Founder, BWS Financial Inc

Hamed Khorsand

Founder

Independent Stock Specific Research

BWS Financial Inc

BWS provides independent stock specific research focused on companies with distinct value that are going through a special situation where there is a tangible catalyst not priced in. The catalyst can be anything from new product, restructuring, M&A, management change, change in business strategy, etc. BWS’s focus is to understand the change and evaluate the potential return for investors.

BWS utilizes a self formed proprietary approach in discovering stocks by putting great emphasis on deep research. BWS does generate short recommendations following a similar criteria.

Equity Bottom-Up

<ul>
<li>GTX is accelerating its redemption of Series B Preferred shares, which could suggest improving underlying business trends. GTX has moved up its $213 million January payment to December</li>
<li>After announcing $100 million stock repurchase program, GTX is committing to use $511 million of cash when it had only $456 million at the end of the third quarter 2021</li>
<li>The clarity in the business GTX’s Board of Directors is signaling has yet to resonate with investors.</li>
</ul>


GTX is accelerating its redemption of Series B Preferred shares, which could suggest improving underlying business trends. GTX has moved up its $213 million January payment to December
After announcing $100 million stock repurchase program, GTX is committing to use $511 million of cash when it had only $456 million at the end of the third quarter 2021
The clarity in the business GTX’s Board of Directors is signaling has yet to resonate with investors.


<ul type="disc"><li>
Garrett Motion (GTX) reported third quarter results missing our estimates in what was already well established as a tough quarter for the auto industry. During the quarter automakers continued to curtail their production levels due to semiconductor shortages.</li></ul> <ul type="disc"><li>Management had already warned when GTX reported second quarter results that it was looking like a weak third quarter with prospects of some activity in the fourth quarter. GTX’s third quarter results reflected such a scenario, but revenue ended up being $85 million below our estimate.</li></ul> <ul type="disc"><li>The turbochargers GTX was shipping in the quarter were mostly for commercial vehicles and aftermarket where the margins are higher. This enabled GTX to report operating margin of 12.3 percent and adjusted EBITDA of $134 million, or 16.0 percent.</li></ul> <ul type="disc"><li>GTX’s stock has been trading in a range over the last several months with waiting for a turn in the industry before purchasing stock. The demand for automobiles is strong enough where GTX could see steady increase in revenue for three years once the chip shortage is dissipated.</li></ul>


Garrett Motion (GTX) reported third quarter results missing our estimates in what was already well established as a tough quarter for the auto industry. During the quarter automakers continued to curtail their production levels due to semiconductor shortages. Management had already warned when GTX reported second quarter results that it was looking like a weak third quarter with prospects of some activity in the fourth quarter. GTX’s third quarter results reflected such a scenario, but revenue ended up being $85 million below our estimate. The turbochargers GTX was shipping in the quarter were mostly for commercial vehicles and aftermarket where the margins are higher. This enabled GTX to report operating margin of 12.3 percent and adjusted EBITDA of $134 million, or 16.0 percent. GTX’s stock has been trading in a range over the last several months with waiting for a turn in the industry before purchasing stock. The demand for automobiles is strong enough where GTX could see steady increase in revenue for three years once the chip shortage is dissipated.

<ul type="disc"><li>
Garrett Motion (GTX) is reducing its debt obligations and could be signaling the business is on pace with the guidance provided on the second quarter earnings report. GTX has reached an agreement with Honeywell International (HON), the sole holder of GTX’s Series B Preferred.</li></ul> <ul type="disc"><li>The Series B Preferred was structured to pay HON $800 million in eight equal annual payments. However, there were put and call options depending on GTX achieving $600 million adjusted EBITDA in trailing twelve months for two consecutive quarters.</li></ul> <ul type="disc"><li>The prepayment GTX is making helps reduce the leverage of its balance sheet while improving the capital structure. We believe GTX is on pace to achieve the guidance the Company issued with its second quarter earnings call.</li></ul> <ul type="disc"><li>GTX has forecast generating between $300 million and $400 million of free cash flow in 2021. GTX ended the June quarter with $401 million of cash and should be able to retain significant level liquidity entering 2022.</li></ul>


Garrett Motion (GTX) is reducing its debt obligations and could be signaling the business is on pace with the guidance provided on the second quarter earnings report. GTX has reached an agreement with Honeywell International (HON), the sole holder of GTX’s Series B Preferred. The Series B Preferred was structured to pay HON $800 million in eight equal annual payments. However, there were put and call options depending on GTX achieving $600 million adjusted EBITDA in trailing twelve months for two consecutive quarters. The prepayment GTX is making helps reduce the leverage of its balance sheet while improving the capital structure. We believe GTX is on pace to achieve the guidance the Company issued with its second quarter earnings call. GTX has forecast generating between $300 million and $400 million of free cash flow in 2021. GTX ended the June quarter with $401 million of cash and should be able to retain significant level liquidity entering 2022.

• Demand for light-weight vehicles remains elevated, but the lack of components is preventing automakers from ramping production. When Garrett Motion (GTX) reported second quarter results, management asserted there was little clarity into the quarter until September. Unfortunately, the environment has not improved with automakers continuing to limit their production levels.• The second quarter did not have the typical seasonal lift due to automakers pausing orders to catchup with semiconductor shortages. The third quarter seems to have many of the same attributes of the second quarter. • GTX issued full year revenue guidance of $3.7 billion to $3.9 billion with our estimate being closer to the middle of the range at $3.84 billion. However, we are now adjusting our 2021 revenue down to $3.76 billion. We are leaving our 2022 estimates unchanged as demand remains healthy and inventory is light. • The growth story that attracted us to GTX has been delayed until 2022.

• Demand for light-weight vehicles remains elevated, but the lack of components is preventing automakers from ramping production. When Garrett Motion (GTX) reported second quarter results, management asserted there was little clarity into the quarter until September. Unfortunately, the environment has not improved with automakers continuing to limit their production levels.• The second quarter did not have the typical seasonal lift due to automakers pausing orders to catchup with semiconductor shortages. The third quarter seems to have many of the same attributes of the second quarter. • GTX issued full year revenue guidance of $3.7 billion to $3.9 billion with our estimate being closer to the middle of the range at $3.84 billion. However, we are now adjusting our 2021 revenue down to $3.76 billion. We are leaving our 2022 estimates unchanged as demand remains healthy and inventory is light. • The growth story that attracted us to GTX has been delayed until 2022.

<ul type="disc"><li>
Garrett Motion (GTX, GTXAP) was not immune to the production curtailments within the auto industry. GTX reported second quarter results showing a decline in the number of turbocharger units sold in the quarter while average selling price (“ASP”) rose.</li></ul> <ul type="disc"><li>Automakers have been focusing on producing their highest margin vehicles at a time when semiconductors are in short supply to meet industry demand. The change in product mix allowed GTX to report an increased gross margin and operating margin.</li></ul> <ul type="disc"><li>The demand environment for vehicles has increased resulting in lowered channel inventory. Automakers have stated they expect the tight inventory environment could remain until 2023. At the same time, new car models are being introduced and GTX is winning greater share of light vehicles in the US with its new gasoline turbochargers.</li></ul> <ul type="disc"><li>We have made changes to our earnings model after GTX updated its guidance for the year. We believe GTX is taking a cautious tone reflecting the chip shortage causing automakers to reduce production in the near-term.</li></ul>


Garrett Motion (GTX, GTXAP) was not immune to the production curtailments within the auto industry. GTX reported second quarter results showing a decline in the number of turbocharger units sold in the quarter while average selling price (“ASP”) rose. Automakers have been focusing on producing their highest margin vehicles at a time when semiconductors are in short supply to meet industry demand. The change in product mix allowed GTX to report an increased gross margin and operating margin. The demand environment for vehicles has increased resulting in lowered channel inventory. Automakers have stated they expect the tight inventory environment could remain until 2023. At the same time, new car models are being introduced and GTX is winning greater share of light vehicles in the US with its new gasoline turbochargers. We have made changes to our earnings model after GTX updated its guidance for the year. We believe GTX is taking a cautious tone reflecting the chip shortage causing automakers to reduce production in the near-term.

Switzerland

Garrett Motion Inc. operates as an automobile technology provider. The Company offers turbocharging, electric boosting, and automotive software solutions. Garrett Motion serves customers worldwide.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Garrett Motion (GTX US)

GTX: Signal to Clarity

GTX accelerating its redemption of Series B Preferred to a degree we believe the business has stabilized. GTX is committing to pay $411M between...

BWS Financial Inc

GTX: Profitable Thru Industry Trough

Automakers have continued to reduce production levels waiting for semiconductor availability to improve. GTX has shifted to selling higher average...

BWS Financial Inc

GTX: Turbocharged Deleverage

GTX reached an agreement with HON to repay $213 million of its Series B Pfd to reduce its debt balance. The prepayment suggests GTX should manage...

BWS Financial Inc

GTX: Gearing for Ramp in 2022

We are adjusting our numbers for the rest of 2021 to reflect the continued production slowdown at automakers due to the lack of semiconductors....

BWS Financial Inc

GTX: Clarity in Motion

GTX updated their guidance to reflect the current OEM order environment in a worst case scenario, which should allow investors to value the shares...

BWS Financial Inc

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)