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Tenneco (TEN) Up 7.7% Since Q4 Earnings Beat, Rosy '21 View

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Tenneco Inc.’s (TEN - Free Report) shares rose 7.7% following solid quarterly results released by the firm on Feb 24, before the opening bell. The Illinois-based auto supplier not just delivered a comprehensive beat but also posted higher year-over-year earnings and sales. Upbeat revenue and EBITDA projections provided by the company are cheered by investors.

In the light of improving demand across all segments and operational efficiency on the back of the firm’s Accelerate+ program, Tenneco expects 2021 adjusted EBITDA in the band of $1.3-$1.4 billion, implying an uptick from $1,045 million registered in 2020. Full-year revenues are envisioned within $17.2-$17.8 billion, indicating a year-over-year rise of 13.6% at the midpoint of the guided range. The firm anticipates net debt to decline to $4.2 billion at 2021-end from $4.5 billion recorded as of Dec 31, 2020.

Q4 Earnings Snapshot

Tenneco reported adjusted earnings of $1.68 per share for fourth-quarter 2020, surpassing the Zacks Consensus Estimate of $1.02 and improving from the year-ago figure of 28 cents. Higher-than-expected revenues across all segments led to the outperformance.

Revenues of $4,650 million topped the Zacks Consensus Estimate of $4,321 million and increased 12.2% year over year. Adjusted EBITDA for the December-end quarter came in at $410 million, surging 42.8% from the comparable year-ago period driven by strong operating performance, and enhanced contribution from structural and temporary cost savings.

Segmental Highlights

For the October-December period, the Clean Air division’s revenues summed $2,117 million, higher than the year-ago figure of $1,743 million. The metric also beat the Zacks Consensus Estimate of $1,884 million. Adjusted EBITDA totaled $160 million for the quarter, up from the year-ago quarter’s $142 million.

For the fourth quarter, revenues in the Ride Performance division came in at $683 million, increasing from $641 million recorded in the year-earlier period and surpassing the consensus mark of $616 million. Adjusted EBITDA totaled $29 million in the December-end quarter, declining from $34 million witnessed in the prior-year quarter.

The Powertrain division’s revenues amounted to $1,120 million for fourth-quarter 2020, rising 10% year over year and outpacing the consensus mark of $998 million. Adjusted EBITDA came in at $152 million for the reported quarter, up from the year-ago quarter’s $82 million.

The Motorparts division’s revenues came in at $730 million, down from $741 million generated in fourth-quarter 2019. Nevertheless, the revenue figure topped the Zacks Consensus Estimate of $720 million. Adjusted EBITDA totaled $110 million for the quarter under review, up from $76 million generated in the corresponding period of 2019.

Financial Position & Q1 View

Tenneco — which shares space with Magna International (MGA - Free Report) , Meritor (MTOR - Free Report) and American Axle & Manufacturing (AXL - Free Report)  — had cash and cash equivalents of $798 million as of Dec 31, 2020 compared with $564 million in the corresponding period of 2019. Long-term debt totaled $5,171 million, down from $5,371 million as of Dec 31, 2019. During the fourth quarter, the company’s net cash provided by operating activities was $474 million compared with the year-earlier quarter’s $380 million.

For the first quarter of 2021, Tenneco — which currently carries a Zacks Rank #4 (Sell) — expects revenues between $4.45 billion and $4.55 billion. Adjusted EBITDA is forecast in the band of $325-$335 million.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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