Spin-off of turbo-charger segment of Honeywell. Filed for bankruptcy and emerged in 2021. Operates in a duopology with BorgWarner ($BWA).
Messy capital structure after emerging from BK — Series B & Series A Preferred shares
- Series B — treat like debt; GTX has repaid a lot of this as of FY21 and into 1Q22 — $207m present value remaining as of 1Q22
- Series A — treat like equity; converts into 246m shares of common as of FY21
2022 guidance — 2022 guidance calls for 7% revenue growth (midpoint) and 2% EBITDA growth (midpoint)
2013-2017 performance — flattish net sales ~$3-3.2bn and ~$600m EBITDA
Market for turbochargers and penetration rate — gaining share and outgrowing overall light vehicle production
Financials & Valuation
FY21 Valuation — Competitors with similar balance sheets are trading at 10-12x earnings/FCF. With $440m in FY22 FCF that would be $14-17 per share vs. $7.40 today (90%+ upside). Using the median group earnings multiple (8.5x) would net $12/share for GTX.
Link to GTX model
Garrett Motion ($GTX) — FY21 Update