Garrett Motion Inc (NYSE:GTX) Q4 2018 Earnings Conference Call - Final Transcript

Feb 20, 2019 • 08:30 am ET


Garrett Motion Inc (NYSE:GTX) Q4 2018 Earnings Conference Call - Final Transcript


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Hello. My name is Sean, and I will be your operator this morning. I would like to welcome everyone to the Garrett Motion 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 hand the call over to Mr. Paul Blalock, VP, Investor Relations. Please go ahead.

Paul Blalock

Thank you, Sean. Good day, everyone, and thanks for listening to Garrett Motion's fourth quarter and full year 2018 financial results conference call. Before we begin, I'd like to mention that today's presentation is available on the Garrett Motion website where you will also find links to our SEC filings, as well as our 2018 financial results and our Investor Day presentation and webcast in September, along with other important information about Garrett.

Turning to Slide 2, we encourage you to read and understand the risk factors contained in our financial filings, become aware of the risks and uncertainties in our business and understand that forward-looking statements are only estimates of future performance and should be taken as such. Today's presentation also uses numerous non-GAAP financial terms to describe the way in which we manage and operate our business.

We've reconciled each of these terms to the closest GAAP term and encourage -- and you are encouraged to examine those reconciliations, which are found in the appendix to this presentation both in the press release and in the slide presentation. Also in today's call, comments will be referring to light vehicle diesel and light vehicle gasoline products by using the terms diesel and gasoline only.

On slide 3, please notice additional disclaimers related to basis of our financial presentation, the nature of our historical carve-out financial information and our new standalone post-spin financial results reported today. In accordance with the terms of our Indemnification and Reimbursement Agreement with Honeywell, our consolidated and combined balance sheet reflects a liability of $1,244 million in obligations payable to Honeywell as of December 31, 2018 the Indemnification Liability.

The amount of the Indemnification Liability is based on information provided to us by Honeywell, with respect to Honeywell's assessment of its own asbestos-related liability payments and accounts payable as of such date and is calculated in accordance with the terms of the Indemnification and Reimbursement Agreement. Honeywell estimates its future liability for asbestos-related claims based on a number of factors.

In the course of preparing our annual report on Form 10-K and our consolidated and combined financial statements for the year ended December 31, 2018, our management has determined that there is a material weakness in our internal control with over financial reporting related to the supporting evidence for our liability to Honeywell under the Indemnification and Reimbursement Agreement. Specifically, we were unable to independently verify the accuracy of certain information Honeywell provided to us that we used to calculate the amount for our Indemnification Liability, including information provided in Honeywell's actuary report and the amounts of