Analyst Note| Richard Hilgert |
No-moat-rated Tenneco reported first quarter adjusted earnings per share (EPS) of $1.09, blowing past the $0.66 FactSet consensus EPS estimate by $0.43. Value-added (VA) revenue (excludes pass-through catalytic converter) increased 16% to $3.6 billion from $3.1 billion last year. Excluding currency, organic VA revenue rose 13% on COVID-19 recovery in China and strong commercial truck, off-highway, and industrial markets. Adjusted EBITDA was $388 million, up 62.3% from $239 million reported a year ago. Margin to VA revenue expanded 310 basis points to 10.7% on higher volume and the company’s turnaround program. Quarter-end liquidity was healthy at $2.1 billion, including $626 million in cash and $1.5 billion available revolver. Due to operating results, lower capital expenditures, and despite an unfavorable $167 million working capital swing on higher business activity, first quarter seasonal cash usage improved to $95 million from $137 million.