Investor Presentation - August 2020 NYSE: TEN - Tenneco Inc.
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Investor Presentation August 2020 NYSE: TEN
Safe Harbor
Forward-Looking Statements
This communication contains forward-looking statements. These forward-looking statements include, but are not limited to, (i) all statements, other than
statements of historical fact, included in this communication that address activities, events or developments that we expect or anticipate will or may occur in the
future or that depend on future events and (ii) statements about our future business plans and strategy and other statements that describe Tenneco’s outlook,
objectives, plans, intentions or goals, and any discussion of future operating or financial performance. These forward-looking statements are included in various
sections of this communication and the words “may,” “will,” “believe,” “should,” “could,” “plan,” “expect,” “anticipate,” “estimate,” and similar expressions (and
variations thereof) are intended to identify forward-looking statements. Forward-looking statements included in this communication concern, among other things,
future performance improvement plans; future financial and operating results; and other statements that are not historical facts. Forward-looking statements are
subject to a number of risks and uncertainties that could cause actual results to materially differ from those described in the forward-looking statements, including
the course of the COVID-19 pandemic and its impact on general economic, business and market conditions: our ability (or inability) to execute on our plans to
respond to the COVID-19 pandemic and our previously announced Accelerate plan and to realize the anticipated benefits of these actions; our financial flexibility
in addressing the impact of the COVID-19 pandemic; our ability to maintain compliance with the agreements governing our indebtedness and otherwise have
sufficient liquidity through the COVID-19 pandemic; the possibility that Tenneco may not complete a separation of the Aftermarket & Ride Performance business
from the Powertrain Technology business; the possibility that Tenneco will be unable to execute on its strategy and maintain compliance with the covenants in its
Credit Agreement; the ability to retain and hire key personnel and maintain relationships with customers, suppliers or other business partners; as well as the risk
factors and cautionary statements included in Tenneco's periodic and current reports (Forms 10-K, 10-Q and 8-K) filed from time to time with the SEC. Given these
risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results. Unless otherwise indicated, the
forward-looking statements in this release are made as of the date of this communication, and, except as required by law, Tenneco does not undertake any
obligation, and disclaims any obligation, to publicly disclose revisions or updates to any forward-looking statements. Additional information regarding these risk
factors and uncertainties is 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, 2019 and quarterly reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020.
In addition, please see Tenneco’s press release issued August 6, 2020 for factors that could cause Tenneco’s future performance to vary from the expectations
expressed or implied by the forward-looking statements herein and for certain reconciliations of GAAP to non-GAAP results. Please see Tenneco’s press releases
issued August 6, 2020 and March 2, 2020 for certain reconciliations of GAAP to non-GAAP results.
2
Tenneco Overview
Diversified profile with end market and regional scale
CTOH, Industrial &
Other 14%
Clean Air
Ride Product 54%
Performance Applications
Light
Vehicle
$2.7 VA Revenue
32%
$4.1
Aftermarket
Clean Air/ Operating & OES
DRiV
TM
Powertrain
DIVISION
Segments DIVISION
VA Revenue
$3.2
China
$4.4 Motorparts 11% 43% North America
Powertrain
ROW 9% Regions
VA Revenue
2019 Revenue
$17.5B Revenue 37%
$14.4B Value-add (VA) Revenue Europe
See reconciliations of GAAP to non-GAAP financial metrics in Tenneco’s press release issued March 2, 2020. 3
Global Manufacturing and Distribution Facilities
78,000 global team members
Manufacturing plants- 217
Distribution centers- 41
AMER EMEA APAC
Team members 32,500 30,500 15,000
Manufacturing plants 75 75 67
Distribution centers 16 21 4
Diversified profile – serving global and regional customers in all key markets
4
Tenneco Business Structure
Globally scaled & focused operating groups
TENNECO
Clean Air/Powertrain DRiV TM
Clean Air Powertrain Motorparts Ride Performance
2019 VA Revenue $4.1B $4.4B $3.2B $2.7B
% of TEN 28% 31% 22% 19%
• Chassis - suspension, steering • Advanced & conventional
• Emission controls • Fuel economy
Product & System & braking suspensions
• Fuel economy • Emission reduction
Solutions • Powertrain - sealing, engine, • NVH reduction
• Acoustic performance • Durability emissions & maintenance • Braking
• Advanced product lines
• N America & Europe
• N America & Europe • Brand & category fortification − Global capability expansion
− Business line & capacity
− Priority customer/platform • Supply chain excellence • Conventional product lines
Strategic Focus optimization
growth • Omni channel support − NA/EMEA capacity
• Industrial growth
• APAC growth • Training & services optimization
• APAC growth
− APAC growth
Advanced Suspension
Targeted Growth Technologies
Large engine (CTOHI) solutions Top 3 regional markets
Investments &
NVH Performance Materials
See reconciliations of GAAP to non-GAAP financial metrics in Tenneco’s press release issued March 2, 2020. 5
Liquidity and Debt Update
Strong liquidity position of $1.37B; compliant with all debt covenants as of June 30, 2020
($ millions)
Debt maturities excluding subsidiary debt:
$ millions
$2,750 $1,598 Book Net Leverage Ratio 6/30/2020
$1,600
Total Debt $6,851
$1,400
$1,200 Cash Balances (1) 1,371
$1,000 $972 Net Debt $5,480
$800 LTM Adjusted EBITDA $921
$654
$600 $500 Net Leverage Ratio 5.95x
$400
$200 $145 Bank Financial
$102 6/30/2020
Maintenance Covenants
$0
2020 2021 2022 2023 2024 2025 2026 Senior secured net leverage ratio
4.57x
(max. 6.75x)
TLA (LIBOR + 175bps) TLB (LIBOR + 300bps)
Revolver borrowings Notes due 2022 (FM 4.875%) Interest coverage ratio (min. 2.00x) 4.23x
Floating Notes due 2024 (FM 4.875%) Notes due 2024 (FM 5.000%) (Bank covenant ratio required as of 6/30/2020)
Notes due 2024 (TEN 5.375%) Notes due 2026 (TEN 5.000%) (1) Includes restricted cash
Adequate flexibility and liquidity available to navigate current market uncertainty;
all-in cost to borrow on all debt facilities is ~3.6%
See reconciliations of GAAP to non-GAAP financial metrics in Tenneco’s press release issued August 6, 2020. 6
Building a Stronger Tenneco
Performance Focus - Margin Expansion & Cash Generation
Reduce Lower Capital Optimize Business Invest in
Structural Cost Intensity Line Portfolio Growth Targets
• Execute Accelerate+ • Improve capex/revenue • Value Stream Simplification • Motorparts – top 3 markets
program ratio - 80/20 value analytics • Advanced Suspension
• Lean corporate & operating • Expand working capital • Align business lines to Technologies
group structure turns portfolio positions • NVH Performance Materials
– Inventory driven • Divest/discontinue non- • Large Engine Solutions
core business lines (CTOHI)
Optimizing shareholder value creation through debt reduction focus
and targeted growth investments
7
Clean Air & Powertrain
Driving Progress Toward Cleaner, More Efficient Engines
8
Clean Air & Powertrain Overview
Driving Progress Toward Cleaner, More Efficient Engines
$8.5B 50,000 161 21
2019 VA Revenue Global team Manufacturing Globally networked
members sites worldwide engineering &
technical centers
Global pure-play powertrain supplier, positioned to capture opportunities
9
Revenue and Business Mix
Clean Air & Powertrain Division – 2019 VA Revenue $8.5 billion
Top OE Platforms (Models)
CTOH, 8% MQB A/B (Golf, Octavia and Sagitar passenger cars)
Industrial & Light Vehicle
Other 3% Ford T3/P552 LD (LD F-150 truck)
19%
3% GM C1XX (Traverse, Enclave and Acadia SUVs)
Other General Motors
19.0% 12.9% 2% Ford T3/P558 HD (HD Super Duty truck)
Product 70%
OES 11%
Applications 2% GM Global Delta/D2XX (Monza passenger car and Equinox SUV)
2% Daimler MRA (E and C class passenger cars)
John Deere Ford Motors 2% GM K2XX / T1XX LD (LD Silverado and Sierra trucks)
2.2% 11.1%
Tata Motors 2% BMW LU (X1 and Mini passenger cars)
2.3%
2% Daimler MFA (CLA and A-Class passenger cars and GLA SUV)
Cummins 2.5% Top Customers
2% GM K2XX / T1XX HD (HD Silverado and Sierra trucks)
PSA Peugeot 2.8%
VA Rev
North America VW Group 2% BMW LK/L7 (3 Series and Z4 passenger cars)
Citroen
2.9% 8.7%
39% 1% RAM DS HD (Ram DS HD truck)
Toyota Motor
3.6% GM Global Epsilon/E2XX (Malibu and Regal passenger cars and
1%
XT4 SUV )
China
14% FAW Daimler AG 1%
Land Rover PLA-D7u (RR Sport, Discovery and Range Rover
3.6%
8.3% SUVs)
Regions 1% FCA EVO/CUSW (Jeep Cherokee truck)
SAIC 3.7%
Motor FCA
BMW
8% 4.3% 7.8%
ROW Caterpillar 4.3% Expected growth in CTOH & Industrial
further diversifies the business profile
Renault/Nissan/
39% Mitsubishi
Europe
See reconciliations of GAAP to non-GAAP financial metrics in Tenneco’s press release issued March 2, 2020. 10Clean Air Segment Key Drivers and Technologies
Products and systems that support ICE, HEV and BEV
Products and Systems Emissions Control Fuel Economy Acoustic Performance
• Thermal management • Mass reduction
• Passive and active noise
• Criteria pollutant • Efficient use and recovery
management
reduction of engine exhaust energy
Selective Catalytic Reduction
Gasoline & Diesel Particulate Filters
Cold Start Thermal Unit (Active Heating)
High Efficiency Urea Mixing
Fabricated Manifolds
Close-Coupled Catalysts
Large Engine Aftertreatment + Dosing
Full Exhaust Aftertreatment Systems
Exhaust Heat Recovery Systems
Lightweight Compact Systems
Smart Sound
Active Electronic Valves
High Performance Passive Valves
Cold End Systems
11Powertrain Segment Key Drivers and Technologies
Products and systems that support ICE, HEV and BEV
Products and Systems Emissions Fuel Economy Durability
• Friction
• Thermal Management • Life (Wear, Fatigue)
• Advanced Combustion
• Seal (Oil) • Seal (Coolant, Gas, Oil)
• Electrification/ Hybridization
Controlled Power Technologies
Heavy-Duty and Light Vehicle Steel Pistons
Spark Plugs
Cylinder Liners
Gaskets
Advanced Gasoline Pistons
Systems Protection
Piston Rings
Bearings
Shaft Seals
Valves
Valve Seats and Valve Guides
12Tightening Emissions Regulations
Regulatory-driven growth expected to accelerate through the next decade
PROJECTED GROWTH OF POWERTRAINS UNDER
• Commercial Truck REGULATION
(millions)
– 2020-21 / 2023 – China VIa/VIb**
– 2020 – India BS VI (skipping BS V)
Regulated Off-Hwy 7.7 10%
– 2023-2027 – CARB & EPA Low NOx** CT: Euro VI
6.1
• Off-Highway Regulated
10%
– 2019 – EU Stage V Off-Hwy
– 2020 – China 4R (equiv. EU Stage 3B + DPF)
5
– 2020/2024 – India BS IV/India BS V 4
Total 4.3
• Light Vehicle
– 2017-2025 – US Tier 3
– 2017-2021 – Euro 6c/6d Real Driving Emissions
2.9
– 2020/2023 – China 6a/6b**
– 2020 – India BS 6 (skipping BS 5) 12% CT: Euro VI
2.1 2.7
CHINA VI CONTENT GROWTH OPPORTUNITY 1.4
• 30% Increase in Light Vehicle VA CPV vs. 2018A
• Commercial VA CPV Expansion Higher
2019 2022 2025 CAGR
Source: PSR production forecast and Tenneco estimates, July 2019
CTOH market expands with increasing number of vehicles under regulation
** Tenneco estimates 13Commercial Truck Regulatory Path
Heavy-Duty Vehicle emission standards
expected to reduce average CO2 emissions by
EMEA
• Upcoming CO2 regulation (-15%/-30%) will lead to additional
ATS requirements for NOx reduction and energy recovery
• EuroVII regulation is not yet defined but will further strengthen
NOx reduction and PEMS
At least
-15% in 2015 -30% in 2030 North America
• Cleaner truck initiative will be implemented in two steps (EPA
Source: European Commission 2024 / 2027) with an expected significant reduction in NOx
reduction and the introduction of a severe low load cycle
China
• After a successful introduction of CNVI nationwide, authorities
PRODUCTS/TECHNOLOGIES IN DEVELOPMENT start working on the definition of CNVII, which will most likely
follow EUVII targets
• New modular architectures for CN/IN, NA and EU
• CTOH burner
• E-heater integration South America
• Next generation mixing • Introduction of EUVI for CT in 2022
14Significant Growth Potential in CTOH
AMERICAS EMEA ASIA PACIFIC
2025 CTOH Production: 1.3M 2025 CTOH Production: 2.1M 2025 CTOH Production: 7.3M
Regulated Diesel 2019: 64% Regulated Diesel 2019: 77% Regulated Diesel 2019: 30%
Regulated Diesel 2025: 70% Regulated Diesel 2025: 77% Regulated Diesel 2025: 72%
Europe 560 888 335
477 Japan/Korea
28 China
1,032
1 1,399 1,266
North America
441
India
1,052
Projected Regulated 2025 Units (thousands) 142
Commercial Truck South America
Off-Highway Engines
Asia Pacific production is expected to be 2x
the Americas and EMEA regions combined
CTOH regulated diesel volume expected to increase by nearly 3.5 million units by 2025, driven mainly by APAC
* Source: PSR July 2019 & Tenneco forecasts, Fuel type = Diesel, NG/LPG, excluding emissions compliance = None 15DRiV
TM
Driving Advancements for Every Vehicle, Every Ride, Every Race, Every Journey
16DRiV™ Overview
$5.9B 28,000 56 41
2019 VA Revenue Global team Manufacturing Global distribution
members sites worldwide centers
Capabilities with global scale to serve aftermarket and original equipment customers
17DRiV™
Driving Advancements for Every Vehicle, Every Ride, Every Race, Every Journey
With global reach and scale, and a world-leading
stable of automotive brands ranging from the
highest level of performance to the broadest
everyday use, DRiV is dedicated to helping drivers
Upper control arm
experience the perfect ride. Top mount
As a global leader serving both aftermarket and OE
markets, DRiV is dedicated to helping its customers Spring assembly
Ball joint
innovate the ride experience in an emerging age of
advanced suspension, autonomous driving, shared Dampers
mobility and electrification. Hub assembly
Inner and outer tie rods
SOLUTIONS PROVIDED FOR
Bushings
Brake rotors
Lower control arm
Linkages
18Serving Aftermarket and OE Customers Globally
™
DRiV Division – 2019 VA Revenue $5.9 billion
CTOH,
Industrial &
Other
6% Light Vehicle DIVERSIFIED BUSINESS PROFILE
VW Group
33% 8.0% Advance • Strong aftermarket counterbalance to
Auto Parts OE market cyclicality
5.4%
Product Ford
Applications
5.1% SEGMENT ADJUSTED EBITDA
GM
4.9%
Aftermarket 61%
& OES
72%
Other
Top Customers 3.6%
O'Reilly
48.8% Auto Parts
North
3.2%
America ATR
China
49% 3.0%
8%
NAPA
2.9%
ROW 9%
2.9% Daimler AG 28%
Regions
2.5%
PEPBoys /
2.1% AutoPlus
2.0% FCA AM OE
1.9%
1.8% 1.9% The Group
34% ADI Motorparts Ride Performance
Alliance
Europe Renault/Nissan/ Tata
Group
Mitsubishi Motors
See reconciliations of GAAP to non-GAAP financial metrics in Tenneco’s press release issued March 2, 2020. 19Motorparts Segment
Leading Aftermarket Product Categories, Brands and Services
• Shock absorbers • Steering and suspension • Brake pads, shoes, linings • Gaskets
PRODUCTS
• Struts and strut assemblies • Wheelend • Rotors and drums • Seals
POSITION 1 #1 North America
#1 Globally #1 North America #1 North America
Top 3 EMEA
• Suspension links, bushings,
• Brake pads • Ignition
PRODUCTS • Emission control products mounts, exhaust isolators
• Brake shoes, linings • Underhood service • Shocks and struts
POSITION 1 Top 32 North America
#1 Globally Top 3 EMEA #1 South America
& EMEA
Global multi-category, multi-brand portfolio of products, services and solutions
1) Market position among branded competitive set.
2) For ignition products 20Motorparts Segment
Vehicles 6-13 years old
(units, millions)
AFTERMARKET GROWTH OPPORTUNITIES in three priority markets NORTH AMERICA 138
134
128
123 122
North America 119
117 117
• Vehicles In Operation (VIO) tailwind – VIO aged 6 to 13 116 116
years growing 2.9% CAGR through 2025
• Opportunity to recapture previous years’ channel conflict
business loss (~$300M)
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Europe
CHINA 152
• Share capture opportunity – Europe business is ~40% 140
147
the size of our North America business with a larger VIO 128
112
99
86
73
61
China 51
• China market growth – poised to be the largest
aftermarket in the world by 2025 with low double digit
growth in VIO aged 6 to 13 years
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Note: based on IHS global LV VIO forecast. Data released 1/31/2020
21Ride Performance Segment
Elevating the OE Ride Experience
NVH Performance Materials Advanced Suspension Tech Ride Control Braking
Offers a suite of noise Dedicated to helping drivers
Offers one of the broadest
vibration and harshness experience the perfect ride A global leader in
product portfolios of
(NVH) solutions with and delivering advanced conventional suspension
friction products in the
solid coverage across LV suspension technologies solutions, DRiVTM sells
market, including solutions
and CT markets and that offer performance, more than 75 million OE
for zero-copper friction
electric vehicle comfort and the power to shocks and struts globally.
materials.
platforms differentiate vehicles.
Technology Growth Optimize Performance
= Growth Engine = Selective Growth
22Ride Performance Growth Engines
NVH Performance Materials Advanced Suspension Technologies
Product & Material Targeted Platform and
Portfolio Expansion Product Portfolio
Leading Edge NVH Solutions Global Market Share
for Emerging Mobility Market Expansion
Regional Expansion &
Enhance System-level
Penetration
Capabilities
Engineered solutions provider in NVH isolation and advanced suspension technologies
23Appendix
24Appendix:
Commitment to Corporate Social Responsibility Driving Results
Environmental Social Governance
• 34% reduction in GHG emissions over the Health and Safety Board and Leadership
past ten years (before acquisition) • Regular board and governance refreshment
• 43% of our manufacturing sites are process
• 8% YOY reduction in emissions intensity of OHSAS 18001 / ISO 45001 certified with
Scope 1 and Scope 2 greenhouse gases select third party audits • 8 of 9 directors are independent
• 46% YOY reduction of Lost Day Rate • 4 of 9 board seats refreshed in last 2 years
• 81% of global mfg. sites ISO 14001 certified
• 9% YOY reduction of Incident Rate • 3 of 9 directors are female
• Reduction targets set for energy and
greenhouse gas emissions, water usage, and
hazardous waste generation and disposal Ethical and Secure Practices
Product Quality • Code of Conduct and Supplier Code of
• Product innovations driven by fuel economy
Conduct are compatible with the UN
standards to reduce CO2 and criteria • 92% of locations certified to IATF 16949 Declaration of Human Rights and the UN
pollutant emissions
Global Compact principles
2018 Performance • Comprehensive risk-based information
Workforce Diversity security program based on industry best
practice frameworks for data security, such
• > 25% US employees diverse / female as NIST and ISO 27001
16.4 Metric 5 Million 4.6 Million 8% Overall • 16,000 diversity partnerships through • Due diligence process to select vendors that
Tonnes CO2e Gallons of H2O Pound Waste Reduction in share Tenneco’s values around human
Savings Recycled Reduction Emissions the Local Job Network
rights, ethics and environmental
responsibility
Read our 2018 Corporate Social Responsibility Report for details on these and other initiatives
25Appendix:
Update on Cost Actions
(as of Q2 ‘20 earnings on August 6, 2020)
Accelerate+ program on track
• Structural cost actions with long-term benefit
• Continue to expect $265M annual savings run-rate by end of 2021
‒ In 2020, $165M run rate savings by end of year with no expected
change to the $150M cost to achieve
• $250M working capital improvement expected; half in 2020
Q2 temporary actions taken to mitigate COVID-19 impacts
• Q2 salary costs reduced at least 25%
‒ Programs in all regions (unpaid furloughs, net pay decreases, etc.)
‒ Executive leadership team reduced salaries 50-100%
• Board of Directors retainer fees reduced 25% for the rest of 2020
Salary reductions continue into Q3 but at a reduced level of
10% to 20%
Largely variable cost base; ~75% of Cost of Goods Sold is materials and labor
26Appendix:
Diversified Business Profile
Combined Tenneco – 2019 VA Revenue $14.4 billion
TOP OE PLATFORMS (MODELS)
7% MQB A/B (Golf, Octavia and Sagitar passenger cars)
General Motors
9.6% 2% Ford T3/P552 LD (LD F-150 truck)
2% GM K2XX / T1XX LD (LD Silverado and Sierra trucks)
Ford Motors
8.6% 2% Ford T3/P558 HD (HD Super Duty truck)
2% GM C1XX (Traverse, Enclave and Acadia SUVs)
1% Daimler MRA (E and C class passenger cars)
Other
VW Group
38.3% 1% GM Global Delta/D2XX (Monza passenger car and Equinox SUV)
Top Customers 8.4%
1% BMW LU (X1 and Mini passenger cars)
VA revenue 1% Daimler MFA (CLA and A-Class passenger cars and GLA SUV)
Daimler AG 1% GM K2XX / T1XX HD (HD Silverado and Sierra trucks)
6.1% 1% BMW LK/L7 (3 Series and Z4 passenger cars)
1% GM Global Epsilon/E2XX (Malibu and Regal passenger cars and XT4 SUV )
FCA
5.6% 1% VW MQB A0 (Polo passenger car and T-Cross SUV)
1.5% 1% RAM DS HD (Ram DS HD truck)
3.2%
1.9% 3.1%
O’Reilly Auto Parts 1.9% 2.8% 1% Ford C1 (Focus passenger car; Escape and Kuga SUVs)
2.5% BMW Renault/ Nissan
PSA Peugeot Citroen 2.1%
2.2% 2.2% FAW SAIC Mitsubishi
Toyota
Tata Motors
Advance Auto Parts Caterpillar
27Appendix:
Full Year 2019 Financial Results
($ millions, except percents and per share data)
2019 Adjusted Free Cash Flow(5)
($ millions)
Revenue $17,450 2019
VA revenue 14,423 Cash from operations $444
Deferred proceeds from factored receivables(3) 250
Adjusted EBITDA 1,415
Cash payments for PP&E(4) (744)
VA adjusted EBITDA margin 9.8%
Adjusted Free Cash Flow $(50)
Interest expense 322
(5) Adjusted Free Cash Flow represents cash flow from operations, plus the proceeds from factored receivables less the
amount of cash payments for property, plant and equipment and software (including a non-cash adjustment for
Adjusted noncontrolling interest expense 63 amounts not paid as of the end of the period). Adjusted Free Cash Flow is not a GAAP calculation and should not be
considered as an alternative to operating cash flows as a measure of liquidity. Tenneco has presented Adjusted Free
Cash Flow because it regularly reviews Adjusted Free Cash Flow a measure of the company's performance. In
Adjusted EPS $2.98 addition, Tenneco believes its investors utilize and analyze the company's Adjusted Free Cash Flow for similar
purposes. However, the Adjusted Free Cash Flow measure presented may not always be comparable to similarly
titled measures reported by other companies due to differences in the components of the calculation.
Adjusted D&A(1) 658
Capital expenditures(2) 713
(1) Difference between Adjusted EBITDA and Adjusted EBIT.
(2) Additions to PP&E, excluding expenditures for software of $27M.
(3) See Proceeds from deferred purchase price of factored receivables on the cash flow statement in the Investing
section. Amount is reclassified from Change in receivables in the Cash from operations section.
(4) Cash payments for PP&E includes capital expenditures for PP&E and software and includes a non-cash
adjustment for amounts not paid as of the end of the period.
See reconciliations of GAAP to non-GAAP financial metrics in Tenneco’s press release issued March 2, 2020.
28Appendix:
Motorparts Segment
Our Categories, Product Lines, Brands Create Depth and Scale
Categories Shocks & Steering &
Braking Sealing Engine Emissions Maintenance
Struts Suspension
Brands
Product lines
Shock Absorbers Control Arms Shoes Head Gaskets Pistons Catalytic Converters Spark Plug
Strut Assemblies Ball Joints Pads Valve Cover Gaskets Piston Ring Set Exhaust Manifolds Air Filters
Bare Strut Tie Rod Ends Rotors Oil Seals Engine Bearings Exhaust Pipes Oil Filters
Coil Springs Wheel Bearings Drums Other Gaskets Valves Mufflers Cabin Air Filter
Top Mounts Sway Bar Links Master Cylinders Valve-train Batteries
RC Accessories Hub Assembly Camshaft Headlamps
Universal Joints Valve Lifters Glow plug
Oil Pump Chemical
OE heritage brings strong culture of engineering, performance and quality
29Appendix:
Tenneco Enterprise Financial Profile
2019 Actuals & Pro Forma 2018 and 2017 Revenue and Earnings, Recast by Segment
2020 2019 2018 2017
($ millions) Q1 Q2 Q1 Q2 Q3 Q4 FY Pro forma Pro forma
Tenneco Revenue
Clean Air $ 1,545 $1,140 $ 1,779 $ 1,827 $ 1,772 $ 1,743 $ 7,121 $ 6,707 $ 6,216
Powertrain 997 602 1,175 1,133 1,082 1,018 4,408 4,737 4,573
Motorparts 706 559 797 835 794 741 3,167 3,527 3,678
Ride Performance 588 336 733 709 671 641 2,754 2,888 2,686
$ 3,836 $2,637 $ 4,484 $ 4,504 $ 4,319 $ 4,143 $ 17,450 $ 17,859 $ 17,153
Value-add Revenue
Clean Air $ 845 517 $ 1,073 $ 1,050 $ 997 $ 974 $ 4,094 $ 4,207 $ 4,029
Powertrain 997 602 1,175 1,133 1,082 1,018 4,408 4,737 4,573
Motorparts 706 559 797 835 794 741 3,167 3,527 3,678
Ride Performance 588 336 733 709 671 641 2,754 2,888 2,686
$ 3,136 $2,014 $ 3,778 $ 3,727 $ 3,544 $ 3,374 $ 14,423 $ 15,359 $ 14,966
Adj. EBITDA(1)
Clean Air $ 104 $38 $ 140 $ 168 $ 157 $ 142 $ 607 $ 625 $ 598
Powertrain 90 (21) 116 118 109 82 425 532 563
Motorparts 73 71 90 126 121 76 413 448 462
Ride Performance 16 (41) 31 50 42 34 157 175 205
Corporate (44) (39) (50) (48) (42) (47) (187) (153) (185)
$ 239 $8 $ 327 $ 414 $ 387 $ 287 $ 1,415 $ 1,627 $ 1,643
Value-add Adj. EBITDA(1) Margin
Clean Air 12.3% 7.4% 13.0% 16.0% 15.7% 14.6% 14.8% 14.9% 14.8%
Powertrain 9.0% -3.5% 9.9% 10.4% 10.1% 8.1% 9.6% 11.2% 12.3%
Motorparts 10.3% 12.7% 11.3% 15.1% 15.2% 10.3% 13.0% 12.7% 12.6%
Ride Performance 2.7% -12.2% 4.2% 7.1% 6.3% 5.3% 5.7% 6.1% 7.6%
Tenneco Total 7.6% 0.4% 8.7% 11.1% 10.9% 8.5% 9.8% 10.6% 11.0%
See reconciliations of GAAP to non-GAAP financial metrics at the segment level in Tenneco’s quarterly earnings releases and attachments for 2020 and 2019, and pro forma reconciliations for 2018 and 2017 on pages 31 and 32
(1) Including noncontrolling interests 30Appendix:
FY 2018 Recast Pro Forma(2) Revenue and Adjusted EBITDA
Reconciliation of GAAP(1) to Non-GAAP Results
Pro Forma New Tenneco Pro Forma DRiV
Corporate- Ride Corporate- Pro Forma
($ millions except per share amounts) Clean Air Powertrain New Tenneco Motorparts DRiV Other/Elim
New Tenneco Performance DRiV Total Tenneco
Net sales and operating revenues $ 6,707 $ 4,737 - $ 11,444 $ 3,527 $ 2,888 - $ 6,415 - $ 17,859
Less: Substrate sales 2,500 - - 2,500 - - - - - 2,500
Value-add revenues (3) 4,207 4,737 - 8,944 3,527 2,888 - 6,415 - 15,359
EBIT, Earnings (Loss) before interest expense,
443 184 - 627 276 (56) - 220 (269) 578
income taxes and noncontrolling interests
Depreciation and amortization of other intangibles 154 243 - 397 96 144 - 240 3 640
Total EBITDA including noncontrolling interests (4) 597 427 - 1,024 372 88 - 460 (266) 1,218
Loss on Sale of Receivables reclass 2 2 4 8 21 1 - 22 - 30
Segment change impact 12 39 (54) (3) (69) 59 (103) (113) 116 -
Total EBITDA including noncontrolling interests
611 468 (50) 1,029 324 148 (103) 369 (150) 1,248
after reclass and segment change(4)
Adjustments(2)
Restructuring and related expenses 11 7 - 18 13 46 - 59 - 77
Cost reduction initiatives - - - - - 10 - 10 8 18
Acquisition advisory costs - - - - - - - - 96 96
Costs to achieve synergies 3 - - 3 36 11 - 47 12 62
Purchase accounting adjustments - 44 - 44 57 5 - 62 - 106
Anti-dumping duty charge - - - - 16 - - 16 - 16
Environmental charge - - - - - - - - 4 4
Warranty charge - - - - - 5 - 5 - 5
Litigation settlement accrual - - - - - 9 - 9 1 10
Loss on debt modification - - - - - - - - 10 10
Pension charges - - - - - 3 - 3 - 3
Goodwill settlement charge - - - - - 3 - 3 - 3
Purchase price contingency - 5 - 5 - - - - - 5
Transaction related costs - - - - - - - - 14 14
Cost to exit a multiemployer pension plan - 5 - 5 - - - - - 5
Gain (loss) on sale of assets - - - - - (65) - (65) - (65)
Charge for extinguishment of dissenting
- - - - - - - - 5 5
shareholders’ shares
Other - 3 - 3 2 - - 2 - 5
Adjusted EBITDA (5) $ 625 $ 532 $ (50) $ 1,107 $ 448 $ 175 $ (103) $ 520 $ - $ 1,627
Adjusted EBITDA as % of value-add revenue (6) 14.9% 11.2% 12.4% 12.7% 6.1% 8.1% 10.6%
See footnotes on slide 33 31Appendix:
FY 2017 Recast Pro Forma(2) Revenue and Adjusted EBITDA
Reconciliation of GAAP(1) to Non-GAAP Results
Pro Forma New Tenneco Pro Forma DRiV
Corporate- Ride Corporate- Pro Forma
($ millions except per share amounts) Clean Air Powertrain New Tenneco Motorparts DRiV Other/Elim
New Tenneco Performance DRiV Total Tenneco
Net sales and operating revenues $ 6,216 $ 4,573 - $ 10,789 $ 3,678 $ 2,686 - $ 6,364 - $ 17,153
Less: Substrate sales 2,187 - - 2,187 - - - - - 2,187
Value-add revenues (3) 4,029 4,573 - 8,602 3,678 2,686 - 6,364 - 14,966
EBIT, Earnings (Loss) before interest expense,
420 234 - 654 394 (42) - 352 (272) 734
income taxes and noncontrolling interests
Depreciation and amortization of other intangibles 142 254 - 396 92 132 - 224 4 624
Total EBITDA including noncontrolling interests (4) 562 488 - 1,050 486 90 - 576 (268) 1,358
Loss on Sale of Receivables reclass 2 2 - 4 16 1 - 17 - 21
Segment change impact 7 54 (71) (10) (67) 75 (114) (106) 116 -
Total EBITDA including noncontrolling interests
571 544 (71) 1,044 435 166 (114) 487 (152) 1,379
after reclass and segment change(4)
Adjustments(2)
Restructuring and related expenses 23 16 - 39 21 23 - 44 1 84
Cost reduction initiatives 4 - - 4 3 12 - 15 3 22
Loss on debt modification - - - - - - - - 5 5
Pension charges / Stock vesting - - - - - - - - 13 13
Goodwill impairment charge - 11 - 11 4 7 - 11 - 22
Antitrust settlement accrual - - - - - - - - 132 132
Warranty settlement - - - - - 7 - 7 - 7
Gain on sale of unconsolidated JV - - - - - - - - (5) (5)
Gain from termination of customer contract - - - - - (6) - (6) - (6)
Warranty release - - - - (4) - - (4) - (4)
Release of deferred purchase price payment - - - - - (3) - (3) - (3)
EBITDA contribution of pending asset sales - (2) - (2) - - - - - (2)
Transaction related costs - 3 - 3 1 - - 1 3 7
Gain (loss) on sale of business - (3) - (3) - - - - - (3)
Gain (loss) on sale of nonconsolidated
- - - - 2 - - 2 - 2
affiliates
Gain (loss) on sale of assets - (6) - (6) - (1) - (1) - (7)
Adjusted EBITDA (5) $ 598 $ 563 $ (71) $ 1,090 $ 462 $ 205 $ (114) $ 553 $ - $ 1,643
Adjusted EBITDA as % of value-add revenue (6) 14.8% 12.3% 12.7% 12.6% 7.6% 8.7% 11.0%
See footnotes on slide 33 32Footnotes to slides 31 - 32
(1) U.S. Generally Accepted Accounting Principles.
(2) Tenneco presents pro forma revenues and earnings measures to show what the company’s performance would have been had Federal-Mogul been consolidated with Tenneco for the
entirety of 2018. We believe this supplemental information is useful to investors who are trying to understand the results of the entire enterprise, including Federal-Mogul. The Motorparts
segment reflects the company’s historical Aftermarket segment plus the Motorparts aftermarket business acquired in the Federal-Mogul acquisition. The Ride Performance segment reflects
the company’s historical Ride Performance segment plus the Motorparts OE business acquired in the Federal-Mogul acquisition.
(3) Tenneco presents the above reconciliation of revenues in order to reflect value-add revenues separately from substrate sales. Substrate sales include precious metals pricing, which may be
volatile. Substrate sales occur when, at the direction of its OE customers, Tenneco purchases catalytic converters or components thereof from suppliers, uses them in its manufacturing
processes and sells them as part of the completed system. While Tenneco original equipment customers assume the risk of this volatility, it impacts reported revenue. Excluding substrate
sales removes this impact. Tenneco uses this information to analyze the trend in revenues before these factors. Tenneco believes investors find this information useful in understanding
period to period comparisons in the company's revenues.
(4) EBITDA including noncontrolling interests represents income before interest expense, income taxes, noncontrolling interests and depreciation and amortization. We have also presented
EBITDA including noncontrolling interests to give effect to the reclassification of financing charges on sale of receivables that took place in the first quarter 2019 and to give effective to the
impact of the segment changes that occurred in the first quarter of 2019. EBITDA including noncontrolling interests is not a calculation based upon GAAP. The amounts included in the
EBITDA including noncontrolling interests calculation, however, are derived from amounts included in the historical statements of income data. In addition, EBITDA including noncontrolling
interests should not be considered as an alternative to net income (loss) attributable to Tenneco Inc. or operating income as an indicator of the company's operating performance, or as an
alternative to operating cash flows as a measure of liquidity. Tenneco has presented EBITDA including noncontrolling interests because it regularly reviews EBITDA including noncontrolling
interests as a measure of the company's performance. In addition, Tenneco believes its investors utilize and analyze the company's EBITDA including noncontrolling interests for similar
purposes. Tenneco also believes EBITDA including noncontrolling interests assists investors in comparing a company's performance on a consistent basis without regard to depreciation and
amortization, which can vary significantly depending upon many factors. However, the EBITDA including noncontrolling interests measure presented may not always be comparable to
similarly titled measures reported by other companies due to differences in the components of the calculation.
(5) Tenneco presents the above reconciliation of GAAP to non-GAAP earnings measures primarily to reflect the results in a manner that allows a better understanding of the results of operational
activities separate from the financial impact of decisions made for the long-term benefit of the company and other items impacting comparability between the periods. Adjustments similar
to the ones reflected above have been recorded in earlier periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Using only the non-GAAP
earnings measures to analyze earnings would have material limitations because its calculation is based on the subjective determinations of management regarding the nature and
classification of events and circumstances that investors may find material. Management compensates for these limitations by utilizing both GAAP and non-GAAP earnings measures
reflected above to understand and analyze the results of the business. The company believes investors find the non-GAAP information helpful in understanding the ongoing performance of
operations separate from items that may have a disproportionate positive or negative impact on the company's financial results in any particular period.
(6) “Adjusted EBITDA” is EBITDA including noncontrolling interests (after giving effect to the reclassification and segment change described above) and is presented in order to reflect the results
in a manner that allows a better understanding of operational activities separate from the financial impact of decisions made for the long term benefit of the company and other items
impacting comparability between the periods. Similar adjustments to EBITDA including noncontrolling interests have been recorded in earlier periods, and similar types of adjustments can
reasonably be expected to be recorded in future periods. The company believes investors find the non-GAAP information helpful in understanding the ongoing performance of operations
separate from items that may have a disproportionate positive or negative impact on the company's financial results in any particular period.
(7) Tenneco presents the above reconciliation in order to reflect Adjusted EBITDA as a percent of both value-add revenues. Presenting Adjusted EBITDA as a percent of value-add revenue assists
investors in evaluating the company's operational performance without the impact of substrate sales, which can be volatile.
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