GARRETT MOTION INC (+) : Turbocharging Industrial Momentum

Research evidence excerpt

GARRETT MOTION INC (+) : Turbocharging Industrial Momentum

Refinitiv

Value of GTX’s Industrial Businesses

We believe the best way to assess the value of its high-growth industrial businesses

(both turbos & HVAC) is to model them out to 2035, and use ‘27E multiples on discounted

2035 EBITDA. While both businesses are exposed to datacenters, we believe they have

a significantly wider TAM beyond just datacenter demand (especially HVAC).

Importantly, while our forecast runs above GTX’s targets (>$500M in ‘30E sales &

>$850M by ‘35E), we believe they are intentionally conservative as GTX enters new

markets. We see our analysis as comfortably supported by both the strength of GTX’s

product portfolio and the size of its addressable market.

We believe the industrial turbo (incl. marine) & HVAC businesses are each worth ~$7/sh.

and ~$11/sh., respectfully (total ~$36/sh.), implying ~18% upside when combined with

the core business (~$17/sh.).

For the industrial turbo business, we utilize the same genset peer group as our similar

BWA analysis (plus large turbo supplier Accelleron). Because this is an established

business w/ multiple customers (e.g., CAT, Kohler), we do not use the same discount

and estimate the business is worth ~18.5x ‘27E EBITDA. GTX has previously disclosed

that it generated ~$100M of revenue from selling turbochargers for datacenter backup

power generation in 2025, and the business is consistently growing at a +DD% annual

CAGR.

The HVAC award with Trane does represent new business, but importantly the program

is not exclusive, giving GTX significantly lower customer risk. We compare this business

to key HVAC suppliers averaging ~16.0x EV/EBITDA, and after a modest new business

discount, we assess it at ~16.5X ‘27E EBITDA. We model the business reaching ~$340M