Third Quarter Earnings Conference Call October 26, 2018 NYSE: TEN TENNECO INC. Q3 2018 EARNINGS 1
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, benefits of the Federal-Mogul acquisition; the combined company’s plans, objectives and expectations; 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 outcome of any legal proceeding that may be instituted against Tenneco and others following the announcement of the transaction; the possibility that the combined company may not complete the spin-off of the Aftermarket & Ride Performance business from the Powertrain Technology business (or achieve some or all of the anticipated benefits of such a spin-off); the possibility that the transaction 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 transaction, including synergies, may not be fully realized or may take longer to realize than expected; the risk that the transaction may not advance the combined company’s business strategy; the risk that the combined company may experience difficulty integrating or separating all employees or operations; the potential diversion of Tenneco management’s attention resulting from the transaction; 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. In addition, please see Tenneco’s financial results press release for factors that could cause Tenneco’s future performance to vary from the expectations expressed or implied by the forward-looking statements herein. TENNECO INC. Q3 2018 EARNINGS 2
Agenda Brian Kesseler Third Quarter Highlights Co-Chief Executive Officer Jason Hollar Segment Results & Financial Overview Chief Financial Officer Brian Kesseler Outlook Roger Wood Co-Chief Executive Officer Brian Kesseler Q&A Roger Wood Jason Hollar Non-GAAP Results: Please see the tables that reconcile GAAP results with non-GAAP results at the end of this presentation and in Tenneco’s financial results press release, which is incorporated herein by reference. TENNECO INC. Q3 2018 EARNINGS 3
Third Quarter Highlights Delivered a solid Q3 with strong organic * revenue growth across all product applications • Record revenue of $2.4B, up 4% YoY, in constant currency up 7% -- outpacing industry production ** by 9 percentage points – Commercial truck and off-highway revenue up 27% – Light vehicle industry production down 2% globally • Value-Add Revenue up 1%, constant currency up 5% • Q3 VA adjusted EBIT margin of 8.4% -- consistent with outlook • Record adjusted EPS of $1.70 * Organic revenue growth is measured at constant currency rates and excludes acquisitions and divestitures. Strong organic growth outpaced industry production by 9 percentage points **IHS light vehicle production forecast and Tenneco estimates TENNECO INC. Q3 2018 EARNINGS 4
Industry Q3 Revenue Drivers Macro Drivers TEN Q3 Position • China light vehicle slowdown; certain domestic • China exposure weighted towards global OEM Chinese OEMs underperforming LV production JVs and select domestic OEMs • Impact from WLTP and diesel declines on our • Europe light vehicle WLTP production platform mix is relatively neutral disruptions and diesel declines • Europe Clean Air ~85% VA revenue unaffected by passenger car diesel mix • NA light vehicle production: • NA light vehicle revenue levered to strong mix ‒ passenger cars weak with YoY declines trend with > 80% pickups and SUVs ‒ light trucks strong YoY growth • Commercial truck and off-highway volume • CT volumes up in Europe, India and NA strength • OH volumes up in NA, Europe and Japan Strength of our diversified portfolio helps mitigate industry challenges TENNECO INC. Q3 2018 EARNINGS 5
Q3 Value-add Revenue VA REVENUE by product application RECORD VALUE-ADD REVENUE $1,776M, up 5% * AM 18% - Q3 light vehicle production down 2%** YoY OH 7% Q3 2018 Clean Air 6% * CA LV CT 6% 47% RP LV 22% Ride Performance 5% * VA REVENUE YOY comparison Light Vehicle 2%* Aftermarket 1% * Commercial Truck 23%* Off-Highway 25%* Aftermarket 1%* Organic growth in all product applications; strong growth in commercial truck and off-highway **IHS light vehicle production forecast and Tenneco estimates * In constant currency TENNECO INC. Q3 2018 EARNINGS 6
Q3 Earnings Q3 ADJUSTED EBIT $149M • Revenue growth outpacing industry production, with growth in all product applications (constant currency) • VA adjusted EBIT margin of 8.4% -- consistent with outlook • Adjusted EBIT / margin impacts – Steel economics and tariff costs increased, 30bps impact on YoY margins – Currency a negative 20bps impact on YoY margins, primarily Argentina transactional Fx RECORD ADJUSTED DILUTED EPS $1.70, up 3-cents • Q3 diluted share count of 51.4M Q3 adjusted EBIT margin consistent with outlook; record EPS of $1.70 TENNECO INC. Q3 2018 EARNINGS 7
Q3 Clean Air VA REVENUE $1,006M, up 6% * VA REVENUE by product application Light Vehicle + 2% * VA Revenue $831M OH 12% • North America +7%, outpace production of +2% CT 5% Americas + 7% * • South America down slightly • Outpacing LV production of -5% + 3% * Q3 2018 EMEA • New content on recent launches with Daimler, BMW and Ford. Light • China -4%, in-line with production Vehicle - 8% * APAC • India double-digit growth, outpacing production +7% 83% • Australia end of OE production impact -500bps CTOH + 25% * VA Revenue $175M • New CT business with Daimler Truck in North America Q3 Commercial Highlights + 35% * Americas • Off-highway up over 30% on higher volumes with CAT and John Deere • 16 platform wins in China (majority • MAN and Deutz business launched late Q3 last year EMEA + 33% * incremental), with leading global and • Higher volumes with CAT and Daimler Truck domestic OEMs • India ramp-up on BS IV reg.; China CT volumes -18% APAC flat * • 7 platform wins in India, including 4 BSVI • Kubota volumes up over 10% commercial truck programs • Won 2 hybrid programs in APAC in Q3 for a Adj. EBIT $108M; VA Adj. EBIT Margin 10.7% YTD 2018 total of 9 hybrid program awards * In constant currency 8 TENNECO INC. Q3 2018 EARNINGS
Q3 Ride Performance VA REVENUE $461M, up 5% * VA REVENUE by product application Light Vehicle + 3% * VA Revenue $394M CTOH 15% LV Intelligent • Outpacing Americas LV production of +2% Suspension Americas + 7% * • Higher volumes on new programs with VW & FCA 7% • NVH content growth on new BEV program Q3 2018 EMEA - 4% * • In-line with LV production of -5% • China +1%, outpacing production of -4% APAC + 5% * • India +16%, outpacing production of +7% LV Conventional 78% CTOH + 21% * VA Revenue $67M Q3 Commercial Highlights • Higher volumes with Paccar, Daimler Truck Americas + 21% * and Hendrickson • 2 program wins for intelligent • Higher volumes including with Volvo Truck, + 16% * suspension, 1 incremental EMEA Paccar and Scania • In Q3, 2 intelligent suspension launches, 1 incremental Adj. EBIT $17M; VA Adj. EBIT Margin 3.7% • New program launches in China and India continue to drive revenue growth Announced intention to realign North America manufacturing footprint • and close 2 plants -- expect savings of $20M to $25M by end of 2020 above production growth Increased steel economics and tariff costs, 90bps impact on YoY margins • TENNECO INC. Q3 2018 EARNINGS * In constant currency 9
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