LAKE FOREST, Ill., Aug. 6, 2019 /PRNewswire/ -- Tenneco Inc.
(NYSE: TEN) reported second quarter 2019 revenue▲ of
$4.5 billion, a 78% increase versus
$2.5 billion a year ago, which
includes $1.9 billion from
acquisitions. On a constant currency pro forma basis, total
revenue increased 1% versus last year, while light vehicle industry
production* declined 8% in the quarter. Value-add revenue for the
second quarter was $3.7
billion.
The company reported net income for second quarter 2019 of
$26 million, or 32-cents per diluted share. Second quarter
2018 net income▲ was $47
million, or 92-cents per
diluted share. Second quarter 2019 adjusted net income was
$97 million, or $1.20 per diluted share, compared with
$96 million, or $1.84 per diluted share last year. Diluted shares
outstanding in the second quarter increased 57% to 80.9 million
shares, from 51.6 million shares in the second quarter 2018,
primarily due to the acquisition of Federal-Mogul.
Second quarter EBIT (earnings before interest, taxes and
noncontrolling interests) was $141
million including the acquired Federal-Mogul business,
versus $111 million last year.
EBIT as a percent of revenue was 3.1% versus 4.4% last year and
compares to -0.5% last quarter.
Second quarter adjusted EBITDA was $414
million versus $233 million
last year. Adjusted EBITDA as a percent of value-add revenue
was 11.1%. Second quarter performance improved 240 basis
points sequentially, compared to first quarter 2019, driven by the
ramp up of synergy benefits and cost control initiatives.
Cash generated from operations was $50
million.
"Tenneco's revenue growth outpaced industry production by nine
percentage points, driven by higher light vehicle, commercial truck
and off-highway revenues," said Brian
Kesseler, co-CEO, Tenneco. "We delivered sequential earnings
improvement on flat revenue quarter to quarter, with disciplined
cost management and effective synergy capture actions."
OUTLOOK
Third Quarter 2019
Tenneco expects third quarter
revenue in the range of $4.3 billion
to $4.4 billion. Further, the
company expects its third quarter adjusted EBITDA to be in the
range of $390 million to $410 million, including year-over-year pro forma
margin improvement of approximately 100 basis points in both the
DRiV and New Tenneco divisions.
Full Year 2019
The company updated its 2019 full year
outlook, and now expects:
- Total revenues in the range of $17.6
billion to $17.8 billion.
- Value-add revenues in the range of $14.6
billion to $14.8 billion
- Value-add adjusted EBITDA margin of 10.4% to 10.6%
- Adjusted EBITDA of $1,515 million
to $1,565 million
- Interest expense of ~$335
million
- Cash taxes in the range of $180
million to $200 million
- Capital expenditures of ~$730
million
- Net debt/LTM adjusted EBITDA of 3.3x
"In the third quarter, we expect our revenues to outgrow the
markets we serve," said Roger Wood,
co-CEO, Tenneco. "More importantly, we anticipate higher
margins on a year-over-year basis in both divisions supported by
operational performance improvements, synergy realization and our
continued focus on eliminating waste and cost throughout the
business."
Leverage and Spin Update
The company confirmed its targeted timing for the separation of the
business into two standalone companies, and expects the DRiV™
spinoff to occur mid-2020. Management remains focused and committed
to the separation of the businesses.
*Source: IHS Markit
July 2019 global light vehicle production forecast and Tenneco
estimates.
|
|
▲
Financial results for the second quarter of 2018 have been revised
for certain immaterial adjustments, which are further discussed in
Tenneco's Form 10-Q for the quarter ended June 30, 2019.
|
|
See "About revenue
and EBITDA guidance" below for further information about revenue
guidance and forecasted performance measures.
|
Attachment 1
Statements of Income – 3 Months
Statements of Income – 6 Months
Balance Sheets
Statements of Cash Flows – 3 Months
Statements of Cash Flows – 6 Months
Attachment 2
Reconciliation of GAAP to Non-GAAP
Earnings Measures – 3 Months
Reconciliation of GAAP to Non-GAAP Earnings Measures – 6 Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – 3
Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – 6
Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – 3 and
6 Months
Reconciliation of Non-GAAP Measures – Debt Net of Cash/Pro Forma
Adjusted LTM EBITDA including noncontrolling interests
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures –
Original Equipment and Aftermarket Revenue – 3 and 6
Months
Reconciliation of GAAP Revenue and Earnings to Non-GAAP Revenue and
Earnings Measures – 3 Months
Reconciliation of GAAP Revenue and Earnings to Non-GAAP Revenue and
Earnings Measures – 6 Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures –
Original Equipment Commercial Truck, Off-Highway, Industrial and
other revenues – 3 and 6 Months
Reconciliation of GAAP revenue to pro forma revenue and Non-GAAP
earnings measures – 2018 quarterly
Reconciliation of GAAP revenue to pro forma revenue and Non-GAAP
earnings measures – 2018 and 2017 annual
Division Level Q3 and FY 2019 Outlook
CONFERENCE CALL
The company will host a conference
call on Tuesday, August 6, 2019 at
9:30 a.m. ET. The dial-in
number is 833-366-1121 (domestic) or 412-902-6733
(international). The passcode is: Tenneco Inc. The call and
accompanying slides will be available on the financial section of
the Tenneco web site at www.investors.tenneco.com. A
recording of the call will be available one hour following
completion of the call on August 6,
2019 through August 13,
2019. To access this recording, dial 877-344-7529 (domestic)
or 412-317-0088 (international) or 855 669-9658 (Canada). The replay access code is 10133241.
The purpose of the call is to discuss the company's operations for
the second fiscal quarter 2019, as well as provide updated
information regarding matters impacting the company's outlook,
including the plan to separate its businesses to form two new,
independent companies, an Aftermarket and Ride Performance company
as well as a new Powertrain Technology company. A copy of the press
release is available on the financial and news sections of the
Tenneco web site.
About Tenneco
Headquartered in Lake Forest, Illinois, Tenneco is one of the
world's leading designers, manufacturers and marketers of
Aftermarket, Ride Performance, Clean Air and Powertrain products
and technology solutions for diversified markets, including light
vehicle, commercial truck, off-highway, industrial and the
aftermarket, with 2018 revenues of $11.8
billion and approximately 81,000 employees worldwide. On
October 1, 2018, Tenneco completed
the acquisition of Federal-Mogul, a leading global supplier to
original equipment manufacturers and the aftermarket.
Additionally, the company expects to separate its businesses to
form two new, independent companies, an Aftermarket and Ride
Performance company as well as a new Powertrain Technology
company.
About DRiV™ - the future Aftermarket and
Ride Performance Company
Following the expected separation of Tenneco to form two new,
independent companies, an Aftermarket and Ride Performance company
(DRiV™) as well as a new Powertrain Technology company, DRiV
will be one of the largest global multi-line, multi-brand
aftermarket companies, and one of the largest global OE ride
performance and braking companies. DRiV's principal product
brands will feature Monroe®, Öhlins®, Walker®,
Clevite®Elastomers, MOOG®, Fel-Pro®, Wagner®, Ferodo®, Champion®
and others. DRiV would have 2018 pro-forma revenues of $6.4 billion, with 54% of those revenues from
aftermarket and 46% from original equipment customers.
About the new Tenneco - the future Powertrain Technology
company
Following Tenneco's expected separation to form two
new, independent companies, an Aftermarket and Ride Performance
company (DRiV™), as well as a new Powertrain Technology company,
the new Tenneco will be one of the world's largest pure-play
powertrain companies serving OE markets worldwide with engineered
solutions addressing fuel economy, power output, and criteria
pollution requirements for gasoline, diesel and electrified
powertrains. The new Tenneco would have 2018 pro-forma revenues of
$11.4 billion, serving light vehicle,
commercial truck, off-highway and industrial markets.
About Revenue and EBITDA Guidance
Revenue estimates
and other forecasted information in this release are based on OE
manufacturers' programs that have been formally awarded to the
company; programs where Tenneco is highly confident that it will be
awarded business based on informal customer indications consistent
with past practices; and Tenneco's status as supplier for the
existing program and its relationship with the customer. This
information is also based on anticipated vehicle production levels
and pricing, including precious metals pricing and the impact of
material cost changes. Unless otherwise indicated, our methodology
does not attempt to forecast currency fluctuations, and
accordingly, reflects constant currency. Certain elements of the
restructuring and related expenses, legal settlements and other
unusual charges we incur from time to time cannot be forecasted
accurately. In this respect, we are not able to reconcile
forecasted adjusted EBITDA (and the related margins) on a
forward-looking basis to the most comparable GAAP measures without
unreasonable efforts on account of these factors and other factors
not in our control. For certain additional assumptions upon
which these estimates are based, see the slides accompanying the
August 6, 2019 webcast, which will be
available on the financial section of the Tenneco website at
www.investors.tenneco.com.
About Forward-Looking Statements
This press
release contains forward-looking statements. The words "may,"
"will," "believe," "should," "could," "plan," "expect,"
"anticipate," "estimate," and similar expressions (and variations
thereof), identify these forward-looking statements. These
forward-looking statements are based on the current expectations of
the company (including its subsidiaries). Because these
statements involve risks and uncertainties, actual results may
differ materially from the expectations expressed in the
forward-looking statements. Important factors that could cause
actual results to differ materially from the expectations reflected
in the forward-looking statements include:
- general economic, business and market conditions;
- our ability to source and procure needed materials,
components and other products and services in accordance with
customer demand and at competitive prices;
- the cost and outcome of existing and any future claims,
legal proceedings or investigations, including, but not limited to,
any of the foregoing arising in connection with the ongoing global
antitrust investigation, product performance, product safety or
intellectual property rights;
- changes in consumer demand, prices and our ability to have
our products included on top selling vehicles, including any shifts
in consumer preferences away from historically higher margin
products for our customers and us, to other lower margin vehicles,
for which we may or may not have supply arrangements, and the
cyclical nature of the global vehicle industry, including the
performance of the global aftermarket sector;
- changes in consumer demand for our original equipment
products or aftermarket products, or changes in automotive and
commercial vehicle manufacturers' production rates and their actual
and forecasted requirements for our products, due to difficult
economic conditions and/or regulatory or legal changes affecting
internal combustion engines and/or aftermarket products;
- our dependence on certain large customers, including the
loss of any of our large original equipment manufacturer customers
(on whom we depend for a substantial portion of our revenues), or
the loss of market shares by these customers if we are unable to
achieve increased sales to other customers or any change in
customer demand due to delays in the adoption or enforcement of
worldwide emissions regulations;
- new technologies that reduce the demand for certain of our
products or otherwise render them obsolete;
- our ability to introduce new products and technologies that
satisfy customers' needs in a timely fashion;
- the overall highly competitive nature of the automotive and
commercial vehicle parts industries, and any resultant inability to
realize the sales represented by our awarded book of business
(which is based on anticipated pricing and volumes over the life of
the applicable program);
- changes in capital availability or costs, including
increases in our cost of borrowing (i.e., interest rate increases),
the amount of our debt, our ability to access capital markets at
favorable rates, and the credit ratings of our debt;
- our ability to comply with the covenants contained in our
debt instruments;
- our working capital requirements;
- our ability to successfully execute cash management and
other cost reduction plans, and to realize the anticipated benefits
from these plans;
- risks inherent in operating a multi-national company,
including economic conditions, such as currency exchange and
inflation rates, and political conditions in the countries where we
operate or sell our products, adverse changes in trade agreements,
tariffs, immigration policies, political stability, and tax and
other laws, and potential disruptions of production and
supply;
- increasing competition from lower cost, private-label
products;
- damage to the reputation of one or more of our leading
brands;
- the effect of improvements in automotive parts on
aftermarket demand for some of our products;
- industrywide strikes, labor disruptions at our facilities or
any labor or other economic disruptions at any of our significant
customers or suppliers or any of our customers' other
suppliers;
- developments relating to our intellectual property,
including our ability to adapt to changes in technology;
- costs related to product warranties and other customer
satisfaction actions;
- the failure or breach of our information technology systems,
including the consequences of any misappropriation, exposure or
corruption of sensitive information stored on such systems and the
interruption to our business such failure or breach may
cause;
- the effect of consolidation among vehicle parts suppliers
and customers on our ability to compete in the highly competitive
automotive and commercial vehicle supplier industry;
- changes in distribution channels or competitive conditions
in the markets and countries where we operate;
- the evolution towards autonomous vehicles and car and ride
sharing;
- customer acceptance of new products;
- our ability to successfully integrate, and benefit from, any
acquisitions we complete;
- our ability to effectively manage our joint ventures and
other third-party relationships;
- the potential impairment in the carrying value of our
long-lived assets, goodwill, or indefinite-lived intangible assets
or our inability to realize our deferred tax assets;
- the negative effect of fuel price volatility on
transportation and logistics costs, raw material costs,
discretionary purchases of vehicles or aftermarket products, and
demand for off-highway equipment;
- increases in the costs of raw materials or components,
including our ability to successfully reduce the effect of any such
cost increases through materials substitutions, cost reduction
initiatives, customer recovery, and other methods;
- changes by the Financial Accounting Standards Board or the
Securities and Exchange Commission of authoritative generally
accepted accounting principles or policies;
- changes in accounting estimates and assumptions, including
changes based on additional information;
- any changes by the International Organization for
Standardization (ISO) or other such committees in their
certification protocols for processes and products, which may have
the effect of delaying or hindering our ability to bring new
products to market;
- the effect of the extensive, increasing, and changing laws
and regulations to which we are subject, including environmental
laws and regulations, which may result in our incurrence of
environmental liabilities in excess of the amount reserved or
increased costs or loss of revenues relating to products subject to
changing regulation;
- potential volatility in our effective tax rate;
- disasters, such as fires, earthquakes and flooding, and any
resultant disruptions in the supply or production of goods or
services to us or by us, in demand by our customers or in the
operation of our system, disaster recovery capabilities or business
continuity capabilities;
- acts of war and/or terrorism, as well as actions taken or to
be taken by the United States and
other governments as a result of further acts or threats of
terrorism, and the effect of these acts on economic, financial, and
social conditions in the countries where we operate;
- pension obligations and other postretirement
benefits;
- our hedging activities to address commodity price
fluctuations; and
- the timing and occurrence (or non-occurrence) of other
transactions, events and circumstances which may be beyond our
control.
In addition, important factors related to the acquisition of
Federal-Mogul LLC ("Federal-Mogul") and the planned separation of
our company into a powertrain technology company and an aftermarket
and ride performance company that could cause actual results to
differ materially from the expectations reflected in the
forward-looking statements, including:
- the risk the Company may not complete a separation of its
powertrain technology business and its aftermarket and ride
performance business (or achieve some or all of the anticipated
benefits of the separation);
- the risk the combined company and each separate company
following the separation will underperform relative to our
expectations;
- the ongoing transaction costs and risk we may incur greater
costs following separation of the business;
- the risk the spin-off is determined to be a taxable
transaction;
- the risk the benefits of the acquisition of Federal-Mogul,
including synergies, may not be fully realized or may take longer
to realize than expected;
- the risk the acquisition of Federal-Mogul may not advance
our business strategy;
- the risk we may experience difficulty integrating or
separating employees or operations; and
- the risk the transaction may have an adverse effect on
existing arrangements with us, including those related to
transition, manufacturing and supply services and tax matters; our
ability to retain and hire key personnel; or our ability to
maintain relationships with customers, suppliers or other business
partners.
The company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after
the date of this press release. Additional information regarding
these risk factors and uncertainties is, and will be, detailed from
time to time in the company's SEC filings, including but not
limited to its annual report on Form 10-K for the year ended
December 31,
2018.
Investor
inquiries:
|
Media
inquiries:
|
|
|
Linae
Golla
|
Bill
Dawson
|
847-482-5162
|
847-482-5807
|
lgolla@tenneco.com
|
bdawson@tenneco.com
|
|
|
Rich Kwas
|
Steve Blow
|
248-849-1340
|
517-262-0655
|
rich.kwas@tenneco.com
|
sblow@tenneco.com
|
ATTACHMENT
1
|
TENNECO INC. AND
CONSOLIDATED SUBSIDIARIES
|
STATEMENTS OF INCOME
(LOSS)
|
Unaudited
|
THREE MONTHS ENDED
JUNE 30,
|
(Millions except per
share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018*
|
|
Net sales and
operating revenues:
|
|
|
|
|
Clean Air - Value-add
revenues
|
$ 1,050
|
|
$ 1,073
|
|
Clean Air - Substrate
sales
|
777
|
|
621
|
|
Powertrain
|
1,133
|
|
-
|
|
Motorparts
|
835
|
|
333
|
|
Ride
Performance
|
709
|
|
506
|
|
Total net sales and operating revenues
|
$ 4,504
|
|
$ 2,533
|
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
Cost of
sales
|
3,793
|
(e) (f)
(g)
|
2,134
|
|
Selling,
general and administrative
|
288
|
(b) (c)
|
154
|
(j) (k) (l)
(m)
|
Depreciation and amortization
|
169
|
(a)
|
60
|
|
Engineering, research, and development
|
78
|
|
39
|
|
Restructuring charges and asset impairments
|
61
|
(a) (d)
|
29
|
(i) (l)
|
Total costs and expenses
|
4,389
|
|
2,416
|
|
|
|
|
|
|
Other expense
(income):
|
|
|
|
|
Non-service pension
and other postretirement benefit costs (credits)
|
4
|
|
3
|
|
Equity in (earnings)
losses of nonconsolidated affiliates, net of tax
|
(17)
|
|
-
|
|
Other expense
(income), net
|
(13)
|
|
3
|
|
Total other expense (income)
|
(26)
|
|
6
|
|
|
|
|
|
|
Earnings before
interest expense, income taxes, and noncontrolling
interests:
|
|
|
|
|
Clean Air
|
113
|
(a) (f)
|
103
|
(i) (l)
|
Powertrain
|
42
|
(a) (d)
|
-
|
|
Motorparts
|
75
|
(a) (c) (d) (e)
(g)
|
51
|
(i) (l)
|
Ride
Performance
|
(11)
|
(a) (d)
(e)
|
3
|
(i) (j)
|
Corporate
|
(78)
|
(b) (c)
(d)
|
(46)
|
(k) (l)
(m)
|
Total earnings before interest expense, income taxes, and
noncontrolling interests
|
141
|
|
111
|
|
|
|
|
|
|
Interest
expense
|
82
|
(o)
|
22
|
(o)
|
Earnings before
income taxes and noncontrolling interests
|
59
|
|
89
|
|
|
|
|
|
|
Income
tax expense
|
14
|
(h)
|
26
|
(n)
|
Net
income
|
45
|
|
63
|
|
|
|
|
|
|
Less:
Net income attributable to noncontrolling interests
|
19
|
|
16
|
|
Net income
attributable to Tenneco Inc.
|
$
26
|
|
$
47
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
Basic
|
80.9
|
|
51.3
|
|
Diluted
|
80.9
|
|
51.6
|
|
|
|
|
|
|
Earnings per share of
common stock:
|
|
|
|
|
Basic
|
$
0.32
|
|
$
0.92
|
|
Diluted
|
$
0.32
|
|
$
0.92
|
|
|
* Financial results
for 2018 have been revised for certain immaterial adjustments,
which will be further discussed in Tenneco's Form 10-Q for the
quarter ended June 30, 2019.
|
|
(a) Includes
restructuring and related charges of $60 million pre-tax, $44
million after tax and noncontrolling interests or $0.54 per diluted
share. Of the amount, $57 million is recorded in restructuring
charges and asset impairments and $3 million is recorded in
depreciation and amortization. $15 million is recorded in Clean
Air, $16 million is recorded in Powertrain, $3 million is recorded
in Motorparts and $26 million is recorded in Ride
Performance.
|
|
(b) Includes costs
related to cost reduction initiatives of $2 million pre-tax, $1
million after tax or $0.02 per diluted share.
|
|
(c) Includes
acquisition and expected spin costs of $27 million pre-tax, $19
million after tax or $0.23 per diluted share. $1 million is
recorded in Motorparts and $26 million is recorded in
Corporate.
|
|
(d) Includes costs to
achieve synergies of $7 million pre-tax, $5 million after tax or
$0.06 per diluted share. Of the amount, $4 million is recorded in
restructuring charges and asset impairments and $3 million is
recorded in selling, general and administrative. $2 million is
recorded in Powertrain, $4 million is recorded in Motorparts, $(1)
million is recorded in Ride Performance and $2 million is recorded
in Corporate.
|
|
(e) Includes charges
related to purchase accounting of $3 million pre-tax, $1 million
after tax or $0.02 per diluted share. $1 million is recorded in
Motorparts and $2 million is recorded in Ride
Performance.
|
|
(f) Includes process
harmonization charge of $1 million pre-tax.
|
|
(g) Includes warranty
charge of $7 million pre-tax, $5 million after tax or $0.06 per
diluted share.
|
|
(h) Includes net tax
benefit of $4 million or $0.05 per diluted share for discrete tax
adjustments recognized in the period.
|
|
(i) Includes
restructuring and related charges of $21 million pre-tax, $14
million after tax and noncontrolling interests or $0.26 per diluted
share. $11 million is recorded in Clean Air, $2 million is
recorded in Motorparts and $8 million is recorded in Ride
Performance.
|
|
(j) Includes costs
related to cost reduction initiatives of $10 million pre-tax, $7
million after tax or $0.14 per diluted share.
|
|
(k) Includes
acquisition costs of $18 million pre-tax, $14 million after tax or
$0.27 per diluted share.
|
|
(l) Includes costs to
achieve synergies of $9 million pre-tax, $7 million after tax or
$0.11 per diluted share. Of the amount, $8 million is recorded in
restructuring charges and asset impairments and $1 million is
recorded in selling, general and administrative. $6 million is
recorded in Clean Air, $1 million is recorded in Motorparts and $2
million is recorded in Corporate.
|
|
(m) Includes
environmental charge of $4 million pre-tax, $3 million after tax or
$0.06 per diluted share related to an acquired site whereby an
indemnification reverted back to the Company resulting from a 2009
bankruptcy filing of Mark IV Industries.
|
|
(n) Includes net tax
expense of $4 million or $0.08 per diluted share for discrete tax
adjustments recognized in the period.
|
|
(o) Financing charges
on sale of receivables are included in interest expense.
|
ATTACHMENT
1
|
TENNECO INC. AND
CONSOLIDATED SUBSIDIARIES
|
STATEMENTS OF INCOME
(LOSS)
|
Unaudited
|
SIX MONTHS ENDED JUNE
30,
|
(Millions except per
share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
2018*
|
|
Net sales and
operating revenues:
|
|
|
|
|
Clean Air - Value-add
revenues
|
$ 2,123
|
|
$ 2,177
|
|
Clean Air - Substrate
sales
|
1,483
|
|
1,273
|
|
Powertrain
|
2,308
|
|
-
|
|
Motorparts
|
1,632
|
|
645
|
|
Ride
Performance
|
1,442
|
|
1,019
|
|
Total net sales and operating revenues
|
$ 8,988
|
|
$ 5,114
|
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
Cost of
sales
|
7,657
|
(e) (g)
(h)
|
4,327
|
(n)
|
Selling,
general and administrative
|
604
|
(b) (c)
(d)
|
305
|
(k) (l) (m)
(o)
|
Depreciation and amortization
|
338
|
(a)
|
120
|
|
Engineering, research, and development
|
170
|
|
79
|
|
Restructuring charges and asset impairments
|
85
|
(a) (d)
|
41
|
(j) (m)
|
Goodwill
impairment charge
|
60
|
(f)
|
-
|
|
Total costs and expenses
|
8,914
|
|
4,872
|
|
|
|
|
|
|
Other expense
(income):
|
|
|
|
|
Non-service pension
and other postretirement benefit costs (credits)
|
6
|
|
6
|
|
Equity in (earnings)
losses of nonconsolidated affiliates, net of tax
|
(33)
|
|
-
|
|
Other expense
(income), net
|
(16)
|
|
3
|
|
Total other expense (income)
|
(43)
|
|
9
|
|
|
|
|
|
|
Earnings before
interest expense, income taxes, and noncontrolling
interests:
|
|
|
|
|
Clean Air
|
207
|
(a) (d)
(g)
|
223
|
(j) (m)
|
Powertrain
|
96
|
(a) (d)
(e)
|
-
|
|
Motorparts
|
84
|
(a) (c) (d) (e) (g)
(h)
|
90
|
(j) (m)
|
Ride
Performance
|
(92)
|
(a) (d) (e)
(f)
|
10
|
(j) (k)
(n)
|
Corporate
|
(178)
|
(a) (b) (c)
(d)
|
(90)
|
(l) (m)
(o)
|
Total earnings before interest expense, income taxes, and
noncontrolling interests
|
117
|
|
233
|
|
|
|
|
|
|
Interest
expense
|
163
|
(q)
|
45
|
(q)
|
Earnings (Loss)
before income taxes and noncontrolling interests
|
(46)
|
|
188
|
|
|
|
|
|
|
Income
tax expense
|
14
|
(i)
|
51
|
(p)
|
Net income
(loss)
|
(60)
|
|
137
|
|
|
|
|
|
|
Less:
Net income attributable to noncontrolling interests
|
31
|
|
30
|
|
Net income (loss)
attributable to Tenneco Inc.
|
$
(91)
|
|
$
107
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
Basic
|
80.9
|
|
51.2
|
|
Diluted
|
80.9
|
|
51.5
|
|
|
|
|
|
|
Earnings (Loss) per
share of common stock:
|
|
|
|
|
Basic
|
$ (1.13)
|
|
$
2.08
|
|
Diluted
|
$ (1.13)
|
|
$
2.07
|
|
|
* Financial results
for 2018 have been revised for certain immaterial adjustments,
which will be further discussed in Tenneco's Form 10-Q for the
quarter ended June 30, 2019.
|
|
(a) Includes
restructuring and related charges of $80 million pre-tax, $60
million after tax and noncontrolling interests or $0.73 per diluted
share. Of the amount, $74 million is recorded in restructuring
charges and asset impairments and $6 million is recorded in
depreciation and amortization. $19 million is recorded in Clean
Air, $17 million is recorded in Powertrain, $4 million is recorded
in Motorparts, $39 million is recorded in Ride Performance and $1
million is recorded in Corporate.
|
|
(b) Includes costs
related to cost reduction initiatives of $10 million pre-tax, $7
million after tax or $0.09 per diluted share.
|
|
(c) Includes
acquisition and expected spin costs of $67 million pre-tax, $51
million after tax or $0.62 per diluted share. $1 million is
recorded in Motorparts and $66 million is recorded in
Corporate.
|
|
(d) Includes costs to
achieve synergies of $14 million pre-tax, $11 million after tax or
$0.14 per diluted share. Of the amount, $11 million is recorded in
restructuring charges and asset impairments and $3 million is
recorded in selling, general and administrative. $1 million
is recorded in Clean Air, $2 million is recorded in Powertrain, $7
million is recorded in Motorparts, $2 million is recorded in Ride
Performance and $2 million is recorded in Corporate.
|
|
(e) Includes charges
related to purchase accounting of $44 million pre-tax, $35 million
after tax or $0.44 per diluted share. $2 million is recorded in
Powertrain, $37 million is recorded in Motorparts and $5 million is
recorded in Ride Performance.
|
|
(f) Represents
goodwill impairment charges of $60 million pre-tax, $60 million
after tax or $0.74 per diluted share.
|
|
(g) Includes process
harmonization charge of $10 million pre-tax, $7 million after tax
or $0.09 per diluted share, of which $5 million is recorded in
Clean Air and $5 million is recorded in Motorparts.
|
|
(h) Includes warranty
charge of $7 million pre-tax, $5 million after tax or $0.06 per
diluted share.
|
|
(i) Includes net tax
benefit of $6 million or $0.07 per diluted share for discrete tax
adjustments recognized in the period.
|
|
(j) Includes
restructuring and related charges of $33 million pre-tax, $22
million after tax and noncontrolling interests or $0.42 per diluted
share. $12 million is recorded in Clean Air, $4 million is recorded
in Motorparts and $17 million is recorded in Ride
Performance.
|
|
(k) Includes costs
related to cost reduction initiatives of $10 million pre-tax, $7
million after tax or $0.15 per diluted share.
|
|
(l) Includes
acquisition costs of $31 million pre-tax, $25 million after tax or
$0.48 per diluted share.
|
|
(m) Includes costs to
achieve synergies of $9 million pre-tax, $7 million after tax or
$0.12 per diluted share. Of the amount, $8 million is recorded in
restructuring charges and asset impairments and $1 million is
recorded in selling, general and administrative. $6 million is
recorded in Clean Air, $1 million is recorded in Motorparts and $2
million is recorded in Corporate.
|
|
(n) Includes warranty
charge of $5 million pre-tax, $4 million after tax or $0.08 per
diluted share.
|
|
(o) Includes
environmental charge of $4 million pre-tax, $3 million after tax or
$0.06 per diluted share related to an acquired site whereby an
indemnification reverted back to the Company resulting from a 2009
bankruptcy filing of Mark IV Industries.
|
|
(p) Includes net tax
expense of $4 million or $0.09 per diluted share for discrete tax
adjustments recognized in the period.
|
|
(q) Financing charges
on sale of receivables are included in interest expense.
|
|
|
ATTACHMENT
1
|
TENNECO INC. AND
CONSOLIDATED SUBSIDIARIES
|
BALANCE
SHEETS
|
Unaudited
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
June 30,
2019
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
384
|
|
$
697
|
|
|
|
|
|
|
|
|
|
|
Restricted
cash
|
6
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Receivables,
net
|
2,847
|
(a)
|
2,572
|
(a)
|
|
|
|
|
|
|
|
|
|
Inventories
|
2,207
|
|
2,245
|
|
|
|
|
|
|
|
|
|
|
Prepayments and other
current assets
|
550
|
|
590
|
|
|
|
|
|
|
|
|
|
|
Other noncurrent
assets
|
4,029
|
|
3,622
|
|
|
|
|
|
|
|
|
|
|
Property, plant and
equipment, net
|
3,569
|
|
3,501
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
$
13,592
|
|
$
13,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Shareholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term debt,
including current maturities of long-term debt
|
$
170
|
|
$
153
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
2,725
|
|
2,759
|
|
|
|
|
|
|
|
|
|
|
Accrued compensation
and employee benefits
|
391
|
|
343
|
|
|
|
|
|
|
|
|
|
|
Accrued income
taxes
|
-
|
|
64
|
|
|
|
|
|
|
|
|
|
|
Accrued expenses and
other current liabilities
|
1,024
|
|
1,001
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
5,508
|
(b)
|
5,340
|
(b)
|
|
|
|
|
|
|
|
|
|
Deferred income
taxes
|
110
|
|
88
|
|
|
|
|
|
|
|
|
|
|
Pension and
postretirement benefits
|
1,129
|
|
1,167
|
|
|
|
|
|
|
|
|
|
|
Deferred credits and
other liabilities
|
546
|
|
263
|
|
|
|
|
|
|
|
|
|
|
Redeemable
noncontrolling interests
|
145
|
|
138
|
|
|
|
|
|
|
|
|
|
|
Tenneco Inc.
shareholders' equity
|
1,638
|
|
1,726
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
206
|
|
190
|
|
|
|
|
|
|
|
|
|
|
Total liabilities,
redeemable noncontrolling interests and equity
|
$
13,592
|
|
$
13,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2019
|
|
December 31,
2018
|
|
(a)
|
Accounts receivable
net of:
|
|
|
|
|
|
|
Accounts receivable
outstanding and derecognized
|
$
1,098
|
|
$
1,011
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2019
|
|
December 31,
2018
|
|
(b)
|
Long-term debt
composed of:
|
|
|
|
|
|
|
Revolver
Borrowings
|
$
250
|
|
$
-
|
|
|
|
LIBOR plus 1.75% Term
Loan A due 2019 through 2023
|
1,649
|
|
1,691
|
|
|
|
LIBOR plus 3.00% Term
Loan B due 2019 through 2025
|
1,626
|
|
1,629
|
|
|
|
$225 million of
5.375% Senior Notes due 2024
|
222
|
|
222
|
|
|
|
$500 million of
5.000% Senior Notes due 2026
|
494
|
|
493
|
|
|
|
€415 million 4.875%
Euro Fixed Rate Notes due 2022
|
489
|
|
496
|
|
|
|
€300 million of
Euribor plus 4.875% Euro Floating Rate Notes due 2024
|
345
|
|
349
|
|
|
|
€350 million of
5.000% Euro Fixed Rate Notes due 2024
|
422
|
|
427
|
|
|
|
Other Debt, primarily
foreign instruments
|
91
|
|
106
|
|
|
|
|
5,588
|
|
5,413
|
|
|
|
Less: maturities
classified as current
|
80
|
|
73
|
|
|
|
Total long-term
debt
|
$
5,508
|
|
$
5,340
|
|
ATTACHMENT
1
|
TENNECO INC. AND
CONSOLIDATED SUBSIDIARIES
|
STATEMENTS OF CASH
FLOWS
|
Unaudited
|
(Millions)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
2019
|
|
2018*
|
|
|
|
|
Operating
Activities
|
|
|
|
Net income
|
$
45
|
|
$
63
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
169
|
|
60
|
Deferred income
taxes
|
(6)
|
|
(8)
|
Stock-based
compensation
|
6
|
|
2
|
Restructuring charges
and asset impairments, net of cash paid
|
28
|
|
14
|
Change in pension and
other postretirement benefit plans
|
(15)
|
|
2
|
Equity in earnings of
nonconsolidated affiliates
|
(17)
|
|
-
|
Cash dividends
received from nonconsolidated affiliates
|
12
|
|
-
|
Loss (gain) on sale
of assets
|
(1)
|
|
-
|
Changes in operating
assets and liabilities:
|
|
|
|
Receivables
|
(89)
|
|
(12)
|
Inventories
|
90
|
|
(19)
|
Payables and accrued
expenses
|
(109)
|
|
21
|
Accrued interest and
accrued income taxes
|
(28)
|
|
2
|
Other assets and
liabilities
|
(35)
|
|
(47)
|
Net cash provided by
operating activities
|
50
|
|
78
|
|
|
|
|
Investing
Activities
|
|
|
|
Proceeds from sale of
assets
|
4
|
|
3
|
Cash payments for
property, plant and equipment
|
(169)
|
|
(85)
|
Proceeds from
deferred purchase price of factored receivables
|
87
|
|
32
|
Other
|
(3)
|
|
2
|
Net cash used by
investing activities
|
(81)
|
|
(48)
|
|
|
|
|
Financing
Activities
|
|
|
|
Proceeds from term
loans and notes
|
83
|
|
3
|
Repayments of term
loans and notes
|
(126)
|
|
(15)
|
Borrowings on
revolving lines of credit
|
2,406
|
|
1,402
|
Payments on revolving
lines of credit
|
(2,273)
|
|
(1,425)
|
Issuance (repurchase)
of common shares
|
-
|
|
1
|
Cash
dividends
|
-
|
|
(12)
|
Debt issuance cost of
long-term debt
|
-
|
|
(2)
|
Net increase
(decrease) in bank overdrafts
|
(7)
|
|
(3)
|
Other
|
2
|
|
10
|
Distributions to
noncontrolling interest partners
|
(19)
|
|
(28)
|
Net cash provided
(used) by financing activities
|
66
|
|
(69)
|
|
|
|
|
Effect of foreign
exchange rate changes on cash, cash equivalents and restricted
cash
|
(8)
|
|
(14)
|
Increase (Decrease)
in cash, cash equivalents and restricted cash
|
27
|
|
(53)
|
|
|
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
363
|
|
290
|
Cash, cash
equivalents and restricted cash, end of period
|
$
390
|
|
$
237
|
|
|
|
|
|
|
|
|
Supplemental Cash
Flow Information
|
|
|
|
Cash paid during the
period for interest
|
$
71
|
|
$
17
|
Cash paid during the
period for income taxes, net of refunds
|
57
|
|
31
|
|
|
|
|
Non-cash Investing
Activities
|
|
|
|
Period end balance of
accounts payables for property, plant and equipment
|
$
116
|
|
$
54
|
Deferred purchase
price of receivables factored in the period
|
52
|
|
71
|
|
* Financial results
for 2018 have been revised for certain immaterial adjustments,
which will be further discussed in Tenneco's Form 10-Q for the
quarter ended June 30, 2019.
|
ATTACHMENT
1
|
TENNECO INC. AND
CONSOLIDATED SUBSIDIARIES
|
STATEMENTS OF CASH
FLOWS
|
Unaudited
|
(Millions)
|
|
|
|
|
|
|
|
|
|
Six Months Ended June
30,
|
|
2019
|
|
2018*
|
|
|
|
|
Operating
Activities
|
|
|
|
Net income
(loss)
|
$
(60)
|
|
$
137
|
Adjustments to
reconcile net income (loss) to cash provided (used) by operating
activities:
|
|
|
|
Goodwill impairment
charge
|
60
|
|
-
|
Depreciation and
amortization
|
338
|
|
120
|
Deferred income
taxes
|
(14)
|
|
(9)
|
Stock-based
compensation
|
13
|
|
7
|
Restructuring charges
and asset impairments, net of cash paid
|
14
|
|
10
|
Change in pension and
other postretirement benefit plans
|
(32)
|
|
2
|
Equity in earnings of
nonconsolidated affiliates
|
(33)
|
|
-
|
Cash dividends
received from nonconsolidated affiliates
|
27
|
|
-
|
Loss (gain) on sale
of assets
|
(1)
|
|
-
|
Changes in operating
assets and liabilities:
|
|
|
|
Receivables
|
(401)
|
|
(233)
|
Inventories
|
101
|
|
(51)
|
Payables and accrued
expenses
|
48
|
|
206
|
Accrued interest and
accrued income taxes
|
(66)
|
|
(2)
|
Other assets and
liabilities
|
(94)
|
|
(109)
|
Net cash provided
(used) by operating activities
|
(100)
|
|
78
|
|
|
|
|
Investing
Activities
|
|
|
|
Proceeds from sale of
assets
|
5
|
|
5
|
Net proceeds from
sale of business
|
22
|
|
-
|
Cash payments for
property, plant and equipment
|
(379)
|
|
(174)
|
Acquisition of
business (net of cash acquired)
|
(158)
|
|
-
|
Proceeds from
deferred purchase price of factored receivables
|
147
|
|
66
|
Other
|
(1)
|
|
2
|
Net cash used by
investing activities
|
(364)
|
|
(101)
|
|
|
|
|
Financing
Activities
|
|
|
|
Proceeds from term
loans and notes
|
111
|
|
9
|
Repayments of term
loans and notes
|
(190)
|
|
(28)
|
Borrowings on
revolving lines of credit
|
4,525
|
|
2,669
|
Payments on revolving
lines of credit
|
(4,254)
|
|
(2,614)
|
Issuance (repurchase)
of common shares
|
(2)
|
|
(1)
|
Cash
dividends
|
(20)
|
|
(25)
|
Debt issuance cost of
long-term debt
|
-
|
|
(2)
|
Net increase
(decrease) in bank overdrafts
|
(8)
|
|
(7)
|
Other
|
(1)
|
|
(20)
|
Distributions to
noncontrolling interest partners
|
(20)
|
|
(28)
|
Net cash provided
(used) by financing activities
|
141
|
|
(47)
|
|
|
|
|
Effect of foreign
exchange rate changes on cash, cash equivalents and restricted
cash
|
11
|
|
(11)
|
Decrease in cash,
cash equivalents and restricted cash
|
(312)
|
|
(81)
|
|
|
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
702
|
|
318
|
Cash, cash
equivalents and restricted cash, end of period
|
$
390
|
|
$
237
|
|
|
|
|
|
|
|
|
Supplemental Cash
Flow Information
|
|
|
|
Cash paid during the
period for interest
|
$
145
|
|
$
40
|
Cash paid during the
period for income taxes, net of refunds
|
100
|
|
56
|
|
|
|
|
Non-cash Investing
Activities
|
|
|
|
Period end balance of
accounts payables for property, plant and equipment
|
$
116
|
|
$
54
|
Deferred purchase
price of receivables factored in the period
|
52
|
|
71
|
|
* Financial results
for 2018 have been revised for certain immaterial adjustments,
which will be further discussed in Tenneco's Form 10-Q for the
quarter ended June 30, 2019.
|
ATTACHMENT
2
|
TENNECO
INC.
|
RECONCILIATION OF
GAAP(1)TO NON-GAAP EARNINGS
MEASURES(2)
|
Unaudited
|
(Millions except per
share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2019
|
|
Q2 2018*
|
|
|
Net income
attributable to
Tenneco Inc.
|
|
Per Share
|
|
EBIT
|
|
EBITDA
(3)
|
|
Net income
attributable to
Tenneco Inc.
|
|
Per Share
|
|
EBIT
|
|
EBITDA
(3)
|
Earnings
Measures
|
$
26
|
|
$
0.32
|
|
$
141
|
|
$
310
|
|
$
47
|
|
$
0.92
|
|
$ 111
|
|
$
171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related expenses(4)
|
44
|
|
0.54
|
|
60
|
|
57
|
|
14
|
|
0.26
|
|
21
|
|
21
|
|
Cost reduction
initiatives (5)
|
1
|
|
0.02
|
|
2
|
|
2
|
|
7
|
|
0.14
|
|
10
|
|
10
|
|
Acquisition and spin
costs (6)
|
19
|
|
0.23
|
|
27
|
|
27
|
|
14
|
|
0.27
|
|
18
|
|
18
|
|
Costs to achieve
synergies (7)
|
5
|
|
0.06
|
|
7
|
|
7
|
|
7
|
|
0.11
|
|
9
|
|
9
|
|
Purchase accounting
charges (8)
|
1
|
|
0.02
|
|
3
|
|
3
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Process harmonization
(9)
|
-
|
|
-
|
|
1
|
|
1
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Warranty charge
(10)
|
5
|
|
0.06
|
|
7
|
|
7
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Environmental charge
(11)
|
-
|
|
-
|
|
-
|
|
-
|
|
3
|
|
0.06
|
|
4
|
|
4
|
|
Net tax
adjustments
|
(4)
|
|
(0.05)
|
|
-
|
|
-
|
|
4
|
|
0.08
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net income,
EPS, EBIT, and EBITDA
|
$
97
|
|
$
1.20
|
|
$
248
|
|
$
414
|
|
$
96
|
|
$
1.84
|
|
$ 173
|
|
$
233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2019
|
|
|
|
|
Global
Segments
|
|
|
|
|
|
|
|
|
Clean Air
|
|
Powertrain
|
|
Motorparts
|
|
Ride
Performance
|
|
Total
|
|
Corporate
|
|
Total
|
|
|
Net income
attributable to Tenneco Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
$
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT, Earnings (Loss)
before interest expense, income taxes and noncontrolling
interests
|
$
113
|
|
$
42
|
|
$
75
|
|
$
(11)
|
|
$
219
|
|
$
(78)
|
|
$ 141
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
39
|
|
58
|
|
35
|
|
37
|
|
169
|
|
-
|
|
169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA
including noncontrolling interests (3)
|
$
152
|
|
$
100
|
|
$
110
|
|
$
26
|
|
$
388
|
|
$
(78)
|
|
$ 310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related expenses(4)
|
15
|
|
16
|
|
3
|
|
23
|
|
57
|
|
-
|
|
57
|
|
|
|
Cost reduction
initiatives (5)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2
|
|
2
|
|
|
|
Acquisition and spin
costs (6)
|
-
|
|
-
|
|
1
|
|
-
|
|
1
|
|
26
|
|
27
|
|
|
|
Costs to achieve
synergies (7)
|
-
|
|
2
|
|
4
|
|
(1)
|
|
5
|
|
2
|
|
7
|
|
|
|
Purchase accounting
charges (8)
|
-
|
|
-
|
|
1
|
|
2
|
|
3
|
|
-
|
|
3
|
|
|
|
Process harmonization
(9)
|
1
|
|
-
|
|
-
|
|
-
|
|
1
|
|
-
|
|
1
|
|
|
|
Warranty charge
(10)
|
-
|
|
-
|
|
7
|
|
-
|
|
7
|
|
-
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
168
|
|
$
118
|
|
$
126
|
|
$
50
|
|
$
462
|
|
$
(48)
|
(12)
|
$ 414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2018*
|
|
|
|
|
|
|
Global
Segments
|
|
|
|
|
|
|
|
|
|
|
Clean Air
|
|
Motorparts
|
|
Ride
Performance
|
|
Total
|
|
Corporate
|
|
Total
|
|
|
|
|
Net income
attributable to Tenneco Inc.
|
|
|
|
|
|
|
|
|
|
|
$
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT, Earnings before
interest expense, income taxes and noncontrolling
interests
|
$
103
|
|
$
51
|
|
$
3
|
|
$
157
|
|
$
(46)
|
|
$
111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
39
|
|
4
|
|
17
|
|
60
|
|
-
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA
including noncontrolling interests (3)
|
$
142
|
|
$
55
|
|
$
20
|
|
$
217
|
|
$
(46)
|
|
$
171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related expenses
|
11
|
|
2
|
|
8
|
|
21
|
|
-
|
|
21
|
|
|
|
|
|
Cost reduction
initiatives (5)
|
-
|
|
-
|
|
10
|
|
10
|
|
-
|
|
10
|
|
|
|
|
|
Acquisition costs
(6)
|
-
|
|
-
|
|
-
|
|
-
|
|
18
|
|
18
|
|
|
|
|
|
Costs to achieve
synergies (7)
|
6
|
|
1
|
|
-
|
|
7
|
|
2
|
|
9
|
|
|
|
|
|
Environmental charge
(11)
|
-
|
|
-
|
|
-
|
|
-
|
|
4
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
159
|
|
$
58
|
|
$
38
|
|
$
255
|
|
$
(22)
|
|
$
233
|
|
|
|
|
|
* Financial results
for 2018 have been revised for certain immaterial adjustments,
which will be further discussed in Tenneco's Form 10-Q for the
quarter ended June 30, 2019.
|
|
(1)U.S.
Generally Accepted Accounting Principles.
|
|
(2)Tenneco
presents the above reconciliation of GAAP to non-GAAP earnings
measures primarily to reflect the results in a manner that allows a
better understanding of the results of operational activities
separate from the financial impact of decisions made for the
long-term benefit of the company and other items impacting
comparability between the periods. Adjustments similar to the
ones reflected above have been recorded in earlier periods, and
similar types of adjustments can reasonably be expected to be
recorded in future periods. Using only the non-GAAP earnings
measures to analyze earnings would have material limitations
because its calculation is based on the subjective determinations
of management regarding the nature and classification of events and
circumstances that investors may find material. Management
compensates for these limitations by utilizing both GAAP and
non-GAAP earnings measures reflected above to understand and
analyze the results of the business. The company believes
investors find the non-GAAP information helpful in understanding
the ongoing performance of operations separate from items that may
have a disproportionate positive or negative impact on the
company's financial results in any particular period.
|
|
(3) EBITDA
including noncontrolling interests represents income before
interest expense, income taxes, noncontrolling interests and
depreciation and amortization. EBITDA including
noncontrolling interests is not a calculation based upon
GAAP. The amounts included in the EBITDA including
noncontrolling interests calculation, however, are derived from
amounts included in the historical statements of income data.
In addition, EBITDA including noncontrolling interests should not
be considered as an alternative to net income attributable to
Tenneco Inc. or operating income as an indicator of the company's
operating performance, or as an alternative to operating cash flows
as a measure of liquidity. Tenneco has presented EBITDA
including noncontrolling interests because it regularly reviews
EBITDA including noncontrolling interests as a measure of the
company's performance. In addition, Tenneco believes its
investors utilize and analyze the company's EBITDA including
noncontrolling interests for similar purposes. Tenneco also
believes EBITDA including noncontrolling interests assists
investors in comparing a company's performance on a consistent
basis without regard to depreciation and amortization, which can
vary significantly depending upon many factors. However, the
EBITDA including noncontrolling interests measure presented may not
always be comparable to similarly titled measures reported by other
companies due to differences in the components of the
calculation.
|
|
(4)Q2 2019
includes $3 million of accelerated depreciation related to plant
closures.
|
|
(5)Costs
related to cost reduction initiatives.
|
|
(6)Costs
related to acquisitions and costs related to expected
spin.
|
|
(7)Costs
to achieve synergies related to Federal-Mogul
acquisition.
|
|
(8)This
primarily relates to a non-cash charge to cost of goods sold for
the amortization of the inventory fair value step-up recorded as
part of the Acquisitions.
|
|
(9)Charge
due to process harmonization.
|
|
(10)Charge
related to warranty. Although Tenneco regularly incurs warranty
costs, this specific charge is of an unusual nature in the period
incurred.
|
|
(11)Environmental charge related to an
acquired site whereby an indemnification reverted back to the
Company resulting from a 2009 bankruptcy filing of Mark IV
Industries.
|
|
(12)Corporate costs for each division are
$23M for New Tenneco and $25M for DRiV.
|
ATTACHMENT
2
|
TENNECO
INC.
|
RECONCILIATION OF
GAAP(1)TO NON-GAAP EARNINGS
MEASURES(2)
|
Unaudited
|
(Millions except per
share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2019
|
|
YTD 2018*
|
|
|
Net income
(loss)
attributable to
Tenneco Inc.
|
|
Per Share
|
|
EBIT
|
|
EBITDA
(3)
|
|
Net income
attributable to
Tenneco Inc.
|
|
Per Share
|
|
EBIT
|
|
EBITDA
(3)
|
Earnings (Loss)
Measures
|
$
(91)
|
|
$
(1.13)
|
|
$
117
|
|
$
455
|
|
$
107
|
|
$
2.07
|
|
$ 233
|
|
$
353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related expenses(4)
|
60
|
|
0.73
|
|
80
|
|
74
|
|
22
|
|
0.42
|
|
33
|
|
33
|
|
Cost reduction
initiatives (5)
|
7
|
|
0.09
|
|
10
|
|
10
|
|
7
|
|
0.15
|
|
10
|
|
10
|
|
Acquisition and spin
costs (6)
|
51
|
|
0.62
|
|
67
|
|
67
|
|
25
|
|
0.48
|
|
31
|
|
31
|
|
Costs to achieve
synergies (7)
|
11
|
|
0.14
|
|
14
|
|
14
|
|
7
|
|
0.12
|
|
9
|
|
9
|
|
Purchase accounting
charges (8)
|
35
|
|
0.44
|
|
44
|
|
44
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Goodwill impairment
charge (9)
|
60
|
|
0.74
|
|
60
|
|
60
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Process harmonization
(10)
|
7
|
|
0.09
|
|
10
|
|
10
|
|
-
|
|
-
|
|
-
|
|
-
|
|
Warranty charge
(11)
|
5
|
|
0.06
|
|
7
|
|
7
|
|
4
|
|
0.08
|
|
5
|
|
5
|
|
Environmental charge
(12)
|
-
|
|
-
|
|
-
|
|
-
|
|
3
|
|
0.06
|
|
4
|
|
4
|
|
Net tax
adjustments
|
(6)
|
|
(0.07)
|
|
-
|
|
-
|
|
4
|
|
0.09
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net income,
EPS, EBIT, and EBITDA
|
$
139
|
|
$
1.71
|
|
$
409
|
|
$
741
|
|
$
179
|
|
$
3.47
|
|
$ 325
|
|
$
445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2019
|
|
|
|
|
Global
Segments
|
|
|
|
|
|
|
|
|
Clean Air
|
|
Powertrain
|
|
Motorparts
|
|
Ride
Performance
|
|
Total
|
|
Corporate
|
|
Total
|
|
|
Net loss attributable
to Tenneco Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
$
(91)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
(60)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT, Earnings (Loss)
before interest expense, income taxes and noncontrolling
interests
|
$
207
|
|
$
96
|
|
$
84
|
|
$
(92)
|
|
$
295
|
|
$
(178)
|
|
$ 117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
76
|
|
117
|
|
71
|
|
73
|
|
337
|
|
1
|
|
338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA
including noncontrolling interests (3)
|
$
283
|
|
$
213
|
|
$
155
|
|
$
(19)
|
|
$
632
|
|
$
(177)
|
|
$ 455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related expenses(4)
|
19
|
|
17
|
|
4
|
|
33
|
|
73
|
|
1
|
|
74
|
|
|
|
Cost reduction
initiatives (5)
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
10
|
|
10
|
|
|
|
Acquisition and spin
costs (6)
|
-
|
|
-
|
|
1
|
|
-
|
|
1
|
|
66
|
|
67
|
|
|
|
Costs to achieve
synergies (7)
|
1
|
|
2
|
|
7
|
|
2
|
|
12
|
|
2
|
|
14
|
|
|
|
Purchase accounting
charges (8)
|
-
|
|
2
|
|
37
|
|
5
|
|
44
|
|
-
|
|
44
|
|
|
|
Goodwill impairment
charge (9)
|
-
|
|
-
|
|
-
|
|
60
|
|
60
|
|
-
|
|
60
|
|
|
|
Process harmonization
(10)
|
5
|
|
-
|
|
5
|
|
-
|
|
10
|
|
-
|
|
10
|
|
|
|
Warranty charge
(11)
|
-
|
|
-
|
|
7
|
|
-
|
|
7
|
|
-
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
308
|
|
$
234
|
|
$
216
|
|
$
81
|
|
$
839
|
|
$
(98)
|
(13)
|
$ 741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2018*
|
|
|
|
|
|
|
Global
Segments
|
|
|
|
|
|
|
|
|
|
|
Clean Air
|
|
Motorparts
|
|
Ride
Performance
|
|
Total
|
|
Corporate
|
|
Total
|
|
|
|
|
Net income
attributable to Tenneco Inc.
|
|
|
|
|
|
|
|
|
|
|
$
107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
137
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT, Earnings before
interest expense, income taxes and noncontrolling
interests
|
$
223
|
|
$
90
|
|
$
10
|
|
$
323
|
|
$
(90)
|
|
$
233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
76
|
|
10
|
|
34
|
|
120
|
|
-
|
|
120
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA
including noncontrolling interests (3)
|
$
299
|
|
$
100
|
|
$
44
|
|
$
443
|
|
$
(90)
|
|
$
353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related expenses
|
12
|
|
4
|
|
17
|
|
33
|
|
-
|
|
33
|
|
|
|
|
|
Cost reduction
initiatives (5)
|
-
|
|
-
|
|
10
|
|
10
|
|
-
|
|
10
|
|
|
|
|
|
Acquisition costs
(6)
|
-
|
|
-
|
|
-
|
|
-
|
|
31
|
|
31
|
|
|
|
|
|
Costs to achieve
synergies (7)
|
6
|
|
1
|
|
-
|
|
7
|
|
2
|
|
9
|
|
|
|
|
|
Warranty charge
(11)
|
-
|
|
-
|
|
5
|
|
5
|
|
-
|
|
5
|
|
|
|
|
|
Environmental charge
(12)
|
-
|
|
-
|
|
-
|
|
-
|
|
4
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
317
|
|
$
105
|
|
$
76
|
|
$
498
|
|
$
(53)
|
|
$
445
|
|
|
|
|
|
* Financial results
for 2018 have been revised for certain immaterial adjustments,
which will be further discussed in Tenneco's Form 10-Q for the
quarter ended June 30, 2019.
|
|
(1)U.S.
Generally Accepted Accounting Principles.
|
|
(2)Tenneco
presents the above reconciliation of GAAP to non-GAAP earnings
measures primarily to reflect the results in a manner that allows a
better understanding of the results of operational activities
separate from the financial impact of decisions made for the
long-term benefit of the company and other items impacting
comparability between the periods. Adjustments similar to the
ones reflected above have been recorded in earlier periods, and
similar types of adjustments can reasonably be expected to be
recorded in future periods. Using only the non-GAAP earnings
measures to analyze earnings would have material limitations
because its calculation is based on the subjective determinations
of management regarding the nature and classification of events and
circumstances that investors may find material. Management
compensates for these limitations by utilizing both GAAP and
non-GAAP earnings measures reflected above to understand and
analyze the results of the business. The company believes
investors find the non-GAAP information helpful in understanding
the ongoing performance of operations separate from items that may
have a disproportionate positive or negative impact on the
company's financial results in any particular period.
|
|
(3) EBITDA
including noncontrolling interests represents income before
interest expense, income taxes, noncontrolling interests and
depreciation and amortization. EBITDA including
noncontrolling interests is not a calculation based upon
GAAP. The amounts included in the EBITDA including
noncontrolling interests calculation, however, are derived from
amounts included in the historical statements of income data.
In addition, EBITDA including noncontrolling interests should not
be considered as an alternative to net income attributable to
Tenneco Inc. or operating income as an indicator of the company's
operating performance, or as an alternative to operating cash flows
as a measure of liquidity. Tenneco has presented EBITDA
including noncontrolling interests because it regularly reviews
EBITDA including noncontrolling interests as a measure of the
company's performance. In addition, Tenneco believes its
investors utilize and analyze the company's EBITDA including
noncontrolling interests for similar purposes. Tenneco also
believes EBITDA including noncontrolling interests assists
investors in comparing a company's performance on a consistent
basis without regard to depreciation and amortization, which can
vary significantly depending upon many factors. However, the
EBITDA including noncontrolling interests measure presented may not
always be comparable to similarly titled measures reported by other
companies due to differences in the components of the
calculation.
|
|
(4)YTD
2019 includes $6 million of accelerated depreciation related to
plant closures.
|
|
(5)Costs
related to cost reduction initiatives.
|
|
(6)Costs
related to acquisitions and costs related to expected
spin.
|
|
(7)Costs
to achieve synergies related to Federal-Mogul
acquisition.
|
|
(8)This
primarily relates to a non-cash charge to cost of goods sold for
the amortization of the inventory fair value step-up recorded as
part of the Acquisitions.
|
|
(9)Non-cash asset impairment charge
related to goodwill.
|
|
(10)Charge
due to process harmonization.
|
|
(11)Charge
related to warranty. Although Tenneco regularly incurs warranty
costs, this specific charge is of an unusual nature in the period
incurred.
|
|
(12)Environmental charge related to an
acquired site whereby an indemnification reverted back to the
Company resulting from a 2009 bankruptcy filing of Mark IV
Industries.
|
|
(13)Corporate costs for each division are
$43M for New Tenneco and $55M for DRiV.
|
ATTACHMENT
2
|
TENNECO
INC.
|
RECONCILIATION OF
GAAP (1)REVENUE TO NON-GAAP REVENUE
MEASURES(2)
|
Unaudited
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2019
|
|
|
|
|
|
|
|
|
Currency
|
|
Value-add
|
|
|
|
|
|
|
|
|
Impact on
|
|
Revenues
|
|
|
|
|
Substrate
|
|
Value-add
|
|
Value-add
|
|
excluding
|
|
|
Revenues
|
|
Sales
|
|
Revenues
|
|
Revenues
|
|
Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
Clean Air
|
$
1,827
|
|
$
777
|
|
$
1,050
|
|
$
(31)
|
|
$
1,081
|
|
Powertrain
|
1,133
|
|
-
|
|
1,133
|
|
-
|
|
1,133
|
|
Motorparts
|
835
|
|
-
|
|
835
|
|
(8)
|
|
843
|
|
Ride
Performance
|
709
|
|
-
|
|
709
|
|
(20)
|
|
729
|
|
|
|
|
|
|
|
|
|
|
|
Total Tenneco
Inc.
|
$
4,504
|
|
$
777
|
|
$
3,727
|
|
$
(59)
|
|
$
3,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2018*
|
|
|
|
|
|
|
|
|
Currency
|
|
Value-add
|
|
|
|
|
|
|
|
|
Impact on
|
|
Revenues
|
|
|
|
|
Substrate
|
|
Value-add
|
|
Value-add
|
|
excluding
|
|
|
Revenues
|
|
Sales
|
|
Revenues
|
|
Revenues
|
|
Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
Clean Air
|
$
1,694
|
|
$
621
|
|
$
1,073
|
|
$
-
|
|
$
1,073
|
|
Motorparts
|
333
|
|
-
|
|
333
|
|
-
|
|
333
|
|
Ride
Performance
|
506
|
|
-
|
|
506
|
|
-
|
|
506
|
|
|
|
|
|
|
|
|
|
|
|
Total Tenneco
Inc.
|
$
2,533
|
|
$
621
|
|
$
1,912
|
|
$
-
|
|
$
1,912
|
|
* Financial results
for 2018 have been revised for certain immaterial adjustments,
which will be further discussed in Tenneco's Form 10-Q for the
quarter ended June 30, 2019.
|
|
(1)U.S.
Generally Accepted Accounting Principles.
|
|
(2)
Tenneco presents the above reconciliation of revenues in order to
reflect value-add revenues separately from the effects of doing
business in currencies other than the U.S. dollar.
Additionally, substrate sales include precious metals pricing,
which may be volatile. Substrate sales occur when, at the
direction of its OE customers, Tenneco purchases catalytic
converters or components thereof from suppliers, uses them in its
manufacturing processes and sells them as part of the completed
system. While Tenneco original equipment customers assume the risk
of this volatility, it impacts reported revenue. Excluding
substrate sales removes this impact. Tenneco uses this
information to analyze the trend in revenues before these
factors. Tenneco believes investors find this information
useful in understanding period to period comparisons in the
company's revenues.
|
ATTACHMENT
2
|
TENNECO
INC.
|
RECONCILIATION OF
GAAP (1)REVENUE TO NON-GAAP REVENUE
MEASURES(2)
|
Unaudited
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2019
|
|
|
|
|
|
|
|
|
Currency
|
|
Value-add
|
|
|
|
|
|
|
|
|
Impact on
|
|
Revenues
|
|
|
|
|
Substrate
|
|
Value-add
|
|
Value-add
|
|
excluding
|
|
|
Revenues
|
|
Sales
|
|
Revenues
|
|
Revenues
|
|
Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
Clean Air
|
$
3,606
|
|
$
1,483
|
|
$
2,123
|
|
$
(82)
|
|
$
2,205
|
|
Powertrain
|
2,308
|
|
-
|
|
2,308
|
|
-
|
|
2,308
|
|
Motorparts
|
1,632
|
|
-
|
|
1,632
|
|
(26)
|
|
1,658
|
|
Ride
Performance
|
1,442
|
|
-
|
|
1,442
|
|
(51)
|
|
1,493
|
|
|
|
|
|
|
|
|
|
|
|
Total Tenneco
Inc.
|
$
8,988
|
|
$
1,483
|
|
$
7,505
|
|
$
(159)
|
|
$
7,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2018*
|
|
|
|
|
|
|
|
|
Currency
|
|
Value-add
|
|
|
|
|
|
|
|
|
Impact on
|
|
Revenues
|
|
|
|
|
Substrate
|
|
Value-add
|
|
Value-add
|
|
excluding
|
|
|
Revenues
|
|
Sales
|
|
Revenues
|
|
Revenues
|
|
Currency
|
|
|
|
|
|
|
|
|
|
|
|
|
Clean Air
|
$
3,450
|
|
$
1,273
|
|
$
2,177
|
|
$
-
|
|
$
2,177
|
|
Motorparts
|
645
|
|
-
|
|
645
|
|
-
|
|
645
|
|
Ride
Performance
|
1,019
|
|
-
|
|
1,019
|
|
-
|
|
1,019
|
|
|
|
|
|
|
|
|
|
|
|
Total Tenneco
Inc.
|
$
5,114
|
|
$
1,273
|
|
$
3,841
|
|
$
-
|
|
$
3,841
|
|
* Financial results
for 2018 have been revised for certain immaterial adjustments,
which will be further discussed in Tenneco's Form 10-Q for the
quarter ended June 30, 2019.
|
|
(1)U.S.
Generally Accepted Accounting Principles.
|
|
(2)
Tenneco presents the above reconciliation of revenues in order to
reflect value-add revenues separately from the effects of doing
business in currencies other than the U.S. dollar.
Additionally, substrate sales include precious metals pricing,
which may be volatile. Substrate sales occur when, at the
direction of its OE customers, Tenneco purchases catalytic
converters or components thereof from suppliers, uses them in its
manufacturing processes and sells them as part of the completed
system. While Tenneco original equipment customers assume the risk
of this volatility, it impacts reported revenue. Excluding
substrate sales removes this impact. Tenneco uses this
information to analyze the trend in revenues before these
factors. Tenneco believes investors find this information
useful in understanding period to period comparisons in the
company's revenues.
|
ATTACHMENT
2
|
TENNECO
INC.
|
RECONCILIATION OF
GAAP (1)REVENUE TO NON-GAAP REVENUE MEASURES
|
Unaudited
|
(Millions except
percents)
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2019 vs. Q2 2018 $
Change and % Change Increase (Decrease)
|
|
|
Revenues
|
|
% Change
|
|
Value-add
Revenues
Excluding
Currency
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
Clean Air
|
$
133
|
|
8%
|
|
$
8
|
|
1%
|
|
Powertrain
|
1,133
|
|
NM
|
|
1,133
|
|
NM
|
|
Motorparts
|
502
|
|
151%
|
|
510
|
|
153%
|
|
Ride
Performance
|
203
|
|
40%
|
|
223
|
|
44%
|
Total Tenneco
Inc.
|
$
1,971
|
|
78%
|
|
$
1,874
|
|
98%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD Q2 2019 vs. YTD
Q2 2018 $ Change and % Change Increase (Decrease)
|
|
|
Revenues
|
|
% Change
|
|
Value-add
Revenues
Excluding
Currency
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
Clean Air
|
$
156
|
|
5%
|
|
$
28
|
|
1%
|
|
Powertrain
|
2,308
|
|
NM
|
|
2,308
|
|
NM
|
|
Motorparts
|
987
|
|
153%
|
|
1,013
|
|
157%
|
|
Ride
Performance
|
423
|
|
42%
|
|
474
|
|
47%
|
Total Tenneco
Inc.
|
$
3,874
|
|
76%
|
|
$
3,823
|
|
100%
|
|
(1)U.S.
Generally Accepted Accounting Principles.
|
ATTACHMENT
2
|
TENNECO
INC.
|
RECONCILIATION OF
NON-GAAP MEASURES
|
Debt net of total
cash / Pro Forma Adjusted LTM EBITDA including noncontrolling
interests
|
Unaudited
|
(Millions except
ratios)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2019
|
|
|
|
December 31,
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
|
|
|
|
|
|
|
$
5,678
|
|
|
|
$
5,493
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cash, cash
equivalents and restricted cash (total cash)
|
|
|
|
|
|
|
390
|
|
|
|
702
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt net of total
cash balances (1)
|
|
|
|
|
|
|
$
5,288
|
|
|
|
$
4,791
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma Adjusted
LTM EBITDA including noncontrolling interests(2) (3)
(5)
|
|
|
|
|
|
|
$
1,514
|
|
|
|
$
1,627
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma ratio of
debt net of total cash balances to Pro forma Adjusted LTM EBITDA
including noncontrolling interests (4) (5)
|
|
|
|
|
|
|
3.5x
|
|
|
|
2.9x
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 18*
|
|
Q2 18*
|
|
Q3 18*
|
|
Q4 18
|
|
Q1 19
|
|
Q2 19
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Tenneco Inc.
|
$
60
|
|
$
47
|
|
$
57
|
|
$
(109)
|
|
$(117)
|
|
$
26
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
14
|
|
16
|
|
9
|
|
17
|
|
12
|
|
19
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
74
|
|
63
|
|
66
|
|
(92)
|
|
(105)
|
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
25
|
|
26
|
|
22
|
|
(10)
|
|
-
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
23
|
|
22
|
|
24
|
|
79
|
|
81
|
|
82
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT, Earnings (Loss)
before interest expense, income taxes and noncontrolling
interests
|
122
|
|
111
|
|
112
|
|
(23)
|
|
(24)
|
|
141
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
60
|
|
60
|
|
60
|
|
165
|
|
169
|
|
169
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA
including noncontrolling interests (2)
|
$ 182
|
|
$ 171
|
|
$ 172
|
|
$
142
|
|
$ 145
|
|
$
310
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related expenses
|
12
|
|
21
|
|
12
|
|
17
|
|
17
|
|
57
|
Cost reduction
initiatives (6)
|
-
|
|
10
|
|
-
|
|
8
|
|
8
|
|
2
|
Acquisition and spin
costs (7)
|
13
|
|
18
|
|
12
|
|
53
|
|
40
|
|
27
|
Warranty charge
(8)
|
5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
7
|
Costs to achieve
synergies(9)
|
-
|
|
9
|
|
4
|
|
49
|
|
7
|
|
7
|
Purchase accounting
charges (10)
|
-
|
|
-
|
|
-
|
|
106
|
|
41
|
|
3
|
Goodwill impairment
charge (11)
|
-
|
|
-
|
|
-
|
|
3
|
|
60
|
|
-
|
Process harmonization
(12)
|
-
|
|
-
|
|
-
|
|
-
|
|
9
|
|
1
|
Anti-dumping duty
charge (13)
|
-
|
|
-
|
|
-
|
|
16
|
|
-
|
|
-
|
Environmental charge
(14)
|
-
|
|
4
|
|
-
|
|
-
|
|
-
|
|
-
|
Litigation settlement
accrual
|
-
|
|
-
|
|
10
|
|
-
|
|
-
|
|
-
|
Loss on debt
modification (15)
|
-
|
|
-
|
|
-
|
|
10
|
|
-
|
|
-
|
Pension charges
(16)
|
-
|
|
-
|
|
-
|
|
3
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Adjusted EBITDA
including noncontrolling interests (3)
|
$ 212
|
|
$ 233
|
|
$ 210
|
|
$
407
|
|
$ 327
|
|
$
414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy Federal-Mogul
Reconciliation of Non-GAAP earnings measures
|
|
|
|
|
|
|
|
Q1 18
|
|
Q2 18
|
|
Q3 18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Federal-Mogul
|
$
26
|
|
$
25
|
|
$
35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
3
|
|
3
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
29
|
|
28
|
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
15
|
|
13
|
|
16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
48
|
|
52
|
|
49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT, Earnings before
interest expense, income taxes and noncontrolling
interests
|
92
|
|
93
|
|
101
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
100
|
|
96
|
|
99
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total EBITDA
including noncontrolling interests (2)
|
$ 192
|
|
$ 189
|
|
$ 200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring charges
and asset impairments, net
|
-
|
|
-
|
|
15
|
|
|
|
|
|
|
Purchase price
contingency
|
5
|
|
-
|
|
-
|
|
|
|
|
|
|
Transaction related
costs
|
1
|
|
13
|
|
-
|
|
|
|
|
|
|
Cost to exit a
multiemployer pension plan
|
-
|
|
5
|
|
-
|
|
|
|
|
|
|
Gain (loss) on sale
of assets
|
-
|
|
-
|
|
(65)
|
|
|
|
|
|
|
Charge for
extinguishment of dissenting shareholders shares
|
-
|
|
-
|
|
5
|
|
|
|
|
|
|
Other
|
2
|
|
2
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Adjusted EBITDA
including noncontrolling interests (3)
|
$ 200
|
|
$ 209
|
|
$ 156
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 18*
|
|
Q2 18*
|
|
Q3 18*
|
|
Q4 18
|
|
Q1 19
|
|
Q2 19
|
Pro forma Adjusted
EBITDA including noncontrolling interests(2) (3)
(5)
|
$ 412
|
|
$ 442
|
|
$ 366
|
|
$
407
|
|
$ 327
|
|
$
414
|
Q4 2018 Pro forma
Adjusted LTM EBITDA including noncontrolling interests(2) (3)
(5)
|
|
|
|
|
|
|
$
1,627
|
|
|
|
|
Q2 2019 Pro forma
Adjusted LTM EBITDA including noncontrolling interests(2) (3)
(5)
|
|
|
|
|
|
|
|
|
|
|
$
1,514
|
|
* Financial results
for the first three quarters of 2018 have been revised for certain
immaterial adjustments as discussed in Tenneco's Form 10-K for the
year ended December 31, 2018.
|
|
(1)
Tenneco presents debt net of total cash balances because management
believes it is a useful measure of Tenneco's credit position and
progress toward reducing leverage. The calculation is limited
in that the company may not always be able to use cash to repay
debt on a dollar-for-dollar basis.
|
|
(2) EBITDA
including noncontrolling interests represents income before
interest expense, income taxes, noncontrolling interests and
depreciation and amortization. EBITDA including
noncontrolling interests is not a calculation based upon
GAAP. The amounts included in the EBITDA including
noncontrolling interests calculation, however, are derived from
amounts included in the historical statements of income data.
In addition, EBITDA including noncontrolling interests should not
be considered as an alternative to net income (loss) attributable
to Tenneco Inc. or operating income as an indicator of the
company's operating performance, or as an alternative to operating
cash flows as a measure of liquidity. Tenneco has presented
EBITDA including noncontrolling interests because it regularly
reviews EBITDA including noncontrolling interests as a measure of
the company's performance. In addition, Tenneco believes its
investors utilize and analyze the company's EBITDA including
noncontrolling interests for similar purposes. Tenneco also
believes EBITDA including noncontrolling interests assists
investors in comparing a company's performance on a consistent
basis without regard to depreciation and amortization, which can
vary significantly depending upon many factors. However, the
EBITDA including noncontrolling interests measure presented may not
always be comparable to similarly titled measures reported by other
companies due to differences in the components of the
calculation.
|
|
(3)
Adjusted EBITDA including noncontrolling interests is presented in
order to reflect the results in a manner that allows a better
understanding of operational activities separate from the financial
impact of decisions made for the long term benefit of the company
and other items impacting comparability between the periods.
Similar adjustments to EBITDA including noncontrolling interests
have been recorded in earlier periods, and similar types of
adjustments can reasonably be expected to be recorded in future
periods. The company believes investors find the non-GAAP
information helpful in understanding the ongoing performance of
operations separate from items that may have a disproportionate
positive or negative impact on the company's financial results in
any particular period.
|
|
(4)
Tenneco presents the above reconciliation of the ratio of debt net
of total cash to LTM Adjusted EBITDA including noncontrolling
interests to show trends that investors may find useful in
understanding the company's ability to service its debt. For
purposes of this calculation, Adjusted LTM and Pro Forma adjusted
LTM EBITDA including noncontrolling interests is used as an
indicator of the company's performance and debt net of total cash
is presented as an indicator of the company's credit position and
progress toward reducing the company's financial leverage.
This reconciliation is provided as supplemental information and not
intended to replace the company's existing covenant ratios or any
other financial measures that investors may find useful in
describing the company's financial position. See notes (1), (2) and
(3) for a description of the limitations of using debt net of total
cash, EBITDA including noncontrolling interests and Adjusted EBITDA
including noncontrolling interests.
|
|
(5)
Tenneco is providing Pro Forma Adjusted LTM EBITDA and the ratio of
debt net of cash balances to Pro Forma Adjusted LTM EBITDA to show
the company's Adjusted LTM EBITDA as if Federal-Mogul had been
consolidated with Tenneco for the entirety of 2018 and LTM Q2 2019
(and the resultant impact on the net debt ratio). Tenneco
believes this supplemental information is useful to investors who
are trying to understand the results of the entire enterprise,
including Federal-Mogul, for 2018 and 2019 and the ability of the
company to service its debt.
|
|
(6)Costs
related to cost reduction initiatives.
|
|
(7)Costs
related to acquisitions and costs related to expected
spin.
|
|
(8)Charge
related to warranty. Although Tenneco regularly incurs warranty
costs, this specific charge is of an unusual nature in the period
incurred.
|
|
(9)Costs
to achieve synergies related to Federal-Mogul
acquisition.
|
|
(10)This
primarily relates to a non-cash charge to cost of goods sold for
the amortization of the inventory fair value step-up recorded as
part of the Acquisitions.
|
|
(11)Non-cash asset impairment charge
related to goodwill.
|
|
(12)Charge
due to process harmonization.
|
|
(13)Charge
due to retroactive application of anti-dumping duty on a supplier's
products.
|
|
(14)Environmental charge related to an
acquired site whereby an indemnification reverted back to the
Company resulting from a 2009 bankruptcy filing of Mark IV
Industries.
|
|
(15)Loss
on debt modification.
|
|
(16)Charges related to pension derisking
and the acceleration of restricted stock vesting in accordance with
the long-term incentive plan.
|
ATTACHMENT
2
|
TENNECO
INC.
|
RECONCILIATION OF
GAAP (1)REVENUE TO NON-GAAP REVENUE
MEASURES(2)
|
Unaudited
|
(Millions)
|
|
Q2 2019
|
|
Revenues
|
|
Currency
|
|
Revenues
Excluding
Currency
|
|
Substrate Sales
Excluding
Currency
|
|
Value-add
Revenues
Excluding
Currency
|
|
|
|
|
|
|
|
|
|
|
Original equipment
light vehicle revenues
|
$
2,850
|
|
$
(56)
|
|
$
2,906
|
|
$
679
|
|
$
2,227
|
Original equipment
commercial truck, off-highway, industrial and other
revenues
|
819
|
|
(10)
|
|
829
|
|
113
|
|
716
|
Aftermarket
revenues
|
835
|
|
(8)
|
|
843
|
|
-
|
|
843
|
Net sales and
operating revenues
|
$
4,504
|
|
$
(74)
|
|
$
4,578
|
|
$
792
|
|
$
3,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2018*
|
|
Revenues
|
|
Currency
|
|
Revenues
Excluding
Currency
|
|
Substrate Sales
Excluding
Currency
|
|
Value-add
Revenues
Excluding
Currency
|
|
|
|
|
|
|
|
|
|
|
Original equipment
light vehicle revenues
|
$
1,841
|
|
$
-
|
|
$
1,841
|
|
$
520
|
|
$
1,321
|
Original equipment
commercial truck, off-highway, industrial and other
revenues
|
359
|
|
-
|
|
359
|
|
101
|
|
258
|
Aftermarket
revenues
|
333
|
|
-
|
|
333
|
|
-
|
|
333
|
Net sales and
operating revenues
|
$
2,533
|
|
$
-
|
|
$
2,533
|
|
$
621
|
|
$
1,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2019
|
|
Revenues
|
|
Currency
|
|
Revenues
Excluding
Currency
|
|
Substrate Sales
Excluding
Currency
|
|
Value-add
Revenues
Excluding
Currency
|
|
|
|
|
|
|
|
|
|
|
Original equipment
light vehicle revenues
|
$
5,667
|
|
$
(145)
|
|
$
5,812
|
|
$
1,293
|
|
$
4,519
|
Original equipment
commercial truck, off-highway, industrial and other
revenues
|
1,689
|
|
(30)
|
|
1,719
|
|
232
|
|
1,487
|
Aftermarket
revenues
|
1,632
|
|
(26)
|
|
1,658
|
|
-
|
|
1,658
|
Net sales and
operating revenues
|
$
8,988
|
|
$
(201)
|
|
$
9,189
|
|
$
1,525
|
|
$
7,664
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2018*
|
|
Revenues
|
|
Currency
|
|
Revenues
Excluding
Currency
|
|
Substrate Sales
Excluding
Currency
|
|
Value-add
Revenues
Excluding
Currency
|
|
|
|
|
|
|
|
|
|
|
Original equipment
light vehicle revenues
|
$
3,734
|
|
$
-
|
|
$
3,734
|
|
$
1,063
|
|
$
2,671
|
Original equipment
commercial truck, off-highway, industrial and other
revenues
|
735
|
|
-
|
|
735
|
|
210
|
|
525
|
Aftermarket
revenues
|
645
|
|
-
|
|
645
|
|
-
|
|
645
|
Net sales and
operating revenues
|
$
5,114
|
|
$
-
|
|
$
5,114
|
|
$
1,273
|
|
$
3,841
|
|
* Financial results
for 2018 have been revised for certain immaterial adjustments,
which will be further discussed in Tenneco's Form 10-Q for the
quarter ended June 30, 2019.
|
|
(1)U.S.
Generally Accepted Accounting Principles.
|
|
(2)
Tenneco presents the above reconciliation of revenues in order to
reflect value-add revenues separately from the effects of doing
business in currencies other than the U.S. dollar.
Additionally, substrate sales include precious metals pricing,
which may be volatile. Substrate sales occur when, at the
direction of its OE customers, Tenneco purchases catalytic
converters or components thereof from suppliers, uses them in its
manufacturing processes and sells them as part of the completed
system. While Tenneco original equipment customers assume the risk
of this volatility, it impacts reported revenue. Excluding
substrate sales removes this impact. Tenneco uses this
information to analyze the trend in revenues before these
factors. Tenneco believes investors find this information
useful in understanding period to period comparisons in the
company's revenues.
|
ATTACHMENT
2
|
TENNECO
INC.
|
RECONCILIATION OF
GAAP (1)REVENUE AND EARNINGS TO NON-GAAP REVENUE AND
EARNINGS MEASURES(2)
|
Unaudited
|
(Millions except
percents)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2019
|
|
Global
Segments
|
|
|
|
|
|
Clean Air
|
|
Powertrain
|
|
Motorparts
|
|
Ride
Performance
|
|
Total
|
|
Corporate
|
|
Total
|
Net sales and
operating revenues
|
$
1,827
|
|
$
1,133
|
|
$
835
|
|
$
709
|
|
$
4,504
|
|
$
-
|
|
$ 4,504
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Substrate
sales
|
777
|
|
-
|
|
-
|
|
-
|
|
777
|
|
-
|
|
777
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value-add
revenues
|
$
1,050
|
|
$
1,133
|
|
$
835
|
|
$
709
|
|
$
3,727
|
|
$
-
|
|
$ 3,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
$
152
|
|
$
100
|
|
$
110
|
|
$
26
|
|
$
388
|
|
$
(78)
|
|
$
310
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA as a %
of revenue
|
8.3%
|
|
8.8%
|
|
13.2%
|
|
3.7%
|
|
8.6%
|
|
|
|
6.9%
|
EBITDA as a %
of value-add revenue
|
14.5%
|
|
8.8%
|
|
13.2%
|
|
3.7%
|
|
10.4%
|
|
|
|
8.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
168
|
|
$
118
|
|
$
126
|
|
$
50
|
|
$
462
|
|
$
(48)
|
|
$
414
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
as a % of revenue
|
9.2%
|
|
10.4%
|
|
15.1%
|
|
7.1%
|
|
10.3%
|
|
|
|
9.2%
|
Adjusted EBITDA
as a % of value-add revenue
|
16.0%
|
|
10.4%
|
|
15.1%
|
|
7.1%
|
|
12.4%
|
|
|
|
11.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2018*
|
|
|
|
Global
Segments
|
|
|
|
|
|
|
|
Clean Air
|
|
Motorparts
|
|
Ride
Performance
|
|
Total
|
|
Corporate
|
|
Total
|
|
|
Net sales and
operating revenues
|
$
1,694
|
|
$
333
|
|
$
506
|
|
$
2,533
|
|
$
-
|
|
$
2,533
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Substrate
sales
|
621
|
|
-
|
|
-
|
|
621
|
|
-
|
|
621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value-add
revenues
|
$
1,073
|
|
$
333
|
|
$
506
|
|
$
1,912
|
|
$
-
|
|
$
1,912
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
$
142
|
|
$
55
|
|
$
20
|
|
$
217
|
|
$
(46)
|
|
$
171
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA as a %
of revenue
|
8.4%
|
|
16.5%
|
|
4.0%
|
|
8.6%
|
|
|
|
6.8%
|
|
|
EBITDA as a %
of value-add revenue
|
13.2%
|
|
16.5%
|
|
4.0%
|
|
11.3%
|
|
|
|
8.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
159
|
|
$
58
|
|
$
38
|
|
$
255
|
|
$
(22)
|
|
$
233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
as a % of revenue
|
9.4%
|
|
17.4%
|
|
7.5%
|
|
10.1%
|
|
|
|
9.2%
|
|
|
Adjusted EBITDA
as a % of value-add revenue
|
14.8%
|
|
17.4%
|
|
7.5%
|
|
13.3%
|
|
|
|
12.2%
|
|
|
|
* Financial results
for 2018 have been revised for certain immaterial adjustments,
which will be further discussed in Tenneco's Form 10-Q for the
quarter ended June 30, 2019.
|
|
(1)U.S.
Generally Accepted Accounting Principles.
|
|
(2)
Tenneco presents the above reconciliation of revenues in order to
reflect EBITDA and adjusted EBITDA as a percent of both total
revenues and value-add revenues. Substrate sales include
precious metals pricing, which may be volatile. Substrate
sales occur when, at the direction of its OE customers, Tenneco
purchases catalytic converters or components thereof from
suppliers, uses them in its manufacturing processes and sells them
as part of the completed system. While Tenneco original equipment
customers assume the risk of this volatility, it impacts reported
revenue. Excluding substrate sales removes this impact.
Further, presenting EBITDA and adjusted EBITDA as a percent of
value-add revenue assists investors in evaluating the company's
operational performance without the impact of such substrate
sales.
|
ATTACHMENT
2
|
TENNECO
INC.
|
RECONCILIATION OF
GAAP (1)REVENUE AND EARNINGS TO NON-GAAP REVENUE AND
EARNINGS MEASURES(2)
|
Unaudited
|
(Millions except
percents)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2019
|
|
Global
Segments
|
|
|
|
|
|
Clean Air
|
|
Powertrain
|
|
Motorparts
|
|
Ride
Performance
|
|
Total
|
|
Corporate
|
|
Total
|
Net sales and
operating revenues
|
$
3,606
|
|
$
2,308
|
|
$
1,632
|
|
$
1,442
|
|
$
8,988
|
|
$
-
|
|
$ 8,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Substrate
sales
|
1,483
|
|
-
|
|
-
|
|
-
|
|
1,483
|
|
-
|
|
1,483
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value-add
revenues
|
$
2,123
|
|
$
2,308
|
|
$
1,632
|
|
$
1,442
|
|
$
7,505
|
|
$
-
|
|
$ 7,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
$
283
|
|
$
213
|
|
$
155
|
|
$
(19)
|
|
$
632
|
|
$
(177)
|
|
$
455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA as a %
of revenue
|
7.8%
|
|
9.2%
|
|
9.5%
|
|
-1.3%
|
|
7.0%
|
|
|
|
5.1%
|
EBITDA as a %
of value-add revenue
|
13.3%
|
|
9.2%
|
|
9.5%
|
|
-1.3%
|
|
8.4%
|
|
|
|
6.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
308
|
|
$
234
|
|
$
216
|
|
$
81
|
|
$
839
|
|
$
(98)
|
|
$
741
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
as a % of revenue
|
8.5%
|
|
10.1%
|
|
13.2%
|
|
5.6%
|
|
9.3%
|
|
|
|
8.2%
|
Adjusted EBITDA
as a % of value-add revenue
|
14.5%
|
|
10.1%
|
|
13.2%
|
|
5.6%
|
|
11.2%
|
|
|
|
9.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
YTD 2018*
|
|
|
|
Global
Segments
|
|
|
|
|
|
|
|
Clean Air
|
|
Motorparts
|
|
Ride
Performance
|
|
Total
|
|
Corporate
|
|
Total
|
|
|
Net sales and
operating revenues
|
$
3,450
|
|
$
645
|
|
$
1,019
|
|
$
5,114
|
|
$
-
|
|
$
5,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less: Substrate
sales
|
1,273
|
|
-
|
|
-
|
|
1,273
|
|
-
|
|
1,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value-add
revenues
|
$
2,177
|
|
$
645
|
|
$
1,019
|
|
$
3,841
|
|
$
-
|
|
$
3,841
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
$
299
|
|
$
100
|
|
$
44
|
|
$
443
|
|
$
(90)
|
|
$
353
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA as a %
of revenue
|
8.7%
|
|
15.5%
|
|
4.3%
|
|
8.7%
|
|
|
|
6.9%
|
|
|
EBITDA as a %
of value-add revenue
|
13.7%
|
|
15.5%
|
|
4.3%
|
|
11.5%
|
|
|
|
9.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
317
|
|
$
105
|
|
$
76
|
|
$
498
|
|
$
(53)
|
|
$
445
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
as a % of revenue
|
9.2%
|
|
16.3%
|
|
7.5%
|
|
9.7%
|
|
|
|
8.7%
|
|
|
Adjusted EBITDA
as a % of value-add revenue
|
14.6%
|
|
16.3%
|
|
7.5%
|
|
13.0%
|
|
|
|
11.6%
|
|
|
|
* Financial results
for 2018 have been revised for certain immaterial adjustments,
which will be further discussed in Tenneco's Form 10-Q for the
quarter ended June 30, 2019.
|
|
(1)U.S.
Generally Accepted Accounting Principles.
|
|
(2)
Tenneco presents the above reconciliation of revenues in order to
reflect EBITDA and adjusted EBITDA as a percent of both total
revenues and value-add revenues. Substrate sales include
precious metals pricing, which may be volatile. Substrate
sales occur when, at the direction of its OE customers, Tenneco
purchases catalytic converters or components thereof from
suppliers, uses them in its manufacturing processes and sells them
as part of the completed system. While Tenneco original equipment
customers assume the risk of this volatility, it impacts reported
revenue. Excluding substrate sales removes this impact.
Further, presenting EBITDA and adjusted EBITDA as a percent of
value-add revenue assists investors in evaluating the company's
operational performance without the impact of such substrate
sales.
|
ATTACHMENT
2
|
TENNECO
INC.
|
RECONCILIATION OF
GAAP(1)REVENUE TO NON-GAAP REVENUE
MEASURES(2)- Original equipment commercial truck,
off-highway, industrial and other revenues
|
Unaudited
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2019
|
|
|
Q1
|
|
Q2
|
|
YTD
|
|
|
|
|
Substrate
|
|
Value-add
|
|
|
|
Substrate
|
|
Value-add
|
|
|
|
Substrate
|
|
Value-add
|
|
|
Revenues
|
|
Sales
|
|
Revenues
|
|
Revenues
|
|
Sales
|
|
Revenues
|
|
Revenues
|
|
Sales
|
|
Revenues
|
|
Clean Air
|
$
319
|
|
$
115
|
|
$
204
|
|
$
300
|
|
$
110
|
|
$
190
|
|
$
619
|
|
$
225
|
|
$
394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Powertrain
|
426
|
|
-
|
|
426
|
|
401
|
|
-
|
|
401
|
|
827
|
|
-
|
|
827
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ride
Performance
|
125
|
|
-
|
|
125
|
|
118
|
|
-
|
|
118
|
|
243
|
|
-
|
|
243
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Tenneco
Inc.
|
$
870
|
|
$
115
|
|
$
755
|
|
$
819
|
|
$
110
|
|
$
709
|
|
$
1,689
|
|
$
225
|
|
$
1,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
Q1
|
|
Q2
|
|
YTD
|
|
|
|
|
Substrate
|
|
Value-add
|
|
|
|
Substrate
|
|
Value-add
|
|
|
|
Substrate
|
|
Value-add
|
|
|
Revenues
|
|
Sales
|
|
Revenues
|
|
Revenues
|
|
Sales
|
|
Revenues
|
|
Revenues
|
|
Sales
|
|
Revenues
|
|
Clean Air
|
$
307
|
|
$
109
|
|
$
198
|
|
$
290
|
|
$
101
|
|
$
189
|
|
$
597
|
|
$
210
|
|
$
387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ride
Performance
|
69
|
|
-
|
|
69
|
|
69
|
|
-
|
|
69
|
|
138
|
|
-
|
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Tenneco
Inc.
|
$
376
|
|
$
109
|
|
$
267
|
|
$
359
|
|
$
101
|
|
$
258
|
|
$
735
|
|
$
210
|
|
$
525
|
|
(1)U.S.
Generally Accepted Accounting Principles.
|
|
(2)
Tenneco presents the above reconciliation of revenues in order to
reflect value-add revenues separately from substrate sales which
include precious metals pricing, which may be volatile.
Substrate sales occur when, at the direction of its OE customers,
Tenneco purchases catalytic converters or components thereof from
suppliers, uses them in its manufacturing processes and sells them
as part of the completed system. While Tenneco original equipment
customers assume the risk of this volatility, it impacts reported
revenue. Excluding substrate sales removes this impact.
Tenneco uses this information to analyze the trend in revenues
before these factors. Tenneco believes investors find this
information useful in understanding period to period comparisons in
the company's revenues.
|
ATTACHMENT
2
|
TENNECO
INC.
|
RECONCILIATION OF
GAAP(1) REVENUE TO PRO FORMA(2) REVENUE AND
NON-GAAP EARNINGS MEASURES - 2018 Quarterly
|
Unaudited
|
(Millions except
percents)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q1 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma New
Tenneco
|
|
Pro forma
DRiV
|
|
|
|
|
|
|
Clean Air
|
|
Powertrain
|
|
Corporate -
New
Tenneco
|
|
New
Tenneco
|
|
Motorparts
|
|
Ride
Performance
|
|
Corporate -
DRiV
|
|
DRiV
|
|
Other/Elim
|
|
Total Pro
forma
Tenneco
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and
operating revenues
|
$
1,756
|
|
$
1,260
|
|
$
-
|
|
$
3,016
|
|
$
903
|
|
$
761
|
|
$
-
|
|
$
1,664
|
|
$
-
|
|
$
4,680
|
Less: Substrate
sales
|
652
|
|
-
|
|
-
|
|
652
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
652
|
Value-add revenues
(3)
|
1,104
|
|
1,260
|
|
-
|
|
2,364
|
|
903
|
|
761
|
|
-
|
|
1,664
|
|
-
|
|
4,028
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT, Earnings (Loss)
before interest expense, income taxes and noncontrolling
interests
|
119
|
|
60
|
|
-
|
|
179
|
|
96
|
|
(18)
|
|
-
|
|
78
|
|
(51)
|
|
206
|
Depreciation and
amortization
|
37
|
|
61
|
|
-
|
|
98
|
|
24
|
|
38
|
|
-
|
|
62
|
|
-
|
|
160
|
Total EBITDA
including noncontrolling interests(4)
|
156
|
|
121
|
|
-
|
|
277
|
|
120
|
|
20
|
|
-
|
|
140
|
|
(51)
|
|
366
|
Financing charges on
sale of receivables reclass
|
1
|
|
1
|
|
1
|
|
3
|
|
5
|
|
-
|
|
-
|
|
5
|
|
-
|
|
8
|
Segment change
impact
|
2
|
|
12
|
|
(16)
|
|
(2)
|
|
(19)
|
|
17
|
|
(32)
|
|
(34)
|
|
36
|
|
-
|
Total EBITDA
including noncontrolling interests after reclass and segment
change(4)
|
159
|
|
134
|
|
(15)
|
|
278
|
|
106
|
|
37
|
|
(32)
|
|
111
|
|
(15)
|
|
374
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related expenses
|
1
|
|
-
|
|
-
|
|
1
|
|
2
|
|
7
|
|
-
|
|
9
|
|
-
|
|
10
|
|
Cost reduction
initiatives
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2
|
|
-
|
|
2
|
|
-
|
|
2
|
|
Acquisition and spin
costs
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
13
|
|
13
|
|
Warranty
charge
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5
|
|
-
|
|
5
|
|
-
|
|
5
|
|
Purchase price
contingency
|
-
|
|
5
|
|
-
|
|
5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5
|
|
Transaction related
costs
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1
|
|
1
|
|
Other
|
-
|
|
1
|
|
-
|
|
1
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(5)
|
$
160
|
|
$
140
|
|
$
(15)
|
|
$
285
|
|
$
108
|
|
$
51
|
|
$
(32)
|
|
$
127
|
|
$
-
|
|
$
412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as a
percent of value-add revenue(6)
|
14.5%
|
|
11.1%
|
|
|
|
12.1%
|
|
12.0%
|
|
6.7%
|
|
|
|
7.6%
|
|
|
|
10.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma New
Tenneco
|
|
Pro forma
DRiV
|
|
|
|
|
|
|
Clean Air
|
|
Powertrain
|
|
Corporate -
New
Tenneco
|
|
New
Tenneco
|
|
Motorparts
|
|
Ride
Performance
|
|
Corporate -
DRiV
|
|
DRiV
|
|
Other/Elim
|
|
Total Pro
forma
Tenneco
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and
operating revenues
|
$
1,694
|
|
$
1,243
|
|
$
-
|
|
$
2,937
|
|
$
930
|
|
$
753
|
|
$
-
|
|
$
1,683
|
|
$
-
|
|
$
4,620
|
Less: Substrate
sales
|
621
|
|
-
|
|
-
|
|
621
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
621
|
Value-add revenues
(3)
|
1,073
|
|
1,243
|
|
-
|
|
2,316
|
|
930
|
|
753
|
|
-
|
|
1,683
|
|
-
|
|
3,999
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT, Earnings (Loss)
before interest expense, income taxes and noncontrolling
interests
|
103
|
|
70
|
|
-
|
|
173
|
|
109
|
|
(19)
|
|
-
|
|
90
|
|
(65)
|
|
198
|
Depreciation and
amortization
|
39
|
|
61
|
|
-
|
|
100
|
|
21
|
|
34
|
|
-
|
|
55
|
|
1
|
|
156
|
Total EBITDA
including noncontrolling interests(4)
|
142
|
|
131
|
|
-
|
|
273
|
|
130
|
|
15
|
|
-
|
|
145
|
|
(64)
|
|
354
|
Financing charges on
sale of receivables reclass
|
-
|
|
-
|
|
1
|
|
1
|
|
5
|
|
-
|
|
-
|
|
5
|
|
-
|
|
6
|
Segment change
impact
|
3
|
|
13
|
|
(16)
|
|
-
|
|
(17)
|
|
14
|
|
(24)
|
|
(27)
|
|
27
|
|
-
|
Total EBITDA
including noncontrolling interests after reclass and segment
change(4)
|
145
|
|
144
|
|
(15)
|
|
274
|
|
118
|
|
29
|
|
(24)
|
|
123
|
|
(37)
|
|
360
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related expenses
|
11
|
|
1
|
|
-
|
|
12
|
|
1
|
|
10
|
|
-
|
|
11
|
|
-
|
|
23
|
|
Cost reduction
initiatives
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
8
|
|
-
|
|
8
|
|
-
|
|
8
|
|
Acquisition and spin
costs
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
18
|
|
18
|
|
Costs to achieve
synergies
|
6
|
|
-
|
|
-
|
|
6
|
|
1
|
|
-
|
|
-
|
|
1
|
|
2
|
|
9
|
|
Environmental
charge
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4
|
|
4
|
|
Transaction related
costs
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
13
|
|
13
|
|
Cost to exit a
multiemployer pension plan
|
-
|
|
5
|
|
-
|
|
5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5
|
|
Other
|
-
|
|
(2)
|
|
-
|
|
(2)
|
|
5
|
|
(1)
|
|
-
|
|
4
|
|
-
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(5)
|
$
162
|
|
$
148
|
|
$
(15)
|
|
$
295
|
|
$
125
|
|
$
46
|
|
$
(24)
|
|
$
147
|
|
$
-
|
|
$
442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as a
percent of value-add revenue(6)
|
15.1%
|
|
11.9%
|
|
|
|
12.7%
|
|
13.4%
|
|
6.1%
|
|
|
|
8.7%
|
|
|
|
11.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma New
Tenneco
|
|
Pro forma
DRiV
|
|
|
|
|
|
|
Clean Air
|
|
Powertrain
|
|
Corporate -
New
Tenneco
|
|
New
Tenneco
|
|
Motorparts
|
|
Ride
Performance
|
|
Corporate -
DRiV
|
|
DRiV
|
|
Other/Elim
|
|
Total Pro
forma
Tenneco
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and
operating revenues
|
$
1,602
|
|
$
1,122
|
|
$
-
|
|
$
2,724
|
|
$
867
|
|
$
690
|
|
$
-
|
|
$
1,557
|
|
$
-
|
|
$
4,281
|
Less: Substrate
sales
|
596
|
|
-
|
|
-
|
|
596
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
596
|
Value-add revenues
(3)
|
1,006
|
|
1,122
|
|
-
|
|
2,128
|
|
867
|
|
690
|
|
-
|
|
1,557
|
|
-
|
|
3,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT, Earnings (Loss)
before interest expense, income taxes and noncontrolling
interests
|
105
|
|
21
|
|
-
|
|
126
|
|
102
|
|
28
|
|
-
|
|
130
|
|
(51)
|
|
205
|
Depreciation and
amortization
|
38
|
|
62
|
|
-
|
|
100
|
|
22
|
|
35
|
|
-
|
|
57
|
|
2
|
|
159
|
Total EBITDA
including noncontrolling interests(4)
|
143
|
|
83
|
|
-
|
|
226
|
|
124
|
|
63
|
|
-
|
|
187
|
|
(49)
|
|
364
|
Financing charges on
sale of receivables reclass
|
1
|
|
1
|
|
1
|
|
3
|
|
5
|
|
-
|
|
-
|
|
5
|
|
-
|
|
8
|
Segment change
impact
|
4
|
|
13
|
|
(18)
|
|
(1)
|
|
(16)
|
|
16
|
|
(28)
|
|
(28)
|
|
29
|
|
-
|
Total EBITDA
including noncontrolling interests after reclass and segment
change(4)
|
148
|
|
97
|
|
(17)
|
|
228
|
|
113
|
|
79
|
|
(28)
|
|
164
|
|
(20)
|
|
372
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related expenses
|
1
|
|
8
|
|
-
|
|
9
|
|
8
|
|
10
|
|
-
|
|
18
|
|
-
|
|
27
|
|
Acquisition and spin
costs
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
12
|
|
12
|
|
Costs to achieve
synergies
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
1
|
|
-
|
|
1
|
|
3
|
|
4
|
|
Litigation settlement
accrual
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
9
|
|
-
|
|
9
|
|
1
|
|
10
|
|
Gain (loss) on sale
of assets
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(65)
|
|
-
|
|
(65)
|
|
-
|
|
(65)
|
|
Charge for
extinguishment of dissenting shareholders shares
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5
|
|
5
|
|
Other
|
-
|
|
4
|
|
-
|
|
4
|
|
(3)
|
|
1
|
|
-
|
|
(2)
|
|
(1)
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(5)
|
$
149
|
|
$
109
|
|
$
(17)
|
|
$
241
|
|
$
118
|
|
$
35
|
|
$
(28)
|
|
$
125
|
|
$
-
|
|
$
366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as a
percent of value-add revenue(6)
|
14.8%
|
|
9.7%
|
|
|
|
11.3%
|
|
13.6%
|
|
5.1%
|
|
|
|
8.0%
|
|
|
|
9.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma New
Tenneco
|
|
Pro forma
DRiV
|
|
|
|
|
|
|
Clean Air
|
|
Powertrain
|
|
Corporate -
New
Tenneco
|
|
New
Tenneco
|
|
Motorparts
|
|
Ride
Performance
|
|
Corporate -
DRiV
|
|
DRiV
|
|
Other/Elim
|
|
Total Pro
forma
Tenneco
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and
operating revenues
|
$
1,655
|
|
$
1,112
|
|
$
-
|
|
$
2,767
|
|
$
827
|
|
$
684
|
|
$
-
|
|
$
1,511
|
|
$
-
|
|
$
4,278
|
Less: Substrate
sales
|
631
|
|
-
|
|
-
|
|
631
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
631
|
Value-add revenues
(3)
|
1,024
|
|
1,112
|
|
-
|
|
2,136
|
|
827
|
|
684
|
|
-
|
|
1,511
|
|
-
|
|
3,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT, Earnings (Loss)
before interest expense, income taxes and noncontrolling
interests
|
116
|
|
33
|
|
-
|
|
149
|
|
(31)
|
|
(47)
|
|
-
|
|
(78)
|
|
(102)
|
|
(31)
|
Depreciation and
amortization
|
40
|
|
59
|
|
-
|
|
99
|
|
29
|
|
37
|
|
-
|
|
66
|
|
-
|
|
165
|
Total EBITDA
including noncontrolling interests(4)
|
156
|
|
92
|
|
-
|
|
248
|
|
(2)
|
|
(10)
|
|
-
|
|
(12)
|
|
(102)
|
|
134
|
Financing charges on
sale of receivables reclass
|
-
|
|
-
|
|
1
|
|
1
|
|
6
|
|
1
|
|
-
|
|
7
|
|
-
|
|
8
|
Segment change
impact
|
3
|
|
1
|
|
(4)
|
|
-
|
|
(17)
|
|
12
|
|
(19)
|
|
(24)
|
|
24
|
|
-
|
Total EBITDA
including noncontrolling interests after reclass and segment
change(4)
|
159
|
|
93
|
|
(3)
|
|
249
|
|
(13)
|
|
3
|
|
(19)
|
|
(29)
|
|
(78)
|
|
142
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related expenses
|
(2)
|
|
(2)
|
|
-
|
|
(4)
|
|
2
|
|
19
|
|
-
|
|
21
|
|
-
|
|
17
|
|
Cost reduction
initiatives
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
8
|
|
8
|
|
Acquisition and spin
costs
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
53
|
|
53
|
|
Costs to achieve
synergies
|
(3)
|
|
-
|
|
-
|
|
(3)
|
|
35
|
|
10
|
|
-
|
|
45
|
|
7
|
|
49
|
|
Purchase accounting
adjustments
|
-
|
|
44
|
|
-
|
|
44
|
|
57
|
|
5
|
|
-
|
|
62
|
|
-
|
|
106
|
|
Anti-dumping duty
charge
|
-
|
|
-
|
|
-
|
|
-
|
|
16
|
|
-
|
|
-
|
|
16
|
|
-
|
|
16
|
|
Loss on debt
modification
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
10
|
|
10
|
|
Pension charges /
Stock vesting
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3
|
|
-
|
|
3
|
|
-
|
|
3
|
|
Goodwill impairment
charge
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3
|
|
-
|
|
3
|
|
-
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(5)
|
$
154
|
|
$
135
|
|
$
(3)
|
|
$
286
|
|
$
97
|
|
$
43
|
|
$
(19)
|
|
$
121
|
|
$
-
|
|
$
407
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as a
percent of value-add revenue(6)
|
15.0%
|
|
12.1%
|
|
|
|
13.4%
|
|
11.7%
|
|
6.3%
|
|
|
|
8.0%
|
|
|
|
11.2%
|
|
(1)U.S.
Generally Accepted Accounting Principles.
|
|
(2) Tenneco presents pro forma
revenues and earnings measures to show what the company's
performance would have been had Federal-Mogul been consolidated
with Tenneco for each quarter of 2018. We believe this
supplemental information is useful to investors who are trying to
understand the results of the entire enterprise, including
Federal-Mogul. The Motorparts segment reflects the
company's historical Aftermarket segment plus the Motorparts
aftermarket business acquired in the Federal-Mogul
acquisition. The Ride Performance segment reflects the
company's historical Ride Performance segment plus the Motorparts
OE business acquired in the Federal-Mogul acquisition.
|
|
(3)
Tenneco presents the above reconciliation of revenues in order to
reflect value-add revenues separately from substrate sales.
Substrate sales include precious metals pricing, which may be
volatile. Substrate sales occur when, at the direction of its
OE customers, Tenneco purchases catalytic converters or components
thereof from suppliers, uses them in its manufacturing processes
and sells them as part of the completed system. While Tenneco
original equipment customers assume the risk of this volatility, it
impacts reported revenue. Excluding substrate sales removes
this impact. Tenneco uses this information to analyze the
trend in revenues before these factors. Tenneco believes
investors find this information useful in understanding period to
period comparisons in the company's revenues.
|
|
(4)
EBITDA including noncontrolling interests represents income
before interest expense, income taxes, noncontrolling interests and
depreciation and amortization. We have also presented
EBITDA including noncontrolling interests to give effect to the
reclassification of financing charges on sale of receivables that
took place in the first quarter 2019 and to give effective to the
impact of the segment changes that occurred in the first quarter of
2019. EBITDA including noncontrolling interests is not a
calculation based upon GAAP. The amounts included in the
EBITDA including noncontrolling interests calculation, however, are
derived from amounts included in the historical statements of
income data. In addition, EBITDA including noncontrolling
interests should not be considered as an alternative to net income
(loss) attributable to Tenneco Inc. or operating income as an
indicator of the company's operating performance, or as an
alternative to operating cash flows as a measure of
liquidity. Tenneco has presented EBITDA including
noncontrolling interests because it regularly reviews EBITDA
including noncontrolling interests as a measure of the company's
performance. In addition, Tenneco believes its investors
utilize and analyze the company's EBITDA including noncontrolling
interests for similar purposes. Tenneco also believes EBITDA
including noncontrolling interests assists investors in comparing a
company's performance on a consistent basis without regard to
depreciation and amortization, which can vary significantly
depending upon many factors. However, the EBITDA including
noncontrolling interests measure presented may not always be
comparable to similarly titled measures reported by other companies
due to differences in the components of the
calculation.
|
|
(5)"Adjusted EBITDA" is EBITDA including
noncontrolling interests (after giving effect to the
reclassification and segment change described above) and is
presented in order to reflect the results in a manner that allows a
better understanding of operational activities separate from the
financial impact of decisions made for the long term benefit of the
company and other items impacting comparability between the
periods. Similar adjustments to EBITDA including
noncontrolling interests have been recorded in earlier periods, and
similar types of adjustments can reasonably be expected to be
recorded in future periods. The company believes investors find the
non-GAAP information helpful in understanding the ongoing
performance of operations separate from items that may have a
disproportionate positive or negative impact on the company's
financial results in any particular period.
|
|
(6)
Tenneco presents the above reconciliation in order to reflect
Adjusted EBITDA as a percent of both value-add revenues.
Presenting Adjusted EBITDA as a percent of value-add revenue
assists investors in evaluating the company's operational
performance without the impact of substrate sales, which can be
volatile.
|
ATTACHMENT
2
|
TENNECO
INC.
|
RECONCILIATION OF
GAAP(1) REVENUE TO PRO FORMA(2) REVENUE AND
NON-GAAP EARNINGS MEASURES - 2018 and 2017 Annual
|
Unaudited
|
(Millions except
percents)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma New
Tenneco
|
|
Pro forma
DRiV
|
|
|
|
|
|
|
Clean Air
|
|
Powertrain
|
|
Corporate -
New
Tenneco
|
|
New
Tenneco
|
|
Motorparts
|
|
Ride
Performance
|
|
Corporate -
DRiV
|
|
DRiV
|
|
Other/Elim
|
|
Total Pro
forma
Tenneco
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and
operating revenues
|
$
6,707
|
|
$
4,737
|
|
$
-
|
|
$
11,444
|
|
$
3,527
|
|
$
2,888
|
|
$
-
|
|
$
6,415
|
|
$
-
|
|
$
17,859
|
Less: Substrate
sales
|
2,500
|
|
-
|
|
-
|
|
2,500
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2,500
|
Value-add revenues
(3)
|
4,207
|
|
4,737
|
|
-
|
|
8,944
|
|
3,527
|
|
2,888
|
|
-
|
|
6,415
|
|
-
|
|
15,359
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT, Earnings (Loss)
before interest expense, income taxes and noncontrolling
interests
|
443
|
|
184
|
|
-
|
|
627
|
|
276
|
|
(56)
|
|
-
|
|
220
|
|
(269)
|
|
578
|
Depreciation and
amortization
|
154
|
|
243
|
|
-
|
|
397
|
|
96
|
|
144
|
|
-
|
|
240
|
|
3
|
|
640
|
Total EBITDA
including noncontrolling interests(4)
|
597
|
|
427
|
|
-
|
|
1,024
|
|
372
|
|
88
|
|
-
|
|
460
|
|
(266)
|
|
1,218
|
Financing charges on
sale of receivables reclass
|
2
|
|
2
|
|
4
|
|
8
|
|
21
|
|
1
|
|
-
|
|
22
|
|
-
|
|
30
|
Segment change
impact
|
12
|
|
39
|
|
(54)
|
|
(3)
|
|
(69)
|
|
59
|
|
(103)
|
|
(113)
|
|
116
|
|
-
|
Total EBITDA
including noncontrolling interests after reclass and segment
change(4)
|
611
|
|
468
|
|
(50)
|
|
1,029
|
|
324
|
|
148
|
|
(103)
|
|
369
|
|
(150)
|
|
1,248
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related expenses
|
11
|
|
7
|
|
-
|
|
18
|
|
13
|
|
46
|
|
-
|
|
59
|
|
-
|
|
77
|
|
Cost reduction
initiatives
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
10
|
|
-
|
|
10
|
|
8
|
|
18
|
|
Acquisition and spin
costs
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
96
|
|
96
|
|
Costs to achieve
synergies
|
3
|
|
-
|
|
-
|
|
3
|
|
36
|
|
11
|
|
-
|
|
47
|
|
12
|
|
62
|
|
Purchase accounting
adjustments
|
-
|
|
44
|
|
-
|
|
44
|
|
57
|
|
5
|
|
-
|
|
62
|
|
-
|
|
106
|
|
Anti-dumping duty
charge
|
-
|
|
-
|
|
-
|
|
-
|
|
16
|
|
-
|
|
-
|
|
16
|
|
-
|
|
16
|
|
Environmental
charge
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
4
|
|
4
|
|
Warranty
charge
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5
|
|
-
|
|
5
|
|
-
|
|
5
|
|
Litigation settlement
accrual
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
9
|
|
-
|
|
9
|
|
1
|
|
10
|
|
Loss on debt
modification
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
10
|
|
10
|
|
Pension charges /
Stock vesting
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3
|
|
-
|
|
3
|
|
-
|
|
3
|
|
Goodwill impairment
charge
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
3
|
|
-
|
|
3
|
|
-
|
|
3
|
|
Purchase price
contingency
|
-
|
|
5
|
|
-
|
|
5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5
|
|
Transaction related
costs
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
14
|
|
14
|
|
Cost to exit a
multiemployer pension plan
|
-
|
|
5
|
|
-
|
|
5
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5
|
|
Gain (loss) on sale
of assets
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(65)
|
|
-
|
|
(65)
|
|
-
|
|
(65)
|
|
Charge for
extinguishment of dissenting shareholders shares
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5
|
|
5
|
|
Other
|
-
|
|
3
|
|
-
|
|
3
|
|
2
|
|
-
|
|
-
|
|
2
|
|
-
|
|
5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(5)
|
$
625
|
|
$
532
|
|
$
(50)
|
|
$
1,107
|
|
$
448
|
|
$
175
|
|
$
(103)
|
|
$
520
|
|
$
-
|
|
$
1,627
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as a
percent of value-add revenue(6)
|
14.9%
|
|
11.2%
|
|
|
|
12.4%
|
|
12.7%
|
|
6.1%
|
|
|
|
8.1%
|
|
|
|
10.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma New
Tenneco
|
|
Pro forma
DRiV
|
|
|
|
|
|
|
Clean Air
|
|
Powertrain
|
|
Corporate -
New
Tenneco
|
|
New
Tenneco
|
|
Motorparts
|
|
Ride
Performance
|
|
Corporate -
DRiV
|
|
DRiV
|
|
Other/Elim
|
|
Total Pro
forma
Tenneco
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales and
operating revenues
|
$
6,216
|
|
$
4,573
|
|
$
-
|
|
$
10,789
|
|
$
3,678
|
|
$
2,686
|
|
$
-
|
|
$
6,364
|
|
$
-
|
|
$
17,153
|
Less: Substrate
sales
|
2,187
|
|
-
|
|
-
|
|
2,187
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
2,187
|
Value-add revenues
(3)
|
4,029
|
|
4,573
|
|
-
|
|
8,602
|
|
3,678
|
|
2,686
|
|
-
|
|
6,364
|
|
-
|
|
14,966
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT, Earnings (Loss)
before interest expense, income taxes and noncontrolling
interests
|
420
|
|
234
|
|
-
|
|
654
|
|
394
|
|
(42)
|
|
-
|
|
352
|
|
(272)
|
|
734
|
Depreciation and
amortization
|
142
|
|
254
|
|
-
|
|
396
|
|
92
|
|
132
|
|
-
|
|
224
|
|
4
|
|
624
|
Total
EBITDA including noncontrolling interests(4)
|
562
|
|
488
|
|
-
|
|
1,050
|
|
486
|
|
90
|
|
-
|
|
576
|
|
(268)
|
|
1,358
|
Financing charges on
sale of receivables reclass
|
2
|
|
2
|
|
-
|
|
4
|
|
16
|
|
1
|
|
-
|
|
17
|
|
-
|
|
21
|
Segment change
impact
|
7
|
|
54
|
|
(71)
|
|
(10)
|
|
(67)
|
|
75
|
|
(114)
|
|
(106)
|
|
116
|
|
-
|
Total EBITDA
including noncontrolling interests after reclass and segment
change(4)
|
571
|
|
544
|
|
(71)
|
|
1,044
|
|
435
|
|
166
|
|
(114)
|
|
487
|
|
(152)
|
|
1,379
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring and
related expenses
|
23
|
|
16
|
|
-
|
|
39
|
|
21
|
|
23
|
|
-
|
|
44
|
|
1
|
|
84
|
|
Cost reduction
initiatives
|
4
|
|
-
|
|
-
|
|
4
|
|
3
|
|
12
|
|
-
|
|
15
|
|
3
|
|
22
|
|
Loss on debt
modification
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
5
|
|
5
|
|
Pension charges /
Stock vesting
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
13
|
|
13
|
|
Goodwill impairment
charge
|
-
|
|
11
|
|
-
|
|
11
|
|
4
|
|
7
|
|
-
|
|
11
|
|
-
|
|
22
|
|
Warranty
settlement
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
7
|
|
-
|
|
7
|
|
132
|
|
139
|
|
Gain on sale of
unconsolidated JV
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(5)
|
|
(5)
|
|
Gain from termination
of customer contract
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(6)
|
|
-
|
|
(6)
|
|
-
|
|
(6)
|
|
Warranty
release
|
-
|
|
-
|
|
-
|
|
-
|
|
(4)
|
|
-
|
|
-
|
|
(4)
|
|
-
|
|
(4)
|
|
Release of deferred
purchase price payment
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(3)
|
|
-
|
|
(3)
|
|
-
|
|
(3)
|
|
EBITDA contribution
of pending asset sales
|
-
|
|
(2)
|
|
-
|
|
(2)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(2)
|
|
Transaction related
costs
|
-
|
|
3
|
|
-
|
|
3
|
|
1
|
|
-
|
|
-
|
|
1
|
|
3
|
|
7
|
|
Gain (loss) on sale
of business
|
-
|
|
(3)
|
|
-
|
|
(3)
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
(3)
|
|
Gain (loss) on sale
of nonconsolidated affiliates
|
-
|
|
-
|
|
-
|
|
-
|
|
2
|
|
-
|
|
-
|
|
2
|
|
-
|
|
2
|
|
Gain (loss) on sale
of assets
|
-
|
|
(6)
|
|
-
|
|
(6)
|
|
-
|
|
(1)
|
|
-
|
|
(1)
|
|
-
|
|
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(5)
|
$
598
|
|
$
563
|
|
$
(71)
|
|
$
1,090
|
|
$
462
|
|
$
205
|
|
$
(114)
|
|
$
553
|
|
$
-
|
|
$
1,643
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA as a
percent of value-add revenue(6)
|
14.8%
|
|
12.3%
|
|
|
|
12.7%
|
|
12.6%
|
|
7.6%
|
|
|
|
8.7%
|
|
|
|
11.0%
|
|
(1)U.S.
Generally Accepted Accounting Principles.
|
|
(2) Tenneco presents pro forma
revenues and earnings measures to show what the company's
performance would have been had Federal-Mogul been consolidated
with Tenneco for the entirety of 2017 and 2018. We believe
this supplemental information is useful to investors who are trying
to understand the results of the entire enterprise, including
Federal-Mogul. The Motorparts segment reflects the
company's historical Aftermarket segment plus the Motorparts
aftermarket business acquired in the Federal-Mogul
acquisition. The Ride Performance segment reflects the
company's historical Ride Performance segment plus the Motorparts
OE business acquired in the Federal-Mogul acquisition.
|
|
(3)
Tenneco presents the above reconciliation of revenues in order to
reflect value-add revenues separately from substrate sales.
Substrate sales include precious metals pricing, which may be
volatile. Substrate sales occur when, at the direction of its
OE customers, Tenneco purchases catalytic converters or components
thereof from suppliers, uses them in its manufacturing processes
and sells them as part of the completed system. While Tenneco
original equipment customers assume the risk of this volatility, it
impacts reported revenue. Excluding substrate sales removes
this impact. Tenneco uses this information to analyze the
trend in revenues before these factors. Tenneco believes
investors find this information useful in understanding period to
period comparisons in the company's revenues.
|
|
(4)
EBITDA including noncontrolling interests represents income
before interest expense, income taxes, noncontrolling interests and
depreciation and amortization. We have also presented
EBITDA including noncontrolling interests to give effect to the
reclassification of financing charges on sale of receivables that
took place in the first quarter 2019 and to give effective to the
impact of the segment changes that occurred in the first quarter of
2019. EBITDA including noncontrolling interests is not a
calculation based upon GAAP. The amounts included in the
EBITDA including noncontrolling interests calculation, however, are
derived from amounts included in the historical statements of
income data. In addition, EBITDA including noncontrolling
interests should not be considered as an alternative to net income
(loss) attributable to Tenneco Inc. or operating income as an
indicator of the company's operating performance, or as an
alternative to operating cash flows as a measure of
liquidity. Tenneco has presented EBITDA including
noncontrolling interests because it regularly reviews EBITDA
including noncontrolling interests as a measure of the company's
performance. In addition, Tenneco believes its investors
utilize and analyze the company's EBITDA including noncontrolling
interests for similar purposes. Tenneco also believes EBITDA
including noncontrolling interests assists investors in comparing a
company's performance on a consistent basis without regard to
depreciation and amortization, which can vary significantly
depending upon many factors. However, the EBITDA including
noncontrolling interests measure presented may not always be
comparable to similarly titled measures reported by other companies
due to differences in the components of the calculation.
|
|
(5)"Adjusted EBITDA" is EBITDA including
noncontrolling interests (after giving effect to the
reclassification and segment change described above) and is
presented in order to reflect the results in a manner that allows a
better understanding of operational activities separate from the
financial impact of decisions made for the long term benefit of the
company and other items impacting comparability between the
periods. Similar adjustments to EBITDA including
noncontrolling interests have been recorded in earlier periods, and
similar types of adjustments can reasonably be expected to be
recorded in future periods. The company believes investors find the
non-GAAP information helpful in understanding the ongoing
performance of operations separate from items that may have a
disproportionate positive or negative impact on the company's
financial results in any particular period.
|
|
(6)
Tenneco presents the above reconciliation in order to reflect
Adjusted EBITDA as a percent of both value-add revenues.
Presenting Adjusted EBITDA as a percent of value-add revenue
assists investors in evaluating the company's operational
performance without the impact of substrate sales, which can be
volatile.
|
ATTACHMENT
2
|
TENNECO
INC.
|
Division Level Q3 and
FY 2019 Outlook
|
Unaudited
|
|
|
|
DRiV™ 2019 YOY
Expectations
|
|
|
Q3
Outlook:
|
|
Revenue expected down
~3%(1) or around $1.5 billion
|
|
Expect adjusted
EBITDA margin rate improvement of approximately 100
bps(2)
|
Full Year
Outlook:
|
|
Revenue expected down
3% to 4%(1), or $6.0 billion to $6.1 billion
|
|
Adjusted EBITDA
margin up 20 to 40 bps(2)
|
|
Capital expenditures
in the range of $250 million to $260 million
|
|
|
New Tenneco 2019 YOY
Expectations
|
|
|
Q3
Outlook:
|
|
VA Revenue expected
(1)% to 1%(1)or around $2.1 billion
|
|
Expect VA adjusted
EBITDA margin rate improvement of approximately 120
bps(2)
|
Full Year
Outlook:
|
|
VA Revenue expected
flat to (2)%(1)or $8.6 billion to $8.7
billion
|
|
VA adjusted EBITDA
margin down between 40 to 60 bps (2)
|
|
Capital expenditures
in the range of $470 million to $485 million
|
|
(1) Pro
Forma revenue growth is measured at 2018 constant currency rates
and includes FM acquisition in prior periods.
|
(2)
Measured vs. proforma 2018
|
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SOURCE Tenneco Inc.