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Tenneco Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 8, 2010 02:32PM

Tenneco Inc. (TEN) filed Quarterly Report for the period ended 2010-09-30. Tenneco Inc. has a market cap of $2.05 billion; its shares were traded at around $34.23 with a P/E ratio of 25.17 and P/S ratio of 0.44.

TEN is in the portfolios of Mario Gabelli of GAMCO Investors, Jim Simons of Renaissance Technologies LLC, Steven Cohen of SAC Capital Advisors, George Soros of Soros Fund Management LLC.

Highlight of Business Operations:

Total revenues for the third quarter of 2010 were $1,542 million, compared to $1,254 million in the third quarter of 2009. Excluding the impact of currency and substrate sales, revenue was up $202 million or 20 percent due to higher year-over-year OE vehicle production levels in all geographic regions and new platform launches. Stronger year-over-year aftermarket sales globally, in particular North America and South America, also contributed to the increase.

Selling, general and administrative expense was up $19 million in the third quarter of 2010, at $109 million, compared to $90 million in the third quarter of 2009. Higher performance-based compensation costs, the restoration of salary and benefit cuts which were in place in the third quarter of 2009, along with a charge related to an actuarial loss for a lump-sum pension payment drove the increase. This pension charge relates to a non-qualified pension plan in which one current and three former employees were participants. Lump-sum pension payments are required when participants retire or when they turn 55. One former employee turned 55 in the current year third quarter. Another former employee will turn 55 in the fourth quarter which will result in an additional $2 million charge at that time. Engineering expense was $30 million and $27 million in the third quarter of 2010 and 2009, respectively. The restoration of employee salary and benefit cuts which were in place in the third quarter of 2009 primarily drove the higher engineering costs year-over-year. Selling, general, administrative and engineering expenses decreased to 9.0 percent of revenues from 9.3 percent of revenues in 2009 due to higher year-over-year revenues.

Earnings before interest expense, taxes and noncontrolling interests (“EBIT”) was $67 million for the third quarter of 2010 compared to $35 million in the third quarter of 2009. Improved year-over-year OE production volumes in every geographic region, the related manufacturing efficiencies, lower restructuring and related expenses and higher aftermarket sales globally drove the increase to EBIT. Higher selling, general, administrative and engineering expenses and an unfavorable currency impact of $1 million partially offset the increase.

Total revenues for the first nine months of 2010 were $4,360 million, compared to $3,327 million for the first nine months of 2009. Excluding the impact of currency and substrate sales, revenue was up $753 million, from $2,656 million to $3,409 million, driven by higher year-over-year OE vehicle production levels in every geographic region, new platform launches and higher aftermarket volumes.

Selling, general and administrative expense was up $51 million in the first three quarters of 2010, at $307 million, compared to $256 million in the first three quarters of 2009. Increased changeover costs due to new aftermarket business in North America, higher performance-based compensation costs, a charge related to an actuarial loss for a lump-sum pension payment and the cost reduction efforts from the first three quarters of 2009, which included employee furloughs and salary and benefit cuts that were subsequently restored, drove the increase in expense year-over-year. The first nine months of 2009 included $1 million in restructuring and related expense. Engineering expense was $90 million and $72 million in the first three quarters of 2010 and 2009, respectively. Increased spending related to diesel aftertreatment technology development, higher performance-based compensation costs and the cost reduction efforts, including employee furloughs and salary and benefit cuts, in the first three quarters of 2009 drove the increase in expense year-over-year. Selling, general, administrative and

EBIT was $219 million for the first three quarters of 2010, up from $39 million in 2009. Higher OE production volumes globally and the related manufacturing efficiencies, higher aftermarket sales, decreased restructuring and related costs and $4 million of positive currency drove the year-over-year increase. Partially offsetting the increase was higher selling, general, administrative and engineering spending.

Read the The complete Report



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