Post Earnings Coverage as Tenneco’s Quarterly Revenue Grew 9% on Constant Currency; Adjusted EPS Gained 20%

Upcoming AWS Coverage on BorgWarner Post-Earnings Results

LONDON, UK / ACCESSWIRE / February 27, 2017 / Active Wall St. announces its post-earnings coverage on Tenneco Inc. (NYSE: TEN). The Company posted its fourth quarter and fiscal 2016 financial results on February 07, 2017. The auto parts maker outperformed revenue and earnings expectations. Register with us now for your free membership at:

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One of Tenneco’s competitors within the Auto Parts space, BorgWarner Inc. (NYSE: BWA), reported on February 09, 2017, its Q4 and full year results. AWS will be initiating a research report on BorgWarner in the coming days.

Today, AWS is promoting its earnings coverage on TEN; touching on BWA. Get our free coverage by signing up to:

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Earnings Reviewed

For the quarter ended December 31, 2016, Tenneco reported total revenue of $2.155 billion, up 6% on a y-o-y basis, as a result of stronger global light vehicle revenues which was driven by both the Clean Air and Ride Performance product lines. On a constant currency basis, the Company’s total revenue increased 9% to $2.212 billion, driven by a 13% increase in light vehicle revenue, nearly doubling global light vehicle industry production growth of 7%. The Company’s revenue numbers surpassed analysts’ consensus of $2.09 billion.

Tenneco’s Q4 2016 OE commercial truck and off-highway revenues declined 7% y-o-y, remaining essentially even when compared to Q3 2016 numbers. The Company’s global aftermarket revenue was up 1% versus a year ago.

Tenneco reported Q4 2016 net income of $40 million, or $0.73 per diluted share, which includes an after-tax pension charge of $47 million. In Q4 2015, the Company’s net income was $68 million, or $1.17 per diluted share. Tenneco’s adjusted net income rose to $92 million, or $1.67 per diluted share, versus $80 million, or $1.39 per diluted share, in the year earlier same quarter, exceeding market expectations of $1.42 per share.

Segment Performance

Tenneco reported Q4 2016 EBIT (earnings before interest, taxes and non-controlling interests) of $75 million versus $128 million in Q4 2015. The Company’s adjusted EBIT rose 6% to $157 million, a Q4 record. Tenneco’s EBIT as a percent of revenue was 3.5%, which included a pre-tax pension charge of $72 million, and $10 million in restructuring and related expenses. Adjusted EBIT as a percent of value-add revenue was 9.6%, consistent with a strong performance a year ago. Tenneco stated that both EBIT and EBIT margin results continue to be driven by capitalizing on light vehicle growth in excess of industry production, technology content growth in both product lines, higher aftermarket sales, and a continued focus on launch execution and manufacturing improvements.

For the full year 2016, Tenneco reported total revenue of $8.599 billion. In constant currency, revenue increased 7% to $8.819 billion. The Company’s FY16 EBIT increased to $528 million versus $519 million a year ago. Adjusted EBIT rose 9% to $636 million. Tenneco generated FY16 EBIT as a percent of revenue of 6.1%. Adjusted EBIT as a percent of value-add revenue was 9.7%, up 40 basis points versus a year ago.

Cash Flow & Balance Sheet

Tenneco reported that cash generated by operations in Q4 2016 was $250 million compared to $329 million in Q4 2015. For FY16, the Company’s cash generated by operations was $489 million down from $517 million a year ago, due to the timing of revenue growth at the end of the year and the resulting impact on accounts receivable.

Tenneco’s Capital investments in the reported quarter were $129 million consistent with the level of investment the Company signaled earlier in 2016. These investments are for new or expanded business in North America and Europe and increased capacity in China to support a significant launch in 2017.

In Q4 2016, Tenneco repurchased 1.4 million shares for $79 million. For FY16, the Company repurchased a total of 4.2 million shares for $225 million. The Company’s Board of Directors initiated a quarterly cash dividend of $0.25 with the initial dividend payable on March 23, 2017, to shareholders of record as of March 07, 2017. Additionally, the Board authorized the repurchase of up to $400 million of common shares over the next three years, including the amount remaining on previous authorizations.

Outlook

For Q1 2017, Tenneco expects total revenue growth of 7%, outpacing forecasted light vehicle industry production growth of 3%. The Company expects to better the industry with 4% organic growth, driven by incremental content to meet Tier 3 and Euro 6 emissions regulations, the ramp up of recently launched programs, and Tenneco’s strong position on light vehicle platforms globally.

Full year 2017

Tenneco expects total revenue growth to outpace light vehicle industry production by 4%, resulting in 5% growth in FY17. For full year 2017, Tenneco expects capital expenditures to be between $360 million and $390 million; annual interest expense of about $70 million; and cash taxes between $125 million and $140 million.

In 2018 and 2019, Tenneco expects continued revenue growth, outpacing industry production by 3% to 5% each year.

Stock Performance

On Friday, February 24, 2017, the stock closed the trading session at $65.22, marginally falling 0.17% from its previous closing price of $65.33. A total volume of 315.21 thousand shares have exchanged hands. Tenneco’s stock price advanced 7.68% in the last three months, 15.88% in the past six months, and 43.75% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have gained 4.40%. The stock is trading at a PE ratio of 10.15 and has a dividend yield of 0.38%.

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