Investor Presentation June 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, the proposed separation of DRiV™ from the Powertrain Technology business; 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 the 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 possibility that the separation may have an adverse impact on existing arrangements with Tenneco, including those related to transition, manufacturing and supply services and tax matters; the ability to retain and hire key personnel and maintain relationships with customers, suppliers or other business partners; the risk that the benefits of the separation may not be fully realized or may take longer to realize than expected; the risk that the separation may not advance Tenneco's business strategy; the potential diversion of Tenneco management's attention resulting from the separation; 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 report on Form 10-Q for the quarter ended March 31, 2020. In addition, please see Tenneco’s press release issued May 8, 2020 for factors that could cause Tenneco’s future performance to vary from the expectations expressed or implied by the forward-looking statements herein. Please see Tenneco’s press releases issued May 8, 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 OE CTOH & Industrial 20% Clean Air Ride Product Performance OE Light 58% Applications Vehicle $2.7 VA Revenue 22% $4.1 Aftermarket Clean Air/ Operating DRiV TM Powertrain Segments DIVISION DIVISION VA Revenue $3.2 China Motorparts $4.4 11% North America 43% Powertrain 6% Rest of AP Regions 3% South VA Revenue America 2019 Revenue $17.5B Revenue 37% $14.4B Value-add (VA) Revenue Europe 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 4
Tenneco Business Structure Globally scaled & focused operating groups TENNECO Clean Air/Powertrain DRiV TM Clean Air Powertrain Motorparts Ride Performance $4.1B $4.4B $3.2B $2.7B 2019 VA Revenue % of TEN 28% 31% 22% 19% Advanced & conventional Chassis - suspension, steering • • Emission controls Fuel economy • • suspensions Product & System & braking Fuel economy Emission reduction • • Solutions NVH reduction Powertrain - sealing, engine, • • Acoustic performance Durability • • emissions & maintenance Braking • Advanced product lines • N America & Europe • Brand & category fortification N America & Europe • − Global capability expansion • − Business line & capacity Supply chain excellence − Priority customer/platform • Conventional product lines • Strategic Focus optimization growth Omni channel support • − NA/EMEA capacity Industrial growth • APAC growth optimization • Training & services • APAC growth • − APAC growth Advanced Suspension Targeted Growth Technologies Large engine (CTOHI) solutions Top 3 regional markets Investments & NVH Performance Materials 5
Performance Focus: Margin Expansion & Cash Generation Lower Capital Reduce Optimize Business Invest in Intensity Structural Cost Line Portfolio Growth Targets • Motorparts – top 3 markets • Execute Accelerate + • Improve capex/revenue ratio • Value Stream Simplification program • Advanced Suspension • Expand working capital turns – 80/20 value analytics Technologies • Lean corporate & operating – Inventory driven • RONA & EVA prioritization group structure • NVH Performance Materials • Large engine (CTOHI) solutions Maximizing performance improvement potential 6
Liquidity, Debt and Covenant Update ADEQUATE LIQUIDITY AND OPERATING FLEXIBILITY * Liquidity of $1.57B as of March 31, 2020, consisting of $770M of cash and undrawn revolver capacity of $800M 3/31/2020 ($ in millions) (on our $1.5B revolving credit facility) • Drew down remaining revolver subsequent to quarter-end Total Debt $6,012 Covenant amendment in May provides flexibility to Cash Balances (1) $770 operate through downturn Net Debt $5,242 • Updated leverage covenant uses senior secured debt for measurement through Q4 2021 − Maximum permitted ratio of 9.5x in Q3 2020 and steps LTM Adjusted EBITDA $1,327 down thereafter − Up to $750 million of cash can be netted against debt Net Leverage Ratio 4.0x (1) Includes restricted cash balance to determine ratio (1) Includes restricted cash • Converts back to total net leverage ratio in Q1 2022 * Based on current expectations See reconciliations of GAAP to non-GAAP financial metrics in Tenneco’s press release issued May 8,, 2020. 7
Key Takeaways Building momentum on performance Confident in liquidity position and ability improvement initiatives to manage production recovery* • Heightened focus on working capital management and • Maximizing opportunity to accelerate enterprise margin priority capital expenditures in near-term performance and cash flow generation, in anticipation of lower industry growth Targeting investments to drive Applying optimization disciplines to profitable growth enhance returns • CTOHI content opportunities available globally • Utilizing 80/20 value analytics to optimize our business line portfolio and improve returns • Targeted growth investments in Motorparts, Advanced Suspension and NVH • Leveraging diversified portfolio with advantaged end market and regional scale * Based on current expectations 8
Clean Air & Powertrain Driving Progress Toward Cleaner, More Efficient Engines 9
Clean Air & Powertrain Overview Driving Progress Toward Cleaner, More Efficient Engines $8.5B 50,000 161 21 2019 VA Revenue Global team Globally networked Manufacturing members sites worldwide engineering & technical centers Global pure-play powertrain supplier, positioned to capture opportunities 10
Recommend
More recommend
