Tenneco Fourth Quarter 2020 Performance Results In Strong Cash Generation, Margin Expansion And Debt Reduction
LAKE FOREST, Ill., Feb. 24, 2021 /PRNewswire/ -- Tenneco (NYSE: TEN) today announced results for the fourth quarter and full year ended December 31, 2020, including the following:
-- Fourth quarter 2020 revenue of $4.7 billion was up 12% year-over-year.
Value-add revenue for the fourth quarter 2020 was $3.6 billion, or 4%
higher versus last year, excluding currency impact of $76 million.
-- The Company reported net income for the fourth quarter 2020 of $167
million, or $2.03 per diluted share, and adjusted net income for the
fourth quarter 2020 of $138 million, or $1.68 per diluted share.
-- Fourth quarter 2020 EBIT* improved by $404 million to $260 million,
versus a loss of $144 million in the prior year, and EBIT as a percent
of revenue increased 910 basis points to 5.6% versus -3.5% in the prior
year.
-- Fourth quarter adjusted EBITDA** was $410 million, up $123 million
versus prior year. Adjusted EBITDA as a percent of value-add revenue was
11.5%, a 300 basis point increase year-over-year. The Accelerate+
program drove improved operating performance, and is on or ahead of
schedule.
-- Cash generated from operations of $474 million in the fourth quarter
2020 was primarily driven by strong earnings and effective working
capital management.
"Strong operational performance in the quarter helped Tenneco generate significant cash flow and year-over-year debt reduction," said Brian Kesseler, Tenneco's chief executive officer. "Our Accelerate+ program continues to drive margin expansion and is on track to achieve $265 million in annual run rate savings by the end of 2021, and we achieved our working capital efficiency improvement target of $250 million a year ahead of schedule. We are proud of the resilience and commitment of the global Tenneco team as they continue to overcome the challenges of a volatile operating environment," added Kesseler.
Net Debt and Liquidity
The Company's fourth quarter 2020 performance resulted in significant improvements to the Company's debt net of total cash balances and liquidity position. At 2020 year end, total debt was $5.3 billion and net debt was $4.5 billion, a reduction of $460 million in net debt compared with 2019 year end. Total liquidity was $2.3 billion at year end, consisting of $0.8 billion of cash balances and $1.5 billion of available revolving credit facility, up from total liquidity of $1.8 billion at the end of the third quarter 2020.
Full-Year Results
The global COVID-19 pandemic and its effect on the economy and industry volumes had a negative impact on the Company's full year revenue and earnings, particularly in the first half of 2020. Full year 2020 total revenue was $15.4 billion versus $17.5 billion in the prior year. Full year 2020 EBIT was a loss of $724 million, which includes $933 million from non-cash charges, primarily due to COVID related impairment charges, versus earnings of $121 million a year ago, and adjusted EBITDA was $1,045 million versus $1,415 million a year ago. The Company's performance in the second half of 2020 delivered significant year-over-year improvements in both margin and free cash flow generation.
"We continue to build positive performance momentum off our strong second half of 2020," added Kesseler. "Our focus on reducing structural costs, expanding margins, and lowering our capital intensity allowed us to reduce our net debt position by nearly $500 million in 2020. The Tenneco team's relentless commitment to disciplined execution is expected to deliver continuing performance improvements in 2021. We expect this continued focus on cost and cash management to enable significant near-term value creation potential, and at the same time, support investments in our core growth platforms to deliver long-term value to our customers and shareholders."
Outlook
For the full year and first quarter 2021, Tenneco provides the following financial outlook summary.
Full Year 2021 First Quarter 2021
---
Revenue
$17.2 - $17.8B
Revenue
$4.45 - $4.55B
---
Value-
Add
Revenue
$13.2 - $13.8B
Value-Add Revenue
$3.45 - $3.55B
---
Adjusted
EBITDA**
$1.3 - $1.4B
Adjusted EBITDA**
$325 - $355M
---
Net
Debt(1)
$4.2B
---
(1) Total debt net of total cash
balances.
* EBIT: Earnings before interest
expense, income taxes and
noncontrolling interests.
** Adjusted EBITDA: Adjusted
earnings before interest expense,
income taxes, noncontrolling
interests, and depreciation and
amortization.
Earnings Conference Call Details
The Company will report its fourth quarter and full year 2020 financial results before the market opens on Wednesday, February 24, 2021 and host a webcast conference call the same day at 9:00 a.m. ET. The purpose of the call is to discuss the Company's financial results for the fourth quarter and full year 2020, as well as to provide other information regarding the Company's outlook.
A live "listen only" webcast and presentation materials will be available on the investor section of the company's website at https://investors.tenneco.com. An archive of the webcast will be available approximately one hour after conclusion of the call for one year.
Telephone participants are encouraged to pre-register for the conference call using the following link: https://dpregister.com/sreg/10151813/e17b0eadaf
Callers who pre-register will be given a conference passcode and unique PIN to gain immediate access to the call and bypass the live operator. Participants may pre-register at any time, including up to and after the call start time.
Those without internet access or unable to pre-register may dial in, using the passcode "Tenneco Inc."
PARTICIPANT DIAL IN (TOLL FREE): 1-833-366-1121
PARTICIPANT INTERNATIONAL DIAL IN: 1-412-902-6733
Annual Meeting
The Tenneco Board of Directors has scheduled the company's annual meeting of shareholders for Friday, May 14, 2021 at 10:00 a.m. CT. The record date for shareholders eligible to vote at the meeting is March 24, 2021. This year's annual meeting will be held entirely online to allow for greater participation in light of the public health impact of the COVID-19 pandemic.
Attachment 1
Statements of Income (Loss) - 3 months
Statements of Income (Loss) - 12 months
Balance Sheets
Statements of Cash Flows - 3 Months
Statements of Cash Flows - 12 Months
Attachment 2
Reconciliation of GAAP to Non-GAAP Earnings Measures - 3 Months
Reconciliation of GAAP to Non-GAAP Earnings Measures - 12 Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures - 3 Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures - 12 Months
Reconciliation of Non-GAAP Measures - Debt Net of Total Cash/Adjusted LTM EBITDA including noncontrolling interests
Reconciliation of GAAP to Non-GAAP Revenue Measures - Original Equipment, Original Equipment Service and Aftermarket Revenue - 3 and 12 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 - 12 Months
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures - Original Equipment Commercial Truck, Off-Highway, Industrial and other revenues - 3 and 12 Months
About Tenneco
Tenneco is one of the world's leading designers, manufacturers and marketers of automotive products for original equipment and aftermarket customers, with full year 2020 revenues of $15.4 billion and approximately 73,000 team members working at more than 270 sites worldwide. Through our four business groups, Motorparts, Ride Performance, Clean Air and Powertrain, Tenneco is driving advancements in global mobility by delivering technology solutions for diversified global markets, including light vehicle, commercial truck, off-highway, industrial, motorsport and the aftermarket.
Visit www.tenneco.com to learn more.
Investors and others should note that Tenneco routinely posts important information on its website and considers the Investor section, www.investors.tenneco.com, a channel of distribution.
About 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, substrate pricing, and other unusual charges we incur from time to time cannot be forecasted accurately. In this respect, we are not able to forecast corresponding GAAP measures without unreasonable efforts on account of these factors and other factors not in our control.
Safe Harbor
This press release contains forward-looking statements. The words "will," "would," "could," "expect," "anticipate," 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, market and social conditions, including the effects of the COVID-19 pandemic; disasters, local and global public health emergencies or other catastrophic events, where we or other customers do business, and any resultant disruptions; our ability (or inability) to successfully execute cost reduction, performance improvement and other plans, including our plans in response to the COVID-19 pandemic and our previously announced accelerated performance improvement plan ("Accelerate"), and to realize the anticipated benefits from these plans; 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 and our financial flexibility to respond to COVID-19 pandemic; our ability to maintain compliance with the agreements governing our indebtedness and otherwise have sufficient liquidity through the COVID-19 pandemic; our working capital requirements; 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; changes in consumer demand for our OE products or aftermarket products, prices and our ability to have our products included on top selling vehicles, including any shifts in consumer preferences; the continued evolution of the automotive industry towards car and ride sharing and autonomous vehicles; in an effort to reduce greenhouse gas emissions, governments and vehicle manufacturers have announced plans to limit production of diesel and gasoline powered vehicles in various national and local jurisdictions globally; the cyclical nature of the global vehicle industry, including the performance of the global aftermarket sector and the impact of vehicle parts' longer product lives; 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 OE 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 OE-customers or any change in customer demand due to delays in the adoption or enforcement of worldwide emissions regulations; 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); risks inherent in operating a multi-national company; damage to the reputation of one or more of our leading brands; industry-wide 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; changes in distribution channels or competitive conditions in the markets and countries where we operate; customer acceptance of new products; our ability to successfully integrate, and benefit from, any acquisitions that we complete; the potential impairment in the carrying value of our long-lived assets, goodwill, and other intangible assets or the inability to fully realize our deferred tax assets; increases in the costs of raw materials or components, including our ability to successfully reduce the impact of any such cost increases through materials substitutions, cost reduction initiatives, customer recovery and other methods; 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 or increased costs or loss of revenues relating to products subject to changing regulation; and the timing and occurrence (or non-occurrence) of other transactions, events and circumstances which may be beyond our control.
In addition, statements regarding the Company's ongoing review of strategic alternatives and the potential separation of the Company into a powertrain technology company and an aftermarket and ride performance company constitute forward-looking statements. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include (in addition to the risks set forth above): the ability to identify and consummate strategic alternatives that yield additional value for shareholders; the timing, benefits and outcome of the Company's strategic review process; the structure, terms and specific risk and uncertainties associated with any potential strategic alternative; potential disruptions in our business and stock price as a result of our exploration, review and pursuit of any strategic alternatives; the possibility that the Company may not complete a separation of the aftermarket and ride performance business from the powertrain technology business (or achieve some or all of the anticipated benefits of such a separation on the timeline contemplated or at all); the ability to retain and hire key personnel and maintain relationships with customers, suppliers or other business partners; the potential diversion of management's attention resulting from a separation or other strategic alternative; 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 a separation of the business or other strategic alternative; and the risk a separation is determined to be a taxable transaction.
The risks included here are not exhaustive. 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, 2019 and quarterly reports on Form 10-Q for the quarters ended March 31, 2020, June 30, 2020 and September 30, 2020.
Investor inquiries:
Linae Golla
847-482-5162
lgolla@tenneco.com
Rich Kwas
248-849-1340
rich.kwas@tenneco.com
Media inquiries:
Bill Dawson
847-482-5807
bdawson@tenneco.com
ATTACHMENT 1
TENNECO INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Unaudited
(millions, except per share amounts)
Three Months Ended
December 31,
2020 2019
---
Net sales and operating revenues:
Clean Air - Value-add revenues $
1,046 $
974
Clean Air - Substrate sales 1,071 769
Powertrain 1,120 1,018
Motorparts 730 741
Ride Performance 683 641
Total net sales and operating revenues 4,650 4,143
Costs and expenses:
Cost of sales (exclusive of depreciation and
amortization) 3,955 3,581
Selling, general, and administrative 231 276
Depreciation and amortization 158 170
Engineering, research, and development 74 76
Restructuring charges, net and asset impairments - 28
Goodwill and intangible impairment charges - 172
Total costs and expenses 4,418 4,303
Other income (expense):
Non-service pension and other postretirement
benefit (costs) credits (2) (3)
Equity in earnings (losses) of nonconsolidated
affiliates, net of tax 21 9
Gain (loss) on extinguishment of debt 2
Other income (expense), net 7 10
28 16
Earnings (loss) before interest expense, income
taxes, and noncontrolling interests 260 (144)
Interest expense (68) (80)
Earnings (loss) before income taxes and
noncontrolling interests 192 (224)
Income tax (expense) benefit (6) (14)
Net income (loss) 186 (238)
Less: Net income (loss) attributable to
noncontrolling interests 19 75
Net income (loss) attributable to Tenneco Inc. $
167 $
(313)
Basic earnings (loss) per share:
Earnings (loss) per share $
2.04 $
(3.87)
Weighted average shares outstanding 81.5 80.9
Diluted earnings (loss) per share:
Earnings (loss) per share $
2.03 $
(3.87)
Weighted average shares outstanding 81.9 80.9
ATTACHMENT 1
TENNECO INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
Unaudited
(millions, except per share amounts)
Twelve Months Ended
December 31,
2020 2019
---
Net sales and operating revenues:
Clean Air - Value-add revenues $
3,366 $
4,094
Clean Air - Substrate sales 3,355 3,027
Powertrain 3,726 4,408
Motorparts 2,725 3,167
Ride Performance 2,207 2,754
Total net sales and operating revenues 15,379 17,450
Costs and expenses:
Cost of sales (exclusive of depreciation and
amortization) 13,402 14,912
Selling, general, and administrative 889 1,138
Depreciation and amortization 639 673
Engineering, research, and development 273 324
Restructuring charges, net and asset impairments 622 126
Goodwill and intangible impairment charges 383 241
Total costs and expenses 16,208 17,414
Other income (expense):
Non-service pension and postretirement benefit
(costs) credits 18 (11)
Equity in earnings (losses) of nonconsolidated
affiliates, net of tax 47 43
Gain (loss) on extinguishment of debt 2
Other income (expense), net 38 53
105 85
Earnings (loss) before interest expense, income
taxes, and noncontrolling interests (724) 121
Interest expense (277) (322)
Earnings (loss) before income taxes and
noncontrolling interests (1,001) (201)
Income tax (expense) benefit (459) (19)
Net income (loss) (1,460) (220)
Less: Net income (loss) attributable to
noncontrolling interests 61 114
Net income (loss) attributable to Tenneco Inc. $
(1,521) $
(334)
Basic earnings (loss) per share:
Earnings (loss) per share $
(18.69) $
(4.12)
Weighted average shares outstanding 81.4 80.9
Diluted earnings (loss) per share:
Earnings (loss) per share $
(18.69) $
(4.12)
Weighted average shares outstanding 81.4 80.9
ATTACHMENT 1
TENNECO INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
Unaudited
(dollars in millions)
December 31, 2020 December 31, 2019
Assets
Cash and cash equivalents $
798 $
564
Restricted cash 5 2
Receivables, net 2,528 (a) 2,538 (a)
Inventories 1,743 1,999
Prepayments and other current
assets 619 632
Other noncurrent assets 3,102 3,864
Property, plant and equipment,
net 3,057 3,627
Total assets $
11,852 $
13,226
Liabilities and Shareholders' Equity
Short-term debt, including
current maturities of long-
term debt $
162 $
185
Accounts payable 2,917 2,647
Accrued compensation and
employee benefits 365 325
Accrued income taxes 54 72
Accrued expenses and other
current liabilities 1,188 1,070
Long-term debt 5,171 (b) 5,371 (b)
Deferred income taxes 89 106
Pension and postretirement
benefits 1,101 1,145
Deferred credits and other
liabilities 546 490
Redeemable noncontrolling
interests 78 196
Total Tenneco Inc.
shareholders' equity (deficit) (119) 1,425
Noncontrolling interests 300 194
Total liabilities, redeemable
noncontrolling interests, and
equity $
11,852 $
13,226
December 31, 2020 December 31, 2019
(a) Accounts receivable net of:
Accounts receivable outstanding
and derecognized $
956 $
1,037
(b) Long-term debt composed of:
Revolver Borrowings
$ $
183
LIBOR plus 2.50% Term Loan A
due 2019 through 2023 (1) 1,520 1,608
LIBOR plus 3.00% Term Loan B
due 2019 through 2025 1,612 1,623
$225 million of 5.375% Senior Notes due 2024 223 222
$500 million of 5.000% Senior Notes due 2026 494 494
EUR415 million of 4.875% Euro
Fixed Rate Notes due 2022 - 479
EUR300 million of Euribor plus
4.875% Euro Floating Rate
Notes due 2024 370 340
EUR350 million of 5.000% Euro
Fixed Rate Notes due 2024 445 413
$500 million of 7.875% Senior Secured Notes due 2029 489
Other Debt, primarily foreign
instruments 23 13
5,176 5,375
Less: maturities classified as
current 5 4
Total long-term debt $
5,171 $
5,371
____________________
(1) The interest rate on Term Loan A at December 31, 2019
was LIBOR plus 1.75%
ATTACHMENT 1
TENNECO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(dollars in millions)
Three Months Ended
December 31,
2020 2019
---
Operating Activities
Net income (loss) $
186 $
(238)
Adjustments to reconcile net income (loss)
to cash (used) provided by operating
activities:
Goodwill and intangible
impairment charges - 172
Depreciation and amortization 158 170
Deferred income taxes (1) (36)
Stock-based compensation 5 5
Restructuring charges and asset
impairments, net of cash paid (29) (1)
Change in pension and other
postretirement benefit plans (45) (8)
Equity in earnings of
nonconsolidated affiliates (21) (9)
Cash dividends received from
nonconsolidated affiliates 5 8
Loss (gain) on sale of assets
and other (19)
Changes in operating assets and liabilities:
Receivables 247 232
Inventories (24) 172
Payables and accrued expenses 66 (165)
Accrued interest and accrued
income taxes (35) 15
Other assets and liabilities (19) 63
Net cash (used) provided by
operating activities 474 380
Investing Activities
Proceeds from sale of assets 37 12
Proceeds from sale of
investment in nonconsolidated
affiliates - 2
Net proceeds from sale of
business 6
Cash payments for property,
plant, and equipment (86) (203)
Proceeds from deferred purchase
price of factored receivables 107 47
Other (3) 2
Net cash (used) provided by
investing activities 61 (140)
Financing Activities
Proceeds from term loans and
notes 511 29
Repayments of term loans and
notes (569) (63)
Borrowings on revolving lines
of credit 1,268 2,316
Payments on revolving lines of
credit (1,690) (2,336)
Debt issuance costs of long-
term debt (9)
Net decrease in bank overdrafts (11) (1)
Acquisition of additional
ownership interest in
consolidated affiliates - (10)
Other 30 (2)
Distributions to noncontrolling
interest partners (24) (23)
Net cash (used) provided by
financing activities (494) (90)
Effect of foreign exchange rate
changes on cash, cash
equivalents, and restricted
cash 41 21
Increase (decrease) in cash,
cash equivalents, and
restricted cash 82 171
Cash, cash equivalents, and
restricted cash, beginning of
period 721 395
Cash, cash equivalents, and
restricted cash, end of period $
803 $
566
Supplemental Cash Flow Information
Cash paid during the period for
interest $
58 $
54
Cash paid during the period for
income taxes, net of refunds $
40 $
38
Non-cash Investing Activities
Period end balance of trade
payables for property, plant,
and equipment $
113 $
134
Deferred purchase price of
receivables factored in the
period in investing $
102 $
45
Increase (decrease) in assets
from redeemable noncontrolling
interest transaction with
owner
$ $
53
ATTACHMENT 1
TENNECO INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(dollars in millions)
Twelve Months Ended
December 31,
Operating Activities 2020 2019
---
Net income (loss) $
(1,460) $
(220)
Adjustments to reconcile net income (loss) to cash (used)
provided by operating activities:
Goodwill and intangible impairment charges 383 241
Depreciation and amortization 639 673
Deferred income taxes 301 (151)
Stock-based compensation 18 25
Restructuring charges and asset impairments,
net of cash paid 500 11
Change in pension and postretirement benefit
plans (94) (57)
Equity in earnings of nonconsolidated
affiliates (47) (43)
Cash dividends received from nonconsolidated
affiliates 23 53
Loss (gain) on sale of assets and other (18)
Changes in operating assets and liabilities:
Receivables (182) (225)
Inventories 279 284
Payables and accrued expenses 308 (66)
Accrued interest and accrued income taxes (12) 3
Other assets and liabilities (9) (84)
Net cash (used) provided by operating
activities 629 444
Investing Activities
Acquisitions, net of cash acquired - (158)
Proceeds from sale of assets 45 20
Proceeds from sale of investment in
nonconsolidated affiliates - 2
Net proceeds from sale of business 9 22
Cash payments for property, plant and equipment (394) (744)
Proceeds from deferred purchase price of
factored receivables 283 250
Other - 2
Net cash (used) provided by investing
activities (57) (606)
Financing Activities
Proceeds from term loans and notes 654 200
Repayments of term loans and notes (765) (341)
Borrowings on revolving lines of credit 6,120 9,120
Payments on revolving lines of credit (6,337) (8,884)
Repurchase of common shares (1) (2)
Cash dividends - (20)
Debt issuance costs of long-term debt (25)
Net decrease in bank overdrafts (2) (13)
Acquisition of additional ownership interest in
consolidated affiliates - (10)
Distributions to noncontrolling interest
partners (42) (43)
Other 40 (4)
Net cash (used) provided by financing
activities (358) 3
Effect of foreign exchange rate changes on
cash, cash equivalents, and restricted cash 23 23
Increase (decrease) in cash, cash equivalents,
and restricted cash 237 (136)
Cash, cash equivalents, and restricted cash,
beginning of period 566 702
Cash, cash equivalents, and restricted cash,
end of period $
803 $
566
Supplemental Cash Flow Information
Cash paid during the year for interest $
246 $
284
Cash paid during the year for income taxes, net
of refunds $
154 $
177
Non-cash inventory charge due to aftermarket
product line exit $
73
$
Non-cash Investing Activities
Period end balance of trade payables for
property, plant and equipment $
113 $
134
Deferred purchase price of receivables factored
in the period in investing $
299 $
253
Increase (decrease) in assets from redeemable
noncontrolling interest transaction with owner $
(53) $
53
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS MEASURES(2)
Unaudited
(dollars in millions, except per share amounts)
Q4 2020
Q4 2019
---
Net
Per Net income Income EBIT EBITDA (3)
Net
Per Net income Income EBIT EBITDA (3)
income Share (loss) tax income Share (loss) tax
(loss) attributable (expense) (loss) attributable
to to (expense)
attributable noncontrolling benefit attributable noncontrolling benefit
to Tenneco interests to Tenneco interests
Inc. Inc.
---
Earnings (Loss)
Measures $
167 $
2.03 $
19 $
(6) $
260 $
418 $
(313) $
(3.87) $
75 $
(14) $
(144) $
26
Adjustments:
Restructuring and
related expenses (5) 5 0.06 (1) 6 6 34 0.41 1 (7) 42 36
Acquisition and
expected separation
costs (6) 2 0.02 1 1 1 28 0.36 (2) 30 30
Antitrust reserve
change in estimate
(7) (11) (0.13) (11) (11)
Gain/Loss on sale of
assets (1) (0.02) 1 (2) (2)
Gain on extinguishment
of debt (2) (0.03) (2) (2)
Cost reduction
initiatives (8) 1 (1) (1)
Costs to achieve
synergies (9) 7 0.09 (1) 8 8
Purchase accounting
charges (10) 4 0.05 2 2 2
Goodwill and
intangible impairment
charges (11) 172 2.13 172 172
Process harmonization
(12) 14 0.17 (2) 16 16
Pension adjustments
(13) (1) (0.02) 1 (2) (2)
Noncontrolling
interests adjustments (1) (0.01) 1 58 0.71 (58)
Net tax adjustments (21) (0.24) (21)
Adjusted Net income,
EPS, NCI, Tax, EBIT,
and EBITDA (4) $
138 $
1.68 $
20 $
(26) $
252 $
410 $
3 $
0.03 $
18 $
(22) $
123 $
287
Q4 2020
Global Segments
Clean Powertrain Motorparts Ride Total Corporate Total
Air Performance
Net income (loss)
attributable to Tenneco
Inc. $
167
Net income (loss)
attributable to
noncontrolling interests 19
Net income (loss) 186
Income tax (expense) benefit (6)
Interest expense (68)
EBIT, Earnings (Loss) before
interest expense, income
taxes and noncontrolling
interests 260
Depreciation and
amortization 158
Total EBITDA including
noncontrolling interests
(3) $
175 $
151 $
109 $
29 $
464 $
(46) $
418
Restructuring and related
expenses(5) (1) 1 1 3 2 6
4
Acquisition and expected
separation costs (6) (3) (3) 4 1
Antitrust reserve change in
estimate (7) (11) (11) (11)
Gain/Loss on sale of assets (3) (3) 1 (2)
Gain on extinguishment of
debt (2) (2)
Adjusted EBITDA (4) $
160 $
152 $
110 $
29 $
451 $
(41) $
410
Q4 2019
---
Global Segments
Clean Powertrain Motorparts Ride Total Corporate Total
Air Performance
Net income (loss)
attributable to Tenneco
Inc. $
(313)
Net income (loss)
attributable to
noncontrolling interests 75
Net income (loss) (238)
Income tax (expense) benefit (14)
Interest expense (80)
EBIT, Earnings (Loss) before
interest expense, income
taxes and noncontrolling
interests (144)
Depreciation and
amortization 170
Total EBITDA including
noncontrolling interests
(3) $
130 $
60 $
(84) $
7 $
113 $
(87) $
26
Restructuring and related
expenses(5) 3 2 23 28 8 36
Acquisition and expected
separation costs (6) 30 30
Cost reduction initiatives
(8) (1) (1)
Costs to achieve synergies
(9) 1 2 3 5 8
Purchase accounting charges
(10) 2 2 2
Goodwill and intangible
impairment charges (11) 18 154 172 172
Process harmonization (12) 8 4 4 16 16
Pension adjustments (13) (2) (2)
Adjusted EBITDA (4) $
142 $
82 $
76 $
34 $
334 $
(47) $
287
_________________________________________
(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) Adjusted results are 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
periods. Similar adjustments 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.
(5) Q4 2020 includes no accelerated depreciation related to restructuring and related expenses,
while Q4 2019 includes $6 million of accelerated depreciation related to plant closures.
(6) Costs related to acquisitions and costs related to expected separation.
(7) Reduction in estimated antitrust accrual.
(8) Costs related to cost reduction initiatives.
(9) Costs to achieve synergies related to the Acquisitions.
(10) This primarily relates to a non-cash charge to cost of sales for the amortization of the
inventory fair value step-up recorded as part of the Acquisitions.
(11) Non-cash asset impairment charges related to goodwill and intangibles.
(12) Charges due to process harmonization.
(13) Charges related to settlements of our pension benefit plans in connection with our
derisking activities.
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS MEASURES(2)
Unaudited
(dollars in millions, except per share amounts)
Q4 2020 YTD
Q4 2019 YTD
---
Net
Per Net income Income EBIT EBITDA (3)
Net
Per Net income Income EBIT EBITDA (3)
income Share (loss)
tax income Share (loss)
tax
(loss) attributable (expense) (loss) attributable
to to (expense)
attributable noncontrolling benefit attributable noncontrolling benefit
to Tenneco interests to Tenneco interests
Inc. Inc.
---
Earnings (Loss)
Measures $
(1,521) $
(18.69) $
61 $
(459) $
(724) $
(85) $
(334) $
(4.12) $
114 $
(19) $
121 $
794
Adjustments:
Restructuring and
related expenses (5) 141 1.71 (36) 177 169 116 1.43 6 (31) 153 138
Inventory write-down
(6) 54 0.67 (19) 73 73
Asset impairments (7) 396 4.87 7 (100) 503 503
Acquisition and
expected separation
costs (8) 31 0.39 (7) 38 38 102 1.27 (25) 127 127
Antitrust reserve
change in estimate
(9) (11) (0.14) (11) (11) (7) (0.09) 2 (9) (9)
Gain/Loss on sale of
assets (1) (0.02) 1 (2) (2)
Gain on extinguishment
of debt (2) (0.03) (2) (2)
OPEB curtailment (10) (21) (0.26) (21) (21)
Goodwill and
intangible impairment
charges (11) 366 4.51 5 (12) 383 383 241 2.98 241 241
Cost reduction
initiatives (12) - 12 0.15 (3) 15 15
Costs to achieve
synergies (13) - 23 0.29 (6) 29 29
Purchase accounting
charges (14) - 49 0.61 (8) 57 57
Process harmonization
(15) - 21 0.26 (5) 26 26
Warranty charge (16) - 6 0.07 (2) 8 8
Brazil tax credit (17) - (14) (0.18) 8 (22) (22)
Out of period
adjustment (18) - 4 0.05 1 5 5
Impairment of assets
held for sale - 6 0.07 (2) 8 8
Pension adjustments
(19) - (1) (0.02) 1 (2) (2)
Noncontrolling
interests adjustments
(20) 10 0.13 (10) 58 0.71 (58)
Net tax adjustments
(21) 522 6.42 522 (41) (0.50) (41)
Adjusted Net income,
EPS, NCI, Tax, EBIT,
and EBITDA (4) $
(36) $
(0.44) $
63 $
(110) $
414 $
1,045 $
241 $
2.98 $
63 $
(131) $
757 $
1,415
Q4 2020 YTD
Global Segments
Clean Powertrain Motorparts Ride Total Corporate Total
Air Performance
Net income (loss)
attributable to Tenneco
Inc. $
(1,521)
Net income (loss)
attributable to
noncontrolling interests 61
Net income (loss) (1,460)
Income tax (expense) benefit (459)
Interest expense (277)
EBIT, Earnings (Loss) before
interest expense, income
taxes and noncontrolling
interests (724)
Depreciation and
amortization 639
Total EBITDA including
noncontrolling interests
(3) $
440 $
130 $
155 $
(595) $
130 $
(215) $
(85)
Restructuring and related
expenses(5) 22 51 20 68 161 8 169
Inventory write-down(6) 73 73 73
Asset impairments (7) 4 27 455 486 17 503
Acquisition and expected
separation costs (8) (2) (2) 40 38
Antitrust reserve change in
estimate (9) (11) (11) (11)
Gain/Loss on sale of assets (3) (3) 1 (2)
Gain on extinguishment of
debt (2) (2)
OPEB curtailment (10) (21) (21)
Goodwill and intangible
impairment charges (11) 160 110 113 383 383
Adjusted EBITDA (4) $
451 $
345 $
385 $
36 $
1,217 $
(172) $
1,045
Q4 2019 YTD
---
Global Segments
Clean Powertrain Motorparts Ride Total Corporate Total
Air Performance
Net income (loss)
attributable to Tenneco
Inc. $
(334)
Net income (loss)
attributable to
noncontrolling interests 114
Net income (loss) (220)
Income tax (expense) benefit (19)
Interest expense (322)
EBIT, Earnings (Loss) before
interest expense, income
taxes and noncontrolling
interests 121
Depreciation and
amortization 673
Total EBITDA including
noncontrolling interests
(3) $
582 $
363 $
184 $
8 $
1,137 $
(343) $
794
Restructuring and related
expenses(5) 24 30 4 71 129 9 138
Acquisition and expected
separation costs (8) 1 1 126 127
Antitrust reserve change in
estimate (9) (9) (9) (9)
Goodwill and intangible
impairment charges (11) 18 154 69 241 241
Cost reduction initiatives
(12) 15 15
Costs to achieve synergies
(13) 6 2 11 2 21 8 29
Purchase accounting charges
(14) 12 41 4 57 57
Process harmonization (15) 13 9 4 26 26
Warranty charge (16) 8 8 8
Brazil tax credit (17) (9) (7) (6) (22) (22)
Out of period adjustment
(18) 5 5 5
Pension adjustments (19) (2) (2)
Impairment of assets held
for sale 8 8 8
Adjusted EBITDA (4) $
607 $
425 $
413 $
157 $
1,602 $
(187) $
1,415
_________________________________________
(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) Adjusted results are 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
periods. Similar adjustments 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.
(5) FY 2020 includes $7 million of accelerated depreciation related to plant closures and $1
million depreciation related to restructuring and related expenses and FY 2019 includes $15
million of accelerated depreciation related to plant closures and $5 million asset impairment
charges.
(6) Non-cash charge to write-down inventory in the Motorparts segment in connection with its
initiative to rationalize its supply chain and distribution network.
(7) Asset impairment charges.
(8) Costs related to acquisitions and costs related to expected separation.
(9) Reduction in estimated antitrust accrual.
(10) OPEB curtailment as a result of an amended union agreement that eliminates healthcare
benefits for future retirees.
(11) Non-cash asset impairment charge related to goodwill and intangibles.
(12) Costs related to cost reduction initiatives.
(13) Costs to achieve synergies related to the Acquisitions.
(14) This primarily relates to a non-cash charge to cost of sales for the amortization of the
inventory fair value step-up recorded as part of the Acquisitions.
(15) Charge due to process harmonization.
(16) Charge related to warranty. Although Tenneco regularly incurs warranty costs, this
specific charge is of an unusual nature in the period incurred.
(17) Recovery of value-added tax in a foreign jurisdiction.
(18) Inventory losses attributable to prior periods.
(19) Charges related to settlements of our pension benefit plans in connection with our
derisking activities.
(20) Amount related to adjustments made to mark certain redeemable noncontrolling interests to
their redemption values.
(21) FY 2020 includes non-cash tax valuation allowance charge of $524 million.
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) TO NON-GAAP REVENUE MEASURES(2)
Unaudited
(dollars in millions except percents)
Q4 2020
Revenues Substrate Sales Value-add Currency Value-add
Revenues Impact on Revenues
Value-add excluding
Revenues Currency
---
Clean Air $
2,117 $
1,071 $
1,046 $
23 $
1,023
Powertrain 1,120 1,120 34 1,086
Motorparts 730 730 1 729
Ride Performance 683 683 18 665
Total Tenneco
Inc. $
4,650 $
1,071 $
3,579 $
76 $
3,503
Q4 2019
Revenues Substrate Sales Value-add Currency Value-add
Revenues Impact on Revenues
Value-add excluding
Revenues Currency
---
Clean Air $
1,743 $
769 $
974
$ $
974
Powertrain 1,018 1,018 1,018
Motorparts 741 741 741
Ride Performance 641 641 641
Total Tenneco
Inc. $
4,143 $
769 $
3,374
$ $
3,374
Q4 2020 vs. Q4 2019 $ Change and % Change Increase (decrease)
Revenues % Change Value-add Revenues % Change
excluding Currency
Clean Air $
374 21 $
49 5
% %
Powertrain 102 10 68 7
% %
Motorparts (11) (1) (12) (2)
% %
Ride Performance 42 7 24 4
% %
Total Tenneco Inc. $
507 12 $
129 4
% %
_________________________________
(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) TO NON-GAAP REVENUE MEASURES(2)
Unaudited
(dollars in millions except percents)
Q4 2020 YTD
Revenues Substrate Sales Value-add Currency Value-add
Revenues Impact on Revenues
Value-add excluding
Revenues Currency
---
Clean Air $
6,721 $
3,355 $
3,366 $
(4) $
3,370
Powertrain 3,726 3,726 (15) 3,741
Motorparts 2,725 2,725 (55) 2,780
Ride Performance 2,207 2,207 (6) 2,213
Total Tenneco
Inc. $
15,379 $
3,355 $
12,024 $
(80) $
12,104
Q4 2019 YTD
Revenues Substrate Sales Value-add Currency Value-add
Revenues Impact on Revenues
Value-add excluding
Revenues Currency
---
Clean Air $
7,121 $
3,027 $
4,094
$ $
4,094
Powertrain 4,408 4,408 4,408
Motorparts 3,167 3,167 3,167
Ride Performance 2,754 2,754 2,754
Total Tenneco
Inc. $
17,450 $
3,027 $
14,423
$ $
14,423
Q4 2020 YTD vs. Q4 2019 YTD $ Change and % Change Increase
(decrease)
Revenues % Change Value-add
Revenues % Change
excluding
Currency
Clean Air $
(400) (6) $
(724) (18)
% %
Powertrain (682) (15) (667) (15)
% %
Motorparts (442) (14) (387) (12)
% %
Ride Performance (547) (20) (541) (20)
% %
Total Tenneco $
(2,071) (12) $
(2,319) (16)
Inc.
% %
_________________________________________
(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 NON-GAAP MEASURES
Debt net of total cash / Adjusted LTM EBITDA including noncontrolling interests
Unaudited
(dollars in millions except ratios)
December 31, December 31,
2020 2019
---
Total debt $
5,333 $
5,556
Total cash, cash equivalents and restricted cash (total cash) 803 566
Debt net of total cash balances (1) $
4,530 $
4,990
Adjusted LTM EBITDA including noncontrolling interests (2) (3) $
1,045 $
1,415
Ratio of debt net of total cash balances to adjusted LTM EBITDA including noncontrolling
interests (4) 4.3x 3.5x
_________________________________________
(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
Adjusted LTM 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 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.
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) TO NON-GAAP REVENUE MEASURES(2)
Unaudited
(dollars in millions)
Q4 2020
Revenues Currency Revenues Substrate Value-add
Excluding Sales Revenues
Currency Excluding Excluding
Currency Currency
---
Original
equipment
light vehicle
revenues $
2,964 $
71 $
2,893 $
899 $
1,994
Original
equipment
commercial
truck, off-
highway,
industrial and
other revenues 608 15 593 126 467
Aftermarket &
original
equipment
service
revenues 1,078 13 1,065 23 1,042
Net sales and
operating
revenues $
4,650 $
99 $
4,551 $
1,048 $
3,503
Q4 2019*
Revenues Currency Revenues Substrate Value-add
Excluding Sales Revenues
Currency Excluding Excluding
Currency Currency
---
Original
equipment
light vehicle
revenues $
2,497
$ $
2,497 $
639 $
1,858
Original
equipment
commercial
truck, off-
highway,
industrial and
other revenues 576 576 108 468
Aftermarket &
original
equipment
service
revenues 1,070 1,070 22 1,048
Net sales and
operating
revenues $
4,143
$ $
4,143 $
769 $
3,374
Q4 2020 YTD*
Revenues Currency Revenues Substrate Value-add
Excluding Sales Revenues
Currency Excluding Excluding
Currency Currency
---
Original
equipment
light vehicle
revenues(3) $
9,348 $
7 $
9,341 $
2,828 $
6,513
Original
equipment
commercial
truck, off-
highway,
industrial and
other revenues
(3) 2,069 (49) 2,118 448 1,670
Aftermarket &
original
equipment
service
revenues (3) 3,962 (47) 4,009 88 3,921
Net sales and
operating
revenues $
15,379 $
(89) $
15,468 $
3,364 $
12,104
Q4 2019 YTD*
Revenues Currency Revenues Substrate Value-add
Excluding Sales Revenues
Currency Excluding Excluding
Currency Currency
---
Original
equipment
light vehicle
revenues $
10,434
$ $
10,434 $
2,535 $
7,899
Original
equipment
commercial
truck, off-
highway,
industrial and
other revenues 2,370 2,370 411 1,959
Aftermarket &
original
equipment
service
revenues 4,646 4,646 81 4,565
Net sales and
operating
revenues $
17,450
$ $
17,450 $
3,027 $
14,423
__________________________________
* Prior to the second quarter 2020, original equipment service
revenues was previously classified within original equipment light
vehicle revenues and original equipment commercial truck, off-
highway, industrial and other revenues.
(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.
(3) YTD 2020 includes reclassification between prior quarters
vehicle type revenue to conform to Q4 2020 presentation for
comparability purposes.
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) REVENUE AND EARNINGS TO NON-GAAP REVENUE AND EARNINGS MEASURES(2)
UNAUDITED
(dollars in millions except percents)
Q4 2020
Global Segments
Clean Air Powertrain Motorparts Ride Total Corporate Total
Performance
---
Net sales
and
operating
revenues $
2,117 $
1,120 $
730 $
683 $
4,650
$ $
4,650
Less:
Substrate
sales 1,071 1,071 1,071
Value-add
revenues $
1,046 $
1,120 $
730 $
683 $
3,579
$ $
3,579
EBITDA $
175 $
151 $
109 $
29 $
464 $
(46) $
418
EBITDA as a
% of % % % % % %
revenue 8.3 13.5 14.9 4.2 10.0 9.0
EBITDA as a
% of % % % % % %
value-add
revenue 16.7 13.5 14.9 4.2 13.0 11.7
Adjusted
EBITDA $
160 $
152 $
110 $
29 $
451 $
(41) $
410
Adjusted
EBITDA as % % % % % %
a % of
revenue 7.6 13.6 15.1 4.2 9.7 8.8
Adjusted
EBITDA as % % % % % %
a % of
value-add
revenue 15.3 13.6 15.1 4.2 12.6 11.5
Q4 2019
Global Segments
Clean Air Powertrain Motorparts Ride Total Corporate Total
Performance
---
Net sales
and
operating
revenues $
1,743 $
1,018 $
741 $
641 $
4,143
$ $
4,143
Less:
Substrate
sales 769 769 769
Value-add
revenues $
974 $
1,018 $
741 $
641 $
3,374
$ $
3,374
EBITDA $
130 $
60 $
(84) $
7 $
113 $
(87) $
26
EBITDA as a
% of % % % % % %
revenue 7.5 5.9 (11.3) 1.1 2.7 0.6
EBITDA as a
% of % % % % % %
value-add
revenue 13.3 5.9 (11.3) 1.1 3.3 0.8
Adjusted
EBITDA $
142 $
82 $
76 $
34 $
334 $
(47) $
287
Adjusted
EBITDA as % % % % % %
a % of
revenue 8.1 8.1 10.3 5.3 8.1 6.9
Adjusted
EBITDA as % % % % % %
a % of
value-add
revenue 14.6 8.1 10.3 5.3 9.9 8.5
________________________________________
(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. See prior pages for a discussion of EBITDA and adjusted EBITDA.
ATTACHMENT 2
TENNECO INC.
RECONCILIATION OF GAAP(1) REVENUE AND EARNINGS TO NON-GAAP REVENUE AND EARNINGS MEASURES(2)
UNAUDITED
(dollars in millions except percents)
Q4 2020 YTD
Global Segments
Clean Air Powertrain Motorparts Ride Total Corporate Total
Performance
---
Net sales
and
operating
revenues $
6,721 $
3,726 $
2,725 $
2,207 $
15,379
$ $
15,379
Less:
Substrate
sales 3,355 3,355 3,355
Value-add
revenues $
3,366 $
3,726 $
2,725 $
2,207 $
12,024
$ $
12,024
EBITDA $
440 $
130 $
155 $
(595) $
130 $
(215) $
(85)
EBITDA as a
% of % % % % %
revenue 6.5 3.5 5.7 (27.0) 0.8
% (0.6)
EBITDA as a
% of % % % % %
value-add
revenue 13.1 3.5 5.7 (27.0) 1.1
% (0.7)
Adjusted
EBITDA $
451 $
345 $
385 $
36 $
1,217 $
(172) $
1,045
Adjusted
EBITDA as % % % %
a % of
revenue 6.7 9.3 14.1 1.6 7.9
% 6.8
%
Adjusted
EBITDA as % % % % %
a % of
value-add
revenue 13.4 9.3 14.1 1.6 10.1 8.7
%
Q4 2019 YTD
Global Segments
Clean Air Powertrain Motorparts Ride Total Corporate Total
Performance
---
Net sales
and
operating
revenues $
7,121 $
4,408 $
3,167 $
2,754 $
17,450
$ $
17,450
Less:
Substrate
sales 3,027 3,027 3,027
Value-add
revenues $
4,094 $
4,408 $
3,167 $
2,754 $
14,423
$ $
14,423
EBITDA $
582 $
363 $
184 $
8 $
1,137 $
(343) $
794
EBITDA as a
% of % % % %
revenue 8.2 8.2 5.8 0.3 6.5
% 4.6
%
EBITDA as a
% of % % % %
value-add
revenue 14.2 8.2 5.8 0.3 7.9
% 5.5
%
Adjusted
EBITDA $
607 $
425 $
413 $
157 $
1,602 $
(187) $
1,415
Adjusted
EBITDA as % % % %
a % of
revenue 8.5 9.6 13.0 5.7 9.2
% 8.1
%
Adjusted
EBITDA as % % % % %
a % of
value-add
revenue 14.8 9.6 13.0 5.7 11.1 9.8
%
_________________________________________
(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. See prior pages for a discussion of EBITDA and adjusted EBITDA.
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
(dollars in millions)
Q4 2020
Revenues Substrate Value-add
Sales Revenues
---
Clean Air $
313 $
125 $
188
Powertrain 224 224
Ride Performance 71 71
Total Tenneco
Inc. $
608 $
125 $
483
Q4 2019*
Revenues Substrate Value-add
Sales Revenues
---
Clean Air $
264 $
108 $
156
Powertrain 240 240
Ride Performance 72 72
Total Tenneco
Inc. $
576 $
108 $
468
Q4 2020 YTD*
Revenues Substrate Value-add
Sales Revenues
---
Clean Air (3) $
1,066 $
436 $
630
Powertrain 765 765
Ride Performance
(3) 238 238
Total Tenneco
Inc. (3) $
2,069 $
436 $
1,633
Q4 2019 YTD*
Revenues Substrate Value-add
Sales Revenues
---
Clean Air $
1,114 $
411 $
703
Powertrain 916 916
Ride Performance 340 340
Total Tenneco
Inc. $
2,370 $
411 $
1,959
________________________________
* Prior to the second quarter 2020, original equipment service
revenues related to original equipment commercial truck, off-
highway, industrial and other were previously classified within
original equipment commercial truck, off-highway, industrial and
other revenues.
(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.
(3) YTD 2020 includes reclassification between prior quarters
vehicle type revenue to conform to Q4 2020 presentation for
comparability purposes.
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SOURCE Tenneco Inc.
