9 feb. 2018 / Tenneco reported fourth quarter net income of $68 million, or $1.33 per diluted share. Fourth quarter 2016 net income* was $38 million, or $0.69 per diluted share. Adjusted net income rose to a record $97 million, or $1.89 per diluted share, versus $90 million or $1.63 per diluted share last year*.
Fourth quarter results revenue
Total revenue in the fourth quarter was a record $2.391 billion, up 11% year-over-year, with increases in both the Clean Air and Ride Performance product lines. On a constant currency basis, total revenue increased 7% driven by higher volumes and incremental content on light vehicle, commercial truck and off-highway applications.
In constant currency, value-add revenue grew 7% versus last year to $1.748 billion, with Ride Performance increasing 9% and Clean Air up 5%. Tenneco’s value-add revenue growth outpaced underlying industry production growth in all OE applications. Global aftermarket revenue was slightly higher versus a year ago.
“We delivered a quarter of strong organic growth with gains in both product lines and double-digit growth in commercial truck and off-highway revenue,” said Brian Kesseler, Tenneco CEO. “We continue to focus on converting top-line growth into higher earnings. This drove a strong increase in earnings, as well as record cash flow from operations in the quarter”.
EBIT and EBIT margin*
Fourth quarter EBIT (earnings before interest, taxes and noncontrolling interests) was $135 million, versus $71 million a year ago. Adjusted EBIT increased 10% to $168 million compared with $153 million last year, driven by revenue gains in all end-market applications.
In the fourth quarter 2017, Tenneco EBIT as a percent of revenue was 5.6%, and adjusted EBIT as a percent of value-add revenue was 9.3%, in line with prior year.
Cash generated by operations in the quarter was $466 million, up 86% versus $251 million last year. The cash performance in the quarter was driven by higher earnings and improved working capital management and included $107 million from an additional accounts receivable securitization program established in the fourth quarter.
During the quarter, the company returned $51 million to shareholders, including the repurchase of approximately 627,000 shares of common stock for $38 million, and a dividend payment of 25-cents per share, for $13 million.
For the full year, total revenue was a record high $9.274 billion. In constant currency, total revenue and value-add revenue each increased 7% to $9.188 billion and $7.018 billion, respectively, significantly outpacing industry production growth. Tenneco’s revenue growth was driven by stronger volumes and higher content on light vehicle, commercial truck and off-highway applications in all regions.
EBIT and EBIT margin*
Full-year EBIT was $417 million, versus $516 million a year ago. Adjusted EBIT rose 4% to $647 million.
EBIT as a percent of revenue was 4.5%. Adjusted EBIT as a percent of value-add revenue was 9.1%.
EBIT was impacted primarily by charges for restructuring and related costs and an antitrust settlement accrual.
Cash generated by operations for the full year improved 30% to $629 million, compared with $484 million last year.
In 2017, Tenneco returned $222 million to shareholders, including the repurchase of approximately 2.9 million shares of common stock for $169 million, and dividend payments of $53 million.
OUTLOOK: First quarter 2018
Tenneco expects constant dollar total revenue growth of 3% in the first quarter 2018, outpacing a flat** light vehicle industry production growth forecast. The company expects organic growth to outpace the industry with revenues driven by the ramp up of recently launched programs and Tenneco’s strong position on light vehicle platforms globally, double-digit year-over-year growth in commercial truck and off-highway revenues and a solid contribution from the global aftermarket.
*Year-over-year earnings comparisons reflect revisions to prior period financial results for certain immaterial adjustments as described in Tenneco’s form 10K/A for the year ended December 31, 2016.