Specialist
Former VP at Tenneco Inc
Agenda
- Competitive synergies and competencies across Tenneco’s (NYSE: TEN) core business segments
- Clean Air and Ride Performance segments' revenue metrics
- Potential for long-term Clean Air profitability in an evolving business environment
- Credit and near-term risks
Questions
1.
Can we start with your high-level overview of tier 1 auto suppliers? What key trends and themes do you think the investment community should be tracking particularly closely?
2.
What is your up-to-date assessment of the semiconductor shortage in the industry, specifically on the production side? How do you expect it to impact Tenneco and its customer base, especially with OEMs cutting back production?
3.
How do you assess the competitive positioning and revenue trajectory of Tenneco’s Clean Air segment?
4.
You said Tenneco perceives the Clean Air segment as a cash machine – could you elaborate on that? Are there any particular CAPEX investments you’d expect the cash from this segment to be allocated towards?
5.
I believe value-added revenue for the Clean Air segment peaked at around USD 4.2bn back in 2018. How should we frame the revenue declines or increases for Clean Air, given the seasonally adjusted revenue rates for 2021 vs 2018 and the increasing penetration of EVs?
6.
Tenneco’s Q4 2020 earnings call expressed a fairly optimistic tone for the remainder of 2021. How should we reconcile that with your assessment of the Clean Air segment? Did the management team sound too optimistic in your view?
7.
Do you think further volume declines are inevitable in Tenneco’s Powertrain business? What might its future hold?
8.
Tenneco discussed a potential spin-off of the DRiV unit in 2019. Do you think this could still happen?
9.
How would you assess Tenneco’s execution of the Accelerate programme roll-out?
10.
How would you caution Tenneco towards these cost-cutting or cost-rationalisation strategies? How do you think the company can avoid overcutting?
11.
A PE firm was reportedly interested in buying Tenneco’s Powertrain business in 2019. What is your retrospective assessment of this interest? Are there any natural industry buyers you would highlight if the Powertrain business were to be sold eventually?
12.
Does Tenneco have any product innovations that could help it gain incremental pricing power over customers – specifically on new contracts with OEMs, which are planned many years in advance?
13.
EVs will have fewer individual components, which many people have said could hurt the tier 1s in particular. How should we frame the impact on Tenneco? Are there any additional steps you think the company should be taking to adapt to this new reality?
14.
What are your thoughts on Tenneco’s Aftermarket business? How would you describe its positioning and revenue growth outlook?
15.
Do you think Tenneco’s heavy European exposure places it at greater risk than other suppliers? There have been numerous announcements around phasing out internal combustion engines in Europe, but it seems like Tenneco might be slightly behind on this.
16.
Is there anything further that you think Tenneco can do to drive down its sourcing and procurement costs? How do you generally assess the performance of the company’s procurement team?
17.
What EBIT margin improvements do you think Tenneco can achieve through its Accelerate programme?
18.
How can Tenneco seek to maintain margins in the Clean Air segment while managing stagnant volumes?
19.
Could you elaborate on Tenneco’s platinum exposure and inflation here? I know CEO Brian Kesseler has said the company can pass it through to customers, but might OEMs push back on any inflation pass-through in light of the declining volumes on internal combustion platforms?
20.
How do you assess Tenneco’s general investments and progress towards the EV transition? Might it need to invest more than it has planned to? How would you grade the company’s execution here?
21.
What are your thoughts on Tenneco’s debt load moving forward? Do you think the company should consider reducing it over the next couple of years? Is it an inhibiting factor to some of the dynamics we’ve discussed, such as the EV transition?
22.
What is your assessment of Brian Kesseler and the rest of Tenneco’s management team? How confident are you in their ability to navigate this uncertain period?
23.
What do you think is the post-pandemic new normal for Tenneco and tier 1 auto suppliers more broadly?
24.
What are your best- and worst-case scenarios for Tenneco over the next 2-3 years, taking all the segments into consideration?
25.
Are there any key topics relating to Tenneco or the broader industry you’d like to highlight in conclusion?
