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Tenneco Inc. (ticker: TEN, exchange: New York Stock Exchange)

Tenneco Reports Third Quarter 2022 Results

October 31, 2022

Company expects to close transaction with Apollo Funds in mid-November, 2022

SKOKIE, Ill., Oct. 31, 2022 /PRNewswire/ -- Tenneco Inc. (NYSE: TEN) today announced results for the third quarter ended September 30, 2022, including the following:

  • Third quarter total revenue of $4.9 billion, up 14% year-over-year. Value-add revenue of $3.6 billion was up 17% year-over-year, excluding a negative currency impact of $214 million.  The Company's OE light vehicle value-add revenue growth of 32%, excluding currency, outpaced global industry light vehicle production*, which was up 27% year-over-year. Material, energy, and freight cost recoveries contributed more than $200 million of revenue on a year-over-year basis.

  • EBIT** of $129 million, compared with EBIT of $125 million in third quarter 2021. Adjusted EBITDA*** improved 8% year-over-year to $301 million, compared with $279 million last year. The increase in earnings is primarily a result of higher light vehicle volumes.

  • Net loss of $44 million, or a loss of $0.53 per diluted share, compared to net earnings of $15 million, or $0.17 per diluted share, in the prior year. Third quarter 2022 adjusted net loss of $11 million, or a loss of $0.14 per diluted share, compared to prior year adjusted net income of $15 million, or $0.17 per diluted share.  The year-over-year comparisons were primarily driven by higher non-operating interest and tax expenses.

"In a tough business environment, I'm proud of how Team Tenneco delivered year-over-year growth in revenue and adjusted EBITDA" said Brian Kesseler, Tenneco CEO. "Our continued focus on operational excellence, cash generation, and cost control actions also helped us deliver both significant sequential margin improvement across all business groups, and lower net debt." 

As previously disclosed, all conditions to closing with respect to antitrust and/or foreign direct investment laws under Tenneco's merger agreement with certain affiliates of Apollo Global Management, Inc. have been satisfied or waived in accordance with the terms and conditions of the merger agreement.  The Company expects to complete the transaction in mid-November 2022.  In light of this, Tenneco will not conduct a conference call or give forward-looking guidance.

*

Source: S&P Global Mobility (formerly IHS Markit) October 2022 global light vehicle production forecast.

**

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.

Attachment 1 
Statements of Income (Loss) – 3 months 
Statements of Income (Loss) – 9 months 
Balance Sheets 
Statements of Cash Flows – 3 Months 
Statements of Cash Flows – 9 Months

Attachment 2 
Reconciliation of GAAP to Non-GAAP Earnings Measures – 3 and 9 Months 
Reconciliation of GAAP Revenue and Earnings to Non-GAAP Revenue and Earnings Measures – 3 and 9 Months 
Reconciliation of GAAP to Non-GAAP Revenue Measures – 3 and 9 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 9 Months 
Reconciliation of GAAP to Non-GAAP Cash Flow Measures – 3 and 9 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 2021 revenues of $18 billion and approximately 71,000 team members working at more than 260 sites worldwide.  Through our four business groups, Motorparts, Performance Solutions, 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. 

Safe Harbor

This press release includes forward-looking statements regarding the Agreement and Plan of Merger (the "Merger Agreement") that the Company entered into with Pegasus Holdings III, LLC (the "Parent") and Pegasus Merger Co. on February 22, 2022. Pursuant to the terms and conditions set forth in the Merger Agreement, Merger Sub will merge with and into Tenneco (the "Merger") with Tenneco continuing as the surviving corporation of the Merger and as a wholly owned subsidiary of Parent. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements include (without limitation and in addition to the risks set forth above): the inability to consummate the Merger within the anticipated time period, or at all, due to any reason, including the failure to satisfy conditions to the consummation of the Merger; the risk that the Merger disrupts our current plans and operations or diverts management's attention from its ongoing business;  the effect of the announcement of the Merger on our ability to retain and hire key personnel and maintain relationships with our customers, suppliers and others with whom we do business; the effect of the announcement of the Merger on our operating results and business generally; the amount of costs, fees and expenses related to the Merger; the risk that our stock price may decline significantly if the Merger is not consummated; the nature, cost and outcome of any litigation and other legal proceedings, including any such proceedings related to the Merger and instituted against Tenneco and others; and other risks to consummation of the proposed Merger, including the risk that the proposed Merger will not be consummated within the expected time period or at all.

If the proposed transaction is consummated, the Company's stockholders will cease to have any equity interest in the Company and will have no right to participate in its earnings and future growth. The risks included here are not exhaustive.  These and other factors are identified and described in more detail in the Company's Annual Report on Form 10-K for the year ended December 31, 2021, and quarterly reports on Form 10-Q for the quarters ended March 31, 2022 and June 30, 2022, as well as the Company's subsequent filings and quarterly reports, available online at www.sec.gov. Readers are cautioned not to place undue reliance on the Company's projections and other forward-looking statements, which speak only as of the date thereof. Except as required by applicable law, the Company undertakes no obligation to update any forward-looking statement, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

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 September 30,


2022


2021

Net sales and operating revenues:




Motorparts

$                 723


$                 769

Performance Solutions

849


686

Clean Air - Value-add revenues

1,040


897

Clean Air - Substrate sales

1,295


1,039

Powertrain

1,024


941

          Total net sales and operating revenues

4,931


4,332

Costs and expenses:




   Cost of sales (exclusive of depreciation and amortization)

4,388


3,776

   Selling, general, and administrative

219


240

   Depreciation and amortization

140


147

   Engineering, research, and development

71


71

   Restructuring charges, net and asset impairments

3


(4)

          Total costs and expenses

4,821


4,230

Other income (expense):




Non-service pension and postretirement benefit (costs) credits

3


4

Equity in earnings (losses) of nonconsolidated affiliates, net of tax

3


10

Other income (expense), net

13


9


19


23

Earnings (loss) before interest expense, income taxes, and noncontrolling interests

129


125

Interest expense

(90)


(66)

Earnings (loss) before income taxes and noncontrolling interests

39


59

Income tax (expense) benefit

(67)


(34)

Net income (loss)

(28)


25

Less: Net income (loss) attributable to noncontrolling interests

16


10

Net income (loss) attributable to Tenneco Inc.

$                 (44)


$                   15





Basic earnings (loss) per share:




Earnings (loss) per share

$              (0.53)


$                0.17

Weighted average shares outstanding

83.7


82.3

Diluted earnings (loss) per share:




Earnings (loss) per share

$              (0.53)


$                0.17

Weighted average shares outstanding

83.7


84.1

 

 

ATTACHMENT 1

TENNECO INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

Unaudited

(millions, except per share amounts) 


Nine Months Ended September 30,


2022


2021

Net sales and operating revenues:




Motorparts

$              2,174


$              2,282

Performance Solutions

2,433


2,188

Clean Air - Value-add revenues

3,058


2,876

Clean Air - Substrate sales

3,517


3,208

Powertrain

3,063


3,092

          Total net sales and operating revenues

14,245


13,646

Costs and expenses:




Cost of sales (exclusive of depreciation and amortization)

12,663


11,810

Selling, general, and administrative

728


764

Depreciation and amortization

429


447

Engineering, research, and development

220


216

Restructuring charges, net and asset impairments

45


48

          Total costs and expenses

14,085


13,285

Other income (expense):




Non-service pension and postretirement benefit (costs) credits

9


10

Equity in earnings (losses) of nonconsolidated affiliates, net of tax

25


47

Gain (loss) on extinguishment of debt


8

Other income (expense), net

27


30


61


95

Earnings (loss) before interest expense, income taxes, and noncontrolling interests

221


456

Interest expense

(232)


(205)

Earnings (loss) before income taxes and noncontrolling interests

(11)


251

Income tax (expense) benefit

(140)


(122)

Net income (loss)

(151)


129

Less: Net income (loss) attributable to noncontrolling interests

52


59

Net income (loss) attributable to Tenneco Inc.

$                (203)


$                   70





Basic earnings (loss) per share:




Earnings (loss) per share

$              (2.44)


$                0.85

Weighted average shares outstanding

83.5


82.2

Diluted earnings (loss) per share:




Earnings (loss) per share

$              (2.44)


$                0.83

Weighted average shares outstanding

83.5


83.5

 

 

ATTACHMENT 1

TENNECO INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

Unaudited

(dollars in millions)


September 30, 2022


December 31, 2021


Assets





Cash and cash equivalents

$                       415


$                       859


Restricted cash

8


6


Receivables, net

2,819

(a)

2,419

(a)

Inventories

1,948


1,846


Prepayments and other current assets

553


683


Property, plant, and equipment, net

2,557


2,872


Other noncurrent assets

2,652


2,937


Total assets

$                 10,952


$                 11,622


Liabilities and Shareholders' Equity





Short-term debt, including current maturities of long-term debt

$                   1,427


$                         57


Accounts payable

3,288


2,955


Accrued compensation and employee benefits

364


381


Accrued income taxes

70


71


Accrued expenses and other current liabilities

1,153


1,227


Long-term debt

3,603

(b)

5,018

(b)

Deferred income taxes

96


105


Pension and postretirement benefits

723


830


Deferred credits and other liabilities

436


491


Redeemable noncontrolling interests

37


91


Total Tenneco Inc. shareholders' equity (deficit)

(519)


85


Noncontrolling interests

274


311


Total liabilities, redeemable noncontrolling interests, and equity

$                 10,952


$                 11,622


 

 


September 30, 2022


December 31, 2021


(a) Accounts receivable net of:





Accounts receivable outstanding and derecognized

$                   1,063


$                   1,043







(b) Long-term debt composed of:





Revolver Borrowings

$                         39


$                         —


LIBOR plus 2.00% Term Loan A due 2019 through 2023(1)

1,271


1,396


LIBOR plus 3.00% Term Loan B due 2019 through 2025

1,602


1,606


$225 million of 5.375% Senior Notes due 2024

224


223


$500 million of 5.000% Senior Notes due 2026

496


496


$500 million of 7.875% Senior Secured Notes due 2029

491


490


$800 million of 5.125% Senior Secured Notes due 2029

789


787


Other debt, primarily foreign instruments

25


26



4,937


5,024


Less: maturities classified as current

1,334


6


Total long-term debt

$                   3,603


$                   5,018


 

(1)

The interest rate on Term Loan A at December 31, 2021 was LIBOR plus 1.75%.

 

ATTACHMENT 1

 TENNECO INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(dollars in millions)


Three Months Ended September 30,


2022


2021

Operating Activities




Net income (loss)

$                  (28)


$                    25

Adjustments to reconcile net income (loss) to cash (used) provided by operating activities:




Depreciation and amortization

140


147

Deferred income taxes

5


(4)

Stock-based compensation

5


9

Restructuring charges and asset impairments, net of cash paid

(4)


(20)

Change in pension and other postretirement benefit plans

(8)


(11)

Equity in earnings of nonconsolidated affiliates

(3)


(10)

Cash dividends received from nonconsolidated affiliates

11


Loss (gain) on sale of assets and other

6


15

Changes in operating assets and liabilities:




Receivables

(349)


30

Inventories

56


(1)

Payables and accrued expenses

156


(238)

Accrued interest and accrued income taxes

15


(10)

Other assets and liabilities

53


20

Net cash (used) provided by operating activities

55


(48)

Investing Activities




Proceeds from sale of assets

1


27

Net proceeds from sale of business

1


Proceeds from sale of investment in nonconsolidated affiliates

4


3

Cash payments for property, plant, and equipment

(82)


(101)

Proceeds from deferred purchase price of factored receivables

98


102

Net cash (used) provided by investing activities

22


31

Financing Activities




Proceeds from term loans and notes

35


(2)

Repayments and extinguishment costs of term loans and notes

(54)


(72)

Borrowings on revolving lines of credit

2,203


1,896

Payments on revolving lines of credit

(2,170)


(1,903)

Debt issuance costs of long-term debt


(1)

Distributions to noncontrolling interest partners

(10)


(4)

Collections (payments) on securitization programs, net and other

8


(5)

Net cash (used) provided by financing activities

12


(91)

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

(61)


(16)

Increase (decrease) in cash, cash equivalents, and restricted cash

28


(124)

Cash, cash equivalents, and restricted cash, beginning of period

395


719

Cash, cash equivalents, and restricted cash, end of period

$                  423


$                  595

Supplemental Cash Flow Information




Cash paid during the period for interest

$                    78


$                    62

Cash paid during the period for income taxes, net of refunds

$                    41


$                    42

Lease assets obtained in exchange for new operating lease liabilities

$                    32


$                      9

Non-cash Investing Activities




Period end balance of accounts payable for property, plant, and equipment

$                    81


$                    73

Deferred purchase price of receivables factored in the period

$                    88


$                  102

 

 

ATTACHMENT 1

 TENNECO INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Unaudited

(dollars in millions)


Nine Months Ended September 30,


2022


2021

Operating Activities




Net income (loss)

$                (151)


$                  129

Adjustments to reconcile net income (loss) to cash (used) provided by operating activities:




Depreciation and amortization

429


447

Deferred income taxes

(2)


8

Stock-based compensation

17


18

Restructuring charges and asset impairments, net of cash paid

13


(17)

Change in pension and other postretirement benefit plans

(29)


(22)

Equity in earnings of nonconsolidated affiliates

(25)


(47)

Cash dividends received from nonconsolidated affiliates

55


58

Loss (gain) on sale of assets and other

(4)


8

Changes in operating assets and liabilities:




Receivables

(920)


(451)

Inventories

(237)


(194)

Payables and accrued expenses

551


11

Accrued interest and accrued income taxes

(1)


24

Other assets and liabilities

91


3

Net cash (used) provided by operating activities

(213)


(25)

Investing Activities




Proceeds from sale of assets

13


39

Net proceeds from sale of business

3


1

Proceeds from sale of investment in nonconsolidated affiliates

5


6

Cash payments for property, plant and equipment

(253)


(286)

Proceeds from deferred purchase price of factored receivables

310


356

Other

(1)


Net cash (used) provided by investing activities

77


116

Financing Activities




Proceeds from term loans and notes

57


836

Repayments and extinguishment costs of term loans and notes

(177)


(1,011)

Borrowings on revolving lines of credit

6,221


4,772

Payments on revolving lines of credit

(6,160)


(4,774)

Debt issuance costs of long-term debt


(13)

Distributions to noncontrolling interest partners

(44)


(12)

Payment for redeemable noncontrolling interest redemption

(53)


Collections (payments) on securitization programs, net and other

(36)


(78)

Net cash (used) provided by financing activities

(192)


(280)

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

(114)


(19)

Increase (decrease) in cash, cash equivalents, and restricted cash

(442)


(208)

Cash, cash equivalents, and restricted cash, beginning of period

865


803

Cash, cash equivalents, and restricted cash, end of period

$                  423


$                  595

Supplemental Cash Flow Information




Cash paid during the period for interest

$                  192


$                 162

Cash paid during the period for income taxes, net of refunds

$                  172


$                 104

Lease assets obtained in exchange for new operating lease liabilities

$                    61


$                   35

Non-cash inventory charge due to aftermarket product line exit

$                      4


$                    44

Non-cash Investing Activities




Period end balance of accounts payable for property, plant, and equipment

$                    81


$                    73

Deferred purchase price of receivables factored in the period

$                  319


$                  368

 

 

ATTACHMENT 2

TENNECO INC.

RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS MEASURES(2)

Unaudited

(millions, except per share amounts)



Q3 2022


Q3 2021


Net
income
(loss)
attributable
to Tenneco
Inc.


Per
Share


Net
income
(loss)
attributable to
noncontrolling
interests


Income
tax
(expense)
benefit


EBIT


EBITDA (3)


Net
income
(loss)
attributable
to Tenneco
Inc.


Per
Share


Net
income
(loss)
attributable to
noncontrolling
interests


Income
tax
(expense)
benefit


EBIT


EBITDA (3)

Earnings (Loss) Measures

$        (44)


$(0.53)


$            16


$       (67)


$  129


$     269


$          15


$ 0.17


$            10


$      (34)


$  125


$     272

Adjustments:
























Restructuring and related expenses (5)

11


0.13



(1)


12


10







Anti-dumping duty charge 

1





1


1


3


0.03




3


3

Asset impairments 







1


0.01




1


1

Other costs (including strategic and transaction related) 

17


0.21




17


17


2


0.03




2


2

Loss on sale of unconsolidated affiliate

2


0.03




2


2


1


0.01




1


1

Other

2


0.02




2


2







Net tax adjustments







(7)


(0.08)



(7)



Adjusted Net income, EPS, NCI, Tax, EBIT, and EBITDA (4)

$         (11)


$  (0.14)


$            16


$       (68)


$  163


$     301


$          15


$ 0.17


$            10


$       (41)


$  132


$     279

 

 


Q3 2022


Global Segments






Motorparts


Performance Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net income (loss) attributable to Tenneco Inc.













$      (44)

Net income (loss) attributable to noncontrolling interests













16

Net income (loss)













(28)

Income tax (expense) benefit













(67)

Interest expense













(90)

EBIT, Earnings (Loss) before interest expense, income taxes and noncontrolling interests













129

Depreciation and amortization













140

Total EBITDA including noncontrolling interests (3)

$           73


$              41


$        131


$           90


$   335


$        (66)


$      269

Restructuring and related expenses

1


5


2


2


10



10

Anti-dumping duty charge

1





1



1

Loss on sale of unconsolidated affiliate


2




2



2

Other costs (including strategic and transaction related)






17


17

Other

1


1




2



2

Adjusted EBITDA (4)

$           76


$              49


$        133


$           92


$   350


$        (49)


$      301

 


Q3 2021


Global Segments






Motorparts


Performance Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net income (loss) attributable to Tenneco Inc.













$        15

Net income (loss) attributable to noncontrolling interests













10

Net income (loss)













25

Income tax (expense) benefit













(34)

Interest expense













(66)

EBIT, Earnings (Loss) before interest expense, income taxes and noncontrolling interests













125

Depreciation and amortization













147

Total EBITDA including noncontrolling interests (3)

$         111


$              42


$        138


$           71


$   362


$        (90)


$      272

Restructuring and related expenses


(5)


(1)


3


(3)


3


Anti-dumping duty charge

3





3



3

Asset impairments

1





1



1

Loss on sale of unconsolidated affiliate


1




1



1

Other costs (including strategic and transaction related)






2


2

Adjusted EBITDA (4)

$         115


$              38


$        137


$           74


$   364


$        (85)


$      279

 

(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) Q3 2022 includes $2 million of accelerated depreciation related to restructuring and related expenses.

 

 ATTACHMENT 2

TENNECO INC.

RECONCILIATION OF GAAP(1) TO NON-GAAP EARNINGS MEASURES(2)

Unaudited

(in millions, except per share amounts)



Q3 2022 YTD


Q3 2021 YTD


Net
income
(loss)
attributable
to Tenneco
Inc.


Per
Share


Net
income
(loss)
attributable to
noncontrolling
interests


Income
tax
(expense)
benefit


EBIT


EBITDA (3)


Net
income
(loss)
attributable
to Tenneco
Inc.


Per
Share


Net
income
(loss)
attributable to
noncontrolling
interests


Income
tax
(expense)
benefit


EBIT


EBITDA (3)

Earnings (Loss) Measures

$      (203)


$  (2.44)


$       52


$   (140)


$  221


$  650


$        70


$  0.83


$       59


$    (122)


$   456


$ 903

Adjustments:
























Restructuring and related expenses (5)

62


0.78



(4)


66


64


57


0.68



(5)


62


59

Anti-dumping duty charge 

1


0.01




1


1


3


0.03




3


3

Inventory write-down (6)

3


0.03



(1)


4


4


44


0.53




44


44

Asset impairments

4


0.05




4


4


5


0.05



1


4


4

Other costs (including strategic and transaction related) 

34


0.41




34


33


15


0.18




15


15

Loss on sale of unconsolidated affiliate

5


0.06




5


5


2


0.03




2


2

Loss on sale of business

2


0.02




2


2



0.01



(1)


1


1

Gain on debt extinguishment







(8)


(0.10)




(8)


(8)

Other

3


0.02




3


3







Net tax adjustments







(14)


(0.16)



(14)



Adjusted Net income, EPS, NCI, Tax, EBIT, and EBITDA (4)

$       (89)


$  (1.06)


$       52


$   (145)


$  340


$  766


$      174


$  2.08


$       59


$    (141)


$   579


$  1,023

 

 


Q3 2022 YTD


Global Segments






Motorparts


Performance Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net income (loss) attributable to Tenneco Inc.













$    (203)

Net income (loss) attributable to noncontrolling interests













52

Net income (loss)













(151)

Income tax (expense) benefit













(140)

Interest expense













(232)

EBIT, Earnings (Loss) before interest expense, income taxes and noncontrolling interests













221

Depreciation and amortization













429

Total EBITDA including noncontrolling interests (3)

$         229


$              67


$        338


$         198


$   832


$      (182)


$      650

Restructuring and related expenses

5


19


10


23


57


7


64

Anti-dumping duty charge

1





1



1

Inventory write-down (6)

4





4



4

Loss on sale of business



2



2



2

Asset impairments

2




2


4



4

Loss on sale of unconsolidated affiliate


5




5



5

Other costs (including strategic and transaction related)






33


33

Other


3




$       3


$          —


3

Adjusted EBITDA (4)

$         241


$              94


$        350


$         223


$   908


$      (142)


$      766

 


Q3 2021 YTD


Global Segments






Motorparts


Performance Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net income (loss) attributable to Tenneco Inc.













$        70

Net income (loss) attributable to noncontrolling interests













59

Net income (loss)













129

Income tax (expense) benefit













(122)

Interest expense













(205)

EBIT, Earnings (Loss) before interest expense, income taxes and noncontrolling interests













456

Depreciation and amortization













447

Total EBITDA including noncontrolling interests (3)

$         280


$            117


$        430


$         280


1,107


$      (204)


$      903

Restructuring and related expenses

8


8


10


22


48


11


59

Anti-dumping duty charge

3





3



3

Inventory write-down (6)

44





44



44

Loss on sale of business

1





1



1

Asset impairments

2





2


2


4

Loss on sale of unconsolidated affiliate


2




2



2

Other costs (including strategic and transaction related)






15


15

Gain on debt extinguishment






(8)


(8)

Adjusted EBITDA (4)

$         338


$            127


$        440


$         302


$  1,207


$      (184)


$   1,023

 

* Beginning in the first quarter of 2021, the Company made a change to its operating segments. This change consisted of moving a reporting unit within the Powertrain segment to the Ride Performance segment. In addition, with this change to its segments, Ride Performance was renamed Performance Solutions. As such, prior period operating segment results have been conformed to reflect the Company's current operating segments.


(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) Q3 YTD 2022 and Q3 YTD 2021 includes $2 million and $3 million of accelerated depreciation related to restructuring and related expenses, respectively.


(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.

 

ATTACHMENT 2

TENNECO INC.

RECONCILIATION OF GAAP(1) REVENUE AND EARNINGS TO NON-GAAP REVENUE AND EARNINGS MEASURES(2)

Unaudited

(in millions, except percents)


Q3 2022


Global Segments






Motorparts


Performance
Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net sales and operating revenues

$        723


$           849


$     2,335


$     1,024


$     4,931


$              —


$     4,931

Less: Substrate sales



1,295



1,295



1,295

Value-add revenues

$        723


$           849


$     1,040


$     1,024


$     3,636


$              —


$     3,636















EBITDA

$          73


$             41


$        131


$          90


$        335


$            (66)


$        269

EBITDA as a % of revenue

10.1 %


4.8 %


5.6 %


8.8 %


6.8 %




5.5 %

EBITDA as a % of value-add revenue

10.1 %


4.8 %


12.6 %


8.8 %


9.2 %




7.4 %















Adjusted EBITDA

$          76


$             49


$        133


$          92


$        350


$            (49)


$        301

Adjusted EBITDA as a % of revenue

10.5 %


5.8 %


5.7 %


9.0 %


7.1 %




6.1 %

Adjusted EBITDA as a % of value-add revenue

10.5 %


5.8 %


12.8 %


9.0 %


9.6 %




8.3 %

 


Q3 2021


Global Segments






Motorparts


Performance
Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net sales and operating revenues

$        769


$           686


$     1,936


$        941


$     4,332


$              —


$     4,332

Less: Substrate sales



1,039



1,039



1,039

Value-add revenues

$        769


$           686


$        897


$        941


$     3,293


$              —


$     3,293















EBITDA

$        111


$             42


$        138


$          71


$        362


$            (90)


$        272

EBITDA as a % of revenue

14.4 %


6.1 %


7.1 %


7.5 %


8.4 %




6.3 %

EBITDA as a % of value-add revenue

14.4 %


6.1 %


15.4 %

`

7.5 %


11.0 %




8.3 %















Adjusted EBITDA

$        115


$             38


$        137


$          74


$        364


$            (85)


$        279

Adjusted EBITDA as a % of revenue

15.0 %


5.5 %


7.1 %


7.9 %


8.4 %




6.4 %

Adjusted EBITDA as a % of value-add revenue

15.0 %


5.5 %


15.3 %


7.9 %


11.1 %




8.5 %

 


Q3 2022 YTD


Global Segments






Motorparts


Performance
Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net sales and operating revenues

$     2,174


$     2,433


$     6,575


$     3,063


$   14,245


$             —


$   14,245

Less: Substrate sales



3,517



3,517



3,517

Value-add revenues

$     2,174


$     2,433


$     3,058


$     3,063


$   10,728


$             —


$   10,728















EBITDA

$        229


$          67


$        338


$        198


$        832


$         (182)


$        650

EBITDA as a % of revenue

10.5 %


2.8 %


5.1 %


6.5 %


5.8 %




4.6 %

EBITDA as a % of value-add revenue

10.5 %


2.8 %


11.1 %


6.5 %


7.8 %




6.1 %















Adjusted EBITDA

$        241


$          94


$        350


$        223


$        908


$         (142)


$        766

Adjusted EBITDA as a % of revenue

11.1 %


3.9 %


5.3 %


7.3 %


6.4 %




5.4 %

Adjusted EBITDA as a % of value-add revenue

11.1 %


3.9 %


11.4 %


7.3 %


8.5 %




7.1 %

 


Q3 2021 YTD


Global Segments






Motorparts


Performance
Solutions


Clean Air


Powertrain


Total


Corporate


Total

Net sales and operating revenues

$     2,282


$     2,188


$     6,084


$     3,092


$   13,646


$              —


$   13,646

Less: Substrate sales



3,208



3,208



3,208

Value-add revenues

$     2,282


$     2,188


$     2,876


$     3,092


$   10,438


$              —


$   10,438















EBITDA

$        280


$        117


$        430


$        280


$     1,107


$          (204)


$        903

EBITDA as a % of revenue

12.3 %


5.3 %


7.1 %


9.1 %


8.1 %




6.6 %

EBITDA as a % of value-add revenue

12.3 %


5.3 %


15.0 %


9.1 %


10.6 %




8.7 %















Adjusted EBITDA

$        338


$        127


$        440


$        302


$     1,207


$          (184)


$     1,023

Adjusted EBITDA as a % of revenue

14.8 %


5.8 %


7.2 %


9.8 %


8.8 %




7.5 %

Adjusted EBITDA as a % of value-add revenue

14.8 %


5.8 %


15.3 %


9.8 %


11.6 %




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) TO NON-GAAP REVENUE MEASURES(2)

Unaudited

(in millions, except percents)



Q3 2021
Value-add
Revenues


Currency


Volume, Mix
and Other


Q3 2022
Value-add
Revenues


% Change
increase
(decrease)
excluding
currency

Motorparts

$                 769


$                 (34)


$                 (12)


$                 723


(1.6) %

Performance Solutions

686


(54)


217


849


31.6 %

Clean Air

897


(55)


198


1,040


22.1 %

Powertrain

941


(71)


154


1,024


16.4 %

Total Tenneco Inc.

$              3,293


$               (214)


$                 557


$              3,636


16.9 %

 


Q3 2021 YTD
Value-add
Revenues


Currency


Volume, Mix
and Other


Q3 2022 YTD
Value-add
Revenues


% Change
increase
(decrease)
excluding
currency

Motorparts

$             2,282


$                 (73)


$                 (35)


$             2,174


(1.5) %

Performance Solutions

2,188


(122)


367


2,433


16.8 %

Clean Air

2,876


(119)


301


3,058


10.5 %

Powertrain

3,092


(174)


145


3,063


4.7 %

Total Tenneco Inc.

$           10,438


$               (488)


$                 778


$           10,728


7.5 %

 

(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

(in millions, except ratios)



September 30, 2022


September 30, 2021

Total debt

$             5,030


$              5,128

Total cash, cash equivalents and restricted cash (total cash)

423


595

Debt net of total cash balances (1)

$             4,607


$              4,533

Adjusted LTM EBITDA including noncontrolling interests (2) (3)

$             1,016


$              1,433

Net leverage ratio (4)

4.5x


3.2x

 


Q4 2021


Q1 2022


Q2 2022


Q3 2022


Q3 2022 LTM

Net income (loss) attributable to Tenneco Inc.

$               (35)


$               (38)


$             (121)


$               (44)


$             (238)

Net income (loss) attributable to noncontrolling interests

6


19


17


16


58

Net income (loss)

(29)


(19)


(104)


(28)


(180)

Income tax (expense) benefit

(60)


(30)


(43)


(67)


(200)

Interest expense

(69)


(66)


(76)


(90)


(301)

EBIT, Earnings (Loss) before interest expense, income taxes and noncontrolling interests

100


77


15


129


321

Depreciation and amortization

146


146


143


140


575

Total EBITDA including noncontrolling interests (2)

$               246


$               223


$               158


$               269


$               896











Adjustments:










Restructuring and related expenses

16


17


37


10


80

Anti-dumping duty charge




1


1

Inventory write-down (5)


4




4

Other costs (including strategic and transaction related)

2


4


12


17


35

Asset impairments

17


4




21

Loss on sale of unconsolidated affiliate

2



3


2


7

(Gain)/Loss on sale of assets or business

(31)


2




(29)

Other

(2)


(1)


2


2


1

Total Adjusted EBITDA including noncontrolling interests (3)

$               250


$               253


$               212


$               301


$           1,016

 


Q4 2020


Q1 2021


Q2 2021


Q3 2021


Q3 2021 LTM

Net income (loss) attributable to Tenneco Inc.

$               167


$                 65


$               (10)


$                 15


$               237

Net income (loss) attributable to noncontrolling interests

19


22


27


10


78

Net income (loss)

186


87


17


25


315

Income tax (expense) benefit

(6)


(47)


(41)


(34)


(128)

Interest expense

(68)


(70)


(69)


(66)


(273)

EBIT, Earnings (Loss) before interest expense, income taxes and noncontrolling interests

260


204


127


125


716

Depreciation and amortization

158


155


145


147


605

Total EBITDA including noncontrolling interests (2)

$               418


$               359


$               272


$               272


$           1,321











Adjustments:










Restructuring and related expenses

6


28


31



65

Inventory write-down (5)



44



44

Other costs (including strategic and transaction related)

1


8


5


2


16

Asset impairments



3


1


4

Loss on sale of unconsolidated affiliate



1


1


2

Antitrust reserve change in estimate (6)

(11)





(11)

Anti-dumping duty charge




3


3

(Gain)/Loss on sale of assets or business

(2)


1




(1)

Gain on extinguishment of debt

(2)


(8)




(10)

Total Adjusted EBITDA including noncontrolling interests (3)

$               410


$               388


$               356


$               279


$           1,433

 

(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 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) Net leverage ratio represents ratio of debt net of total cash balances to adjusted LTM EBITDA including noncontrolling interests. Tenneco presents the above reconciliation of the net leverage ratio 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. See the company's fourth quarter earnings release dated February 23, 2022 for the calculation of net leverage ratio as of December 31, 2021. 


(5) Non-cash charge to write-down inventory in the Motorparts segment in connection with its initiative to rationalize its supply chain and distribution network.


(6) Reduction in estimated antitrust accrual.

 

ATTACHMENT 2

TENNECO INC.

RECONCILIATION OF GAAP(1) TO NON-GAAP REVENUE MEASURES(2)

Unaudited

(in millions)



Q3 2022


Original equipment light
vehicle revenues


Original equipment
commercial truck, off-
highway, industrial and
other revenues


Aftermarket & original
equipment service
revenues


Total

Net sales and operating revenues

$                          3,111


$                             733


$                          1,087


$                          4,931

Less: Substrate sales

1,109


145


41


1,295

Value-add revenues

$                          2,002


$                             588


$                          1,046


$                          3,636










Q3 2021


Original equipment light
vehicle revenues


Original equipment
commercial truck, off-
highway, industrial and
other revenues


Aftermarket & original
equipment service
revenues


Total

Net sales and operating revenues

$                          2,439


$                             757


$                          1,136


$                          4,332

Less: Substrate sales

837


160


42


1,039

Value-add revenues

$                          1,602


$                             597


$                          1,094


$                          3,293

 


Q3 2022 YTD


Original equipment light
vehicle revenues


Original equipment
commercial truck, off-
highway, industrial and
other revenues


Aftermarket & original
equipment service
revenues


Total

Net sales and operating revenues

$                         8,690


$                         2,281


$                         3,274


$                       14,245

Less: Substrate sales

2,952


444


121


3,517

Value-add revenues

$                         5,738


$                         1,837


$                         3,153


$                       10,728






Q3 2021 YTD


Original equipment light
vehicle revenues


Original equipment
commercial truck, off-
highway, industrial and
other revenues


Aftermarket & original
equipment service
revenues


Total

Net sales and operating revenues

$                         7,945


$                         2,319


$                         3,382


$                       13,646

Less: Substrate sales

2,614


471


123


3,208

Value-add revenues

$                         5,331


$                         1,848


$                         3,259


$                       10,438

 


Q3 2021
Value-add
Revenues


Currency


Volume,
Mix and
Other


Q3 2022
Value-add
Revenues


% Change
increase
(decrease)
excluding
currency

Original equipment light vehicle revenues

$         1,602


$          (106)


$            506


$         2,002


31.6 %

Original equipment commercial truck, off-highway, industrial and other revenues

597


(39)


30


588


5.0 %

Aftermarket & original equipment service revenues

1,094


(69)


21


1,046


1.9 %

Total Tenneco Inc.

$         3,293


$          (214)


$            557


$         3,636


16.9 %

 


Q3 2021
YTD Value-
add
Revenues


Currency


Volume,
Mix and
Other


Q3 2022
YTD Value-
add Revenues


% Change
increase
(decrease)
excluding
currency

Original equipment light vehicle revenues

$         5,331


$          (249)


$            656


$         5,738


12.3 %

Original equipment commercial truck, off-highway, industrial and other revenues

1,848


(85)


74


1,837


4.0 %

Aftermarket & original equipment service revenues

3,259


(154)


48


3,153


1.5 %

Total Tenneco Inc.

$       10,438


$          (488)


$            778


$       10,728


7.5 %

 

(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 CASH FLOW MEASURES(2)

Unaudited

(in millions)



Q3 2022


Q3 2021

Cash from operations

$                             55


$                           (48)

Proceeds from deferred purchase price of factored receivables (1)

98


102

Capital expenditures

(82)


(101)

Payments to noncontrolling interest partners

(10)


(4)

Other investing and financing

(44)


6

Free cash flow for debt service (2) (Change in net debt)

$                             17


$                           (45)






Q3 2022 YTD


Q3 2021 YTD

Cash from operations

$                         (213)


$                           (25)

Proceeds from deferred purchase price of factored receivables (1)

310


356

Capital expenditures

(253)


(286)

Payments to noncontrolling interest partners

(97)


(12)

Other investing and financing

(144)


(36)

Free cash flow for debt service (2) (Change in net debt)

$                         (397)


$                             (3)

 

(1) U.S. Generally Accepted Accounting Principles requires reclassification of amount from Change in receivables in the Cash from operations section. 


(2) Tenneco presents the above reconciliation of cash flow from operation to Free Cash Flow for debt service. Free Cash Flow for debt service represents cash flow from operations, plus the proceeds from deferred purchase price of factored receivables less the amount of cash payments for property, plant and equipment and payments to noncontrolling interest partners, as well as various other amounts.  Free Cash Flow for debt service is not a GAAP calculation and should not be considered as an alternative to operating cash flows as a measure of liquidity. Tenneco has presented Free Cash Flow for debt service because it regularly reviews Free Cash Flow for debt service as a measure of the company's performance and ability to reduce net debt.  In addition, Tenneco believes its investors utilize and analyze the company's Free Cash Flow for debt service for similar purposes. However, the Free Cash Flow for debt service measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation. 

 

SOURCE Tenneco Inc.

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