Press Releases

Tenneco Automotive Reports Improved Results

April 22, 2003
  • Company reports EPS of 2-cents per share, reversing prior year net loss
  • EBIT improves 15 percent to $31 million
  • EBITDA improves 14 percent to $70 million
  • Revenues increase 14 percent as favorable platform mix helps original equipment sales outpace market
  • Restructuring program realizes $6 million in savings

LAKE FOREST, ILLINOIS, APRIL 22, 2003 - Tenneco Automotive (NYSE: TEN) announced today that the company reported net income of $1 million, or 2-cents per share, in the first quarter of 2003, versus a net loss of $2 million, or 5-cents per share before the cumulative effect of a change in accounting principle, for the first quarter of 2002. First Call's analyst consensus estimate for the quarter was a loss of 4-cents per share. EBIT (income before interest, taxes and minority interest) improved to $31 million in the quarter, a 15 percent increase over $27 million the previous year. EBITDA was $70 million for the quarter, a 14 percent improvement over first quarter 2002 EBITDA of $61 million.

The first quarter 2003 results include pre-tax restructuring and restructuring related costs of $5 million, or 7-cents per share, and a tax benefit from resolution of outstanding tax issues of $3 million, or 8-cents per share. The first quarter 2002 results include a pre-tax non-accruable restructuring expense of $1 million, or one cent per share; pre-tax charges associated with the company's amendment of its senior debt agreements of $2 million, or 3-cents per share; and income from a tax benefit of $4 million, or 10-cents per share. (See the table entitled, "Reconciliation of GAAP Results to non-GAAP Results" attached to this press release for more information about these adjustments and other non-GAAP results in this press release.)

The company reported revenue of $921 million for the quarter, up 14 percent versus $809 million in the first quarter of 2002. Favorable currency exchange rates benefited revenue by $54 million in the quarter. Excluding the impact of currency, revenue was up 7 percent.

"We are pleased with our results, especially given industry and economic uncertainties at the beginning of the year. We benefited this quarter from our strong position on top-selling vehicle platforms as North American OE production volumes remained strong. We also continue to see steady improvement in our European original equipment exhaust business where revenues are up year-over-year, and gross margins improved over last quarter and are now even with first quarter 2002," said Mark P. Frissora, chairman and CEO, Tenneco Automotive. "We still face challenges in the global aftermarket and are aggressively taking costs out of the businesses, including flexing our operations, while continuing to invest strategically in promoting our products and premium brands."

The company generated $10 million in positive cash flow before financing activities during the quarter compared with $14 million in the first quarter of 2002. The company used more cash in the quarter, compared with first quarter 2002, primarily to prepare for platform launches and for seasonal inventory builds. More aggressive receivables and payables management steps were taken in the quarter to offset this heavier cash use and to help preserve liquidity given the uncertainties in the market for the second quarter of 2003. Total bank and bond debt was $1.443 billion at quarter-end compared with $1.445 billion at the end of 2002.

Tenneco Automotive again significantly outperformed the requirements of its bank debt covenants. At March 31, the leverage ratio was 4.35, below the maximum limit of 5.75; the fixed charge coverage ratio was 1.31, exceeding the minimum required ratio of 0.80; and the interest coverage ratio was 2.31, exceeding the minimum required ratio of 1.65.

The company continues to improve its operational efficiency and realized $6 million in savings during the quarter from implementation of its Project Genesis restructuring program and $6 million in savings from Six Sigma initiatives. The company's SGA&E (selling, general and administrative expense plus engineering, research and development expense) as a percent of sales was 11.6 percent, within management's goal for the year of maintaining this ratio at less than 12 percent.

"We made progress this quarter as our original equipment businesses fueled top-line growth and we continued to successfully execute our restructuring and cost-cutting initiatives. We were especially encouraged that our North American aftermarket business equaled last year's profitability on softer sales," said Frissora. "Going forward, we're cautiously optimistic about OE revenue growth given our platform mix and we're launching new products and marketing programs to help counter industry conditions in the aftermarket. We also remain intensely focused on generating cash and see solid opportunities to reduce inventories and improve our working capital performance."


  • Strong OE production and the company's presence on high volume OE vehicle models drove North American original equipment revenue to $373 million in the quarter, a 9 percent increase over first quarter 2002 revenue of $341 million. Excluding catalytic converter pass-through sales, revenue increased 12 percent.
  • Original equipment revenue included a 7 percent increase in heavy-duty revenues versus last year.
  • North American aftermarket revenue was $108 million versus $126 million one year ago. Sales were negatively impacted by lower consumer confidence and the continued universal decline in the exhaust market. Despite the decrease in aftermarket revenue, EBIT for that business was flat on a year-over-year comparison.
  • EBIT for North American operations was $28 million compared with $19 million in the first quarter of 2002. The 46 percent EBIT improvement was primarily driven by OE volumes, improved operating efficiency and continued tight cost controls. EBITDA was $50 million versus $40 million in first quarter 2002.
  • First quarter 2003 EBIT results include $3 million in restructuring and restructuring related costs. First quarter 2002 EBIT results include $1 million in restructuring related costs and $1 million in charges associated with the company's amendment of its senior debt agreements.


  • European original equipment revenue increased 30 percent to $269 million from $207 million in the first quarter of 2002. Excluding catalytic converter pass-through sales and the impact of favorable currency exchange rates, revenue would have increased 5 percent.
  • The company's European aftermarket revenue increased to $76 million, versus $65 million one year ago. Excluding the impact of currency, revenue would have decreased 4 percent.
  • European EBIT was a loss of $1 million, compared with positive EBIT of $5 million in the first quarter of 2002. EBIT was impacted by a $4 million increase in depreciation and higher aftermarket promotional costs. EBITDA was $13 million compared with $15 million in first quarter 2002.
  • First quarter 2003 EBIT results include $2 million in restructuring and restructuring related costs. First quarter 2002 EBIT results include $1 million in charges associated with the company's amendment of its senior debt agreements and no restructuring costs.


  • The company's Asian operations reported revenue of $36 million, versus $18 million one year ago. Revenue growth was primarily driven by strong China OE volumes and higher pass-through sales.
  • In South America, the company reported revenue of $26 million, flat compared with the previous year. Unfavorable currency exchange rates negatively impacted revenue by $7 million, which was offset by stronger OE and aftermarket volumes.
  • The company's Australian operations reported revenue of $33 million for the quarter, a 27 percent increase over first quarter 2002 revenue of $26 million. A favorable currency exchange rate impacted revenue by $4 million. Strong OE production offset softer sales in both the ride control and exhaust segments of the aftermarket.
  • Combined EBIT for Asia, South America and Australia was $4 million, versus $3 million in the first quarter of 2002. Higher OE volumes in all the regions were primarily responsible for the increase. Combined EBITDA for rest of world was $7 million compared with $6 million in first quarter 2002.

The attachments provide additional information on Tenneco Automotive's first quarter 2003 results:

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The company will host a conference call on April 22, 2003 at 9 a.m. Eastern time. The dial-in number is 888 809-8968 domestic or 630 395-0038 international. Passcode is Tenneco Auto. The call will be available on the financial section of the Tenneco Automotive web site at A copy of this press release, which includes in the attachments financial information to be discussed on this call, is also available on the financial and news sections of the Tenneco Automotive web site at A recording of this call will be available one hour following the completion of the call on April 22 through April 29, 2003. To access this recording, dial 800 454 0157 domestic or 402 220-2123 international and enter passcode 8400.

Tenneco Automotive is a $3.5 billion manufacturing company with headquarters in Lake Forest, Illinois and approximately 19,600 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 Monroe 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. Words such as "taking", "focused", "goal", "expect", "anticipate", "should", "believe", "plan", "remain", "confident", "continue," "will", "may", "can", "intend", "continue", "estimate" and "seek" 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) 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 and the overall highly competitive nature of the automotive parts industry; (v) changes in consumer demand and prices, including longer product lives of automobile parts and the cyclicality of automotive production and sales of 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 execute restructuring and other cost reduction plans and to realize anticipated benefits from these plans; (x) 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; (xi) further changes in the distribution channels for the company's aftermarket products, further consolidations among automotive parts customers and suppliers, and product warranty costs; (xii) changes by the Financing Accounting Standards Board or other accounting regulatory bodies of authoritative generally accepted accounting principles or policies; (xiii) acts of war, riots or terrorism, including, but not limited to the events taking place in the Middle East, the current military action in Iraq and the continuing war on terrorism, as well as actions taken or to be taken by the United States or other governments as a result of further acts or threats of terrorism, and the impact of these acts on economic, financial and social conditions in the countries where the company operates and (xiv) 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, 2002.

Tenneco Automotive, Media Relations
Jane Ostrander
(1) 847 482 5607

Tenneco Automotive, Investor Relations
Leslie Hunziker
(1) 847 482 5042