☒
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Registrant’s telephone number, including area ~~code: +41 21 695 30 00~~

code)

(Former Name, Former Address and Former Fiscal Year,

if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

1.	~~changes in the automotive industry and economic or competitive conditions;~~

2.	~~our ability to develop new technologies and products, and the development of either effective alternative turbochargers or new replacement technologies;~~

3.	~~failure to protect our intellectual property or allegations that we have infringed the intellectual property of others; our ability to license necessary intellectual property from third parties;~~

4.	~~potential material losses and costs as a result of any warranty claims and product liability actions brought against us;~~

5.	significant failure or inability to comply with the specifications and manufacturing requirements of our original equipment manufacturer customers or by increases or decreases to the inventory levels maintained by our customers;

6.	~~volume of products we produce and market demand for such products and prices we charge and the margins we realize from our sales of our products;~~

7.	~~loss of or a significant reduction in purchases by our largest customers, material nonpayment or nonperformance by any our key customers, and difficulty collecting receivables;~~

8.	~~inaccuracies in estimates of volumes of award business;~~

9.	~~work stoppages, other disruptions or the need to relocate any of our facilities;~~

~~10.~~

~~supplier dependency;~~

~~11.~~

~~failure to meet our minimum delivery requirements under our supply agreements;~~

~~12.~~

~~failure to increase productivity or successfully execute repositioning projects or manage our workforce;~~

~~13.~~

~~potential material environmental liabilities and hazards; natural disasters and physical impacts of climate change;~~

~~14.~~

~~technical difficulties or failures, including cybersecurity risks;~~

~~15.~~

~~potential material litigation matters, including labour disputes;~~

~~16.~~

~~changes in legislation or government regulations or policies;~~

~~17.~~

~~risks related to international operations and our investment in foreign markets;~~

~~18.~~

~~risks related to our agreements with Honeywell, such as the Indemnification and Reimbursement Agreement and Tax Matters Agreement;~~

~~19.~~

~~the terms of our indebtedness; our ability to access capital markets;~~

~~20.~~

~~unforeseen adverse tax effects;~~

~~21.~~

~~costs related to operating as a standalone public company and failure to achieve benefits expected from the Spin-Off;~~

~~22.~~

~~inability to recruit and retain qualified personnel; and~~

~~23.~~

~~the other factors described under the caption "Risk Factors" in our Registration Statement on Form 10, as amended and filed with the Securities and Exchange Commission on September 5, 2018.~~

Item 1. Financial ~~Statements.~~

Statements

CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS

The Notes to ~~Combined~~the Consolidated Interim Financial Statements are an integral part of this statement.

GARRETT MOTION INC.

~~COMBINED~~

CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2018

2017

2018

2017

(Dollars in millions)

Net income

$
929

$
57

$
1,137

$
237

Foreign exchange translation adjustment

(3
)

1

(251
)

46

Defined benefit pension plan adjustment, net of tax (Note 13)

—

—

—

—

Changes in fair value of effective cash flow hedges, net of tax (Note 10)

5

(14
)

24

(65
)
Changes in currency basis reserve (Note 10)

(3
)

—

(3
)

—

Total other comprehensive (loss) income, net of tax

$
(1
)

$
(13
)

$
(230
)

$
(19
)
Comprehensive (loss) income

$
928

$
44

$
907

$
218


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in millions)
Net income	$	57	$	105	$	209	$	278
Foreign exchange translation adjustment	14		10		8		13

Changes in fair value of effective cash flow hedges, net of tax (Note 16)	(2)		9		(3)		26
Changes in fair value of net investment hedges, net of tax (Note 16)	20		45		18		87
Total other comprehensive income, net of tax	32		64		23		126
Comprehensive income	$	89	$	169	$	232	$	404

The Notes to ~~Combined~~the Consolidated Interim Financial Statements are an integral part of this statement.

GARRETT MOTION INC.

~~COMBINED~~

CONSOLIDATED INTERIM BALANCE SHEETS

September 30,
2018

December 31,
2017

(Dollars in millions)

ASSETS

Current assets:

Cash and cash equivalents

$
197

$
300

Accounts, notes and other receivables – net (Note 6)

762

745

Inventories – net (Note 7)

183

188

Due from related parties, current (Note 3)

—

530

Other current assets

43

321

Total current assets

1,185

2,084

Due from related parties, non-current (Note 3)

—

23

Investments and long-term receivables

37

38

Property, plant and equipment – net

422

442

Goodwill

193

193

Insurance recoveries for asbestos related liabilities (Note 12)

162

174

Deferred income taxes (Note 5)

228

41

Other assets

63

2

Total assets

$
2,290

$
2,997

LIABILITIES

Current liabilities:

Accounts payable

$
828

$
860

Due to related parties, current (Note 3)

98

1,117

Current maturities of long-term debt (Note 9)

28

—

Accrued liabilities (Note 8)

504

571

Total current liabilities

1,458

2,548

Long-term debt (Note 9)

1,577

—

Deferred income taxes (Note 5)

22

956

Asbestos related liabilities (Note 12)

1,516

1,527

Other liabilities

173

161

Total liabilities

$
4,746

$
5,192

COMMITMENTS AND CONTINGENCIES (Note 12)

EQUITY (DEFICIT)

Invested deficit

(2,464
)

(2,433
)
Accumulated other comprehensive income (Note 11)

8

238

Total deficit

(2,456
)

(2,195
)
Total liabilities and deficit

$
2,290

$
2,997


	September 30, 2023		December 31, 2022
	(Dollars in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	162	$	246
Restricted cash	1		2
Accounts, notes and other receivables – net (Note 6)	860		803
Inventories – net (Note 8)	294		270
Other current assets	73		110
Total current assets	1,390		1,431
Investments and long-term receivables	32		30
Property, plant and equipment – net	437		470
Goodwill	193		193
Deferred income taxes	225		232
Other assets (Note 9)	255		281
Total assets	$	2,532	$	2,637
LIABILITIES
Current liabilities:
Accounts payable	$	1,066	$	1,048

Current maturities of long-term debt (Note 14)	7		7


Accrued liabilities (Note 11)	312		320
Total current liabilities	1,385		1,375
Long-term debt (Note 14)	1,622		1,148

Deferred income taxes	21		25
Other liabilities (Note 12)	196		205


Total liabilities	$	3,224	$	2,753
COMMITMENTS AND CONTINGENCIES (Note 20)
EQUITY (DEFICIT)
Series A Preferred Stock, par value $0.001; zero and 245,089,671 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	$	—	$	—
Common Stock, par value $0.001; 1,000,000,000 and 1,000,000,000 shares authorized, 243,305,848 and 64,943,238 issued and 243,011,280 and 64,832,609 outstanding as of September 30, 2023 and December 31, 2022, respectively	—		—
Additional paid–in capital	1,188		1,333
Retained deficit	(1,939)		(1,485)
Accumulated other comprehensive income (Note 17)	59		36
Total deficit	(692)		(116)
Total liabilities and deficit	$	2,532	$	2,637

The Notes to ~~Combined~~the Consolidated Interim Financial Statements are an integral part of this statement.

GARRETT MOTION INC.

~~COMBINED~~

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

For the Nine Months Ended September 30,

2018

2017

(Dollars in millions)

Cash flows from operating activities:

Net income

$
1,137

$
237

Adjustments to reconcile net (loss) income to net cash provided by operating
activities:

Deferred income taxes

(908
)

—

Depreciation

53

47

Foreign exchange (gain) loss

10

(21
)
Stock compensation expense

16

12

Pension expense

7

7

Other

6

(2
)
Changes in assets and liabilities:

Accounts, notes and other receivables

(42
)

(34
)
Receivables from related parties

57

3

Inventories

(7
)

(37
)
Other assets

(2
)

—

Accounts payable

(6
)

(8
)
Payables to related parties

(50
)

(6
)
Accrued liabilities

(57
)

42

Asbestos related liabilities

1

(5
)
Other liabilities

25

(1
)
Net cash provided by (used for) operating activities

240

234

Cash flows from investing activities:

Expenditures for property, plant and equipment

(66
)

(56
)
Proceeds from related party notes receivables

—

67

Increase in marketable securities

(21
)

(540
)
Decrease in marketable securities

312

531

Other

—

3

Net cash provided by (used for) investing activities

225

5

Cash flows from financing activities:

Net increase (decrease) in Invested deficit

(1,493
)

(251
)
Proceeds from issuance of long-term debt

1,631

—

Payments of long-term debt

—

—

Proceeds related to related party notes payable

—

327

Payments related to related party notes payable

(493
)

(326
)
Net change related to cash pooling and short-term notes

(201
)

69

Net cash provided by (used for) financing activities

(556
)

(181
)
Effect of foreign exchange rate changes on cash and cash equivalents

(12
)

10

Net increase (decrease) in cash and cash equivalents

(103
)

68

Cash and cash equivalents at beginning of period

300

119

Cash and cash equivalents at end of period

$
197

$
187


	Nine Months Ended September 30,
	2023		2022
	(Dollars in millions)
Cash flows from operating activities:
Net income	$	209	$	278
Adjustments to reconcile net income to net cash provided by operating activities

Deferred income taxes	13		16
Depreciation	66		64
Amortization of deferred issuance costs	17		6
Interest payments, net of debt discount accretion	—		(19)
Loss on extinguishment of debt	—		5
Loss on remeasurement of forward purchase contract	13		—
Foreign exchange loss	—		4
Stock compensation expense	12		8
Pension expense	1		—
Change in fair value of derivatives	21		(54)
Other	7		2
Changes in assets and liabilities:
Accounts, notes and other receivables	(76)		(166)
Inventories	(30)		(80)
Other assets	2		13
Accounts payable	57		180
Accrued liabilities	26		(2)

Other liabilities	(8)		(17)
Net cash provided by operating activities	$	330	$	238
Cash flows from investing activities:
Expenditures for property, plant and equipment	(57)		(78)
Re-couponing of cross-currency swap contract	9		—
Net cash used for investing activities	$	(48)	$	(78)
Cash flows from financing activities:
Proceeds from issuance of long-term debt, net of debt financing costs	667		—

Payments of long-term debt	(205)		(5)

Redemption of Series B Preferred Stock	—		(381)
Repurchases of Series A Preferred Stock	(580)		(4)
Repurchases of Common Stock	(178)		—
Payments of Additional Amounts for conversion of Series A Preferred Stock	(25)		—
Payments for preference dividends	(42)		(42)
Payments for debt and revolving facility financing costs	(2)		(4)
Other	(1)		—
Net cash used for financing activities	$	(366)	$	(436)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	(1)		(27)
Net decrease in cash, cash equivalents and restricted cash	(85)		(303)
Cash, cash equivalents and restricted cash at beginning of the period	248		464
Cash, cash equivalents and restricted cash at end of the period	$	163	$	161
Supplemental cash flow disclosure:
Income taxes paid (net of refunds)	$	38	$	38
Interest paid	45		56

CONSOLIDATED INTERIM STATEMENTS OF EQUITY (DEFICIT)


	Series A Preferred Stock			Common Stock			Additional Paid-in Capital		Retained Deficit		Accumulated Other Comprehensive Income		Total Deficit
	Shares	Amount		Shares	Amount
	(in millions)
Balance at December 31, 2022	246	$	—	64	$	—	$	1,333	$	(1,485)	$	36	$	(116)
Net income	—	—		—	—		—		81		—		81

Other comprehensive loss, net of tax	—	—		—	—		—		—		(6)		(6)
Dividends	—	—		—	—		—		(42)		—		(42)
Stock-based compensation	—	—		—	—		3		—		—		3
Balance at March 31, 2023	246	$	—	64	$	—	$	1,336	$	(1,446)	$	30	$	(80)
Net income	—	—		—	—		—		71		—		71
Repurchases of Series A Preferred Stock	(70)	—		—	—		(366)		(201)		—		(567)
Repurchases of Common Stock	—	—		(2)	—		—		(18)		—		(18)
Excise tax on share repurchases	—	—		—	—		—		(6)		—		(6)
Other comprehensive loss, net of tax	—	—		—	—		—		—		(3)		(3)
Issuance of Common Stock for preference dividends	—	—		26	—		209		(209)		—		—
Conversion of Series A Preferred Stock to Common Stock	(176)	—		176	—		—		(25)		—		(25)
Stock-based compensation	—	—		—	—		5		—		—		5
Balance at June 30, 2023	—	$	—	264	$	—	$	1,184	$	(1,834)	$	27	$	(623)
Net income	—	—		—	—		—		57		—		57
Repurchases of Common Stock	—	—		(21)	—		—		(161)		—		(161)
Excise tax on share repurchases	—	—		—	—		—		(1)		—		(1)
Other comprehensive loss, net of tax	—	—		—	—		—		—		32		32
Stock-based compensation	—	—		—	—		4		—		—		4
Balance at September 30, 2023	—	$	—	243	$	—	$	1,188	$	(1,939)	$	59	$	(692)

	Series A Preferred Stock			Common Stock			Additional Paid-in Capital		Retained Deficit		Accumulated Other Comprehensive (Loss)/Income		Total Deficit
	Shares	Amount		Shares	Amount
	(in millions)
Balance at December 31, 2021	246	$	—	64	$	—	$	1,326	$	(1,790)	$	(4)	$	(468)
Net income	—	—		—	—		—		88		—		88
Repurchases of Series A Preferred Stock	—	—		—	—		(1)		(1)		—		(2)
Other comprehensive income, net of tax	—	—		—	—		—		—		23		23
Stock-based compensation	—	—		—	—		2		—		—		2
Balance at March 31, 2022	246	—		64	—		$	1,327	$	(1,703)	$	19	$	(357)
Net income	—	—		—	—		—		85		—		85
Repurchases of Series A Preferred Stock	—	—		—	—		(1)		—		—		(1)

Other comprehensive income, net of tax	—	—		—	—		—		—		39		39
Stock-based compensation	—	—		—	—		3		—		—		3
Balance at June 30, 2022	246	$	—	64	$	—	$	1,329	$	(1,618)	$	58	$	(231)
Net income	—	—		—	—		—		105		—		105
Repurchases of Series A Preferred Stock	—	—		—	—		(1)		—		—		(1)
Other comprehensive income, net of tax	—	—		—	—		—		—		64		64
Dividends declared	—	—		—	—		—		(42)		—		(42)
Stock-based compensation	—	—		—	—		3		—		—		3
Balance at September 30, 2022	246	$	—	64	$	—	$	1,331	$	(1,555)	$	122	$	(102)

The Notes to the Consolidated Interim Financial Statements are an integral part of this statement.

NOTES TO ~~COMBINED~~CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in ~~millions)~~

millions, except per share amounts)

Note 1. Background and Basis of Presentation

Garrett Motion Inc., (the “Company” or “Garrett”) designs, manufactures and sells highly engineered turbocharger and electric-boosting technologies for light and commercial vehicle original equipment manufacturers (“OEMs”) and the ~~aftermarket.~~global vehicle independent aftermarket, as well as automotive software solutions. These OEMs in turn ship to consumers globally. We are a global technology leader with significant expertise in delivering products across gasoline, diesel, natural gas and ~~diesel propulsion systems and hybrid~~electric (hybrid and fuel ~~cell powertrains.~~

~~On October 1, 2018, the Company became an independent publicly-traded company through a pro rata distribution by Honeywell International Inc. (“Parent” or “Honeywell”)~~ ~~of 100% of the then-outstanding shares of Garrett to Honeywell’s stockholders (the “Spin-Off”). Each Honeywell stockholder of record received one share of Garrett common stock~~cell) power trains. These products are key enablers for every 10 shares of Honeywell common stock held on the record date. Approximately 74 million shares of Garrett common stock were distributed on October 1, 2018 to Honeywell stockholders. In connection with the Spin-Off, Garrett´s common stock began trading “regular-way” under the ticker symbol “GTX” on the New York Stock Exchange on October 1, 2018.

~~Unless the context otherwise requires, references to “Garrett,” “we,” “us,” “our,”~~fuel economy and “the Company” refer to (i) Honeywell’s Transportation Systems Business (the “Transportation Systems Business” or the “Business”) prior to the Spin-Off and (ii) Garrett Motion Inc. and its subsidiaries following the Spin-Off, as applicable.

emission standards compliance.

Basis of Presentation

The accompanying ~~Combined~~unaudited Consolidated Interim Financial Statements ~~were derived from~~have been prepared in accordance with the ~~consolidated financial statements~~rules and ~~accounting records of Honeywell. These Combined Interim Financial Statements reflect the combined historical results of operations, financial position and cash flows~~regulations of the ~~former Transportation Systems Business as they were historically managed in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).~~

~~Asbestos-related expenses, net of probable insurance recoveries,~~Securities and Exchange Commission applicable to interim financial statements. While these statements reflect all normal recurring adjustments that are, presented within Other expense, net in the Combined Statements of Operations. Honeywell is subject to certain asbestos-related and environmental-related liabilities, primarily related to its legacy Bendix business. In conjunction with the Spin-Off, certain operations that were part of the Bendix business, along with the ownership of the Bendix trademark, as well as certain operations that were part of other legacy elements of the Business, were transferred to us. These Combined Interim Financial Statements, prepared for the period during which the Business was still a part of Honeywell, reflect an estimated liability for resolution of pending and future asbestos-related and environmental liabilities related to these businesses, calculated as if we were responsible for 100% of the Bendix asbestos-liability payments. However, we note that this recognition model in the accompanying Combined Interim Financial Statements will differ from the recognition model to be presented in future financial statements as a standalone company which will reflect the terms of the Indemnification and Reimbursement Agreement (the “Indemnification and Reimbursement Agreement”) with Honeywell entered into on September 12, 2018, under which we are required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. For additional information, see Note 14 Subsequent Events.

~~The Combined Interim Financial Statements are unaudited; however,~~ in the opinion of management, ~~they contain all~~necessary for fair presentation of the ~~adjustments (consisting of those of a normal recurring nature) considered necessary to state fairly the financial position,~~ results of ~~operations~~the interim period, they do not include all of the information and ~~cash flows~~footnotes required by United States generally accepted accounting principles (“GAAP”) for ~~the periods presented in conformity with U.S. GAAP applicable to interim periods.~~complete financial statements. The ~~Combined~~unaudited Consolidated Interim Financial Statements should therefore be read in conjunction with the ~~audited annual Combined~~Consolidated Financial Statements and accompanying notes for the year ended December 31, ~~2017 of the Transportation Systems Business~~2022 included in our Annual Report on Form ~~10,~~10-K, as ~~amended and~~ filed with the Securities and Exchange Commission ~~(“SEC”)~~ on ~~September 5, 2018~~February 14, 2023 (our ~~“Form 10”~~“2022 Form 10-K”). The results of operations for the three and nine months ended September 30, ~~2018~~2023 and cash flows for the nine months ended September 30, ~~2018~~2023 should not necessarily be taken as indicative of the entire year.

All amounts presented are in millions, except per share amounts.

We report our quarterly financial information using a calendar convention: the first, second and third quarters are consistently reported as ending on March 31, June 30 and September 30. It has been our practice to establish actual quarterly closing dates using a predetermined fiscal calendar, which requires our businesses to close their books on a Saturday ~~in order~~ to minimize the potentially

disruptive effects of quarterly closing on our business processes. ~~The effects of this practice are generally not significant to reported results for any quarter and only exist within a reporting year. In the event that~~For differences in actual closing dates that are material to year-over-year comparisons of quarterly or year-to-date results, ~~we will provide appropriate disclosures. Our actual closing dates~~such differences have been adjusted for the three ~~and nine~~ months ended September 30, ~~2018 and~~2022. Our actual closing date for the three months ended September 30, ~~2017 were September 29, 2018 and~~2022 was October 1, 2022. There was no difference in actual closing date for the three months ended September 30, ~~2017.~~

2023.

We evaluate segment reporting in accordance with ASC 280, Segment Reporting. We concluded that Garrett operates in a single operating segment and a single reportable segment based on the operating results available and evaluated regularly by the chief operating decision maker (“CODM”), which is our Chief Executive Officer, to make decisions about resource allocation and performance assessment. The CODM makes operational performance assessments and resource allocation decisions on a consolidated basis, inclusive of all of the Company’s products across channels and geographies.

The preparation of the financial statements in conformity with GAAP requires management to make estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management bases these estimates on assumptions that it believes to be reasonable under the circumstances. Actual results could differ from the original estimates, requiring adjustments to these balances in future periods.

Capital Structure Transformation Transaction

On April 12, 2023, the Company entered into the Transaction (as defined in Note 15 below) to increase the attractiveness of the Company to investors, including simplifying the Company’s capital stock by converting all outstanding Series A Preferred Stock into a single class of Common Stock, subject to certain conditions.

In the Transaction, the Company repurchased and aggregate of 69,707,719 shares of Series A Preferred Stock from the C&O Investors (as defined below), and converted all remaining outstanding 175,337,712 shares of Series A Preferred Stock into an equivalent number of shares of Common Stock. The total amounts paid to holders of Series A Preferred Stock in connection with the Transaction included aggregate cash payments of $605 million and the issuance of an

additional 25,577,517 shares of Common Stock in settlement of accumulated and unpaid preference dividends on the Series A Preferred Stock through June 30, 2023. The Transaction was financed through a new Term Loan B for an aggregate principal amount of $700 million under the framework of the Company's existing credit agreement. See Note 15, Series A Preferred Stock.

The Company recorded the following amounts in the Consolidated Interim Financial Statements related to the repurchase and conversion of its Series A Preferred Stock:


	Movements for the Nine Months Ended
	September 30, 2023
Consolidated Interim Balance Sheet:	(Dollars in millions)
Cash and cash equivalents	$	(605)
Preferred stock, Common stock and Additional Paid-in capital	(157)
Retained earnings	(441)

	Nine Months Ended September 30, 2023
Consolidated Interim Statement of Operations:	(Dollars in millions)

Non-operating expenses	$	13

The Company also incurred $9 million of Transaction-related costs for the nine months ended September 30, 2023, primarily for legal and advisory services that are included in Selling, general and administrative expenses in the Consolidated Interim Statement of Operations. See Note 14, Long-term Debt and Credit Agreement for discussion on the new Term Loan B and Note 15, Series A Preferred Stock for further discussion of the Transaction.

Note 2. Summary of Significant Accounting Policies

The accounting policies of the ~~Business~~Company are set forth in Note 23 to the ~~audited annual Combined~~Consolidated Financial Statements for the year ended December 31, ~~2017 of the Transportation Systems Business~~2022 included in our 2022 Form ~~10. We include herein certain updates~~10-K.

Recently Adopted Accounting Pronouncements

In September 2022, the FASB issued ASU 2022-04, Disclosure of Supplier Finance Program Obligations (Topic 405-50): Disclosure of Supplier Finance Purchase Obligations. The amendment in this update requires companies to disclose key terms of supplier financing programs used in connection with the purchase of goods and services, along with information about their obligations under these programs including a rollforward of those ~~policies.~~

~~Sales Recognition—On January 1, 2018, we~~obligations. The Company adopted the ~~FASB´s updated~~new guidance ~~on revenue from contracts with customers, Accounting Standards Codification (“ASC”) 606~~ ~~Revenue from Contracts With~~ ~~Customers (“ASC 606”), using the modified retrospective method applied to contracts that were not completed~~ as of January 1, ~~2018. Results~~2023. See Note 10, Supplier Financing for ~~reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting.~~

Product sales are recognized when we transfer control of the promised goods to our customer, which is based on shipping terms. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring the promised goods.

~~In the sale of products in the OEM channel, the transaction price for these goods is equal~~disclosure related to the ~~agreed price of each unit and represents the standalone selling price for the unit.~~

In the sale of products in the aftermarket channel, the terms of a contract or the historical business practice can give rise to variable consideration due to, but not limited to, discounts and bonuses. We estimate variable consideration at the most likely amount we will receive from customers and reduce revenues recognized accordingly. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current and forecasted) that is reasonably available to us.

~~Pension Benefits~~—On January 1, 2018, we retrospectively adopted the new accounting guidance contained in Accounting Standards Update (“ASU”) 2017-07 which amends the presentation of net periodic pension costs. That guidance requires that we disaggregate the service cost component of net benefit costs and report those costs in the same line item or items in the Combined Statement of Operations as other compensation costs arising from services rendered by the pertinent employees during the period. The other non-service components of net benefit costs are required to be presented separately from the service cost component.

Following the adoption of this guidance, we continue to record the service cost component of Pension ongoing (income) expense in Cost of goods sold. The remaining components of net benefit costs within Pension ongoing (income) expense, primarily interest costs and assumed return on plan assets, are now recorded in Non-operating (income) expense. We will continue to recognize net actuarial gains or losses in excess of 10% of the greater of the fair value of plan assets or the plans’ projected benefit obligation (the corridor) annually in the fourth quarter each year (MTM Adjustment). The MTM Adjustment will also be reported in Non-operating (income) expense.

~~Derivative Financial Instruments— On September 27,~~2018, we early adopted the new accounting guidance contained in ASU 2017-12 on a modified retrospective approach. The new standard is intended to improve and simplify rules relating to hedge accounting, including the elimination of periodic hedge ineffectiveness, recognition of components excluded from hedge effectiveness assessment, the ability to elect to perform subsequent effectiveness assessments qualitatively, and other provisions designed to provide more transparency around the economics of a company’s hedging strategy.

On September 27, 2018, the Company entered into a cross-currency swap contract to hedge the foreign currency exposure from foreign currency-denominated debt as described in Note 10, Financial Instruments and Fair Value Measures. The contract is designated as a fair value hedge for accounting purposes. On adoption of ASU 2017-12, the Company has elected to account for the portion of the change in fair value of the cross-currency swap attributable to the cross-currency basis spread separately within Currency basis reserve as a component of Other Comprehensive Income (“OCI”).

In relation to the Company’s foreign currency exchange forward and option contracts (foreign currency exchange contracts), adoption of ASU 2017-12 had no impact on Garrett Motion Inc.’s combined balance sheets or results of operations. Such contracts will continue to be accounted for in the same manner as outlined in Note 2 to the audited annual Combined Financial Statements for the year ended December 31, 2017 of the Transportation Systems Business included in our Form 10.

~~Recent Accounting Pronouncements~~—We consider the applicability and impact of all recent accounting standards updates (“ASU’s”) issued by the Financial Accounting Standards Board (FASB). ASU’s not listed below were assessed and determined to be either not applicable or are expected to have immaterial impact on the combined financial position or results of operations.

In February 2016, the FASB issued guidance on accounting for leases which requires lessees to recognize most leases on their balance sheets for the rights and obligations created by those leases. The guidance requires enhanced disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases that will be effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. We expect to adopt the requirements of the new standard effective January 1, 2019. The guidance requires the use of a modified retrospective approach. We are currently evaluating our lease portfolio to assess the impact to the Combined Interim Financial Statements as well as planning for adoption and implementation of this standard, which includes assessing the impact on information systems and internal controls.

In February 2018, the FASB issued guidance that allows for an entity to elect to reclassify the income tax effects on items within accumulated other comprehensive income resulting from U.S. tax reform to retained earnings. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted, including interim periods within those years. We are currently evaluating the impact of this standard on our Combined Interim Financial Statements and whether we will make the allowed election.

~~Note 3. Related Party Transactions with Honeywell~~

~~The Combined Interim Financial Statements have been prepared on a stand-alone basis and are derived from the Consolidated Interim Financial Statements and accounting records of Honeywell.~~

Prior to the Spin-Off, Honeywell provided certain services, such as legal, accounting, information technology, human resources and other infrastructure support, on behalf of the Business. The cost of these services has been allocated to the Business on the basis of the proportion of revenues. The Business and Honeywell consider the allocations to be a reasonable reflection of the benefits received by the Business. During the three and nine months ended September 30, 2018 and 2017, Garrett was allocated $26 million and $87 million, and $31 million and $92 million, respectively, of general corporate expenses incurred by Honeywell, and such amounts are included within Selling, general and administrative expenses in the Combined Statements of Operations. As certain expenses reflected in the Combined Interim Financial Statements include allocations of corporate expenses from Honeywell, these statements could differ from those that would have been prepared had Garrett operated on a stand-alone basis.

~~Honeywell uses a centralized approach for the purpose of cash management and~~Company's supplier financing of its operations. Prior to the Spin-Off, the Business’ cash was historically transferred to Honeywell daily, and Honeywell funded its operating and investing activities as needed. The Company has operated a centralized non-interest-bearing cash pool in U.S. and regional interest-bearing cash pools outside of U.S. As of September 30, 2018 and December 31, 2017, the Company had non-interest-bearing cash pooling balances of $0 million and $51 million, respectively, which are presented in Invested deficit within the Combined Balance Sheets.

The Company received interest income for related party notes receivables of $0 million and $1 million, and $0 million and $0 million, for the three and nine months ended September 30, 2018 and 2017, respectively. Additionally, the Company incurred interest expense for related party notes payable of $0 million and $1 million, and $2 million and $5 million, for the three and nine months ended September 30, 2018 and 2017, respectively.

~~Due from related parties, current consists of the following:~~

program obligations.

September 30,
2018

December 31,
2017

Cash pooling and short-term notes receivables

$
—

$
495

Other tax receivables from Parent

—

26

Receivables from related parties

—

8

Related party notes receivables, current

—

1

Foreign currency exchange contracts

—

—

$
—

$
530

September 30,
2018

December 31,
2017

Other tax receivables from Parent

$
—

$
23

$
—

$
23

~~Due to related parties, current consists of the following:~~

September 30,
2018

December 31,
2017

Cash pooling and short-term notes payables

$
98

$
545

Related party notes payables, current

—

484

Payables to related parties

—

51

Foreign currency exchange contracts

—

37

$
98

$
1,117

Net transfers to and from Honeywell are included within Invested deficit on the Combined Balance Sheet. The components of the net transfers to and from Honeywell for the three and nine months ended September 30, 2018 and 2017 are as follows:

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2018

2017

2018

2017

General financing activities

$
30

$
(111
)

$
1,761

$
(243
)
Distribution to Parent

(1,628
)

(69
)

(2,994
)

(69
)
Unbilled corporate allocations

15

31

41

64

Stock compensation expense and other compensation awards

5

5

17

14

Pension expense

2

2

7

7

Total net decrease in Invested deficit

$
(1,576
)

$
(142
)

$
(1,168
)

$
(227
)

Note 4.3. Revenue Recognition and Contracts with Customers

The Company generates revenue through the sale of products to customers in the OEM and aftermarket channels. OEM and aftermarket contracts generally include scheduling agreements that stipulate the pricing and delivery terms that identify the quantity and timing of the product to be transferred.

Revenue recognition will be generally consistent with the previous standard, with the exception of how we account for payments made to customers in conjunction with future business. Historically these payments were recognized as a reduction of revenue at the time the payments were made. Under ASC 606, these payments result in deferred reductions to revenue that are subsequently recognized when the products are delivered to the customer. The Company evaluates the amounts capitalized each period end for recoverability and expenses any amounts that are no longer expected to be recovered over the term of the business arrangement. These payments are recorded in Other current assets and Other assets in our Combined Balance Sheet. Upon adoption the cumulative impact of this change is as follows:

December 31, 2017

As reported

Adjustments

As adjusted

Combined Balance Sheet

Assets

Current assets:

Other current assets

$
321

$
7

$
328

Other assets

2

53

55

Liabilities

Non-current liabilities:

Deferred income taxes

956

6

962

Equity (Deficit)

Invested deficit

(2,433
)

54

(2,379
)

Under the modified retrospective method of adoption, we are required to disclose the impact to revenues had we continued to follow our accounting policies under the previous revenue recognition guidance. We estimate the impact to revenues for the three and nine months ended September 30, 2018 was a decrease of $1 million and $4 million, respectively. As of September 30, 2018, deferred payments to customers recorded in Other current assets and Other assets in our Combined Balance Sheet were $9 million and $45 million, respectively. Refer to Note 2, Summary of Significant Accounting Policies for a summary of our significant policies for revenue recognition.

Disaggregated Revenue

~~Sales~~

Net sales by region (determined based on country of shipment) and channel are as follows:

For the Nine Months
Ended September 30, 2018

OEM

Aftermarket

Total

United States

$
276

$
120

$
396

Europe

1,321

114

1,435

Asia

673

38

711

Other International

18

16

34

$
2,288

$
288

$
2,576

The following table summarizes our contract assets and liabilities balances:

Note 4. Research, Development & Engineering

Garrett conducts research, development and is defined as the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. For product sales, typically each product sold to a customer represents a distinct performance obligation.

~~Virtually all of our performance obligations are satisfied as of a point in time. Performance obligations are supported by contracts with customers, providing a framework for the nature~~engineering (“RD&E”) activities, which consist primarily of the ~~distinct goods, services or bundle~~development of new products and product applications. RD&E costs are charged to expense as incurred unless the Company has a contractual guarantee for reimbursement from the customer. Customer reimbursements are netted against gross RD&E expenditures as they are considered a recovery of cost. Such costs are included in Cost of goods sold as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in millions)
Research and development costs	$	42	$	38	$	128	$	112
Engineering-related expenses, net of customer (reimbursements) (1)	(3)		4		(8)		13
	$	39	$	42	$	120	$	125

(1) Engineering-related expenses include customer reimbursements of $10 million and services. The timing of satisfying the performance obligation is typically indicated by the terms of the contract. All performance obligations are expected to be satisfied within one year, with substantially all performance obligations being satisfied within a month.

The timing of satisfaction of our performance obligations does not significantly vary from the typical timing of payment, with cash advances (contract liabilities) and unbilled receivables (contract assets) being settled within 3 months. For some contracts, we may be entitled to receive an advance payment.

~~We have applied the practical expedient to not disclose the value of remaining performance obligations for contracts with an original expected term of one year or less.~~

~~Note 5. Income Taxes~~

~~The effective tax rate decreased~~$6 million for the three months ended September 30, ~~2018, as compared to the three months ended September 30, 2017, primarily due to tax benefits from an internal restructuring of Garrett’s business in advance of the Spin-Off that resulted in an $870~~2023 and 2022, respectively, and $34 million ~~reduction in tax expense~~ and increased tax benefits attributable to currency impacts for withholding taxes on undistributed foreign earnings, partially offset by adjustments to the provisional tax amount related to U.S. tax reform.

~~The effective tax rate decreased~~$15 million for the nine months ended September 30, 2018, as compared to the nine months ended September 30, 2017, primarily due to tax benefits from an internal restructuring of Garrett’s business in advance of the Spin-Off that resulted in an $880 million reduction in tax expense2023 and increased tax benefits attributable to currency impacts for withholding taxes on undistributed foreign earnings, partially offset by adjustments to the provisional tax amount related to U.S. tax reform.

2022, respectively.

Note 5. Income Taxes


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(Dollars in millions)
Tax expense	$	13		$	26		$	70		$	83
Effective tax rate	18.6		%	19.8		%	25.1		%	23.0		%

The effective tax rate for the three months ended September 30, 2023 is lower than the effective rate for the three months ended September 30, 2022 primarily related to an increase in global research and development benefits, lower taxes on non-U.S. earnings partially offset by nondeductible expenses, and a prior year non-recurring decrease in withholding taxes on undistributed earnings.

The effective tax rate for the nine months ended September 30, ~~2018~~2023 is higher than the effective rate for the nine months ended September 30, 2022 primarily related to a prior year non-recurring decrease in withholding taxes on undistributed earnings and nondeductible expenses, partially offset by increase in global research and development benefit and lower taxes on non-U.S. earnings.

The effective tax rate for the three months ended September 30, 2023 was lower than the U.S. federal statutory rate of 21% primarily due to tax benefits from an internal restructuring of Garrett’s business in advance of the Spin-Off that resulted in an $870 million and $880 million reduction in tax expense, respectively and tax benefits related to a decrease in the ~~currency impacts on withholding~~

annual effective tax rate driven by lower taxes on ~~undistributed foreign earnings,~~international operations, partially offset by ~~adjustments to the provisional tax amount related to U.S. tax reform and non-deductible expenses.~~

nondeductible transaction costs.

The effective tax rate for the three and nine months ended September 30, 2017 was lower than the U.S. federal statutory rate of 35% from non-U.S. earnings taxed at lower rates, partially offset by non-deductible expenses. In addition, the effective tax rate for the nine months ended September 30, ~~2017~~2023 was ~~further reduced as a result of the resolution of tax matters with certain jurisdictions.~~

~~On December 22, 2017,~~higher than the U.S. ~~government enacted~~federal statutory rate of 21% primarily related to nondeductible expenses and tax ~~legislation that included changes to the taxation of foreign earnings~~reserves, partially offset by ~~implementing a dividend exemption system, expansion of the current anti-deferral rules, a minimum tax~~lower taxes on ~~low-taxed foreign~~non-U.S. earnings and new measures to deter base erosion. The tax legislation also included a permanent reduction in the corporate tax rate to 21%, repeal of the corporate alternative minimum tax, expensing of capital investment,global research and limitation of the deduction for interest expense. Furthermore, as part of the transition to the new tax system, a one-time transition tax was imposed on a U.S. shareholder’s historical undistributed earnings of foreign affiliates.

~~As described in our~~ ~~Combined Financial Statements for the year ended December 31, 2017,~~ we reasonably estimated certain effects of the tax legislation and, therefore, recorded provisional amounts, including the deemed repatriation transition tax and withholding taxes on undistributed earnings. For the nine months ended September 30, 2018, the Company recorded an adjustment to the provisional tax amount related to the deemed repatriation transition tax and taxes on undistributed earnings of $13 million and $(8) million, respectively. This adjustment results in a net increase of $5 million to the effective tax rate for the nine months ended September 30, 2018 of 1.7%. The Company has not finalized the accounting for the tax effects of the tax legislation as we are continuing to gather additional information and expect to complete our accounting within the prescribed measurement period.

development benefits.

Note 6. Accounts, Notes and Other Receivables—Net

September 30,
2018

December 31,
2017

Trade receivables

$
596

$
592

Notes receivables

112

83

Other receivables

56

73

$
764

$
748

Less—Allowance for doubtful accounts

(2
)

(3
)

$
762

$
745


	September 30, 2023		December 31, 2022
	(Dollars in millions)
Trade receivables	$	667	$	619
Notes receivable	111		105
Other receivables	89		88
	867		812
Less—Allowance for expected credit losses	(7)		(9)
	$	860	$	803

Trade ~~Receivables~~receivables include ~~$13~~$44 million and $6$46 million of unbilled customer contract asset balances as of September 30, ~~2018~~2023 and December 31, ~~2017,~~2022, respectively. These amounts are billed in accordance with the terms of customer contracts to which they relate. ~~Unbilled receivables include $6 million and $5 million of contract assets as of September 30, 2018 and December 31, 2017, respectively.~~ See Note 43, Revenue Recognition and Contracts with ~~Customers.~~

Customers.

Notes receivable is related to guaranteed bank notes without recourse that the Company receives in settlement of accounts receivables, primarily in the Asia Pacific region. See Note 7, Factoring and Notes Receivable for further information.

Note 7. Factoring and Notes Receivable

The Company enters into arrangements with financial institutions to sell eligible trade receivables. The receivables are sold without recourse and the Company accounts for these arrangements as true sales. The Company also receives guaranteed bank notes without recourse, in settlement of accounts receivables, primarily in the Asia Pacific region. The Company can hold the bank notes until maturity, exchange them with suppliers to settle liabilities, or sell them to third-party financial institutions in exchange for cash. Bank notes sold to third-party financial institutions without recourse are likewise accounted for as true sales.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in millions)
Eligible receivables sold without recourse	$	184	$	112	$	584	$	481
Guaranteed bank notes sold without recourse	41		35		41		102

The expenses related to the sale of trade receivables and guaranteed bank notes are recognized within Other expense, net in the Consolidated Interim Statements of Operations. Such expenses amounted to $1 million and $3 million for the three and nine months ended September 30, 2023, respectively, and were immaterial for the three and nine months ended September 30, 2022.


	September 30, 2023		December 31, 2022
	(Dollars in millions)
Receivables sold but not yet collected by the bank from the customer	$	7	$	5
Guaranteed bank notes sold but not yet collected by the bank from the customer	—		—

As of September 30, 2023 and December 31, 2022, the Company had no guaranteed bank notes pledged as collateral.

Note 8. Inventories—Net

Note 9. Other Assets


	September 30, 2023		December 31, 2022
	(Dollars in millions)
Advanced discounts to customers, non-current	$	41	$	51
Operating right-of-use assets (Note 13)	40		44
Income tax receivable	22		22
Pension and other employee related	4		4
Designated cross-currency swaps	71		74
Designated and undesignated derivatives	66		76
Other	11		10
	$	255	$	281

Note 10. Supplier Financing

The Company has supplier financing arrangements with two third-party financial institutions under which certain suppliers may factor their receivables from Garrett. The Company also enters into arrangements with banking institutions to issue bankers acceptance drafts in settlement of accounts payables, primarily in the Asia Pacific region. The bankers acceptance drafts, or guaranteed bank notes, have a contractual maturity of six months or less, and may be held by suppliers until maturity, transferred to their suppliers, or discounted with financial institutions in exchange for cash. The supplier financing obligations and guaranteed bank notes outstanding are recorded within Accounts payable in our Consolidated Interim Balance Sheet.


	September 30, 2023		December 31, 2022
	(Dollars in millions)
Supplier financing obligations outstanding with financial institutions	$	67	$	33
Guaranteed bank notes outstanding	172		171

Note 8.11. Accrued Liabilities

September 30,
2018

December 31,
2017

Asbestos-related liabilities

$
185

$
185

Customer pricing reserve

119

114

Compensation, benefit and other employee related

69

65

Repositioning

19

60

Product warranties and performance guarantees

26

28

Other taxes

5

22

Customer advances and deferred income^(a)

11

21

Other (primarily operating expenses)

70

76

$
504

$
571


	September 30, 2023		December 31, 2022
	(Dollars in millions)
Customer pricing reserve	$	64	$	50
Compensation, benefit and other employee related	74		69
Repositioning	12		9
Product warranties and performance guarantees - short-term (Note 20)	17		18
Income and other taxes	55		39
Advanced discounts from suppliers, current	4		8
Customer advances and deferred income (1)	18		29
Accrued interest	25		13
Short-term lease liability (Note 13)	9		9
Accrued freight	13		9
Dividends payable	—		42
Designated and undesignated derivatives	8		8
Other (primarily operating expenses) (2)	13		17
	312		320

~~(a)~~

Customer advances and deferred income include $3 million and $7 million of contract liabilities as of September 30, 2018 and December 31, 2017, respectively. See Note 4 Revenue Recognition and Contracts with Customers.

(1)Customer advances and deferred income include $12 million and $8 millionof contract liabilities as of September 30, 2023 and December 31, 2022, respectively. See Note 3, Revenue Recognition and Contracts with Customers.

(2)Includes $3 million and $3 million of environmental liabilities as of September 30, 2023 and December 31, 2022, respectively.

The Company ~~accrued~~accrues repositioning costs related to projects to optimize ~~our~~its product costs and to right-size our organizational structure. Expenses related to the repositioning accruals are included in Cost of goods sold and Selling, general and administrative expenses in our ~~Combined Statement~~Consolidated Interim Statements of Operations.

Severance Costs

Exit
Costs

Total

Balance at December 31, 2016

$
35

$
8

$
43

Charges

13

—

13

Usage—cash

(5
)

(2
)

(7
)
Foreign currency translation

4

—

4

Balance at September 30, 2017

$
47

$
6

$
53


	Severance Costs		Other Costs		Total
	(Dollars in millions)
Balance at December 31, 2022	$	9	$	—	$	9
Charges	13		2		15
Usage—cash	(10)		—		(10)
Non-cash asset write-offs	—		(2)		(2)
Balance at September 30, 2023	$	12	$	—	$	12

Severance Costs

Exit
Costs

Total

Balance at December 31, 2017

$
53

$
7

$
60

Charges

2

—

2

Usage—cash

(39
)

(4
)

(43
)
Foreign currency translation

—

—

—

Balance at September 30, 2018

$
16

$
3

$
19


	Severance Costs		Other Costs		Total
	(Dollars in millions)
Balance at December 31, 2021	$	10	$	—	$	10
Charges	4		—		4
Usage—cash	(5)		—		(5)
Balance at September 30, 2022	$	9	$	—	$	9

Note 12. Other Liabilities


	September 30, 2023		December 31, 2022
	(Dollars in millions)
Income taxes	$	104	$	99

Pension and other employee related	17		21
Long-term lease liability (Note 13)	33		36
Advanced discounts from suppliers	3		6
Product warranties and performance guarantees – long-term (Note 20)	9		10
Environmental remediation – long term	12		14
Long-term accounts payable	7		8
Other	11		11
	196		205

We have operating leases that primarily consist of real estate, machinery and equipment. Our leases have remaining lease terms of up to 15 years, some of which include options to extend the leases for up to two years, and some of which include options to terminate the leases within the year.

Supplemental balance sheet information related to operating leases is as follows:


	September 30, 2023		December 31, 2022
	(Dollars in millions)
Other assets	$	40	$	44
Accrued liabilities	9		9
Other liabilities	33		36


	September 30, 2023		December 31, 2022
Weighted-average remaining lease term (in years)	8.14		8.41
Weighted-average discount rate	5.69	%	5.61	%

Maturities of operating lease liabilities as of September 30, 2023 were as follows:


	(Dollars in millions)
2023	$	3
2024	10
2025	8
2026	6
2027	5
Thereafter	20
Total lease payments	52
Less imputed interest	(11)
	$	41

Note 9:14. Long-term Debt and Credit Agreements

The principal outstanding and carrying amounts ~~outstanding on~~of our long-term debt as of September 30, 2023 and December 31, 2022 are as follows:

September 30,
2018

Term Loan A

$
382

Term Loan B

859

Senior Notes

406

1,647

Less: current portion

(28
)

$
1,619


	Due	Interest Rate	September 30, 2023		December 31, 2022
2021 Dollar Term Facility	4/30/2028	SOFR plus 351 bps	$	700	$	706
2023 Dollar Term Facility	4/30/2028	SOFR plus 450 bps	500		—
Euro Term Facility	4/30/2028	EURIBOR plus 350 bps	477		480
Total principal outstanding			1,677		1,186
Less: unamortized deferred financing costs			(48)		(31)
Less: current portion of long-term debt			(7)		(7)
Total long-term debt			$	1,622	$	1,148

On ~~September 27, 2018, we~~April 30, 2021, the Company entered into a ~~Credit Agreement, by and among us, Garrett LX I S.à r.l., Garrett LX II S.à r.l. (“Lux Guarantor”), Garrett LX III S.à r.l. (“Lux Borrower”), Garrett Borrowing LLC (in such capacity,~~credit agreement (as amended from time to time, the ~~“US Co-Borrower”~~"Credit Agreement"), and Honeywell Technologies Sàrl (“Swiss Borrower” and, together with Lux Borrower and US Co-Borrower, the “Borrowers”), the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”).

~~The Credit Agreement provides~~ providing for senior secured financing, ~~of approximately the Euro equivalent of $1,254 million,~~ consisting of ~~(i)~~ a seven-year ~~senior~~ secured first-lien U.S. Dollar term B loan facility ~~which consists~~initially in the amount of ~~a tranche denominated in Euro of €375 million and a tranche denominated in U.S. Dollars of $425~~$715 million (the ~~“Term B~~“2021 Dollar Term Facility”), ~~(ii) five-year senior~~a seven-year secured first-lien Euro term A loan facility initially in ~~an aggregate principal~~the amount of ~~€330~~€450 million (the ~~“Term A~~“Euro Term Facility” ~~and, together with the Term B Facility, the “Term Loan Facilities”~~) and ~~(iii)~~ a five-year senior secured first-lien revolving credit facility initially in ~~an aggregate principal~~the amount of ~~€430~~

$300 million ~~with revolving~~providing for multi-currency revolving loans ~~to Swiss Borrower, to be made available in a number of currencies including Australian Dollars, Euros, Pounds Sterling, Swiss Francs, U.S. Dollars and Yen~~ (the “Revolving Facility”). The maximum amount of borrowings available under the Revolving Facility was increased to $475 million in 2022.

On April 27, 2023, the Company entered into Amendment No. 3 (the "Third Amendment") to the Credit Agreement, which provided for additional financing consisting of a five-year secured first-lien U.S. Dollar term loan facility initially in the amount of $700 million (the “2023 Dollar Term Facility”, together with the 2021 Dollar Term Facility and Euro Term Facility, the "Term Loan Facilities", and together with the ~~Term Loan Facilities,~~Revolving Facility, the ~~“Senior Credit Facilities”~~"Credit Facilities"). ~~Each~~The full amount of the 2023 Dollar Term Facility was drawn on June 6, 2023 (the "Closing Date"), and the proceeds were primarily used to finance the repurchases of the Series A Preferred Stock as part of the Transaction, and pay fees and expenses incurred in connection with the Third Amendment.

The 2023 Dollar Term Facility will mature on April 30, 2028. Prior to maturity, the 2023 Dollar Term Facility will be repaid quarterly in an amount equal to, during the first two years occurring after the Closing Date, 7.50% per annum of the aggregate principal amount, and thereafter, 10.00% per annum. The Term Borrowers may also prepay the 2023 Dollar Term Facility at any time in whole or in part without premium or penalty, subject to certain exceptions (including for (i) customary breakage and redeployment costs in the case of prepayment of term benchmark rate loans and (ii) 2023 Dollar Term Facility repricing events occurring during the period from the Closing Date to the date that is twelve months following the Closing Date).

The Third Amendment also provided for (i) an increase in the maximum borrowing amount under the Revolving Facility by $95 million (the “Incremental Revolving Commitment”) to an aggregate amount of $570 million; and (ii) an extension of the maturity date for the Revolving Facility by two years from April 30, 2026 to April 30, 2028 (or January 30, 2028 if any of the currently outstanding term loans or term loans under the 2023 Dollar Term A Facility maturing as of April 30, 2028 remain outstanding as of such date). The Incremental Revolving Commitment has the same terms and is generally subject to the same conditions applicable to the existing revolving facility under the Credit Agreement, except for fees paid in connection with the arrangement of the increased amount.

Under the Revolving Facility, the Company may use up to $125 million for the issuance of letters of credit to its subsidiaries. Letters of credit are available for issuance under the Credit Agreement on terms and conditions customary for financings of this kind, which issuances reduce availability under the Revolving Facility. As of September 30, 2023, the Company had no loans outstanding under the Revolving Facility, no outstanding letters of credit, and available borrowing capacity of approximately $570 million.

Separate from the Revolving Facility, the Company has a bilateral letter of credit facility in the amount of $15 million, which matures ~~five years after~~on April 30, 2026. As of September 30, 2023, the ~~effective date~~Company had $12 million utilized and $3 million of remaining available capacity under such facility.

Minimum scheduled principal repayments of the Credit ~~Agreement, in each case with certain extension rights in the discretion~~Facilities as of ~~each lender.~~ September 30, 2023 are as follow:


	September 30, 2023
	(Dollars in millions)
2023	$	2
2024	7
2025	7
2026	17
2027	77
Thereafter	1,567
Total debt payments	$	1,677

Interest Rate and Fees

The 2021 Dollar Term B Facility ~~matures seven years after the effective date of the Credit Agreement, with certain extension rights in the discretion of each lender.~~

~~The Senior Credit Facilities are~~is subject to an interest rate, at our option, of either (a) an alternate base rate determined by reference to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the “prime rate” in the United States, (2) the greater of the federal funds effective rate and the overnight bank funding rate, plus 0.5% and (3) the one month adjusted LIBOR rate, plus 1% per annum (“ABR”~~), (b) an adjusted LIBOR rate (“LIBOR”~~) (which shall not be less than ~~zero),~~1.50%) or ~~(c)~~(b) an adjusted ~~EURIBOR~~SOFR rate (“~~EURIBOR”~~SOFR”) (which shall not be less than ~~zero)~~0.50%), in each case, plus an applicable ~~margin.~~margin equal to 3.51% in the case of SOFR loans and 2.25% in the case of ABR loans. The Euro Term Facility is subject to an interest rate equal to an adjusted EURIBOR rate (which shall not be less than zero) plus an applicable margin for the U.S. Dollar tranche of the Term B Facility is currently 2.50% per annum (for LIBOR loans) and 1.50% per annum (for ABR loans) while that for the Euro tranche of the Term B Facility is currently 2.75% per annum (for EURIBOR loans)equal to 3.50%. The applicable margin for each of the Term A Facility and the Revolving Credit Facility varies based on our leverage ratio. Accordingly, the interest rates for the Senior Credit Facilities will fluctuate during the term of the Credit Agreement based on changes in the ABR, LIBOR, EURIBOR or future changes in our leverage ratio. Interest payments with respect to the 2021 Dollar and Euro Term ~~Loan~~ Facilities are required either on a quarterly basis (for ABR loans) or at the end of each interest period (for ~~LIBOR~~SOFR and EURIBOR loans) or, if the duration of the applicable interest period exceeds three months, then every three months.

~~We are obligated to make quarterly principal payments throughout the term of~~

The 2023 Dollar Term Facility will bear interest, at the Term ~~Loan Facilities according~~Borrowers’ election, at a rate per annum equal to (i) SOFR (subject to a 0.50% floor) plus the ~~amortization provisions in~~applicable margin or (ii) the ~~Credit Agreement. Borrowings~~base rate plus the applicable margin. The applicable margin for loans under the 2023 Dollar Term Facility is 4.50% for SOFR loans and 3.50% for base rate loans.

The Revolving Facility is subject to an interest rate comprised of an applicable benchmark rate as provided under the Credit Agreement ~~are prepayable at our option without premium or penalty, subject to a~~(which shall not be less than 1.00% ~~prepayment premium in connection with any repricing transaction with respect to~~if such benchmark is the ~~Term B Facility~~ABR rate and not less than 0.00% in the ~~first six months after~~case of other applicable benchmark rates) that is selected based on the ~~effective date of~~currency in which borrowings are outstanding thereunder, in each case, plus an applicable margin, that may vary based on our leverage ratio.

In addition to paying interest on outstanding borrowings under the ~~Credit Agreement. We may request~~Revolving Facility, we are also required to ~~extend~~pay a quarterly commitment fee based on the ~~maturity date of all or a~~average daily unused portion of the ~~Senior Credit Facilities subject~~Revolving Facility during such quarter, which is determined by our leverage ratio and ranges from 0.25% to ~~certain conditions customary for financings of this type.~~ 0.50% per annum.

The Credit Agreement ~~also~~ contains certain mandatory prepayment provisions in the event that we incur certain types of indebtedness, or receive net cash proceeds from certain non-ordinary course asset sales or other dispositions of property, or have excess cash flow (calculated on an annual basis with the required prepayment equal to 50%, 25% or 0% of such excess cash flow, subject to compliance with certain leverage ratios), in each case subject to terms and conditions customary for financings of this ~~type.~~

kind.

On July 31, 2023, the Company made an early repayment in the amount of $200 million on the 2023 Dollar Term Facility. The ~~schedule~~early repayment resulted in incremental amortization on debt issuance cost in the amount of ~~principal payments on long-term debt is as follows:~~

$9 million, included within Interest Expense in the Consolidated Interim Statement of Operations.

September 30,
2018

2018 (remaining)

$
7

2019

28

2020

32

2021

52

2022

71

Thereafter

1,457

$
1,647

Less: current portion

(28
)

$
1,619

Certain Covenants

The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit our and our subsidiaries’ ability to incur additional indebtedness or liens, to dispose of assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees and acquisitions, to prepay certain indebtedness and to pay dividends, to make other distributions or redemptions/ repurchases, in respect of the our and our subsidiaries’ equity interests, to engage in transactions with affiliates, amend certain material documents or to permit the International Financial Reporting Standards equity amount of Lux Borrower to decrease below a certain amount.type. The ~~Credit Agreement~~Revolving Facility also contains a financial ~~covenants~~covenant requiring the maintenance of a consolidated total leverage ratio of not greater than 4.25 to 1.00 (with step-downs to (i) 4.00 to 1.00 in approximately 2019, (ii) 3.75 to 1.00 in approximately 2020 and (iii) 3.50 to 1.00 in approximately 2021), and a consolidated interest coverage ratio4.7 times as of ~~not less than 2.75 to 1.00.~~

~~On September 27, 2018, we completed~~ the ~~offering~~end of ~~€350 million (approximately $400 million) in~~each fiscal quarter if, on the last day of any such fiscal quarter, the aggregate ~~principal~~ amount of ~~5.125% senior notes due 2026~~loans and letters of credit (excluding backstopped or cash collateralized letters of credit and other letters of credit with an aggregate face amount not exceeding $30 million) outstanding under the Revolving Facility exceeds 35% of the aggregate commitments in effect thereunder on such date. As of September 30, 2023, the Company was in compliance with all covenants.

Note 15. Series A Preferred Stock

On April 12, 2023 (the ~~“Senior Notes”~~“Transaction Date”)~~. The Senior Notes bear interest at~~, the Company entered into separate definitive agreements (the “Agreements”) with each of Centerbridge Partners, L.P. and funds managed by Oaktree Capital Management, L.P. (collectively, the “C&O Investors”) to effect a ~~fixed annual interest rate~~series of ~~5.125%~~integrated transactions (collectively the “Transaction”) designed to increase the attractiveness of the Company to investors, including by simplifying the Company’s capital structure by converting all outstanding Series A Preferred Stock into a single class of Common Stock, subject to certain conditions.

As part of the Agreements, the holders of a majority of the outstanding shares of the Series A Preferred Stock authorized and ~~mature on October 15, 2026.~~

~~The Senior Notes were issued pursuant~~approved the amendment and restatement of the certificate of designations for the Series A Preferred Stock (as amended, the “Certificate of Designations”) to, ~~an Indenture, dated September 27, 2018 (the “Indenture”), which,~~ among other things, ~~and~~require the conversion of all shares of Series A Preferred Stock into shares of the Company’s common stock (the “2023 Conversion”), subject to ~~certain limitations~~the repurchase by the Company of a portion of the shares of Series A Preferred Stock held by the C&O Investors (the “Series A Repurchase”).

Under the terms of the Agreements, the Company agreed to repurchase a total of $570 million (“Base Repurchase Price”) of shares of Series A Preferred Stock from the C&O Investors at a cash price of $8.10 per share which was subsequently adjusted to equal the volume-weighted average price of the Common Stock for the fifteen trading days following the announcement of the transactions (the “15 Days VWAP”), subject to a minimum price of $7.875 per share and ~~exceptions, limits our ability~~a maximum price of $8.50 per share. The 15 Days VWAP was subsequently established at a value of $8.177 per share.

As part of the Transaction, all holders of Series A Preferred Stock, including the C&O Investors, received approximately 0.104379 shares of Common Stock, being an amount equal to $0.853509 per share of Series A Preferred Stock, valued at the 15 Days VWAP, representing accumulated and unpaid preference dividends on each share of Series A Preferred Stock through June 30, 2023 (the “Accumulated Dividends”), as well as $0.144375 per share of Series A Preferred Stock, representing the ~~ability~~preference dividends that would have accrued on the Series A Preferred Stock through September 30, 2023 (the “Additional Amounts”).

As part of ~~our restricted subsidiaries to: (i) incur, assume or guarantee additional indebtedness or issue certain disqualified equity interests and preferred shares, (ii) pay dividends or distributions~~the Transaction, following the effectiveness of the Certificate of Designations which occurred on ~~or redeem or repurchase, capital stock and make other restricted payments, (iii) make investments, (iv) consummate certain asset~~

~~sales or transfers, (v) engage in certain transactions with affiliates, (vi) grant or assume certain liens on assets to secure debt unless~~June 6, 2023, the ~~Senior Notes are secured equally and ratably (vii) restrict dividends and other payments by certain~~Company completed all steps of ~~their subsidiaries and (vii) consolidate, merge, sell or otherwise dispose of all or substantially all of our or our restricted subsidiaries’ assets.~~

~~All debt issuance costs, except for those associated~~the Transaction as follows:

•The Company paid $580 million to the Revolving Credit Facility, are deferred and recognized as a direct deduction to the related debt liability and are amortized to interest expense over the debt term. The company paid approximately $37 million of debt issuance costsC&O Investors in connection with the ~~Term~~repurchase of 69,707,719 shares of Series A ~~Facility, Term B~~ ~~Facility, and Senior Notes.~~

~~The unutilized portion~~Preferred Stock, comprising of the ~~Revolving Credit Facility is subject to an annual commitment fee~~Base Repurchase Price as well as $10 million ($0.144375 for each repurchased share) in consideration of ~~0.40% to 0.50% depending~~the Additional Amounts on the ~~Company’s consolidated leverage ratio. Debt issuance costs associated~~repurchased shares of Series A Preferred Stock.

•The remaining 175,337,712 shares of Series A Preferred Stock outstanding following such repurchase were converted into 175,337,712 shares of Common Stock (in accordance with the ~~Revolving Credit Facility~~customary procedures of the Company’s transfer agent, for shares held in registered form, and of the Depository Trust Company, for shares held in street name). Following the completion of the 2023 Conversion, trading of the Series A Preferred Stock on Nasdaq was suspended;

•As part of the 2023 Conversion, the Company also paid $25 million ($0.144375 for each converted share) to the holders of Series A Preferred Stock in consideration of the Additional Amounts on the shares of Series A Preferred Stock that were ~~capitalized~~converted; and

•Issued 25,577,517 shares of Common Stock to all holders of Series A Preferred Stock (equal to $0.853509 per share, valued at the 15 Days VWAP, adjusted to avoid the issuance of fractional shares of Common Stock), in ~~Other assets~~consideration of the Accumulated Dividends of an aggregate amount of $209 million. Cash payments for fractional shares were immaterial.

The Agreements were accounted for as freestanding physically settled forward purchase contracts. The Agreements were initially recorded at fair value and ~~are amortized~~then remeasured through earnings until the establishment of the 15 Days VWAP, whereupon the Agreements were subsequently measured based on the amount of consideration to be paid at settlement. A Monte-Carlo simulation model was used to determine the Transaction Date fair value of the Agreements by simulating a range of possible future stock prices for the Company through the expected settlement date of the Agreements. The significant assumptions utilized in estimating the fair value of the Agreements include: (i) a dividend yield of 0.0%; (ii) an expected volatility of 40.0%; (iii) a risk-free interest rate of 4.23% based on observed interest rates from the Treasury Constant Maturity yield curve consistent with the simulation term; and (iv) a starting share price of $8.25 based on the market price of the Company’s common stock as of the Transaction Date.

The initial fair value of the Agreements represented a forward purchase liability of $4 million. A loss of $13 million was recognized in Non-operating expense ~~over~~in the ~~debt term. Approximately,~~Consolidated Interim Statement of Operations to reflect the subsequent remeasurement of fair value of the Agreements due to changes in the market price of the Company’s Common Stock. The difference between the fair value of consideration transferred under the Agreements and the carrying value of the repurchased Series A Preferred Stock, amounting to $201 million, was recorded to Retained Deficit as a deemed dividend on the repurchase of shares of Series A Preferred Stock from the C&O Investors as part of the Transaction. A liability for excise tax, amounting to $6 million, ~~of debt issuance costs were paid in~~was also recorded to Retained Deficit as a deemed dividend.

In connection with the ~~Revolving Credit Facility.~~

2023 Conversion, the Company also recognized a deemed dividend on the 2023 Conversion for $25 million, corresponding to the Additional Amounts paid to the holders of Series A Preferred Stock on the shares of Series A Preferred Stock that were converted.

As part of the Agreements, the C&O Investors have agreed with the Company to certain changes to their governance rights under the Company’s governance documents, including a reduction of their existing board nomination rights, as well as lock-up restrictions on their equity securities of the Company for up to twelve months, and certain limits on their ability to purchase additional equity securities of the Company and to voting limitations, in each case for a period of up to eighteen months.

On April 12, 2023, the Company also announced an increase in its share repurchase authorization to $250 million. Under the share repurchase program, the Company may repurchase shares of Common Stock in open market transactions, privately negotiated purchases and other transactions from time to time.

The following table summarizes the effects of the Transaction on the Consolidated Interim Balance Sheet as of September 30, 2023 and the Consolidated Interim Statement of Operations and Consolidated Interim Statement of Cash Flows for the nine months ended September 30, 2023:


	Series A Repurchase		2023 Conversion		Settlement of Accumulated Dividends		Excise tax on share repurchase		Total
	(Dollars in millions)
Consolidated Interim Balance Sheet - increase/(decrease):
Cash and cash equivalents	$	(580)	$	(25)	$	—	$	—	$	(605)
Accrued liabilities	—		—		—		6		6
Preferred Stock	—		—		—		—		—
Common Stock	—		—		—		—		—
Additional Paid-in capital	(366)		—		209		—		(157)
Retained earnings	(201)		(25)		(209)		(6)		(441)
Consolidated Interim Statement of Operations:

Non-operating expenses	13		—		—		—		13
Consolidated Interim Statement of Cash Flows
Repurchases of Series A Preferred Stock	(580)		—		—		—		(580)
Payments for Additional Amounts for conversion of Series A Preferred Stock	—		(25)		—		—		(25)

The Company has also incurred $9 million of Transaction-related costs for the nine months ended September 30, 2023, primarily for legal and advisory services that are included in Selling, general and administrative expenses in the Consolidated Interim Statement of Operations.

Our credit, market and foreign currency risk management policies are described in Note ~~14,~~ 19, Financial Instruments and Fair Value Measures ~~of the notes~~, to the ~~audited annual Combined~~Consolidated Financial Statements for the year ended December 31, ~~2017 of the Transportation Systems Business~~2022 included in our 2022 Form ~~10. At~~10-K. As of September 30, ~~2018~~2023 and December 31, ~~2017,~~2022, we had contracts with aggregate gross notional amounts of ~~$812~~$2,884 million and ~~$928~~$2,621 million, respectively, to ~~exchange~~hedge interest rates and foreign currencies, principally the U.S. Dollar, Swiss Franc, British Pound, Euro, Chinese Yuan, Japanese Yen, Mexican Peso, New Romanian Leu, Czech Koruna, Australian Dollar and Korean Won.

Fair Value of Financial Instruments

The FASB’s accounting guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Financial and nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table sets forth the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, ~~2018~~2023 and December 31, ~~2017:~~

Fair Value

Notional Amounts

Assets

Liabilities

September 30,
2018

December 31,
2017

September 30,
2018

December 31,
2017

September 30,
2018

December 31,
2017

Designated forward currency
   exchange contracts

$
—

$
556

$
—

$
—

$
—

$
35

^(d)
Cross-currency swap designated as
   fair value hedge

425

—

10

^(a)

—

—

—

$
425

$
556

$
10

$
—

$
—

$
35

Undesignated forward currency
   exchange contracts

387

372

2

^(b)

—

1

^(c)

2

^(d)

$
812

$
928

$
12

$
—

$
1

$
37

~~(a)~~

~~Recorded within Other assets in the Company’s combined balance sheet~~

2022:

~~(b)~~

~~Recorded within Other current assets in the Company’s combined balance sheet~~


					Fair Value
	Notional Amounts				Assets					Liabilities
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Designated instruments:
Designated forward currency exchange contracts	$	449	$	565	$	15	$	22	(a)	$	6	$	6	(c)
Designated cross-currency swaps	1,015		715		71		74		(b)	—		—
Designated interest-rate swaps	200		—		1		—		(b)	—		—
Total designated instruments	1,664		1,280		87		96			6		6
Undesignated instruments:
Undesignated interest rate swaps	879		1,024		65		76		(b)	—		—
Undesignated forward currency exchange contracts	341		317		3		4		(a)	2		2		(c)
Total undesignated instruments	1,220		1,341		68		80			2		2
Total designated and undesignated instruments	$	2,884	$	2,621	$	155	$	176		$	8	$	8

~~(c)~~

~~Recorded within Accrued liabilities in the Company’s combined balance sheet~~

(a) Recorded within Other current assets

~~(d)~~

~~Recorded within Due to related parties in the Company’s combined balance sheet~~

(b) Recorded within Other assets

As of September ~~27, 2018,~~30, 2023, the Company ~~entered into a floating-floating~~had outstanding interest rate swaps with aggregate notional amounts of €830 million ($879 million based on September 30, 2023 foreign exchange rates) and $200 million, with maturities of April 2024, July 2024, October 2024, April 2025, April 2026, April 2027 and April 2028. The Company uses interest rate swaps specifically to mitigate variable interest risk exposure on its long-term debt portfolio. The $200 million interest rate swaps have been designated as cash flow hedges. The designated interest rate swaps' fair value were net assets of $1 million as of September 30, 2023.

The Company executed cross-currency ~~swap contract~~swaps which have been designated as net investment hedges of its Euro-denominated operations and cash flow hedges to hedge the foreign currency exposure from foreign currency-denominated debt. ~~The contract is~~In May 2023, the Company re-couponed the cross-currency swap contracts which have been designated as net investment hedges and received a ~~foreign currency~~cash settlement of $9 million. As of September 30, 2023, an aggregate notional amount of €615 million was designated as net investment hedges of the Company’s investment in Euro-denominated operations and €280 million was designated as cash flow hedges. The cross-currency swaps’ fair ~~value hedge for accounting purposes and will mature on~~values were net assets of $71 million as of September ~~27, 2025. Accordingly, the gain or loss on this derivative instrument is recognized in earnings and included in Non-operating (income) expense. The change~~30, 2023. Our Consolidated Interim Statements of Comprehensive Income include Changes in fair value of ~~the cross-currency swap attributable to the cross-currency basis spread are excluded from the fair value hedge effectiveness assessment~~net investment hedges and ~~are recorded separately within Currency Basis Reserve as a component~~cash flow hedges, net of ~~Accumulated Other Comprehensive Income. For~~tax, of $20 million and $18 million, during the three and nine months ended September 30, ~~2018, gains~~2023, respectively, related to these designated cross-currency swaps. No ineffectiveness has been recorded ~~in Non-operating (income) expense,~~on the designated cross-currency hedges.

The Company's forward currency exchange contract under ~~the cross-currency swap contract were $13 million.~~our cash flow hedging program are assessed as highly effective and are designated as cash flow hedges. Gains and losses ~~attributable to~~on derivatives qualifying as cash flow hedges are recorded in Accumulated other comprehensive income until the ~~cross-currency basis spread of $3 million were deferred to Other Comprehensive Income for the period ended September 30, 2018. The balance of the cross-currency basis spread of $3 million is included~~underlying transactions are recognized in ~~the carrying value of the cross-currency swap contract of $10 million - the application of fair value hedge accounting had no effect on the carrying value of the hedged liability.~~

earnings.

The foreign currency exchange, interest rate swap and cross-currency swap contracts are valued using market observable inputs. As such, these derivative instruments are classified within Level 2. The assumptions used in measuring the fair value of the cross-currency swap are considered ~~level~~Level 2 inputs, which are based upon ~~market observable~~market-observable interest rate curves, ~~cross currency~~cross-currency basis curves, credit default swap curves, and foreign exchange rates.

The carrying value of Cash, ~~and~~ cash equivalents ~~Marketable securities (Level 2),~~and restricted cash, Account receivables ~~notes~~ and ~~other~~Notes and Other receivables ~~Due from related parties, Account payables, and Due to related parties~~ contained in the ~~Combined~~Consolidated Interim Balance Sheet approximates fair value.

The following table sets forth the Company’s financial assets and liabilities that were not carried at fair value:

September 30, 2018

Carrying Value

Fair Value

Long-term debt and related current maturities

$
1,605

$
1,647


	September 30, 2023				December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value
	(Dollars in millions)
Term Loan Facilities	$	1,629	$	1,671	$	1,156	$	1,151

The Company determined the fair value of certain of its long-term debt and related current maturities utilizing transactions in the listed markets for similar liabilities. As such, the fair value of the long-term debt and related current maturities is considered ~~level~~Level 2.

Note ~~11.~~17. Accumulated Other Comprehensive Income ~~(Loss)~~

~~Changes~~

The changes in Accumulated Other Comprehensive Income ~~(Loss)~~ by ~~Component~~

component are set forth below:

Foreign
Exchange
Translation
Adjustment

Changes in
Fair Value of
Effective
Cash Flow
Hedges

Change in Currency Basis Reserve

Pension
Adjustments

Total Accumulated
Other
Comprehensive
Income (Loss)

Balance at December 31, 2016

$
212

$
42

$
—

$
(11
)

$
243

Other comprehensive income (loss) before
   reclassifications

46

(52
)

—

—

(6
)
Amounts reclassified from accumulated other
   comprehensive income (loss)

—

(13
)

—

—

(13
)
Net current period other comprehensive
   income (loss)

46

(65
)

—

—

(19
)
Balance at September 30, 2017

$
258

$
(23
)

$
—

$
(11
)

$
224


	Foreign Exchange Translation Adjustment		Changes in Fair Value of Effective Cash Flow Hedges		Changes in Fair Value of Net Investment Hedges		Pension Adjustments		Total Accumulated Other Comprehensive Income
	(Dollars in millions)
Balance at December 31, 2022	$	(44)	$	13	$	85	$	(18)	$	36
Other comprehensive income before reclassifications	8		17		18		—		43
Amounts reclassified from accumulated other comprehensive income	—		(20)		—		—		(20)
Net current period other comprehensive income	8		(3)		18		—		23
Balance at September 30, 2023	$	(36)	$	10	$	103	$	(18)	$	59

Foreign
Exchange
Translation
Adjustment

Changes in
Fair Value of
Effective
Cash Flow
Hedges

Change in Currency Basis Reserve

Pension
Adjustments

Total Accumulated
Other
Comprehensive
Income (Loss)

Balance at December 31, 2017

$
284

$
(35
)

$
—

$
(11
)

$
238

Other comprehensive income (loss) before
   reclassifications

(251
)

3

(3
)

—

(251
)
Amounts reclassified from accumulated other
   comprehensive income (loss)

—

21

—

—

21

Net current period other comprehensive
   income (loss)

(251
)

24

(3
)

—

(230
)
Balance at September 30, 2018

$
33

$
(11
)

$
(3
)

$
(11
)

$
8


	Foreign Exchange Translation Adjustment		Changes in Fair Value of Effective Cash Flow Hedges		Changes in Fair Value of Net Investment Hedges		Pension Adjustments		Total Accumulated Other Comprehensive Income
	(Dollars in millions)
Balance at December 31, 2021	$	(43)	$	7	$	41	$	(9)	$	(4)
Other comprehensive income before reclassifications	13		43		87		—		143
Amounts reclassified from accumulated other comprehensive income	—		(17)		—		—		(17)
Net current period other comprehensive income	13		26		87		—		126
Balance at September 30, 2022	$	(30)	$	33	$	128	$	(9)	$	122

Note 18. Earnings Per Share

For the three months ended September 30, 2023, basic earnings per share ("EPS") is computed using the weighted-average number of common shares outstanding during the period.

For the nine months ended September 30, 2023 as well as the three and nine months ended September 30, 2022, basic earnings per share is calculated using the two-class method as our Series A Preferred Stock, which was converted into Common Stock pursuant to the Transaction, was considered a participating security. The two-class method requires an allocation of earnings to all securities that participate in dividends with common shares, such as our Series A Preferred Stock, to the extent that each security may share in the entity’s earnings. Basic earnings per share are then calculated by dividing undistributed earnings allocated to common stock by the weighted average number of common shares outstanding for the period. The Series A Preferred Stock was not included in the computation of basic earnings per share in periods in which we have a net loss, as the Series A Preferred Stock was not contractually obligated to share in our net losses.

Diluted earnings per share for the three months ended September 30, 2023 is calculated based on the weighted-average number of common shares outstanding for the period plus the dilutive effect of common stock equivalents using the treasury stock method. Diluted earnings per share for the nine months ended September 30, 2023 as well as the three and nine months ended September 30, 2022 is calculated using the more dilutive of the two-class or if-converted methods. The two-class method uses net income available to common shareholders and assumes conversion of all potential shares other than the participating securities. The if-converted method uses net income and assumes conversion of all potential shares including the participating securities.

The details of the EPS calculations for the three and nine months ended September 30, 2023 and 2022 are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in millions except per share)
Basic earnings per share:
Net income	$	57	$	105	$	209	$	278
Less: preferred stock dividend	—		(40)		(80)		(117)
Less: preferred stock deemed dividends	—		—		(232)		—
Net (loss) income available for distribution	57		65		(103)		161
Less: earnings allocated to participating securities	—		(51)		—		(127)
Net (loss) income available to common shareholders	$	57	$	14	$	(103)	$	34
Weighted average common shares outstanding - Basic	250,888,716		64,820,887		141,745,701		64,834,298
EPS – Basic	$	0.23	$	0.21	$	(0.73)	$	0.52

Diluted earnings per share:
Method used:			Two-class		Two-class		Two-class
Weighted average common shares outstanding - Basic	250,888,716		64,820,887		141,745,701		64,834,298
Dilutive effect of unvested RSUs and other contingently issuable shares	1,493,003		429,400		—		283,723

Weighted average common shares outstanding – Diluted	252,381,719		65,250,287		141,745,701		65,118,021
EPS – Diluted	$	0.23	$	0.21	$	(0.73)	$	0.52

For the periods where a net loss attributable to common shareholders is present, dilutive securities have been excluded from the calculation of diluted net loss per share attributable to common stockholders as including them would have been anti-dilutive. For the nine months ended September 30, 2023, the weighted-average number of unvested RSUs and other contingently issuable shares excluded from the computations was 1,349,442 shares.

Note 19. Related Party Transactions

We lease certain facilities and receive property maintenance services from Honeywell International Inc. (“Honeywell”), which is a holder of our Common Stock and was also a holder of our Series A Preferred Stock prior to the 2023 Conversion as discussed below and in Note 15, Series A Preferred Stock. We also contract with Honeywell for the occasional purchase of certain goods and services. Lease and service agreements were made at commercial terms prevalent in the market at the time they were executed. Honeywell is not considered a related party subsequent to the 2023 Conversion.

Our payments under the agreements with Honeywell during the period that Honeywell was considered a related party are as follow:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in millions)
Payments under agreements with Honeywell	$	—	$	2	$	2	$	6

Our payments under the agreements with Honeywell are included in Cost of goods sold and Selling, general and administrative expenses in our Consolidated Interim Statements of Operations. Related to the agreements with Honeywell, our Consolidated Balance Sheet at December 31, 2022 includes liabilities of $10 million. Liability balances are primarily related to lease contracts of $7 million as of December 31, 2022.

As discussed in Note 15, Series A Preferred Stock, in order to effect the Transaction, on April 12, 2023, the Company entered into separate definitive agreements with each of Centerbridge Partners, L.P. (“Centerbridge”) and funds managed by Oaktree Capital Management, L.P. (“Oaktree”), each of which is a holder of our Common Stock and appoints a director to our Board of Directors. Additionally, Mr. Kevin Mahony, who serves as a Managing Director of Centerbridge, and Mr. Steven Tesoriere, who serves as a Managing Director of Oaktree, have been appointed to our Board of Directors as designees of Centerbridge and Oaktree, respectively. As described more fully in Note 15, Series A Preferred Stock, in connection with the Transaction, we paid to Centerbridge and Oaktree an aggregate of approximately $570 million for the repurchase of shares of Series A Preferred Stock, plus an aggregate of approximately $10 million and 7,276,036 shares of Common Stock representing the Additional Amounts and Accumulated Dividends in respect of the repurchased shares of Series A Preferred Stock. Additionally, in connection with the conversion of the Series A Preferred Stock, we issued to Centerbridge and Oaktree an aggregate of 65,334,277 shares of Common Stock, plus Additional Amounts and Accumulated Dividends of approximately $9 million and 6,819,540 shares of Common Stock.

In connection with the conversion of our Series A Preferred Stock, we issued to Honeywell, as a holder of our Series A Preferred Stock, 4,196,330 shares of Common Stock upon the conversion of an equivalent number of shares of Series A Preferred Stock, plus Additional Amounts and Accumulated Dividends of approximately $1 million and 438,009 shares of Common Stock.

Additionally, Mr. John Petry, a director on our Board, serves as Managing Member of Sessa Capital (Master), L.P., which indirectly held shares of our Series A Preferred Stock prior to the conversion. In connection with the conversion of our Series A Preferred Stock, we issued to Sessa Capital and its affiliates, as holder of our Series A Preferred Stock, 16,592,384 shares of Common Stock upon the conversion of an equivalent number of shares of Series A Preferred Stock, plus Additional Amounts and Accumulated Dividends of approximately $2 million and 1,731,900 shares of Common Stock.

Note ~~12.~~20. Commitments and Contingencies

~~Asbestos Matters~~

~~Honeywell is~~

Securities Litigation

On September 25, 2020, a defendant in asbestos related personal injury actions mainly related to its legacy Bendix Friction Materials (“Bendix”) business. The Bendix business, manufactured automotive brake parts that contained chrysotile asbestos in an encapsulated form. Claimants consist largely of individuals who allege exposure to asbestos from brakes from either performing or being in the vicinity of individuals who performed brake replacements. In conjunction withputative securities class action complaint was filed against Garrett~~’s separation from Honeywell,~~ Motion Inc. and certain ~~operations that were part of the Bendix business, along with the ownership of the Bendix trademark, was transferred to Garrett.~~

As discussed in Note 1, these Combined Interim Financial Statements, prepared for the period during which the Business was still a part of Honeywell, reflect an estimated liability for resolution of pendingcurrent and ~~future asbestos-related~~former Garrett officers and environmental liabilities related to these businesses, calculated as if we were responsible for 100% of the Bendix asbestos-liability payments. However, we note that this recognition model in the Combined Interim Financial Statements will differ from the recognition model to be presented in future financials as a standalone company which will reflect the terms of the Indemnification and Reimbursement

Agreement with Honeywell signed on September 12, 2018, under which we are required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix businessdirectors in the United States ~~as well as certain environmental-related liability payments~~District Court for the Southern District of New York. The case bears the caption: Steven Husson, Individually and ~~accounts payable~~On Behalf of All Others Similarly Situated, v. Garrett Motion Inc., Olivier Rabiller, Alessandro Gili, Peter Bracke, Sean Deason, and ~~non-United States asbestos-related liability payments~~Su Ping Lu, Case No. 1:20-cv-07992-JPC (SDNY) (the “Husson Action”). The Husson Action asserted claims under Sections 10(b) and ~~accounts payable, in each case related to legacy elements~~20(a) of the ~~Business, including~~Securities Exchange Act of 1934 as amended (the "Exchange Act"), for securities fraud and control person liability. On September 28, 2020, the ~~legal costs~~

plaintiff sought to voluntarily dismiss his claim against Garrett Motion Inc. in light of ~~defending~~the Company’s bankruptcy; this request was granted.

On October 5, 2020, another putative securities class action complaint was filed against certain current and ~~resolving such liabilities, less 90% of Honeywell’s net insurance receipts~~former Garrett officers and ~~as may be applicable, certain other recoveries associated with such liabilities. For additional information, see Note 14 Subsequent Events.~~

~~The following tables summarize information concerning both Bendix and other asbestos related balances. Other represents asbestos liabilities related to claimants outside~~directors in the United ~~States.~~

~~Asbestos Related Liabilities~~

Nine Months Ended September 30,
2018

Bendix

Other

Total

Beginning of the period

$
1,703

$
9

$
1,712

Accrual for update to estimated liabilities

141

—

141

Asbestos related liability payments

(151
)

(1
)

(152
)
End of the period

$
1,693

$
8

$
1,701

~~Insurance Recoveries~~States District Court for ~~Asbestos Related Liabilities~~

the Southern District of New York. This case bears the caption: The Gabelli Asset Fund, The Gabelli Dividend & Income Trust, The Gabelli Value 25 Fund Inc., The Gabelli Equity Trust Inc., SM Investors LP and SM Investors II LP, on behalf of themselves and all others similarly situated, v. Su Ping Lu, Olivier Rabiller, Alessandro Gili, Peter Bracke, Sean Deason, Craig Balis, Thierry Mabru, Russell James, Carlos M. Cardoso, Maura J. Clark, Courtney M. Enghauser, Susan L. Main, Carsten Reinhardt, and Scott A. Tozier, Case No. 1:20-cv-08296-JPC (SDNY) (the “Gabelli Action”). The Gabelli Action also asserted claims under Sections 10(b) and 20(a) of the Exchange Act.

Nine Months
Ended September 30,
2018

Bendix

Beginning of the period

$
191

Probable insurance recoveries related to estimated liability

10

Insurance receipts for asbestos related liabilities

(24
)
Insurance receivables settlements

1

End of the period

$
178

On November 5, 2020, another putative securities class action complaint was filed against certain current and former Garrett officers and directors in the United States District Court for the Southern District of New York. This case bears the caption: Joseph Froehlich, Individually and On Behalf of All Others Similarly Situated, v. Olivier Rabiller, Allesandro Gili, Peter Bracke, Sean Deason, and Su Ping Lu, Case No. 1:20-cv-09279-JPC (SDNY) (the “Froehlich Action”). The Froehlich Action also asserted claims under Sections 10(b) and 20(a) of the Exchange Act.

~~Asbestos balances~~

The actions were assigned to Judge John P. Cronan. On November 24, 2020, competing motions were filed seeking the appointment of lead plaintiff and lead counsel and the consolidation of the Husson, Gabelli, and Froehlich Actions.

On December 8, 2020, counsel for the plaintiffs in the Gabelli Action— the Entwistle & Cappucci law firm — filed an unopposed stipulation and proposed order that would (1) appoint the plaintiffs in the Gabelli Action — the “Gabelli Entities” — the lead plaintiffs; (2) would appoint Entwistle & Cappucci as lead counsel for the plaintiff class; and (3) consolidate the Gabelli Action, the Husson Action, and the Froehlich Action (the “Consolidated D&O Action”). On January 21, 2021, the Court granted the motion to consolidate the actions and granted the Gabelli Entities’ motions for appointment as lead plaintiff and for selection of lead counsel. On February 25, 2021, plaintiffs filed a Consolidated Amended Complaint.

The Company’s insurer, AIG, has accepted the defense, subject to the customary reservation of rights.

The Company agreed with the Gabelli Entities and their lead counsel to permit a class claim to be recognized in the bankruptcy court and to have securities claims against the Company to be litigated in the district court alongside the Consolidated D&O Action. The Gabelli Entities have agreed that any recoveries against Garrett Motion Inc. on account of securities claims litigated through the class claim are limited to available insurance policy proceeds. On July 2, 2021, the bankruptcy court entered an order approving the joint request from the Company and the Gabelli Entities to handle the securities claims against Garrett Motion Inc. in this manner.

The Gabelli Entities were authorized and, on July 22, 2021, filed a second amended complaint to add claims against Garrett Motion Inc. On August 11, 2021, Garrett Motion Inc., Olivier Rabiller, Alessandro Gili, Peter Bracke, Sean Deason, Russell James, Carlos Cardoso, Maura Clark, Courtney Enghauser, Susan Main, Carsten Reinhardt, and Scott Tozier filed a motion to dismiss with respect to claims asserted against them. On the same day, Su Ping Lu, who is represented separately, filed a motion to dismiss with respect to the claims asserted against her. Lead plaintiffs’ opposition to the motions to dismiss was filed on October 26, 2021, and the defendant's reply briefs were filed on or before December 8, 2021. On March 31, 2022, the judge dismissed the complaints entirely - Su Ping Lu's motion to dismiss was granted with prejudice while the court granted the plaintiffs 30 days to file a third amended complaint against the Company and the other defendants.

On May 2, 2022, the plaintiffs filed a Third Amended Complaint (“TAC”) against all of the foregoing Defendants apart from Alessandro Gili and Su Ping Lu. On June 24, 2022, defendants moved to dismiss the TAC in its entirety, with prejudice. Plaintiffs filed their opposition on August 16, 2022, and defendants filed their reply brief on September 23, 2022. On September 22, 2022, the action was reassigned from Judge John P. Cronan to Judge Jennifer L. Rochon, who was recently appointed. On March 31, 2023, the action was dismissed with prejudice. The plaintiffs filed an appeal and the defendants' opposition is due on October 31, 2023.

Brazilian Tax Matter

In September 2020, the Brazilian tax authorities issued an infraction notice against Garrett Motion Industria Automotiva Brasil Ltda, challenging the use of certain tax credits (“Befiex Credits”) between January 2017 and February 2020. The infraction notice results in a loss contingency that may or may not ultimately be incurred by the Company. The

estimated total amount of the contingency as of September 30, 2023 was $37 million including penalties and interest. The Company believes, based on management’s assessment and the advice of external legal counsel, that it has meritorious arguments in connection with the infraction notice and any liability for the infraction notice is currently not probable. Accordingly, no accrual is required at this time.

Warranties and Guarantees

In the normal course of business, we issue product warranties and product performance guarantees. We accrue for the estimated cost of product warranties and performance guarantees based on contract terms and historical experience at the time of sale to the customer. Adjustments to initial obligations for warranties and guarantees are made as changes to the obligations become reasonably estimable. Product warranties and product performance guarantees are included in ~~the following balance sheet accounts:~~

September 30,
2018

December 31,
2017

Other current assets

$
16

$
17

Insurance recoveries for asbestos related liabilities

162

174

$
178

$
191

Accrued liabilities

$
185

$
185

Asbestos related liabilities

1,516

1,527

$
1,701

$
1,712

Accrued Liabilities and Other Liabilities. The following ~~tables present~~table summarizes information ~~regarding Bendix related asbestos claims activity:~~

Nine Months Ended September 30,

Years Ended
December 31,

Claims Activity

2018

2017

2016

Claims Unresolved at the beginning of the period

6,280

7,724

7,779

Claims Filed

1,895

2,645

2,830

Claims Resolved

(2,088
)

(4,089
)

(2,885
)
Claims Unresolved at the end of the period

6,087

6,280

7,724

concerning our recorded obligations for product warranties and product performance guarantees.

Nine Months Ended September 30,

Years Ended
December 31,

Disease Distribution of Unresolved Claims

2018

2017

2016

Mesothelioma and Other Cancer Claims

2,868

3,062

3,490

Nonmalignant Claims

3,219

3,218

4,234

Total Claims

6,087

6,280

7,724


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in millions)
Warranty and product performance guarantees at beginning of period	$	27	$	30	$	28	$	32
Accruals for warranties/guarantees issued during the year	2		3		8		10
Settlement of warranty/guarantee claims	(2)		(2)		(9)		(10)

Foreign currency translation	(1)		(2)		(1)		(3)
Warranty and product performance guarantees at end of period	$	26	$	29	$	26	$	29

~~Honeywell has experienced average resolutions per claim excluding legal costs as follows:~~

Years Ended December 31,

2017

2016

2015

2014

2013

(in whole dollars)

Malignant claims

$
56,000

$
44,000

$
44,000

$
53,500

$
51,000

Nonmalignant claims

$
2,800

$
4,485

$
100

$
120

$
850

~~It is not possible to predict whether resolution values for Bendix-related asbestos claims will increase, decrease or stabilize in the future.~~

~~Our Combined Interim Financial Statements reflect an estimated liability for resolution of pending~~Other Commitments and unasserted Bendix-related asbestos claims. We have valued pending and unasserted Bendix-related asbestos claims using average resolution values for the previous five years. We update the resolution values used to estimate the cost of pending and unasserted Bendix-related asbestos claims during the fourth quarter each year.

Such estimated cost of unasserted Bendix-related asbestos claims is based on historic claims filing experience and dismissal rates, disease classifications, and resolution values in the tort system for the previous five years. Asbestos costs and insurance recoveries are recorded in Other expense, net.

Our insurance receivable corresponding to the liability for settlement of pending and unasserted Bendix asbestos claims reflects coverage which is provided by a large number of insurance policies written by dozens of insurance companies in both the domestic insurance market and the London excess market. Based on our ongoing analysis of the probable insurance recovery, insurance receivables are recorded in the Combined Interim Financial Statements simultaneous with the recording of the estimated liability for the underlying asbestos claims. This determination is based on our analysis of the underlying insurance policies, our historical experience with our insurers, our ongoing review of the solvency of our insurers, judicial determinations relevant to our insurance programs, and our consideration of the impacts of any settlements reached with our insurers.

~~Other Matters~~

Contingencies

We are subject to other lawsuits, investigations and disputes arising out of the conduct of our business, including matters relating to commercial transactions, government contracts, product liability, prior acquisitions and divestitures, employee benefit plans, intellectual property and environmental, health and safety matters. We recognize a liability for any contingency that is probable of ~~occurrence~~occurring and reasonably estimable. We continually assess the likelihood of adverse judgments of outcomes in these matters, as well as potential ranges of possible losses (taking into consideration any insurance recoveries), based on a careful analysis of each matter with the assistance of outside legal counsel and, if applicable, other experts. ~~To date, no such matters are material to the Combined Statements of Operations.~~

Note ~~13.~~21. Pension Benefits

~~Prior to the completion of the Spin-Off, certain Garrett employees participated in~~

We sponsor several funded U.S. and non-U.S. defined benefit pension plans. Significant plans ~~(the “Shared Plans”) sponsored by Honeywell which includes participants of other Honeywell subsidiaries~~outside the U.S. are in Switzerland and operations. We accounted for our participation in the Shared Plans as multiemployer benefit plans. Accordingly, we did not record an asset or liability to recognize the funded status of the Shared Plans. The related pension expense was based on annual service cost of active Garrett participants and reported within Cost of goods sold in the Combined Statements of Operations. The pension expense specifically identified for the active Garrett participants in the Shared Plans for the three and nine months ended September 30, 2018 and 2017 was $1 million and $5 million, and $1 million and $5 million, respectively.

~~Additionally, we sponsored a funded defined benefit pension plan covering the majority of our employees and retirees in Ireland (the “Ireland Plan”).~~Ireland. Other pension plans ~~sponsored by~~outside the ~~Company outside of Ireland~~U.S. are not material to the Company, either individually or in the aggregate.

Our general funding policy for qualified defined benefit pension plans is to contribute amounts at least sufficient to satisfy regulatory funding standards. We are not required to make any contributions to our U.S. pension plan in 2023. We expect to make contributions of cash and/or marketable securities of approximately $7 million to our non-U.S. pension plans to satisfy regulatory funding standards in 2023, of which $6 million has been contributed as of September 30, 2023.

Net periodic ~~pension~~ benefit costs for our significant defined benefit plans include the ~~Ireland Plan was $0 million,~~following components:


	Three Months Ended September 30,								Nine Months Ended September 30,
	U.S. Plans				Non-U.S. Plan				U.S. Plans				Non-U.S. Plan
	2023		2022		2023		2022		2023		2022		2023		2022
	(Dollars in millions)
Service cost	$	—	$	—	$	1	$	2	$	—	$	1	$	4	$	5
Interest cost	2		1		1		—		6		4		4		1
Expected return on plan assets	(2)		(2)		(2)		(2)		(6)		(6)		(6)		(5)
Amortization of prior service (credit)	—		—		—		—		—		—		(1)		—
	$	—	$	(1)	$	—	$	—	$	—	$	(1)	$	1	$	1

For both our U.S. and ~~$1 million~~non-U.S. defined benefit pension plans, we estimate the service and ~~$0 million, and $1 million for the three and nine months ended September 30, 2018 and 2017, respectively.~~

~~Note 14. Subsequent Events~~

~~The Company evaluated subsequent events for recognition or disclosure through November 6, 2018, the date the Combined Interim Financial Statements were available to be issued.~~

~~On October 1, 2018, the Company became an independent publicly-traded company through~~interest cost components of net periodic benefit (income) cost by utilizing a ~~pro rata distribution by Honeywell of 100% of the outstanding shares of Garrett to Honeywell’s stockholders. For additional details, refer to Note 1 Background and Basis of Presentation.~~

In connection with the Spin-Off, we also entered into an Indemnification and Reimbursement Agreement with Honeywell on September 12, 2018. As of the Spin-Off date of October 1, 2018, we are obligated to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix businessfull yield curve approach in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. Pursuant to the terms of this Indemnification and Reimbursement Agreement, we are responsible for paying to Honeywell such amounts, up to a cap of an amount equal to the Euro-to-U.S. dollar exchange rate determined by Honeywell as of a date within two business days prior to the date of the Distribution (1.16977 USD = 1 EUR) equivalent of $175 million in respect of such liabilities arising in any given calendar year. The payments that we are required to make to Honeywell pursuant to the terms of this agreement will not be deductible for U.S. federal income tax purposes.

On September 12, 2018, we also entered into a Tax Matters Agreement with Honeywell (the “Tax Matters Agreement”), which governs the respective rights, responsibilities and obligations of Honeywell and us after the Spin-Off with respect to all tax matters (including tax liabilities, tax attributes, tax returns and tax contests). The Tax Matters Agreement generally provides that, following the Spin-Off date of October 1, 2018, we are responsible and will indemnify Honeywell for all taxes, including income taxes, sales taxes, VAT and payroll taxes, relating to Garrett for all periods, including periods prior to the completion date of the Spin-Off. Among other items, as a result of the mandatory transition tax imposed by the Tax Cuts and Jobs Act, one of our subsidiaries is required to make payments to a subsidiary of Honeywell in the amount representing the net tax liability of Honeywell under the mandatory transition tax attributable to us, as determined by Honeywell. We currently estimate that our aggregate payments to Honeywell with respect to the mandatory transition tax will be $240 million. Under the terms of the Tax Matters Agreement, we are required to pay this amount in Euros, without interest, in five annual installments, each equal to 8% of the aggregate amount, followed by three additional annual installments equal to 15%, 20% and 25% of the aggregate amount, respectively. In addition, the Tax Matters Agreement addresses the allocation of liability for taxes incurred as a result of restructuring activities undertaken to effectuate the Spin-Off. The Tax Matters Agreement also provides that we are required to indemnify Honeywell for certain taxes (and reasonable expenses) resulting from the failure of the Spin-Off and related internal transactions to qualify for their intended tax treatment under U.S. federal, state and local income tax law, as well as foreign tax law. Further, the Tax Matters Agreement also imposes certain restrictions on us and our subsidiaries (including restrictions on share issuances, redemptions or repurchases, business combinations, sales of assets and similar transactions) that are designed to address compliance with Section 355 of the Internal Revenue Code of 1986, as amended, and are intended to preserve the tax-free nature of the Spin-Off.

We also entered into several additional agreements with Honeywell that govern the future relationship between us and Honeywell and impose certain obligations on us following the Spin-Off, and which may cause us to incur new costs, including the following:

~~a Separation and Distribution Agreement;~~

~~a Transition Services Agreement;~~

~~an Employee Matters Agreement;~~

~~an Intellectual Property Agreement; and~~

~~a Trademark License Agreement.~~

~~A description of each~~estimation of these ~~agreements is included~~cost components by applying the specific spot rates along the yield curve used in ~~a Current Report on Form 8-K filed with the SEC on October 1, 2018.~~

On October 19, 2018, Honeywell disclosed in its Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 (the “Honeywell Form 10-Q”) that the Division of Enforcement of the SEC has opened an investigation into Honeywell’s prior accounting for liability for unasserted Bendix-related asbestos claims. In addition, Honeywell noted that it revised certain previously-issued financial statements to correct the time period associated with the determination of appropriate accruals for legacy Bendix asbestos-related liability for unasserted claims. Our restated carve-out financial statements included in our Form 10 already contemplate these revisions, consistent with Honeywell’s previous disclosure in its Form 8-K filed with the ~~SEC on August 23, 2018. The Indemnification~~pension benefit obligation to their underlying projected cash flows. This approach provides a more precise measurement of service and ~~Reimbursement Agreement has not been amended~~interest costs by improving the correlation between projected cash flows and ~~otherwise remains unchanged. Prior to the filing of the Honeywell Form 10-Q with the SEC, our management was not aware of the SEC’s investigation into Honeywell’s prior accounting.~~

their corresponding spot rates.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations, which we refer to as our “MD&A,” should be read in conjunction with our ~~Combined~~Consolidated Interim Financial Statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q as well as the audited annual ~~Combined~~Consolidated Financial Statements for the year ended December 31, ~~2017 of the Transportation Systems Business of Honeywell International Inc.~~2022, included in our Annual Report on Form ~~10,~~10-K, as ~~amended and~~ filed with the Securities and Exchange Commission on ~~September 5, 2018~~February 14, 2023 (our ~~“Form 10”~~“2022 Form 10-K”). Some of the information contained in this ~~discussion and analysis~~MD&A or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many important factors, including those set forth in the “Risk Factors” section of our ~~Registration Statement~~2022 Form 10-K and this Quarterly Report on Form ~~10,~~10-Q, our actual results could differ materially from the results described in, or implied, by these forward-looking statements.

The following MD&A is intended to help ~~the reader~~you understand the results of operations and financial condition of Garrett Motion Inc., for the three ~~months~~ and nine months ended September 30, ~~2018. Unless~~2023.

Executive Summary

For the ~~context otherwise requires, references~~three months ended September 30, 2023, net sales were $960 million, an increase compared to ~~“Garrett,” “we,” “us,” “our,” and “the Company” refer to (i) Honeywell’s Transportation Systems Business (the “Transportation Systems Business”~~prior year of $15 million or ~~the “Business”) prior to our spin-off~~2%, including a favorable impact of $21 million or 3% from ~~Honeywell International Inc. (the “Spin-Off”) and (ii) Garrett Motion Inc. and its subsidiaries following the Spin-Off, as applicable.~~

~~Overview and Business Trends~~

~~Garrett designs, manufactures and sells highly engineered turbocharger and electric-boosting technologies~~foreign currency translation. The increase was driven by ramp up of new products in small gasoline engine applications, offset by unfavorable product mix dynamics from demand softness for ~~light~~diesel and commercial vehicle ~~original equipment manufacturers (“OEMs”) and the~~applications due to global macro economic conditions.

Light vehicle ~~and independent aftermarket. These OEMs in turn ship to consumers globally. We are a global technology leader with significant expertise in delivering products across gasoline,~~product sales (which were comprised of diesel and ~~electric (hybrid and fuel cell) powertrains. These~~gasoline products, ~~are key enablers~~including products for ~~fuel economy and emission standards compliance.~~

~~Market penetration of vehicles with a turbocharger is expected to increase from approximately 47% in 2017 to approximately 59% by 2022, according to IHS Markit (“IHS”)~~passenger cars, SUVs, light trucks, and other ~~industry sources, which we believe will allow~~products) accounted for approximately 70% of our ~~business to grow at a faster rate than overall automobile production. The turbocharger market volume growth was particularly strong in China~~revenues. Commercial vehicle product sales (products for on- and off- highway trucks, construction, agriculture and power-generation machines) accounted for 16% of our revenues, while aftermarket and other ~~high-growth regions.~~

~~The growth trajectory for turbochargers is expected~~products contributed 14% of our revenues. Approximately 45% of our revenues came from sales to ~~continue, as~~customers located in Europe, 32% from sales to customers located in Asia, 21% from sales to customers in North America, and 2% from sales to customers in other international markets.

For the ~~technology is one~~three months ended September 30, 2023, we repurchased $161 million of Common Stock in connection with our share repurchase program. As of September 30, 2023, we had $72 million of the ~~most cost-effective solutions for OEMs to address strict constraints for vehicle fuel efficiency and emissions standards. As a result, OEMs are increasing their adoption~~authorized repurchase value remaining under our share repurchase program.

On July 31, 2023, we made an early debt repayment in the amount of turbocharger technologies across gasoline and diesel engines as well as hybrid-electric and fuel cell vehicles. In recent years, we have also seen a shift in demand from diesel engines to gasoline engines.

In particular, the commercial vehicle OEM market and light vehicle gasoline markets in China and other high-growth regions have increased due to favorable economic conditions and rising income levels which have led to an increase in automotive and vehicle content demand. While we have recently observed a slowdown in China, we continue to expect an increase in future vehicle production utilizing turbocharger technologies as vehicle ownership remains well below ownership levels in developed markets.

$200 million on our 2023 Dollar Term Facility.

Disaggregated Revenue

The following ~~charts~~tables show our ~~percentage of~~ revenues by geographic region and product line for the three and nine months ended September 30, ~~2018~~2023 and ~~the percentage change from the prior year comparable period.~~

~~By Geography~~

~~By Product-line~~

~~We are a global business that generated revenues of approximately $0.8 billion and $2.6 billion for the three and nine months ended September 30, 2018,~~2022, respectively.

Light vehicle products (which includes Diesel and Gas products, including products for passenger cars, SUVs, light trucks, and other products) accounted for approximately 68% and 69% of our revenues for the three and nine months ended September 30, 2018, respectively. Commercial vehicle products (products for on-highway trucks and off-highway trucks, construction, agriculture and power-generation machines) accounted for 20% of our revenues for each of the three and nine months ended September 30, 2018. Aftermarket products accounted for the remaining 12% and 11% of our revenues for the three and nine months ended September 30, 2018, respectively.

By Region

Our OEM sales contributed to approximately 88% and 89% of our revenues while our aftermarket and other products contributed 12% and 11% of our revenues for the three and nine months ended September 30, 2018, respectively.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(Dollars in millions)
United States	$	203	21%	$	189	20%	$	566	19%	$	515	19%
Europe	436		45%	428		45%	1,427		49%	1,319		49%
Asia	305		32%	308		33%	896		30%	817		30%
Other	16		2%	20		2%	52		2%	54		2%
Total	$	960		$	945		$	2,941		$	2,705

Approximately 55% and 56% of our revenues came from sales to customers located in Europe, 27% and 28% from sales to customers located in Asia, 16% and 15% from sales to customers in North America, and 2% and 1% from sales to customers in other international markets for the three and nine months ended September 30, 2018, respectively.

~~Separation from Honeywell~~

~~On October 1, 2018, the Company became an independent publicly-traded company through a pro rata distribution by Honeywell International Inc. (“Parent” or “Honeywell”)~~

By Product Line


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(Dollars in millions)
Diesel	$	229	24%	$	238	25%	$	751	26%	$	729	27%
Gas	441		46%	401		43%	1,299		44%	1,109		41%
Commercial Vehicle	156		16%	178		19%	507		17%	498		18%
Aftermarket	118		12%	115		12%	342		12%	328		12%
Other	16		2%	13		1%	42		1%	41		2%
Total	$	960		$	945		$	2,941		$	2,705

Results of 100% of the then-outstanding shares of Garrett to Honeywell’s stockholders. Each Honeywell stockholder of record received one share of Garrett common stock for every 10 shares of Honeywell common stock held on the record date. Approximately 74 million shares of Garrett common stock were distributed on October 1, 2018 to Honeywell stockholders. In connection with the separation, Garrett´s common stock began trading “regular-way” under the ticker symbol “GTX” on the New York Stock Exchange on October 1, 2018.

In connection with the separation, we entered into several agreements with Honeywell that govern the future relationship between us and Honeywell and impose certain obligations on us following the Spin-Off and which may cause us to incur new costs, including the following:

~~a Separation and Distribution Agreement;~~

~~a Transition Services Agreement;~~

~~an Employee Matters Agreement;~~

~~an Intellectual Property Agreement; and~~

~~a Trademark License Agreement.~~

~~A description of each of these agreements is included in a Current Report on Form 8-K filed with the SEC on October 1, 2018.~~

In addition, we entered into an Indemnification and Reimbursement Agreement (the “Indemnification and Reimbursement Agreement”) and a Tax Matters Agreement (the “Tax Matters Agreement”) with Honeywell on September 12, 2018, each of which is described in this MD&A.

~~Basis of Presentation~~

The accompanying historical Combined Interim Financial Statements were derived from the consolidated financial statements and accounting records of Honeywell. These Combined Interim Financial Statements reflect the combined historical results of operations, financial position and cash flows of the Business as they were historically managed in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Therefore, the historical combined financial information may not be indicative of our future performance and does not necessarily reflect what our combined results of operations, financial condition and cash flows would have been had the Business operated as a separate, publicly traded company during the periods presented, particularly because of changes that we have experienced, and expect to continue to experience, in the future as a result of our separation from Honeywell, including changes in the financing, cash management, operations, cost structure and personnel needs of our business.

The Combined Interim Financial Statements include certain assets and liabilities that were held at the Honeywell corporate level prior to the Spin-Off but are specifically identifiable or otherwise allocable to the Business. Additionally, prior to the Spin-Off, Honeywell provided certain services, such as legal, accounting, information technology, human resources and other infrastructure support, on behalf of the Business. The cost of these services has been allocated to the Business on the basis of the proportion of revenues. We consider these allocations to be a reasonable reflection of the benefits received by the Business. Actual costs that would have been incurred if the Business had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. We consider the basis on which the expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefits received by the Business during the periods presented.

Subsequent to the completion of the Spin-Off, we have incurred, and expect to continue to incur, expenditures consisting of employee-related costs, costs to start up certain stand-alone functions and information technology systems, and other one-time transaction related costs. Recurring stand-alone costs include establishing the internal audit, treasury, investor relations, tax and corporate secretary functions as well as the annual expenses associated with running an independent publicly traded company including listing fees, compensation of non-employee directors, related board of director fees and other fees and expenses related to insurance, legal and external audit. Recurring stand-alone costs that differ from historical allocations may have an impact on profitability and operating cash flows but we believe the impact will not be significant. As a stand-alone public company, we do not expect our recurring stand-alone corporate costs to be materially higher than the expenses historically allocated to us from Honeywell.

~~Asbestos-Related and Environmental Liabilities~~

Our asbestos-related and environmental expenses, net of probable insurance recoveries, are reported within Other expense, net in our Combined Statement of Operations. Honeywell is subject to certain asbestos-related and environmental-related liabilities, primarily related to its legacy Bendix business. In conjunction with the Spin-Off, certain operations that were part of the Bendix business, along with the ownership of the Bendix trademark, as well as certain operations that were part of other legacy elements of the Business, were transferred to us. Our Combined Interim Financial Statements reflect an estimated liability for resolution of pending and future asbestos-related and environmental liabilities related to these businesses, calculated as if we were responsible for 100% of the Bendix asbestos-liability payments. See Asbestos Matters in Note 12, Commitments and Contingencies of Notes to Combined Interim Financial Statements for additional information. In connection with the Spin-Off, we entered into the Indemnification and Reimbursement Agreement, under which we are required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. Pursuant to the terms of this Indemnification and Reimbursement Agreement, we are responsible for paying to Honeywell such amounts, up to a cap of an amount equal to the Euro-to-U.S. dollar exchange rate determined by Honeywell as of a date within two business days prior to the date of the Distribution (1.16977 USD = 1 EUR) (the “Distribution Date Currency Exchange Rate”) equivalent of $175 million in respect of such liabilities arising in any given calendar year. The payments that we are required to make to Honeywell pursuant to the terms of this agreement will not be deductible for U.S. federal income tax purposes.

~~On October 19, 2018, Honeywell disclosed in its Quarterly Report on Form 10-Q~~Operations for the ~~quarter~~Three and Nine Months Ended September 30, 2023

Net Sales


	Three Months Ended September 30,					Nine Months Ended September 30,
	2023			2022		2023			2022
	(Dollars in millions)
Net sales	$	960		$	945	$	2,941		$	2,705
% change compared with prior period	1.6		%			8.7		%

For the three months ended September 30, ~~2018 (the “Honeywell Form 10-Q”) that~~2023, net sales increased compared to prior year by $15 million or 2%, including a favorable impact of $21 million or 3% due to foreign currency translation driven by higher Euro-to-US dollar exchange rates and partially offset by lower Chinese yuan-to-US dollar exchange rates. The increase was driven by ramp up of new products in small gasoline engine applications, offset by unfavorable product mix from demand softness for diesel and commercial vehicle applications due to global macro economic conditions.

Gasoline product sales increased by $40 million or 10% (including a favorable impact of $3 million or 1% due to foreign currency translation), primarily due to strong performance in Asia and North America related to product ramp-ups.

Diesel product sales decreased by $9 million or 4% (including a favorable impact of $12 million or 5% due to foreign currency translation), primarily driven by demand softness in India and China, due to program phase out and the ~~Division~~negative impact of ~~Enforcement~~macro economic dynamics, respectively.

Commercial vehicle sales decreased by $22 million or 13% (including a favorable impact of $2 million or 1% due to foreign currency translation), primarily driven by demand softness influenced by the ~~Securities~~global economic environment combined with inventory build-up by some customers during prior quarters.

Aftermarket sales improved by $3 million or 3% (including a favorable impact of $3 million or 3% due to foreign currency translation), primarily due to favorable aftermarket conditions and ~~Exchange Commission (the “SEC”) has opened an investigation into Honeywell’s prior accounting~~demand for ~~liability for unasserted Bendix-related asbestos claims. In addition, Honeywell noted that it revised certain previously-issued financial statements to correct~~replacement parts in Europe and Asia Pacific, offset by softer sales in North America and Brazil.

For the ~~time period associated with the determination of appropriate accruals for legacy Bendix asbestos-related liability for unasserted claims.~~

Our restated carve-out financial statements included in our Form 10 already contemplate these revisions, consistent with Honeywell’s previous disclosure in its Form 8-K filed with the SEC on August 23, 2018. These revisions are also contemplated in our Combined Interim Financial Statements for the three and nine months ended September 30, ~~2018. The Indemnification~~2023, net sales increased compared to prior year by $236 million or 9%, including an unfavorable impact of $32 million or 1% due to foreign currency translation driven by lower Chinese yuan-to-US dollar and ~~Reimbursement Agreement has not been amended~~lower Euro-to-US dollar exchange rates. This increase was driven by higher volumes as markets recovered from the semiconductor shortages experienced in the prior year coupled with strong demand for new product launches and ~~otherwise remains unchanged.~~

~~Prior~~ramp ups, and inflation recoveries net of pricing across all product lines.

Gasoline product sales increased by $190 million or 17% (including an unfavorable impact of $25 million or 2% due to foreign currency translation), primarily driven by the industry recovery from prior year’s global semiconductor shortages and COVID-related lockdown measures in China combined with new product launches and ramp ups across all regions.

Diesel product sales increased by $22 million or 3% (including a favorable impact of $1 million or 0% due to foreign currency translation), driven by performance in Europe where diesel is essential to meet fleet CO2 regulations targets coupled with light commercial vehicle sales on incumbent platforms.

Commercial vehicle sales increased by $9 million or 2% (including an unfavorable impact of $8 million or 1% due to foreign currency translation), primarily driven by performance in North America and Europe on new product launches and combined with favorable global product mix dynamics.

Aftermarket sales improved by $14 million or 4%, primarily on strong demand in Europe and Asia Pacific related to favorable aftermarket conditions including the continued high demand for replacement parts. Recovery in China from the end of the Chinese government's zero COVID-19 policy as well as new product introductions and favorable pricing impact also contributed to the ~~filing~~growth.

Cost of ~~the Honeywell Form 10-Q with the SEC, our management was not aware of the SEC’s investigation into Honeywell’s prior accounting.~~

~~Results of Operations for~~Goods Sold and Gross Profit


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(Dollars in millions)
Cost of goods sold	$	784		$	767		$	2,374		$	2,183
% change compared with prior period	2.2		%				8.7		%
Gross profit percentage	18.3		%	18.8		%	19.3		%	19.3		%


	Cost of Goods Sold			Gross Profit
	(Dollars in millions)
Cost of Goods Sold / Gross Profit for the three months ended September 30, 2022	$	767		$	178
Increase/(decrease) due to:
Volume	12			5
Product mix	5			(23)
Price, net of inflation pass-through	—			(5)

Productivity, net	(12)			12
Research & development	2			(2)
Foreign exchange rate impacts	10			11
Cost of Goods Sold / Gross Profit for the three months ended September 30, 2023	$	784	784	$	176

For the three months ended September 30, 2023, cost of goods sold increased by $17 million, primarily driven by higher sales volumes and an unfavorable product mix which contributed to increases of $12 million and $5 million, respectively. Cost of goods sold further increased by $2 million related to Research and development ("R&D") costs reflecting the continued commitment to investment in new technologies and $10 million from foreign currency impacts from transactional, translational and hedging effects. Our continued focus on productivity, net of labor inflation and repositioning costs, contributed to a decrease in cost of goods sold of $12 million.

Gross profit decreased by $2 million, mainly driven by $23 million of unfavorable product mix from the decline of high margin products, $5 million of pricing net of inflation recovery from customer pass-through agreements, and $2 million of higher R&D costs as discussed above. These decreases were partially offset by $12 million of higher productivity net of labor inflation and repositioning costs, coupled with higher sales volumes of $5 million. Furthermore, foreign currency impacts from transactional, translational and hedging effects also contributed to increases in gross profit of $11 million.


	Cost of Goods Sold			Gross Profit
	(Dollars in millions)
Cost of Goods Sold / Gross Profit for the nine months ended September 30, 2022	$	2,183		$	522
Increase/(decrease) due to:
Volume	162			69
Product mix	40			(46)
Inflation pass-through, net of price	—			46
Commodity, transportation & energy inflation	42			(42)
Productivity, net	(29)			27
Research & development	12			(12)
Foreign exchange rate impacts	(36)			3
Cost of Goods Sold / Gross Profit for the nine months ended September 30, 2023	$	2,374	2374	$	567

For the nine months ended September 30, ~~2018 compared with~~2023, cost of goods sold increased by $191 million, primarily driven by our higher sales volumes and unfavorable product mix which contributed to increases of $162 million and $40 million, respectively. Cost of goods sold further increased $42 million from inflation of commodities, energy and transportation and $12 million from increased R&D costs which reflects the ~~three~~continued investment in new technologies and ~~nine months ended September 30, 2017~~

~~Net Sales~~

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2018

2017

2018

2017

(Dollars in millions)

Net sales

$
784

$
745

$
2,576

$
2,292

% change compared with prior period

5.2
%

12.4
%

~~The change~~headcount year-over-year. Our focus on productivity, net of labor inflation, one-time expenses and higher repositioning costs, contributed to a decrease in cost of goods sold of $29 million. Foreign currency impacts from transactional, translational and hedging effects reduced cost of goods sold by $36 million.

Gross profit increased by $45 million, mainly driven by the higher sales volumes of $69 million and $46 million of inflation recovery from customer pass-through agreements net ~~sales compared to prior year period is attributable to the following:~~

For the Three Months
Ended September 30, 2018

For the Nine Months
Ended September 30, 2018

Volume

6.6
%

7.7
%
Price

—

(0.8
)%
Foreign Currency Translation

(1.4
)%

5.5
%

5.2
%

12.4
%

~~Three Months Ended September 30, 2018 compared with Three Months Ended September 30, 2017~~

~~Our~~of pricing reductions. Furthermore, gross profit increased $27 million from higher productivity net ~~sales increased~~of labor inflation, one-time expenses and higher repositioning costs as discussed above, and $3 million from foreign currency impacts from transactional, translational and hedging effects. These increases were partially offset by $42 million inflation on commodities, energy costs and transportation, as discussed above, $46 million of unfavorable product mix and a $12 million increase in R&D costs.

Selling, General and Administrative Expenses


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(Dollars in millions)
Selling, general and administrative expense	$	59		$	57		$	178		$	164
% of sales	6.1		%	6.0		%	6.1		%	6.1		%

Selling, general and administrative (“SG&A”) expenses for the three months ended September 30, ~~2018~~2023 increased by $2 million compared towith the prior year period by $39 million or approximately 5.2% (including a negative impact of 1.4% due to foreign currency translation) primarily driven by increases in sales volume and unfavorable foreign currency translation. The increase in sales volume was primarily driven by light vehicles OEM products growth of approximately $43 million. Commercial vehicles OEM products growth increased slightly by $2 million, offset by aftermarket and other products decrease of approximately $6 million.

Our light vehicles OEM product growth was primarily driven by increased gasoline volumes in Europe and North America as a result of increased turbocharger penetration in gasoline engines and new product launches. Additionally, diesel vehicles OEM product sales growth increased slightly as a result of increased volumes in Asia partially offset by lower diesel volumes to our OEM customers in Europe. The slight commercial vehicles OEM product growth was primarily driven by volume increases in Europe partially offset by decreases in China. Our slight aftermarket and other product sales decrease was primarily driven by a ~~decrease~~$2 million increase in ~~sales in North America~~legal and ~~Japan.~~

~~Nine Months Ended September 30, 2018 compared with Nine Months Ended September 30, 2017~~

~~Our net sales increased~~advisory fees following the completion of our Transaction and $1 million of labor inflation impact.

SG&A expenses for the nine months ended September 30, ~~2018~~2023 increased by $14 million compared towith the prior year, ~~period by $284 million or approximately 12.4% (5.5% of which was due to foreign currency translation)~~ primarily driven by ~~increases in sales volume~~$9 million of legal and favorable foreign currency translation partially offset by contractual price reductions. The increase in sales volume, net of contractual price reductions, was primarily driven by light vehicles OEM products growth of approximately $225 million, commercial vehicles OEM products growth of approximately $60 million and slight aftermarket and other products growth of approximately $1 million.

Our light vehicles OEM product growth was primarily driven by increased gasoline volumes in China, Europe, North America, and South Korea, as a result of increased turbocharger penetration in gasoline engines and new product launches, partially offset by lower diesel volumesadvisory fees related to our ~~OEM customers in Europe~~Transaction, $4 million of labor inflation impact, and Korea. The commercial vehicles OEM product growth was primarily driven by volume increases in North America and Europe. Our aftermarket and other sales remained flat primarily due to slightly lower volumes in Japan and North America offset by favorable foreign currency translation.

~~Cost~~$3 million of ~~Goods Sold~~

higher incentive compensation expense.

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2018

2017

2018

2017

(Dollars in millions)

Cost of goods sold

$
606

$
568

$
1,972

$
1,730

% change compared with prior period

6.7
%

14.0
%

Gross profit percentage

22.7
%

23.8
%

23.4
%

24.5
%
Interest Expense


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in millions)
Interest expense	$	50	$	18	$	108	$	61

~~Three Months Ended September 30, 2018 compared with Three Months Ended September 30, 2017~~

~~Costs of goods sold increased in~~

For the three months ended September 30, ~~2018~~2023, interest expense increased by $32 million compared to the prior year ~~period by $38~~due to $25 million ~~or approximately 6.7% primarily~~of higher interest expense driven by ~~an increase in direct material costs~~the new 2023 Dollar Term Facility and increased interest rates, and $10 million of ~~approximately $39 million (primarily due to an increase in volume).~~

~~Gross profit percentage decreased~~debt issuance cost amortization primarily due to ~~unfavorable impacts from mix (approximately 2.7 percentage point impact) and unfavorable impacts from inflation (approximately 1.3 percentage point impact),~~the $200 million early repayment on our 2023 Dollar Term Facility, partially offset by ~~favorable productivity (approximately 2.5 percentage point impact) and by favorable volume leverage (approximately 0.5 percentage point impact).~~

~~Nine Months Ended September 30, 2018 compared with Nine Months Ended September 30, 2017~~

~~Costs of goods sold increased in~~$3 million from unrealized marked-to-market gains on our interest rate swaps.

For the nine months ended September 30, ~~2018~~2023, interest expense increased by $47 million compared to prior year due to $55 million of higher interest expense driven by the new 2023 Dollar Term Facility and increased interest rates, and $11 million of debt issuance cost amortization mainly due to the $200 million early repayment on our 2023 Dollar Term Facility. These increases in interest expense were partially offset by $10 million of interest accretion in the prior year ~~period by $242~~on our Series B Preferred Stock that was fully redeemed in June 2022 and $7 million ~~or approximately 14.0% primarily driven by an increase~~decrease in ~~direct material costs of approximately $204 million (primarily due to an increase in volume and the impacts of foreign currency translation).~~

Gross profit percentage decreased primarily due to unfavorable impacts from mix and price (approximately 2.2 percentage point impact), partially offset by favorable volume leverage (approximately 0.8 percentage point impact) and net favorable impacts from foreign currency translation (approximately 0.4 percentage point impact).

unrealized marked-to-market losses on our interest rate swaps.

Non-operating income

~~Selling, General and Administrative Expenses~~

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2018

2017

2018

2017

(Dollars in millions)

Selling, general and administrative expense

$
60

$
61

$
186

$
180

% of sales

7.7
%

8.2
%

7.2
%

7.9
%


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in millions)
Non-operating income	$	(4)	$	(29)	$	(1)	$	(73)

~~Three Months Ended September 30, 2018 compared with Three Months Ended September 30, 2017~~

~~Selling, general and administrative expenses decreased by $1 million in~~

For the three months ended September 30, ~~2018~~2023, non-operating income amounted to $4 million versus $29 million in the prior year, due to a decrease of $23 million of interest income recognized in the prior year from unrealized marked-to-market gains on our interest rate swaps.

For the nine months ended September 30, 2023, non-operating income amounted to $1 million, versus $73 million in the prior year period, driven by a decrease of $56 million of interest income net of unrealized marked-to-market losses on our interest rate swaps, a $13 million loss on the remeasurement of the Series A Preferred Stock Agreement related to our capital structure transformation during the three months ended June 30, 2023, and $4 million of lower benefits from non-service components of pension cost compared to the prior year period. ~~The decline in expenses as a percentage of sales was primarily due to favorable volume leverage.~~

~~Nine Months Ended September 30, 2018 compared with Nine Months Ended September 30, 2017~~

Selling, general and administrative expenses increased by $6 million in the nine months ended September 30, 2018 compared to the prior year period. The decline in expenses as a percentage of sales was primarily due to favorable volume leverage.

~~Other Expense, Net~~

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2018

2017

2018

2017

(Dollars in millions)

Other expense, net

$
51

$
43

$
132

$
129

% of sales

6.5
%

5.8
%

5.1
%

5.6
%

~~Three Months Ended September 30, 2018 compared with Three Months Ended September 30, 2017~~

Other expense, net increased in the three months ended September 30, 2018 compared to the prior year period primarily driven by a $6 million increase in environmental charges and $2 million of higher asbestos charges.

~~Nine Months Ended September 30, 2018 compared with Nine Months Ended September 30, 2017~~

Other expense, net increased in the nine months ended September 30, 2018 compared to the prior year period due to a $6 million increase in environmental charges, partially offset by a $3 million decrease in asbestos charges.

Tax Expense ~~(Benefit)~~

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2018			2017			2018			2017				Three Months Ended September 30,						Nine Months Ended September 30,
	(Dollars in millions)													2023			2022			2023			2022
Tax expense (benefit)	$	(856	)	$	17		$	(844	)	$	25
														(Dollars in millions)
Tax expense													Tax expense	$	13		$	26		$	70		$	83
Effective tax rate		(1172.6	)%		23.0	%		(288.1	)%		9.5	%	Effective tax rate	18.6		%	19.8		%	25.1		%	23.0		%

The effective tax rate for the three months ended September 30, ~~2018 was~~2023 is lower than the ~~U.S. federal statutory~~effective rate ~~of 21%~~for the three month ended September 30, 2022 primarily ~~due to tax benefits from an internal restructuring of Garrett’s business in advance of the Spin-Off that resulted in an $870 million reduction in tax expense and tax benefits~~ related to ~~the currency impacts~~an increase in global R&D benefits, lower taxes on non-U.S. earnings partially offset by nondeductible expenses and prior year non-recurring decrease in withholding taxes on undistributed ~~foreign earnings, partially offset by adjustments to the provisional tax amount related to U.S. tax reform and non-deductible expenses.~~

earnings.

The effective tax rate for the nine months ended September 30, ~~2018 was lower~~2023 is higher than the U.S. federal statutory rate of 21% primarily due to tax benefits from an internal restructuring of Garrett’s business in advance of the Spin-Off that resulted in an $880 million reduction in tax expense and tax benefits related to the currency impacts on withholding taxes on undistributed foreign earnings, partially offset by adjustments to the provisional tax amount related to U.S. tax reform and non-deductible expenses.

~~The~~ effective ~~tax~~ rate for the nine months ended September 30, 2017 was lower than the U.S. federal statutory rate of 35% due to the resolution of tax matters with certain jurisdictions and non-U.S. earnings taxed at lower rates, partially offset by non-deductible expenses.

On December 22, 2017, the U.S. enacted tax reform that instituted fundamental changes to the taxation of multinational corporations. As a result of the tax reform, we recorded a provisional tax charge at December 31, 2017 of $354 million2022 primarily related to the mandatory transition tax and $980 million related to taxes on undistributed foreign earnings that are no longer intended to be permanently reinvested. We recorded a provisional amount because certain information related to the computation of earnings and profits, distributable reserves, and foreign exchange gains and losses is not readily available; some of the testing dates to determine taxable amounts have not yet occurred; and there is limited information from federal and state taxing authorities regarding the application and interpretation of the recently enacted legislation. In accordance with current SEC guidance, we will report the impact of final provisional amountsprior year non-recurring decrease in ~~the reporting period in which the accounting is completed, which will not exceed one year from the date of enactment of tax reform.~~

As described in our Combined Financial Statements for the year ended December 31, 2017, we reasonably estimated certain effects of the tax legislation and, therefore, recorded provisional amounts, including the deemed repatriation transition tax and withholding taxes on undistributed ~~earnings. For~~earnings and nondeductible expenses in the ~~nine months ended September 30, 2018, we recorded an adjustment to the provisional tax amount related to the deemed repatriation transition tax~~prior year partially offset by increase in global research and development benefit and lower taxes on ~~undistributed earnings~~non-U.S. earnings.

In December 2022, the European Union reached an agreement to adopt the Minimum Tax Directive under Pillar Two. The agreement affirms that all Member States must transpose the Directive by December 31, 2023. The rules will therefore first be applicable for fiscal years starting on or after December 31, 2023. We will continue to monitor the implementation of ~~$13 million and $(8) million, respectively. This adjustment results~~Pillar Two in ~~a net increase of $5 million to~~ the countries in which we operate, as it is possible that such changes could materially impact our effective tax rate, ~~for the nine months ended September 30, 2018 of 1.7%. We have not finalized the accounting for the~~corporate tax ~~effects of the~~liabilities and cash tax ~~legislation as we are continuing to gather additional information and expect to complete our accounting within the prescribed measurement period.~~

liabilities.

The effective tax rate can vary from quarter to quarter ~~for unusual or infrequently occurring items, such as~~due to changes in the ~~tax impacts from~~Company’s global mix of earnings, the resolution of income tax audits, changes in tax laws, ~~revisions~~deductions related to employee share-based payments, internal restructurings, and pension mark-to-market adjustments.


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
	(Dollars in millions)
Net income	$	57		$	105		$	209		$	278
Net income margin	5.9		%	11.1		%	7.1		%	10.3		%

Net income for the ~~provisional amounts from U.S.~~three months ended September 30, 2023 decreased by $48 million compared with the prior year, primarily due to $32 million of higher interest expense as discussed above and $25 million of lower non-operating income, partially offset by $13 million of lower tax ~~reform or internal restructurings.~~

expense.

Net income for the nine months ended September 30, 2023 decreased by $69 million compared with the prior year, primarily due to $72 million of lower non-operating income as discussed above, $47 million of higher interest expense and $14 million higher SG&A expenses, partially offset by a $45 million increase in gross profit, $13 million lower tax expense and a $5 million loss on extinguishment of debt recorded in the prior year.

It is management’s intent to provide non-GAAP financial information to ~~enhance~~supplement the understanding of our ~~GAAP financial information,~~business operations and performance, and it should be considered by the reader in addition to, but not instead of, the financial statements prepared in accordance with GAAP. Each non-GAAP financial measure is presented along with the ~~corresponding~~most directly comparable GAAP measure so as not to imply that more emphasis should be placed on the non-GAAP measure. The non-GAAP financial information presented may be determined or calculated differently by other companies and may not be comparable to other similarly titled measures used by other companies.

Additionally, the non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for an analysis of the Company’s operating results as reported under GAAP.

EBITDA and Adjusted EBITDA⁽¹⁾

For the Three Months
Ended September 30,

For the Nine Months
Ended September 30,

2018

2017

2018

2017

(Dollars in millions)

Net income — GAAP

$
929

$
57

$
1,137

$
237

Net interest (income) expense

—

(1
)

(3
)

(5
)
Tax expense

(856
)

17

(844
)

25

Depreciation

17

17

53

47

EBITDA (Non-GAAP)

$
90

$
90

$
343

$
304

Other operating expenses, net (which primarily
consists of asbestos and environmental expenses)⁽²⁾

51

43

132

129

Non-operating (income) expense⁽³⁾

—

—

(4
)

—

Stock compensation expense⁽⁴⁾

4

4

16

12

Repositioning charges

—

4

2

13

Foreign exchange (gain) loss on debt, net of related hedging
(gain) loss

(8
)

—

(8
)

—

Adjusted EBITDA (Non-GAAP)⁽⁵⁾

$
137

$
141

$
481

$
458

~~(1)~~

~~We evaluate performance on the basis of EBITDA and Adjusted EBITDA. We define “EBITDA” as our net income (loss) calculated in accordance with U.S. GAAP, plus the sum of net interest expense, tax expense and depreciation. We define “Adjusted EBITDA~~” as EBITDA, plus the sum of non-operating (income) expense, other expenses, net (which primarily consists of asbestos and environmental expenses), stock compensation expense, repositioning charges and foreign transaction losses (gains) on hedging instruments. We believe that EBITDA and Adjusted EBITDA are important indicators of operating performance and provide useful information for investors because:

(1)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(Dollars in millions)
Net income (GAAP)	$	57	$	105	$	209	$	278
Interest expense, net of interest income	47		(9)		98		(5)
Tax expense	13		26		70		83
Depreciation	23		21		66		64
EBITDA (Non-GAAP)	140		143		443		420
Reorganization items, net (2)	—		—		—		2
Stock compensation expense (3)	4		3		12		8
Repositioning costs (4)	6		1		14		4

Loss on extinguishment of debt	—		—		—		5
Discounting costs on factoring	1		1		3		2
Other non-operating income (5)	(1)		(2)		(4)		(11)
Capital structure transformation expenses (6)	2		—		22		—

Adjusted EBITDA (Non-GAAP)	$	152	$	146	$	490	$	430

EBITDA and Adjusted EBITDA exclude the effects of income taxes, as well as the effects of financing and investing activities by eliminating the effects of interest and depreciation expenses and therefore more closely measure our operational performance; and

(1)We evaluate performance on the basis of EBITDA and Adjusted EBITDA. We define “EBITDA” as our net income calculated in accordance with U.S. GAAP, plus the sum of net interest expense, tax expense and depreciation. We define “Adjusted EBITDA” as EBITDA, plus the sum of net reorganization items, stock compensation expense, repositioning costs, loss on extinguishment of debt, discounting costs on factoring, other non-operating income and capital structure transformation expenses. We believe that EBITDA and Adjusted EBITDA are important indicators of operating performance and provide useful information for investors because:

~~certain adjustment items, while periodically affecting our results, may vary significantly from period to period and have disproportionate effect~~in~~a given period, which affects comparability of our results.~~

•EBITDA and Adjusted EBITDA exclude the effects of income taxes, as well as the effects of financing and investing activities by eliminating the effects of interest and depreciation expenses and therefore more closely measure our operational performance; and

•certain adjustment items, while periodically affecting our results, may vary significantly from period to period and have disproportionate effect in a given period, which affects the comparability of our results.

In addition, our management may use Adjusted EBITDA in setting performance incentive targets ~~in order~~ to align performance measurement with operational performance.

~~(2)~~

On a going forward basis, pursuant to the Indemnification and Reimbursement Agreement, we expect to be responsible for 90% of Honeywell’s asbestos-related liability payments primarily related to Honeywell’s legacy Bendix friction materials business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. The amounts payable by us in respect of such liabilities arising in a given calendar year will be subject to a cap of $175 million.

~~(3)~~

~~Non-operating (income) expense adjustment excludes net interest (income), pension expense, equity income of affiliates, and the impact of foreign exchange.~~

~~(4)~~

~~Stock compensation expense adjustment includes only non-cash expenses.~~

~~(5)~~

The remaining fluctuations are largely attributable to fluctuations in the EUR/USD exchange rate resulting in hedging (gains) losses of $(6) million and $4 million, and $0 million and $(15) million in the three and nine months ended September 30, 2018 and 2017.

~~Cash flow from operations less Expenditures~~(2)The Company applied ASC 852 for ~~property, plant~~periods subsequent to September 20, 2020, the date the Company and ~~equipment~~⁽¹⁾

For the Nine Months
Ended September 30,

2018

2017

(Dollars in millions)

Net cash provided by (used for) operating activities — GAAP

240

234

Expenditures for property, plant and equipment

(66
)

(56
)
Cash flow from operations less Expenditures for property, plant
and equipment (Non-GAAP)

$
174

$
178

~~(1)~~

Cash flow from operations less Expenditures for property, plant and equipment is a non-GAAP financial measure that reflects an additional way of viewing our liquidity that, when viewed with our GAAP results, provides a more complete understanding of factors and trends affecting our cash flows. Cash flow from operations less Expenditures for property, plant and equipment is calculated by subtracting Expenditures for property, plant and equipment from Net cash provided by (used for) operating activities. We believe it is a more conservative measure of cash flow because purchases of fixed assets are necessary for ongoing operations. We believe it is important to view Cash flow from operations less Expenditures for property, plant and equipment as a complement to our Combined statements of cash flows.

~~Liquidity and Capital Resources~~

~~Historical Liquidity~~

~~Historically, we have generated positive cash flows from operations.~~

~~Honeywell Central Treasury Function~~

~~As part~~certain of its subsidiaries each filed a voluntary petition for relief under Chapter 11 of title 11 of the ~~Parent, we~~United States Code, to distinguish transactions and events that were ~~dependent upon Honeywell for all of its working capital and financing requirements. Honeywell uses a centralized approach to cash management and financing of its operations. The majority~~directly associated with the Company’s reorganization from the ongoing operations of the ~~Business’s cash was transferred~~business. Accordingly, certain expenses and gains incurred related to ~~Honeywell daily~~these transactions and ~~Honeywell funded its operating~~events were recorded within Reorganization items, net in the Consolidated Interim Statements of Operations.

(3)Stock compensation expense includes only non-cash expenses.

(4)Repositioning costs includes severance costs related to restructuring projects to improve future productivity.

(5)Reflects the non-service component of net periodic pension costs and ~~investing activities as needed. This arrangement is~~other income that are non-recurring or not ~~reflective~~considered directly related to the Company's operations.

(6)Includes the loss on remeasurement of the ~~manner in which the Business would have been able to finance its operations had it been a stand-alone business separate from Honeywell during the periods presented. Cash transfers to~~Agreements as well as third-party legal and ~~from Honeywell’s cash management accounts~~advisory fees that are ~~reflected within Invested deficit.~~

We operated a centralized non-interest-bearing cash pool in U.S. and regional interest-bearing cash pools outside of the U.S. As of September 30, 2018 and December 31, 2017, we had non-interest-bearing cash pooling balances of $0 million and $51 million, respectively, which are presented in Invested deficit within the Combined Balance Sheets. As part of the preparation for the Spin-Off, we delinked from U.S. and regional cash pools operated by Honeywell, which resulted in a significant decrease in Due from related parties and Due to related parties balances as of September 30, 2018.

All intracompany transactions have been eliminated. All significant transactions between the Business and Honeywell have been included in our Combined Interim Financial Statements and were settled for cash prior to the Spin-Off, with the exception of certain related party notes which were forgiven. The transactions that were expected to be settled for cash prior to the Spin-Off are reflected in the Combined Balance Sheets as Due from related parties or Due to related parties. In the Combined Statements of Cash Flows, the cash flows related to related party notes receivables presented in the Combined Balance Sheets in Due from related parties are reflected as investing activities since these balances represent amounts loaned to Parent. The cash flows related to related party notes payables presented in the Combined Balances in Due to related parties are reflected as financing activities since these balances represent amounts financed by Parent. For the related party notes, which were expected to be forgiven, the total net effect of the settlement of these transactions is reflected in the Combined Balance Sheets as Invested deficit and in the Combined Statements of Cash Flows as financing activities.

The cash and cash equivalents held by Honeywell at the corporate level were not specifically identifiable to the Business and therefore were not allocated for any of the periods presented. Honeywell third-party debt and the related interest expense have not been allocated for any of the periods presented as Honeywell’s borrowings were not directly attributable to the ~~Business.~~

~~We received interest income for related party notes receivables of $0 million and $1 million, and $0 and $0~~Transaction.

Adjusted EBITDA for the Three Months Ended September 30, 2023

For the three months ended September 30, 2023, net income decreased by $48 million versus the prior year as discussed above within the Results of Operations for Three and Nine Months Ended September 30, 2023 section.

Adjusted EBITDA increased by $6 million compared to the prior year, mainly due to increased volume and productivity, and favorable foreign exchange impacts. These increases in Adjusted EBITDA were partially offset by unfavorable product mix and pricing net of inflation pass-through.

During the three months ended September 30, 2023, we saw product ramp-ups of new small engine applications in gasoline, offset by demand softening in diesel and commercial vehicle applications influenced by global macro economic dynamics which resulted in an unfavorable product mix.

The increased productivity combined with fixed cost savings was partially offset by year-over-year labor inflation.

R&D expenses increased $2 million which reflects continued investments in new technologies, increased hiring to accelerate growth in the new technologies and year-over-year labor inflation.

Gains in foreign currency from translational, transactional and hedging effects in the three months ended September 30, 2023, primarily driven by a higher Euro-to-US dollar exchange rate versus the prior-year period, also accounted for an $8 million increase in Adjusted EBITDA.

Adjusted EBITDA for the Nine Months Ended September 30, 2023

For the nine months ended September 30, ~~2018~~2023, net income decreased by $69 million versus the prior year as discussed above within the Results of Operations for the Three and ~~2017, respectively. Additionally, we incurred interest expense for related party notes payable~~Nine Months Ended September 30, 2023 section.

Adjusted EBITDA increased by $60 million compared to the prior year, mainly driven by increased volume and productivity, inflation pass-through net of ~~$0 million~~pricing, and ~~$1 million,~~favorable foreign exchange impacts. These increases in Adjusted EBITDA were partially offset by inflation on commodities, energy and ~~$2 million~~transportation and ~~$5 million for~~unfavorable product mix.

During the ~~three and~~ nine months ended September 30, ~~2018 and 2017, respectively.~~

~~Senior Credit Facilities~~

~~On September 27, 2018,~~2023, we entered into a Credit Agreement, by and among us, Garrett LX I S.à r.l., Garrett LX II S.à r.l. (“Lux Guarantor”), Garrett LX III S.à r.l. (“Lux Borrower”), Garrett Borrowing LLC (in such capacity, the “US Co-Borrower”), and Honeywell Technologies Sàrl (“Swiss Borrower” and, together with Lux Borrower and US Co-Borrower, the “Borrowers”), the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent (the “Credit Agreement”).

The Credit Agreement provides for senior secured financing of approximately the Euro equivalent of $1,254 million, consisting of (i) a seven-year senior secured first-lien term B loan facility, which consists of a tranche denominated in Euro of €375 million and a tranche denominated in U.S. Dollars of $425 million (the “Term B Facility”), (ii) five-year senior secured first-lien term A loan facility in an aggregate principal amount of €330 million (the “Term A Facility” and, together with the Term B Facility, the “Term Loan Facilities”) and (iii) a five-year senior secured first-lien revolving credit facility in an aggregate principal amount of €430 million with revolving loans to Swiss Borrower, to be made availablesaw customer demand increases across all product lines, in a ~~number of currencies~~less disruptive supply chain environment, as the industry recovered from the semiconductor shortages experienced in the prior year. Favorable impact from new product launches in gasoline, volume ramp-ups in commercial vehicles, and favorable aftermarket conditions including ~~Australian Dollars, Euros, Pounds Sterling, Swiss Francs, U.S. Dollars~~high demand for replacement parts, also contributed to Adjusted EBITDA during the period.

We maintained our focus on productivity in the current year as rising commodity prices led to higher raw material costs, particularly for nickel, aluminum and ~~Yen (the “Revolving Facility” and, together with the Term Loan Facilities, the “Senior Credit Facilities”). Each~~steel alloys. We recovered a majority of the ~~Revolving Facility~~increases from our customer pass-through agreements, especially for nickel, and continue to negotiate with our customers for further pass-through while actively managing our supply base and cost recovery mechanisms to minimize the ~~Term A Facility matures five years after the effective date~~impact of ~~the Credit Agreement,~~materials cost inflation. The increased productivity was partially offset by year-over-year labor inflation and increases in ~~each case with certain extension rights~~our SG&A expenses from higher incentive compensation expense.

R&D expenses increased $12 million reflecting continued investment in new technologies, including hiring, and year-over-year labor inflation.

Gains in foreign currency from translational, transactional and hedging effects in the ~~discretion of each lender. The Term B Facility matures seven years after the effective date of the Credit Agreement, with certain extension rights~~nine months ended September 30, 2023, primarily driven by lower Euro-to-US dollar exchange rates, also accounted for a $6 million increase in ~~the discretion of each lender.~~

~~The Senior Credit Facilities are subject~~Adjusted EBITDA.

Liquidity and Capital Resources

We employ several means to ~~an interest rate, at~~manage our option, of either (a) base rate determined by reference to the highest of (1) the rate of interest last quoted by The Wall Street Journal as the “prime rate” in the United States, (2) the greater of the federal funds effective rate and the overnight bank funding rate, plus 0.5% and (3) the one month adjusted LIBOR rate, plus 1% per annum (“ABR”), (b) an adjusted LIBOR rate (“LIBOR”) (which shall not be less than zero), or (c) an adjusted EURIBOR rate (“EURIBOR”) (which shall not be less than zero), in each case, plus an applicable margin. The applicable margin for the U.S. Dollar tranche of the Term B Facility is currently 2.50% per annum (for LIBOR loans) and 1.50% per annum (for ABR loans) while that for the euro tranche of the Term B Facility is currently 2.75% per annum (for EURIBOR loans). The applicable margin for each of the Term A Facility and the Revolving Credit Facility varies based on our leverage ratio. Accordingly, the interest rates for the Senior Credit Facilities will fluctuate during the term of the Credit Agreement based on changes in the ABR, LIBOR, EURIBOR or future changes in our leverage ratio. Interest payments with respect to the Term Loan Facilities are required either on a quarterly basis (for ABR loans) or at the end of each interest period (for LIBOR and EURIBOR loans) or, if the duration of the applicable interest period exceeds three months, then every three months.

We are obligated to make quarterly principal payments throughout the term of the Term Loan Facilities according to the amortization provisions in the Credit Agreement. Borrowings under the Credit Agreement are prepayable at our option without premium or penalty, subject to a 1.00% prepayment premium in connection with any repricing transaction with respect to the Term B Facility in the first six months after the effective date of the Credit Agreement. We may request to extend the maturity date of all or a portion of the Senior Credit Facilities subject to certain conditions customary for financings of this type. The Credit Agreement also contains certain mandatory prepayment provisions in the event that we incur certain types of indebtedness or receive net cash proceeds from certain non-ordinary course asset sales or other dispositions of property, in each case subject to terms and conditions customary for financings of this type.

~~The Credit Agreement contains certain affirmative and negative covenants customary for financings of this type that, among other things, limit our~~liquidity, and our ~~subsidiaries’ ability to incur additional indebtedness or liens, to dispose~~sources of ~~assets, to make certain fundamental changes, to enter into restrictive agreements, to make certain investments, loans, advances, guarantees~~financing include cash flows from operations, cash and ~~acquisitions, to prepay certain indebtedness and to pay dividends, to make other distributions or redemptions/ repurchases, in respect of the~~cash equivalents, our and our subsidiaries’ equity interests, to engage in transactions with affiliates, amend certain material documents or to permit the International Financial Reporting Standards equity amount of Lux Borrower to decrease below a certain amount. The Credit Agreement also contains financial covenants requiring the maintenance of a consolidated total leverage ratio of not greater than 4.25 to 1.00 (with step-downs to (i) 4.00 to 1.00 in approximately 2019, (ii) 3.75 to 1.00 in approximately 2020 and (iii) 3.50 to 1.00 in approximately 2021), and a consolidated interest coverage ratio of not less than 2.75 to 1.00

~~Senior Notes~~

On September 27, 2018, we completed the offering of €350 million (approximately $400 million) in aggregate principal amount of 5.125% senior notes due 2026 (the “Senior Notes”). The Senior Notes bear interest at a fixed annual interest rate of 5.125% and mature on October 15, 2026.

The Senior Notes were issued pursuant to an Indenture, dated September 27, 2018 (the “Indenture”), which, among other things and subject to certain limitations and exceptions, limits our ability and the ability of our restricted subsidiaries to: (i) incur, assume or guarantee additional indebtedness or issue certain disqualified equity interests and preferred shares, (ii) pay dividends or distributions on, or redeem or repurchase, capital stock and make other restricted payments, (iii) make investments, (iv) consummate certain asset sales or transfers, (v) engage in certain transactions with affiliates, (vi) grant or assume certain liens on assets to secure debt unless the

notes are secured equally and ratably (vii) restrict dividends and other payments by certain of their subsidiaries and (vii) consolidate, merge, sell or otherwise dispose of all or substantially all of our or our restricted subsidiaries’ assets.

~~Use of Proceeds from Senior Credit Facilities and Senior Notes~~

In connection with the consummation of the Spin-Off, Lux Borrower used all of the net proceeds of the Term B Facility to make three unsecured intercompany loans to Swiss Borrower. In addition, the subsidiary that issued the Senior Notes used all of the net proceeds of the Senior Notes to make a secured intercompany loan to Swiss Borrower. Swiss Borrower used the proceeds of the intercompany loans, as well as the net proceeds of the Term A Facility, which equal, in the aggregate, the Euro-equivalent of approximately $1.621 billion, to repay certain Euro-denominated intercompany notes to Honeywell or a subsidiary of Honeywell. We used a portion of the gross proceeds from the Term Loan Facilities, and Revolving Facility.


	September 30, 2023		December 31, 2022
	(Dollars in millions)
Cash and cash equivalents	$	162	$	246
Restricted cash	1		2
Revolving Facility - available borrowing capacity	570		475
Revolving Facility - borrowings or letters of credit outstanding	—		—
Term Loan Facilities - principal outstanding	1,677		1,186
Bilateral letter of credit facility - available capacity	3		1
Bilateral letter of credit facility - utilized capacity	12		14

On April 27, 2023, the ~~Senior Notes offering~~Company entered into the Third Amendment to the Credit Agreement, which provided for additional financing of $700 million through the 2023 Dollar Term Facility and an increase of $95 million in maximum borrowings available under the Revolving Facility. The proceeds from the 2023 Dollar Term Facility were primarily used to finance the repurchase of shares of Series A Preferred Stock from the C&O Investors as part of the Transaction, and pay fees ~~costs~~ and expenses incurred in connection with the ~~entry into~~Third Amendment. The 2023 Dollar Term Facility matures on April 30, 2028. Prior to maturity, the ~~Senior Credit Facilities and~~2023 Dollar Term Facility will be repaid quarterly in an amount equal to, during the ~~consummation~~first two years occurring after the Closing Date, 7.50% per annum of the ~~Senior Notes offering.~~

~~Future Liquidity~~

~~On a recurring basis, our primary future cash needs will be centered on operating activities, working capital, capital expenditures, asbestos~~aggregate principal amount, and ~~environmental compliance costs, and interest payments. Our ability to fund these needs will depend, in part,~~thereafter, 10.00% per annum. During the nine months ended September 30, 2023, we repaid $200 million on our ~~ability to generate or raise cash in the future, which is subject to general economic, financial, competitive, regulatory~~2023 Dollar Term Facility and ~~other factors that are beyond our control.~~

Following the separation from our Parent, our capital structure and sources of liquidity will change from its historical capital structure because we will no longer participate in Parent’s centralized cash management program. Our ability to fund our operating needs will depend$5 million on our ~~future ability to continue to generate positive cash flow from operations and raise cash in~~2021 Dollar Term Facility.

As previously disclosed, the capital markets. Based upon our history of generating strong cash flows, we believe will be able to meet our short-term liquidity needs for at least the next twelve months. We believe we will meet known or reasonably likely future cash requirements, through the combination of cash flows from operating activities, available cash balances and available borrowings through our debt agreements. We expect that our primary cash requirements in 2018 will primarily be to fund capital expenditures and to meet our obligation under the debt instruments and the Indemnification and Reimbursement Agreement described below, as well as the Tax Matters Agreement. If these sources of liquidity need to be augmented, additional cash requirements would likely be financed through the issuance of debt or equity securities; however, there can be no assurances that we will be able to obtain additional debt or equity financing on acceptable terms in the future.

~~Indemnification and Reimbursement Agreement~~

~~On September 12, 2018, we~~Company entered into the ~~Indemnification~~Agreements with the C&O Investors to repurchase certain shares and Reimbursement Agreement, under which we are required to make certain payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elementsconvert all remaining Series A Preferred Stock. As part of the ~~Business,~~Transaction, all holders of Series A Preferred Stock, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. Pursuant to the terms of the Indemnification and Reimbursement Agreement, we are responsible for paying to Honeywell such amounts, up to a cap ofC&O Investors, received an amount equal to the ~~Distribution Date Currency Exchange Rate (1.16977 USD = 1 EUR) equivalent~~Accumulated Dividends and Additional Amounts outstanding at repurchase or conversion date (each as defined in Note 15, Series A Preferred Stock of ~~$175 million (exclusive~~the Notes to the

Consolidated Interim Financial Statements). As of ~~any late payment fees)~~September 30, 2023, all Series A Preferred Stock had either been repurchased or converted and there are no accumulated unpaid dividends on the Series A Preferred Stock. Refer to Note 15, Series A Preferred Stockof the Notes to the Consolidated Interim Financial Statements for further details regarding the Transaction.

We expect to continue investing in ~~respect~~our facilities as we expand our manufacturing capacity for new product launches and invest in new technologies and strategic growth opportunities, in particular in the electrification of ~~such liabilities arising in any given calendar year. This Indemnification and Reimbursement Agreement may have material adverse effects on our liquidity and~~drivetrains. We believe the combination of expected cash flows, the term loan borrowings, and ~~on our results~~the Revolving Facility being committed until 2028, will provide us with adequate liquidity to support the Company's operations.

Share Repurchase Program

On November 16, 2021, the Board of ~~operations, regardless~~Directors authorized a $100 million share repurchase program for one year, providing for the purchase of ~~whether we experience a decline in net sales. See “We are subject to risks associated with~~shares of Series A Preferred Stock and Common Stock. On November 2, 2022, the ~~Indemnification and Reimbursement Agreement, pursuant to which we are required to make substantial cash payments to Honeywell, measured in substantial part by reference to estimates by Honeywell~~Board of ~~certain of its liabilities.” In addition,~~Directors authorized the ~~payments that we are required to make to Honeywell pursuant to the terms~~extension of the ~~Indemnification and Reimbursement Agreement will not be deductible for U.S. federal income tax purposes.~~

~~Tax Matters Agreement~~

share repurchase program to November 15, 2023. On ~~September~~April 12, ~~2018, we entered into a Tax Matters Agreement with Honeywell. The Tax Matters Agreement governs~~2023, the ~~respective rights, responsibilities and obligations~~Board of ~~Honeywell and us after~~Directors further authorized an increase in the ~~Spin-Off with respect to all tax matters (including tax liabilities, tax attributes, tax returns and tax contests).~~

The Tax Matters Agreement generally provides that we are responsible and will indemnify Honeywell for all taxes, including income taxes, sales taxes, VAT and payroll taxes, relating to Garrett for all periods, including periods prior to the completion datesize of the ~~Spin-Off. Among other items,~~share repurchase program to an aggregate amount of $250 million available as ~~a result~~ of that date.

As of September 30, 2023, the ~~mandatory transition tax imposed by the Tax Cuts and Jobs Act, one~~Company had repurchased $178 million of ~~our subsidiaries is required to make payments to a subsidiary of Honeywell in the amount representing the net tax liability of Honeywell~~

Common Stock, with $72 million remaining under the mandatory transition tax attributable to us, as determined by Honeywell. We currently estimate that our aggregate payments to Honeywell with respect to the mandatory transition tax will be $240 million. Under the termsshare repurchase program. For more information, see Item 2. Unregistered Sales of ~~the Tax Matters Agreement, we are required to pay this amount in Euros, without interest, in five annual installments, each equal to 8%~~Equity Securities and Use of the aggregate amount, followed by three additional annual installments equal to 15%, 20% and 25% of the aggregate amount, respectively. In addition, the Tax Matters Agreement addresses the allocation of liability for taxes incurred as a result of restructuring activities undertaken to effectuate the Spin-Off.

In addition, the Tax Matters Agreement provides that we are required to indemnify Honeywell for certain taxes (and reasonable expenses) resulting from the failure of the Spin-Off and related internal transactions to qualify for their intended tax treatment under U.S. federal, state and local income tax law, as well as foreign tax law.

The Tax Matters Agreement also imposes certain restrictions on us and our subsidiaries (including restrictions on share issuances, redemptions or repurchases, business combinations, sales of assets and similar transactions) that are designed to address compliance with Section 355 of the Internal Revenue Code of 1986, as amended, and are intended to preserve the tax-free nature of the Spin-Off.

Proceeds.

Cash Flow Summary

for the Nine Months Ended September 30, 2023


	For the Nine Months Ended September 30,							Nine Months Ended September 30,
	2018			2017				2023		2022
	(Dollars in millions)							(Dollars in millions)
Cash provided by (used for):							Cash provided by (used for):
Operating activities		240			234		Operating activities	$	330	$	238
Investing activities		225			5		Investing activities	(48)		(78)
Financing activities		(556	)		(181	)	Financing activities	(366)		(436)
Effect of exchange rate changes on cash		(12	)		10
Net increase (decrease) in cash and cash equivalents	$	(103	)	$	68
Effect of exchange rate changes on cash and restricted cash							Effect of exchange rate changes on cash and restricted cash	(1)		(27)
Net decrease in cash, cash equivalents and restricted cash							Net decrease in cash, cash equivalents and restricted cash	$	(85)	$	(303)

Cash provided by ~~operating~~operating activities increased by $6$92 million for the nine months ended September 30, ~~2018~~2023 versus the ~~same period last~~prior year. The increase was primarily ~~due to favorable~~driven by an increase of $49 million in net income, excluding the effects of non-cash items. Favorable impacts from working capital and other assets and liabilities of ~~$24~~$17 million and an$26 million, respectively, also contributed to the increase in ~~net income before deferred income taxes and foreign exchange of $23 million, which was partially offset by an unfavorable impact from Payables to related parties of $44 million.~~

~~Cash~~cash provided by operating activities.

Cash used for investing activities ~~increased~~decreased by ~~$220~~$30 million for the nine months ended September 30, ~~2018~~2023 versus the ~~same period last~~prior year ~~primarily~~ due to ~~favorable~~$21 million of decreased expenditures for property, plant and equipment and $9 million of cash settlement received on the re-couponing of our cross currency swap contracts which have been designated as net ~~cash impacts from marketable securities~~ investment ~~activities period over period~~hedges of ~~$300 million, partially offset by an increase in proceeds from related party notes receivables of $67 million.~~

our Euro-denominated operations.

Cash used for financing activities ~~increased~~decreased by ~~$375~~$70 million for the nine months ended September 30, ~~2018 versus~~2023 compared with the ~~same period last~~prior year. The change was primarily due to unfavorable impacts from changes in Invested deficit of $1,242 million, from related party notes payable of $494 million, and in net change related to cash pooling and short-term notes of $270 million period over period. These decreases are partially offset by the $1,631 million in proceeds from issuance of long-term debtCash flows for financing activities during the ~~three~~nine months ended September 30, ~~2018.~~

~~Seasonality~~

~~Our operations are directly~~2023 included $667 million from the 2023 Dollar Term Facility net of debt financing costs. We paid an aggregate amount of $605 million to holders of the Series A Preferred Stock related to the ~~seasonality experienced by~~Transaction, including the ~~automotive industry.~~conversion of the Series A Preferred Stock as discussed above and in Note 15, Series A Preferred Stock of the Notes to the Consolidated Interim Financial Statements. We ~~may experience seasonal variations in~~also made payments of $178 million for the ~~demand~~repurchase of Common Stock under our share repurchase program and debt repayments of $205 million including a $200 million early debt repayment of our 2023 Dollar Term Facility and quarterly payments for our ~~products~~2021 Dollar Term Facility. In comparison, cash used for financing activities for the nine months ended September 30, 2022 was primarily related to the ~~extent that OEM vehicle production fluctuates, such as during July, August~~Company's payment of $381 million for the final early redemption of our Series B Preferred Stock (exclusive of $28 million attributable to interest and ~~December when North America and Europe OEM plants may close for summer shutdowns and holiday periods. Shut-down periods~~included in ~~the rest of the world may vary by country.~~

~~Contractual Obligations and Probable Liability Payments~~

~~There have been no material changes to our contractual obligations~~cash from ~~those described in our Registration Statement on Form 10, except for our incurrence of obligations in respect of the Senior Credit Facilities and Senior Notes as described above.~~

operating activities).

We do not engage in any off-balance sheet financial arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies

The preparation of our ~~Combined~~Consolidated Interim Financial Statements in accordance with generally accepted accounting principles is based on the selection and application of accounting policies that require us to make significant estimates and assumptions about the effects of matters that are inherently uncertain. Actual results could differ from our estimates and assumptions, and any such differences could be material to our financial statements.Our critical accounting policies are summarized in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our ~~Registration Statement on~~2022 Form ~~10.~~ ~~As of September 30, 2018, there were no significant changes to any of our critical accounting policies.~~

10-K.

Recent Accounting Pronouncements

On January 1, 2018, we adopted new accounting guidance on revenue from contracts with customers, using the modified retrospective method applied to contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under that guidance, while prior period amounts are not adjusted and continue to be reported in accordance with the previous guidance.

See Note 4~~, Revenue Recognition and Contracts with Customers~~2, Summary of Significant Accounting Policies of the Notes to ~~Combined Interim Financial Statements for further details.~~

~~On January 1, 2018, we adopted a new accounting standard that resulted in~~ the ~~components of net periodic pension cost and net periodic postretirement benefit cost other than service costs to no longer be presented in Cost~~ ~~of products and services sold and Selling, general and administrative expenses, but to instead be presented within Non-operating~~ ~~(income) expense.~~

~~On September 27,~~2018, we early adopted the new accounting guidance contained in Accounting Standards Update 2017-12 on a modified retrospective approach. The new standard is intended to improve and simplify rules relating to hedge accounting, including the elimination of periodic hedge ineffectiveness, recognition of components excluded from hedge effectiveness assessment, the ability to elect to perform subsequent effectiveness assessments qualitatively, and other provisions designed to provide more transparency around the economics of a company’s hedging strategy.

~~See Note 2, Summary of Significant Accounting Policies of the Notes to Combined~~Consolidated Interim Financial Statements for further discussion of recent accounting pronouncements.

~~Other Matters~~

~~Litigation and Environmental Matters~~

~~See~~

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the ~~notes to~~Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the ~~Combined Interim Financial Statements for a discussion~~Securities Exchange Act of ~~environmental, asbestos~~1934, as amended (the “Exchange Act”). All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q, including without limitation statements regarding the following, are forward-looking statements: statements regarding our future results of operations and financial position, results of operations and financial position, expectations regarding the growth of the turbocharger and electric vehicle markets and other industry trends, the sufficiency of our cash and cash equivalents, anticipated sources and uses of cash, anticipated investments in our business, our business strategy, pending litigation, ~~matters.~~

anticipated interest expense, and the plans and objectives of management for future operations and capital expenditures are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including:

You should read this Quarterly Report on Form 10-Q and the documents that we reference herein completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Item 3. Quantitative and ~~Qualitati~~veQualitative Disclosures About Market ~~Risk.~~

~~Foreign Currency~~ Risk

We are exposed to market risks from changes in currency exchange rates. These exposures may impact future earnings and/or operating cash flows. Our exposure to market risk for changes in foreign currency exchange rates arises from international financing activities between subsidiaries, foreign currency denominated monetary assets and liabilities and transactions arising from international trade.

As part of Honeywell´s centralized treasury function, the primary objective was to preserve the U.S. Dollar value of foreign currency denominated cash flows and earnings. The historical treasury strategies implemented by Honeywell’s centralized treasury function may differ from our future treasury strategies as a standalone company.

We hedge currency exposures with natural offsets to the fullest extent possible and, once these opportunities have been exhausted, through foreign currency exchange forward contracts (foreign currency exchange contracts). We hedge monetary assets and liabilities denominated in non-functional currencies. Prior to conversion into U.S. dollars, these assets and liabilities are remeasured at spot exchange rates in effect on the balance sheet date. The effects of changes in spot rates are recognized in earnings and included in Non-operating (income) expense. Open foreign currency exchange contracts (excluding the below cross-currency swap) mature in the next two months. At September 30, 2018 and December 31, 2017, we had contracts with notional amounts of $812 million and $928 million, respectively, to exchange foreign currencies, principally the U.S. Dollar, Euro, Chinese Yuan, Japanese Yen, Mexican Peso, New Romanian Leu, Australian Dollars and Korean Won.

On September 27, 2018, the Company entered into a floating-floating cross-currency swap contract to hedge the foreign currency exposure from foreign currency-denominated debt. The contract is designated as a foreign currency fair value hedge for accounting purposes and will mature on September 27, 2025. Accordingly, the gain or loss on this derivative instrument is recognized in earnings and included in Non-operating (income) expense. The change in fair value of the cross-currency swap attributable to the cross-currency basis spread are excluded from the fair value hedge effectiveness assessment and are recorded separately within Currency Basis Reserve as a component of Accumulated Other Comprehensive Income. For the three and nine months ended September 30, 2018, gains recorded in Non-operating (income) expense, under the cross-currency swap contract were $13 million. Gains and losses attributable to the cross-currency basis spread of $3 million were deferred to Other Comprehensive Income for the period ended September 30, 2018. The balance of the cross-currency basis spread of $3 million is included in the carrying value of the cross-currency swap contract of $10 million - the application of fair value hedge accounting had no effect on the carrying value of the hedged liability.

Item 4. Controls and ~~Procedures.~~

Procedures

In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

As previously disclosed in our Registration Statement on Form 10, first filed with the SEC on August 23, 2018, in connection with preparing for the Spin-Off from Honeywell, a material weakness in internal control over financial reporting was identified in August 2018 related to the estimation in the liability for unasserted Bendix-related asbestos claims. Our financial statements in periods prior to the Spin-Off were derived from the consolidated financial statements and accounting records of Honeywell. In the course of preparing for the Spin-Off, Honeywell reassessed its accounting for unasserted Bendix-related asbestos claims to reflect the epidemiological projections through 2059 in its measurement of such liability. This matter also affected our financial statements included in the Form 10. As a result, our financial statements included in the Form 10 were restated as described in Note 1, and a material weakness in internal control over financial reporting was identified related to a deficiency of internal controls for the estimation of probable and reasonably estimable liability for unasserted Bendix-related asbestos claims.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, ~~evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness~~conducted an evaluation of our disclosure controls and procedures, ~~(as~~as such term is defined ~~in Rules~~under Rule 13a-15(e) ~~and 15d-15(e)~~promulgated under the Exchange ~~Act) and, as a result of the foregoing,~~Act. Based on management’s evaluation, our Chief Executive Officer and Chief Financial Officer concluded that ~~as of September 30, 2018,~~ our disclosure controls and procedures were ~~not~~ effective at the reasonable assurance ~~level.~~

We note that, during the period covered by this evaluation, the Company was still a part of Honeywell. For periods beginning on and after October 1, 2018 (the effective date of the Spin-Off from Honeywell), the Company’s combined financial statements will no longer reflect an estimated liability for resolution of pending and future asbestos-related and environmental liabilities. Instead, the combined financial statements for such periods will reflect the impact of the Indemnification and Reimbursement Agreement with Honeywell, under which we are required to make payments to Honeywell in amounts equal to 90% of Honeywell’s asbestos-related liability payments and accounts payable, primarily related to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities. Pursuant to the terms of this Indemnification and Reimbursement Agreement, we are responsible for paying to Honeywell such amounts, up to a cap of an amount equal to the Euro-to-U.S. dollar exchange rate determined by Honeywelllevel as of a date within two business days prior to the date of the Distribution (1.16977 USD = 1 EUR) equivalent of $175 million in respect of such liabilities arising in any given calendar year. See Note 1 Background and Basis of Presentation.

September 30, 2023.

There were no changes in ~~the Company’s~~our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended September 30, ~~2018~~2023 that have materially affected, or are reasonably likely to materially affect, ~~the Company’s~~our internal control over financial reporting.

Item 1. Legal ~~Proceedings.~~

Proceedings

We are involved in various lawsuits, claims and proceedings incident to the operation of our businesses, including those pertaining to product liability, product safety, environmental, safety and health, intellectual property, employment, commercial and contractual matters and various other matters. Although the outcome of any such lawsuit, claim or proceeding cannot be predicted with certainty and some may be disposed of unfavorably to us, we do not currently believe that such lawsuits, claims or proceedings will have a material adverse effect on our financial position, results of operations or cash flows. We accrue for potential liabilities in a manner consistent with accounting principles generally accepted in the United States. Accordingly, we accrue for a liability when it is probable that a liability has been incurred and the amount of the liability is reasonably estimable.

~~Additionally, in connection with~~

For additional information regarding our ~~entry into~~legal proceedings, see Note 20, Commitments and Contingenciesof the Indemnification and Reimbursement Agreement, we will be required to make payments to Honeywell for a certain amount of Honeywell’s asbestos-related liability payments and accounts payable, primarily relatedNotes to the Bendix business in the United States, as well as certain environmental-related liability payments and accounts payable and non-United States asbestos-related liability payments and accounts payable, in each case related to legacy elements of the Business, including the legal costs of defending and resolving such liabilities, less 90% of Honeywell’s net insurance receipts and, as may be applicable, certain other recoveries associated with such liabilities.

Consolidated Interim Financial Statements.

Item 1A. Risk ~~Factors.~~

Factors

There have been no material changes to the risks described under "Risk Factors” in our 2022 Form 10-K. In addition to the other information set forth in this ~~report,~~Quarterly Report on Form 10-Q, you should carefully consider the factors discussed under “Risk Factors” in our ~~Registration Statement on~~2022 Form ~~10, as amended and filed with the Securities and Exchange Commission on September 5, 2018~~10-K. These ~~factors~~factors could materially adversely affect our business, financial condition, ~~liquidity,~~or results of operations, ~~and capital position,~~ and could cause our actual results to differ materially from our historical results or the results contemplated by any forward-looking statements contained in this report.

Item 2. Unregistered Sales of Equity Securities and Use of ~~Proceeds.~~

~~None.~~

Proceeds

On November 16, 2021, the Board of Directors authorized a $100 million share repurchase program for one year, providing for the purchase of shares of Series A Preferred Stock and Common Stock. On November 2, 2022, the Board of Directors extended the duration of the share repurchase program to November 15, 2023. On April 12, 2023, the Board of Directors authorized a further increase in the size of the share repurchase program to an aggregate amount of $250 million as of that date.

The following table summarizes our share repurchase activity for the three months ended September 30, 2023 and additional information regarding our share repurchase program:

~~Delaware~~	~~82-4873189~~
Delaware		82-4873189
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

La Pièce 16, Rolle, Switzerland		1180
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	GTX	The Nasdaq Stock Market LLC

	~~Page~~
			Page
PART I.		FINANCIAL INFORMATION	2
Item 1.		Financial Statements (Unaudited)	4 2
		~~Combined~~Consolidated Interim Statements of Operations (Unaudited)	4 2
		~~Combined~~Consolidated Interim Statements of Comprehensive Income ~~(Loss)~~ (Unaudited)	5 3
		~~Combined~~Consolidated Interim Balance Sheets (Unaudited)	6 4
		~~Combined~~Consolidated Interim Statements of Cash Flows (Unaudited)	7 5
		Consolidated Interim Statements of Equity (Deficit) (Unaudited)	6
		Notes to ~~Unaudited Combined~~Consolidated Interim Financial Statements (Unaudited)	8 7
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	23 26
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	36 37
Item 4.		Controls and Procedures	37 38
PART II.		OTHER INFORMATION	39
Item 1.		Legal Proceedings	38 39
Item 1A.		Risk Factors	38 39
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds	38 39
Item 3.		Defaults Upon Senior Securities	38 39
Item 4.		Mine Safety Disclosures	38 39
Item 5.		Other Information	38 40
Item 6.		Exhibits	39 41
Signatures			41

☐
☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	September 30, 2018			December 31, 2017
	(Dollars in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	197		$	300
Accounts, notes and other receivables – net (Note 6)		762			745
Inventories – net (Note 7)		183			188
Due from related parties, current (Note 3)		—			530
Other current assets		43			321
Total current assets		1,185			2,084
Due from related parties, non-current (Note 3)		—			23
Investments and long-term receivables		37			38
Property, plant and equipment – net		422			442
Goodwill		193			193
Insurance recoveries for asbestos related liabilities (Note 12)		162			174
Deferred income taxes (Note 5)		228			41
Other assets		63			2
Total assets	$	2,290		$	2,997
LIABILITIES
Current liabilities:
Accounts payable	$	828		$	860
Due to related parties, current (Note 3)		98			1,117
Current maturities of long-term debt (Note 9)		28			—
Accrued liabilities (Note 8)		504			571
Total current liabilities		1,458			2,548
Long-term debt (Note 9)		1,577			—
Deferred income taxes (Note 5)		22			956
Asbestos related liabilities (Note 12)		1,516			1,527
Other liabilities		173			161
Total liabilities	$	4,746		$	5,192
COMMITMENTS AND CONTINGENCIES (Note 12)
EQUITY (DEFICIT)
Invested deficit		(2,464	)		(2,433	)
Accumulated other comprehensive income (Note 11)		8			238
Total deficit		(2,456	)		(2,195	)
Total liabilities and deficit	$	2,290		$	2,997

	For the Nine Months Ended September 30,
	2018			2017
	(Dollars in millions)
Cash flows from operating activities:
Net income	$	1,137		$	237
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Deferred income taxes		(908	)		—
Depreciation		53			47
Foreign exchange (gain) loss		10			(21	)
Stock compensation expense		16			12
Pension expense		7			7
Other		6			(2	)
Changes in assets and liabilities:
Accounts, notes and other receivables		(42	)		(34	)
Receivables from related parties		57			3
Inventories		(7	)		(37	)
Other assets		(2	)		—
Accounts payable		(6	)		(8	)
Payables to related parties		(50	)		(6	)
Accrued liabilities		(57	)		42
Asbestos related liabilities		1			(5	)
Other liabilities		25			(1	)
Net cash provided by (used for) operating activities		240			234
Cash flows from investing activities:
Expenditures for property, plant and equipment		(66	)		(56	)
Proceeds from related party notes receivables		—			67
Increase in marketable securities		(21	)		(540	)
Decrease in marketable securities		312			531
Other		—			3
Net cash provided by (used for) investing activities		225			5
Cash flows from financing activities:
Net increase (decrease) in Invested deficit		(1,493	)		(251	)
Proceeds from issuance of long-term debt		1,631			—
Payments of long-term debt		—			—
Proceeds related to related party notes payable		—			327
Payments related to related party notes payable		(493	)		(326	)
Net change related to cash pooling and short-term notes		(201	)		69
Net cash provided by (used for) financing activities		(556	)		(181	)
Effect of foreign exchange rate changes on cash and cash equivalents		(12	)		10
Net increase (decrease) in cash and cash equivalents		(103	)		68
Cash and cash equivalents at beginning of period		300			119
Cash and cash equivalents at end of period	$	197		$	187

	September 30, 2018		December 31, 2017
Cash pooling and short-term notes receivables	$	—	$	495
Other tax receivables from Parent		—		26
Receivables from related parties		—		8
Related party notes receivables, current		—		1
Foreign currency exchange contracts		—		—
	$	—	$	530

	September 30, 2018		December 31, 2017
Cash pooling and short-term notes payables	$	98	$	545
Related party notes payables, current		—		484
Payables to related parties		—		51
Foreign currency exchange contracts		—		37
	$	98	$	1,117

	December 31, 2017
	As reported			Adjustments		As adjusted
Combined Balance Sheet
Assets
Current assets:
Other current assets	$	321		$	7	$	328
Other assets		2			53		55

Liabilities
Non-current liabilities:
Deferred income taxes		956			6		962

Equity (Deficit)
Invested deficit		(2,433	)		54		(2,379	)


								Three Months Ended September 30, 2023								Three Months Ended September 30, 2022
	For the Three Months Ended September 30, 2018							OEM		Aftermarket		Other		Total		OEM		Aftermarket		Other		Total
	OEM		Aftermarket		Total			(Dollars in millions)
United States	$	89	$	40	$	129	United States	$	147	$	54	$	2	$	203	$	134	$	54	$	1	$	189
Europe		394		36		430	Europe	382		45		9		436		381		41		6		428
Asia		201		13		214	Asia	287		13		5		305		288		14		6		308
Other International		6		5		11
Other							Other	9		6		1		16		14		6		—		20
	$	690	$	94	$	784		$	825	$	118	$	17	$	960	$	817	$	115	$	13	$	945

								Nine Months Ended September 30, 2023								Nine Months Ended September 30, 2022
								OEM		Aftermarket		Other		Total		OEM		Aftermarket		Other		Total
								(Dollars in millions)
United States							United States	$	412	$	150	$	4	$	566	$	354	$	159	$	2	$	515
Europe							Europe	1,265		136		26		1,427		1,181		117		21		1,319
Asia							Asia	846		38		12		896		765		34		18		817
Other							Other	33		18		1		52		36		18		—		54
								$	2,556	$	342	$	43	$	2,941	$	2,336	$	328	$	41	$	2,705

	September 30, 2018		December 31, 2017
Asbestos-related liabilities	$	185	$	185
Customer pricing reserve		119		114
Compensation, benefit and other employee related		69		65
Repositioning		19		60
Product warranties and performance guarantees		26		28
Other taxes		5		22
Customer advances and deferred income^(a)		11		21
Other (primarily operating expenses)		70		76
	$	504	$	571

	Severance Costs			Exit Costs			Total
Balance at December 31, 2016	$	35		$	8		$	43
Charges		13			—			13
Usage—cash		(5	)		(2	)		(7	)
Foreign currency translation		4			—			4
Balance at September 30, 2017	$	47		$	6		$	53

	September 30, 2018
Term Loan A	$	382
Term Loan B		859
Senior Notes		406
		1,647
Less: current portion		(28	)
	$	1,619

	September 30, 2018
2018 (remaining)	$	7
2019		28
2020		32
2021		52
2022		71
Thereafter		1,457
	$	1,647
Less: current portion		(28	)
	$	1,619

	September 30, 2018
	Carrying Value		Fair Value
Long-term debt and related current maturities	$	1,605	$	1,647

	Foreign Exchange Translation Adjustment		Changes in Fair Value of Effective Cash Flow Hedges			Change in Currency Basis Reserve		Pension Adjustments			Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2016	$	212	$	42		$	—	$	(11	)	$	243
Other comprehensive income (loss) before reclassifications		46		(52	)		—		—			(6	)
Amounts reclassified from accumulated other comprehensive income (loss)		—		(13	)		—		—			(13	)
Net current period other comprehensive income (loss)		46		(65	)		—		—			(19	)
Balance at September 30, 2017	$	258	$	(23	)	$	—	$	(11	)	$	224

	Nine Months Ended September 30, 2018
	Bendix			Other			Total
Beginning of the period	$	1,703		$	9		$	1,712
Accrual for update to estimated liabilities		141			—			141
Asbestos related liability payments		(151	)		(1	)		(152	)
End of the period	$	1,693		$	8		$	1,701

	Nine Months Ended September 30, 2018
	Bendix
Beginning of the period	$	191
Probable insurance recoveries related to estimated liability		10
Insurance receipts for asbestos related liabilities		(24	)
Insurance receivables settlements		1
End of the period	$	178

	Nine Months Ended September 30,			Years Ended December 31,
Claims Activity	2018			2017			2016
Claims Unresolved at the beginning of the period		6,280			7,724			7,779
Claims Filed		1,895			2,645			2,830
Claims Resolved		(2,088	)		(4,089	)		(2,885	)
Claims Unresolved at the end of the period		6,087			6,280			7,724

	Nine Months Ended September 30,		Years Ended December 31,
Disease Distribution of Unresolved Claims	2018		2017		2016
Mesothelioma and Other Cancer Claims		2,868		3,062		3,490
Nonmalignant Claims		3,219		3,218		4,234
Total Claims		6,087		6,280		7,724

	Years Ended December 31,
	2017		2016		2015		2014		2013
	(in whole dollars)
Malignant claims	$	56,000	$	44,000	$	44,000	$	53,500	$	51,000
Nonmalignant claims	$	2,800	$	4,485	$	100	$	120	$	850


Period	Total Number of Common Shares Purchased	Average Price Paid per Share		Total Number of Preferred Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan or Program
July 1, 2023 - July 31, 2023	9,001,214	$	7.44	—	$	—	9,001,214	$	166,403,263
August 1, 2023 - August 31, 2023	12,000,000	7.70		—	—		12,000,000	74,003,263
September 1, 2023 - September 30, 2023	235,695	7.70		—	—		235,695	72,189,441
Total	21,236,909	$	7.59	—	$	—	21,236,909	$	72,189,441

		Incorporated by Reference
Exhibit Number	Description	Form	File No.	Exhibit	Filing Date	Filed/ Furnished Herewith
2.1+	Indemnification and Reimbursement Agreement, dated September 12, 2018, by and among Honeywell ASASCO Inc., Honeywell ASASCO 2 Inc., and Honeywell International Inc.	8-K	001-38636	2.1	9/14/2018
2.2+	Tax Matters Agreement, dated September 12, 2018, by and between Honeywell International Inc., Garrett Motion Inc., and, solely for purposes of Section 3.02(g), 5.05 and 6.13(b), Honeywell ASASCO Inc. and Honeywell ASASCO 2 Inc.	8-K	001-38636	2.2	9/14/2018
2.3+	Separation and Distribution Agreement, dated September 27, 2018, between Honeywell and Garrett	8-K	001-38636	2.1	10/1/2018
2.4+	Transition Services Agreement, dated September 27, 2018, between Honeywell and Garrett Transportation I Inc.	8-K	001-28636	2.2	10/1/2018
2.5+	Employee Matters Agreement, dated September 27, 2018, between Honeywell and Garrett	8-K	001-28636	2.3	10/1/2018
2.6+	Intellectual Property Agreement, dated September 27, 2018, between Honeywell and Garrett	8-K	001-28636	2.4	10/1/2018
2.7+	Trademark License Agreement, dated September 27, 2018, between Honeywell and Garrett	8-K	001-28636	2.5	10/1/2018
3.1	Amended and Restated Certificate of Incorporation of Garrett Motion Inc.	S-8	333-227619	4.1	10/1/2018
3.2	Amended and Restated By-laws of Garrett Motion Inc.	8-K	333-227619	4.2	10/1/2018
4.1	Indenture, dated as of September 27, 2018, between Garrett LX I S.à r.l, Garrett Borrowing LLC, the Company, the guarantors named therein, Deutsche Trustee Company Limited, as Trustee, Deutsche Bank AG, London Branch, as Security Agent and Paying Agent, and Deutsche Bank Luxembourg S.A., as Registrar and Transfer Agent	8-K	001-38636	4.1	10/1/2018
10.1	Credit Agreement, dated as of September 27, 2018, by and among the Company, Garrett LX I S.à r.l., Garrett LX II S.à r.l., Garrett LX III S.à r.l., Garrett Borrowing LLC, and Honeywell Technologies Sàrl, the Lenders and Issuing Banks party hereto and JPMorgan Chase Bank, N.A., as administrative agent.	8-K	001-38636	10.1	10/1/2018
10.2	Intercreditor Agreement, dated as of September 27, 2018, among Garrett Motion Inc., Garrett LX I S.à r.l, Garrett LX II S.à r.l, Garrett LX III S.à r.l, Honeywell Technologies Sàrl, Garrett Borrowing LLC, other debtors and grantors party thereto, JPMorgan Chase Bank, N.A., Deutsche Trust Company Limited, Deutsche Bank AG, London Branch, other lenders party thereto from time to time, Honeywell ASASCO 2 Inc., and each additional representative from time to time party thereto	8-K	001-38636	10.2	10/1/2018
10.3	2018 Stock Incentive Plan of Garrett Motion Inc. and its Affiliates	S-8	333-227619	4.3	10/1/2018
10.4	2018 Stock Plan for Non-Employee Directors of Garrett Motion Inc.	S-8	333-227619	4.4	10/1/2018
10.5	2018 Stock Incentive Plan of Garrett Motion Inc. and its Affiliates Form of Stock Option Award Agreement	S-8	333-227619	4.5	10/1/2018
10.6	2018 Stock Incentive Plan of Garrett Motion Inc. and its Affiliates Form of Restricted Stock Unit Agreement	S-8	333-227619	4.6	10/1/2018
10.7	2018 Stock Incentive Plan of Garrett Motion Inc. and its Affiliates Form of Restricted Stock Unit Agreement (for replacement awards)	S-8	333-227619	4.7	10/1/2018
10.8	2018 Stock Incentive Plan of Garrett Motion Inc. and its Affiliates Form of Performance Stock Unit Agreement	S-8	333-227619	4.8	10/1/2018
10.9	2018 Stock Incentive Plan of Garrett Motion Inc. and its Affiliates Form of Performance Unit Agreement	S-8	333-227619	4.9	10/1/2018
10.10	2018 Stock Plan for Non-Employee Directors of Garrett Motion Inc. Form of Stock Option Award Agreement	S-8	333-227619	4.10	10/1/2018

+	Certain schedules (and similar attachments) to these exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish copies of any of the omitted schedules and similar attachments upon request by the SEC.
**		Furnished herewith.
†		Management contract or compensatory plan or arrangement.


	Garrett Motion Inc.

Date: ~~November 6, 2018~~ October 24, 2023	By:	~~By:~~	/s/ Olivier Rabiller
			Olivier Rabiller
			President and Chief Executive Officer

Date: ~~November 6, 2018~~ October 24, 2023	By:	~~By:~~	/s/ ~~Alessandro Gili~~ Sean Deason
			~~Alessandro Gili~~ Sean Deason
			Senior Vice President and Chief Financial Officer