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Item 1. Business

2024-02-15 compared with 2023-02-14 · 142 added, 218 removed, 158 unchanged (69% of the section changed)

Garrett designs, manufactures and sells highly engineered turbocharger and electric-boosting technologies for light and commercial vehicle original equipment manufacturers (“OEMs”) and the 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 for internal combustion engines ("ICE") using gasoline, diesel, natural gas and electrified powertrains (hybrid and fuel cell).

Additionally, we are currently in the development stage of turbochargers for internal combustion engines using hydrogen as fuel and other highly engineered components for zero emission vehicles.

These products are key enablers for fuel (and/or energy) economy and emissions standards compliance.

The turbocharger industry is expected to increase from approximately 46 million units in 2022 to approximately 48 million units by 2024, then gradually plateau and drop to approximately 41 million units by 2028, according to S&P ("S&P", formerly IHS) for light vehicles and Knibb, Gormezano and Partners ("KGP") and Power Systems Research ("PSR") for on-highway and off-highway commercial vehicles.

The turbocharger industry growth is mainly driven in the short and medium term by an expected increase in the penetration of hybrid vehicles, from approximately 13 million hybrid cars globally in 2022 to an anticipated 29 million hybrid cars globally in 2026.

In 2022, a significant increase in battery electric vehicle (“BEV”) production has been observed in Europe and China, with BEV representing, respectively, 8% and 18% of light vehicles produced.

In China, renewed sales incentives, especially in Tier 2 and Tier 3 cities, as well as non-financial incentives such as more generous license-plate quotas for major metropolitan areas, have b olstered Chinese BEV penetration.

In the long-term, the proposal in the European Union ("E.U.") for all new cars to be zero-emission at tail pipe by 2035, as well as local regulations, could drive a further increase of BEV penetration in Europe beyond currently forecasted levels.

In the United States of America ("US" or "United States"), the tightening of CO2/mileage targets is expected to drive higher turbo penetration in the short to medium-term.

The President of the United States signed an executive order with the goal of making half of all new vehicles sold in 2030 zero-emissions vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles, which is expected to accelerate the electrification trend in the mid-to-long term .

Garrett's portfolio for hybrid powertrains includes new electric boosting solutions that leverage our unique technologies for electrical high speed boosting machinery.

Garrett's product portfolio also includes fuel cell compressors for which we are developing the third generation.

We are well positioned to take advantage of growing opportunities especially in the application of commercial vehicles.

In China, the roadmap released by the China Society of Automotive Engineers, Energy-saving and New Energy Vehicle Technology Roadmap 2.0 , outlines a technology path for the next ten years that aims to find a balance between fuel consumption improvement for hybrids and the introduction of electric vehicles.

In that context, the turbocharger industry is expected to keep contributing to fuel economy optimization of gasoline, diesel vehicles and hybrid vehicles.

In the short to medium term, we continue to believe that turbocharger demand will grow as turbochargers remain one of the most cost-efficient levers to improve the fuel efficiency of gasoline, diesel and hybrid vehicles.

In 2021, Garrett won the prestigious Automotive News PACE™ award for the industry's first E-turbo that successfully launched in 2022.

The unique high speed electric motor technology developed for this product came from Garrett's fuel cell compressors that are required by fuel cell vehicles.

Additionally, this technology also offers opportunities for new products to support all types of electrified drivetrains.

In the commercial vehicle industry, we expect a slower transition to BEVs due to the requirements of specific applications and associated range and charging time constraints, which translates into more resilient turbocharger demand, as most commercial vehicles are turbocharged.

In addition, low or zero emission alternative fuels for ICE, like natural gas or hydrogen, are expected to gain momentum in coming years, supporting continued turbocharger demand.

Growth in the turbocharger industry is expected globally, with special mention for high-growth regions in Asia, where rising income levels continue to drive long-term automotive demand.

While these positive factors do not isolate the turbocharger industry from fluctuations in global vehicle production volumes, such factors may assist in mitigating the negative impact of macroeconomic cycles.

In addition, approximately 30% of our revenue comes from commercial vehicle and aftermarket sales that are less sensitive to the trend of electrification.

Emergence from Chapter 11

On September 20, 2020 (the “Petition Date”), the Company and certain of its subsidiaries (collectively, the “Debtors”) each filed a voluntary petition for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”).

Debtors’ chapter 11 cases (the “Chapter 11 Cases”) were jointly administered under the caption “In re:

Garrett Motion Inc., 20-12212.” On April 20, 2021, the Debtors filed the Revised Amended Plan of Reorganization (the “Plan”).

On April 26, 2021, the Bankruptcy Court entered an order (the “Confirmation Order”) among other things, confirming the Plan.

On April 30, 2021 (the “Effective Date”), the conditions to the effectiveness of the Plan were satisfied or waived and the Company emerged from bankruptcy (the "Emergence").

Macroeconomic disruptions

The automotive industry continues to be impacted by uncertainty due to worldwide semiconductor shortages, the Covid-19 pandemic, governmental responses to the pandemic including the lockdown measures in China, and geopolitical tensions.

The semiconductor shortage is expected to continue into 2023 although to a lesser extent compared to the previous year, and production levels may be reduced further should Covid-related lockdown measures persist or extend.

The evolution of geopolitical conflicts and the consequent energy shortage in Europe, especially during the winter season, may further expose supply related challenges for the automotive industry while adding inflationary pressure and triggering recessionary scenarios.

The Company continues to review production levels at OEM plants and closely monitor supply-chain disruptions related to logistics and component shortages in order to minimize the impact of the bottleneck in supply and mitigate any potential disruption in production.

Additionally, we have in place procedures for the monitoring of supplier risks and we believe we have substantially addressed such risks with manageable economic impacts including use of premium freight or adjusted payment terms that are limited in time.

We have prepared contingency plans for multiple scenarios that we believe will allow us to react swiftly to changes in customer demand while protecting Garrett’s long-term growth potential.

See "- Risks Relating to our Business - Volatility in the cost and availability of raw materials, components, energy and transportation, in addition to disruptions in the supply chain, including supplier insolvency, has increased, and may continue to increase, the cost of our products and services, and may impact our ability to meet commitments to customers and cause us to incur significant liabilities." - in Item 1A - Risk Factors of this Annual Report.

Analyst consensus for the full year 2022 estimates growth of approximately 6% in global light vehicle production and approximately 15% drop in commercial vehicle production.

As for the turbocharger industry, a 5% increase for the combined light and commercial vehicle turbocharger industry volume occurred in 2022.

In 2023, 4% growth is expected by S&P for light vehicle production, and commercial vehicles are expected by KGP and PSR to grow at 5%.

We have prepared contingency plans for multiple scenarios that we believe will allow us to react swiftly to changes in customer demand while protecting Garrett’s long-term growth potential.

The supplies needed for our operations were generally available throughout 2022.

In limited circumstances, certain suppliers experienced financial distress during 2022, resulting in supply disruptions.

However, we had implemented new procedures in 2021 for monitoring of supplier risks associated with Covid-19 and we believe we have substantially addressed such risks with manageable economic impacts including use of premium freight or adjusted payment terms that are limited in time.

As the global supply chain restarts, it is possible that additional supply constraints will appear for the industry.

In addition, we sustained cost control measures and cash management actions in 2022 including:

• Postponing capital expenditures;

• Optimizing working capital requirements;

• Lowering discretionary spending;

• Flexing organizational costs by implementing short-term working schemes;

• Reducing temporary workforce and contract service workers;

• Restricting external hiring.

The following charts show our percentage of revenues by geographic region and product line for the years ended December 31, 2022, 2021 and 2020, and the percentage changes from the prior years.

Revenue Summary

North America Europe Asia Other

• We are a global business that generated revenues of approximately $3.6 billion in 2022.

• In 2022, our OEM sales contributed approximately 86% of our revenues while our aftermarket and other products contributed 14%.

• Amongst OEM sales, light vehicle products (products for passenger cars, SUVs, light trucks, and other products) accounted for approximately 78% of our revenues.

Commercial vehicle products (products for on-highway trucks and off-highway trucks, construction, agriculture and power-generation machines) accounted for 22%.

• Approximately 48% of our 2022 revenues came from sales shipped from Europe, 31% from sales shipped from Asia and 19% from sales shipped from North America.

For more information, see Note 27, Concentrations, of the Notes to our Consolidated Financial Statements.

We currently compete in the global turbocharger industry for gasoline, diesel and natural gas engines, in the electric-boosting industry for electrified (hybrid and fuel cell) vehicle powertrains and in the emerging connected vehicle software industry.

As vehicles become more electrified, our electric-boosting products use principles similar to our turbochargers to further optimize air intake and thus further enhance performance, fuel economy and exhaust emissions with the help of an integrated high-speed electric motor.

By using a turbocharger or electric-boosting technology, an OEM can deploy smaller, lighter powertrains with better fuel economy and exhaust emissions while delivering the same power and acceleration as larger, heavier powertrains.

As such, turbochargers have become one of the most highly effective technologies for helping global OEMs meet increasingly stricter emission standards.

At the same time, we have developed unique technological competencies, which we aim to continue leveraging to solve our customers’ energy related challenges in the electrification evolution related to ICE, hybrids and electric powertrains.

We are developing solutions and increasing our research and development ("R&D") spend, focusing more than 50% of total R&D expenditure in 2023 on electrification technologies like fuel cell compressors for a broad range of stack power (40kW to 250kW) and high value electric vehicle components.

We are also continuing to develop Model Predictive Controls ("MPC") algorithms and cybersecurity software solutions that leverage our knowledge of vehicle powertrains and experience working closely with OEM manufacturers.

Global Turbocharger Industry

The global turbocharger industry includes turbochargers for new light and commercial vehicles as well as turbochargers for replacement use in the global aftermarket.

According to S&P, KGP and PSR, the global turbocharger industry consisted of approximately 46 million turbocharged vehicles with an estimated total value of approximately $10 billion in 2022.

Within the global turbocharger industry in 2022, light vehicles accounted for approximately 86% of total unit volume and commercial vehicles accounted for the remaining 14%.

S&P, KGP and PSR project that the turbocharger production volume will peak in 2024 and return to 2022 levels by 2026, driven mainly by turbochargers for light vehicle gasoline engines and continued slow growth for commercial vehicles, offset by a decline in diesel turbochargers given a decline in diesel powertrains, particularly for light vehicles.

This annual sales estimate would add 230 million new turbocharged vehicles on the road globally between 2023 and 2027.

Garrett is a cutting-edge technology leader delivering differentiated solutions for emission reduction and energy efficiency.

We design, manufacture and sell highly engineered turbocharging, air and fluid compression, and high-speed electric motor technologies for original equipment manufacturers ("OEMs") and distributors within the mobility and industrial space.

We have significant expertise in delivering products at scale for internal combustion engines ("ICE") using gasoline, diesel, natural gas and hydrogen, as well as for zero emission technologies using hydrogen fuel cell systems, both for mobility and industrial use.

As our customers continue to progress on electrification, we are applying our technological pillars to develop highly engineered E-Powertrain and E-Cooling compressor products to support their ambition.

These products are key enablers for fuel economy, energy efficiency, thermal management, and compliance with emissions standards and overall greenhouse gas and other emission reduction targets.

Our growth strategy in zero emission technologies is to focus on solving OEMs' pain points with existing technologies and bring differentiated technologies for traction (E-Powertrain) and thermal management (E-Cooling compressor), leveraging a unique set of technology pillars that are hard to replicate by competitors like high-speed motors and power electronics, controls software, oil-less bearings and system integration.

These technology pillars have been developed by Garrett over the past decade and require significant and sustained research and development ("R&D") investments, resulting in the successful launch of E-Boosting and fuel cell compressor applications.

They bring unique features to our offerings in terms of energy efficiency, lower weight and packaging requirements that are highly valued by our customers.

We provide cutting-edge technology for the mobility and industrial space, including light vehicles, commercial vehicles and industrial applications.

Our products include mechanical and electrical products for turbocharging and boosting internal combustion engines, as well as compressing air for fuel cell compressors, and compressing refrigerant for electric cooling compressors.

As of 2023, our primary source of sales is associated with the global turbocharger industry for gasoline, diesel and natural gas engines across light vehicle, commercial vehicle and industrial applications.

Sales also come from E-Boosting solutions and hydrogen fuel cell compression solutions, already manufactured at scale.

We are developing solutions and increasing our research and development (“R&D”) spend, focusing more than 50% of total R&D expenditure in 2024 on technologies for electrification including zero emission technologies, fuel cell compressors for a broad range of cell stack power (40kW to 250kW) and high value electric vehicle components including E-Powertrain and E-Cooling Compressor technologies.

Key trends affecting our industry

Current global economic conditions due to Covid-19 and geopolitical conflicts have adversely affected and may continue to adversely affect many industries including the automotive sector.

Chip shortages and rising raw material prices and inflation also had significant impacts on the automotive industry, making it unable to serve the recovery in demand.

Consequently, S&P reduced its light vehicle production volume forecast for 2023 from approximately 91 million units that they forecasted in 2021 to between 80 to 88 million units in their January 2023 light vehicle industry production volume forecast.

Current global economic conditions due to geopolitical conflicts, high inflation in Europe and China's slow pace of recovery, all have adversely affected and may continue to adversely affect many industries including the automotive sector.

Growth in overall vehicle production

After an increase of 3% in light vehicle production and 1% in commercial vehicle production in 2021, a stronger growth was expected in 2022.

However, supply chain disruptions, driven by shortages in semiconductors and the continuous impact of Covid-19 particularly in China, affected vehicle production in 2022 resulting in flat volumes versus 2021.

For 2023, S&P, KGP and PSR expect limited growth in light vehicle production and growth in commercial vehicle production of approximately 6%.

However, significant uncertainty level remains with further Covid-19 waves, continued supply chain disruptions and geopolitical tensions.

Light vehicle production increased 9% in 2023, compared to prior year.

Commercial vehicle production remained steady in 2023 while the on-highway segment increased 12%, and the off-highway sector decreased by 7%.

For 2024, S&P and KGP expect an overall drop of approximately 1% in the automotive (light vehicle and commercial vehicle) industry.

Moreover, significant uncertainty remains on global economic growth, with some supply chain disruptions, geopolitical tensions, and China facing low inflation and job market deterioration.

The shift from pure gasoline and diesel ICE to hybridized powertrains is expected to continue in response to increasingly strict fuel efficiency and regulatory standards.

In parallel, the share of pure electric vehicles is expected to continue to increase from a low base as technology and supporting infrastructure continue to improve.

parallel, the share of pure electric vehicles is expected to continue to increase, with short-term dynamics such as China's economic slow down, significant vehicle price gaps between gasoline and ICE-powered vehicles, and slower than planned charging infrastructure, limiting the pace of adoption.

Global vehicle fuel efficiency and emissions standards

OEMs are facing increasingly strict constraints for vehicle fuel efficiency and emissions standards globally.

Regulatory authorities in key vehicle regions such as the United States, the European Union, China, Japan, and Korea have instituted regulations that require sustained and significant reductions in greenhouse gas (including CO2 and NOx) and particulate matter vehicle emissions.

Regulatory authorities in key regions such as the United States, the European Union, China, Japan, and Korea have instituted regulations that require sustained and significant reductions in greenhouse gas (including CO2 and NOx) and particulate matter vehicle emissions.

OEMs are required to evaluate and adopt various solutions to address these stricter standards.

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This combustion optimization is critical to engine efficiency, exhaust emissions, power and transient response and enables such concepts as exhaust gas recirculation for diesel engines and Miller-cycle operation for gasoline engines.

Consequently, we believe turbocharging will continue to be

a key technology for automakers to meet future tough fuel economy and emissions standards without sacrificing performance.

Consequently, we believe turbocharging will continue to be a key technology for automakers to meet future tough fuel economy and emissions standards without sacrificing performance.

Turbocharger penetration

The utilization of turbochargers and electric-boosting technologies on vehicle powertrain systems is one of the most cost-effective solutions to address stricter standards, and OEMs are increasing their adoption of these technologies.

S&P, KGP and PSR expect total turbocharger penetration to increase globally from approximately 46 million units in 2022 to approximately 48 million units by 2024;

after this year, the turbocharger penetration will plateau then start decreasing based on current expectations on hybrid solutions adopted by different OEMs, reaching the same volumes from 2022 in 2026.

S&P forecasts turbocharger penetration growth for gasoline turbochargers, expecting an increase in light vehicles from approximately 47% in 2022 to 51% in 2025.

Total turbocharger production increased globally from approximately 46 million units in 2022 to 50 million units in 2023 and is expected to decrease from 2024 onward based on current expectations of electric vehicle penetration, gradually decreasing to 2022 volume levels by 2026.

S&P forecasts turbocharger penetration on ICE-based powertrains to grow in light vehicles from 52% in 2021 to approximately 57% in 2025 and to then come back to approximately 51% in 2030.

Medium-Term Powertrain Trends

Note - Years 2020 - 2022 represent actual data and years 2023 - 2027 represent forecasted data.

S&P, KGP, PSR

Engine size and complexity .

In order to address stricter fuel economy standards, OEMs have used turbochargers to reduce the average engine size on their vehicles over time without compromising performance.

Stricter pollutants emissions standards (primarily for NOx and particulates) have driven higher turbocharger adoption as well, which we believe will continue in the future, with a predicted total automotive turbocharger production volume CAGR of 1% between 2022 and 2025, in an industry with a predicted total automobile production volume CAGR of approximately 3% over the same period, in each case according to S&P, KGP and PSR.

Electrification .

To address stricter fuel economy standards, OEMs also have been increasing the electrification of their vehicle offerings, primarily with the addition of hybrid vehicles, which have powertrains equipped with a gasoline or diesel internal combustion engine in combination with an electric motor.

Years 2021 - 2023 represent actual data and years 2024 - 2028 represent forecasted data.

Electrification and hybrids

In order to address stricter fuel economy standards, OEMs also have been increasing the electrification of their vehicle offerings, primarily with the addition of hybrid powertrains equipped with a gasoline or diesel internal combustion engine in combination with an electric motor.

S&P estimates that hybrid vehicles produced globally will grow from a total of approximately 17 million vehicles in 2023 to 27 million vehicles by 2027, representing a CAGR of 12%.

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Furthermore, the application of electric boosting extends the requirement for engineering collaboration with OEMs to include electrical integration, software controls, and advanced sensing.

Overall, this move to electric boosting further increases the role and value of turbocharging in improving vehicle fuel economy and exhaust emissions.

Overall, the move to electric boosting further increases the role and value of turbocharging by improving vehicle fuel economy and reducing exhaust emissions.

Battery electric and fuel cell technologies

OEMs are investing in full BEVs to comply with increasingly tight regulatory targets across regions.

S&P, KGP and PSR expect that BEVs will compose 26% of total light and commercial vehicle production globally by 2026.

OEMs are investing in full battery electric vehicles ("BEV"s) to comply with increasingly tight regulatory targets across regions.

S&P and KGP expect that BEVs will compose 26% of total light and commercial vehicle production globally by 2026.

Consumer adoption hinges on future "cost of range", tightly linked to the energy capacity of the battery, but also how well that energy is used.

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The hydrogen fuel cell also requires advanced electric-boosting technology to run efficiently and optimize range and cost of ownership.

We are investing to address selected challenges raised by the electrification trend, where our differentiated technology can bring benefits related to lighter, more compact and more energy efficient components for electric vehicles.

Connected vehicles, software and controls.

In addition to powertrain evolution, the connected vehicle industry is growing rapidly.

Our MPC algorithms, predictive maintenance, diagnostics and cybersecurity tools address this industry.

We expect their adoption will increase as advanced driver assistance features increase requirements for vehicle functional safety.

Simultaneously, our cybersecurity solutions protect those vehicles against outside interference to ensure correct functionality.

Vehicle ownership in China, India and other high-growth regions.

Vehicle ownership in China, India and other emerging regions remains well below ownership levels in developed areas and will be a key driver of future vehicle production.

At the same time, these regions are following the lead of developed countries by instituting stricter emission standards.

Growth in production volume and greater penetration by large global OEMs in these regions, along with evolving emission standards and increasing fuel economy and vehicle performance demands, is driving increasing turbocharger penetration in high-growth regions.

Our Competitive Strengths

We believe that we differentiate ourselves through the following competitive strengths:

Global and broad industry leadership

We are investing to address selected opportunities, raised by the electrification trend, where our differentiated technology can bring benefits related to lighter, more compact and more energy efficient components for electric vehicles.

We are a global leader in the $11 billion OEM turbocharger industry.

We believe we will continue to benefit from the increased adoption of turbochargers, as well as our global technology leadership, comprehensive portfolio, continuous product innovation and our deep-seated relationships with all global OEMs.

Light Vehicles

We believe we will continue to benefit from global technology leadership in the turbocharger industry through our deep-seated relationships with all global OEMs.

Continuous product innovation to bring innovative and differentiated technologies for electric vehicles (E-Powertrain and E-Cooling compressors), fuel cell compressors and solutions beyond automotive are the new challenges we are embracing and pursuing.

Internal combustion light vehicle products

The global adoption of turbochargers by OEMs on gasoline engines has increased rapidly from approximately 14% in 2013 to approximately 48% in 2023 and is forecasted by S&P to increase to 51% by 2025.

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In 2016, we launched our first high volume VNT gasoline application, and this technology is expected to experience increased adoption in years to come.

According to forecast by S&P, VNT should represent 10% of global turbo gasoline production by 2027, with 25% in Europe and 18% in China.

In 2028, forecasted penetration maintains the same at a global level, with 25% in Europe and 19% in China.

A key to our strategy for gasoline growth is thus to leverage our technology strengths in high-temperature materials and variable geometry as well as our scale, global footprint and in-market capabilities to meet the volume on technology demands of global OEMs.

According to a forecast by S&P, VNT represented 24% of global turbo gasoline production in 2023, reaching 36% by 2028.

A key to our strategy for gasoline growth is thus to leverage our technological leadership in high-temperature materials and variable geometry, as well as our scale, global footprint and in-market capabilities to meet the volume of technological demands of global OEMs.

We have a long history of technology leadership in diesel engine turbochargers.

Despite diesel industry weakness for some vehicle segments, the majority of our diesel turbochargers revenue comes from heavier and bigger vehicles like SUVs, pickup trucks and light commercial vehicles (such as delivery vans), which remain a stable part of the diesel industry.

Diesel maintains a unique advantage in terms of fuel consumption, hence cost of ownership, and towing capacity makes it the powertrain of choice for heavier vehicle applications.

Despite the diesel industry's weakness for some vehicle segments, the majority of our diesel turbocharger revenues come from heavier and bigger vehicles like SUVs, pickup trucks and light commercial vehicles (such as delivery vans), which remain a stable part of the diesel industry.

Diesel maintains a unique advantage in terms of fuel consumption, cost of ownership, and towing capacity which makes it the powertrain of choice for heavier vehicle applications.

Diesel also remains essential for OEMs to meet their CO2 fleet average regulatory target going forward, as diesel vehicles produce less CO2 on average than gasoline vehicles.

• Electrified vehicles:

We provide a comprehensive portfolio of turbocharger and electric-boosting technologies to manufacturers of hybrid-electric and fuel cell vehicles.

OEMs have increased their adoption of these

electrified technologies given regulatory standards and consumer demands driving an expected CAGR globally of approximately 25% from 2022 to 2026, according to S&P.

• Hybrid vehicles:

We provide a comprehensive portfolio of turbocharger and electric-boosting technologies to manufacturers of hybrid-electric powertrains.

OEMs have increased their adoption of hybrid technologies given regulatory standards.

Similar to turbochargers for gasoline and diesel engines, turbochargers for hybrid vehicles are an essential component of maximizing fuel efficiency and overall engine performance.

Our products provide OEMs with solutions that further optimize engine performance and position us well to serve OEMs as they add more electrified vehicles into their fleets.

Commercial vehicles.

Our products provide

OEMs with solutions that further optimize engine performance and position us well as they add more hybrid-electric vehicles into their fleets.

Internal combustion commercial vehicles & industrial products

Our Company traces its roots to the 1950s when we helped develop a turbocharged commercial vehicle for Caterpillar.

We have maintained our strategic relationship with key commercial vehicle OEMs for over 60 years as well as industry-leading positions across both on- and off-highway use.

Our products improve engine performance and lower emissions on trucks, buses, agriculture equipment, construction equipment and mining equipment with engine sizes ranging 1.8L to 105L.

High-growth regions.

We have a strong track record serving global and local OEMs, including customers in China and India, with an in-market and for-market strategy.

We operate two R&D centers and three manufacturing facilities in these high-growth regions that serve light and commercial vehicle OEMs.

Our local presence in high-growth regions has helped us win business with key international and domestic Chinese and Indian OEMs, and we grew significantly faster than the vehicle production in these regions between 2013 and 2022.

We have maintained our strategic relationship with key commercial vehicle OEMs for over 60 years as well as industry-leading positions for both on- and off-highway use.

Our products improve engine performance and enable lower emissions on trucks, buses, agriculture equipment, construction equipment and mining equipment with engine sizes ranging 1.8L to 105L.

We continue to develop our product range to serve more engine needs, even beyond automotive (e.g.

our new GT80 product presented in 2023, our biggest turbocharger to date).

Hydrogen fuel cell electric vehicles & industrial products

We provide a comprehensive range of electric air compressors to manufacturers of fuel cell systems.

Our system consists of efficient, powerful, and lightweight air compressors using leading automotive technologies to boost fuel cell vehicles.

Air supply is critical for performance, durability and H2 fuel consumption / range for applications equipped with H2 fuel cells.

We launched the auto industry's first fuel cell production car application in 2016.

We now provide a comprehensive portfolio of fuel cell air compressors covering a broad range of fuel cell stack power from 40kW to 250+kW and we will launch our third generation of fuel cell products in 2024.

Electric (battery electric and H2 fuel cell electric) vehicles & industrial products

Leveraging a set of unique technological building blocks, we are now offering to our customers disruptive solutions for electric traction (E-Powertrain) and electric thermal management (E-Cooling compressor) that can enhance an application’s energy efficiency in a reduced packaging space and with significant weight savings.

Our customers have taken note of these products, and we are engaged in a number of pre-development programs with OEMs in all regions.

Aftermarket and performance products

Our Garrett aftermarket brand has strong recognition across distributors and garages globally, and is known for boosting performance, quality and reliability.

We operate through a distribution network of more than 300 distributors covering 165 countries.

Our aftermarket business has historically provided a stable stream of revenue supported by our large installer base, currently estimated at over 130 million vehicles.

As turbocharger penetration rates continue to increase, we expect that our installer base and aftermarket opportunities will continue to grow.

We are also working to enhance our sales channels with the introduction of Garrett Marketplace, an e-commerce platform connecting Garrett's major performance distributors with turbocharger enthusiasts, racing professionals and automotive hobbyists, allowing them to access Garrett performance and racing products faster and more conveniently.

Our Competitive Strengths

We believe that we differentiate ourselves through the following competitive strengths:

• Differentiated and innovative technology in, and beyond, mobility

• Strong and collaborative relationships with leading OEMs globally

• Global and low-cost manufacturing footprint with operational excellence

Differentiated and innovative technology in, and beyond, mobility

We have led the revolution in turbocharging technology over the last 60 years and maintain a leading technology portfolio of approximately 1,300 patents and patents pending.

We have a globally deployed team of approximately 1,300 engineers across five R&D centers and 11 close-to-customer engineering centers.

Our engineers have led the mainstream commercialization of several leading turbocharger innovations, including variable geometry turbines, dual-boost compressors, ball-bearing rotors, electrically actuated controls, and air-bearing electric compressors for hydrogen fuel cells.

We maintain a culture of continuous product innovation, introducing about ten new technologies per year and upgrading our existing key product lines approximately every 3 years.

At the end of 2023, we announced an expansion of our turbocharger portfolio to serve large bore engines used in industrial applications, including marine, power generation and other machinery.

Outside of our turbocharger product lines, we apply this culture of continuous innovation to meet the needs of our customers in new areas.

We are developing solutions and increasing our R&D spend, focusing almost 60% of total research, development and engineering expenditures in 2024 on zero emission technologies for mobility and beyond,

such as fuel cell compressors for a broad range of cell stack power (40kW to 250kW) and high value electric products including E-Powertrain and E-Cooling compressor technologies.

Strong and collaborative relationships with leading OEMs globally

We supply our products to more than 60 OEMs globally.

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Our regional research, development and manufacturing capabilities are a key advantage in helping us to supply OEMs as they expand geographically and shift towards standardized engines and vehicle platforms globally.

Global aftermarket platform

Our Garrett aftermarket brand has strong recognition across distributors and garages globally, and is known for boosting performance, quality and reliability.

We operate through a distribution network of more than 250 distributors covering 165 countries.

Our aftermarket business has historically provided a stable stream of revenue supported by our large installed base, currently estimated at over 120 million vehicles.

As turbocharger penetration rates continue to increase, we expect that our installed base and aftermarket opportunities will continue to grow.

Highly-engineered portfolio with continuous product innovation

We have led the revolution in turbocharging technology over the last 60 years and maintain a leading technology portfolio of approximately 1,700 patents and patents pending.

We have a globally deployed team of more than 1,220 engineers across five R&D centers and 11 close-to-customer engineering centers.

Our engineers have led the mainstream commercialization of several leading turbocharger innovations, including variable geometry turbines, dual-boost compressors, ball-bearing rotors, electrically actuated controls and air-bearing electric compressors for hydrogen fuel cells.

We maintain a culture of continuous product innovation, introducing about ten new technologies per year and upgrading our existing key product lines approximately every 3 years.

Outside of our turbocharger product lines, we apply this culture of continuous innovation to meet the needs of our customers in new areas, particularly in connected automotive technologies.

We are developing solutions and increasing our R&D spend, focusing more than 50% of total R&D expenditure in 2023 on electrification technologies like fuel cell compressors for a broad range of stack power (40kW to 250kW) and high value electric vehicle components.

We are also continuing to develop MPC algorithms and cybersecurity software solutions that leverage our knowledge of vehicle powertrains and experience working closely with OEM manufacturers.

With regards to new technology offerings for zero emissions, our proven track record in bringing innovation to production is a key decision factor for our customers to engage in joint technology assessments through pre-development projects with Garrett.

Global and low-cost manufacturing footprint with operational excellence

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In all regions where we operate, we leverage low-cost sourcing through our robust supplier development program, which continually works to develop new suppliers that are able to meet our specific quality, productivity and cost requirements.

We now source more than two-thirds of our materials from low-cost countries and believe our high-quality, low-cost supplier network to be a

significant competitive advantage.

We now source more than two-thirds of our materials from low-cost countries and believe our high-quality, low-cost supplier network to be a significant competitive advantage.

We have invested heavily to bring differentiated local capabilities to our customers in high-growth regions, including China and India.

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We have a long-standing culture of lean manufacturing excellence and continuous productivity improvement.

We believe global uniformity and operational excellence across facilities is a key competitive advantage in our industry given that OEM engine platforms are often designed centrally but manufactured locally, requiring suppliers to meet the exact same specifications across all locations.

Our Growth Strategies

We believe global uniformity and operational excellence across facilities is a key competitive advantage in our industry given that OEM powertrain platforms are often designed centrally but manufactured locally, requiring suppliers to meet the exact same specifications across all locations.

Garrett invests in innovative technologies that address the needs of our customers in the ongoing auto industry transformation.

This continued investment into differentiated technology, coupled with our relentless focus on customer relations and our global capabilities, allows us to drive the following business strategies:

Strengthen industry leadership across powertrain technologies

We are focused on strengthening our industry position in light vehicles:

• Gasoline turbochargers, which historically lagged adoption of diesel turbochargers, are expected to increase at a 2.1% annual CAGR from 2022 to 2025, according to S&P.

We expect to benefit from this higher growth given the gasoline platforms we have been awarded over the past several years.

We have launched the first modern 1.5L VNT gasoline application with a major OEM and we expect to see increasing adoption of this technology in years to come.

Key to our strategy for gasoline growth is our plan to leverage our technology strengths in high temperature materials and variable geometry technologies as well as our scale, global footprint and in-region capabilities to meet the volume demands of global OEMs.

• We believe growth in our share of the diesel turbochargers industry will be driven by new product introductions focused on emissions-enforcement technologies and supported by our favorable positioning with large vehicles and high-growth regions within this industry.

The more stringent emissions standards require greater turbocharger technology content such as variable geometry, 2-stage systems, advanced bearings and materials which increase our content per vehicle.

Leverage our differentiated technology to solve key challenges in electrification

We stand to benefit from the increased adoption of hybrid-electric and fuel cell vehicles and the increased need for turbochargers associated with increased sales volumes for these engine types.

S&P estimates that the global production of electrified vehicles (ranging from mild-hybrids to plugin-hybrids to battery and fuel cell electric vehicles) will increase from approximately 22 million vehicles in 2022 to approximately 60 million vehicles by 2027, representing an annualized growth rate of approximately 18%.

OEMs will need to further improve engine performance for their increasingly hybrid electrified offerings, and our comprehensive portfolio of turbocharger and electric-boosting technologies are designed to help OEMs do so.

We expect to continue to invest in product innovations and new technologies and believe that we are well positioned to continue to be a technology-leader in the propulsion of electrified vehicles.

As we keep strengthening our electrical know-how, we believe our capabilities and technological expertise can be pivoted in the electrification arena for selected electric powertrain opportunities.

Increase industry position in high-growth regions

In 2022, after a steep drop in the first quarter due to strict lockdowns, vehicle production in China continued to experience further challenges through the third quarter from supply chain disruptions caused by shortage of semiconductor components whereas fourth quarter recovery partly compensated for the decline in the first three quarters, with a 4% full year growth, aligned to average growth in the other regions.

S&P expects vehicle production in China to be stable next year.

We plan to continue to strengthen our relationships with OEMs in high-growth, emerging regions by demonstrating our technology leadership through our local research, development and manufacturing capabilities.

We expect our local footprint to continue to provide a strong competitive edge in high-growth regions due to our ability to work closely with OEMs throughout all stages of the product lifecycle including aftermarket support.

For example, in China, our research center in Shanghai, our manufacturing facilities in Wuhan and Shanghai and our 1,042 employees support our differentiated end-to-end capabilities and we believe will continue to support key platform wins in the Chinese market.

Our operations in China are expected to continue to benefit us as OEMs build global platforms in low cost regions.

commitment to providing high-touch technology support to OEMs has allowed us to be recognized as a local player in other key high-growth regions, such as India.

This continued investment into differentiated technology, coupled with our relentless focus on customer relationships and our global capabilities, allows us to drive the following business strategies:

• Strengthen our leadership in the turbocharger industry within the light vehicle, commercial vehicle and industrial space;

• Use of our differentiated technology to solve key challenges for zero emission vehicles;

• Grow our aftermarket business

Strengthen our leadership in the turbocharger industry within the light vehicle, commercial vehicle and industrial space

We are focused on strengthening our industry position in the light vehicle, commercial vehicle and industrial turbocharger industries:

• Light vehicle gasoline turbochargers, which have historically lagged the adoption of diesel turbochargers, after reaching a peak in 2023, are now expected to decrease at a 4% annual CAGR from 2023 to 2026, according to S&P.

We have launched the first modern 1.5L VNT gasoline application with a major OEM and expect to see increasing adoption of this technology in the future years.

A major key to our strategy for gasoline growth is our plan to leverage our strengths in high temperature materials and variable geometry technologies as well as our scale, global footprint and in-region capabilities to meet the volume demands of global OEMs.

This also includes E-Boosting solutions for hybrids with many high volume application launches planned in coming years.

• The commercial vehicle and industrial spaces remain a focus for us, considering its slower shift to electric, and the increasing need for higher energy efficiency and productivity.

We continue to invest in turbocharger technology upgrades, including for new types of fuels for ICE, like hydrogen.

We also are expanding our

portfolio with the launch of new frame sizes aimed at serving larger engines, mostly used in marine and power generation verticals.

Use of our differentiated technology to solve key challenges for zero emission vehicles

We stand to benefit from the increased adoption of electric (battery or fuel cell) vehicles.

S&P estimates that the global production of electrified vehicles (battery and fuel cell electric) will increase from approximately 11 million vehicles in 2023 to approximately 31 million vehicles by 2027, representing an annualized growth rate of approximately 29%.

To solve current challenges in terms of range, vehicle cost and performance, OEMs will need technologies enabling step changes in energy efficiency, weight and packaging and thermal management.

We expect to continue to invest in product innovation and new technologies, and by leveraging our capabilities and expertise to develop selected offerings for electric vehicles, we believe that we are well positioned to remain a technology leader in the field of electrified vehicles.

In particular, we have already developed a full portfolio of fuel cell compressors and we are in the pre-development phase with some of our customers for differentiated E-Powertrain and E-Cooling compressor solutions.

Grow our aftermarket business

We have an opportunity to strengthen our global network of more than 300 distributors in 165 countries by deepening our channel penetration, leveraging our well-recognized Garrett brand, utilizing new online technologies for customer engagement and sales, and widening the product portfolio.

Installer Connect, a global web-based platform providing self-service tools aimed at connecting garage technicians generated more than 15 thousand additional technicians certified, and our Turbo Service Replacement website attracted more than 800 thousand visitors.

Additionally, the Garrett Web Racing & Performance section of our website attracted more than 1.4 million visitors in 2022.

Installer Connect, a global web-based platform providing self-service tools aimed at connecting garage technicians generated more than 24,000 additional technicians certified, and our Turbo Service Replacement website attracted more than 800,000 visitors.

Additionally, the Garrett Web Racing & Performance section of our website attracted nearly 1 million visitors in 2023.

Research, Development and Intellectual Property

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As of December 31, 2023, we employed approximately 1,300 engineers.

Our total R&D expenses were $153 million, $136 million and $111 million for the years ended December 31, 2022, 2021 and 2020, respectively, with more than 50% of our total R&D spend in 2022 focused on electrification technologies.

Additionally, the Company incurred engineering-related expenses which are also included in Cost of goods sold of $11 million, $22 million, and $13 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Our total R&D expenses were $175 million, $153 million and $136 million for the years ended December 31, 2023, 2022 and 2021, respectively, with more than 50% of our total R&D spend in 2023 focused on zero emission technologies.

Additionally, the Company incurred engineering-related expenses, net of customer (reimbursements) which are also included in Cost of goods sold of $(12) million , $11 million and $22 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Engineering-related expenses include customer reimbursements of $46 million, $25 million and $21 million for the years ended December 31, 2023, 2022 and 2021, respectively.

We currently hold approximately 1,300 patents and patents pending.

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As of December 31, 2023, we have not experienced any significant shortage of raw materials and we or our suppliers (on our behalf) do not typically carry inventories of such raw materials in excess of those reasonably required to meet our production and shipping schedules.

Our Customers

Our global customer base includes nine of the ten largest light vehicle OEMs and nine of the ten largest commercial vehicle engine makers.

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We typically supply products to our OEM customers through “open” purchase orders, which are generally governed by terms and conditions negotiated with each OEM.

Although the terms and conditions vary from customer to customer, they typically contemplate a relationship under which our customers are not required to purchase a minimum amount of product from us.

Although the terms and conditions vary from customer to customer,

they typically contemplate a relationship under which our customers are not required to purchase a minimum amount of product from us.

These relationships typically extend over the life of the related engine platform.

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Individual purchase orders are terminable for cause or non-performance and, in most cases, upon our insolvency and certain change of control events.

In addition, many of our OEM customers have the option to terminate for convenience on certain programs, which permits our customers to impose pressure on pricing during the life of the vehicle program, and issue purchase contracts for less than the duration of the vehicle program, which potentially reduces our profit margins and increases the risk of our losing future sales under those purchase contracts.

We manufacture, and ship based on customer

release schedules, normally provided on a weekly basis, which can vary due to cyclical automobile production or inventory levels throughout the supply chain.

In addition, many of our OEM customers have the option to terminate for convenience on certain programs, which permits our customers to impose pressure on pricing during the life of the vehicle program, and issue purchase contracts for less than the duration of the vehicle program, potentially reducing our profit margins and increasing the risk of losing future sales under those purchase contracts.

We manufacture, and ship based on customer release schedules, normally provided on a weekly basis, which can vary due to cyclical automobile production or inventory levels throughout the supply chain.

Although customer programs typically extend to future periods, and although there is an expectation that we will supply certain levels of OEM production during such future periods, customer agreements including applicable terms and conditions do not necessarily constitute firm orders.

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Our sustainability approach

Garrett’s mission to enable cleaner, more efficient and connected vehicles is at the heart of our contribution to society.

Our engineering expertise and transformative technologies help optimize fuel efficiency, reduce harmful emissions and manage growing vehicle complexity, all of which are critical areas on the road to a clean transportation future.

Our corporate sustainability framework, called WeCare4, starts from our mission to enable cleaner, more efficient vehicles by spearheading technology development and continuing to deliver industry-first innovations.

Garrett is a cutting-edge technology leader delivering differentiated solutions for emission reduction and energy efficiency.

We are passionate about innovating for mobility and beyond.

With a 70-year legacy, we serve customers worldwide with passenger vehicle, commercial vehicle, aftermarket replacement, and performance enhancement solutions.

Garrett’s mission to deliver differentiated solutions for emission reduction and energy efficiency is at the heart of our contribution to society.

Our engineering expertise and transformative technologies help optimize fuel efficiency, reduce emissions and manage growing vehicle complexity, all of which are critical areas on the road to a clean transportation future.

Garrett's technologies enable sustainable automotive and industry transformation.

Our corporate sustainability framework, called WeCare4, starts from our mission by spearheading technology development and continuing to deliver industry-first innovations for mobility and beyond.

It is built on two main pillars - investing in a culture of innovation and operating responsibly to ensure long-term impact.

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Primary responsibility at Board level for reviewing and reporting to the full Board on our sustainability programs and policies, as well as our corporate citizen commitments, resides with the Nominating & Governance Committee.

Garrett articulates its commitments to social and environmental considerations in the communities in which it operates in the Company’s Code of Business Conduct, which can be found on our website at www.garrettmotion.com under "About Us – Corporate – Sustainability".

The Company published its fiscal year 2022 Sustainability Report in 2023, the content of which is not incorporated by reference into this Annual Report or in any other report or document we file with the SEC.

Human Capital

At Garrett, we place a high value on developing the right working environment and the right skillsets to advance our performance culture, support our growth strategy and ensure that the world at large can continue to benefit from breakthroughs in sustainable mobility.

At Garrett, we place a high value on developing the right working environment and skill sets to advance our performance culture, support our growth strategy and ensure that the world at large can continue to benefit from breakthroughs in sustainable mobility.

We invest in creating an inclusive, stimulating, and safe work environment where our employees can deliver their workplace best every day.

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• Regular reporting and review of existing diversity and inclusion metrics and initiatives

• Work by 14 Diversity and Inclusion Champions in key countries to develop local Diversity and Inclusion initiatives suitable for the local context while aligning with the global strategy

• Holding Garrett’s annual Diversity and Inclusion Week in November based on the themes of Beyond Bias.

The percentage of female employees in Garrett was 21.8% in 2022.

• Work by our team of Diversity and Inclusion Champions in key countries to develop local Diversity and Inclusion initiatives suitable for the local context while aligning with the global strategy

• Training for all managers on Unconscious Bias

• Holding Garrett’s annual Diversity and Inclusion Week in December, where the focus was engagement around three new Employee Resource Groups ("ERGs"), Cultural Mosaic, LGBTIQ+ and Diverse Abilities, in addition to the long-standing Garrett Women's Network ERG.

The percentage of female employees in Garrett was 22.8% in 2023 (an increase from 21.8% in 2022).

The percentage of female employees in Senior Management roles was 19.5% in 2023.

Over the past four years, Garrett increased the percentage of female employees in Garrett by 5.8% (from 20.6% to 21.8%) and by 13.8% in Senior Management over the same four year period (from 16.7% to 19.0%).

The table below shows the evolution of our gender diversity representation over the last four years and our 2025 ambition:

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From annual goal setting and performance reviews to learning opportunities for employees and leaders, the Company helps its people align their professional experience with the Company’s business objectives and encourages them to take ownership of their development and career paths.

Our learning environment offers employees access to more than 1,000 online trainings that address a wide range of functional competencies, technical skills, and human skills.

Our learning environment offers employees access to approximately 1,800 online trainings that address a wide range of functional competencies, technical skills, and human skills.

Learning can be self-paced, while the Company’s growing online peer-to-peer learning communities also allow employees to easily access courses specific to their function and to share materials and ideas on topics of interest.

A variety of instructor led virtual programs were deployed during 2023 to support employees' development and a number of dedicated programs for emerging and experienced leaders were successfully held.

Approximately 80,000 hours of online training was delivered during 2022.

More than 68,500 hours of online training was delivered during 2023.

We use regular talent reviews to strengthen the Company’s internal development processes and to calibrate assessment of individual performance.

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Ahead of both annual and mid-year performance reviews, leaders hold calibration meetings to ensure that assessment ratings are consistent and fair amongst peer groups.

To support our strategy and objectives, in 2023 we implemented a skills intelligence system.

This system, enabled by artificial intelligence, can detect known and hidden capabilities of our employees.

We expect this system will support us in identifying efficient paths of upskilling, reskilling and hiring for our future needs.

Be well, work well

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Compliance with our standards and local regulatory requirements is monitored through a company-wide self-assessment process assured through annual audits.

In 2022 we supplemented this with a rolling 4-year compliance audit against local regulations by a global service provider.

The timely development and implementation of process improvement and corrective action plans are closely monitored.

As the Covid-19 pandemic started to recede in the first quarter of 2022, through government and international action, we transitioned to more normal working with continued support for the health and well being of our employees.

This transition is now complete with the emergence of China from their zero-Covid policy.

Our safety performance was maintained in our Total Case Incident Rate (“TCIR”).

TCIR is measured as the number of recordable injuries and illnesses multiplied by 200,000 and then that number is divided by the total number of hours worked by employees, TCIR was 0.12 in 2022, which is consistent with the TCIR in the previous three years.

In 2023 we continued a rolling 4-year compliance audit against local regulations by a global service provider.

The timely development and implementation of process improvement and corrective action plans, including any improvements identified through our local regulatory compliance audits, are closely monitored.

Our safety performance improved when measured by our Total Case Incident Rate (“TCIR”), which reduced to 0.04 in 2023, compared to 0.12 in 2022.

TCIR is measured as the number of recordable injuries and illnesses multiplied by 200,000 and then that number is divided by the total number of hours worked by employees.

Compensation and benefits

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This service is confidential and is also available to each employee’s dependents.

In late 2020, the Company made a number of well-being resources available to all its connected employees, including useful tools and techniques for managing mental and physical health, in addition to dedicated online events.

These remained in place throughout 2021 and 2022.

Employee feedback, representation, and retention

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Garrett’s Internship Programs enable students to connect theoretical knowledge with practical responsibilities in the spirit of ‘living laboratories’ during which they are encouraged to take ownership of business projects and define tactics to meet the project goals.

In 2022, Garrett offered 261 internships in 11 countries, which is twice as many compared to 2021 (approximately 37% in Engineering, 32% in Integrated Supply Chain, 12% in IT and the remainder in Finance, HR, Marketing and Sales, Legal and Internal Audit).

Garrett runs a Graduate Program which in 2022 provided 25 graduates in 2 countries to gain experience and exposure to Garrett’s cutting-edge technologies while at the same time building their leadership skills in a fast-paced and professional work environment.

The Company sponsors Formula SAE and Formula Student teams in several countries providing the students in the racing team with leadership coaching, technical guidance, parts for the vehicle and financial support.

Our engineers and leaders take part on Formula Student and Formula SAE races as judges and technical support.

In 2022, the Company sponsored the European BEST Engineering Competition, the biggest international technical competition in Central Europe, where Garrett defined an assignment for over 50 students on a case study comparing pros and cons for a cooling unit with conventional pump and radial impeller driven compressor.

Garrett supports the local Universities globally with master thesis projects, class speakers and technical sharing events and is involved in the community supporting STEM activities for high schools worldwide.

The Company continues to enhance the engagement with global organizations at the university focused on diversity students increasing intern and full time recruiting.

In 2023, Garrett welcomed 205 Interns in 11 countries, versus 261 internships in 2022 (approximately 44% in Engineering, 18% in Integrated Supply Chain, 16% in IT and the remainder in Finance, HR, Marketing and Sales, Legal and Internal Audit).

In 2023, Garrett onboarded 10 graduates into our Graduate Program in China and India to join existing Graduate Program cohorts moving through their rotational cycles and to gain experience and exposure to Garrett's cutting-edge technologies while at the same time building their leadership skills in a fast-paced and professional work environment.

In 2023, the Company sponsored 5 Formula SAE and Formula Student teams in several countries providing the students in the racing team with over 10 technical workshops in electrical powertrain, leadership coaching, parts for the racing vehicle and financial support.

Garrett sponsored the Formula SAE event in the U.S., the Formula Student race in Hungary and the Formula Student race in the Czech Republic, where our experts worked as technical judges, provided technical support and awarded 3 EV Formula Student University teams with the Garrett E-Powertrain Innovation award.

During 2023, the Company shared its growth vision with over 1,500 students and over 300 female engineers and automotive enthusiasts.

The Company also sponsored the European BEST Engineering Competition, the biggest international competition in Central Europe.

The Garrett student programs hires over 90 students globally to support challenging projects in multiple engineering fields providing an enriching growth experience for potential future Garrett employees.

The Company also supports local Universities globally with master thesis projects, class speakers and technical sharing events.

Garrett is involved in the community supporting STEM activities for high schools worldwide and in 2023, Garrett sponsored a high school team from the Czech Republic competing in hydrogen-powered racing.

The Company continues to enhance the engagement with global organizations with a focus on growing diversity interest in STEM and automotive engineering as well as intern and full time recruiting.

Garrett works closely with leading Universities globally on over 12 collaboration projects that push the envelope of technical innovation.

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This seasonality in cash flow is mostly caused by timing of supplier payments for capital expenditures, changes in working capital balances related to the sales seasonality discussed above, and incentive payments.

Cybersecurity

Cybersecurity and protection of our data is a top priority across the entire organization.

To that end, we take a holistic approach to securing our data and business systems from attack, compromise or loss.

The Company's cybersecurity objective is to protect Garrett data privacy, information theft, and protection from external and insider cyber threats.

This includes the combination of leading technologies, policies, and procedures, and the Company’s Security Operation Center (“SOC”).

The Company's SOC provides visibility across all information technology assets and includes proactive cyber security Threat Detection Technology to facilities the identification of misconfigurations to mitigate threats and prevent data loss.

As part of the Company’s holistic approach to cybersecurity, there are incremental programs and technology associated with threat hunting, vulnerability scanning and threat detection and response technology.

We continually evaluate risks, threats, intelligence feeds and vulnerabilities to adapt, mitigate or respond as necessary to preserve a secure state.

Combining technology, processes, and threat intelligence we deliver specific and timely education and training to the organization, including mandatory training for all employees.

While Garrett focuses heavily on prevention and detection, response and recovery plans, service agreements and partner engagements are in place should there be a need for us to respond to an attack.

There have been no material cybersecurity events during the year ended December 31, 2022.

Additional Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business