Tenneco's revenue slumped and the company swung to an adjusted net loss in the first quarter as automakers suspended production because of the coronavirus pandemic, the supplier said Friday.
The maker of ride control and emissions systems said first-quarter revenue fell 14 percent to $3.84 billion. The company estimates the COVID-19 crisis affected value-add revenue by $340 million.
Tenneco's first-quarter net loss widened to $839 million from a loss of $117 million last year. The net loss included noncash impairments of $854 million.
Its adjusted net loss was $26 million, compared with income of $42 million in the year-earlier period. Adjusted earnings before interest, taxes, depreciation and amortization dropped 27 percent to $239 million.
Shares of Tenneco were up 15.7 percent to $5.24 in midday trading Friday. Tenneco joins several other major suppliers, including Aptiv, Adient, BorgWarner and Magna, in reporting quarterly earnings this week.
"Tenneco responded quickly to the COVID-19 crisis to protect our team members' health and safety while taking aggressive actions to mitigate the financial impact of the pandemic on the company," CEO Brian Kesseler said in a statement. "We expanded on the structural cost reductions introduced last quarter, and implemented a range of temporary cost reductions including plant closures, deferment of discretionary spending and the reduction of capital expenditures."
The company said about 75 percent of its plants and distribution centers worldwide are operating at various levels of production as of the first week of May, up from a low of 47 percent during the first week of April.
Like other suppliers, Tenneco withdrew is 2020 outlook and said Friday it won't provide full-year guidance because of uncertainty related to the virus pandemic.
The company said on Friday it would suspend or reduce operations, furlough workers, implement pay cuts and reduce capital spending, which would help it save $65 million on a annual run-rate basis by end of 2020. That's in addition to the two-year, $200 million savings plan announced earlier this year.
Tenneco also got some relief earlier this week after its lenders changed the terms of a debt covenant.
"The covenant amendment to our senior credit facility... provides us with additional headroom to operate in the current economic environment," CFO Kenneth Trammell said on a call with analysts.
As of March 31, Tenneco had liquidity of $1.57 billion, made up of $770 million cash and $800 million undrawn on its revolving credit facility. The company said it has drawn the remaining amount available.
The company said it believes it has adequate liquidity to weather the downturn.
Tenneco, whose biggest shareholder is activist investor Carl Icahn, plans to split into two publicly traded companies — one from its aftermarket and ride-performance business DRiV and a new Tenneco, based on its powertrain technology. But it has struggled to separate since the plan was announced in 2018.
The company said previously that market conditions could affect its ability to complete a separation in the midyear 2020 time range.
Tenneco ranks No. 26 on the Automotive News Europe list of the top 100 global suppliers, with worldwide sales to automakers of $10 billion in 2018.
Shares of parts suppliers rallied Friday after stronger-than-expected results suggest the companies may be doing better than feared amid the challenges posed by the coronavirus pandemic.
Besides Tenneco, American Axle and Lear were among the biggest gainers in the sector after all three reported first-quarter results that impressed investors and analysts, though concerns about the second quarter persist. Shares also received a boost on news that manufacturers in Michigan and California may resume operations in the coming days.
The S&P Supercomposite Auto Components Industry Index gained as much as 6.2 percent, while the S&P 500 Index rose 1.5 percent. Valuations in the sector had suffered significantly this year, as investors worried about a sharp decline in car sales and production as people were advised to stay home in order to curb the spread of the COVID-19 infection.
Reuters and Bloomberg contributed to this report.