬美元，報告淨銷售額減少 1.34 億美元。這相當於低於 6% 的不利利潤，凸顯了蓋瑞特在整個產業週期中的實力。

Overall operating performance contributed $32 million to adjusted EBITA versus the prior year driven by the actions I just mentioned this resulted in a strong 17.4% adjusted EBITDA margin which represents a 160-basis point improvement when compared to the same period last year and a 50 basis point sequential improvement over the last quarter.

在我剛才提到的行動的推動下，整體營運表現為調整後的EBITA 貢獻了3,200 萬美元，調整後的EBITDA 利潤率高達17.4%，與去年同期相比提高了160 個基點，提高了50 個基點較上季連續改善。

As I mentioned on the last slide, commercial vehicle, industrial and aftermarket represent approximately 30% of our annual sales and were stable this quarter contributing not only to revenue stability but also help to offset adjusted EBITDA declines. As these tend to be higher margin businesses. Please turn to slide 9 and I'll walk you through our adjusted EBITA to adjusted free cash flow bridge.

正如我在上一張投影片中提到的，商用車、工業和售後市場約占我們年銷售額的30%，本季保持穩定，不僅有助於收入穩定，還有助於抵消調整後EBITDA的下降。因為這些往往是利潤率較高的業務。請翻到投影片 9，我將引導您了解調整後的 EBITA 與調整後的自由現金流橋樑。

Once again, Garrett delivered a healthy $71 million of adjusted free cash flow in Q3 2024 in line with our updated full year outlook, which I will talk about later in the presentation.

Garrett 再次在 2024 年第三季實現了 7,100 萬美元的健康調整自由現金流，這與我們更新的全年展望一致，我將在稍後的演示中討論這一點。

Although we experienced a negative working capital impact in Q3 of $'28 million primarily due to decrease sequential sales. As mentioned previously, we expect that working capital will stabilize in the fourth quarter and reverse once industry macros in global production recovers capital expenditures came in well within our financial framework at 2.4% of sales and all other items were in line with full year expectations. Turning now to slide 10, we continue to generate cash and execute on our capital allocation priorities. We ended the quarter with a strong liquidity position of $696 million comprised of $600 million of undrawn capacity under our revolving credit facility and $96 million of unrestricted cash.

儘管我們在第三季經歷了 2800 萬美元的負面營運資金影響，這主要是由於連續銷售額的下降。如前所述，我們預計，一旦全球生產的行業宏觀經濟復甦，營運資本將在第四季度趨於穩定，資本支出將完全符合我們的財務框架，佔銷售額的2.4%，並且所有其他項目均符合全年預期。現在轉向幻燈片 10，我們繼續產生現金並執行我們的資本配置優先事項。本季結束時，我們擁有 6.96 億美元的強勁流動性頭寸，其中包括循環信貸安排下的 6 億美元未提取能力和 9,600 萬美元的無限現金。

Our continued focus on profitability and cash generation contributed to an improved outlook by Fitch from stable to positive. Our cash generation also enabled us to return significant value to our shareholders in the quarter. As we repurchased an additional $52 million of common stock for a total of $226 million repurchased through Q3 under our $350 million stock repurchase program. Compared to a year ago, our share count has been reduced by approximately 28 million shares or 12% of shares outstanding in Q3 2023. Our cash performance also allowed us to maintain our net leverage ratio at 2.26 times at the same level as the previous quarter.

我們對獲利能力和現金產生的持續關注有助於惠譽將前景從穩定改善為積極。我們的現金產生能力也使我們能夠在本季度向股東回報可觀的價值。我們額外回購了 5,200 萬美元的普通股，根據我們 3.5 億美元的股票回購計劃，整個第三季回購總額為 2.26 億美元。與一年前相比，我們的股票數量減少了約 2,800 萬股，即 2023 年第三季已發行股票的 12%。我們的現金表現也使我們能夠將淨槓桿率維持在與上一季相同的2.26倍水準。

Moving to slide 11, you can see our updated 2024 Outlook with the following implied midpoints net sales of $3.45 billion constant currency, net sales decline of 11%, net income of $248 million, adjusted EBITDA of $595 million implying an adjusted EBITDA margin of 17.2% net cash provided by operating activities of $375 million and adjusted free cash flow of $325 million. These updates reflect software industry, production and light vehicle and stable commercial vehicle implying a flat sales outlook in the fourth quarter compared to Q3.

前往投影片11，您可以看到我們更新的2024 年展望，其中隱含的固定匯率淨銷售額為34.5 億美元，淨銷售額下降11%，淨利潤為2.48 億美元，調整後EBITDA 為5.95億美元，意味著調整後EBITDA 利潤率為17.2經營活動提供的淨現金為 3.75 億美元，調整後的自由現金流為 3.25 億美元。這些更新反映了軟體產業、生產和輕型汽車以及穩定的商用車，這意味著第四季的銷售前景與第三季持平。

Additionally, our outlook also incorporates the impact of sustain sustainable fixed cost actions implemented throughout the year and the benefits of our highly variable cost structure which allows us to deliver an updated outlook for adjusted EBITDA margin of 17.2% at the midpoint. Although our industry is experiencing a softening macro environment, we continue to dedicate over 50% of our research and development spending in 2024 to zero emissions technologies. While still investing in turbo. Lastly, our adjusted free cash flow is expected to remain healthy with a midpoint of $325 million or approximately $125 million in the fourth quarter.

此外，我們的展望還考慮了全年實施的持續可持續固定成本行動的影響以及我們高度可變的成本結構的好處，這使我們能夠提供調整後 EBITDA 利潤率中點 17.2% 的最新展望。儘管我們的產業正在經歷疲軟的宏觀環境，但到 2024 年，我們將繼續將超過 50% 的研發支出用於零排放技術。同時仍在渦輪方面進行投資。最後，我們調整後的自由現金流預計將保持健康，第四季中點為 3.25 億美元，約 1.25 億美元。

With that, I will turn the call back to Olivia.

這樣，我會將電話轉回給奧莉維亞。

Thank you, Sean turning now to slide 12 as a reminder of the ways in which we are well positioned for long term success. We continue to expand our Turbo offerings not only to sell the expected growth in hybrids but also to develop our larger turbos for industrial applications. Our operational framework is highly cash generative of our cycles allowing us to invest in new technologies while reducing debt and returning cash to shoulders. Our priority remains to identify and focus on unmet customer needs where we can leverage our innovation capabilities to develop differentiated and highly efficient solutions at scale.

謝謝，Sean 現在轉向投影片 12，提醒我們如何為長期成功做好準備。我們繼續擴展我們的渦輪機產品，不僅是為了銷售混合動力車的預期成長，而且是為了開發用於工業應用的更大渦輪機。我們的營運框架在我們的周期中具有高度現金產生能力，使我們能夠投資新技術，同時減少債務並將現金回饋到肩上。我們的首要任務仍然是識別並專注於未滿足的客戶需求，我們可以利用我們的創新能力大規模開發差異化且高效的解決方案。

Turning now to slide 13, I want to thank the entire team for driving outstanding operating performance in the quarter. We have proven once again the resilience of our financial framework delivering solid financial results and achieving a 17.4% adjusted EBITDA margin. We continue to return capital to shareholders which we believe make Garrett's a highly attractive investment. We secured several significant commercial winds in turbo and are expanding our portfolio to sell industrial and marine applications with our newest and largest turbo offering.

現在轉向投影片 13，我要感謝整個團隊在本季推動了出色的營運表現。我們再次證明了我們財務框架的彈性，實現了穩健的財務業績，並實現了 17.4% 的調整後 EBITDA 利潤率。我們繼續向股東返還資本，我們相信這使加勒特成為一項極具吸引力的投資。我們在渦輪機領域獲得了許多重要的商業風能，並正在擴大我們的產品組合，以利用我們最新、最大的渦輪機產品來銷售工業和船舶應用。

And finally, our recent award and customer recognition across our differentiated high-speed solution for zero emission platform are proof points that we are developing the right set of solutions for the next generation of electric data.

最後，我們最近在零排放平台的差異化高速解決方案中獲得的獎項和客戶認可證明了我們正在為下一代電力數據開發一套正確的解決方案。

Thank you for your time operator. We are now ready to be in the Q&A.

感謝您的時間接線生。我們現在準備好進行問答。

(Operator Instructions)

（操作員說明）

Hamed Khorsand, BWS Financial.

Hamed Khorsand，BWS Financial。

Hi, good morning. So, first question is given your performance in Q3 and the commentary you gave in Q2. What's changed? That surprised you in Q3 that it's led to you to readjust your guidance for Q4.

嗨，早安。因此，第一季度是關於您在第三季的表現以及您在第二季的評論。發生了什麼變化？這讓您在第三季感到驚訝，這導致您重新調整了第四季度的指導。

Well, that's a good question. Let me let me try to address that.

嗯，這是個好問題。讓我嘗試解決這個問題。

At the end of the day, it's the softness of the automotive industry.

歸根究底，這是汽車產業的疲軟。

[It's a little bit stronger]. I don't think it's a surprise by the way because I've seen that pretty much, everyone has seen that the same way.

【稍微強一點】。順便說一句，我認為這並不令人驚訝，因為我已經看到了很多這樣的情況，每個人都以同樣的方式看到了這一點。

And this is, this is the main driver because for the rest, quite frankly, the performance of the company is quite nice and potentially, I would even say even better than what we anticipated when it comes to margins.

這是主要的驅動因素，因為對於其他方面來說，坦白說，該公司的業績相當不錯，而且有可能，我甚至會說，在利潤率方面甚至比我們預期的還要好。

Okay. Are you, are you seeing any changes in China, you know, as far as your customers are concerned and the start-up of production for what you've won?

好的。就您的客戶而言，您是否看到中國發生了任何變化以及您贏得的產品的生產啟動？

Is there any impacts there?

那裡有什麼影響嗎？

But we are what we are seeing in China is that there is we keep on adding softness into the passenger vehicle industry and we keep on adding a huge viability of what we call share demand and participation of different carmakers on the marketplace.

但我們在中國看到的是，我們不斷增加乘用車行業的疲軟性，我們不斷地增加所謂的市場份額需求和不同汽車製造商的參與的巨大活力。

That is not only limited to the global ones by the way, because some of the legacy state owned enterprises have also lost some shares to some new fast rising other companies. That's one but at the same time, that's probably the trend we've seen on that data that that remains. But what we've seen more than that is a weakening industry in Europe. And you may have seen that and also, I would say some positive signals to me to get that the commercial industry, the way business in China for us is a sign of recovery into industry and certain sign of recovery because of the underlying trend of the industry. And also, because we are starting to see a significant benefit of a number of applications that we want, especially on the gas-powered trucks, the natural gas-powered trucks, which is a place where we are developing our position.

順便說一句，這不僅限於全球企業，因為一些傳統的國有企業也失去了一些股份，讓給了一些新的快速崛起的其他公司。這是其中之一，但同時，這可能是我們在仍然存在的數據中看到的趨勢。但我們看到的不僅是歐洲產業的疲軟。你可能已經看到了這一點，而且，我想向我傳達一些積極的信號，讓我明白商業行業，對我們來說在中國的業務方式是工業復甦的標誌，也是復甦的某種跡象，因為經濟的基本趨勢產業。而且，因為我們開始看到我們想要的許多應用的顯著優勢，特別是在燃氣動力卡車、天然氣動力卡車上，這是我們正在發展地位的一個領域。

Okay. And my other question was, are you in a position to talk about the, what's happening in the light vehicle market as far as product mix is concerned, a lot more hybrid vehicles are being considered. And you are you talking about when this will benefit you on the sales side? And by what magnitude?

好的。我的另一個問題是，您是否可以談談輕型汽車市場在產品組合方面正在發生的事情，並正在考慮更多的混合動力汽車。您是在談論這何時會為您的銷售帶來好處嗎？幅度是多少？

Well, there are a few things that are happening. So, the first one, as we said, the consolidation of our industry drives some more programs to the direction of the main players. We are not the only one there.

嗯，有一些事情正在發生。因此，第一個，正如我們所說，我們行業的整合推動了更多項目向主要參與者的方向發展。我們並不是那裡唯一的人。

But we see that happening and we see that as a positive trend for the months and the years to come. On top of that, the point we were alluding to during our next call, which is that carmakers are busy reviewing their strategic portfolio for the long term, taking into account, a bigger share of plug-in hybrid vehicles is happening at the same time. And this is a goodness for the jobber industry, and this is goodness for Garrett as well. Those two trends combined are our plus.

但我們看到這種情況正在發生，我們認為這是未來幾個月和幾年的正面趨勢。最重要的是，我們在下次電話會議中提到的一點是，汽車製造商正在忙於審查其長期戰略組合，考慮到插電式混合動力汽車的份額正在增加。這對批發業來說是件好事，對加勒特來說也是一件好事。這兩種趨勢的結合是我們的優勢。

And my last question is, are you seeing customers adopt more of their higher priced, higher margin or more on the lower end of, of the your product spectrum?

我的最後一個問題是，您是否看到客戶更多地採用價格較高、利潤較高或較低端的產品系列？

What we see is that when it comes to and now, I would say I would be specific because in Europe, we are already having a lot of what we would call valuable geometry turbochargers also on hybrid vehicles. And I would say in the US the next year for emission regulations drive obviously more technology on the turbo charger which is a good trend for us and whether it's applying to pure ice powertrain or IBD power train.

我們看到的是，當談到現在時，我會說我會具體，因為在歐洲，我們已經在混合動力汽車上擁有許多我們稱之為有價值的幾何渦輪增壓器。我想說的是，明年在美國，排放法規顯然會推動渦輪增壓器技術的發展，這對我們來說是一個很好的趨勢，無論它是應用於純冰動力系統還是 IBD 動力系統。

Okay. Thank You.

好的。謝謝。

Michael Ward, Freedom Capital.

邁克爾·沃德，自由資本。

Good morning, everyone.

大家早安。

Two things on the interest expense side. Why wasn't the benefit from the refine may reflected in the quarterly interest expense number?

利息支出方面有兩件事。為什麼精煉帶來的好處沒有反映在季度利息支出數據中？

I mean, you are seeing it affected in the run rate if you're looking at cash though, remember we do have bonds outstanding, and they pay twice a year. But in terms of interest expense, you are starting to see it the benefits. So

我的意思是，如果你關注的是現金，你會發現它會影響運行率，請記住我們確實有未償還的債券，而且他們每年支付兩次。但就利息支出而言，你開始看到它的好處。所以

I'm looking at $37 million -- I'm looking at $37 million versus $35 million in Q2,

我正在考慮 3700 萬美元——我正在考慮 3700 萬美元，而第二季度為 3500 萬美元，

Right? But it so I think I can walk you through that wreck. Mike offline, I think we can do it that way. But we are, we absolutely are seeing the benefit on interest expense.

正確的？但我想我可以帶你走出那段殘骸。麥克離線，我想我們可以這樣做。但我們確實看到了利息支出的好處。

Okay. It's just not showing up on the income statement.

好的。它只是沒有出現在損益表上。

It there's some accounting, back and forth of the, some of the fees that flowed through in Q3 from Q2 refi, but

第三季從第二季再融資產生的一些費用需要一些會計處理，但是

There were, so there were some one-time fees in there

有，所以裡面有一些一次性費用

That, and you've got some interest rate, swap activity with market movements.

這樣，你就會得到一些利率、隨市場變動而發生的掉期活動。

Okay. And what were the one-time fees?

好的。一次性費用是多少？

Oh, I think it's probably a [$1 million or $2]. But again, let me give you the details on that. I think more importantly, it's more the activity on the market against our interest rate swaps that are mark to market.

哦，我想這可能是一個[100 萬美元或 2 美元]。但再次讓我向您提供相關詳細資訊。我認為更重要的是，市場上的活動更多的是針對我們以市價計價的利率互換。

Okay. Olivia on page 5, you, you kind of go through some of you have a lot going on the electrified solutions. A lot of it seems to be targeted towards the commercial side or larger vehicles. Is that fair to say? And it looks like you have several joint programs that are starting to kick off. And I'm just curious about what that means structurally for the industry. Are you seeing some of these manufacturers go towards a respected name like Garrett and engineering expertise? Is it still, is that part of the market just starting to develop? What, what are you seeing there?

好的。奧莉維亞（Olivia）在第 5 頁上，您，您經歷了一些關於電氣化解決方案的許多事情。其中很多似乎是針對商用車或大型車輛。這麼說公平嗎？看起來你們有幾個聯合計畫正在開始啟動。我只是好奇這對這個行業的結構意味著什麼。您是否看到其中一些製造商正在走向像 Garrett 這樣受人尊敬的名字和工程專業知識？這部分市場還剛開始發展嗎？什麼，在那裡看到什麼？

So that's a good question. Let me answer your question in [22 points]. The first one is that we're talking about commercial vehicles, but we're also talking about passenger of the account on that page, you mentioned that

這是一個好問題。讓我回答你的問題[22分]。第一個是我們談論的是商用車，但我們也在談論該頁面上帳戶的乘客，您提到了這一點

We are about dominated by commercial, and I just saw the one block on the passenger,

我們差不多是商業為主，我剛剛看到客運上的一堵，

Okay? But I mean, there is always in this industry, things that you can say publicly about programs and not penalties is a big deal for us, okay? And I would even say it's not very often that you get a warrant being given by carmakers in this industry for a technology that is not yet in production. So that tells you about the magnitude of the change that we are bringing.

好的？但我的意思是，在這個行業中，你可以公開談論計劃而不是懲罰，這對我們來說是一件大事，好嗎？我甚至想說，這個行業的汽車製造商為尚未投入生產的技術提供保證的情況並不常見。這告訴你我們正在帶來的改變的規模。

Okay. So that's for passenger vehicle. What I'm saying also is that obviously the benefit of a power dense solution increase with the power of the power train, the more of power, the more benefit you get from our solutions, which is true for passenger vehicle. And it is even more true for commercial vehicles. And wanted to highlight that because commercial vehicle as you've seen through the deck and through many presentations, we did is an industry that we like very much. It's an industry where the end consumer pays for the technology that he's having on his vehicle. If you save a few percent of energy, a fleet manager would pay for that.

好的。這適用於乘用車。我想說的是，顯然，功率密集解決方案的好處隨著動力系統功率的增加而增加，功率越大，您從我們的解決方案中獲得的好處就越大，對於乘用車也是如此。對於商用車更是如此。我想強調的是，正如您透過演示和許多演示所看到的那樣，我們所做的商用車是一個我們非常喜歡的行業。在這個行業中，最終消費者需要為其車輛所擁有的技術付費。如果您節省了百分之幾的能源，車隊經理就會為此付費。

And that's good. And you can see that obviously, we are dealing with high power on those solutions, and we are highlighting in the presentation that on some specific axels versus some competitive solutions that are existing. We bring benefits up to 300 kg on one axel of the heavy-duty track.

這很好。您可以看到，顯然，我們正在處理這些解決方案的高功率，並且我們在演示中強調了在某些特定軸上與現有的一些競爭解決方案的比較。我們為重型履帶的一個軸帶來高達 300 公斤的重量。

So, a big deal as well. Passenger vehicle, we've been working at that for some time, commercial vehicle, we started a little bit later and I would say I'm very pleased to validate that. Obviously, there is a need for our technology on passenger vehicle, but there is a need on commercial vehicle. And quite frankly, it's taking up very, very fast and that's the reason why I want to highlight that.

所以，這也是一件大事。乘用車，我們已經在這方面工作了一段時間，商用車，我們開始得晚一些，我想說我很高興驗證這一點。顯然，乘用車需要我們的技術，商用車也需要我們的技術。坦白說，它的發展速度非常非常快，這就是我想強調這一點的原因。

So, if you look out five or '10 years longer term and you look at that your passenger vehicle and then the commercial vehicle segments and your mix of revenue, how, what percentage do you think will be electrified?

因此，如果你放眼五年或十年，你會看到你的乘用車，然後是商用車細分市場以及你的收入組合，你認為電氣化的比例是多少？

But today with the target we have and that we've disclosed is that for 2030 we are targeting $1 billion of revenue in [non-turbo] businesses. So [non-turbo] businesses, which is in terms of in terms of product for us, fuel cell compressor, hydrogen electric vehicle.

但今天我們制定並揭露的目標是，到 2030 年，我們的目標是[非渦輪]業務收入達到 10 億美元。因此，[非渦輪增壓]業務，對我們來說，就是燃料電池壓縮機、氫電動車的產品。

It's the full power solution for cars and light vehicle, light duty vehicles and trucks. And it's also electric centrifugal compressors for cooling electric vehicles. These are the three products that we have in mind. There is obviously a significant portion of that that will be driven by electric powertrain.

它是汽車和輕型車輛、輕型車輛和卡車的完整動力解決方案。它也用於冷卻電動車的電動離心壓縮機。這是我們想要的三種產品。顯然，其中很大一部分將由電動動力系統驅動。

Okay. So, if you take a $5 billion type revenue number, you're talking about 20% of revenue. So, it's not like you're being pushed out of the market, if anything you're being included in it.

好的。因此，如果您採用 50 億美元類型的收入數字，那麼您談論的是收入的 20%。所以，這並不是說你被趕出了市場，如果有的話，你會被納入其中。

Well, we are not just pushed out of the market on the trouble side when you look at, when you look at, we gave the forecast, by the way, at the time when, and we've been public about that, we were expecting 41% of battery electric vehicle on light vehicle by 2013.

好吧，當你看時，當你看時，我們不僅僅是在麻煩的一面被推出市場，順便說一句，當時我們已經公開了這一點，我們給出了預測預計到2013 年41% 的純電動車將轉向輕型車。

And, and you know that probably the last trends are probably lower than that. So, the tail that we see on our core business is a long tail and that tail is fed by a few things. First, there is a consolidation happening in our industry that goes to the benefit of people that are being the widest portfolio, the most solid position into the industry when it comes to portfolio development, but also the financials to ensure that transition.

而且，你知道最後的趨勢可能會低於這個數字。因此，我們在核心業務上看到的尾巴是一條長尾巴，而這條尾巴是由某些東西組成的。首先，我們的產業正在整合，這有利於那些擁有最廣泛投資組合、在投資組合開發方面處於產業最穩固地位的人們，而且也有利於確保轉型的財務狀況。

And at the same time, we're having plug in hybrids that are coming out new technologies. We are talking about that with a mat a minute ago. And on the commercial vehicle side, we know that the transition will be longer.

同時，我們正在推出新技術的插電式混合動力車。一分鐘前我們正在用墊子討論這個問題。在商用車方面，我們知道過渡時間會更長。

And on the commercial vehicle side, we learned that with our industrial turbo, our industrial turbo, with the new segment that we are now developing and that's not for vehicles, that's for Genset. Most of the use of that is for backup power, Genset for data center, this is booming, and I don't see that slowing down anytime soon. So, our business is extremely resilient long term. We disclosed a year ago that we are expecting that by 2030 the revenue that we were expecting on the turbo side would be at the same level as 2023.

在商用車方面，我們了解到，透過我們的工業渦輪機，我們的工業渦輪機，以及我們現在正在開發的新細分市場，這不是用於車輛的，而是用於發電機組的。它的大部分用途是用於備用電源，發電機組用於資料中心，這種情況正在蓬勃發展，我認為這種趨勢不會很快放緩。因此，我們的業務長期具有極強的彈性。我們一年前曾透露，預計到 2030 年渦輪增壓的收入將與 2023 年持平。

And this was anticipating a BV percentage that is probably higher than what people have in their latest forecast.

這是預期的 BV 百分比可能高於人們最新的預測。

Very helpful. Thank you.

非常有幫助。謝謝。

Hey, Mike, I just want to clarify one thing. It really is all driven by the interest rate swaps.

嘿，麥克，我只想澄清一件事。這實際上都是由利率互換所驅動的。

The step up in interest expense.

利息支出增加。

Okay. And does that do the interest rate swaps tail off or they are, are they less necessary?

好的。利率互換是否會減少，或是否會減少必要性？

We do, we do like to hedge our interest rate to be about 80% fixed. But they do, they are layered in over time so we dollar cost into them. So, they do trail off over the coming years, but we would also be layering new ones on. But what it's also they're also being mark to market and so it can ebb and flow and there's also cross currency swaps in there as well.

我們確實喜歡對沖固定利率 80% 左右。但它們確實如此，隨著時間的推移，它們是分層的，所以我們在它們上投入了資金。因此，它們確實會在未來幾年逐漸減弱，但我們也會推出新的。但它們也是按市價計價的，所以它可以潮起潮落，而且也有交叉貨幣掉期。

So substantially less your, your balance sheet. Now you have more than half of your debt, it's fixed.

所以你的資產負債表會大大減少。現在你的債務已經有一半以上了，已經解決了。

Yes.

是的。

So, if we look back compared to May as we are today, you should have less of a need for these swaps. So, correct.

因此，如果我們回顧一下今天的五月情況，您對這些掉期的需求應該會減少。所以，正確。

Well, interest rate swaps. Yes, but we swap all of our US dollar debt into Europe. So, we have cross currency swaps as well because the majority of our cash flows are in EUR, so we like to match up our debt flows to our cash flows.

嗯，利率互換。是的，但我們將所有美元債務換成歐洲。因此，我們也有交叉貨幣掉期，因為我們的現金流大多是歐元，所以我們希望將債務流與現金流相匹配。

But it's always been that way. You're going from [$1.7 million down to $700 million] of debt.

但一直都是這樣。您的債務將從 [170 萬美元減少到 7 億美元]。

That's correct. So, we have less of a need for swaps. That is correct on an interest rate basis. So, [$700,000] of the term loan B is also swapped into fix, well, not all [$700,000] but a fair amount.

這是正確的。因此，我們對交換的需求較少。從利率的角度來看，這是正確的。因此，定期貸款 B 的 [700,000 美元] 也被轉換為固定貸款，嗯，不是全部 [700,000 美元]，而是相當多的金額。

So, some of what we saw in Q3 was just because that was tailing off. And now as you go forward, you can have less of a need to swap. Is that correct?

因此，我們在第三季看到的一些情況只是因為情況正在放緩。現在，隨著您的前進，您可以減少交換的需要。這是正確的嗎？

I would say yes, but we unwound the swaps that were associated with the debt that we refined. So we are, hedged and we're not speculating with swaps that aren't, they don't have an underlying.

我想說是的，但我們取消了與我們改進的債務相關的掉期。所以我們是對沖的，我們不會用掉期來投機，因為它們沒有基礎資產。

And when did that unwinding take place in the [32,222?] Beautiful, thanks very much.

[32,222] 中的放鬆是什麼時候發生的？

You're welcome.

不客氣。

Brian Sponheimer, Gabelli Funds. Please go ahead.

布萊恩‧斯彭海默 (Brian Sponheimer)，Gabelli 基金。請繼續。

Hi, good morning, everyone. The top line here is obviously something that you're going to be dealing with from an end market perspective. The durability of which we can maybe talk, talk about later, but the, the 17.4% EBITDA margin, despite the softness begs the question of whether you all have found a higher floor for profitability and how sticky that sort of really excellent performance can be assuming Europe and China remain soft. So, if I'm looking at this, the way that I'm seeing it, are you maybe structurally a strong, a more profitable entity than you otherwise would have thought or are there potentially some costs that could layer back in if softness were to continue in these end markets?

嗨，大家早安。這裡的首要問題顯然是您從終端市場角度要處理的問題。我們也許可以談論它的持久性，稍後再談，但是，儘管疲軟，但17.4% 的EBITDA 利潤率引出了一個問題：你們是否都找到了更高的盈利能力底線，以及這種真正出色的業績能有多大的黏性。因此，如果我看這個問題，我的看法是，您在結構上是否可能是一個比您想像的更強大、更有利可圖的實體，或者如果經濟疲軟，是否可能會產生一些成本？終端市場？

Brian, nice to have you on the on the call today. You are pointing at a very interesting point for us, which is the profitability of this company you've been following Garrett for quite some time, you know that we have a high degree of viable cost and we work on that in a permanent way every day, we work on improving our cost position and when we improve our cost position, that's obviously something we improve for the long run. Meaning we are always working on structural efforts in order to make this company more agile and therefore some people call that a breakeven point. But for us, it's improving the flexibility of the company to the short term shock that we can find on the marketplace, which I think is the key to success into the automotive industry because the long run, we know where we are and usually the uncertainty is coming from the short term.

布萊恩，很高興今天您接聽電話。您指出了對我們來說非常有趣的一點，那就是您已經關注加勒特相當長一段時間的這家公司的盈利能力，您知道我們有很高的可行成本，並且我們每年都以永久的方式致力於這一點今天，我們致力於改善我們的成本狀況，當我們改善我們的成本狀況時，這顯然是我們長期改善的事情。這意味著我們始終致力於結構性工作，以使公司更加敏捷，因此有些人稱之為損益平衡點。但對我們來說，它提高了公司應對市場上短期衝擊的靈活性，我認為這是進入汽車行業成功的關鍵，因為從長遠來看，我們知道自己在哪裡，通常也知道不確定性來自短期。

So today, it's the result, not only of one quarter of the, but we've also been working diligently for the last two years, even more on that because we were seeing, we were anticipating that there could be some softness. We had identified pockets of inefficiencies, and we are always working on these things. So, it's not like a one quarter. I thought we work at making our factories more flexible. We work at decreasing our fixed costs into the factories as an example. And we had a big plan going on for the last year on these things.

所以今天，這不僅是四分之一的結果，而且是我們在過去兩年裡一直努力工作的結果，甚至更多，因為我們看到，我們預計可能會出現一些疲軟。我們發現了一些效率低下的地方，我們一直在努力解決這些問題。所以，這不像四分之一。我認為我們致力於讓我們的工廠更有彈性。例如，我們致力於降低工廠的固定成本。去年我們在這些事情上製定了一個宏偉的計劃。

So, it's like getting to the gym. That's the analogy I'm making with the team. You need to do that on a daily basis.

所以，這就像去健身房一樣。這就是我與團隊所做的類比。你需要每天都這樣做。

And this is the price of excellence when it comes to margin.

就利潤率而言，這就是卓越的代價。

I would say there are obviously a few points that are helping us on top of that, that are probably a little bit more minor when it comes to their contribution. But that are interesting. We've seen the deflation pass through and, and you may remember some of the calls we did earlier a year ago when I was questioned, when is it guys that you're getting back to the corridor of margin that you had indicated five years ago, that you would be closer to 18%.

我想說的是，顯然還有一些點可以幫助我們，但就他們的貢獻而言，這些點可能有點次要。但這很有趣。我們已經看到通貨緊縮已經過去，你可能還記得一年前我們做過的一些電話，當時我被問到，你們什麼時候才能回到你們曾指出的五年的保證金走廊？ 之前，你會接近18%。

And we were mentioning that ethics was part of it where ethics for the ratio has been pretty much stable. So it's not the driver for that, but that's obviously the inflation, especially on raw material was the point for us because when we get compensated for $1 of cost, we get $1 of price, and this is due to our margin. And we have given a little bit of an idea of what it meant for us. So, there is obviously, as we got on deflation on some specific materials, the impact of the deflation into the improvement of these margins and that could fluctuate obviously on that. But most of the effort is coming from, I should not say after costing measures but adapting the structure working on efficiency, developing new system, new processes and everything across the company.

我們提到道德是其中的一部分，而這個比例的道德幾乎是穩定的。所以這不是驅動因素，但這顯然是通貨膨脹，特別是原材料的通貨膨脹對我們來說是重點，因為當我們獲得1 美元的成本補償時，我們得到1 美元的價格，這是由於我們的利潤。我們已經稍微了解了它對我們的意義。因此，很明顯，當我們對某些特定材料進行通貨緊縮時，通貨緊縮對這些利潤率改善的影響可能會明顯波動。但大部分的努力來自，我不應該說是在成本計算之後，而是調整結構以提高效率，開發新系統、新流程以及整個公司的一切。

Okay. I appreciate the color there. One concern I have across the industry is that given that pressure that automakers are seeing, and you noted it yourself, whether yearly price downs or effectively price performance is going to become increasingly more challenging for the supply base. Is that something that you're anticipating on the light vehicle side? Is it already here and I'll let you take it from there?

好的。我很欣賞那裡的顏色。我對整個行業的一個擔憂是，考慮到汽車製造商所面臨的壓力（您自己也注意到了），無論是每年的價格下跌還是有效的價格表現都將對供應基地變得越來越具有挑戰性。您對輕型車輛方面有這樣的期待嗎？它已經在這裡了，我可以讓你從那裡拿走它嗎？

There is there is indeed a price pressure quite frankly, in all fairness. I've not seen that price pressure going down for the last five years.

平心而論，確實存在價格壓力。過去五年我沒有看到價格壓力下降。

So, and I don't think it has eased off the, the point is that we've been demonstrating that we could get our fair share of price at the time when we need it when it came to inflation, whether it was inflation about raw materials, but also some other type of inflation, transportation energy and everything else and price for customers is always relative to the next best alternative. They can action at the end of the day, as long as we bring the right performance, whether it's the performance of our product, whether it's the support to our customers.

因此，我認為這種情況並沒有緩解，關鍵是我們一直在證明，當涉及通貨膨脹時，我們可以在需要時獲得公平的價格份額，無論是關於通貨膨脹原材料，還有其他類型的通貨膨脹、運送能源和其他一切，對客戶來說，價格總是相對於下一個最佳選擇。只要我們帶來正確的表現，無論是我們產品的性能，還是對客戶的支持，他們最終都可以採取行動。

It makes obviously that arbitrage a little bit more complex, it doesn't mean that we are not helping our customers to reduce their costs. We do. And this is a way for us to help them and to help ourselves at the same time.

顯然，這使得套利變得更加複雜，但這並不意味著我們沒有幫助我們的客戶降低成本。我們做到了。這是我們幫助他們同時幫助我們自己的一種方式。

So price pressure in all it exists. It has existed. I've not seen that going down anyway over the last 5 to 10 years, but I've not seen a complete change. And at the end of the day, there is what you can ask for and there is what the industry can deliver.

因此，價格壓力是存在的。它已經存在了。無論如何，在過去的 5 到 10 年裡，我並沒有看到這種情況有所下降，但我也沒有看到完全的變化。歸根結底，你可以要求什麼，產業也可以提供什麼。

Understood. Thank you very much. I'll pass it along.

明白了。非常感謝。我會把它傳遞下去。

This concludes the question-and-answer session. The conference is now also concluded. Thank you for attending today's presentation and you may now disconnect.

問答環節到此結束。會議現在也結束了。感謝您參加今天的演示，您現在可以斷開連接了。