TEN - Earnings call transcript Q3 2020

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Operator

Good morning and welcome to the Tenneco Third Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Linae Golla, Vice President of Investor Relations. Please go ahead.

Linae Golla

morning. good and you Thank Earlier today, and XXXX results third released financial information. our related quarter earnings we A to Investors section presentation on of available corresponding our our prepared website. is remarks the information which are with that today our attachments Please press in reconciled financial materials. and be of will other GAAP aware earnings include all measures, on our discussion release measures non-GAAP When we say EBITDA, it means adjusted EBITDA. are at rates. XXXX currency Revenue constant measured year-over-year comparisons adjusted described EBITDA to margin. otherwise, specifically Unless value-add margin refers available The earnings on earnings are and release our other materials website.

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

Barclays Over the look forward Automotive speaking virtual Symposium, three Gabelli Conference. with next in to Automotive there. you many weeks, the several the XXXX be Industrial Global participating including Global the will We conferences, Baird of we and Conference,

Brian today organization. focusing an and liquidity position CEO, Our as business to agenda a on with efforts operations as Kesseler for our our build current giving well starts update on stronger

Our our an CFO, followed sheet review will Kevin provide then detailed Matti of our summary on up outlook performance a by financial closing a questions. of third for Baird. provide quarter before and make opening quarter our overall overall comments new performance, segment also from Brian COO, Matti balance business and update third Masanovich, will will the call

over Brian? Brian. it to turn will I Now,

Brian Kesseler

and remain Good Linae. safe to you, morning, Thank healthy. continues I everyone welcome. everyone and hope

Chief overview to our team. our team, to knowledge third an performance experience the deep Officer Baird, call. begin Operating Page are begin, and Financial members we our Before would the like on executive quarter the Tenneco our I both strengthens further addition to take them of we the and with leadership to Matti to X. of of welcome team would like Matti I and Kevin Officer Masanovich, Kevin The and newest moment to of Tenneco’s a welcome Chief happy

schedules safety and and our inventories sight ensure returned third pre-pandemic better the we production operations the largely U.S., gives normalized As the of going early close health to When in us global Production members, levels our to fourth quarter continued are quarter. to that quarter. to team the low August, line last the in were was we good second confident quarter. be we spoke than for the of during

savings adjusted the Accelerate+ we expected of million our company’s third the automotive EBITDA and EBITDA recovery. were lower to and year from pace profitability higher China the sales. of reach magnitude America, margin and remain initially our continued able expanded on our savings, solid was However, XX North prior on significant adjusted operating and performance to We Europe achieved surprised than with program, track pleasantly $XXX leverage cost cash quarter. On strengthen above around to to deliver just which and made higher on year-over-year EBITDA the revenue volumes sequentially and and points. team the flow in cash value-add basis global the contributions we dollars targets structural the

a with conversions of some effective our capital and cash working mix management receivables. our increase in to spending able factored are capital we Additionally, discipline, recovery

result, cash third free adjusted the quarter. a $XXX As in million generated flow we of

net detail position and billion at presentation. liquidity in of the roughly had and to outstanding end from revolver in Our reduce the later our the sheet the to million million and $XXX $XXX the our by performance debt balance paid the Matti second of liquidity balance the to quarter quarter billion total meaningfully our debt built down cash us during relative of quarter our quarter. end end. of We $X.X allowed $X.X will quarter. over liquidity second We reduced third more in address

execute to for of XXXX. X Page $XXX end our continue reduction program the Accelerate+ million by our of priorities, on we into cost targets to run-rate annualized Turning savings cost an that delivering update strategic

focused and working efficiency in management, intensity discipline opportunity. Motorparts OE capital greater are is our business, reducing primarily spending Second, inventory we capital and on our our specifically our centric better capital that primary in businesses represents

Third, we portfolio Using businesses to long-term and business not business do may long-term enhance Value stay strategically returns and align Ultimately, objectives. with our some cash methodology, our growth, that the company are Simplification Stream product they optimizing over cash performance market positioning the with portfolio our flow margin are long-term. to flow. and lines our our not we optimize strategic

all key our growth commercial which vehicles, targeted and light aftermarket, and Finally, businesses, off-highway vehicles our in we end-markets, are encompass investing industrial.

these Since XXXX. cost are will savings benefit X, our we million XX% SG&A. on out targets, good into end benefit sold carryover on run-rate $XXX level, run-rate the this the and segment are savings comes remainder expect the of year. track of we At approximately of cost annualized to goods costs of Turning to Accelerate+ achieve the progress structural reducing Page by making with of

addition, Accelerate+ In reduces all corporate which SG&A. structural portion expense, is our of a

on the the Our we This a going gain of forward. momentum hand pace end working are also to one-time XXXX. achieve lower operations and days on improvement required primarily in comes to $XXX turns gains, capital inventory continues million to efficiency higher and from improvement support resulting benefit by

and team The $XX actions, benefit temporary which quarter. cost We restored realize unpaid salary been this third items, our to quarter. of in non-recurring The as temporary the million of expect furloughs, salary reductions year. reductions, that the have was benefit other members to of fourth included half about

of quarter. a our Now, operating to and I Matt? Matti in over performance detailed third Masanovich the it will turn financial for our view CFO,

Matti Masanovich

call to and everyone. Brian great CFO of you Tenneco. morning in earnings join as It good is my you, first Thank

decline $XXX I $XXX segments. cents revenues Powertrain in favorable prior an Adjusted an the lower XX.X%, adjusted was the EBITDA to tax year-over-year would XX% the EBITDA a Total like million versus year-over-year our a currency basis. sales. on prior a basis third earnings to billion driven by per Page X, rate. slight Value-added the value-added X% was million, primarily on margin revenues basis at and results was points and effective $X.X share, increase Turning level. $X.XX quarter and from year were billion, and value-added quarter, were constant quarter Adjusted year $X.X review Motorparts a despite XX included in approximate enterprise

the which largely a This the and rate U.S. deferred losses In jurisdictions, of record arrive quarter’s of business. tax was tax although quarter, related our Those a large are been the charge noted COVID by did That had allowance and tax assets from we by tax available tax assets, our valuation XX% and using deferred un-benefited primarily impacted earnings $XXX took not $XXX were the future effective of above. forecasted pre-tax earnings, tax our impaired mix impacted we benefit. where use. to XXXX at assessed rate historical recoverability third of has for expense adjusted million and million to charge

our working mentioned, seasonal spending. management previously adjusted a from capital flow and basis. strong benefited disciplined As was cash free capital efficient $XXX We and million on

Turning to revenue show our Page performance. X, we more on and details earnings

declined a of vehicle revenues truck a and decrease commercial value-added global declined light production vehicle light year-over-year value-added compared basis, off-highway XX% consolidated our revenues On industry X% X%. to year-over-year. Our

X the of doubled revenues year-over-year However, emissions strength related than our on and China market and commercial more regulations. back on-road new growth to content value-add China the

more to markets OES down aftermarket was OES about weighted due year-over-year, COVID. channel and from European slower towards the European and X% Our a business recovery

significant margin lower value-added year just was the revenue. prior improved On adjusted XX and above EBITDA profitability lower $XXX was right, points. on levels up year-over-year, basis million XX.X%, was Adjusted EBITDA

savings We continue to with which gain execute we as deliver initiatives go to demand our basis. more normalizes forward traction Accelerate+ initiatives, more those as to expect on and a continue we

more Kevin regarding Operating our to second performance. our I for Now, it details turn Baird, will over Chief Officer, Kevin?

Kevin Baird

have the in the am enterprise and for with now. with There I our XX working about to been its Matti. am but make team stronger initiatives. of to-date operating And days is company I Thanks, more key together progress healthier. do, has pleased is how the executing to Tenneco proud I made

revenues Air X% Moving to starting a currency were Clean year our Clean on basis. year a segment million, over $XXX constant Air with on decrease XX. value-added Page review,

industrial and by Segment down service decreased the adjusted XX.X% represented XX% OE was offset of from and lower revenues always end-markets X%. in the X% increased earlier other to which on of savings a XX, was XX.X%, about we and and Commercial At was Adjusted recoveries engineering reduction XX. EBITDA revenues The Cost and XXXX. the $XXX prior segment of EBITDA revenues, The million, even margin X% with decline margin were truck the a timing quarter vehicle year show performance. industrial ago period. constant other year-over-year OE million the third about truck Despite the as see fell the On year-over-year. year. and year-over-year. service $XXX in to off-highway period. year compared were savings cost started increase Page Page executed commercial tangible fixed Our from point currency, revenues was segment Powertrain’s commercial Motorparts basis EBITDA XXX off-highway, light similarly, is next businesses EBITDA to year. well as actions prior declined

program in COVID-XX EBITDA for was regions. Motorparts Page reductions to revenue month fueled Please XXX Segment the October. to in performance. Third quarter the distribution the launched EBITDA $XX aftermarket was secured annual quarter, in by in our despite industry-first the Ride Gurus strategic and at improved exit training turn by constraints margin through into incremental and certain lower constant experience X% increase XX.X%, primarily and of on million around significantly North America. adjusted and due Garage in manufacturing, revenue quarter points that’s revenue performance up operating customer to million $XX currency product year-over-year decision mobile XX details to revenue million basis certain Year-over-year decreased of lines month In year-over-year. $XXX SG&A. continue team cost

mix X. is in you and can benefit $XX compared million in rationalizations. was revenue where plants year. facility year-over-year beginning see operations program XX% the footprint down year. consolidation, currency are the to reduced to America to capacity that margin volume X.X% facilitated last X.X% $XXX North the Ride The the that quarter to was Control by program decline North rationalization was completed from Third the of related of impacted performance, Segment consolidation in we from million primarily EBITDA America middle In X constant we

stabilized. be to XXXX realized consolidated benefits further expect operation as in the We

Our Ride programs for quarter, X vehicle third the advanced business electric intelligent contributed battery suspension business, well. new suspension cash adjustable in CVSAX platform. and Series performance Volkswagen with launched flow IDX damping to Mercedes-AMG cars quarter In the Black our as including we ASC super their technology business in the positive for

SUV call discuss will now Matti conventional I for launched customer. another our the we addition, to In debt turn liquidity and business to for battery a position. electric back

Matti Masanovich

Thanks, Kevin.

drawn fully previously our of billion $X.X down paid revolver. we XX, September of As

abundance $X.X may an you drew billion down credit facility revolving recall, in As the out quarter. of entire caution, of second we the

amount, of to plan back with revolver comfortable get can pay underlying in down and interest industry Our was the put more the that once cost pocket. a reasonable extra our the we health to

overall second billion and very sequential million $X.X stabilized quarter revolving and to to improvement facilities balances $X.X At healthy paying quarter the the billion. very market $XXX demand cash XX, and our down end, With of XXXX we June quarter billion with the of a competence third $X.X are on comfortable consistent on liquidity returning increased total to to un-drawn credit availability it and in the levels, revolver. having more compared

emphasis have optimize been performance, couple Moving we reducing quarters, objective capital on our intensity. to to our the cash talking about past of

levels on This investments our CapEx On some $XXX on basis team’s as a to million, quarter, million in quarter, with full existing That benefit in to to a focus XXXX, we $XX savings business. invest Accelerate+ be reuse continue of significant our to program that for cost In the is impacted improve in made year expect continue to XXXX. we the our capital spending around projects earnings. we execute we $XXX structural by in we of reduction over million equipment. spent be third

flexing our trade capital quarter. did job the addition, excellent In in we working an

efficiencies delivered receivables drove and our suppliers. to significant and as continued through continue while more net our a our our returned capital payables sales cash terms with in of we our investment around levels DSOs we increasing flow. specifically, We metrics processes working we and increased our factoring to and payable result were More volumes, DPOs of reduce improve which normalized on to enhanced as as

increasing our our trade inventory net of and Regarding our Motorparts inventory, success of major also the measure compared be improvement. points business, specifically, segments working continues to our liabilities, working XXX operations this we XX% QX, of approximately from all capital, trade to a to lowering business efficiency More XXXX note have finished we balances. on compared A capital revenue. customer their working way needed improved basis In and net year. performance our a our the turns have third over trade assets of service with delivery sustainably for final as including percentage goods by net the improved we quarter benefited customers. leading our other capital reduction reduction the from tooling to Cash prior of our intensity

As forward based We free for positive demand on maturity current our expect have we flow look remain focused our we fully forecast, windows. on quarter. debt the cash fourth to

the are opportunity that XXXX is to April Our next right and market its bond maturity. actively maturity and significant we that debt conditions in replace monitoring for credit extend

net even quarter our the or in progress with year-end XXXX. of debt end year target significant made have third We than better towards

improved to see debt of debt and compared second XX. significant our $XXX million cushion quarter leverage levels. than billion by lower compliant billion covenants, the of year. debt million to We our fully $X.X debt billion on maturity the on Total improved compared to can remain second You all XXXX. schedule with was on $X.X prior $X.X Slide ratio the $XXX covenant quarter Net

Page be IHS using more to third forecast similar quarter our Turning quarter are production latest conservative XX to the fourth value-added outlook, relative quarter. assumption expect to for revenues and to we fourth the a

normal third in we relative decline estimate revenues quarter, slight addition, reflecting to In a aftermarket the seasonality.

margin profitability, partially the prior third performance by elimination look enhanced the note, savings continue in the margin comparison EBITDA margin at quarter. a year-over-year we strong is quarter in offset fourth we and Of points. cost nearly our The increasing with savings expect basis XXX the expansion As favorable of to realized temporary Accelerate+ build year.

at Our XXXX shown the are key financial for bottom. assumptions

We of $XXX capital expect continue million approximately to expenditures.

million. $XXX Our G&A approximately forecast is

end taxes flow performance. estimate billion. concluding for below the will are $X slightly expecting We back Brian $XXX Overall, remarks. second we net XXXX turn margin to million. level approximately of cash expect debt the half will We year cash or at and our be strong a I call of now

Brian Kesseler

Thanks, Matti.

quick for XX before questions. the we to summary Turning Page for open your line a

through expansion the key move and we As margin remain quarter flow cash fourth our XXXX, and priorities. generation into

optimize Focusing shareholder organization will value. on items two our efforts to continue stronger these build a and

to improvement. As drive we have I avenues mentioned, multiple further

VSS capital we both our structural continue of capital focused are opportunities more and We intend process. continuous improvement reducing capital part lower on and cost as to our identify Accelerate+ program We our working our through standpoint. and to from intensity expenditure

turns expect We working deliver we working improving on the Accelerate+ target. capital improvement as capital

to our lines line each portfolio determine and are where can and one margin cash we further performance. assessing continue our business optimize business to of We enhance

free reduction to are flow debt. the capital, cash activities pay demonstrated just a serve trends used We markets. targets. investments I the These in a in markets increasing targets on be will they from well prospective, capability to From our as have debt underlying the return down solid than higher mentioned, grow their growth macro faster as generated

We confident credit to to as significant ability maintain our our next maturity address market near-term to April debt in will Matti and the are mentioned, covenants on in our continue conditions we significant monitor in XXXX. cushion

closing, In Focusing stronger ultimately and priorities these create hard for through work investments, organization. significant team to thank dedication building a our enhanced shareholder Tenneco like continued growth I Tenneco. allow to reduction global on targeted and our us debt to value their will would

to to call debt. on key Tenneco. this and for we morning questions. on that, earnings our am pay continued and As interest cash continue joining Thank areas, year focus flow your confident for you take look down and With on in we ready a our ahead, and Tenneco’s are ability challenging deliver reflect I generate to your

Operator

Research. Instructions] And Please comes question Rod ahead. our first from Wolfe [Operator of go Lache

Rod Lache

seeing of if there lot the everybody. bit with production morning, there forecast that a light was a lower. the is and vehicle am talk are little QX. of is I developments a – indication getting could tick you IHS so lot hoping curious UK you Good there are first Obviously, forth. lockdown about I below for in Europe any

just color like? look what of high on market any level So, kind conditions

Brian Kesseler

one. Yes, I that will good morning. grab Rod, this is Maybe Brian.

So on Europe, you occasionally. chain the so standpoint mostly seeing, see are a indications bit in with our QX some any but issue cautious much we of is chain to some that different coming with not in the the a outbreaks in is of of We QX, strong look even we also there. supply across the China all some marketplace. get we stress announcements recent of challenges as shut deal in the North continues network, that scheduled, the as are still good bit the but production currently, on on business down some probably don’t kind hear side on more but – from the schedules stress some the do organizations we due especially production could for some seasonality there There see interrupt shutdown to demand supply we America, our ourselves are aftermarket moves as of which strong, operationally And characteristics sequentially Also see from a we generally us. is across being are to hotspots. cautious COVID

Rod Lache

had couple sense. And secondly, I you was makes outlook. the Yes, of can hoping questions just that just that we address about a

wouldn’t about level to for third looks you items in be sustainable any there maybe first the like? color then are QX believe reason businesses stay the this happen talk that like the non-recurring that company this about in the to EBITDA EBITDA may run a or to Is you in Just that look sustained? seeing make something of mid not Is you underway would Is now talk that adjusted any be CapEx rate there? low what the quarter. QX there level on to? and that of right would formal may of closer Can process D&A? alluded revenue And if that to with XXXs normalized

Brian Kesseler

the will levels, one-time get these I’ll just be $XX and temporary a QX I try performance we’ll go them away and one, but period. in Yes, – with will back sustained – million From at of start I the revenue order, kick at a margin in. that if here in and savings obviously, miss

pressure on continues put will QX to that on in then momentum, to as So but drive continue partially would build offset the will and ramp that and Accelerate+, to margins, our that. we expect

start the able $XXX should at status us. will us. should So we we of go it CapEx business space expected continue with different through the for or look those second capital necessary to kind as business reasonable our in rate perspective, at year. or working a conditions assume different from kind on a this the performance, ebb as that It of in below wins. of cause look debt target the year that bit half like look overall million that high we all normalized drive for for million at year, and the sure, as objectives margins. times $XXX you too is to a we be our somewhere $XXX million each to of generalized But rate of of of million, and little we’re green probably a go run way card year-end million a rate, $XXX to is run $XXX $XXX flow on status net and million for objectives From to

Rod Lache

with this company. at more might provide you what businesses Right. made just considering the on the comment point? you any that Can color And stay not on you’re

Brian Kesseler

Yes.

down on it, in smaller, at – and we say break that a would aren’t are want, we capital take maybe we would So at businesses return invested I look that the business targets they as the general. more

taken three XX about our they look and of each which to would of breakdown out, have into to lines we each put them So to move business a categories regionally them kind plus. of we work in of

We’ve invested optimize, So, got ones our then of them really a able see then it’s term. of the over we’ve in highlight, be optimizing for two on the make key and called a discontinuing. the that those got kind even we to back. And businesses the category look put in we longer could three that, have Work And that another a and monetize back acceptable targeted to the smaller group growth in that already to formal Out we’ve decisions, if capacity in, there’s for to we some we’ve presentation. investment heavy we process just do ones, that, they lot quarters, pay can’t get in that there got of a we ones to big XXXX, time course to roadmap to them of deem to the what would that

Rod Lache

big lastly, Okay. you that category – would revenue In sort Work-Out, them aggregate of – high they to? of any aggregated just level if would how but amount last all, those

Brian Kesseler

see I to put sometimes – get good we that, only I there. Yes, out a to things think hesitate in that work Rod, plans we number because would put to to

So, that bit number move I’m a hesitant bit, right quite a it to little a now. on put so around will

Rod Lache

Okay, great. you. Thank

Operator

go Picariello Our Please comes from Capital Markets. next of ahead. question KeyBanc James

James Picariello

good guys. Hey, morning,

Brian Kesseler

Good morning.

James Picariello

measures temporary within be as your quarter fully will it Just fourth unwound. sounds guide, cost the though out

point first the in the from see for most margin my about benefited just where XXX to most trying sequential to as to EBITDA And segments the measures I’m down? XX.X% just the a Thanks. get basis we what we step talk year-over-year quarter? this bridge sense clarification. maybe of fourth can improvement. significant points temporary that’s You’re to get guiding So you might profitability, to

Brian Kesseler

to want you grab that Matti, one?

Matti Masanovich

I Yes, take that. will

going So to initiatives the quarter. They the of $XX recur. not cost million are in third temporary are

are at have reinstall wages XXX%. and away – put to – take We going we

of Board the to the had reduce to wages salary workforces. and we XX% SG&A and So XX% across some

So shared the think And rates. go it it’s in into I back does corporate. across each run and segment

segments, saw a another you the And of one basis out it we is Powertrain of know, in look segments goes an take at level a – Motorparts. of to profitability, quarter, on enhanced across that but in the as back in no ratably of we as back continue really And that any and more there we is going year-over-year step basis, the cost, there impacted overall. two in on – than third the is our no enhanced and and So to EBITDA profitability an kind expect be putting corporate.

James Picariello

it. Got

structural year. Now, is they is right? above a about the my as close, – And basis the to a if headwind to this So try that XQ, unwound we what like are want bias your equal my math offsets? the temporary that’s be $XXX million question, versus like from looking that to incremental just savings million incremental on out measure might think helpful. next is cost year the XQ be – is then side, math we year, the year-over-year to or quantify normalized standpoint, benefit, full is ‘XX from get And – bias $XX so at in versus if thinking level ‘XX – equal there on in might you ultimate then margin you

Brian Kesseler

furloughs in $XX million made and we more or of I I We’ve about you’re in. I cost we adjustments some salaries had action participated remember talked think – that pay so about we would on other right programs in QX, temporary is – million to there. $XXX bigger the there. QX

a So against got QX. we’ve comp in that

improvement in code. from Accelerate+ an zip year about from QX the is earnings I or the right in you’re from the talking think – Accelerate in and code that zip

that So of most to year-over-year, of the the going $XXX of be million with difficult half year, is improvement, kind against our to comp QX. in in first that

offset with the – from makes standpoint we’re of in expect that savings QX generating. some are we you would to able That be to ramping, as sense? temporary us As a that we’re

James Picariello

still it it the if primarily in mean, No, could deferred yes. the us one Yes, can to NOLs more, asset does. future. I you behind mechanics understand your sounds as you that Sure. help tax business related better it’s write-down? U.S. and the slip though your can And utilize just I

earnings what exactly I So a helpful? this, timeframe? lower any charge? allowance Is of on would function what it reflects over be U.S. think clarity valuation the the Just simply outlook,

Matti Masanovich

three rule cumulative a on a based cumulative is It’s over years. rule – the

being in where obviously, primarily our to charge valuation in XXXX COVID, cost, so future to U.S., years, had structurally So etcetera, and the headquarter the take impacted allowance ability generate U.S. we the by are income

and against cumulative So variance allowance that’s deferred in tax the it’s creates – but essentially, what the a rule assets. X-year

James Picariello

Thanks. it. Got

Operator

Our next Brinkman JPMorgan. ahead. Ryan of Please question comes from go

Ryan Brinkman

thanks Hi, question. my for taking

about your year? found normalized based so, And is magnitude think should margin you While Do savings how margin you think margin ultimate has the of this increased? obviously due margin even do some just on of de-leverage, normalized this Accelerate+ of the you what COVID-XX, years been investors the be reductions if think negatively out? that the sales of in given cost year undertaken other to has some have and if improvement you new wake impacted upon the impact these will XXXX

Brian Kesseler

so the savings measuring – think Accelerate+ I baseline off Yes, of are XXXX. cost we a of

to the percentage would think, our put end take shift our of we assume if would a targeting targeting margin in into are up XXXX, we that EBITDA you mean – an safe that from I be we’re So, run million by value-add $XXX to it that revenue. rate of performance

simplest to year, XXX and run into XXXX. talking the So are about I rate about think of this then we of that’s the And remaining into million of we million are about million $XXX – end the by that $XXX the $XXX the way end think it. getting

Ryan Brinkman

your contribution been EBITDA improved there on of execution obviously captured to from operating X. performance And recently thanks. strong Okay, in the driver the has EBITDA Slide in

the as Air improve could ago least be you that curious was there quarter of division. comparatively recoveries optic. improvement seen going results of of from EBITDA segment divisions though of that may subsequent the But Clean contributing at like businesses clear which they and at to executing less slides, the It walks sort less you looks if most to are highlighting are As I’m there rate the walk you year or the various look the lumpiness or terms on it’s comparatively opportunity third through various the feel you just a in engineering forward? in in how the

Brian Kesseler

Probably Obviously, quarter, and you four good all the in good Powertrain opportunity news, we see this Motorparts of see the strongly. in segments. contributed

where going bit like we We the and pleased middle that last to we’re the putting operation the had continue show, as and performance, finalizing meaningful more we Ride on see, housed. but issue through for in Air execute comp Performance, had little protecting we’d the function it is as with better. commercial was a a for suppressed $XX the team to through on going are didn’t recoveries that. ramping would now we the million show the we of there that to plants but year. we forward comp of movement where I sure expect way Clean the we there. you standpoint, to that of executing to than got two maybe the a of of I bit think, look year-over-year operating of locations Air, make plans everything engineering bridge customers it’s them Clean But timing year permanently us mentioned, two as to from into that’s overall, and took be make That to roughly am difficult against. improvement the We’ve a opportunities the out

Performance $XX those year. in $XX rate which million business in encompassed Accelerate+ we Ride So is our numbers, our run to as of next but operations that million benefit, through improvement about stabilize

done. and team think to opportunity I value our more That continuous great is continues use improvement the and work there is identify opportunities. tools to stream simplification never So

Ryan Brinkman

how about level know related assume. know much thanks. to we on payment separation takes high guiding recovering costs you’re how lingering we production, And on sort cash terms, you I restructuring puts things? on for lastly, all is cash and there make industry So, with should think but other I capital working basis can any example, underlying continue and Okay, etcetera, presumably provide one-time you flow? but on not of free to hand, should XXXX, then or progress to the the those just

Brian Kesseler

Accelerate+ program is the have of by that as $XXX target Well, working the of million the for end improvement trade XXXX. capital we part

the half when We perspective into cautious it’s year seen not at be going this you’re to half a looks because us the what might $XXX of anybody I Ryan from we’ve it’s true underlying into that inventories, next QX. but we on QX of mean, trying part this have that think And, so are thing question, looking replenish I see we’re I’m still year, or more missed. – North was in get a like of demand look what when and see sure there just understands targeting another we’ve got I still XXXX, you here of American to probably to market. that million, that great

Ryan Brinkman

It was the restructuring.

Brian Kesseler

million $XXX being we’ve about restructuring we’ve year-to-date, this cost achieve, two-thirds is Accelerate+ $XXX to which, of year, of targeted spent said, about we Yes, it. cost, talked million that of

of a point, you a so, improvement But estimate that here the that quarter think always think that So be a in of kind sector, some always down planned. then restructuring could in that’s fourth continuous should this manufacturing any good and the being restructuring. in bit million I step there at about business remainder and up in made $XXX that’s is

kind forward. proxy rate we driving a is And our continuous for I be should – what think improvement in so our restructuring in projects for good of $XXX that million going

Ryan Brinkman

Very helpful. you. Thank

Operator

Joseph RBC Please go ahead. Instructions] come will from of Capital And [Operator Markets. question Spak our next

Joseph Spak

understand allocate Powertrain quarter, across I structural and sort Because I or that quarter was million quarter? of very how – motorsport guess, Thank improvement you really Matti, just segments? $XX of to yes, to the and this just this date, $XXX okay in say underlying – the am Motorparts you million want much rata was guess year to much. to I time, did better trying one pro the I confirm this

Matti Masanovich

Well, I specifically didn’t that give answer you question to earlier. any

to is through So it’s bit weighted across Powertrain in out the weight the segments and little There we’re the but going give segment. to a details little a more not more the segment, bit Powertrain corporate.

Joseph Spak

you year, what beginning to I got CapEx, of earlier, obviously spending of much this it’s I planning I a think even was, lot on like prior, think but I just spend know you too Again, you were at in – were versus but this initially mentioned your on you XX%. down the Okay. think years it question it’s

to next what how over maybe sense is needed and of years? can that just us give really really some delayed cut So back is and couple you come the been of of much

Kevin Baird

Yes.

some deferred making even we’ve range launches, up $XXX protect this that caught will should, that with on being get CapEx next range probably makeup, we next probably earlier year. bit next we for the that So year to sure new year. we’re in year, What million $XXX maintain, commented replace that that sacrificed those, CapEx repair, a comfortable little we on but haven’t million program is

details We through as obviously we earnings quarter. and on outlook will next more QX give go that

Joseph Spak

I to terms is in – that you you’ve about look may just then which talked of And while. think Okay. divest a for assets something may

market. weren’t to wasn’t pandemic the the of I some on operational look ready brought the think what a Any to some transactions? update ago up little there or given maybe as begin little lower past is in see as do as maybe to multiples X of bit you buyers willing sort are they go normalize past greater to there than months and by to figures delta mentioned of that sense there the either really market sort consummate of far that loosening a you because these yet bit, numbers as potential you does

Brian Kesseler

– might much general not I any talked advisors, picking we sponsor we anywhere looking see think Earlier near any with was of I sponsored and more that private deals, assets for was equity, are and we in, up interest think the a fire. sponsor but we as market not our have, on again earlier the bit. just Yes, money it more just it in money and

– or get fair for will assets they sense. if we think fair if we So, is value value what it makes

So up a I think hopefully it’s bit. still heating little

strategics with and as earnings as see valuations, a transaction we that sooner we to the would know were more later. cautious in mentioned bit recognition mid-flight play of at opportunistically soon as kind than expect call, I us in. think But QX we potential the you margins you that are coming the for pre-COVID

Joseph Spak

how flipside you customers equipment, the regulatory generally are as the this China ‘XX, pretty you product, about construction you you Okay. it as quick the Difficulty] I market are on one give I in think there. of one, about like was strong some CTOH know, sense into the where really thinking Difficulty] Maybe it to seems product think necessary like just your hearing engine inventories know of we from a [Technical were [Technical of on and but don’t terms because change. low year But if us not because construction heading what goes are the goes there your side? the pretty And could

Brian Kesseler

customers and Yes. followed big Deere us. valuable like them the We obviously supply Caterpillar and guys to their

space presence balance see we in China side. have fix huge too along, truck Joe, that go Commercial we don’t and So, moving North with on truck growth next in in continuing to truck through to X side, as you’re on how Europe, side commercial aware, on the India early probably a little know tell go, then and a to off-highway the I continue America. year here the commercial this accelerate on Broad they early we of year. to

Joseph Spak

you Thank very Okay. much.

Operator

van Marc go from comes question Lombard Heems of Odier. Please next ahead. Our

Marc van Heems

the you much of Yes, refinancing thank timeframe What’s do very relevant the you ‘XX the presentation. in the maturity? for for April mind have

Matti Masanovich

look will take looking and opens obviously, that the the as the to actively longer over maturity. replace a maturity. I market, we’re it it it’s say we’d market and and monitoring Brian. the near we’re monitor term, looking cooperative would as for continue one, and and we’ll I to We’ll go and replace But for into the extend be market

Marc van Heems

Do – this? imagine ‘XX in about April calling you or bond you you thought are have

Matti Masanovich

please? question, that repeat you Could

Marc van Heems

‘XX bonds bond the Yes, in in you do think ‘XX? callable the of as April possibly calling

Matti Masanovich

and know liquidity general, – uncertainty we’ll I of the cautious think in approach uncertainty COVID given Company. the just very given overall a to take you

we refinance long-term think a longer-term, maturity. I and look would for

think I kind to prudent that’s to – a thing prudent do.

Marc van Heems

thank Okay, you very much.

Matti Masanovich

you. Thank

Operator

comes ahead. Bank. Rosner Our next Please from of go Deutsche question Emmanuel

Edison Yu

for Hey, Emmanuel. it’s on Edison Two questions.

over dynamics and I year-end? going you’ve you that go and go of the maybe EV going TAM how maybe you shaping have can aftermarket then mentioned maybe or you some think the you and and think those Performance, could through First, to by over some – kind sort might wins up the And Thanks. the secondly, Ride size are products of underlying forward? access of

Brian Kesseler

they are customers Yes, don’t want EV get I to on our one, the revenue take assuming. that front of I EV some too do or the if of far in rates

just but on lower are battery-electric obviously, we and So the I strong. announced volume, vehicle Mercedes, those is have think cars, recently went super

platforms new benefiting Performance NBH are suspension that some both an our Our both unit advanced perspective. entrants development EV the the OE from technology and unit and in Materials traditional are of from from

of our get a to not it, I can So I I customers. put to get it just want said, to lot numbers as of don’t I because in don’t front want

is as question improved from the talk lines. so at aftermarket wouldn’t it than bit channels. other Yes, year The more at as is categories thing on a our that as we year-over-year up positions see individual say lower other about is more and continually, I questions we the are was inventory – it look quarter, this and sequentially through were positions so I saw I oh, good aftermarket, last traditional get the and inventory the much on sometimes they on The think than as overall, customers we year. product channel retail channel our what

So favorable I that’s us. also think for

Operator

today’s question-and-answer also This The now may concludes disconnect. you you Thank session. has our attending conference presentation for now and concluded.

Tenneco (TEN) 2 Nov 202020 Q3 Earnings call transcript