Tenneco Automotive Inc. (ticker: TEN, exchange: New York Stock Exchange) News Release
November 15, 2000
TENNECO AUTOMOTIVE PROJECTS CONTINUED TURNAROUND DESPITE DIFFICULT MARKET CONDITIONS
Company to Web Cast Senior Management Meeting with Financial Community
New York, November 15, 2000 - Tenneco Automotive (NYSE: TEN) announced today that it expects EBITDA for 2001, from operations before restructuring and other non-operating items, will be in the range of $415 million to $425 million. This estimate takes into account an expected 2 percent revenue decline for 2001, due to slowing North American original equipment production and continuing softness in the global aftermarket, as well as benefits the company expects to realize from cost reduction and operational improvement plans. The company expects 2000 year-end EBITDA to be between $355 million and $365 million.
"We expect these very tough market conditions to continue throughout 2001; however, we're confident in our ability to maintain our turnaround and deliver solid results next year," said Mark P. Frissora, chairman and CEO, Tenneco Automotive. "Despite facing some of the toughest industry conditions in recent quarters, we've made progress in our first year as a stand-alone company. Based on last-twelve-month performance, we're seeing positive improvements in key areas including net income, earnings per share, and cash flow."
Frissora and his senior management team will outline the company's strategies and projections for 2001 at a meeting with financial analysts in New York today at 2 p.m. EST. The meeting will be web cast live at www.tenneco-automotive.com.
Difficult market conditions - including a slowing in original equipment production, softness in the worldwide aftermarket, a significant decline in heavy-duty truck production, and unfavorable currency exchanges - have impacted the company's recent results. As a result of these and other conditions, Tenneco Automotive recently accelerated its cost reduction efforts. The company expects that cost reduction initiatives announced in October 2000, combined with the full implementation of previous restructuring initiatives will generate annual incremental savings of approximately $60 million beginning in 2001. The company also anticipates realizing additional savings through Six Sigma manufacturing process improvements.
Tenneco Automotive continues to expand its book of original equipment business with more than $500 million of incremental global business scheduled for production through 2005. Innovative technologies, success in module supply, and increased vehicle content as a result of new environmental regulations and safety concerns are driving opportunities in this segment.
Tenneco Automotive is countering the softness in the North American aftermarket by introducing new products; repositioning products in both ride control and exhaust; and launching new promotional programs. As a result, the company has increased its North American market share in both ride control and exhaust to 54 percent and 38 percent respectively, according to third quarter 2000 MEMA data. The company expects to see improvements in its European aftermarket business beginning in 2001 as it implements strategies similar to those used in North America.
"We are focused on reducing our costs and lowering our debt as quickly as possible in order to position the company for long-term success," said Frissora. "We're taking advantage of increased vehicle content for our products, driven by environmental and safety concerns; building on our module supply capability; leveraging our strategic alliances; and pursuing new technologies that focus on practical applications to help differentiate our customers' products and services."
In addition to the web cast, the analyst meeting is available via live call-in at 888-560-8501 (domestic) or 773-756-4618 (international), pass code: Tenneco Auto; or by playback one hour after completion of the presentations at 888-446-2543 (domestic) or 402-998-1342 (international), pass code: 8400.
For more details concerning Tenneco Automotive's projections in this press release regarding 2001 revenues and EBITDA, please refer to the "Outlook" section of the company's third quarter Quarterly Report on form 10-Q filed on November 14 with the Securities and Exchange Commission.
Tenneco Automotive is a $3.3 billion manufacturing company headquartered in Lake Forest, Ill., with 24,000 employees worldwide. Tenneco Automotive is one of the world's largest producers and marketers of ride control and exhaust systems and products, which are sold under the Monroe® and Walker ® global brand names. Among its products are Sensa-Trac® and Reflex ® shocks and struts, Rancho® shock absorbers, Walker® Quiet-Flow™ mufflers and DynoMax™ performance exhaust products, and Monroe® Clevite™ vibration control components.
This press release contains forward-looking statements concerning the company's EBITDA, revenues, book of business and cost reduction plans and other strategies. Words such as "expects," "anticipates," "scheduled," "will" and similar expressions identify these forward-looking statements. These forward-looking statements are based on the current expectations of the company (including its subsidiaries) and reflect assumptions including, without limitation, (1) in the case of revenues, an original equipment build rate for 2001 of 16.5 million and 20.0 million vehicles in North America and Europe, respectively, and increased aftermarket share for the company despite general aftermarket declines, and (2) in the case of EBITDA, $60 million of costs savings from restructuring and operational improvements in 2001, relatively flat foreign exchange rates and inflation rates in the range of 2 to 4 percent (the "Revenue/EBITDA Assumptions"). Because 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) the general political, economic and competitive conditions in markets and countries where the company and its subsidiaries operate, including currency fluctuations and other risks associated with operating in foreign countries; (ii) governmental actions, including the ability to receive regulatory approvals and the timing of such approvals; (iii) changes in capital availability or costs, including increases in the company's costs of borrowing (i.e. interest rate increases); (iv) changes in automotive manufacturers' production rates and their actual and forecasted requirements for the company's products, including the company's resultant inability to realize the sales represented by its awarded book of business; (v) changes in consumer demand and prices, including decreases in demand for automobiles which include the company's products, and the potential negative impact on the company's revenues and margins from such products; (vi) the cost of compliance with changes in regulations, including environmental regulations; (vii) workforce factors such as strikes or labor interruptions; (viii) material substitutions and increases in the costs of raw materials; (ix) the company's ability to integrate operations of acquired businesses quickly and in a cost effective manner; (x) the company's ability to execute restructuring and other cost reduction plans and to realize anticipated benefits from these plans; (xi) 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; (xii) further changes in the distribution channels for the company's aftermarket products, and further consolidations among automotive parts customers and suppliers; (xiii) changes by the Financing Accounting Standards Board or other accounting regulatory bodies of authoritative generally accepted accounting principles or policies; (xiv) any other change which causes the Revenue/EBITDA Assumptions to prove to be incorrect; and (xv) 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.
CONTACT: Tenneco Automotive, Media relations
Jane Ostrander, 847/482-5607
Tenneco Automotive, Investor relations
Leslie Cleveland Hague, 847/482-5042