Tenneco Automotive Inc. (ticker: TEN, exchange: New York Stock Exchange) News Release
May 23, 2005
TENNECO AUTOMOTIVE ANNOUNCES NEARLY $800 MILLION IN ANNUALIZED NEW OE BUSINESS
New Technology Including Electronic Suspension and Diesel After Treatment Systems Help Win New Contracts
LAKE FOREST, ILLINOIS, MAY 23, 2005 - Tenneco Automotive (NYSE: TEN) announced that the company has been awarded more than $400 million annualized in new contracts with major global OEM customers to supply advanced emission control and ride control products and systems. These five new contracts will launch in late 2006 and 2007. When combined with other recently announced new OE business, the total new OE business is expected to generate up to $800 million in annualized revenue.
Tenneco Automotive will supply two light vehicle OEMs in North America with diesel exhaust systems for various full size pick-up trucks and vans, and medium duty commercial truck models. The company also won a contract with a commercial vehicle OEM to supply full diesel exhaust systems for a medium duty diesel truck platform. The company was also named the full exhaust system supplier on a new generation of cross-over vehicles to be produced in North America. These four exhaust contracts are expected to generate about $400 million annually. Additionally, the company's ride control business secured another OEM contract to supply its Continuously Controlled Electronic Suspension (CES) technology on a European passenger vehicle platform. This platform is expected to generate $12 million annually.
"We continue to grow our original equipment book of business by leveraging our global engineering capabilities and advanced technologies," said Mark P. Frissora, chairman and CEO, Tenneco Automotive. "These significant new business wins further strengthen our position as a leading provider of diesel after treatment systems, and expand our electronic ride control share with leading luxury vehicle manufacturers in Europe."
In addition to these five new contracts, the company previously announced that it will supply exhaust systems for the Ford F-250 and F-350 Super-Duty gasoline and diesel trucks and exhaust components on the next-generation Toyota Tundra, both launching in 2006. The company had also previously announced that its CES suspension will be offered on the Audi A6 and the new A6 Avant, which is expected to launch in 2005.
Based on anticipated vehicle production levels and pricing, these eight new business awards are expected to generate total annualized revenue of approximately $800 million. Approximately 58% of the new business is pass-through sales, which includes sub-components provided by other manufacturers of chemical coatings and substrates.
Tenneco Automotive replaced competitors on these platforms, making all of this business new to the company. However, the estimated revenues are not necessarily incremental to the company's current OE book of business. The revenue from these new business awards and their impact on the OE book of business will depend on a number of other factors including changes in customer requirements, consumer preferences, price changes and currency fluctuations. In addition, the company's book of business will increase or decrease as a result of additional awards of new business and the termination of current platforms. The company will provide its 2007 book of business estimate when it reports its fourth quarter and full-year 2005 financial results in January 2006. In the interim, the company does not intend to update changes in the amount of revenue expected from these new awards that may result from the factors described above.
Tenneco Automotive was one of the first suppliers to offer both fuel-borne additive and catalyst-coated diesel particulate filter technologies in serial production. The company supplies diesel particulate filters to PSA, Mercedes Benz and Audi. The company has successfully leveraged its advanced diesel after treatment technologies from the light vehicle and truck segment into the medium and heavy-duty truck markets.
The company's CES suspension system is a semi-active suspension system that overrides the trade-off between comfort and handling. It continuously adjusts damping levels according to road conditions and vehicle dynamics, such as speed, tuning and cornering as well as driver inputs.
Tenneco Automotive is a $4.2 billion manufacturing company with headquarters in Lake Forest, Illinois and approximately 18,400 employees worldwide. Tenneco Automotive is one of the world's largest designers, manufacturers and marketers of emission control and ride control products and systems for the automotive original equipment market and the aftermarket. Tenneco Automotive markets its products principally under the Monroe®, Walker®, Gillet® and Clevite® Elastomer brand names. Among its products are Sensa-Trac® and Monroe Reflex® shocks and struts, Rancho® shock absorbers, Walker® Quiet-Flow® mufflers, Dynomax® performance exhaust products, and Clevite® Elastomer noise, vibration and harshness control components.
This press release contains forward-looking statements. Words such as "expect," "will," "continue" 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) changes in automotive manufacturers' production rates and their actual and forecasted requirements for the company's products; (ii) the overall highly competitive nature of the automotive parts industry; (iii) the company's ability to realize the sales represented by its awarded book of business which is based on anticipated pricing for the programs over their lives, and is subject to increases or decreases due to changes in customer requirements, customer and consumer preferences and the number of vehicles actually produced by our customers; (iv) the cyclical nature of automotive production and sales of automobiles; (v) the general political, economic and competitive conditions in markets where the company and its subsidiaries operate; (vi) workforce factors such as strikes or labor interruptions; (vii) material substitutions and increases in the costs of raw materials; (viii) the company's ability to develop and profitably commercialize new products and technologies, and the acceptance of such new products and technologies by the company's customers; and (ix) 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. These and other factors are described in more detail in the company's filings with the Securities and Exchange Commission, including in its Annual Report on Form 10-K. The company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release.
Tenneco Automotive, Media Relations
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Tenneco Automotive, Investor Relations