Tenneco Inc Q3 2020 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: James Albert Picariello - KeyBanc Capital Markets Inc., Research Division - Analyst : Just within the fourth quarter guide, it sounds as though your temporary cost-out measures will be fully unwound. So that's my first point of clarification. Then just to get to the 10.5% EBITDA profitability, can you talk about where we might see the most significant sequential step down? You're guiding to 200 basis points in year-over-year margin improvement. I'm just trying to get a sense for what segments may be benefited the most from the temporary measures as we bridge to this fourth quarter.

Question: James Albert Picariello - KeyBanc Capital Markets Inc., Research Division - Analyst : Got it. No, that's helpful. And then as we think about next year, if we want to try to quantify what the year-over-year headwind might be from a temporary cost-out measure standpoint, so you get the $50 million unwound in -- from 3Q to 4Q, just thinking like on a full year basis '21 versus '20 versus this year. And then does that math -- if my math is close, on the structural savings side, you might be looking at $135 million in incremental benefit, right? So is the bias -- my ultimate question is the bias to your normalized incremental margin above that level? Or is there like equal -- are there equal offsets?

Question: James Albert Picariello - KeyBanc Capital Markets Inc., Research Division - Analyst : Yes, yes. No, it does. Sure. If I could just slip one more, can you help us better understand the mechanics behind the deferred tax asset write-down? I mean, it sounds as though it's primarily related to your U.S. business and that you can still utilize your NOLs in the future. So like what exactly reflects the valuation allowance charge? Is it simply a function of a lower U.S. earnings outlook? Over what time frame? Just any clarity on this, I think, would be helpful.