Tenneco Inc. (TEN) announced that its board of directors has approved a share repurchase program by authorizing the repurchase of up to 400,000 shares of the company’s outstanding common stock for the next 12 months.
The program is intended to offset dilution from shares of restricted stock and stock options that were issued in 2011 to employees under the company’s long-term compensation plan.
Tenneco focuses on reducing its debts and improving its cash balance. As a result, the company intends to begin capital returns to its shareholders. At the end of 2010, Tenneco’s cash and cash equivalents amounted to $233 million, an increase from $167 million in the year-ago period. Meanwhile, long-term debt increased to $1.16 billion from $1.15 billion a year ago.
Tenneco depicted a profit of $39 million or 63 cents in the first quarter of 2011, surpassing the Zacks Consensus Estimate by 15 cents per share. It more than doubled from $15 million or 25 cents in the same quarter of 2010 driven by higher original equipment (OE) volumes and strong aftermarket sales.
Revenues in the quarter appreciated 34% to $1.76 billion on the back of higher OE production volumes, strong aftermarket sales and incremental revenues from new light and commercial vehicle launches. It was higher than the Zacks Consensus Estimate of $1.63 billion. Excluding substrate sales and $42 million in currency impact, revenues increased 23% to $1.30 billion.
Tenneco is a Lake Forest, Illinois based leading manufacturer and supplier of emission control, ride control systems, and systems for the automotive OEMs and the aftermarket. The company has many program launches in the pipeline.
The company is launching diesel after treatment programs with 13 commercial vehicle and engine manufacturers globally through 2012 in North America, Europe, China and South America. It is also adding Daimler and MAN, both in South America, to its list of nine previously announced commercial vehicle customers.
In addition, it has recently announced new aftermarket business in North America with seven customers, which is expected to generate more than $15 million in annual revenue.
However, the impact of earthquake and tsunami in Japan and weaker industry conditions, especially in Australia are expected to hamper the company’s results. As a result, the company retains a Zacks #3 Rank on its stock, which translates to a short-term (1 to 3 months) rating of Hold and we reiterate our long-term (more than 6 months) recommendation of Neutral.
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