Tenneco Beats Q3 Earnings Yet Down on Lukewarm Q4 View
Tenneco Inc.’s (TEN) shares have lost 5.7% in the last four trading sessions after the company revealed lukewarm guidance for the fourth quarter along with its third-quarter 2014 financial results. The company reported adjusted earnings per share of $1.25 in the quarter, which beat the Zacks Consensus Estimate of $1.08. Earnings per share improved 26.3% from 99 cents in the third quarter of 2013.
Tenneco Inc - Earnings Surprise | FindTheBest
Adjusted net income increased 25.8% to $78 million from $62 million a year ago. On a reported basis, Tenneco’s net income came in at $78 million or $1.27 per share compared with $12 million or 19 cents per share in the year-ago quarter. The reported net income includes restructuring expenses and tax adjustments in both quarters as well as bad debt charge in the reported quarter.
Revenues increased 6% year on year to $2.08 billion, marginally missing the Zacks Consensus Estimate of $2.10 billion. The improvement can be attributed to higher revenues from both segments.
Revenues benefited from a 6% hike in OE light vehicle revenues and a 15% increase in commercial truck and off-highway OE revenues, while the global aftermarket revenues were flat year over year.
Adjusted EBIT (earnings before interest, taxes and non-controlling interests) grew 17% to $152 million from $130 million a year ago. Adjusted EBIT benefited from a 6% increase in adjusted EBIT at the Clean Air Division and a 16% improvement in adjusted EBIT at the Ride Performance Division. Meanwhile, adjusted EBIT margin improved to 7.3% from 6.6% a year ago.
Segment Results
Revenues from the Clean Air Division improved 8% to $1.43 billion from $1.33 billion a year ago. Adjusted EBIT augmented 6% to $102 million from $96 million a year ago.
Revenues from the Ride Performance Division rose 2% to $650 million from $635 million a year ago. Adjusted EBIT grew 16% to $64 million from $55 million.
Financial Position
Tenneco had cash and cash equivalents of $275 million as of Sep 30, 2014, at par with Dec 31, 2013. Total debt stood at $1.3 billion as of Sep 31, 2014 compared with $1.1 billion as of Dec 31, 2013.
In the first nine months of 2014, the company generated cash flow from operating activities of $89 million, down from $91 million in the year-ago period. Capital expenditures for the period totaled $262 million as against $178 million in the year-ago quarter.
Outlook
Based on IHS Automotive forecasts, Tenneco expects global light vehicle production to increase 3% in the fourth quarter of 2014, with a 4% rise in North America, 6% increase in China and 10% growth in India. Light vehicle production is predicted to decline 9% in South America and 1% in Europe.
Tenneco expects its light vehicle revenues in the fourth quarter to be in line with or slightly higher than the prior-year quarter. Also, the company expects revenues from commercial truck and off-highway customers as well as light vehicle unit volumes in the fourth quarter to increase year over year.
Tenneco retains a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include Toyota Motor Corporation (TM), Tata Motors Limited (TTM) and Gentex Corp. (GNTX), all of which sport a Zacks Rank #1 (Strong Buy).
Read the Full Research Report on TM
Read the Full Research Report on TEN
Read the Full Research Report on TTM
Read the Full Research Report on GNTX
Zacks Investment Research
