Tenneco announced preliminary revenue for the fourth quarter and full year 2018 and provided 2019 revenue guidance.
The company also announced that in the near future it will reschedule the date of its previously announced earnings release and teleconference for the fourth quarter and full year 2018 to allow it sufficient time to complete the first year-end closing process for the combined company.
Total revenue in the fourth quarter was $4.3 billion, up 79% year-over-year, driven mainly by the completion of the Federal-Mogul acquisition on October 1, 2018. Excluding the acquisition and on a constant currency basis, revenue increased 4%, outpacing light vehicle industry production* by 10 percentage points. The outperformance was driven by volume and content growth with commercial truck and off-highway as well as light vehicle customers. Value-add revenue was $3.6 billion, up 100% compared to last year including Federal-Mogul results.
All figures in USD.
For the full year, total revenue was $11.8 billion, including Federal-Mogul revenues since October 1. Excluding the acquisition and the impact of currency exchange rates, Tenneco delivered full-year organic revenue growth of 6%, outpacing industry production* by 7 percentage points, driven by 24% growth in commercial truck and off-highway and 5% light vehicle growth versus last year. Value-add revenue was $9.3 billion, up 31% compared to last year including Federal-Mogul results. The company anticipates that 2018 adjusted earnings will be near the low end of the guidance range previously provided for the fourth quarter.
During the year-end closing process for the newly combined business, a difference was identified through the alignment of the combined company’s accounting practices. This practice relates to determining the appropriate capitalization and/or classification of certain expenses within the income statement. In this respect, the company is taking more time to complete its first combined year-end financial statements. The company currently believes that any changes related to this practice will not be material to earnings or cash flow in any reporting period; however, the cumulative effect may require some revision to prior period results.
“Tenneco’s organic growth continued in the fourth quarter, outpacing industry production by ten percentage points, supported by the strength of our diverse business profile in terms of products, geographic regions and end-markets served,” said Brian Kesseler, Tenneco co-CEO. “We closed the Federal-Mogul transaction, accelerating the transformation of the combined businesses into two purpose-built, industry leading companies, and our acquisition of Öhlins Racing will fuel the growth of advanced suspension technology and enhance our portfolio in broader mobility markets.”
On a pro forma basis, the company expects 2019 constant dollar revenue growth in the range of 4% to 5%, outpacing light vehicle industry production* by 6 to 7 percentage points. Global light vehicle production* is forecast to be down 2% in 2019.
“Our global teams are executing well against the integration plans,” said Roger Wood, Tenneco co-CEO. “In 2019, we expect continued revenue growth that outpaces global industry production, powered by diverse and sustainable growth drivers across our business.”
*Source: IHS Markit February 2019 global light vehicle production forecast and Tenneco estimates.