Garrett Motion

Ticker
$GTX
Industry
Auto Supplier
Type
Post Reorg
Rating
Covered
Category
General
Target Price
$12.00
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Spin-off of turbo-charger segment of Honeywell. Filed for bankruptcy and emerged in 2021. Operates in a duopology with BorgWarner ($BWA).

Notes

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)
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2013-2017 performance — flattish net sales ~$3-3.2bn and ~$600m EBITDA
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Market for turbochargers and penetration rate — gaining share and outgrowing overall light vehicle production
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Financials & Valuation

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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.

Resources

VIC Posts (multiple):

Garrett Motion ($GTX) — FY21 Update