Industrial Conference
Our Markets: Light Vehicle • Commercial Truck • Off-Highway / Large Engine • Aftermarket
S T R AT E G I C I M P E R AT I V E S
• Diversified profile
– Product lines –Platforms
– End markets –Geographies
– Customers
* Source IHS Automotive January 2017 global light vehicles ** CAGR • Global aftermarket leadership
Pioneering Global Ideas for Cleaner Air and Smoother, Quieter and Safer Transportation
6
Built to Outperform
Margin Expansion
† See reconciliations to U.S. GAAP at end of presentation. * Value-add Revenue is total revenue less substrate sales. See slides 53 and 54 for further explanation.
8
Built to Outperform
Diversified Profile – End-Market Applications
LV
83%
Light Aftermarket
vehicle 14%
75% RIDE
PERFORMANCE
Commercial
truck and LV
off-highway 55%
11%
* LV segment
LEADING OE
CUSTOMERS PLATFORMS
24 Countries of Operation
158 Countries Served
Powered by People
• 31,000 Team Members
• 91 Manufacturing Facilities
• 15 Engineering & Technology Centers
11
Appealing Investment Opportunity
12
Market Landscape
0-5 yrs 5-10 yrs >10 yrs
• Market Trends
– Light vehicle growth (Global)
– Accelerating car parc in high growth markets (China and India)
– Agriculture and construction production recovery (U.S. and Europe)
– Differentiate vehicles with ride performance
– Diesel / gasoline powertrain mix (Europe)
• Regulatory Drivers
– Tightening emissions regulations – criteria pollutants
– CO2 emissions
– Asia Pacific CT & OH regulations – criteria pollutants
• Technology Trends
– Strong investments in ICE powertrain
– Electrification – Hybrid
– BEV penetration
– Autonomous driving
– Mobility models
Trends Driving Current and Future Opportunities with Existing Portfolio 13
Ride Performance Overview
Growing demand for advanced suspension technologies
that enhance vehicle performance
RIDE PERFORMANCE CUSTOMERS PRODUCTS
by the Numbers
SERVED
#1 Light Vehicle
Conventional shocks Advanced
and struts suspension systems
Market position for ride control products
10
Engineering centers
NVH solutions
572
Customers served Aftermarket
$2.5 billion
2016 Revenue
– Ride tuning
– Systems integration
– Vehicle dynamics
– Noise, Vibration, Harshness (NVH)
– Light weighting
More than
Active Suspension 6x
RIDE PERFORMANCE
Average
Semi-active Suspension 4x
A segment F segment
Install rate and content growth results in 25% revenue CAGR opportunity 18
Source: IHS database and Tenneco analysis
New Opportunities
Autonomous Driving / Mobility Trends
63
Full exhaust
Manufacturing locations Commercial Truck
system
Diesel particulate
8 filter (DPF)
Engineering centers XNOx® dosing
system for SCR
Electronic
$6.1 billion Valve
2016 Revenue
21
Regulatory Drivers
Key Regulations
Regulations Driving Technology • Light Vehicle
Roadmap and Content Growth – 2017-2025 – US Tier 3
– 2017-2022 – Euro 6c/6d Real Driving Emissions
– 2019 – China CN 6a**
– 2020 – India BS 6 (skipping BS 5)
• Commercial Truck
– 2019 – China CN VI**
– 2020 – India BS VI (skipping BS V)
– 2023 – CARB Low NOx regulation
• Off-Highway
– 2019 – EU Stage V
– TBD – US Stage V equivalent
– 2019 – China CN IV**
– 2019 – Brazil Stage 3B**
– 2021-2022 – India BS IV**
** Proposed or estimated date
22
Regulatory Drivers
Key Technologies and Products
Driver System Solution Technologies and Products
THERMAL MGMT
Sound Creation,
Acoustic Active Noise Cancellation,
Sound Signature Sound, Electronic Valve,
Performance Cancellation Passive Valve
Passive Valve Signature Sound
Elastomer
Noise, Vibration interfaces for Exhaust System Isolator,
NVH
23
Light Vehicle Growth – Asia Pacific
Over $20 billion in announced OEM investment in ICE powertrains since 2015 25
Commercial Truck and Off-Highway
Growth – Asia Pacific
Americas EMEA Asia Pacific
733 1,605
991 250
531 226 794 646
China
North America Japan/Korea
531
India 1,189
126 70
South America
Asia Pacific accounts for +67%
of global CT & OH production
Commercial Truck by 2030
Off-Highway & Engines
2030 CTOH Production: 1.0M 2030 CTOH Production: 1.5M 2030 CTOH Production: 5.2M
Regulated 2015: 86% Regulated 2015: 89% Regulated 2015: 57%
Regulated 2030: 100% Regulated 2030: 93% Regulated 2030: 90%
More engines will come under regulation between today and 2030 than are regulated today
Source: Power Systems Research, Tenneco analysis 26
Technology Trends
Powertrains in Regulated Regions
Total regulated powertrains – light vehicle, commercial truck and off-highway* (in millions)
BEV PENETRATION
CURRENT PROJECTIONS* SENSITIVITY ANALYSIS
Light Vehicle BEVs/Fuel Cells 123 123
Regulated ICEs 4% LV BEV penetration*
26% LV BEV
93 penetration
Countercyclical business with strong margins and cash flow – emerging high growth opportunities
28
Aftermarket Capabilities
Established Markets • History of strong aftermarket,
Monroe & Walker brands are
100 years strong
North America Europe • Product Lifecycle – OE AM
#1 Ride Performance #1 Ride Performance
#1 Clean Air #1 Clean Air
• Powerful brands to attract and
retain customers/consumers
• Marketing/selling expertise –
that leverages training, tools
and data
1950 1960 1970 1980 1990 2000 2010 2020 2025 2030
Source: OCIA, Frost & Sullivan
Between 2015 and 2030, the global car parc nearly doubles 30
Market Trends – Accelerating Car Parc
in High Growth Markets
Vehicle Parc Unit Growth (2015 to 2025)
Established Markets High-Growth Markets
328
42 3 Average age
47 2 Europe
8.5 years
8
North America
China
59 1
India
1 4
42 6 ROW
South America
Light Vehicle
Commercial Truck
2025 2025 2025
Light Vehicle Parc: 455M Light Vehicle Parc: 337M Light Vehicle Parc: 835M
835
10-year CAGR: 2% 10-year CAGR: 1% 10-year CAGR: 9%
CTOH Vehicle Parc: 20M CTOH Vehicle Parc: 12M CTOH Vehicle Parc: 21M
10-year CAGR: 4% 10-year CAGR: 3% 10-year CAGR: 9%
Source:
Frost & Sullivan 2015,
IHS Worldview May 2016 China’s car parc will grow by 328M vehicles over next 10 years 31
China: Brand, Product and Market Coverage
Mobile APP Advertising Campaigns
32
Global Market Opportunity
$114B Opportunity in 2030
Revenue in $B
$114
8
$89
6
33
Aftermarket $70
Ride Performance 5
24
Clean Air $57
4 16 1.8% LV
Production
14 CAGR
73
59
49
39
IHS LV Production 2% 2% 2%
RIDE PERFORMANCE
• Core Suspension Growth – driven by APAC LV production
• NVH Elastomers – extend expertise and capabilities globally
• Advanced Suspension Technology – Install rate and
content growth drives 25% revenue CAGR opportunity
CLEAN AIR
• Continued tightening emissions regulations
• Over $20 billion in announced global OEM investment
in ICE powertrains in past 2 years
• Commercial truck and off-highway – more engines will come
under regulation by 2030 than are regulated today
AFTERMARKET
• Proven market leader in North America and Europe
• Global vehicles in operation nearly doubles by 2030
• Mobility models – higher vehicle utilization drives
increased replacement rate
34
Focused Strategic Objectives
35
Balance Sheet Strength
Leverage Ratio
(Net Debt / Adjusted EBITDA*) Target leverage of around 1x:
• Provides financial flexibility
• Stable balance sheet for
business cycles
• Opportunity for deploying
capital to accelerate growth
and shareholder returns
TEN averaged 5.4% over the past 9 years Capex range of 3.5% - 4.0%
* Including noncontrolling interests. Reconciliations to U.S. GAAP at end of presentation. 36
Capital Allocation Priorities
to Drive Shareholder Value
✔ 1. Fund organic growth
✔ 2. Activities to improve cost competitiveness
✔ 3. Balance sheet strength consistent with target leverage ratio of 1x
37
What It Means to Tenneco
Growth Trajectory
• Short- and mid-term growth in all areas
• Mid-term to long-term accelerating growth in
Ride Performance and Aftermarket
• Long-term, moderating growth in Clean Air
Aftermarket
• Diversified profile
– Product lines –Platforms
– End markets –Geographies
– Customers
Up to 2012 2013 2014 2015 2016 2017 2018 2019 2020 & later
U.S., • Tier 4i Off-Hwy • RICE • Tier 4f* Off-Hwy • CARB LEV III* • NSPS • Tier 3 LV • Tier 3 Light Truck* • CARB Off-Hwy • CARB CTrk Low
(2011) Stationary Stationary NOx* Pass Cars* Small Fleets* NOx (2023)**
Canada • Marine Tier 4f* • Tier 4 • Mex Tier 2 LV
(full impl.)** • Tier 4f Off-Hwy*** • EPA CTrk Low NOx
& Mexico CARB CTrk
• • US revised • CARB Off-Hwy Locomotive • CARB Off-Hwy
(2024)**
Retrofit* (2012) NAAQS Large Fleets* Medium Fleets* • Mex EPA2007
• Mex Euro 4 LV or or EU-V CTrk** • Mex Tier 3 LV** (2025)
• US Utility MACT • Mex EPA2010 or
EPA Tier 2 Bin 10
EU-VI CTrk** (2020)
Europe • EU Off-Hwy • EU Sound • Euro-6b LV • Euro-6c LV (no RDE) • EU VI D CTrk • EU Stage V • EU-6d LV RDE
Stage 3B* (2011) regulation • EU Off-Hwy • EU-6d TEMP In-service Off-Hwy CF1.5* (2020-1)
• EU CO2 /GHG 120g • EU-VI CTrk Stage 4* LV RDE CF2.1* conformity
& PM # LV (2011) (2017-2018)
China • China 5 LV* • China IV CTrk* • Beijing V CTrk • China 5 LV • China 5 LV • China 5 LV • China 6a LV*,** • China 6b LV*,**
(Major Cities) (2012) National (MEP) • Beijing 4 (Eastern National Sl* National Cl* National National (2023)
Off-Hwy Provinces) • China V CTrk*,** • China VI CTrk*,**
China 3 Off-Hwy is equivalent to EU Stage 3A
• China 3 • China 4 Off-Hwy*,**
China 4 Off-Hwy is equivalent to EU Stage 3B
Off-Hwy • Stage 4*
Locomotive**
Japan • JC08 (2009) • JP-13 CTrk • Off-Hwy • JP-16 CTrk* • WLTP LV
Tier 4B
South • Peru EU-3 LV • Chile EU-5 LV • Argentina • Brazil Stage • Brazil Stage 3A • Brazil EU-VI • Brazil Stage • Brazil Proconve
• EC, UR, VEN • Colombia EU-5 LV 3A Off-Hwy Off-Hwy (farming) CTrk** 3B** Off-Hwy L-7 LV**
America (construction) (2026)
EU-1 LV EU-4 LV
• Brazil EU-V CTrk • Brazil Proconve
(2012) L-6 LV
16.6% 1.9%
13.0% 1.7%
7.2% 1.5%
6.4% 1.5%
4.8% 1.5%
4.3% 1.5%
4.2% 1.4%
4.0% 1.4%
3.9% 1.3%
2.3% 1.0%
44
Robust Platform Mix
As a % of Total 2016 Revenue
45
Financial Results Disclaimer
Reconciliations of these non-GAAP financial measures to the comparable GAAP measure are
included in this presentation.
46
Tenneco’s Revenue Outlook
Tenneco’s revenue outlook is based on the type of information set forth under “Outlook” in Item 7 – “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” as set forth in Tenneco’s Annual Report
on Form 10-K for the year ended December 31, 2016. Please see that disclosure for further information. Key
additional assumptions and limitations described in that disclosure include:
• Revenue projections are based on original equipment manufacturers’ programs that have been formally
awarded to the company; programs where the company is highly confident that it will be awarded business
based on informal customer indications consistent with past practices; and Tenneco’s status as supplier for the
existing program and its relationship with the customer.
• Revenue projections are based on the anticipated pricing of each program over its life.
• Revenue projections assume a fixed foreign currency value. This value is used to translate foreign business to
the U.S. dollar.
• Revenue projections are subject to increase or decrease due to changes in customer requirements, customer
and consumer preferences, the number of vehicles actually produced by our customers and pricing.
Tenneco’s revenue outlook constitutes a forward-looking statement. We also refer you to the cautionary language
regarding our forward-looking statements set forth in the Safe Harbor statement on slide 2.
47
EBITDA*–
Reconciliation of Non-GAAP Results
$ Millions, Unaudited
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Net income (loss)
attributable to Tenneco Inc. $ 363 $ 247 $ 226 $ 183 $ 275 $ 157 $ 39 $ (73) $(415) $ (5) $ 49 $ 56 $ 9 $ 25 $(189) $(131) $ (41)
Cumulative effect of change
in accounting principle,
net of income tax - - - - - - - - - - - - - - 218 - -
Net income attributable to
noncontrolling interests 70 56 44 39 29 26 24 19 10 10 6 2 4 6 4 1 2
Income tax expense (benefit) 3 149 131 122 19 88 69 13 289 83 5 26 (21) (6) (6) 50 (27)
Interest expense
(net of interest capitalized) 92 67 91 80 105 108 149 133 113 164 136 133 178 146 140 170 188
EBIT, earnings before interest
expense, income taxes &
noncontrolling interests
(GAAP measure) 528 519 492 424 428 379 281 92 (3) 252 196 217 170 171 167 90 122
EBITDA* $ 740 $ 722 $ 700 $ 629 $ 633 $ 586 $ 497 $ 313 $ 219 $ 457 $ 380 $ 394 $ 347 $ 334 $ 311 $ 243 $ 273
EBITDA* represents earnings before interest expense, income taxes, noncontrolling interests and depreciation and amortization. EBITDA* is not a calculation based upon generally accepted accounting
principles. The amounts included in the EBITDA* calculation, however, are derived from amounts included in the historical statements of income. In addition, EBITDA* should not be considered as an
alternative to net income 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*
because it regularly reviews EBITDA* as a measure of the company’s performance. In addition, Tenneco believes that its security holders utilize and analyze its EBITDA* for similar purposes. Tenneco also
believes EBITDA* 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* measure presented may not always be comparable to similarly titled measures reported by other companies due to differences in the components of the calculation.
* Including noncontrolling interests. 48
Adjusted EBITDA*–
Reconciliation of Non-GAAP Results
$ Millions, Unaudited 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
EBITDA* $ 740 $ 722 $ 700 $ 629 $ 633 $ 586 $ 497 $ 313 $ 219 $ 457 $ 380 $ 394 $ 347 $ 334 $ 311 $ 243 $ 273
Adjustments (reflect
non-GAAP(1) measures):
Restructuring & related expenses 32 59 48 78 13 8 14 17 40 25 27 12 40 8 2 51 61
Environmental reserve - - - - - - - 5 - - - - - - - - -
Pension/post retirement charges 72 4 32 - - - 6 - - - - - - - - - -
Bad debt charge - - 4 - - - - - - - - - - - - - -
New aftermarket customer
changeover costs - - - - - - - - 7 5 6 10 8 - - - -
Pullman recoveries - - - - (5) - - - - - - - - - - - -
Goodwill impairment - - - - - 11 - - 114 - - - - - - - -
Reserve for receivables from
former affiliate - - - - - - - - - - 3 - - - - - -
Change to defined contribution
pension plan - - - - - - - - - - (7) - - - - - -
Consulting fees indexed to
stock price - - - - - - - - - - - - 4 - - - -
Gain on sale of York - - - - - - - - - - - - - - (11) - -
Other non-operational items - - - - - - - - - - - - - - 2 4 4
Adjusted EBITDA* (non-GAAP
$ 844 $ 785 $ 784 $ 707 $ 641 $ 605 $ 517 $ 335 $ 380 $ 487 $ 409 $ 416 $ 399 $ 342 $ 304 $ 298 $ 338
financial measure)(2)
(1) Generally Accepted Accounting Principles
(2) Tenneco presents the above reconciliation of non-GAAP results in order to reflect the results for full years 2000 through 2016 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. 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 measure 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.
* Including noncontrolling interests. 49
Net Debt /Adjusted EBITDA*–
Reconciliation of Non-GAAP Results
$ Millions, Unaudited
2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
Total debt $1,384 $1,210 $1,115 $1,102 $1,180 $1,224 $1,223 $1,220 $1,451 $1,374 $1,385 $1,383 $1,421 $1,430 $1,445 $1,515 $1,527
Total cash 349 288 285 280 223 214 233 167 126 188 202 141 214 145 54 53 35
Debt net of
1,035 922 830 822 957 1,010 990 1,053 1,325 1,186 1,183 1,242 1,207 1,285 1,391 1,462 1,492
cash balances
Adjusted
$ 844 $ 785 $ 784 $ 707 $ 641 $ 605 $ 517 $ 335 $ 380 $ 487 $ 409 $ 416 $ 399 $ 342 $ 304 $ 298 $ 338
EBITDA*
Ratio of net
debt to adjusted 1.2x 1.2x 1.1x 1.2x 1.5x 1.7x 1.9x 3.1x 3.5x 2.4x 2.9x 3.0x 3.0x 3.8x 4.6x 4.9x 4.4x
EBITDA*
Note: We present debt net of cash balances because management believes it is a useful measure of our credit position and progress toward reducing leverage. The calculation is
limited in that we may not always be able to use cash to repay debt on a dollar-for-dollar basis.
* Including noncontrolling interests.
50
Working Capital as a Percentage of Revenue–
Reconciliation of Non-GAAP Results
$ Millions, Unaudited
Receivables $ 1,294 $ 1,112 $ 1,088 $ 1,060 $ 986 $ 980 $ 826 $ 596 $ 574
Inventory 730 682 688 656 667 592 547 428 513
Less: Payables 1,496 1,376 1,372 1,359 1,186 1,171 1,048 766 790
Working Capital $ 528 $ 418 $ 404 $ 357 $ 467 $ 401 $ 325 $ 258 $ 297
Revenue $ 8,599 $ 8,209 $ 8,420 $ 7,964 $ 7,363 $ 7,205 $ 5,937 $ 4,649 $ 5,916
Percentage of Revenue 6.1% 5.1% 4.8% 4.5% 6.3% 5.6% 5.5% 5.5% 5.0%
Tenneco presents the above reconciliation for purposes of computing working capital as a percentage of revenue. We include total receivables, inventory and payables in the
calculation as these are the components of working capital that we have the most direct control over and because they are most closely related to the cash flow performance
of our operations.
51
Adjusted EBIT as a Percentage of Value-Add
Revenue – Reconciliation of Non-GAAP Results
$ Millions 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006
Ride Performance revenue $ 2,530 $ 2,486 $ 2,609 $ 2,520 $ 2,437 $ 2,444 $ 2,112 $ 1,730 $ 1,938 $ 1,853 $ 1,706
Clean Air revenue $ 6,069 $ 5,723 $ 5,811 $ 5,444 $ 4,926 $ 4,761 $ 3,825 $ 2,919 $ 3,978 $ 4,331 $ 2,976
Total revenue $ 8,599 $ 8,209 $ 8,420 $ 7,964 $ 7,363 $ 7,205 $ 5,937 $ 4,649 $ 5,916 $ 6,184 $ 4,682
Less: Substrate sales 2,028 1,916 1,934 1,835 1,660 1,678 1,284 966 1,492 1,673 927
Value-add revenues (1) $ 6,571 $ 6,293 $ 6,486 $ 6,129 $ 5,703 $ 5,527 $ 4,653 $ 3,683 $ 4,424 $ 4,511 $ 3,755
EBIT $ 528 $ 519 $ 492 $ 424 $ 428 $ 379 $ 281 $ 92 $ (3) $ 252 $ 196
Adjustments (reflect non-GAAP (2) measures)
Restructuring and related expenses 36 63 49 78 13 8 19 21 40 25 27
Pullman recoveries - - - - (5) - - - - - -
Asset impairment charge - - - - 7 - - - - - -
Goodwill impairment - - - - - 11 - - 114 - -
Bad debt charge - - 4 - - - - - - - -
Pension / post retirement charges 72 4 32 - - - 6 - - - (7)
Environmental reserves - - - - - - - 5 - - -
New aftermarket customer changeover costs - - - - - - - - 7 5 6
Reserve for receivables from former affiliate - - - - - - - - - - 3
Adjusted EBIT (non-GAAP Financial Measures) (3) $ 636 $ 586 $ 577 $ 502 $ 443 $ 398 $ 306 $ 118 $ 158 $ 282 $ 225
Adjusted EBIT as a % of value-add revenue (4) 9.7% 9.3% 8.9% 8.2% 7.8% 7.2% 6.6% 3.2% 3.6% 6.3% 6.0%
(1) Tenneco presents the above reconciliation of revenues in order to reflect value-add revenues separately from substrate sales, which 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 this factor. Tenneco
believes investors find this information useful in understanding period to period comparisons in the company's revenues.
(2) Generally Accepted Accounting Principles
(3) 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.
(4) Tenneco presents adjusted EBIT as a percentage of value-add revenue to assist investors in evaluating our company’s operational performance without the impact of substrate sales. 52
Adjusted EBIT as a Percentage of Value-Add Revenue –
Clean Air Division – Reconciliation of Non-GAAP Results
$ Millions
2016 2015 2014 2013 2012 2011 2010
Adjusted EBIT (non-GAAP Financial Measures) (3) $ 485 $ 427 $ 418 $ 381 $ 334 $ 304 $ 228
Adjusted EBIT as a % of value-add revenue (4) 12.0% 11.2% 10.8% 10.6% 10.2% 9.9% 9.0%
(1) Tenneco presents the above reconciliation of revenues in order to reflect value-add revenues separately from substrate sales, which 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.
(2) Generally Accepted Accounting Principles
(3) 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.
(4) Tenneco presents adjusted EBIT as a percentage of value-add revenue to assist investors in evaluating our company’s operational performance without the impact of substrate sales.
53
Adjusted EBIT as a Percentage of Value-Add Revenue –
Ride Performance Division – Reconciliation of Non-GAAP Results
$ Millions
2016 2015 2014 2013 2012 2011 2010
Total revenue $ 2,530 $ 2,486 $ 2,609 $ 2,520 $ 2,437 $ 2,444 $ 2,112
Less: Substrate sales - - - - - - -
Value-add revenues (1) $ 2,530 $ 2,486 $ 2,609 $ 2,520 $ 2,437 $ 2,444 $ 2,112
EBIT $ 238 $ 189 $ 219 $ 139 $ 168 $ 139 $ 145
Adjustments (reflect non-GAAP (2) measures)
Restructuring and related expenses 27 53 28 65 6 3 12
Pullman recoveries - - - - (5) - -
Asset impairment charge - - - - 7 - -
Goodwill impairment - - - - - 10 -
Pension/post retirement charges - - 1 - - - 2
Adjusted EBIT (non-GAAP Financial Measures) (3) $ 265 $ 242 $ 248 $ 204 $ 176 $ 152 $ 159
Adjusted EBIT as a % of value-add revenue (4) 10.5% 9.7% 9.5% 8.1% 7.2% 6.2% 7.5%
(1) Tenneco presents the above reconciliation of revenues in order to reflect value-add revenues separately from substrate sales, which 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.
(2) Generally Accepted Accounting Principles
(3) 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.
(4) Tenneco presents adjusted EBIT as a percentage of value-add revenue to assist investors in evaluating our company’s operational performance without the impact of substrate sales. 54
Adjusted Earnings Per Share –
Reconciliation of Non-GAAP Results
2016 2006
Earnings Per Share $ 6.44 $ 1.05
55