- Record-high second quarter revenue,
outpacing industry production
- Double-digit growth in commercial truck
and off highway revenue
- Returned $57 million to shareholders
through share repurchases and dividends
- Company raises full-year revenue
outlook
Tenneco Inc. (NYSE: TEN) reported a second quarter net loss of
$2 million, or 3-cents per diluted share, which includes
adjustments of $104 million after tax. Second quarter 2016 net
income* was $84 million, or $1.46 per diluted share. Adjusted net
income increased to $102 million, or $1.90 per diluted share,
versus $100 million or $1.75 per diluted share last year.*
Revenue
Second quarter revenue was $2.317 billion, up 5% year-over-year,
driven by growth in both the Ride Performance and Clean Air product
lines.
On a constant currency basis, total second quarter revenue
increased 6%, outpacing flat industry production.** Record high
revenue in the quarter reflects a 5% increase in light vehicle
revenue on the strength of the company’s global platform position.
Commercial truck revenue increased 26%, outpacing industry growth
of 4%**, with increases in all regions. Off-highway and specialty
revenue improved 8% year-over-year on higher volumes in Europe and
Japan, with North America revenue steady versus last year. Global
aftermarket revenue was roughly flat versus last year.
In constant currency, value-add revenue increased 6% versus last
year, and included 6% increases in both Ride Performance and Clean
Air revenues.
Adjusted second quarter 2017 and 2016 results
(millions except per share amounts) Q2 2017 Q2 2016*
EBITDA ♦
EBIT
Net incomeattributable toTenneco Inc.
Per Share
EBITDA ♦
EBIT
Net incomeattributable toTenneco Inc.
Per Share Earnings Measures $ 83 $ 28 $ (2 ) $ (0.03 ) $ 225
$ 173 $ 84 $ 1.46 Adjustments (reflects non-GAAP measures):
Restructuring and related expenses 16 17 16 0.30 5 5 4 0.06
Antitrust settlement accrual 132 132 85 1.60 - - - - Warranty
settlement 7 7 5 0.08 - - - - Gain on sale of unconsolidated JV (5
) (5 ) (4 ) (0.08 ) - - - - Costs related to refinancing - - 1 0.02
- - 10 0.18 Net tax adjustments - - 1 0.01 - - 2 0.05
Non-GAAP earnings
measures $ 233 $ 179 $ 102 $ 1.90 $ 230
$ 178 $ 100 $ 1.75
♦ EBITDA including noncontrolling
interests (EBIT before depreciation and amortization)
In addition to the items set forth above, the tables at the end of
this press release reconcile GAAP to non-GAAP results.
EBIT and EBIT Margin*
Second quarter EBIT (earnings before interest, taxes and
noncontrolling interests) was $28 million, versus $173 million last
year. Adjusted EBIT rose to $179 million. Excluding a negative
currency impact of $8 million, adjusted EBIT was $187 million.
Tenneco EBIT as a percent of revenue was 1.2%. Adjusted EBIT as
a percent of value-add revenue was 10.1%. Excluding a 30 basis
point currency headwind, adjusted EBIT as a percent of value-add
revenue was 10.4%.
EBIT results reflect strong light vehicle volumes, higher
commercial truck and off-highway revenues, and the timing of
commodity cost recoveries and other offsets.
Second quarter EBIT margin
Q2 2017 Q2 2016*
EBIT as a percent of revenue 1.2% 7.8% EBIT as a percent of
value-add revenue 1.6% 10.2% Adjusted EBIT as a percent of
revenue 7.7% 8.0% Adjusted EBIT as a percent of value-add revenue
10.1% 10.5%
Cash
Cash generated by operations in the quarter was $119 million,
compared with $132 million a year ago, driven by increased use of
cash for components of working capital. Year to date, cash
generated by operations was $110 million, a 7% increase versus last
year.
During the quarter, Tenneco repurchased 783,800 shares of common
stock for $44 million, and paid a dividend of 25-cents per share,
for $13 million.
OUTLOOK
Third quarter 2017
In the third quarter, Tenneco expects year-over-year revenue
growth of approximately 7% on a constant currency basis, outpacing
estimated light vehicle industry production growth** by 5
percentage points. The company anticipates minimal currency impact
on the year-over-year revenue comparison in the third quarter,
based on exchange rates at the end of the second quarter.
The company’s organic revenue growth is expected to be driven by
Ride Performance and Clean Air content on top-selling light vehicle
platforms globally; strong double digit growth in commercial truck
and off-highway revenue; and a steady contribution from the global
aftermarket.
Full Year 2017
Tenneco announced an increase to its full-year revenue growth
outlook. On a constant currency basis, the company now expects
year-over-year revenue growth of 6%, outpacing estimated light
vehicle industry growth by 5 percentage points.
The company expects second-half 2017 value add adjusted EBIT
margins to be in line with the prior year second half.
Tenneco updated its anticipated tax rate, and now expects a tax
rate between 27-28% for 2017, due to continued optimization of the
global business structure.
“We’re pleased with our year-to-date results, including revenue
growth, strong earnings, and improved cash performance,” said Brian
Kesseler, Tenneco CEO. “As a result of the strong outlook for both
our light vehicle and commercial truck and off-highway revenues, we
are raising our full-year revenue outlook and expect to outpace
industry production by five percentage points. With these results
and multiple and diverse core growth drivers, we are confident in
our ability to continue accelerating top and bottom line
growth.”
*Year-over-year earnings comparisons reflect revisions to prior
period financial results for certain immaterial supplier cost
reduction payments that Tenneco determined should have been
recognized in future periods. Tenneco’s Form 10-Q for the
second quarter may reflect further revisions based on Tenneco’s
ongoing review of certain supplier payments, but Tenneco does not
expect that any such revisions will be material to prior
periods.
**Source: IHS Automotive July 2017 global light vehicle
production forecast, Power Systems Research July 2017 commercial
truck forecast, and/or and Tenneco estimates.
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 Net Income to EBITDA including
noncontrolling interests – 3 Months
Reconciliation of GAAP to Non-GAAP Earnings Measures – 3
Months
Reconciliation of GAAP Net Income to EBITDA including
noncontrolling interests – 6 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
Months and 6 months
Reconciliation of Non-GAAP Measures – Debt Net of Cash/Adjusted
LTM EBITDA including noncontrolling interests
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures –
Original Equipment and Aftermarket Revenue – 3 Months 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 and other revenues
– 3 Months
Reconciliation of Non-GAAP Revenue and Earnings Measures – 3
Months and 6 months
CONFERENCE CALL
The company will host a conference call on Friday, July 28, 2017
at 8:30 a.m. ET. The dial-in number is 866-807-9684 (domestic) or
412-317-5415 (international). The passcode is TENNECO. 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 July 28, 2017 through August 28, 2017. To access this
recording, dial 877-344-7529 (domestic) or 412-317-0088
(international). The purpose of the call is to discuss the
company’s operations for the second fiscal quarter of 2017, as well
as provide updated information regarding matters impacting the
company’s outlook. A copy of the press release is available on the
financial and news sections of the Tenneco web site.
Tenneco is an $8.6 billion global manufacturing company with
headquarters in Lake Forest, Illinois and approximately 31,000
employees worldwide. Tenneco is one of the world’s largest
designers, manufacturers and marketers of clean air and ride
performance products and systems for automotive and commercial
vehicle original equipment markets and the aftermarket. Tenneco’s
principal brand names are Monroe®, Walker®, XNOx® and
Clevite®Elastomers.
Revenue estimates 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. These revenue
estimates are also based on anticipated vehicle production levels
and pricing, including precious metals pricing and the impact of
material cost changes. Unless otherwise indicated, our revenue
estimate methodology does not attempt to forecast currency
fluctuations, and accordingly, reflects constant currency. For
certain additional assumptions upon which these estimates are
based, see the slides accompanying the July 28, 2017 webcast, which
will be available on the financial section of the Tenneco website
at www.investors.tenneco.com.
This press release contains forward-looking statements. Words
such as “may,” “expects,” “anticipate,” “projects,” “will,”
“outlook” and similar expressions identify forward-looking
statements. These forward-looking statements are based on the
current expectations of the company (including its subsidiaries).
Because these forward-looking statements involve risks and
uncertainties, the company's plans, actions and actual results
could differ materially. Among the factors that could cause these
plans, actions and results to differ materially from current
expectations are:
(i) general economic, business and market conditions;
(ii) the company’s ability to source and procure needed
materials, components and other products and services in accordance
with customer demand and at competitive prices;
(iii) 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;
(iv) changes in capital availability or costs, including
increases in the company's costs of borrowing (i.e., interest rate
increases), the amount of the company's debt, the ability of the
company to access capital markets at favorable rates, and the
credit ratings of the company’s debt;
(v) changes in consumer demand, prices and the company’s ability
to have our products included on top selling vehicles, including
any shifts in consumer preferences to lower margin vehicles, for
which we may or may not have supply arrangements;
(vi) changes in automotive and commercial vehicle manufacturers'
production rates and their actual and forecasted requirements for
the company's products such as the significant production cuts
during recent years by automotive manufacturers in response to
difficult economic conditions;
(vii) the overall highly competitive nature of the automobile
and commercial vehicle parts industries, and any resultant
inability to realize the sales represented by the company’s awarded
book of business which is based on anticipated pricing and volumes
over the life of the applicable program;
(viii) the loss of any of our large original equipment
manufacturer (“OEM”) 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 OEMs
or any change in customer demand due to delays in the adoption or
enforcement of worldwide emissions regulations;
(ix) the company's continued success in cost reduction and cash
management programs and its ability to execute restructuring and
other cost reduction plans, including our current cost reduction
initiatives, and to realize anticipated benefits from these
plans;
(x) risk inherent in operating a multi-national company,
including economic, exchange rate 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 disruption of
production and/or supply;
(xi) workforce factors such as strikes or labor
interruptions;
(xii) increases in the costs of raw materials, including the
company’s ability to successfully reduce the impact of any such
cost increases through materials substitutions, cost reduction
initiatives, customer recovery and other methods;
(xiii) the negative impact 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;
(xiv) the cyclical nature of the global vehicular industry,
including the performance of the global aftermarket sector and
longer product lives of automobile parts;
(xv) product warranty costs;
(xvi) the failure or breach of our information technology
systems and the consequences that such failure or breach may have
to our business;
(xvii) the company's ability to develop and profitably
commercialize new products and technologies, and the acceptance of
such new products and technologies by the company's customers and
the market;
(xviii) changes by the Financial Accounting Standards Board or
other accounting regulatory bodies to authoritative generally
accepted accounting principles or policies;
(xix) changes in accounting estimates and assumptions, including
changes based on additional information;
(xx) the impact 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;
(xxi) natural disasters, acts of war and/or terrorism and the
impact of these occurrences or acts on economic, financial,
industrial and social condition, including, without limitation,
with respect to supply chains and customer demand in the countries
where the company operates; and
(xxii) the timing and occurrence (or non-occurrence) of
transactions and events which may be subject to circumstances
beyond the control of the company and its subsidiaries.
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 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,
2016.
ATTACHMENT 1 TENNECO INC. AND CONSOLIDATED SUBSIDIARIES
STATEMENTS OF INCOME
Unaudited
THREE MONTHS ENDED JUNE 30, (Millions except per share amounts)
2017 2016* Net sales and
operating revenues Clean Air Division - Value-add revenues $ 1,078
$ 1,033 Clean Air Division - Substrate sales 541 519 Ride
Performance Division - Value-add revenues 698
660 $ 2,317 $ 2,212 Costs and expenses Cost of sales
(exclusive of depreciation and amortization shown below) 1,945 (a)
(c) (d) 1,814 (g) Engineering, research and development 36 37
Selling, general and administrative 253 (a) (b) 134 (g)
Depreciation and amortization of other intangibles 55
(a) 52 Total costs and expenses 2,289
2,037 Loss on sale of receivables (1 ) (1 )
Other income (expense) 1 (1 ) Total other
income (expense) - (2 ) Earnings before
interest expense, income taxes, and noncontrolling interests Clean
Air Division 114 (a) 131 (g) Ride Performance Division 62 (a) (c)
71 (g) Other (148 ) (a) (b) (d) (29 ) 28 173
Interest expense (net of interest capitalized) 20 (e)
34 (h) Earnings before income taxes and
noncontrolling interests 8 139
Income tax expense (benefit)
(7 ) (f) 39 (i) Net income 15 100 Less:
Net income attributable to noncontrolling interests 17
16
Net income (loss) attributable to Tenneco
Inc.
$ (2 ) $ 84 Weighted average common shares
outstanding: Basic 53.5 56.9 Diluted
53.7 57.3
Earnings (loss) per share of common
stock:
Basic $ (0.03 ) $ 1.47 Diluted $ (0.03 ) $ 1.46
* Prior period financial results have been
revised for certain immaterial supplier cost reduction payments
that Tenneco determined should have been recognized in future
periods. Tenneco’s Form 10-Q for the second quarter may
reflect further revisions based on Tenneco’s ongoing review of
certain supplier payments, but Tenneco does not expect that any
such revisions will be material to prior periods.
(a) Includes restructuring and related charges of $17
million pre-tax, $16 million after tax or $0.30 per diluted share.
Of the amount, $12 million is recorded in cost of sales, $4 million
is recorded in selling, general and administrative expenses and $1
million is recorded in depreciation and amortization. $12 million
is recorded in the Clean Air Division, $3 million is recorded in
the Ride Performance Division and $2 million is recorded in Other.
(b) Includes antitrust settlement accrual of $132 million
pre-tax, $85 million after tax or $1.60 per diluted share.
(c) Includes warranty settlement of $7 million pre-tax, $5 million
after tax or $0.08 per diluted share. (d) Includes gain on
sale of an unconsolidated JV of $5 million pre-tax, $4 million
after tax or $0.08 per diluted share. (e) Includes pre-tax
expenses of $1 million, $1 million after tax or $0.02 per diluted
share for costs related to refinancing activities. (f)
Includes net tax adjustments of $1 million or $0.01 per diluted
share for tax adjustments to prior year estimates. (g)
Includes restructuring and related charges of $5 million pre-tax,
$4 million after tax or $0.06 per diluted share. Of the amount, $3
million is recorded in cost of sales and $2 million is recorded in
selling, general and administrative expenses. $1 million is
recorded in the Clean Air Division and $4 million is recorded in
the Ride Performance Division. (h) Includes pre-tax expenses
of $16 million, $10 million after tax or $0.18 per diluted share
for costs related to refinancing activities. (i) Includes
net tax adjustments of $2 million or $0.05 per diluted share for
tax adjustments to prior year estimates. ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES STATEMENTS OF INCOME
Unaudited
SIX MONTHS ENDED JUNE 30, (Millions except per share amounts)
2017* 2016* Net sales and operating revenues
Clean Air Division - Value-add revenues $ 2,162 $ 2,038 Clean Air
Division - Substrate sales 1,088 1,029 Ride Performance Division -
Value-add revenues 1,359 1,281 $ 4,609
$ 4,348 Costs and expenses Cost of sales (exclusive of
depreciation and amortization shown below) 3,874 (a) (c) (d) 3,584
(g) Engineering, research and development 75 76 Selling, general
and administrative 401 (a) (b) (e) 281 (g) Depreciation and
amortization of other intangibles 107 (a) 106
(g) Total costs and expenses 4,457
4,047 Loss on sale of receivables (2 ) (2 ) Other
income (expense) 1 (2 ) (g) Total other income
(expense) (1 ) (4 ) Earnings before interest
expense, income taxes, and noncontrolling interests Clean Air
Division 219 (a) 242 (g) Ride Performance Division 118 (a) (c) 120
(g) Other (186 ) (a) (b) (d) (e) (65 ) 151 297
Interest expense (net of interest capitalized) 35 (f)
52 (h) Earnings before income taxes and
noncontrolling interests 116 245 Income tax expense
26 73 (i) Net income 90 172 Less: Net
income attributable to noncontrolling interests 31
31 Net income attributable to Tenneco Inc. $ 59
$ 141 Weighted average common shares
outstanding: Basic 53.7 57.0 Diluted
54.0 57.4 Earnings per share of
common stock: Basic $ 1.10 $ 2.47 Diluted $ 1.10
$ 2.45
* Financial results for 2016 and first
quarter 2017 have been revised for certain immaterial supplier cost
reduction payments that Tenneco determined should have been
recognized in future periods. Tenneco’s Form 10-Q for the
second quarter may reflect further revisions based on Tenneco’s
ongoing review of certain supplier payments, but Tenneco does not
expect that any such revisions will be material to prior
periods.
(a) Includes restructuring and related
charges of $32 million pre-tax, $30 million after tax or $0.55 per
diluted share. Of the amount, $23 million is recorded in cost of
sales, $7 million is recorded in selling, general and
administrative expenses and $2 million is recorded in depreciation
and amortization. $22 million is recorded in the Clean Air
Division, $7 million is recorded in the Ride Performance Division
and $3 million is recorded in Other.
(b) Includes antitrust settlement accrual of $132 million
pre-tax, $85 million after tax or $1.59 per diluted share.
(c) Includes warranty settlement of $7 million pre-tax, $5 million
after tax or $0.08 per diluted share. (d) Includes gain on
sale of an unconsolidated JV of $5 million pre-tax, $4 million
after tax or $0.08 per diluted share. (e) Includes pension
and accelerated restricted stock vesting charges of $11 million
pre-tax, $7 million after tax or $0.13 per diluted share.
(f) Includes pre-tax expenses of $1 million, $1 million after tax
or $0.02 per diluted share for costs related to refinancing
activities. (g) Includes restructuring and related charges
of $19 million pre-tax, $17 million after tax or $0.30 per diluted
share. Of the amount, $6 million is recorded in cost of sales, $8
million is recorded in selling, general and administrative
expenses, $3 million is recorded in depreciation and amortization
and $2 million is recorded in other income (expense). $1 million is
recorded in the Clean Air Division and $18 million is recorded in
the Ride Performance Division. (h) Includes pre-tax expenses
of $16 million, $10 million after tax or $0.18 per diluted share
for costs related to refinancing activities. (i) Includes
net tax adjustments of $1 million or $0.01 per diluted share for
tax adjustments to prior year estimates. ATTACHMENT 1
TENNECO INC. AND CONSOLIDATED SUBSIDIARIES BALANCE SHEETS
(Unaudited) (Millions) June 30, 2017 December 31,
2016 * Assets Cash and cash equivalents $ 333 $ 347
Restricted cash 2 2 Receivables, net 1,501 (a) 1,294
(a) Inventories 815 730 Other current assets 311 229
Investments and other assets 439 386 Plant, property,
and equipment, net 1,479 1,357
Total assets $ 4,880 $ 4,345
Liabilities and Shareholders' Equity Short-term debt $ 107 $
90 Accounts payable 1,600 1,496 Accrued taxes 56 41
Accrued interest 13 15 Other current liabilities 513
328 Long-term debt 1,490 (b) 1,294 (b) Deferred
income taxes 7 7 Deferred credits and other liabilities 403
407 Redeemable noncontrolling interests 25 41 Tenneco
Inc. shareholders' equity 624 579 Noncontrolling interests
42 47 Total liabilities,
redeemable noncontrolling interests and shareholders' equity $
4,880 $ 4,345 June 30, 2017 December
31, 2016 (a) Accounts Receivables net of: Europe - Accounts
receivables securitization programs $ 222 $ 160 June 30,
2017 December 31, 2016 (b) Long term debt composed of: Borrowings
against revolving credit facilities $ 366 $ 300 Term loan A (Due
2019) 400 270 5.000% senior notes (Due 2026) 500 500 5.375% senior
notes (Due 2024) 225 225 Other long term debt (1 ) (1
) $ 1,490 $ 1,294
* Prior period financial results have been
revised for certain immaterial supplier cost reduction payments
that Tenneco determined should have been recognized in future
periods. Tenneco’s Form 10-Q for the second quarter may
reflect further revisions based on Tenneco’s ongoing review of
certain supplier payments, but Tenneco does not expect that any
such revisions will be material to prior periods.
ATTACHMENT 1
Tenneco Inc. and Consolidated
Subsidiaries Statements of Cash Flows (Unaudited)
(Millions)
Three Months Ended June 30,
2017 2016* Operating activities: Net income $
15 $ 100 Adjustments to reconcile net income to net cash provided
by operating activities - Depreciation and amortization of other
intangibles 55 52 Stock-based compensation 2 3 Deferred income
taxes (7 ) 9 Loss on sale of assets - 1 Changes in components of
working capital- (Inc.)/dec. in receivables (39 ) (19 ) (Inc.)/dec.
in inventories (15 ) 2 (Inc.)/dec. in prepayments and other current
assets (11 ) (16 ) Inc./(dec.) in payables (8 ) 6 Inc./(dec.) in
accrued taxes (40 ) (6 ) Inc./(dec.) in accrued interest 3 (12 )
Inc./(dec.) in other current liabilities 160 - Changes in long-term
assets 1 1 Changes in long-term liabilities 2 7 Other 1
4 (a) Net cash provided by operating
activities 119 132 Investing activities: Proceeds from sale
of assets 3 2 Proceeds from sale of equity interest 9 - Cash
payments for plant, property & equipment (90 ) (71 ) Cash
payments for software-related intangible assets (6 ) (3 ) Change in
restricted cash 1 (1 ) Other (4 ) - Net cash
used by investing activities (87 ) (73 )
Financing activities: Cash dividends
(13
) - Issuance of common shares - 4 (a) Purchase of common stock
under the share repurchase program (44 ) (41 ) Issuance of
long-term debt
136
501 Debt issuance costs on long-term debt (8 ) (8 ) Retirement of
long-term debt
(2
) (344 ) Net inc./(dec.) in bank overdrafts (12 ) (2 ) Net
inc./(dec.) in revolver borrowings and short-term debt excluding
current maturities on long-term debt and short-term borrowings
secured by accounts receivable
(57
) (168 ) Net inc./(dec.) in short-term debt secured by accounts
receivable - (30 ) Distribution to noncontrolling interest partners
(33 ) (27 ) Net cash used by financing activities
(33 ) (115 ) Effect of foreign exchange rate
changes on cash and cash equivalents (7 ) (7 )
Decrease in cash and cash equivalents (8 ) (63 ) Cash and cash
equivalents, April 1 341 374 Cash and
cash equivalents, June 30 $ 333 $ 311
Supplemental Cash Flow Information Cash paid during the period for
interest (net of interest capitalized) $ 16 $ 42 Cash paid during
the period for income taxes (net of refunds) 28 37 Non-cash
Investing and Financing Activities Period ended balance of payables
for plant, property, and equipment $ 51 $ 35
* Prior period financial results have been
revised for certain immaterial supplier cost reduction payments
that Tenneco determined should have been recognized in future
periods. Tenneco’s Form 10-Q for the second quarter may
reflect further revisions based on Tenneco’s ongoing review of
certain supplier payments, but Tenneco does not expect that any
such revisions will be material to prior periods.
(a) Retrospectively adjusted to reflect the effects of
applying the new guidance on stock compensation adopted in Q1 2017.
ATTACHMENT 1
Tenneco Inc. and Consolidated
Subsidiaries Statements of Cash Flows (Unaudited)
(Millions)
Six Months Ended June 30,
2017* 2016* Operating activities: Net income $
90 $ 172 Adjustments to reconcile net income to net cash provided
by operating activities - Depreciation and amortization of other
intangibles 107 106 Stock-based compensation 11 10 Deferred income
taxes - 12 Loss on sale of assets 1 1 Changes in components of
working capital- (Inc.)/dec. in receivables (176 ) (179 )
(Inc.)/dec. in inventories (60 ) (49 ) (Inc.)/dec. in prepayments
and other current assets (68 ) (35 ) Inc./(dec.) in payables 83 62
Inc./(dec.) in accrued taxes (37 ) 9 Inc./(dec.) in accrued
interest (2 ) - Inc./(dec.) in other current liabilities 152 (17 )
Changes in long-term assets - 4 Changes in long-term liabilities 7
2 Other 2 5 (a) Net cash provided by
operating activities 110 103 Investing activities: Proceeds
from sale of assets 6 3 Proceeds from sale of equity interest 9 -
Cash payments for plant, property & equipment (193 ) (139 )
Cash payments for software-related intangible assets (12 ) (9 )
Change in restricted cash - (2 ) Other (4 ) -
Net cash used by investing activities (194 ) (147 )
Financing activities: Cash dividends
(26
) - Issuance (repurchase) of common shares (3 ) 2 (a) Purchase of
common stock under the share repurchase program (60 ) (57 )
Issuance of long-term debt
136
506 Debt issuance costs on long-term debt (8 ) (8 ) Retirement of
long-term debt
(8
) (348 ) Net inc./(dec.) in bank overdrafts (9 ) 5 Net inc./(dec.)
in revolver borrowings and short-term debt excluding current
maturities on long-term debt and short-term borrowings secured by
accounts receivable
60
25 Net inc./(dec.) in short-term debt secured by accounts
receivable 20 (30 ) Distribution to noncontrolling interest
partners (33 ) (27 ) Net cash provided by financing
activities 69 68 Effect of
foreign exchange rate changes on cash and cash equivalents 1
- Increase (Decrease) in cash and cash
equivalents (14 ) 24 Cash and cash equivalents, January 1
347 287 Cash and cash equivalents, June 30 $
333 $ 311 Supplemental Cash Flow Information
Cash paid during the period for interest (net of interest
capitalized) $ 38 $ 48 Cash paid during the period for income taxes
(net of refunds) 43 58 Non-cash Investing and Financing
Activities Period ended balance of payables for plant, property,
and equipment $ 51 $ 35
* Financial results for 2016 and first
quarter 2017 have been revised for certain immaterial supplier cost
reduction payments that Tenneco determined should have been
recognized in future periods. Tenneco’s Form 10-Q for the
second quarter may reflect further revisions based on Tenneco’s
ongoing review of certain supplier payments, but Tenneco does not
expect that any such revisions will be material to prior
periods.
(a) Retrospectively adjusted to reflect the effects of
applying the new guidance on stock compensation adopted in Q1 2017.
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) NET INCOME TO
EBITDA INCLUDING NONCONTROLLING INTERESTS(2)
Unaudited
(Millions)
Q2 2017 Clean Air Division Ride Performance
Division North Europe & Asia North Europe & Asia America
South America Pacific Total America South America Pacific Total
Other Total
Net income (loss) attributable to Tenneco
Inc.
$ (2 ) Net income attributable to noncontrolling interests
17 Net income 15
Income tax expense (benefit)
(7 ) Interest expense (net of interest capitalized)
20 EBIT, Earnings before interest expense, income
taxes and noncontrolling interests (GAAP measure) $ 58 $ 33 $ 23 $
114 $ 38 $ 7 $ 17 $ 62 $ (148 ) 28 Depreciation and
amortization of other intangibles 17 11 9
37 9 7 2 18 -
55 Total EBITDA including noncontrolling
interests (2) $ 75 $ 44 $ 32 $ 151 $ 47 $ 14 $ 19 $ 80 $ (148 ) $
83 Q2 2016* Clean Air Division Ride Performance
Division North Europe & Asia North Europe & Asia America
South America Pacific Total America South America Pacific Total
Other Total Net income attributable to Tenneco Inc. $ 84 Net
income attributable to noncontrolling interests 16
Net income 100 Income tax expense 39 Interest
expense (net of interest capitalized) 34 EBIT,
Earnings before interest expense, income taxes and noncontrolling
interests (GAAP measure) $ 66 $ 28 $ 37 $ 131 $ 48 $ 10 $ 13 $ 71 $
(29 ) 173 Depreciation and amortization of other intangibles
17 11 6 34 8 7 3
18 - 52 Total EBITDA
including noncontrolling interests (2) $ 83 $ 39 $ 43 $ 165 $ 56 $
17 $ 16 $ 89 $ (29 ) $ 225
* Prior period financial results have been
revised for certain immaterial supplier cost reduction payments
that Tenneco determined should have been recognized in future
periods. Tenneco’s Form 10-Q for the second quarter may
reflect further revisions based on Tenneco’s ongoing review of
certain supplier payments, but Tenneco does not expect that any
such revisions will be material to prior periods.
(1) Generally Accepted Accounting Principles (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 generally accepted
accounting principles. 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.
ATTACHMENT 2
TENNECO INC. RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS
MEASURES(2)
Unaudited
(Millions except per share amounts)
Q2 2017 Q2 2016*
EBITDA (3) EBIT
Net incomeattributable toTenneco Inc.
Per Share EBITDA (3) EBIT
Net incomeattributable toTenneco Inc.
Per Share Earnings Measures $ 83 $ 28 $ (2 ) $ (0.03 ) $ 225 $ 173
$ 84 $ 1.46 Adjustments (reflect non-GAAP measures):
Restructuring and related expenses 16 17 16 0.30 5 5 4 0.06
Antitrust settlement accrual (4) 132 132 85 1.60 - - - - Warranty
settlement (5) 7 7 5 0.08 - - - - Gain on sale of unconsolidated JV
(6) (5 ) (5 ) (4 ) (0.08 ) - - - - Cost related to refinancing - -
1 0.02 - - 10 0.18 Net tax adjustments - - 1 0.01 - - 2 0.05
Non-GAAP earnings
measures $ 233 $ 179 $ 102 $ 1.90 $ 230
$ 178 $ 100 $ 1.75 Q2 2017 Clean Air Division
Ride Performance Division North Europe & Asia North Europe
& Asia America South America Pacific Total America South
America Pacific Total Other Total EBIT $ 58 $ 33 $ 23 $ 114 $ 38 $
7 $ 17 $ 62 $ (148 ) $ 28 Restructuring and related expenses - - 12
12 2 1 - 3 2 17 Antitrust settlement accrual (4) - - - - - - - -
132 132 Warranty settlement (5) - - - - 7 - - 7 - 7 Gain on sale of
unconsolidated JV (6) - - - -
- - - - (5
) (5 ) Adjusted EBIT $ 58 $ 33 $ 35 $ 126 $ 47
$ 8 $ 17 $ 72 $ (19 ) $ 179 Q2 2016*
Clean Air Division Ride Performance Division North Europe &
Asia North Europe & Asia America South America Pacific Total
America South America Pacific Total Other Total EBIT $ 66 $ 28 $ 37
$ 131 $ 48 $ 10 $ 13 $ 71 $ (29 ) $ 173 Restructuring and related
expenses - 1 - 1 1
3 - 4 - 5
Adjusted EBIT $ 66 $ 29 $ 37 $ 132 $ 49
$ 13 $ 13 $ 75 $ (29 ) $ 178
* Prior period financial results have been
revised for certain immaterial supplier cost reduction payments
that Tenneco determined should have been recognized in future
periods. Tenneco’s Form 10-Q for the second quarter may
reflect further revisions based on Tenneco’s ongoing review of
certain supplier payments, but Tenneco does not expect that any
such revisions will be material to prior periods.
(1) 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
generally accepted accounting principles. 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.
(4) Charges related to establish a reserve
for settlement costs necessary to resolve the company’s antitrust
matters globally.
(5) Warranty settlement with customer.
(6) Gain on sale of unconsolidated JV.
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) NET INCOME TO
EBITDA INCLUDING NONCONTROLLING INTERESTS(2)
Unaudited
(Millions)
YTD 2017* Clean Air Division Ride Performance
Division North Europe & Asia North Europe & Asia America
South America Pacific Total America South America Pacific Total
Other Total Net income attributable to Tenneco Inc. $ 59 Net
income attributable to noncontrolling interests 31
Net income 90 Income tax expense 26 Interest expense
(net of interest capitalized) 35 EBIT, Earnings
before interest expense, income taxes and noncontrolling interests
(GAAP measure) $ 110 $ 54 $ 55 $ 219 $ 71 $ 13 $ 34 $ 118 $ (186)
151 Depreciation and amortization of other intangibles
32 23 16 71 17 14
5 36 - 107 Total EBITDA including
noncontrolling interests (2) $ 142 $ 77 $ 71 $ 290 $ 88 $ 27 $ 39 $
154 $ (186) $ 258 YTD 2016* Clean Air Division Ride
Performance Division North Europe & Asia North Europe &
Asia America South America Pacific Total America South America
Pacific Total Other Total Net income attributable to Tenneco Inc. $
141 Net income attributable to noncontrolling interests
31 Net income 172 Income tax expense 73
Interest expense (net of interest capitalized) 52
EBIT, Earnings before interest expense, income taxes and
noncontrolling interests (GAAP measure) $ 128 $ 43 $ 71 $ 242 $ 90
$ 4 $ 26 $ 120 $ (65) 297 Depreciation and amortization of
other intangibles 32 20 14 66 17
17 6 40 - 106 Total
EBITDA including noncontrolling interests (2) $ 160 $ 63 $ 85 $ 308
$ 107 $ 21 $ 32 $ 160 $ (65) $ 403
* Financial results for 2016 and first
quarter 2017 have been revised for certain immaterial supplier cost
reduction payments that Tenneco determined should have been
recognized in future periods. Tenneco’s Form 10-Q for the
second quarter may reflect further revisions based on Tenneco’s
ongoing review of certain supplier payments, but Tenneco does not
expect that any such revisions will be material to prior
periods.
(1) Generally Accepted Accounting Principles (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 generally accepted
accounting principles. 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.
ATTACHMENT 2
TENNECO INC. RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS
MEASURES(2)
Unaudited
(Millions except per share amounts)
YTD 2017* YTD
2016* EBITDA (3) EBIT
Net incomeattributable toTenneco Inc.
Per Share EBITDA (3) EBIT
Net incomeattributable toTenneco Inc.
Per Share Earnings Measures $ 258 $ 151 $ 59 $ 1.10 $ 403 $ 297 $
141 $ 2.45 Adjustments (reflect non-GAAP measures):
Restructuring and related expenses 30 32 30 0.55 16 19 17 0.30
Antitrust settlement accrual (4) 132 132 85 1.59 - - - - Warranty
settlement (5) 7 7 5 0.08 - - - - Gain on sale of unconsolidated JV
(6) (5 ) (5 ) (4 ) (0.08 ) - - - - Pension charges / Stock vesting
(7) 11 11 7 0.13 - - - - Costs related to refinancing - - 1 0.02 -
- 10 0.18 Net tax adjustments - - - - - - (1 ) (0.01 )
Non-GAAP earnings
measures $ 433 $ 328 $ 183 $ 3.39 $ 419
$ 316 $ 167 $ 2.92 YTD 2017* Clean Air
Division Ride Performance Division North Europe & Asia North
Europe & Asia America South America Pacific Total America South
America Pacific Total Other Total EBIT $ 110 $ 54 $ 55 $ 219 $ 71 $
13 $ 34 $ 118 $ (186 ) $ 151 Restructuring and related expenses -
10 12 22 3 4 - 7 3 32 Antitrust settlement accrual (4) - - - - - -
- - 132 132 Warranty settlement (5) - - - - 7 - - 7 - 7 Gain on
sale of unconsolidated JV (6) - - - - - - - - (5 ) (5 ) Pension
charges / Stock vesting (7) - - -
- - - - -
11 11 Adjusted EBIT $ 110 $ 64 $ 67
$ 241 $ 81 $ 17 $ 34 $ 132 $ (45 ) $
328 YTD 2016* Clean Air Division Ride Performance
Division North Europe & Asia North Europe & Asia America
South America Pacific Total America South America Pacific Total
Other Total EBIT $ 128 $ 43 $ 71 $ 242 $ 90 $ 4 $ 26 $ 120 $ (65 )
$ 297 Restructuring and related expenses - 1 -
1 1 17 -
18 - 19 Adjusted EBIT $ 128 $ 44
$ 71 $ 243 $ 91 $ 21 $ 26 $ 138 $ (65 )
$ 316
* Financial results for 2016 and first
quarter 2017 have been revised for certain immaterial supplier cost
reduction payments that Tenneco determined should have been
recognized in future periods. Tenneco’s Form 10-Q for the
second quarter may reflect further revisions based on Tenneco’s
ongoing review of certain supplier payments, but Tenneco does not
expect that any such revisions will be material to prior
periods.
(1) 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
generally accepted accounting principles. 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.
(4) Charges related to establish a reserve
for settlement costs necessary to resolve the company’s antitrust
matters globally.
(5) Warranty settlement with customer.
(6) Gain on sale of unconsolidated JV.
(7) 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 2017
Currency Value-add Impact on Revenues Substrate Value-add Value-add
excluding Revenues Sales Revenues Revenues Currency Clean Air
Division North America $ 802 $ 274 $ 528 $ - $ 528 Europe and South
America 546 202 344 (5 ) 349 Asia Pacific 271 65
206 (7 ) 213 Total Clean Air Division 1,619
541 1,078 (12 ) 1,090 Ride Performance Division North
America 330 - 330 (2 ) 332 Europe and South America 264 - 264 1 263
Asia Pacific 104 - 104 (1 ) 105
Total Ride Performance Division 698 - 698 (2 ) 700 Total
Tenneco Inc. $ 2,317 $ 541 $ 1,776 $ (14 ) $ 1,790 Q2 2016
Currency Value-add Impact on Revenues Substrate Value-add Value-add
excluding Revenues Sales Revenues Revenues Currency Clean Air
Division North America $ 771 $ 273 $ 498 $ - $ 498 Europe and South
America 517 187 330 - 330 Asia Pacific 264 59
205 - 205 Total Clean Air Division 1,552 519
1,033 - 1,033 Ride Performance Division North America 323 -
323 - 323 Europe and South America 250 - 250 - 250 Asia Pacific
87 - 87 - 87 Total Ride
Performance Division 660 - 660 - 660 Total Tenneco Inc. $
2,212 $ 519 $ 1,693 $ - $ 1,693 (1) 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 2017
Currency Value-add Impact on Revenues Substrate Value-add Value-add
excluding Revenues Sales Revenues Revenues Currency Clean Air
Division North America $ 1,618 $ 551 $ 1,067 $ - $ 1,067 Europe and
South America 1,084 408 676 (17 ) 693 Asia Pacific 548
129 419 (16 ) 435 Total Clean Air
Division 3,250 1,088 2,162 (33 ) 2,195 Ride Performance
Division North America 641 - 641 (2 ) 643 Europe and South America
507 - 507 1 506 Asia Pacific 211 - 211
(4 ) 215 Total Ride Performance Division 1,359 - 1,359 (5 )
1,364 Total Tenneco Inc. $ 4,609 $ 1,088 $ 3,521 $ (38 ) $
3,559 YTD 2016 Currency Value-add Impact on Revenues
Substrate Value-add Value-add excluding Revenues Sales Revenues
Revenues Currency Clean Air Division North America $ 1,536 $ 544 $
992 $ - $ 992 Europe and South America 988 360 628 - 628 Asia
Pacific 543 125 418 - 418
Total Clean Air Division 3,067 1,029 2,038 - 2,038 Ride
Performance Division North America 646 - 646 - 646 Europe and South
America 460 - 460 - 460 Asia Pacific 175 - 175
- 175 Total Ride Performance Division 1,281 -
1,281 - 1,281 Total Tenneco Inc. $ 4,348 $ 1,029 $ 3,319 $ -
$ 3,319 (1) 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 REVENUE TO NON-GAAP REVENUE
MEASURES
Unaudited
(Millions except percents)
Q2 2017 vs. Q2 2016 $ Change and % Change Increase
(Decrease) Revenues % Change
Value-addRevenuesExcludingCurrency
% Change Clean Air Division North America $ 31 4 % $ 30 6 % Europe
and South America 29 6 % 19 6 % Asia Pacific 7 3 %
8 4 % Total Clean Air Division 67 4 % 57 6 %
Ride Performance Division North America 7 2 % 9 3 % Europe and
South America 14 6 % 13 5 % Asia Pacific 17 20 %
18 21 % Total Ride Performance Division 38 6 % 40 6 %
Total Tenneco Inc. $ 105 5 % $ 97 6 % YTD Q2 2017 vs.
YTD Q2 2016 $ Change and % Change Increase (Decrease) Revenues %
Change
Value-addRevenuesExcludingCurrency
% Change Clean Air Division North America $ 82 5 % $ 75 8 % Europe
and South America 96 10 % 65 10 % Asia Pacific 5 1 %
17 4 % Total Clean Air Division 183 6 % 157 8 %
Ride Performance Division North America (5 ) (1 %) (3 ) 0 %
Europe and South America 47 10 % 46 10 % Asia Pacific 36
21 % 40 23 % Total Ride Performance Division
78 6 % 83 6 % Total Tenneco Inc. $ 261 6 % $ 240 7 %
ATTACHMENT 2
TENNECO INC. RECONCILIATION OF NON-GAAP MEASURES Debt net of cash /
Adjusted LTM EBITDA including noncontrolling interests
Unaudited
(Millions except ratios) Quarter
Ended June 30, 2017* 2016* Total debt $ 1,597 $ 1,360
Total cash 335 314 Debt net of cash balances
(1) $ 1,262 $ 1,046 Adjusted LTM EBITDA including
noncontrolling interests (2) (3) $ 851 $ 811 Ratio of debt
net of cash balances to adjusted LTM EBITDA including
noncontrolling interests (4) 1.5x 1.3x Q3 16* Q4 16* Q1 17*
Q2 17 Q2 17 LTM*
Net income (loss) attributable to Tenneco
Inc.
$ 179 $ 39 $ 61 $ (2 ) $ 277 Net income attributable to
noncontrolling interests 17 20 14 17 68 Income tax expense
(benefit) (69 ) (2 ) 33 (7 ) (45 ) Interest expense (net of
interest capitalized) 24 16 15 20 75 EBIT, Earnings before
interest expense, income taxes and noncontrolling interests (GAAP
measure) 151 73 123 28 375 Depreciation and amortization of
other intangibles 53 53 52 55 213 Total EBITDA including
noncontrolling interests (2) 204 126 175 83 588
Restructuring and related expenses 7 9 14 16 46 Pension
charges / Stock vesting (5) - 72 11 - 83 Antitrust
settlement accrual (6) - - - 132 132 Warranty settlement (7)
- - - 7 7 Gain on sale of unconsolidated JV (8) - - - (5 )
(5 ) Total Adjusted EBITDA
including noncontrolling interest (3) $ 211 $ 207 $
200 $ 233 $ 851 Q3 15* Q4 15* Q1 16* Q2 16* Q2
16* LTM Net income attributable to Tenneco Inc. $ 52 $ 66 $
57 $ 84 $ 259 Net income attributable to noncontrolling
interests 14 13 15 16 58 Income tax expense 34 26 34 39 133
Interest expense (net of interest capitalized) 16 18 18 34
86 EBIT, Earnings before interest expense, income taxes and
noncontrolling interests (GAAP measure) 116 123 124 173 536
Depreciation and amortization of other intangibles 53 49 54 52 208
Total EBITDA including noncontrolling interests (2) 169 172
178 225 744 Restructuring and related expenses 31 16 11 5 63
Pension charges (5) - 4 - - 4
Total Adjusted EBITDA including noncontrolling interest (3)
$ 200 $ 192 $ 189 $ 230 $ 811
* Financial results for 2015, 2016 and
first quarter 2017 have been revised for certain immaterial
supplier cost reduction payments that Tenneco determined should
have been recognized in future periods. Tenneco’s Form 10-Q
for the second quarter may reflect further revisions based on
Tenneco’s ongoing review of certain supplier payments, but Tenneco
does not expect that any such revisions will be material to prior
periods.
(1) Tenneco presents debt net of 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 generally
accepted accounting principles. 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 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, LTM adjusted
EBITDA including noncontrolling interests is used as an indicator
of the company's performance and debt net of 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 cash, EBITDA including
noncontrolling interests and adjusted EBITDA including
noncontrolling interests. (5) Charges related to Pension
derisking and the acceleration of restricted stock vesting in
accordance with the long-term incentive plan. (6) Charges
related to establish a reserve for settlement costs necessary to
resolve the company’s antitrust matters globally. (7)
Warranty settlement with customer. (8) Gain on sale of
unconsolidated JV.
ATTACHMENT 2
TENNECO INC. RECONCILIATION OF GAAP (1) REVENUE TO NON-GAAP REVENUE
MEASURES (2)
Unaudited
(Millions) Q2 2017
Revenues Currency
RevenuesExcludingCurrency
Substrate SalesExcludingCurrency
Value-addRevenuesExcludingCurrency
Original equipment light vehicle revenues $ 1,691 $ (14) $
1,705 $ 461 $ 1,244 Original equipment commercial truck,
off-highway and other revenues 290 (3) 293 84 209 Aftermarket
revenues 336 (1) 337 - 337 Net
sales and operating revenues $ 2,317 $ (18) $ 2,335 $ 545 $ 1,790
Q2 2016 Revenues Currency
RevenuesExcludingCurrency
Substrate SalesExcludingCurrency
Value-addRevenuesExcludingCurrency
Original equipment light vehicle revenues $ 1,620 $ - $
1,620 $ 447 $ 1,173 Original equipment commercial truck,
off-highway and other revenues 253 - 253 72 181 Aftermarket
revenues 339 - 339 - 339 Net
sales and operating revenues $ 2,212 $ - $ 2,212 $ 519 $ 1,693
YTD 2017 Revenues Currency
RevenuesExcludingCurrency
Substrate SalesExcludingCurrency
Value-addRevenuesExcludingCurrency
Original equipment light vehicle revenues $ 3,411 $ (47) $
3,458 $ 943 $ 2,515 Original equipment commercial truck,
off-highway and other revenues 553 (8) 561 162 399 Aftermarket
revenues 645 - 645 - 645 Net
sales and operating revenues $ 4,609 $ (55) $ 4,664 $ 1,105 $ 3,559
YTD 2016 Revenues Currency
RevenuesExcludingCurrency
Substrate SalesExcludingCurrency
Value-addRevenuesExcludingCurrency
Original equipment light vehicle revenues $ 3,197 $ - $
3,197 $ 888 $ 2,309 Original equipment commercial truck,
off-highway and other revenues 505 - 505 141 364 Aftermarket
revenues 646 - 646 - 646 Net
sales and operating revenues $ 4,348 $ - $ 4,348 $ 1,029 $ 3,319
(1) 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 2017 Clean Air
Division Ride Performance Division North Europe & Asia North
Europe & Asia America South America Pacific Total America South
America Pacific Total Other Total Net sales and operating revenues
$ 802 $ 546 $ 271 $ 1,619 $ 330 $ 264 $ 104 $ 698 $ - $ 2,317
Less: Substrate sales 274 202 65 541 - - - - - 541
Value-add revenues $ 528 $ 344 $ 206 $ 1,078 $ 330 $ 264 $ 104 $
698 $ - $ 1,776 EBIT $ 58 $ 33 $ 23 $ 114 $ 38 $ 7 $ 17 $ 62
$ (148) $ 28 EBIT as a % of revenue 7.2% 6.0% 8.5% 7.0%
11.5% 2.7% 16.3% 8.9% 1.2% EBIT as a % of value-add revenue 11.0%
9.6% 11.2% 10.6% 11.5% 2.7% 16.3% 8.9% 1.6% Adjusted EBIT $
58 $ 33 $ 35 $ 126 $ 47 $ 8 $ 17 $ 72 $ (19) $ 179 Adjusted
EBIT as a % of revenue 7.2% 6.0% 12.9% 7.8% 14.2% 3.0% 16.3% 10.3%
7.7% Adjusted EBIT as a % of value-add revenue 11.0% 9.6% 17.0%
11.7% 14.2% 3.0% 16.3% 10.3% 10.1% Q2 2016* Clean Air
Division Ride Performance Division North Europe & Asia North
Europe & Asia America South America Pacific Total America South
America Pacific Total Other Total Net sales and operating revenues
$ 771 $ 517 $ 264 $ 1,552 $ 323 $ 250 $ 87 $ 660 $ - $ 2,212
Less: Substrate sales 273 187 59 519 - - - - - 519
Value-add
revenues $ 498 $ 330 $ 205 $ 1,033 $ 323 $ 250 $ 87 $ 660 $ - $
1,693 EBIT $ 66 $ 28 $ 37 $ 131 $ 48 $ 10 $ 13 $ 71 $ (29) $
173 EBIT as a % of revenue 8.6% 5.4% 14.0% 8.4% 14.9% 4.0%
14.9% 10.8% 7.8% EBIT as a % of value-add revenue 13.3% 8.5% 18.0%
12.7% 14.9% 4.0% 14.9% 10.8% 10.2% Adjusted EBIT $ 66 $ 29 $
37 $ 132 $ 49 $ 13 $ 13 $ 75 $ (29) $ 178 Adjusted EBIT as a
% of revenue 8.6% 5.6% 14.0% 8.5% 15.2% 5.2% 14.9% 11.4% 8.0%
Adjusted EBIT as a % of value-add revenue 13.3% 8.8% 18.0% 12.8%
15.2% 5.2% 14.9% 11.4% 10.5%
* Prior period financial results have been
revised for certain immaterial supplier cost reduction payments
that Tenneco determined should have been recognized in future
periods. Tenneco’s Form 10-Q for the second quarter may
reflect further revisions based on Tenneco’s ongoing review of
certain supplier payments, but Tenneco does not expect that any
such revisions will be material to prior periods.
(1) Generally Accepted Accounting Principles (2)
Tenneco presents the above reconciliation of revenues in order to
reflect EBIT 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 EBIT 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 2017* Clean Air
Division Ride Performance Division North Europe & Asia North
Europe & Asia America South America Pacific Total America South
America Pacific Total Other Total Net sales and operating revenues
$ 1,618 $ 1,084 $ 548 $ 3,250 $ 641 $ 507 $ 211 $ 1,359 $ - $ 4,609
Less: Substrate sales 551 408 129 1,088 - - - - - 1,088
Value-add revenues $ 1,067 $ 676 $ 419 $ 2,162 $ 641 $ 507 $
211 $ 1,359 $ - $ 3,521 EBIT $ 110 $ 54 $ 55 $ 219 $ 71 $ 13
$ 34 $ 118 $ (186) $ 151 EBIT as a % of revenue 6.8% 5.0%
10.0% 6.7% 11.1% 2.6% 16.1% 8.7% 3.3% EBIT as a % of value-add
revenue 10.3% 8.0% 13.1% 10.1% 11.1% 2.6% 16.1% 8.7% 4.3%
Adjusted EBIT $ 110 $ 64 $ 67 $ 241 $ 81 $ 17 $ 34 $ 132 $ (45) $
328 Adjusted EBIT as a % of revenue 6.8% 5.9% 12.2% 7.4%
12.6% 3.4% 16.1% 9.7% 7.1% Adjusted EBIT as a % of value-add
revenue 10.3% 9.5% 16.0% 11.1% 12.6% 3.4% 16.1% 9.7% 9.3%
YTD 2016* Clean Air Division Ride Performance Division North Europe
& Asia North Europe & Asia America South America Pacific
Total America South America Pacific Total Other Total Net sales and
operating revenues $ 1,536 $ 988 $ 543 $ 3,067 $ 646 $ 460 $ 175 $
1,281 $ - $ 4,348 Less: Substrate sales 544 360 125 1,029 -
- - - - 1,029
Value-add revenues $ 992 $ 628 $ 418 $ 2,038 $
646 $ 460 $ 175 $ 1,281 $ - $ 3,319 EBIT $ 128 $ 43 $ 71 $
242 $ 90 $ 4 $ 26 $ 120 $ (65) $ 297 EBIT as a % of revenue
8.3% 4.4% 13.1% 7.9% 13.9% 0.9% 14.9% 9.4% 6.8% EBIT as a % of
value-add revenue 12.9% 6.8% 17.0% 11.9% 13.9% 0.9% 14.9% 9.4% 8.9%
Adjusted EBIT $ 128 $ 44 $ 71 $ 243 $ 91 $ 21 $ 26 $ 138 $
(65) $ 316 Adjusted EBIT as a % of revenue 8.3% 4.5% 13.1%
7.9% 14.1% 4.6% 14.9% 10.8% 7.3% Adjusted EBIT as a % of value-add
revenue 12.9% 7.0% 17.0% 11.9% 14.1% 4.6% 14.9% 10.8% 9.5%
* Financial results for 2016 and first
quarter 2017 have been revised for certain immaterial supplier cost
reduction payments that Tenneco determined should have been
recognized in future periods. Tenneco’s Form 10-Q for the
second quarter may reflect further revisions based on Tenneco’s
ongoing review of certain supplier payments, but Tenneco does not
expect that any such revisions will be material to prior
periods.
(1) Generally Accepted Accounting Principles (2)
Tenneco presents the above reconciliation of revenues in order to
reflect EBIT 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 EBIT 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 and other revenues
Unaudited
(Millions) 2017 Q2 Substrate Value-add
Revenues Sales Revenues Clean Air Division North America $ 88 $ 30
$ 58 Europe and South America 89 32 57 Asia Pacific 54
21 33 Total Clean Air Division 231 83 148
Total Ride Performance Division 59 - 59 Total
Tenneco Inc. $ 290 $ 83 $ 207 2016 Q2 Substrate Value-add
Revenues Sales Revenues Clean Air Division North America $ 86 $ 28
$ 58 Europe and South America 79 31 48 Asia Pacific 36
13 23 Total Clean Air Division 201 72 129
Total Ride Performance Division 52 - 52 Total
Tenneco Inc. $ 253 $ 72 $ 181 (1) 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 NON-GAAP REVENUE AND EARNINGS
MEASURES
Unaudited
(Millions except percents) Q2 2017
Value-addrevenues
Adjusted EBIT
Adjusted EBITas a % ofvalue-addrevenue
(1)
Total $ 1,776 $ 179 10.1 % Currency (14 ) (8 )
Total after currency adjustment $ 1,790 $ 187
10.4 % YTD 2017*
Value-addrevenues
Adjusted EBIT
Adjusted EBITas a % ofvalue-addrevenue
(1)
Total $ 3,521 $ 328 9.3 % Currency (38 ) (12 )
Total after currency adjustment $ 3,559 $ 340
9.6 %
* Financial results for first quarter 2017
have been revised for certain immaterial supplier cost reduction
payments that Tenneco determined should have been recognized in
future periods. Tenneco’s Form 10-Q for the second quarter may
reflect further revisions based on Tenneco’s ongoing review of
certain supplier payments, but Tenneco does not expect that any
such revisions will be material to prior periods.
(1) Tenneco presents the above reconciliations in order to
reflect value-add revenues and adjusted EBIT separately from the
effects of doing business in currencies other than the U.S. dollar.
Presenting adjusted EBIT as a percent of value-add revenue
excluding currency assists investors in evaluating the company's
operational performance.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170728005095/en/
Tenneco Inc.Investor inquiries:Linae
Golla847-482-5162lgolla@tenneco.comorMedia inquiries:Bill
Dawson847-482-5807bdawson@tenneco.com
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