Tenneco's (TEN) Q2 Loss Narrower Than Expected, Revenues Down

Tenneco Inc. TEN posted adjusted loss per share of $2.15 in second-quarter 2020, narrower than the Zacks Consensus Estimate of loss of $3.52. Higher-than-anticipated revenues from the Clean Air, Powertrain and Ride Performance segments resulted in the narrower-than-expectedloss.

However, the bottom-line figure compares unfavorably with the year-ago quarter’s earnings of $1.20 due to lower revenue generation across all of the company’s segments.

The OEM auto supplier recorded revenues of $2,637 million in the reported quarter, beating the Zacks Consensus Estimate of $2,211 million. The top-line figure, however, declined from the $4,504 million recorded in second-quarter 2019.Decline in light-vehicle production due to the coronavirus crisis hurt revenues.

Tenneco Inc. Price, Consensus and EPS Surprise

Tenneco Inc. Price, Consensus and EPS Surprise

Tenneco Inc. price-consensus-eps-surprise-chart | Tenneco Inc. Quote

Segmental Highlights

The Clean Air division’s revenues were $1,140 million compared with the year-earlier figure of $1,827 million. The figure, however, surpassed the Zacks Consensus Estimate of $862 million. Adjusted EBITDA totaled $38 million in the quarter, down from the year-ago quarter’s $168 million.

Revenues in the Ride Performance division came in at $336 million compared with the $709 million recorded in the year-ago quarter. The reported figure, however, outpaced the Zacks Consensus Estimate of $294 million. Negative adjusted EBITDA totaled $41 million in the June-end quarter, down from positive adjusted EBITDA of $50 million witnessed in the prior-year quarter.

The Powertrain division’s revenues summed $602 million, down from the $1,133 million recorded in the corresponding quarter of 2019. The revenue figure, however, beat the Zacks Consensus Estimate of $486 million. Negative adjusted EBITDA totaled $21 million in the reported quarter, down from the year-ago quarter’s positive adjusted EBITDA of $118 million.

The Motor parts division’s revenues came in at $559 million, slumping from the $835 million generated in second-quarter 2019. The figure also missed the Zacks Consensus Estimate of $566 million. Adjusted EBITDA totaled $71 million in the April-June quarter, down 43.7% year over year.

Financial Position

Tenneco had cash and cash equivalents of $1,362 million as of Jun 30, 2020, compared with $564 million as of Dec 31, 2019. Long-term debt was $6,629 million, up from $5,371 million as of Dec 31, 2019.

Outlook

Tenneco suspended the 2020 guidance as it expects the pandemic’s crippling impact to strain its operations in the days to come.

Tenneco expects sales to be up substantially in the third quarter compared with the second. However, sales will likely decline year on year. The organization also expects the benefit of incremental structural cost savings and continued capital management to result in sequential growth in cash from operations through the second half of 2020.

Zacks Rank & Stocks to Consider

Tenneco currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the auto sector include Sonic Automotive Inc. SAH, AutoNation AN and LCI Industries LCII, each sporting a Zacks Rank of 1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Sonic Automotive have appreciated 43.4%, year to date, compared with the industry’s rise of 24%.

Shares of AutoNation have rallied 10.4%, year to date, compared with the industry’s gain of 24.1%.

Shares of LCI Industries have appreciated 37.9%, year to date, as against the industry’s decline of 4.9%.

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