Tenneco today announced results for the third quarter ended September 30, 2020, including the following:
- Revenue of $4.3 billion, down 2% versus prior year, excluding favorable currency of $17 million. Value-add revenue for the third quarter 2020 was $3.3 billion, versus $3.5 billion in the prior year.
- The Company reported a net loss for the third quarter 2020 of $499 million, or $(6.12) per diluted share, which included a non-cash tax valuation allowance charge of $523 million. Third quarter 2020 adjusted net income was $27 million, or 33-cents per diluted share.
- Third quarter EBIT (earnings before interest, taxes and noncontrolling interests) improved to $236 million versus $148 million in the prior year, and EBIT as a percent of revenue increased 210 basis points to 5.5% versus 3.4% in the prior year.
- Adjusted EBITDA was $388 million, up $1 million versus prior year. Adjusted EBITDA as a percent of value-add revenue was 11.8%, 90 basis points higher year-over-year. Earnings performance was driven by operating performance and enhanced contribution from structural and temporary cost savings.
- Cash generated from operations of $486 million was primarily driven by strong earnings resiliency, effective working capital management, including with respect to inventories, and a return to more normalized levels of factoring. Disciplined capital spending also benefitted cash performance in the quarter.
“Our third quarter results demonstrate the effectiveness of our operational execution as we leveraged Tenneco’s global scale and diversified portfolio to deliver strong cash flow performance and year-over-year margin expansion in the face of the prolonged impact of the COVID pandemic,” said Brian Kesseler, Tenneco’s chief executive officer. “My thanks to our global team members for their strong execution and commitment to continuous improvement.”
Debt and Liquidity Update
Total debt of $5.8 billion improved by $1.1 billion compared to second quarter 2020 due to the pay down of the revolving credit facility. Net debt of $5.1 billion improved $429 million compared to the second quarter 2020, and was $123 million lower than the prior year. The Company remains in compliance with all lending covenants.
Liquidity increased to $1.8 billion at September 30, 2020, consisting of total cash balances of $721 million and undrawn revolving credit facility availability of $1.1 billion, compared to liquidity of $1.4 billion on June 30, 2020.
For the fourth quarter, Tenneco expects:
- Value-add revenue to be roughly even with the third quarter 2020. The Company’s revenue forecast incorporates more conservative light vehicle production assumptions than IHS Markit.
- Value-add adjusted EBITDA margin to increase almost 200 basis points on a year-over-year basis.
- By year-end 2020, full year capital expenditures of approximately $380 million, and net debt at or below the 2019 year-end level of $5.0 billion.
“The health of our global team members and the safe operation of our facilities remain our top priorities, and we continue to promote healthy behaviors both inside and outside the workplace,” added Kesseler. “Our Accelerate program is delivering structural cost savings as planned and contributing to improved cash flow and margins, positioning Tenneco to finish 2020 strong with positive momentum.”
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