Tenneco Automotive reported a net loss of $31 million U.S., or 84 cents per diluted share, for the first quarter of 2001.
These results include pre-tax restructuring charges of $12 million (23 cents per share), pre-tax environmental charges of $6 million (12 cents per share), and pre-tax charges associated with the company’s re-negotiation of its senior debt agreements of$2 million (5 cents per share). The company reported a net loss of $16 million, or 44 cents per diluted share, for the first quarter of 2001, before restructuring charges and other unusual charges, compared to net income of $1 million, or 3 cents per diluted share, for the first quarter of 2000. All values in U.S. dollars.
The company’s revenue and profitability continue to be affected by downturns in North American light vehicle and heavy-duty truck production as well as the depressed global aftermarket, despite strong performances during the quarter by its European original equipment and rest of world operations.
Revenue for the quarter was $864 million versus $878 million in the first quarter of 2000. EBITDA for the quarter, excluding restructuring and other unusual charges, was $63 million compared with $86 million the previous year, a 27% decline. The company reported that cash flow from operations during the quarter, while negative, did not decline as much as the decline in EBITDA. At quarter end, working capital, before factored receivables, improved by $100 million compared to the first quarter 2000, as the company enhanced its receivables performance by three days and shrunk inventory levels by six days. A $9 million decrease in capital spending and lower taxes also contributed to this cash flow improvement.
Additionally, the company reduced its SGA&E expense by $18 million year-over-year, as a result of previously announced restructuring initiatives.
“We continue to focus on the key areas that we can control –manufacturing costs, SGA&E, discretionary spending, and working capital — in order to meet the immediate challenges caused by the difficult industry conditions,” said Mark Frissora, chairman and CEO, Tenneco Automotive.
“We are by no means satisfied with our results,” Frissora said. “However, we are encouraged by progress we’ve made in reducing our overhead costs and spending, and our entire organization is determined to make additional improvement in these areas in the second quarter and throughout 2001.”
The company reported the following geographical results before restructuring and other unusual charges:
North American original equipment revenue declined 15% during the quarter to $324 million versus $382 million in the first quarter of 2000.North American aftermarket revenue decreased 13% to $111 million from$128 million in the previous year. North American EBIT declined to $6 million versus $34 million in the first quarter of 2000.
EBIT was primarily impacted by lower revenues, including a significant downturn in the high margin heavy-duty elastomer business. Operating inefficiencies and aftermarket bad debt expense also contributed to the decline.
Driven by increased original equipment exhaust volumes, European original equipment revenue increased 36% to $275 million compared to$202 million in the previous year. European aftermarket revenue declined 20% to $74 million versus $92 million in first quarter of 2000. European EBIT increased 33% to $16 million for the quarter. This increase was driven primarily by operational improvements in the European original equipment exhaust business.
REST OF WORLD
The company’s Australian operations reported a 10% revenue decline from $29 million to $26 million; however, revenue would have increased 5% if currency exchange rates had been the same in the first quarter of 2000 as in the first quarter of 2001. The launch of new original equipment programs in South America fueled a 9% increase in revenue to $36 million, from $33 million in 2000. Revenue from Asian operations grew 64% to $18 million from$11 million in the first quarter of 2000, driven by production from the company’s new facility in Shanghai and aftermarket volumes. Combined EBIT for South America, Australia, and Asia was $4 million compared to $2 million in the previous year, primarily the result of volume increases.
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