Tenneco has reported first quarter net income of US$46m compared with US$54m in the same period last year.

Excluding expenses for restructuring and a tax benefit in 2013, net income increased 27% to US$56m, versus $44 million a year ago.

The supplier also unveiled what it said was its highest quarterly revenue of US$2.09bn, driven by an 11% increase in clean air revenues and a 7% increase in ride performance.

Total revenue reflects a 9% year-over-year increase in light vehicle OE revenue, a 30% increase in commercial truck and off-highway OE revenue, as well as a 2% increase in global aftermarket revenue.

"I am very pleased with our strong results this quarter as we continue to capitalise on Tenneco's outstanding growth drivers and balance across regions and end-markets," said Tenneco chairman and CEO, Gregg Sherrill.

"We delivered revenue growth in all clean air and ride performance operating segments, including year-over-year increases in light vehicle, commercial truck and off-highway and the aftermarket.

"We continue to improve profitability and delivered significant margin improvement by leveraging our top-line growth with strong operational performance."

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TENNECO REPORTS FIRST QUARTER 2014 RESULTS 
  • Record high quarterly revenue
  • Record high first quarter EBIT
  • Strong EBIT margin improvement

 Tenneco Inc. (NYSE: TEN) reported first quarter net income of $46 million, or 75-cents per diluted share, compared with $54 million, or 88-cents per diluted share, in first quarter 2013.  Excluding expenses for restructuring and a tax benefit in 2013, net income increased 27% to $56 million, or 91-cents per diluted share, versus $44 million, or 72-cents per diluted share a year ago.

Revenue

Tenneco reported its highest-ever quarterly revenue of $2.094 billion, driven by an 11% increase in Clean Air revenues and a 7% increase in Ride Performance.  Excluding substrate sales and currency, total revenue was up 13% year-over-year to $1.633 billion. Total revenue reflects a 9% year-over-year increase in light vehicle OE revenue, a 30% increase in commercial truck and off-highway OE revenue, and a 2% increase in global aftermarket revenue.

“I am very pleased with our strong results this quarter as we continue to capitalize on Tenneco’s outstanding growth drivers and balance across regions and end-markets.  We delivered revenue growth in all Clean Air and Ride Performance operating segments, including year-over-year increases in light vehicle, commercial truck and off-highway, and the aftermarket,” said Gregg Sherrill, chairman and CEO.  “We continue to improve profitability and delivered significant margin improvement by leveraging our top-line growth with strong operational performance.”

EBIT

First quarter EBIT (earnings before interest, taxes and noncontrolling interests) was $113 million, up 22% from $93 million last year.  Adjusted EBIT rose 27% to $123 million.

Clean Air adjusted EBIT increased 19% to $93 million driven by higher light vehicle volumes; increased commercial truck and off-highway equipment revenue; the ramp up of new light and commercial truck and off-highway programs in North America, Europe and China; and operational cost performance.

Ride Performance adjusted EBIT increased 38% to $55 million due to strong manufacturing performance on higher light vehicle volumes in North America, Europe and China; increased commercial vehicle revenues in North America and Europe; and higher aftermarket sales in Europe.  These results include a $7 million expense to adjust workers’ compensation reserves.

Adjusted first quarter 2014 and 2013 results

 
    Q1 2014   Q1 2013
  (millions except per share amounts) EBITDA* EBIT Net income attributable to Tenneco Inc. Per Share EBITDA* EBIT Net income  attributable to Tenneco Inc. Per Share
 
Earnings Measures $ 164 $ 113 $ 46 $ 0.75   $ 143 $ 93 $ 54 $ 0.88
 
Adjustments (reflects non-GAAP measures):      
  Restructuring and related expenses   10   10   10   0.16     4   4   3   0.04
  Net tax adjustments   -   -   -   -     -   -   (13)   (0.20)
 
Non-GAAP earnings measures $ 174 $ 123 $ 56 $ 0.91   $ 147 $ 97 $ 44 $ 0.72
 
 * EBITDA including noncontrolling interests (EBIT before depreciation and amortization)
In addition to the items set forth above, the tables at the end of this press release reconcile GAAP to non-GAAP results.

First quarter 2014 adjustments

  • Restructuring and related expenses of $10 million pre-tax, or 16-cents per diluted share.

First quarter 2013 adjustments

  • Restructuring and related expenses of $4 million pre-tax, or 4-cents per diluted share;
  • Tax adjustments of $13 million, or 20-cents per diluted share, mostly related to recognizing a U.S. tax benefit for foreign taxes.

EBIT Margin

Tenneco delivered strong margin improvement in the quarter with year-over-year improvement in each product division for total adjusted EBIT as a percent of value-add revenue of 7.6%.  Clean Air adjusted EBIT as a percent of value-add revenue increased to 9.7% from 9.3% a year ago, and Ride Performance was 8.5%, a significant increase from 6.6%.  The total margin improvement was driven by higher light and commercial vehicle volumes, new platforms and an increase in commercial vehicle content, higher Ride Performance aftermarket sales, and continued strong operational performance.

First quarter results

  Q1 2014   Q1 2013
 
EBIT as a percent of revenue 5.4% 4.9%
EBIT as a percent of value-add revenue 7.0% 6.4%
 
Adjusted EBIT as a percent of revenue 5.9% 5.1%
Adjusted EBIT as a percent of value-add revenue 7.6% 6.7%
 

Cash

Cash used by operations in the quarter was $140 million, compared with a cash use of $92 million a year ago.   Working capital investments to support growth drove a greater use of cash this quarter.

Capital expenditures in the quarter were $71 million versus $59 million last year, primarily for Clean Air programs in China, North America and Europe.

Outlook

For the second quarter, IHS forecasts global light vehicle production to increase 2% year-over-year in the regions where Tenneco operates.  This includes IHS estimates of year-over-year increases in North America (2%), China (11%) and India (6 %).  Europe is forecasted to be down 1%, South America down 26% and Australia is expected to decrease 3%.

The company expects to outpace global light vehicle production in the second quarter with its strong platform position globally.  Commercial truck and off-highway equipment revenue is expected to increase consistent with the full-year revenue growth estimate of 20% to 30%,  driven by new business and incremental content launching on current platforms.  Tenneco also expects a steady performance from its global aftermarket business, up slightly in the second quarter versus last year with some growth in North America and Europe.

 “This quarter continues to demonstrate that our growth is well-balanced across end-markets and geographically.  We expect our revenue growth to continue in the second quarter with a slightly stronger light vehicle production environment and incremental revenue from our growing commercial truck and off-highway equipment business,” said Sherrill.  “We are also staying focused on continuously driving improved operational performance across all our businesses.”

 

Click here for 2014 Q1 release including all attachments listed below

Attachment 1

Statements of Income – 3 Months

Balance Sheets

Statements of Cash Flows – 3 Months

Attachment 2

Reconciliation of GAAP Net Income to EBITDA including noncontrolling interests – 3 Months

Reconciliation of GAAP to Non-GAAP Earnings Measures – 3 Months

Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – 3 Months

Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – 3 Months

Reconciliation of Non-GAAP Measures – Debt Net of Cash/Adjusted LTM EBITDA including noncontrolling interests

Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – Original Equipment and Aftermarket Revenue – 3 Months

Reconciliation of GAAP Revenue and Earnings to Non-GAAP Revenue and Earnings Measures – 3 Months

 

Original source: http://www.tenneco.com/tenneco_reports_first_quarter_2014_results/