Auto Service World
News   April 23, 2002   by Auto Service World

Things Looking Up at Tenneco, but Loss Still Registered


Tenneco Automotive announced today that the company’s first quarter 2002 performance improved significantly versus one year ago with a reported net loss of $2 million, or 5-cents per share, for the first quarter of 2002, compared with a net loss of $31 million, or 84-cents per share, in the first quarter of 2001.
More importantly, says the company, it generated $14 million in positive cash flow, before financing activities, which was a $73 million cash flow improvement versus first quarter 2001. All figures in U.S. dollars. The company also reduced its net debt by $11 million at quarter-end.
“We are pleased with an improved first quarter and particularly with our momentum in North America as well as our continued success in effectively managing cash,” said Mark P. Frissora, chairman and CEO, Tenneco Automotive. “We continue to make steady progress on our key objectives of improving gross margins, reducing working capital, and operating more efficiently, which is reflected in our improving performance.
“We are encouraged by our North American aftermarket performance and the results we are seeing this quarter from expanding our customer base and leveraging our premium products,” Frissora said. “In addition, our lean initiatives and Six Sigma in the North American original equipment business drove improved profitability.”
North American original equipment revenue increased 5 percent during the quarter to $341 million versus $324 million in the first quarter of 2001. Excluding catalytic converter pass-through sales, revenue decreased 1 percent.
North American aftermarket revenue increased 14 percent to $126 million from $111 million one year ago. North American EBIT increased to $19 million from a loss of $3 million in the first quarter of 2001.
EBIT improvement was driven by stronger aftermarket performance and lower manufacturing and overhead costs. First quarter 2001 EBIT included $8 million in restructuring charges and $1 million in environmental charges.
Overall, the company reported revenue of $809 million for the quarter, down 6 percent versus $864 million in the first quarter of 2001. EBITDA for the quarter was $61 million, compared with $43 million the previous year, a 42 percent improvement. Year-over-year, working capital performance improved by $184 million and capital spending was $2 million lower.
The first quarter 2002 results include a pre-tax non-accruable restructuring expense of $1 million (1-cent per share), pre-tax charges associated with the company’s renegotiation of its senior debt agreements of $2 million (3-cents per share) and income from a tax benefit of $4 million (10-cents per share).
In addition, the company incurred higher incremental aftermarket changeover costs of $5 million (7-cents per share) in the first quarter of 2002 related to acquiring significant new aftermarket business. The first quarter 2001 results included pre-tax restructuring charges of $12 million (23-cents per share), pre-tax environmental charges of $6 million (12-cents per share) and $2 million in charges associated with the company’s renegotiation of its senior debt agreements (5-cents per share).


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