fourth quarter and full year 2017 earnings conference...

NYSE: TENFebruary 9, 2018

Fourth Quarter and Full Year 2017 Earnings Conference Call

Agenda

2

Fourth Quarter Highlights Brian KesselerChief Executive Officer

Segment Results Jason HollarSVP Finance

Financial Overview Ken TrammellChief Financial Officer

Full Year Highlights and Outlook Brian KesselerChief Executive Officer

Q&A

Safe Harbor Statement / Non-GAAP Results: Please see the safe harbor statement and 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.

Prior period revision: Financial results for 2016 and first quarter 2017 have been revised for certain immaterial adjustments as discussed in Tenneco’s Form 10-K/A for the year ended December 31, 2016 and Form 10-Q/A for the quarter ended March 31, 2017.T E N N E C O I N C . Q 4 2 0 1 7 E A R N I N G S

Fourth Quarter Highlights

3

Delivered strong organic growth in Q4:• Record revenue up 11%, constant currency up 7% – significantly

outpacing the industry in light vehicle, commercial truck and off-highway product applications

• Record adjusted earnings – EBITDA, EBIT, net income and earnings per share

• Record cash flow from operations

• Returned $51M to shareholders – Repurchased 627,000 shares for $38M – Paid $13M in dividends

Diversification drives performanceT E N N E C O I N C . Q 4 2 0 1 7 E A R N I N G S

Q4 Revenue

4

Outpacing industry production by 7 percentage points

Q4 VALUE-ADD REVENUE $1.8B, up 7%*

Light Vehicle +4%*

• Outpacing flat** global LV production in all key regions– In North America, Europe,

South America, China and India

CommercialTruck +24%*

• Outpacing global production +12%**• Strong volume/content growth in

Europe, South America and India• India ramp-up of Bharat Stage IV

commercial truck regulations

Off-Highway & Specialty +60%*

• Volumes up double digits in North America, Europe and Japan

• Off-highway recovering from weak industry conditions

Aftermarket +1%*• Strong growth in Europe and

South America established markets• Growth in China and India• Lower volumes in NA

* In constant currency **IHS light vehicle production forecast and PSR commercial truck and bus production forecast T E N N E C O I N C . Q 4 2 0 1 7 E A R N I N G S

RECORD

VA REVENUE by product line

Ride Performance + 9%*

Clean Air + 5%*

CA LV49%

AM16%

OH6%CT

6%

VA REVENUE by product application

RP LV23%

Q4 2017

Q4 Earnings

5

Q4 ADJUSTED EBIT $168M, UP 10%

Adjusted EPS up 16% on conversion of revenue growth and share repurchases

RECORD

T E N N E C O I N C . Q 4 2 0 1 7 E A R N I N G S

• Revenue growth in light vehicle, commercial truck and off-highway product applications

– By region, strongest year-on-year growth in Europe and South America

• VA adjusted EBIT margin 9.3%, consistent with prior year

RECORD

ADJUSTED EPS $1.89, UP 16%

• Adjusted net income up 8%

• 2.9 million shares repurchased over last 12 months

Q4 Ride Performance by Segment

6

North America - 1%* VA Revenue $279M

LV +2%*• Outpacing NA production down 4%• New programs with Jeep and VW• NVH content on new BEV platform

CTOH +23%*• Outpacing NA CT prod. +7%• Higher volumes with Paccar, Hendrickson

and Daimler

AM -10%*• Lower customer out-the-door sales• Certain customers reducing inventory• Early Q4 impact from weather events

Light Vehicle

61%

AM31%

OH 1%

CT 7%

Europe and South America + 24%* VA Revenue $290M

LV +26%*

• Outpacing prod: EU +6%, SA +15%• Higher volumes on JLR, Ford, PSA and

Monroe Intelligent Suspension• New platforms with VW and Ford

CTOH +21%*• Europe CT growth with Volvo Truck, Scania,

Paccar and Daimler • South America CT recovery

AM +20%* • Strong growth in Europe +17% and South America +22%

* In constant currency

Asia Pacific + 8%* VA Revenue $127M

LV +4%* • Outpacing production of China -1%, India +7%

AM +33%* • Double digit growth in all regions• Investing in emerging markets

Q4 RP VA REVENUE $696M, up 9%*



Q4 2017

Light Vehicle

80%

AM6%

OH 10%CT

4%

Q4 Clean Air by Segment

7

North America + 2%* VA Revenue $501M

LV -2%*• Outpacing NA production down 4%• Strong platform mix on light trucks• New platform with VW

CTOH +50%* • Higher medium duty commercial truck production

• Off-highway recovering, up over 50% with CAT and Deere

Europe and South America + 13%* VA Revenue $363M

LV +6%* • Growth on existing platforms and new programs with JLR and GM

CTOH +71%*• CT ramp-up in Europe with MAN

and Scania• South America CT recovery

• Europe off-highway up over 50%• Incremental business with Deutz

* In constant currency

Asia Pacific + 1%* VA Revenue $254M

LV ~flat*• Outpacing China production -1%• Higher volumes with GM, VW and

Daimler

CTOH +18%* • Ramp-up of CT Bharat Stage IV regulations across India

• Off-highway volumes up in Japan with Kubota

Q4 CA VA REVENUE $1,118M, up 5%*



Q4 2017

$ Millions Ride Performance Clean Air

Q4 2017 Q4 2017North

AmericaEurope

& SAAsia

Pacific Total North America

Europe& SA

AsiaPacific Total

VA Revenue $ 279 $ 290 $ 127 $ 696 $ 501 $ 363 $ 254 $ 1,118

Adj. EBIT $ 25 $ 17 $ 18 $60 $ 52 $ 34 $ 44 $ 130

Adj. EBIT as a % of VA Revenue 9.0% 5.9% 14.2% 8.6% 10.4% 9.4% 17.3% 11.6%

Q4 2016 Q4 2016North

AmericaEurope

& SAAsia

Pacific Total North America

Europe& SA

AsiaPacific Total

VA revenue $ 282 $ 220 $ 111 $ 613 $ 491 $ 296 $ 240 $ 1,027

Adj. EBIT $ 30 $ 7 $ 21 $ 58 $ 52 $ 27 $ 43 $ 122

Adj. EBIT as a % of VA Revenue 10.6% 3.2% 18.9% 9.5% 10.6% 9.1% 17.9% 11.9%

Q4 Results by Product Line and Segment

8Please see the tables that reconcile GAAP results with non-GAAP results in Tenneco’s financial results press release. See slide 2 on prior period revisions.T E N N E C O I N C . Q 4 2 0 1 7 E A R N I N G S

• Strong revenue growth

• Footprint moves in NA and China

• Lower NA AM vs. OE revenue

• Strong revenue growth

• Europe CTOH ramp improvement

• Timing of engineering recoveries

Key margin drivers

Q4 YoY steel impact lower than Q3 – continued progress on recovery mechanisms

Q4 Adjustments

9

• Restructuring and related expense of $20M pre-tax, or 24-cents per diluted share related to the accelerated move of our Beijing Ride Performance plant and other cost improvement initiatives

• Goodwill impairment charge of $11M pre-tax, or 21-cents per diluted share recorded in Europe RP and South America RP

• Pension settlement charges of $2M pre-tax, or 3-cents per diluted share

• Benefit from net tax adjustments of $11M, or 21-cents per diluted share, for adjustments to prior year estimates

• Tax reform charges of $15M, or 29-cents per diluted share


Tax Expense

10

Reported Q4 tax expense of $29M, includes tax benefit (charge) of:

• $6M on restructuring

• $11M for tax adjustments to prior year estimates

• $(15)M impact from tax reform

Before those Q4 items, adjusted tax expense is $31M; full year $141M• Effective tax rate of 21% in the quarter; full year 24.5%

• Q4 and full year rate include benefit from high tech designation ruling in China and global tax planning

Q4 cash tax payments $21M; full year $95M

• At low end of expected range

Continued focus on global tax planningT E N N E C O I N C . Q 4 2 0 1 7 E A R N I N G S

Tax Reform Impact

11

Tax Reform Impact on Q4 2017

• Net impact of $15M charge – The repatriation charge and write-down of U.S. deferred tax assets were partially offset by new foreign tax credits

• No expected impact on cash taxes for the next several years

• No expected impact on interest deductibility at least until 2022

2018 Tax Expectations• We expect a full year effective tax rate between 23% to 25%, excluding China

high-tech designations – U.S. tax reform expected to benefit our global effective rate by about 200 bps

– China high-tech designation renewals would add a 100 - 150 bps improvement to the effective tax rate

• Expect cash taxes in the range of $105M to $125M

Expect overall positive impact on effective tax rate from tax reformT E N N E C O I N C . Q 4 2 0 1 7 E A R N I N G S

Cash Flow

12

• Record cash generated from operations of $466M; full year $629M

– Q4 cash from operations up $215M, including additional factoring program of $107M in the quarter, taking advantage of lower cost of capital

• Capital expenditures of $117M in the quarter; full year $385M

• Q4 repurchased 627,000 shares for $38M – In 2017 bought back 2.9 million shares for $169M– Remaining authorization of $231M

• Paid $13M in dividends (Q4 $0.25/share)– Full year paid $53M in dividends

• Board of Directors authorized Q1 dividend of $0.25/share


Strong cash flow generation

Debt and Cash Position

13

• Interest expense of $19M in the quarter

• Full year adjusted interest expense of $72M*, consistent with previous outlook

$ Millions December 31,

2017 2016

Total Debt $1,441 $1,384

Cash Balances 318 349

Net Debt $ 1,123 $ 1,035


* Reported interest expense of $73M, including $1M of cost related to the senior credit facility refinancing in Q2 2017.

$7.1B

$6.3B

$4.7B

$3.8B

$3.1B9.1%9.1%

6.6%6.4%6.0%

Built to OutperformProven Track Record of Growth

14

Built to outperform – revenue growth and investment returns

Since 2000, Tenneco has delivered:• Value-add (VA) Revenue* growth outpacing LV industry production• Margin expansion of over 300 bps• Double-digit annual adjusted EPS growth

Total Revenue $ 3.5 $ 4.4 $ 5.9 $ 8.2 $ 9.3

Substrate Sales $ 0.4 $ 0.6 $ 1.2 $ 1.9 $ 2.2

VA Revenue (billion)

Adjusted EBIT† as a % of VA Revenue

Leading ROIC† Performance

5-year average 22.8%

• Over past 10+ years, TEN outpaced industry production by 2x

• Expect 3x outperformance through 2020

Tenneco Revenue (billion)Industry Production♦ (million)

♦ Source IHS Automotive January 2018 global light vehicles* Value-add (VA) Revenue is total revenue less substrate sales. See slide 27 for further explanation. † See reconciliations to U.S. GAAP at end of presentation.


6%CAGR

6%CAGR

3%CAGR

2%CAGR

GM13.9%

Ford 13.2%

VW Group7.9%

Daimler 6.3%

Tata /JLR5.0%

FCA5.0%

SAIC 4.3%

FAW4.3%

Toyota 3.4%

Renault/Nissan3.4%

Caterpillar2.6%

PSA 2.1%

John Deere2.0%

NAPA/Alliance2.0%

Advance 1.8%

Beijing Automotive1.5%

BMW1.4%

O'Reilly 1.2% Geely

1.2%

Chang’an0.9%

Other16.6%

Built to OutperformDiversified Business Profile

15

Diversified customer, product application and regional mix

As a % of 2017 Revenue


More than 600 customers

Clean Air LV

49%

Ride Performance

LV22%

Aftermarket18%

CTOH11%

North America

46%

South America4%

Europe30%

China15%

Rest of AP5%

Product Applications(VA Revenue)

Regions(VA Revenue)

(Total Revenue)

2017

2017

Full Year 2017 Highlights

16

For the full year, delivered strong organic growth:• Record revenue up 8%, constant currency up 7% – significantly

outpacing the industry in light vehicle, commercial truck and off-highway end-market applications

• Record adjusted earnings – EBITDA, EBIT, net income and earnings per share– Adjusted EPS $6.89, up 14%

• Improved effective tax rate of 24.5% vs. 26.6% last year• Adjusted net income up 7%

• Record cash from operations, up 30%• Returned $222M to shareholders

– Repurchased 2.9 million shares for $169M – Paid $53M in dividends

Adjusted EPS up 14% on revenue growth, improved tax rate and share repurchasesT E N N E C O I N C . Q 4 2 0 1 7 E A R N I N G S

2017 Revenue

17

Outpacing industry production by 5 percentage points

2017 VALUE-ADD REVENUE $7.1B, UP 7%*

Light Vehicle +7%*

• Outpacing global LV production of +2%

• NA LV revenue strongly levered to light truck segment**

CommercialTruck +22%*

• Outpacing global production +13%• CT volumes up in all regions, including

new business in Europe and India• India ramp-up of BS IV regulations

Off-Highway & Specialty +21%*

• Volumes up double digits in North America, Europe and Japan, incl. new business with Deutz in Europe

• Off-highway recovering from weak industry conditions

Aftermarket ~flat*• Strength in South America; growing

the customer base• Europe aftermarket growth• Soft North American market

* In constant currency **Light truck segment includes pickups, SUVs, CUVs and work vans (IHS definition)

VA REVENUE by product line

Ride Performance + 8%*

Clean Air + 6%*

CA LV49%

AM18%

OH 6%CT

5%


RECORD


RP LV22%

2017

Accelerating Core Growth

18

Multiple growth drivers further diversify the business profileTENNECO INC. Q4 2017 EARNINGS

Long-term Growth Drivers

Technology-driven Growth • Monroe® Intelligent Suspension• Noise Vibration and Harshness (NVH) Solutions

New Market Growth • China aftermarket opportunity• Opportunity to add new aftermarket

product category

Content Growth • Light vehicle hybridization of the fleet• Tightening emissions regulations globally

Market Expansion Growth • Increasing number of commercial truck and

off-highway powertrains under regulation

45%

23%

20%

12%

49%

22%

18%

11%

2017

Product ApplicationsVA Revenue

2020 Projection

Clean Air Light VehicleRide Performance Light Vehicle

AftermarketCommercial Truck and Off-Highway

Focused Priorities

Revenue Outlook

19

Accelerating organic growth through 2020

Organic Growth 5%

2018 Revenue Outlook (in 2017 constant currency)

Expecting organic growth of 5%, outpacing industry production by 3%

• Content growth in light and commercial vehicles• Continued recovery in regulated off-highway regions

* IHS Automotive January 2018 global light vehicle production and Tenneco estimates.

** Power Systems Research (PSR) January 2018 global commercial truck and bus production and Tenneco estimates.

*** Customer schedules and Tenneco estimates for off-highway engine production in North America and Europe.

See slide 26 for further key assumptions related to our revenue projections.

Impact vs. 2017 Euro/USD RMB/USD Real/USD

+ 2.5% 1.20 0.156 0.328

- 1.14 0.149 0.313

- 2.5% 1.08 0.141 0.297

2018 Assumptions• Global light vehicle production +2%*

• Global commercial truck production about flat**

• Off-highway engine production for regulated regions expected up low double-digits***

• Organic growth is net of OE price downs

• Substrates estimated at 24% - 25% of total revenue

2018 Currency Sensitivity

Mid-term Revenue Outlook LV IndustryProduction* Outperformance

Organic Growth

2019 2% 4% - 6% 6% - 8%

2020 2% 3% - 5% 5% - 7%

Q1 Revenue Outlook Expect Q1 revenue to grow 5%, +3% constant currency. Outpacing flat** light vehicle industry production by 3%.

• Industry outperformance driven by strong double-digit growth in commercial truck and off-highway revenues

• Light vehicle revenue expected in line with industry production

• Expect steady YOY contribution from the global aftermarket

Outlook – Q1 and Full Year

20

* Constant currency with 2017** IHS January 2018 global light vehicle production and Tenneco estimates.*** Excluding discrete tax itemsSee slide 25 for our forecast assumptions


2018 Outlook

Organic growth expected to outpace production by 3%

• Continued conversion on incremental revenues

• Increasing investments in growth – advanced suspension technologies, program launches and China aftermarket growth

• Margins roughly in line with prior year

Total revenue (organic growth)* +5%

Light vehicle industry production** +2%

Capital expenditures $380M to $410M

Effective tax rate*** 23% to 25%

Cash tax payments $105M to $125M

Defined benefit expense /contributions $11M / $15M

OPEB expense / contributions $13M / $9M

Interest expense $75M to $80M

Revenue growth outpacing industry production

Appendix:Industry Production – YoY% Change

21

Global light vehicle production forecast of 2% in 2017 and 2018

Major Regions Q4’17 FY’17 Q1’18 FY’18

North America -4% -4% 0% 2%

Europe 6% 3% 2% 2%

South America 15% 20% 15% 14%

China -1% 2% -4% 1%

India 7% 7% 6% 7%

Global LV Industry Production 0% 2% 0% 2%

Source: IHS Automotive January 2018 global light vehicle production forecast and Tenneco estimates. T E N N E C O I N C . Q 4 2 0 1 7 E A R N I N G S

Appendix:Pension and OPEB

22

Pension 2014 2015 2016 Q4’17 2017 2018E

Defined Benefit Expense* $15 $15 $11 $3 $15** $11

Defined Benefit Contributions $46 $25 $38 $10 $32 $15

OPEB 2014 2015 2016 Q4’17 2017 2018E

Expense $3 $8 $10 $1 $9 $13

Cash Payments $8 $9 $9 $2 $10 $9

* Does not include settlement or curtailment amounts.**Does not include contribution from unconsolidated JV.

$ Millions


Appendix:Financial Overview – Q4

23

Q4‘17 Q4’16** Change

Total Revenue 2,391 2,155 11%

Value-add Revenue Δ 1,814 1,640 11%

Adjusted EBIT † 168 153 10%

Adjusted EBIT † (% of VA Revenue) 9.3% 9.3% -

Adjusted EBITDA *† 227 205 11%

Adjusted Net Income † 97 90 8%

Adjusted EPS ($) † $1.89 $1.63 16%

Cash Flow From Operations 466 251 86%

Net Debt / Adjusted LTM EBITDA*† 1.3x 1.2x 0.1x

Δ Value-add Revenue is total revenue less substrate sales. * Including noncontrolling interests. † See the tables that reconcile GAAP results with non-GAAP results in Tenneco’s financial results press release.** Financial results for 2016 and first quarter 2017 have been revised for certain immaterial adjustments as discussed in Tenneco’s Form 10-K/A for the year ended December 31, 2016 and

Form 10-Q/A for the quarter ended March 31, 2017.

$ Millions, except as noted


Appendix:Financial Overview – FY’17

24

FY’17 FY’16** Change

Total Revenue 9,274 8,599 8%

Value-add Revenue Δ 7,087 6,571 8%

Adjusted EBIT † 647 624 4%

Adjusted EBIT † (% of VA Revenue) 9.1% 9.5% (40)bps

Adjusted EBITDA *† 868 832 4%

Adjusted Net Income † 365 340 7%

Adjusted EPS ($) † $6.89 $6.02 14%

Cash Flow From Operations 629 484 30%

Net Debt / Adjusted LTM EBITDA*† 1.3x 1.2x 0.1x

Δ Value-add Revenue is total revenue less substrate sales. * Including noncontrolling interests. † See the tables that reconcile GAAP results with non-GAAP results in Tenneco’s financial results press release.** Financial results for 2016 and first quarter 2017 have been revised for certain immaterial adjustments as discussed in Tenneco’s Form 10-K/A for the year ended December 31, 2016

and Form 10-Q/A for the quarter ended March 31, 2017.

$ Millions, except as noted


Appendix:Tenneco Projections

25

Tenneco’s revenue outlook for 2018 is as of January 2018. Revenue assumptions are based on projected customer production schedules, IHS Automotive January 2018 forecasts, Power Systems Research January 2018 forecasts and Tenneco estimates.

Tenneco’s revenue outlook for 2019 and 2020 is as of January 2018. Revenue assumptions are based on projected customer production schedules, IHS Automotive January 2018 forecasts, Power Systems Research January 2018 forecasts and Tenneco estimates.

In addition to the information set forth on slide 14 and slides 18 - 20, Tenneco’s revenue projections are 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/A 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.

• Except as otherwise indicated, 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.

Certain elements of the restructuring and related expenses, legal settlements and other unusual charges we incur from time to time cannot be forecasted accurately. In this respect, we are not able to forecast EBIT (and the related margins) on a forward-looking basis without unreasonable efforts on account of these factors and the difficulty in predicting GAAP revenues (for purposes of amargin calculation) due to variability in production rates and volatility of precious metal pricing in the substrates that we pass through to our customers.


Adjusted EBIT as a Percentage of Value-add Revenue – Reconciliation of Non-GAAP Results

26

(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.

* Financial results for 2016 and first quarter 2017 have been revised for certain immaterial adjustments as discussed in Tenneco’s Form 10-K/A for the year ended December 31, 2016 and Form 10-Q/A for the quarter ended March 31, 2017.

$ Millions Q1’16* Q2’16* Q3’16* Q4’16* FY’16*

Net sales and operating revenues $ 2,136 $ 2,212 $ 2,096 $ 2,155 $ 8,599

Less: Substrate sales 510 519 484 515 2,028

Value-add revenues (1) $ 1,626 $ 1,693 $ 1,612 $ 1,640 $ 6,571

EBIT $ 124 $ 171 $ 150 $ 71 $ 516

Adjustments (reflect non-GAAP (2) measures)

Restructuring and related expenses 14 5 7 10 36

Pension charges / Stock vesting - - - 72 72

Adjusted EBIT (non-GAAP Financial Measures) (3) $ 138 $ 176 $ 157 $ 153 $ 624

Adjusted EBIT as % of value-add revenue (4) 8.5% 10.4% 9.7% 9.3% 9.5%


Adjusted EBIT as a Percentage of Value-add Revenue – Reconciliation of Non-GAAP Results

27

(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.

$ Millions 2017 2015 2010 2006 2005 2000

Value-add revenue (1) $ 7,087 $ 6,293 $ 4,653 $ 3,755 $ 3,759 $ 3,127

Clean Air substrate sales $ 2,187 $ 1,888 $ 1,284 $ 927 $ 681 $ 401

Total revenue $ 9,274 $ 8,181 $ 5,937 $ 4,682 $ 4,440 $ 3,528

EBIT $ 417 $ 508 $ 281 $ 196 $ 217 $ 122

Adjustments (reflect non-GAAP (2) measures)

Restructuring and related expenses 72 63 19 27 12 61

Pension / post retirement charges 13 4 6 (7) - -

New aftermarket customer changeover costs - - - 6 10 -

Goodwill impairment 11 - - - - -

Reserve for receivables from former affiliate - - - 3 - -

Antitrust settlement accrual 132 - - - - -

Warranty settlement 7 - - - - -

Gain on sale of unconsolidated JV (5) - - - - -

Other non-operational items - - - - - 4

Adjusted EBIT (non-GAAP Financial Measures) (3) $ 647 $ 575 $ 306 $ 225 $ 239 $ 187

Adjusted EBIT as a % of value-add revenue (4) 9.1% 9.1% 6.6% 6.0% 6.4% 6.0%

Value-add Revenue – Reconciliation of Non-GAAP Results

28

2017

Total revenue $ 9,274

Less: Clean Air substrate sales $ 2,187

Value-add revenue (1) $ 7,087

Clean Air light vehicle value-add revenue $ 3,446

Ride Performance light vehicle value-add revenue $ 1,580

Commercial truck & off-highway value-add revenue $ 810

Aftermarket value-add revenue $ 1,251

Value-add revenue $ 7,087

(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.

$ Millions

Adjusted Earnings Per Share – Reconciliation of Non-GAAP Results

29

2017 2000

Earnings Per Share $ 3.91 $ (1.18)

Adjustments (reflect non-GAAP measures):

Restructuring and related expenses 1.12 1.21

Antitrust settlement accrual 1.61 -

Goodwill impairment 0.20 -

Warranty settlement 0.09 -

Gain on sale of unconsolidated JV (0.08) -

Pension / post retirement charges 0.17 -

Costs related to refinancing 0.02 -

Tax adjustments from US tax reform 0.28 -

Net tax adjustments (0.43) -

Other non-operational items - 0.07

Adjusted Earnings Per Share (1) $ 6.89 $ 0.10

(1) 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.

Return on Invested Capital – Reconciliation of Non-GAAP Results

30

2012Dec 31

2013Dec 31

2014Dec 31

2015Dec 31

2016Dec 31

2017Dec 31

Short-term Debt $ 113 $ 83 $ 60 $ 86 $ 90 $ 83 Long-term Debt 1,052 1,006 1,055 1,124 1,294 1,358Redeemable Noncontrolling Interests 15 20 34 41 40 42Tenneco Inc. Shareholders' Equity 246 432 495 425 573 686Noncontrolling Interests 45 39 40 39 47 46Invested Capital $ 1,471 $ 1,580 $ 1,684 $ 1,715 $ 2,044 $ 2,215

Average Invested Capital $ 1,526 $ 1,632 $ 1,700 $ 1,880 $ 2,130

EBIT $ 422 $ 489 $ 508 $ 516 $ 417

Adjustments (reflect non-GAAP (1) measures)(2)

Restructuring and related expenses 78 49 63 36 72

Antitrust settlement accrual - - - - 132

Goodwill impairment - - - - 11

Warranty settlement - - - - 7

Gain on sale of unconsolidated JV - - - - (5)

Bad debt charge - 4 - - -

Pension / post retirement charges / Stock vesting - 32 4 72 13

Adjusted EBIT (non-GAAP financial measure)(2) 500 574 575 624 647

Effective Tax Rate 35.7% 33.7% 32.9% 26.6% 24.5%

Tax effected Adjusted EBIT $ 321 $ 381 $ 386 $ 458 $ 488

Return on Invested Capital (ROIC)(3)

(non-GAAP financial measure)(2) 21.1% 23.3% 22.7% 24.4% 22.9%

5 year Average Invested Capital $ 1,785

5 years Average tax effected Adjusted EBIT 407

5 year Average ROIC 22.8%

(1) Generally accepted Accounting Principles(2) Tenneco presents the above reconciliation of non-GAAP results in order to allow a better understanding of our performance.(3) We consider Return on Invested Capital (ROIC) to be a meaningful indicator of our operating performance, and we evaluate ROIC because it measures how effectively we use the capital we invest in our operations.

Tenneco defines ROIC as tax effected Adjusted EBIT divided by Average Invested Capital, which is the beginning and ending balances of debt, equity and noncontrolling interests. See the tabular calculation above.

$ Millions, Unaudited

fourth quarter and full year 2017 earnings conference...

Documents