Garrett Motion Inc (NYSE:GTX) Q3 2019 Earnings Conference Call - Final Transcript

Nov 08, 2019 • 08:30 am ET


Garrett Motion Inc (NYSE:GTX) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning. And my name is Chuck, and I'll be your operator this morning. I would like to welcome everyone to the Garrett Motion Quarterly Earnings Conference Call. This call is being recorded and a replay will be available later today. After the company's presentation there will be a question-and-answer session.

I would now like to hand the call over to Paul Blalock, Vice President of Investor Relations. Please go ahead sir.

Paul Blalock

Thank you Chuck. Good day, everyone and thanks for listening to Garrett Motion's third quarter 2019 conference call. Before we begin I'd like to mention that today's presentation and press release are available on the Garrett Motion website at where you will also find links to our SEC filings along with other important information about Garrett. Turning to slide 2, we note that this presentation may contain forward-looking statements regarding our business, prospects, goals, strategies and anticipated financial performance. We encourage you to read our risk factors contained in our financial filings, become aware of the risks and uncertainties in this business and understand that forward-looking statements are only estimates of future performance and should be taken as such.

The forward-looking statements represent management's expectations only as of today, and the company disclaims any obligation to update them. Today's presentation also uses numerous non-GAAP measures to describe the way in which we manage and operate our business. We reconcile each of those measures to the most directly comparable GAAP measure and you are encouraged to examine those reconciliations which are found in the appendix in both the press release and the slide presentation. Also in today's presentation and comments, we 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 the additional disclaimers related to the basis of financial presentation, the nature of the historical carve-out financial information, and our stand-alone post-spin financial results reported today. In accordance with the terms of our indemnification and reimbursement agreement with Honeywell, our consolidated and combined balance sheets reflect a liability of $1.120 billion in obligations payable to Honeywell as of September 30, 2019.

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. As previously disclosed in our Form 10-K and our consolidated and combined financial statements for December 31, 2018 our management has determined that there was a material weakness in our internal control over financial reporting related to the supporting evidence of 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 of our Indemnification Liability. Including information provided