- Revenue performance continues to outpace light vehicle industry production
- Quarter-end liquidity of $1.57 billion, comprised of $770 million cash and $800 million undrawn on the revolving credit facility
- Additional structural cost reductions expected to deliver $65 million annual run rate savings incremental to the recently established Accelerate plan
Lake Forest, Illinois, May 8, 2020 – Tenneco (NYSE: TEN) reported first quarter 2020 revenue of $3.8 billion, versus $4.5 billion a year ago. Excluding unfavorable currency of $97M, total revenue decreased 12% versus last year, while light vehicle industry production* declined 23% in the quarter. Value-add revenue for the first quarter was $3.1 billion. The Company estimates the COVID-19 crisis represented approximately a $340 million negative impact on first quarter value-add revenue.
Including non-cash impairments of $854 million, $737 million after tax, the Company reported a net loss for first quarter 2020 of $839 million, or $(10.34) per diluted share, compared with a first quarter net loss of $117 million, or $(1.44) per diluted share in 2019. First quarter EBIT (earnings before interest, taxes and noncontrolling interests) was a loss of $845 million, versus a loss of $24 million last year. EBIT as a percent of revenue was -22.0% versus -0.5% last year.
First quarter 2020 adjusted net loss was $26 million, or $(0.31) per diluted share, compared with income of $42 million, or 52-cents per diluted share last year. First quarter adjusted EBITDA was $239 million versus $327 million last year. Adjusted EBITDA as a percent of value-add revenue was 7.6% versus 8.7% last year. Cash flow used in operations was $152 million, on par with last year despite the COVID-19 driven impact of lower earnings.
“Tenneco responded quickly to the COVID-19 crisis to protect our team members’ health and safety while taking aggressive actions to mitigate the financial impact of the pandemic on the company,” said Brian Kesseler, Tenneco’s Chief Executive Officer. “We expanded on the structural cost reductions introduced last quarter, and implemented a range of temporary cost reductions including plant closures, deferment of discretionary spending and the reduction of capital expenditures. We have amended the terms of the company’s debt covenants to help us navigate the COVID-19-driven economic downturn, and adopted a shareholder rights plan to help protect the availability of Tenneco’s tax assets.”
Liquidity Update
As of March 31, 2020, Tenneco had liquidity of $1.57 billion, comprised of $770 million cash and $800 million undrawn on the Company’s revolving credit facility. The Company has acted to further bolster its liquidity position by drawing the remaining amount available under this revolving facility. Based on available industry forecasts and Company estimates, the Company believes it has adequate liquidity to weather the current downturn.
Operations Update
Throughout the Company’s operations, incremental health and safety precautions have been implemented, including rigorous cleaning and sanitation protocols, wellness checks for team members and changes within facilities to comply with social distancing requirements. In China, all of the Company’s production facilities, distribution centers and offices are now open and operating at near pre-crisis levels. As of the first week of May, approximately 75% of the Company’s plants and distribution centers worldwide are operating at various levels of production, up from a low of 47% during the first week of April.
“I appreciate the extraordinary effort made by our team members and their families, including helping the company safely maintain operations during the crisis to provide products and services that are considered vital to public security, health and safety,” Kesseler added. “Our focus continues to be on protecting the wellbeing of our team members as we prepare to support our customers in the restart of production globally. In every part of our business, we’ve implemented enhanced operating protocols that will support a safe and efficient ramp up of our operations as customer demand grows.”
Outlook
Tenneco continues to monitor the effects of the COVID-19 pandemic, which is impacting the global automotive industry. Due to uncertainty related to the crisis, the Company is not providing financial guidance for the balance of 2020 at this time.
In response to the lower demand environment related to the COVID-19 crisis, Tenneco will implement additional structural cost reductions expected to achieve an incremental $65 million in annual run rate cost savings by the end of 2020.
Recently, the Company also implemented a number of temporary cost reductions and actions to further mitigate the COVID-19 –related profit pressures and optimize cash performance. These actions include temporarily suspending or reducing operations, salary reductions and furloughs, reducing capital spending and lowering the Board of Director’s retainer fees.
*Source: IHS Markit April V2 2020 global light vehicle production forecast.
Click here to download the 2020 Q1 release and all the attachments listed below.
Attachment 1
Statements of Income (Loss) – 3 months
Balance Sheets
Statements of Cash Flows – 3 Months
Attachment 2
Reconciliation of GAAP to Non-GAAP Earnings 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 and pro forma 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
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – Original Equipment Commercial Truck, Off-Highway, Industrial and other revenues – quarterly
CONFERENCE CALL
The company will host a webcast conference call on Friday, May 8, 2020 at 9:30 a.m. ET. The purpose of the call is to discuss the company’s financial results for the first quarter and full year 2020, as well as to provide other information regarding matters that may impact the company’s outlook. For a “listen only” broadcast and access to the presentation materials, go to the company’s website www.investors.tenneco.com. To participate by telephone, please dial: 1-833-366-1121 (domestic) or 1-412-902-6733 (international), using the passcode “Tenneco Inc.” A call playback will be available for one week, starting approximately one hour after the conclusion of the call. To connect, please dial 1-877-344-7529 (domestic), 1-412-317-0088 (international), 855-669-9658 (Canada), using the replay access code 10138628.
SOURCE: Tenneco
