LAKE FOREST, Ill., Jan. 7, 2020 /PRNewswire/ -- Tenneco Inc.
(NYSE: TEN) (the "Company") today announced plans to
streamline its leadership structure and reinforced its commitment
to the planned spin-off of its Aftermarket and Ride Performance
business ("DRiV") from the remaining Powertrain Technology business
("New Tenneco"). This action is part of a broader plan to
accelerate the reduction of operational costs, improve cash flow
performance and reduce leverage.
The Company announced that Brian
Kesseler, Tenneco's Co-Chief Executive Officer and a member
of the Board of Directors, will assume the newly consolidated role
of Chief Executive Officer of Tenneco. Kesseler will oversee the
operations of the New Tenneco business, in addition to continuing
to oversee the DRiV business. Roger
Wood will no longer serve as Tenneco's Co-Chief Executive
Officer and is stepping down as a Director of the Company,
effective immediately.
Jason Hollar will continue to
serve as Executive Vice President and Chief Financial Officer of
Tenneco overseeing the financial organizations of both DRiV and New
Tenneco.
"On behalf of the Board of Directors, I would like to thank
Roger for his dedication to Tenneco during a critical time for our
company," said Gregg M. Sherrill,
Chairman of the Tenneco Board. "We appreciate his service and
contributions in leading the New Tenneco business as we began the
integration of the Federal-Mogul acquisition. As we pursue the
separation of our businesses, the Board determined that
consolidating our leadership structure now will help improve
Tenneco's operational efficiency and achieve our near-term
financial performance objectives. We wish Roger the very best in
his future endeavors."
Business Separation Update
In 2019, the Company delivered on acquisition related cost
synergy targets almost a year ahead of schedule. During 2020,
Tenneco will be focused on the execution of its accelerated
performance improvement plan to facilitate the expected separation
of the businesses. The Company intends to provide additional
details on this plan when it reports full year 2019 earnings.
As previously discussed in the Company's third quarter release
on October 31, 2019, current
end-market conditions are affecting the Company's ability to
complete a separation in the mid-year 2020 time range. The
Company expects that these trends will continue throughout this
year. Tenneco has made significant progress to facilitate the
planned spin-off of the DRiV business and has completed all
necessary system and process components required for New Tenneco
and DRiV to operate independently. In this respect, the Company is
ready to separate the businesses as soon as favorable conditions
are present. In order to facilitate the separation, the Company
continues to evaluate multiple strategic alternatives, as well as
options to deleverage and mitigate the ongoing impact of
challenging market conditions.
"The Tenneco Board and management team remain focused on
delivering shareholder value," said Brian
Kesseler, CEO of Tenneco. "While we are making tangible
progress to optimize our performance and right-size our cost
structure, we continue to face a volatile industry environment
which has created near-term headwinds. Streamlining our leadership
structure is a first step in a comprehensive plan to further expand
our margins, improve cash flows and lower our leverage profile. We
believe these incremental actions will better position both
businesses for the planned separation. This plan is modular and
specifically tailored to each division to ensure continuous
improvement even after the businesses are separated."
About Tenneco
Headquartered in Lake Forest, Illinois, Tenneco is one of the
world's leading designers, manufacturers and marketers of
Aftermarket, Ride Performance, Clean Air and Powertrain products
and technology solutions for diversified markets, including light
vehicle, commercial truck, off-highway, industrial and the
aftermarket, with 2018 revenues of $11.8
billion and approximately 81,000 employees worldwide. On
October 1, 2018, Tenneco completed
the acquisition of Federal-Mogul, a leading global supplier to
original equipment manufacturers and the aftermarket.
Additionally, the company expects to separate its businesses to
form two independent companies, an Aftermarket and Ride Performance
company as well as a Powertrain Technology company.
About the new Tenneco - the future Powertrain Technology
company
Following Tenneco's expected separation to form two
independent companies, an Aftermarket and Ride Performance company
(DRiV™), as well as a new Powertrain Technology company, the new
Tenneco will be one of the world's largest pure-play powertrain
companies serving OE markets worldwide with engineered solutions
addressing fuel economy, power output, and criteria pollution
requirements for gasoline, diesel and electrified powertrains. The
new Tenneco would have 2018 pro-forma revenues of $11.4 billion, serving light vehicle, commercial
truck, off-highway and industrial markets.
About DRiV™ - the future Aftermarket and Ride Performance
company
Following the expected separation of Tenneco to form
two independent companies, an Aftermarket and Ride Performance
company (DRiV™) as well as a new Powertrain Technology company,
DRiV will be one of the largest global multi-line, multi-brand
aftermarket companies, and one of the largest global OE ride
performance and braking companies. DRiV's principal product brands
will feature Monroe®, Ӧhlins®, Walker®, Clevite® Elastomers, MOOG®,
Fel-Pro®, Wagner®, Ferodo®, Champion® and others. DRiV would have
2018 pro-forma revenues of $6.4
billion, with 54% of those revenues from aftermarket and 46%
from original equipment customers.
Forward-Looking Statements
This press release contains forward-looking statements. The
words "may," "will," "believe," "should," "could," "plan,"
"expect," "anticipate," "estimate," and similar expressions (and
variations thereof), identify these forward-looking statements.
These forward-looking statements are based on the current
expectations of the Company (including its subsidiaries). Because
these statements involve risks and uncertainties, actual results
may differ materially from the expectations expressed in the
forward-looking statements. Important factors that could cause
actual results to differ materially from the expectations reflected
in the forward-looking statements include:
- general economic, business and market conditions;
- our ability to source and procure needed materials,
components and other products and services in accordance with
customer demand and at competitive prices;
- the cost and outcome of existing and any future claims,
legal proceedings or investigations, including, but not limited to,
any of the foregoing arising in connection with the ongoing global
antitrust investigation, product performance, product safety or
intellectual property rights;
- changes in consumer demand, prices and our ability to have
our products included on top selling vehicles, including any shifts
in consumer preferences away from historically higher margin
products for our customers and us, to other lower margin vehicles,
for which we may or may not have supply arrangements, and the
cyclical nature of the global vehicle industry, including the
performance of the global aftermarket sector;
- changes in consumer demand for our original equipment
products or aftermarket products, or changes in automotive and
commercial vehicle manufacturers' production rates and their actual
and forecasted requirements for our products, due to difficult
economic conditions and/or regulatory or legal changes affecting
internal combustion engines and/or aftermarket products;
- our dependence on certain large customers, including the
loss of any of our large original equipment manufacturer customers
(on whom we depend for a substantial portion of our revenues), or
the loss of market shares by these customers if we are unable to
achieve increased sales to other customers or any change in
customer demand due to delays in the adoption or enforcement of
worldwide emissions regulations;
- new technologies that reduce the demand for certain of our
products or otherwise render them obsolete;
- our ability to introduce new products and technologies that
satisfy customers' needs in a timely fashion;
- the overall highly competitive nature of the automotive and
commercial vehicle parts industries, and any resultant inability to
realize the sales represented by our awarded book of business
(which is based on anticipated pricing and volumes over the life of
the applicable program);
- changes in capital availability or costs, including
increases in our cost of borrowing (i.e., interest rate increases),
the amount of our debt, our ability to access capital markets at
favorable rates, and the credit ratings of our debt;
- our ability to comply with the covenants contained in our
debt instruments;
- our working capital requirements;
- our ability to successfully execute cash management and
other cost reduction plans, and to realize the anticipated benefits
from these plans;
- risks inherent in operating a multi-national company,
including economic conditions, such as currency exchange and
inflation rates, and political conditions in the countries where we
operate or sell our products, adverse changes in trade agreements,
tariffs, immigration policies, political stability, and tax and
other laws, and potential disruptions of production and
supply;
- increasing competition from lower cost, private-label
products;
- damage to the reputation of one or more of our leading
brands;
- the effect of improvements in automotive parts on
aftermarket demand for some of our products;
- industrywide strikes, labor disruptions at our facilities or
any labor or other economic disruptions at any of our significant
customers or suppliers or any of our customers' other
suppliers;
- developments relating to our intellectual property,
including our ability to adapt to changes in technology;
- costs related to product warranties and other customer
satisfaction actions;
- the failure or breach of our information technology systems,
including the consequences of any misappropriation, exposure or
corruption of sensitive information stored on such systems and the
interruption to our business such failure or breach may
cause;
- the effect of consolidation among vehicle parts suppliers
and customers on our ability to compete in the highly competitive
automotive and commercial vehicle supplier industry;
- changes in distribution channels or competitive conditions
in the markets and countries where we operate;
- the evolution towards autonomous vehicles and car and ride
sharing;
- customer acceptance of new products;
- our ability to successfully integrate, and benefit from, any
acquisitions we complete;
- our ability to effectively manage our joint ventures and
other third-party relationships;
- the potential impairment in the carrying value of our
long-lived assets, goodwill, or indefinite-lived intangible assets
or our inability to realize our deferred tax assets;
- the negative effect of fuel price volatility on
transportation and logistics costs, raw material costs,
discretionary purchases of vehicles or aftermarket products, and
demand for off-highway equipment;
- increases in the costs of raw materials or components,
including our ability to successfully reduce the effect of any such
cost increases through materials substitutions, cost reduction
initiatives, customer recovery, and other methods;
- changes by the Financial Accounting Standards Board or the
Securities and Exchange Commission of authoritative generally
accepted accounting principles or policies;
- changes in accounting estimates and assumptions, including
changes based on additional information;
- any changes by the International Organization for
Standardization (ISO) or other such committees in their
certification protocols for processes and products, which may have
the effect of delaying or hindering our ability to bring new
products to market;
- the effect of the extensive, increasing, and changing laws
and regulations to which we are subject, including environmental
laws and regulations, which may result in our incurrence of
environmental liabilities in excess of the amount reserved or
increased costs or loss of revenues relating to products subject to
changing regulation;
- potential volatility in our effective tax rate;
- disasters, such as fires, earthquakes and flooding, and any
resultant disruptions in the supply or production of goods or
services to us or by us, in demand by our customers or in the
operation of our system, disaster recovery capabilities or business
continuity capabilities;
- acts of war and/or terrorism, as well as actions taken or to
be taken by the United States and
other governments as a result of further acts or threats of
terrorism, and the effect of these acts on economic, financial, and
social conditions in the countries where we operate;
- pension obligations and other postretirement
benefits;
- our hedging activities to address commodity price
fluctuations; and
- the timing and occurrence (or non-occurrence) of other
transactions, events and circumstances which may be beyond our
control.
In addition, important factors related to the acquisition of
Federal-Mogul LLC ("Federal-Mogul") and the planned separation of
the Company into a powertrain technology company and an aftermarket
and ride performance company that could cause actual results to
differ materially from the expectations reflected in the
forward-looking statements, including:
- the risk the Company may not complete a separation of its
powertrain technology business and its aftermarket and ride
performance business (or achieve some or all of the anticipated
benefits of the separation);
- the risk the combined company and each separate company
following the separation will underperform relative to our
expectations;
- the ongoing transaction costs and risk we may incur greater
costs following separation of the business;
- the risk the spin-off is determined to be a taxable
transaction;
- the risk the benefits of the acquisition of Federal-Mogul,
including synergies, may not be fully realized or may take longer
to realize than expected;
- the risk the acquisition of Federal-Mogul may not advance
our business strategy;
- the risk we may experience difficulty integrating or
separating employees or operations; and
- the risk the transaction may have an adverse effect on
existing arrangements with us, including those related to
transition, manufacturing and supply services and tax matters; our
ability to retain and hire key personnel; or our ability to
maintain relationships with customers, suppliers or other business
partners.
The Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after
the date of this press release. Additional information regarding
these risk factors and uncertainties is, and will be, detailed from
time to time in the company's SEC filings, including but not
limited to its annual report on Form 10-K for the year ended
December 31, 2018.
Investor inquiries:
Linae Golla
847-482-5162
lgolla@tenneco.com
Rich Kwas
248-849-1340
rich.kwas@tenneco.com
Media inquiries:
Bill Dawson
847-482-5807
bdawson@tenneco.com
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SOURCE Tenneco Inc.