Tenneco (TEN) Q3 Earnings & Revenues Beat Estimates, Up Y/Y

Tenneco Inc. TEN reported third-quarter 2017 results, wherein adjusted earnings per share came in at $1.67, surpassing the Zacks Consensus Estimate of $1.59. The company’s bottom line also improved from the prior-year quarter’s figure of $1.53.

Tenneco’s adjusted net income in the third quarter was $88 million, whereas third-quarter 2016 net income was $85 million.

The company recorded quarterly revenues of $2.27 billion, beating the Zacks Consensus Estimate of $2.23 billion. The year-over-year improvement in the top line was aided by strong revenues at both the Clean Air and Ride Performance product lines.

Tenneco Inc. Price, Consensus and EPS Surprise

 

Tenneco Inc. Price, Consensus and EPS Surprise | Tenneco Inc. Quote

Global aftermarket revenues were slightly lower on a year-over-year basis. Commercial truck and off-highway revenues witnessed double-digit growth.

Adjusted EBIT (earnings before interest, taxes and non-controlling interests) plunged to $154 million during the reported quarter from $157 million a year-ago. The EBIT results indicate higher commercial truck and off-highway revenues plus operational cost improvements and ramping up of light vehicle programs, which are offset by steel price changes.

Segment Results

Revenues from the Clean Air division increased 5% to $1.6 billion during the quarter. Adjusted EBIT decreased to $107 million from $110 million in the prior-year quarter.

Revenues from the Ride Performance division rose 8% to $702 million. Adjusted EBIT decreased to $46 million from $62 million in the year-ago quarter.

Financial Position

Tenneco had cash and cash equivalents of $277 million as of Sep 30, 2017, down from $347 million as of Dec 31, 2016. Long-term debt was $1.6 billion as of Sep 30, 2017 compared with $1.3 billion as of Dec 31, 2016.

Share Repurchase

In third-quarter 2017, the company bought back 1.3 million shares for $71 million.

Outlook

For the fourth quarter, the company expects total revenue to improve about 3% year over year on a constant currency basis.

Management expects to witness continued strong double-digit growth in commercial truck and off-highway revenues, light vehicle sales on par with the industry and also estimates a steady contribution from the global aftermarket.

Also, for the fourth quarter, it expects value-added adjusted EBIT margin to remain unchanged from the prior-year quarter.

For fiscal 2017, total revenue is expected to improve about 6% year over year on a constant currency basis.

Zacks Rank & Key Picks

Currently, Tenneco has a Zacks Rank #3 (Hold).

Some better-ranked companies in the auto space include Daimler AG DDAIF, BorgWarner Inc. BWA and Autoliv, Inc. ALV, each stock carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Daimler has an expected long-term growth rate of 2.8%.

BorgWarner has an expected long-term growth rate of 8.9%.

Autoliv has an expected long-term growth rate of 8.7%.

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