Tenneco Inc. (ticker: TEN, exchange: New York Stock Exchange)
March 2, 2020
TENNECO PROVIDES UPDATE TO CERTAIN FOURTH QUARTER AND FULL YEAR 2019 RESULTS
LAKE FOREST, Ill. – March 2, 2020 – Tenneco Inc. (NYSE: TEN) (the “Company”) today announced that, in conjunction with the completion of the Company’s financial statements for the year ended December 31, 2019, it is updating certain fourth quarter and full year 2019 results. This update reconciles the fourth quarter and full year 2019 financial results disclosed and discussed on February 20, 2020 (see table below). Specifically, an adjustment to inventory primarily within one distribution center related to the legacy Federal-Mogul North America Motorparts business resulted in a reduction to pre-tax income of $27 million, or a $20 million impact to net income, for fourth quarter 2019. This adjustment encompassed manual processes that have largely been automated over the past year.
The Company determined that the impact of the adjustment was not material to any prior periods in 2019 and as such concluded that it was appropriate to record the aggregate amount of the expense in the fourth quarter of 2019. The amount of the adjustment relating to previous quarters would have been approximately evenly distributed among all four quarters had the Company determined it was necessary to revise the prior quarterly results.
The Company believes that this adjustment will not materially impact its 2020 first quarter and full year outlook provided on February 20, 2020.
During 2019, the continued integration of the Federal-Mogul acquisition increased the complexity and level of certain financial reporting activities within the North America Motorparts business, without a corresponding change in centralized resource levels. The Company concluded that it has a material weakness in its internal control over financial reporting resulting from a lack of incremental resources in its North America Motorparts business. To address this issue, management is implementing various remediation steps, including, adding additional accounting resources and improving its execution of and oversight over internal controls.
Full Year 2019 Reconciliation
The table below reconciles the financial results disclosed in a February 20, 2020 press release announcing the Company’s financial results for the fourth quarter and full year ended December 31, 2019 to the final results that will be filed today in the Company’s 10-K.
Click here to download the release and the attachments listed below.
Statements of Income – 3 Months
Statements of Income – 12 Months
Statements of Cash Flows – 3 Months
Statements of Cash Flows – 12 Months
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 GAAP Revenue to Non-GAAP Revenue Measures – 3 Months and 12 Months
Reconciliation of Non-GAAP Measures – Debt Net of Cash/Adjusted LTM and pro forma adjusted LTM EBITDA including noncontrolling interests
Reconciliation of GAAP Revenue to Non-GAAP Revenue Measures – Original Equipment and Aftermarket Revenue – 3 Months 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 – quarterly and annual
Reconciliation of GAAP Revenue to pro forma Revenue and Non-GAAP Earnings Measures – 2018 quarterly
Reconciliation of GAAP Revenue to pro forma Revenue and Non-GAAP Earnings Measures – 2018
and 2017 annual
Division Level Full Year 2020 Outlook
Headquartered in Lake Forest, Illinois, Tenneco is one of the world's leading designers, manufacturers and marketers of Aftermarket, Ride Performance, Clean Air and Powertrain products and technology solutions for diversified markets, including light vehicle, commercial truck, off-highway, industrial and the aftermarket, with 2019 revenues of $17.45 billion and approximately 78,000 employees worldwide. On October 1, 2018, Tenneco completed the acquisition of Federal-Mogul, a leading global supplier to original equipment ("OE") manufacturers and the aftermarket. Additionally, the company expects to separate its businesses to form two new, independent companies, an Aftermarket and Ride Performance company as well as a new Powertrain Technology company.
About DRiV™ - the future Aftermarket and Ride Performance Company
Following the separation, DRiV will be one of the largest global multi-line, multi-brand aftermarket companies, and one of the largest global OE ride performance and braking companies. DRiV's principal product brands will feature Monroe®, Öhlins®, Walker®, Clevite®Elastomers, MOOG®, Fel-Pro®, Wagner®, Ferodo®, Champion® and others. DRiV would have 2019 revenues of $5.9 billion, with 53% of those revenues from aftermarket and 47% from original equipment customers.
About the new Tenneco - the future Powertrain Technology Company
Following the separation, the new Tenneco will be one of the world's largest pure-play powertrain companies serving OE markets worldwide with engineered solutions addressing fuel economy, power output, and criteria pollution requirements for gasoline, diesel and electrified powertrains. The new Tenneco would have 2019 revenues of $11.5 billion, serving light vehicle, commercial truck, off-highway and industrial markets.
This release contains forward-looking statements. These forward-looking statements include, among others, statements relating to our strategies and plans to separate into two independent public companies. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to materially differ from those described in the forward-looking statements, including the possibility that Tenneco may not complete the separation of the Aftermarket & Ride Performance business from the Powertrain Technology business (or achieve some or all of the anticipated benefits of such a separation); the possibility that the separation may have an adverse impact on existing arrangements with Tenneco, including those related to transition, manufacturing and supply services and tax matters; the ability to retain and hire key personnel and maintain relationships with customers, suppliers or other business partners; the risk that the benefits of the separation may not be fully realized or may take longer to realize than expected; the risk that the separation may not advance Tenneco's business strategy; the potential diversion of Tenneco management's attention resulting from the separation; as well as the risk factors and cautionary statements included in Tenneco's periodic and current reports (Forms 10-K, 10-Q and 8-K) filed from time to time with the SEC. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Unless otherwise indicated, the forward-looking statements in this release are made as of the date of this communication, and, except as required by law, Tenneco does not undertake any obligation, and disclaims any obligation, to publicly disclose revisions or updates to any forward-looking statements. 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, 2018 and Form 10-Q for the quarter ended September 30, 2019.