Tenneco Inc. (NYSE:TEN) Q4 2017 Earnings Conference Call - Preliminary Transcript

Feb 09, 2018 • 09:00 am ET


Tenneco Inc. (NYSE:TEN) Q4 2017 Earnings Conference Call - Preliminary Transcript


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Hello, everyone, and welcome to the Tenneco Inc. Fourth Quarter and Full Year 2017 Earnings Conference Call. [Operator Instructions]. Please note, this event is being recorded. I would now like to turn the conference over to Linae Golla, Vice President, Investor Relations. Please go ahead.

Linae Golla

Thank you. Good morning. This morning, we released our fourth quarter and full year 2017 earnings and related financial information. On our call today to take you through the results are Brian Kesseler, Chief Executive Officer; Ken Trammell, Chief Financial Officer; and Jason Hollar, Senior Vice President, Finance. The slides related to our prepared comments are available on the Investors section of our website. After our comments, we will open up the call for questions.

Before we begin, please be aware that our discussion today will include information on non-GAAP financial measures, all of which are reconciled with GAAP measures in our press release attachments. The earnings release and attachments are available on our website. Additionally, some of our comments 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 Brian.

Brian Kesseler

Thanks, Linae. Good morning, and thanks for joining our call. Turning first to the fourth quarter highlights on Slide 3. You can see we delivered strong organic growth, higher earnings and an outstanding cash performance, all contributing to record results for the quarter and full year. These results reflect the strength of our diversified portfolio, with sustainable growth drivers in multiple revenue streams.

In the fourth quarter, we also returned $51 million to our shareholders in the form of share repurchases and dividends. These shareholder returns are a good indication of the confidence we have in Tenneco's long-term growth and in the earnings power of our business. Taking a closer look at fourth quarter revenue on Slide 4. Value-add revenue was up 7% in constant currency, with solid increases in both product lines and in all regions. Our revenue significantly outpaced the industry with stronger-than-expected volumes on CTOH programs in North America and Europe; and on light vehicle platforms, mainly in Europe and China.

Revenue highlights this quarter include, a 60% increase in off-highway revenue due to our position with leading off-highway customers in North America, Europe and Japan, as those markets continue to recover; a 24% increase in commercial truck revenue, driven by volume and content growth on platforms in Europe and South America; and in India, where the Bharat Stage IV regulations are ramping up. We also had a 4% increase in light vehicle revenue, outpacing flat global industry production. Light vehicle growth was driven by new program launches, our light truck platform mix in North America and a 17% increase in Monroe Intelligent Suspension revenue from 6 new launches during the year. In addition, we had a slight increase in global aftermarket revenue with growth in most regions except North America, where the market remains soft.

Now turning