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Tenneco's (TEN) CEO Gregg Sherrill on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Earnings Conference Call

April 26, 2016 09:00 AM ET

Executives

Linae Golla - IR

Gregg Sherrill - CEO

Ken Trammell - CFO

Brian Kesseler - COO

Analysts

Brian Johnson - Barclays

Colin Langan - UBS

Ryan Brinkman - JPMC

Pat Archambault - Goldman Sachs

Patrick Nolan - Deutsche Bank

Rich Kwas - Wells Fargo

Matt Stover - SIG

Brett Hoselton - KeyBanc

Joe Spak - RBC Capital Markets

Richard Hilgert - Morningstar

Operator

Good morning and welcome to Tenneco's First Quarter 2016 Earnings Release Conference Call. Today's conference is being recorded. [Operator Instructions].

Now I'd like to turn the call over to Ms. Linae Golla, Executive Director, Investor Relations. Thank you. You may begin.

Linae Golla

Good morning and welcome. This morning we released our earnings and related financial information. On our call today, Gregg Sherrill, Chairman and CEO; Brian Kesseler, Chief Operating Officer and Ken Trammell, Chief Financial Officer will take you through our first quarter results. The slides related to our prepared comments are available on the investor section of our Web site. After our comments, we will open up the call for questions.

So before we begin, I need to tell you that our discussion today will include information on non-GAAP financial measures, all of which are reconciled with GAAP measures in our press release attachment. The earnings release and attachments can be found on our Web site.

Additionally, some of our comments today will include forward-looking statements. Please keep in mind that our actual results could differ materially from those projected in any of our forward-looking statements.

And, with that, I will turn the call over to Gregg.

Gregg Sherrill

Thank you, Linae, and good morning, everyone. As I said last quarter, we came out of 2015 with strong momentum and our goal was to carry that momentum into 2016 with a positive outlook for the year. Clearly we're off to a great start with results we announced this morning. We improved on all metrics with revenue growth and margin improvement helping drive our highest ever first quarter net income and earnings per share. The numbers, all first quarter records are outstanding, we delivered a 9% increase in revenue and a 20% increase in adjusted EBIT excluding currency, an increase of 50 basis points and adjusted value add EBIT margin, a 24% increase in adjusted net income and a 33% increase in earnings per share and a 42% improvement in our operating cash performance. With these results, there is no doubt that our strategies are working and each quarter we're consistently building on a strong track record a solid execution, profitable growth and value creation.

The foundation of our success and our path forward for continued growth remains unchanged. We continue to execute on opportunities in both product lines driven by our four structural growth drivers. The first is the strength of our position on light vehicle platforms globally excluding currency light vehicle revenue increased 11% in the first quarter outpacing industry production growth of 1%. Second is the global mission regulatory landscape where we're benefiting from content growth online on light vehicle platforms and commercial truck and off-highway program to meet new regulations. Excluding currency our first quarter commercial truck and off-highway clear air revenue was up 8% or 15% on a value-add basis despite flat production in these markets. The third growth driver is increasing demand for electronics suspension systems which also contributed to growth this quarter as we continued to launch and ramp up new programs with Tenneco's Monroe Intelligent Suspension Technologies.

And last the growing demand for our aftermarket products is the fourth revenue driver. The global aftermarket had a strong first quarter with revenue excluding currency up 8%. This included positive contributions from North America, Europe and South America. Before I get into more detail on our results, I also want to reinforce one of Tenneco's underlying strength and that's the balance we have across many dimensions. We have multiple product lines, run a variety of platforms with a broad base of customers. We serve different end markets and have operations around the world. Our results are not dependent on any one customer end market or region which had been advantaged in serving cyclical markets and this balance helps mitigate the impact from market risks due to macroeconomic or political issue that we don't control. Again an underlying strength of our business with a positive effect on our results.