Garrett Motion Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by Garrett Motion Inc. on February 8, 2022. The filing addresses a material error in the calculation of earnings per share (EPS) for prior interim periods and announces a partial redemption of Series B Preferred Stock.
Key Financial Metrics and Restatement Impact
The filing discloses a restatement of basic and diluted GAAP earnings per share for the three and six months ended June 30, 2021, and the three and nine months ended September 30, 2021. The error stemmed from the failure to account for the participating nature of Series A preferred stock. Net income, cash flows, and balance sheet items remain unchanged.
| Period | Metric | As Reported | As Restated |
|---|---|---|---|
| Three Months Ended June 30, 2021 | Basic EPS | $5.53 | $1.63 |
| Diluted EPS | $1.73 | $1.29 | |
| Six Months Ended June 30, 2021 | Basic EPS | $3.84 | $1.79 |
| Diluted EPS | $1.94 | $0.95 | |
| Three Months Ended Sept 30, 2021 | Basic EPS | $0.42 | $0.09 |
| Diluted EPS | $0.20 | $0.09 | |
| Nine Months Ended Sept 30, 2021 | Basic EPS | $4.34 | $1.46 |
| Diluted EPS | $1.75 | $1.15 |
Material Changes and Other Events
- Preferred Stock Redemption: On February 18, 2022, the Company will redeem 217,183,244 shares of Series B Preferred Stock for an aggregate price of $196,924,532.
- Remaining Series B Value: Following this redemption, the Present Value of remaining outstanding Series B Preferred Stock will be $207,139,982.
- Internal Controls: Management identified a material weakness in internal control over financial reporting as of December 31, 2021, due to the EPS calculation error. Remediation steps are underway.
Guidance, Risks, and Contingencies
The filing states that the restatement does not affect compliance with financial covenants in outstanding debt instruments or other agreements. The Company will disclose the full impact of the restatements in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021. No forward-looking guidance or outlook was provided in this specific filing.
Investor Verification Checklist
- Verify the updated EPS figures in the upcoming Form 10-K for the fiscal year ended December 31, 2021.
- Confirm the completion of the Series B Preferred Stock redemption on February 18, 2022.
- Review the detailed remediation plan for the material weakness in internal controls in the Form 10-K.
- Assess the impact of the reduced Series B Preferred Stock outstanding on future dividend obligations and capital structure.