CFO leaves, Chief Accounting Officer and Controller leaves within last 60 days and now SEC investigation on asbestos. Coincidence???
10 replies (most recent on top)
the asbestos liability is not going up, its going down. honeywell tried to argue with the SEC that the last few years of payments would taper off. ongoing studies (some completed, many sponsored by honeywell so take w grain of salt) demonstrate the lack of causality between the specific type of asbestos in bendix breaks and mesothelioma, which is caused by a different kind of asbestos. honeywell agreed to record the larger number on garrett's balance sheet that was based on assumption payments would not taper off. in all likelihood, garrett won't have to pay anywhere close to $175mm/year in 2022 and onward
Garrett's asbestos liabilities are limited to $175 million a year; above that Honeywell pays.
Honeywell is the loser here. Their asbestos liabilities haven't changed, so why they lied about it is beyond me. Garrett is unaffected by this: in their investor conference they said they will assume a $175 million payout every year in perpetuity. Factoring in that yearly payout, they correctly noted that their business is still high margin and very profitable.
Just our leaders taking orders from WS.
And I am sure HW loaded up Residio was a bunch of environmental liabilites as well. Financial engineering at is best.
It kind of reflects in GTX stock price.... Ouch!
From yzt, again. It would be nice if the SEC declared that it was not appropriate accounting practice to saddle innocent Garrett turbocharger line with Bendix brake's liability just because they shared an umbrella business unit for a few years. H corporate is doing the usual of loading the spinoffs with a lot of financial baggage like non-asbestos dividends.
Ha. Yes -npi I heard that too. They clearly said they now expect that liability to be greater than previously expected but fortunately Honeywell's liability is now reduced by 90%..... expect a bankruptcy in Garretts future???
The asbestos dodge was also mentioned on earnings call today. How 90% of that should go to spinoffs makes no sense unless you are Honeywell dodging a bullet you know was fired already and you were the big target
Poor Garrett will be in trouble soon....
I beg to differ with npi. All of the smoke and mirror stuff that H has been doing for years and will continue to do aren't contrary to SEC, unfortunately. But when it comes to asbestos, I really blinked when I saw that the turbo guys, now Garrett Motion, have been made financially responsible for 90% of H's Bendix Brake asbestos liability. To me, and I hope the SEC, it is a real reach for H to get this off their books just because turbochargers and brakes were part of what was the Transportation unit of H until sales, spinoffs and closures reduced it to just turbochargers. There is some relevance to layoffs since the turbo boys will be more at risk due to unnecessary $ burden back to H. To make this clear, turbochargers don't have an asbestos problem.
From Motley Fool, "Garrett must make quarterly payments to Honeywell as part of Honeywell's ongoing asbestos liability. Garrett currently carries a liability of $1.32 billion on its books, representing 90% of Honeywell's asbestos obligation."
SEC is looking at the wrong thing. Asbestos is the tip of the iceberg.