TEN - Earnings call transcript Q1 2021

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Operator

Good day and welcome to the Tenneco Inc.

First Quarter 2021 Earnings Conference Call and Webcast. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference call over to Ms. Linae Golla, Vice President, Investor Relations. Ms. yours, is floor the ma’am. Golla,

Linae Golla

prepared good Thank today our our A website. today, on will our released Please be our information Earlier quarter you presentation Investors XXXX discussion of to information. include and measures. first financial earnings we related on available financial that morning. results section is remarks aware corresponding the and non-GAAP

it reconciled release When add which earnings are to with adjusted EBITDA, attachments we website. materials earnings other of in refers press and available GAAP release specifically All our adjusted Unless on materials. and earnings say margin The described our means EBITDA. measures other are EBITDA otherwise, margin. value the

mind projected virtual actual XX. Global from the are that differ Conference Markets materially Additionally, near-term, any In participating in Bank could in our two Industry conferences, and the forward-looking of some comments in will results those June our our forward on Deutsche to Auto we include Conference the X including forward-looking of looking on statements. June Capital keep statements. KeyBanc Please

your for Chief agenda remarks Baird Officer, will starts Our performance; segment provide driving Brian Matti Executive Officer, Chief with Then before enterprise Masanovich, shareholder and the will our details and and outlook Operating more on Kevin will value for Brian second quarter take first on sheet quarter we our with conclude and questions. discuss Kesseler, our giving balance XXXX. full creation Officer, Financial today highlights; Chief year

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

Brian Kesseler

morning, welcome. Good and everyone Linae. you, Thank

our like highlight strong half sheet, driving XXXX. fiscal and our year ways areas are value key solid a from There strengthening for Let’s new are the business balance we building the the We three start shareholders. momentum on had X. how are our to to Page on we today: execution, of positive second start I’d

chain challenging volumes cash and that same on delivering profitability we program expansion, on vein, a First, structural production conversion Plus a results, our generation our strong In saw and margin produce profit Accelerate supply improvement, higher business execution, to environment. benefits. continues and

$XXX projected XXXX. We from million savings carried are expecting in to over program run-rate of savings XXXX, $XX be year realized end into million the plus incremental of

Second, clears no strengthening extension with These and few And debt of in We a senior We our cash of maturities our balance this tangible review terminal to billion revolver. indicators debt the our XXXX all and we the cost. B going on billion with A are clear remain priority operating future. expect consists capital here outstanding in to access ended focused our similar markets on and and sheet forward. on path sheet to the increasing our Matti detail, million revolver, to a $X.X we $X.X credit are our and balance balance liquidity terminal quarter refinance tandem pay-down. of with both the but at $XXX generation which in facility, in health of the results approve with more will extended takeaways.

on remark value our to want priority also our driving shareholders. I Lastly, of for

near-term potential reduction. to value significant We have the unlock through debt

also will are Kevin detail. discuss which in and our growth core investments platforms, We to bolster product our realigning more lines

the mix and performance in realigning positioning our and opportunities the enterprise truck are growth and sustainable commercial Solutions the a on the our As our motor to Ride our concurrent business Powertrain growth Performance we we of the of with to Solutions and segment. shareholders. long-term returns revenue this, transfer for previously renamed segment focusing line By part have Performance segment solutions higher industrial, off-highway to strategically within Performance managed parts,

that with you commitment. results pleased are first evidence We of to share our and quarter as focused delivering both and long-term are in relentlessly results on further near the today

will Page of first through XXXX to quarter overview X, Turning walk I our results. an

Our XX% effects. excluding was up $X.X first XX% billion, up Value-add billion, revenue currency was revenue foreign $X.X year-over-year, year-over-year. total quarter

Our for our scale region. quarter’s product product and On and of we diversification advantages us. are lines by down first break slide, value-add this revenue footprint and application broad markets geographic and primary

at Looking while engine XX%. at and split application, specifically commercial agnostic independent made XX% up vehicle OES revenue powertrain value-add and aftermarket the vehicle of light truck internal by off-highway OE was XX%, combustion product OE light industrial technology, at XX%,

CTOHI, dollar by X% XX% value-add XX% aftermarket in and and constant in Our vehicle performance includes market light in revenue growth OES.

in the XX% XX%, and North leverage flow by followed the at closely was big America quarter our largest seasonally XX%, adjusted margin was with all first net China in EBITDA the up at quarter. to driven revenue. split delivered segments region, better improvements and $XXX at by by EBITDA to value-add leverage value-add in EBITDA another which reduced Looking in our adjusted cash net generated ratio, of and year-over-year, higher margin improving took quarter reducing Europe and by end XX.X%. our X.Xx our since EBITDA Adjusted contributor year We X.Xx million in EBITDA. step We declined adjusted

QX, We than it levels better to now pleased our historical was our are Kevin. with for especially first over quarter. will turn cash which performance in I much

Kevin Baird

quarter first I start Brian. Thanks, performance will with on enterprise X. our Page

currency billion year-over-year impact of was mentioned, after $X.X the quarter, our XX% value-add rates. As excluding up exchange the Brian positive in revenue

top off-highway strong recovery from benefited production. industrial truck significant and a markets as well light China commercial Our vehicle line in as

XX% our revenue in quarter, of first the and higher leverage EBITDA segments quarter. on margin grew because growth continued of solid operating Adjusted reporting showed in the volumes. All the

delivering provided a lift this quarter. operating year our performance that program restructuring to a we the savings Plus and anticipated Accelerate started is ago Our we

in includes with corporate adjusted basis or all to up margin segments EBITDA improvement. in Our the value-add EBITDA showing Adjusted costs. XXX million points, quarter XX.X% increased $XX

parts Let’s X. performance business Page on our turn motor to

quarter, middle strong and America orders the $XXX First quarter favorable, in Margin sales up prior was a second the a of by for was million. our sales We XXX created conditions was up were basis, of in year. slightly saw affected quarter basis but year-over-year setup good points the On Adjusted XX.X% the weather customer which volumes at to after-market for at revenue quarter. were the adverse compared EBITDA North quarter. out-the-door XX% the $XXX million, end year-over-year.

operating Our X savings. taking network We $XX successfully cost million in distribution restructuring complexity. from low Initiative distribution performance turn Page continue value-add to first our rationalize closed benefited X. VSS we to centers U.S. chain out of as and the through Please our quarter supply

aptly year As results mission-critical applications business products unit to end-markets. pro and to reporting our offering that commercial automotive, segment. customers. for from broad Performance the available industrial supplies changed quarterly Powertrain highly to Brian forma XXXX Also products note it as Ride recast name and our is the mentioned, segment’s the segment solutions this of the The engineered the and vehicle, have segment have transfer This business the and we now full into describes we named Performance Solutions. two-wheel of

first First X%, quarter points revenue constant year-over-year. industrial $XX pro lines strong X of margin to are XX% growth and $XXX XX% revenue, Margin programs off-highway Product EBITDA of driven X up in adjusted which year. in hybrids, quarter, forma in business Adjusted to EBITDA segment in up operating or BEV. up the which volumes. this truck new million agnostic on pure electric awarded was compared a commercial XX the million driven and leverage for higher In year-over-year currency, vehicles technology growth the basis was prior was was powertrain was by battery was by of the vehicle. up XX% are

programs are variable hybrid our for semi-active e-bike launches XXXX, Volkswagen Electric or which Both technology. than we announced SUV. and recently greater BMW with ID.X of revenue BEV, SUV suspension Examples have of XX continuously million. Electric of During the with the annualized available include programs, iXX $XXX

performance hybrid. fact, new a of around pipeline third awarded electric of vehicle business is solutions’ year-to-date In and a or third business battery the active

Page Air $X.XX off-highway now XX% Clean year-over-year, vehicle effects. and value-add Air’s up XX, were on Turning XX% results commercial revenue the increased OES value-add growth currency revenues revenue excluding versus year with expanded XX% prior impressive Light Clean revenues, Clean and period XX%. shown Air’s and was group truck foreign year-over-year. value-add billion to

XXXX. compared content the X to XX% revenues of XXXX Our CTOHI the Adjusted in Adjusted EBITDA points to the quarter up from the to first market margin developed XXX markets period. XX.X% Further, strength. China recovery the to prior EBITDA XX% and due segment’s truck value-add benefited expanding first first made vehicle revenues underlying compared compared volume year-over-year. China revenues quarter was almost of of and all segment’s the tripled year million increased XX% CTOHI compared commercial the basis per gains quarter in of to was XXXX. for $XXX

turn Please Powertrain, another mix increased At volume on details Solid constant and the XX% piston prior operating profit for China XX% leverage versus demand and increased quarter. revenues Page year-over-year in in applications, and and gas benefited grew segment’s year. from which supported vehicle strong the steel performance. and India. launches business favorable on XX delivered technology strong currency, conversion to Light bearings advancements new recovery for revenues

was of Strong XX.X% versus were gained XXXX. in JV discuss off-highway rebound year-over-year. first XXX and year’s and the the the and occurring to the OE XX% our increase has X% $XXX savings measured restructuring period. in compared North benefiting leverage margin representing of industrial key Additionally, Europe and the turn commercial is million, Matti commercial now first income basis America revenues regions. points higher to last service I call truck contributors sales EBITDA compared and to and operating XX% performance. balance to expansion decreased Powertrain year quarter guidance. significant markets EBITDA the industrial sheet volume will to to quarter. prior on vehicle exposure those Adjusted from volume, higher of Adjusted an the

Matti Masanovich

Thanks, to end. Kevin. its company’s of on end was billion performance. balance first I improvement year ratio the liquidity revolver. billion the with will net leverage no X.Xx, EBITDA XX. X.Xx Page the growth a quarter The At our $X.X company’s from declined outstanding start benefited $X.X on

levels below well, was for also As seasonal to first and the improvement. cash well contributed our net ratio quarter our usage normal leverage

business intensity spending our lowered reusing make working fund our Plus As of previously in days, inventory program aggressively physical more on capital the as equipment in practices. Accelerated communicated, plant outstanding. capacity. unused sales of continue restructuring days historical we reducing by we structurally to company our have Concurrently, eliminate to improvements consolidations investments led we relative existing our reduced focus percentage sustainable and to capital by a and have with heightened Further, capital capacity

driving reducing are net our generation cash cash leverage. Plus our and and enhance our remain We debt Accelerate top priorities earnings to flow. net and Near-term,

path due equivalent an refinancing amount used redeem During proceeds the us of our the revolver maturities these clears of senior maturity profile to senior and XXXX extended $XXX of were in notes. to XXXX. XXXX. and for at in similar The notes XXXX we term The our loan a million issued in secured A loan cost structure the quarter, and secured term address notes maturity B

we to have Turning a updated our XX, guidance full Page outlook. and year QX initiated

our We outperformance for EBITDA guidance based on increasing value-added in quarter. are revenue our first XXXX the and

guidance $XX our of range implies year $XX.X from full $XX.X billion. our our range At to is billion increased which billion have year-over-year value-added $XX.X growth We up billion, revenue range of midpoint, XX%. to to prior the

Our relative light assumption to the vehicle million year. view change revenue our a uses range initial units. XX global of production of No

IHS quarters year. remaining forecast the three mid-April balanced is the versus conservatism across relatively the of Our

revised billion. raised At million to basis a to of XX.X% to range by compared a guidance value-add margin $XX Additionally, XXX the we EBITDA XXXX, XXXX adjusted EBITDA $X.XX for point improvement our billion our $X.XX EBITDA a midpoint, have to guidance XXXX. translates

discussed, the As in $XXX savings we was have the temporary million us costs second in XXXX in benefited second third the back third cost and this quarter. of quarter Those will $XX come and million year. quarter that previously the

of restructuring those offset Our will partially Accelerate Plus reversal the reductions. savings cost

we year, achieve billion forecast savings Plus balance to year-over-year our fall sheet, $X.X year expect the million to by we $XXX from program. of net the the For to end. now below Accelerate Shifting debt

XXXX CapEx is unchanged. taxes cash for guidance Our and

the in As flow have we reminder, inflow initiated page, In we a and quarter cash XXXX. typically seasonal second half the anticipate the of second of middle outlook. our is significant a

revenue $X.X Our midpoint growth year-over-year value-added a billion. revenue $X.X range billion forecast of of to is XX%. The the implies

guidance. factored sale our have announcements the in recent key into downtime We from customers of

$XXX to $XXX material vehicle Our due primarily Sequential timing margin adjusted recoveries. is EBITDA to is forecasted production million range and lower lower expectations of light performance cost million.

remarks. of back the the quarter second call now approximately net concluding a the for lapping are a ratio we targeting I As four-quarter we on trailing Brian to of end the are Xx turn second basis XXXX, of quarter. leverage will at

Brian Kesseler

Matti. Thanks,

XX, near Page will long-term. close driving our to shareholder with I in and of the priorities Turning for value a both summary

on driving are highly we disciplined performance. focused First,

Accelerate is yielding the on cost XXXX $XXX sustainable end benefits to efforts achieve track Plus our structural of and XXXX by to baseline. run-rate Our compared reduction a are savings million program as

lower of to intensity optimized through spending capital a continue capital management. capital and We our mix working

the are performance. broadening tools across the enhance growth addition, we and of use our stream In value company long-term margin to simplification

Second, for the balance we sheet intend build strong to a long-term.

Our net debt create improve continues to to in the reduction and the free generation most cash near-term. flow value has the potential

our debt maturities are being Additionally, extended.

Our quarrel acquisitions allocation In enhance to use key Once that that to platforms the capital to first debt will balance X.Xx most the to are projects Xx. shareholders. reduce those our to returning we evaluate above of against our of opportunities priority those cash and positioning net a growth. we free two important flow priorities EBITDA our capital target enhance strategic is met, funding near-term, market profitable performance range will ratio

side right sustainable priority the generate page, growth. see you the to of our On long-term

are platforms to our linchpins exposure growth company growth Motor intermediate the of the engine. on performance and parts, our should industrial vehicle drive long-term Our commercial emphasis our truck and to these solutions businesses the off-highway to positioned internal the growth are and over-market. in combustion light to lessen increasing

our engine to light mid technologies. plus internal revenues are XX% of combustion long-term, be to the unrelated Over vehicle, targeting we to only

strategic invest the of managing Additionally, our intend conversion our time to in growth to our core for lines relevance and the we financial as high leverage, areas. we our for The of will maximize over Air we are business evolve reduce cash segments Powertrain value their and Clean shareholders. more benefit

sheet, way sustainable our in generate build our margins and continue returns. our balance ratio. growth strengthening will all, Above on committed business We our a to remain reducing performance managing our to them, positive with we that improving and leverage

and our the world We taking members for safely. each for team other encouraged start care to of like their our to resilience are by around strong to keep thank XXXX. commitment We Tenneco XX,XXX facilities would nearly working and operating and

time Operator, We are business taking our improvements they take to they proud Thank will questions. service drive for continue now of the the to you performance. of to any as high join in today. deliver we level our customers us

Operator

Instructions] go [Operator we first ahead. of will from JPMorgan. Please have the come And question Ryan Brinkman

Ryan Brinkman

year degree comes of whereas drivers of are on might The including just to you the above wanted guide to when it increase we top is in the guiding and that, Hi. guide and the XQ think the arguably, raising other suppliers impressive taking outlook, the relative check on cautioned to XQ, here. or impact. my year, the relative their Thanks most think Of they I for the Street questions. most XQ to beat cover, reaffirming XQ as have, sort outlook line the differentiated some which and the for full to full part, the you for the companies when to either I be semiconductor of other you

your there call, are of on was non-light I now of markets But What starting exposure from less you I allocating etcetera. have know, And the your higher talk see vehicle versus like OE content on-highway it’s more they – end customers? agriculture, some aftermarket light pickups, So, imagine to but other impact I could I on content? then your of On don’t am you some your maybe markets? am products helps And Are towards other there. lower Meritor impact higher presuming and the about any thinking have chips there. semis. have vehicle end What color maybe seeing? guess, might which you those you discussion some I commercial you primarily, about

Brian Kesseler

We that focusing side. in allocations the what space, is big have CUVs, saw talked off we where see got a some mean XX% in here our and – believe forecasted these SUV, generally vehicles, we will as start plus drop about North the in selling our into versus about makeup in production our are quarter we we America the vehicle out, rates. a I I Yes. with light that production. seeing truck light little their conservative still of which that guide. those The the days higher of ROEs quarter first Obviously, appropriately revenue trucks, we obviously, in are to

have So, got we that. we think

the rest production China our Europe. you will, think delays, I diversification production, regulation then saw players of is is, while X continues come see first big the especially the China in generally for aftermarket to the over of followed strongest our gains our some we from forecast benefits some the to from you still got as we for we our China of portfolio. very we starting the is truck the quarter do the CTOHI strong the have well. while, space, Yes, down content. in what In business, quarter, from aftermarket in versus Off-highway probably And are quarter. our the have going commercial if year us. us there and a second

So, the still the X years. numbers guide We build as million IHS. recent a down being balance in the our more on conservative little That’s million about assumptions anticipate conservative May last the more Obviously, we announcements pretty quarter feel than to from about for about – of the for a $XX based IHS the light mid-April year year. Matti the talked bit using per vehicle. come on good $X all or

diversification out. is indication just us is think really, and I our So, of where an helping this end markets

Ryan Brinkman

and as companies environment, right? this it have are lastly we equity finding Thanks. broader they as have most they helpful. because for generally the been because asking quarter and would elevated, or lot of in out relates quite of potential because liquidity transaction the part, about a just M&A, environment M&A at and other acquisitions, the check mostly to that’s markets to the been looking that complaining for of rally including multiples – then on me, the transaction So That’s there. dispositions, but I potential like the are And results Okay. just – including for the

I you be this Given for de-leverage, you accelerate though, about more including that to the for imagine of etcetera, might backdrop. you, potential happier spoken have dispositions would

of report So, else often anything might or is multiples you to on maybe limited but this discussed there are say are number that what that I on encouraging? know or anything you being the be maybe can about front, the inquiries

Brian Kesseler

Yes. are make talk about Ryan, on balancing as here what is active for an M&A positive I you said, limited we we to demand the sure are we think right we right are going also time. can the do in us, overall but for it. value

to We got have in range. ratio. increases talked about dramatically engines good Xx getting X.Xx the really down and some reduction we pretty feel business, into on our point, optionality cash the our that by good. very debt At that leverage We

a our free average for first Traditionally, different Now for which OEs focus lens reduction, do the our were for think, maximizing cash very cash will most – is we cash happy if but our were in flow. math, of Debt through million our of We quarter. opportunities, just course, flow value good, near-term pretty value. cash will $XX far shareholder both outflow in you is I QX near-term shareholder the that’s below always in long-term. operating really the and we But – that’s listen large for the XX-year we go this quarter really flow, And the us. drives with general, the flow, on performance.

Ryan Brinkman

Very helpful. Thank you.

Operator

And Spak Capital of have RBC we Joseph Markets. next,

Joseph Spak

morning. Good you. Thank

Brian Kesseler

Good morning.

Joseph Spak

of past The above quarters been level. the EBITDA Air, the – three Clean sort in margin XX% have over consistently you

we where the But takes hit we I that of Now, little sustainable turned go bit. quarter can segment? probably a and next here? a in corner sort understand sort XX% more Is of have level that

Brian Kesseler

call perspective, a growth CTOHI. that’s our highlighted Clean on a Air From lot of was the

the there. move in mix We continued to

are has – North big. vehicle, Obviously, CUV, our portion higher the trucks, these us. a that business is of margins SUV, pickup for and where generally Clean So America big Air light

CTOHI we makeup. are Air the both Powertrain in a Clean going to a downtime of mix to hurts over them to XX% moving makeup this quarter mid-term light more the second the and vehicle XX% be bit. So, a revenue more, But long-term, and to

the That give pretty got challenges So, that right the have disciplines, year. lately there opportunity the just margin remainder some good. And of over having we they is to maintaining to where XX% in been continue the should, to rates us manage of our in mid-term through long-term. our here

Joseph Spak

Performance color is margins. the this on, that some us Solutions I seems just give the you performance underlying re-class it Okay. maybe guess, legacy Can the In helpful new segment, to like ride quarter?

Brian Kesseler

Yes.

now, business very to pleased right business five lines, we be So, we are with underneath continue running there. – units

what average to the Kevin advanced Our continues lot for above in mentioned that’s awards. suspension business technology us. a grow new margins Again, of business

opportunities bring there. their that vehicles. lot value those engineered again, of of them that and as performance customers NVH to our and All group group, the performance look we there, highly systems are moved is are materials they opportunity differentiate their battery help to electric of of on business great the segment. protection that again, growth most growth, have the issues in good address Our protect solutions seeing that really in over lots vehicles they where side, forecasted, of vehicle our a three We

to the team their progress. Our the X COVID stride. – of steady making hit plants other to the Ride control to all is struggled We consolidation from really is X in starting But midst group with that challenges.

again, expect So, couple improve a side that, business are throughout inside of to And hit strides. we then starting our to challenges North to they braking our that continue year. the their has America

trends for I group. we on So, like performance solutions the the are

Joseph Spak

is like mentioned the a or I commodity the hit of guess, that the year it quarter, were – some I the headwinds like of about are these be sounded sort to like on well. I you quarter margins. should a sequentially. assuming, relative you quite lower It certain significantly thinking even second perspective? sort but from XQ something were, mean from also just anything know balance has – segments, we sounded leverage freight lastly, guide, there specifically historically have or obviously in lower the resins you of of the seen increased basically we But steel – Okay. some less either And volume then first as been for the you

So, whether the I into anything And wondering some there is am forecast what baked the there. so, of offsets? are if

Brian Kesseler

Yes.

So, most a the the commodities. else. like are cost big Steel headwinds and – of cost material experiencing we for material us everybody impact is other just there are several

Now went on benefiting if we remember work point. that’s do X at years, formal getting you still in X negotiations. to we and seeing have mechanisms is on ago, to hard years we recovery steel, What are place us this

very the go working suppliers as timing Normally, we there are through there with are key impressively then partners we lag. that. is our are We a issue. and our helping is seeing What closely XX-day

Sometimes there the on lag side. is depending bit customer a little longer

always offset. risk continue the next that comes of commodities will in. depending and – manage, a in recovery most these we back and got increase, is where we to there out continue be the commodity net going these escalate, of little if when goal quarters the challenge to But is that to on still is our So our couple timing the to of

Joseph Spak

half back ‘XX things event? stabilize it is current the Okay. a or thinking at that your year And that is of

Brian Kesseler

of Aftermarket that goes customer XX-day maybe XX-day, I a customer. That price. depends. lags, that stabilize, a the It’s XXX-day market. it’s all on things through is usually lot is to Obviously, year. There half way lag. If through of again we think variation back pass usually the the the

So, go. continue have to we If continue then it’s just making lag we this. matter as that we they through a to of escalate, get sure

we benefit of the Now, at some that then if it hopefully. comes get point, down,

Joseph Spak

aftermarket sort on calendar have predetermined the through are of those or pushed dates? you side, And increases price at

Brian Kesseler

No, we through. them push generally

Joseph Spak

Okay. Thank you.

Brian Kesseler

you. Thank

Operator

Bret of have we Jefferies. Next, Jordan

Bret Jordan

good Hi, guys. morning

Brian Kesseler

morning. Good

Bret Jordan

On have sales in POS quarter. business, looking second pretty they in aftermarket obviously you your that commented strong retail into are the what about some year-over-year going and like late the Are quarter? I the think Could light talk you inventories channel? strong about

Brian Kesseler

the Yes, we saw pickup.

the in a some pretty saw there As a and but affect our the first weather to Midwest They deliver, POS. those seasonal categories pretty or in. XX-day across off. POS had to those and but the some also production It’s with board, are some orders see as big in from We POS. don’t that Usually South wise. in a lull much we good good, lag points disturbances a we through had did take went customers we produce the reorder from quarter, come a of pretty February now for the strong wise, really good we demand starts a big quarter, XX-day of us after

saw we in we were quarter. a April. into good order We bank the what coming So, happy with saw

in early restocking I off think a good like off we pretty April. their normal and are retail So, demand ebb March inventories, it’s from they flow of their and after but supply,

Bret Jordan

was was specific the specific categories you was seeing far the that of question were as was it I out seasonal strengthen, that second and mix versus anything that like, anything And Okay. as guess ordinary?

Brian Kesseler

product board. BSS lot from purposely lines as us that got weren’t we support, the our costs, across we of structural DCs as to what through but inventory a doing a adding of and work. variation go. go taken of we And the are much out our out so pretty a I No, pretty lowers much little a we the across ordinary, nothing optimization. bit mentioned, couple discontinued do have just places value we where allows They mean have Kevin X

Bret Jordan

final one question. Okay. And then

margin getting or the the segment? higher performance you mentioned products than average I into hybrid, some are the that semi-active mix think higher of you suspension solutions, value into the in the is EV and

Brian Kesseler

Yes.

Bret Jordan

what mix of the talked you sort Have about versus Okay. the is margin average? spread on

Brian Kesseler

it’s margin mixes. up we work products of conventional do bit little a I chalk mean to line. snap our have right some Well, I you got the the when get to to think

we segments think talked of any being OE have a generally these I about about at EBIT performance. X%

good so progress. side, mid-term are and at our mix above where our good there are systems it’s – advanced business the would into I and start making drive our looking Obviously are to suspension we that. expect the business technology when to making NVH we drift think And protection business, to we from stronger get the we we

Bret Jordan

Great. Thank you.

Brian Kesseler

you. Thank

Operator

next will have The come Picariello question Capital Instructions] [Operator Markets. we of from James KeyBanc

James Picariello

Hi, morning guys. good

Brian Kesseler

Good morning, James.

James Picariello

to want back rationale for the re-segment some just color thing. get go I to on the

Powertrain businesses, the right? a terms of something lines? terms is strategic is or and this underlying how few realignment, name Ride just, in there driving along reshuffling reported performance the those and right, more of lines, the that’s they are in efficiencies business So, of In cross-selling,

Brian Kesseler

bit and a of is a very, NVH solving, of the on protection there sell the, highly call performance It’s I to is business I makeup it, problem and systems engineered a much very similar product a very combination will the line. sell the materials think the little it, of AST.

still I so allow to areas those on to want we be the know of at some faster. does some same problem don’t it market, separately, looked customers, but going And go you Kevin, for as opportunities of to... if

Kevin Baird

are over think products, I systems also vehicle. essentially the all protection applications

so other acquisition. Federal-Mogul via And the it came

better growth also and through for vehicles, rest Powertrain protection, of but within products, with given much product. seems And in the a where pure match. just are isn’t Federal-Mogul and it which like also we fit really NVH, have electric applications the it So, systems battery AST the a we

James Picariello

did back any half about Got thinking context for my year? how the if guidance? this, in on And the provide I are commodity exposure what’s apologies but and it. your the embedded net And or missed you quantify you

Brian Kesseler

our is what out bit, it’s timing at of supply because fluctuating we hard quite a base. our mostly we because with of discussed that netted recoveries which customers are the earlier, and with work the haven’t We

that is parts always we else. it. recover then Our If some is get we to work of offset can’t somewhere it fully there to, intent to

bit little you a a change and to bit moves By us. quite probably around I that’s the difficult said time X minutes. now, So, on it would in right

James Picariello

hear Yes, I that. no,

Kevin Baird

agreements the point On we do have a final that on customers. though, escalation with

time through. them they agreed the that to go contractually them but pricing, on customers the majority get on are different we and are And so to. able when Various of we pass commodities, vast lags and have

James Picariello

is parts or within a like forget? July motor seasonality assessed are businesses? me price I assessed of it the passed, year? remind Got kind can not Is within You aftermarket it. timeframe, but Thanks. always of is year that just And or, twice that you twice in a the increases

Brian Kesseler

we even away. lag. Well, and or commodity And then it network we goes today, experiencing when through, a economic generally XX-day right we when increases the lock seeing we them usually is experience them are are increases I that across pass freight mean, we them there will in,

don’t specific schedule. I is a there that So, know

we put days to a a increases the In market it as specific place go. out in movement, fact, It’s see when market. when to isn’t there goes it then schedule to XX usually and we significant price the

James Picariello

Thanks.

Brian Kesseler

Thank you.

Operator

Well, further time. sir, this no questions at

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Tenneco (TEN) 9 May 212021 Q1 Earnings call transcript