5106 CORP-6/10 (1)

5106 CORP-6/10 (1)
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SAFE HARBOR
The foregoing presentation contains forward-looking statements that involve risks and uncertainties which could cause the company’s
plans, actions and results to differ materially from its current expectations. Such risks and uncertainties include, but are not limited to, the
following: (i) the general political, economic and competitive conditions in markets and countries where the company operates,
including currency fluctuations; (ii) governmental actions, including the ability to receive regulatory approvals and the timing of such
approvals; (iii) changes in capital availability or costs, including increases in the company’s costs of borrowing, the amount of the
company’s debt, the ability of the company to access capital markets and the credit ratings of the company’s debt; (iv) changes in
consumer preferences and changes in automotive manufacturers’ production rates and their actual and forecasted requirements for the
company’s products; (v) the overall highly competitive and cyclical nature of the automotive parts industry; (vi) the company’s ability to
realize the sales represented by its book of business which is based on a number of factors, including, but not limited to, the original equipment manufacturers’ programs that have been formally awarded as well as programs where the company is highly confident that it will be
awarded business based on informal customer indications, the company’s status as a supplier on the existing program, and the relationship
with the customer, and anticipated pricing for the applicable program over its life; (vii) the cyclical nature of the global vehicular industry,
including the performance of the global aftermarket sector; (viii) the cost and outcome of existing and any future legal proceedings, and
compliance with changes in regulations; (ix) workforce factors such as strikes or labor interruptions; (x) increases in the costs of raw
materials and our ability to procure needed goods and services; (xi) the company’s continued success in cost reduction and cash management programs; (xii) the company’s ability to develop and profitably commercialize new products and technologies, and the acceptance
of such new products and technologies by the company’s customers and the market; (xiii) changes in the distribution channels for
the company’s aftermarket products, further consolidations among automotive parts customers and suppliers, and product
warranty costs; (xiv) changes by the Financing Accounting Standards Board or other accounting regulatory bodies of authoritative
generally accepted accounting principles or policies; (xv) changes in accouting estimates and
assumptions, potential impairment of our long-lived assets and goodwill and volatility in our
effective tax rate; (xvi) acts of war, riots or terrorism, including, but not limited to the events taking
place in the Middle East; and (xvii) the timing and occurrence (or non-occurrence) of transactions
and events which may be subject to circumstances beyond the control of the company.
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GRASS LAKE EMISSION CONTROL ENGINEERING CENTER
One of 11 globally-networked engineering facilities around
the world
142,000 square foot campus on 208 acres
350 employees
Full-system integration campus: engineering, testing and
validation capabilities
Facility highlights:
- AWD Chassis Dynamometer with 1000 hp capability fully enclosed in a
hemi-anechoic chamber
- Test track incorporating a B&K PULSE-based measurement system
- Two-degree and Eight Degree of Freedom “Full System” Rig Testing
- Structural testing including multi-channel servo hydraulics and bi-Axial component fatigue,
engine vibration durability
- Hot and cold flow lab
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GLOBAL ENGINEERING NETWORK
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GLOBAL SUPPLIER OF EMISSION
AND RIDE CONTROL SYSTEMS
Revenues (Millions)
$4,649
$5,916
Total Emission Control/
Ride Control Balance
63/37
67/33
Original Equipment/
Aftermarket Balance
78/22
81/19
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TENNECO GLOBAL FOOTPRINT
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CUSTOMER MIX
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LEADING LIGHT VEHICLE MARKET POSITIONS – 2009
Original Equipment
Emission Control
North America #2
Faurecia/EMCON, Calsonic Kansei
Europe
Faurecia/EMCON, Eberspächer
Original Equipment
Ride Control
North America #1
Hitachi, ZF Sachs, KYB
Europe
ZF Sachs, KYB
Aftermarket
Emission Control
North America #1
AP Exhaust Products, IMCO
Europe**
Bosal, Klarius Group
Aftermarket
Ride Control
North America #1
KYB, Ride Control LLC
Europe **
KYB, ZF Sachs
#2
#2
#1
#1
* Tenneco estimates for 2009: OEEC reflects Faurecia/EMCON merger in February 2010
** Excludes OE Service
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GLOBAL OE REVENUE GROWTH †
• Global emissions regulations
in on- and off-road commercial
vehicles
• Strengthening light and
commercial vehicle production
• Light vehicle emission and
ride control content
Global production growth assumptions* through 2014:
– Light vehicle 5-year CAGR of 7%
– On-road commercial vehicle 5-year CAGR of 12%
* Source: Global Insight January 2010
† See slide 29 for a discussion of key assumptions on which our revenue projections are based.
CAGR: Compound Annual Growth Rate
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STRATEGIC INITIATIVES
• Emission control technologies to meet emissions regulations
• Adjacent markets for new revenue opportunities
• Advanced technology for improved ride performance
• BRIC+T markets for rapid growth
• Enhance customer mix
• Leverage aftermarket premium brands and distribution strength
• Low-cost country strategy
• Continuously improve productivity and shrink asset base with
Lean / Six Sigma
• Optimize global footprint
• Capitalize on cash flow and EVA discipline
• Focus on reducing leverage
• Target net debt /adjusted EBITDA* ratio of 2.0X
* Including noncontrolling interests
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REGULATORY-DRIVEN GROWTH
OPPORTUNITIES
CVS - Commercial Vehicle Systems
LVS - Light Vehicle Systems
* Phased in
** Estimated date
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REGULATORY-DRIVEN EMISSION CONTROL
PRODUCT PIPELINE
Active Burner
DPF
Turnkey SCR
System
Urea Injection
Retrofit NOx
Aftertreatment and Dosing
Module
(Production
Ready)
Retrofit
Locomotive
Aftertreatment
Off-Road Diesel Fuel Vaporizer
Oxidation
Catalyst & DPF Hydrocarbon
Injector
Off-Road
Emissions
Aftertreatment
Module
ECU
Internet Based
Retrofit Data
Logger
Retrofit Marine
Aftertreatment
Electronic
Exhaust Valve
Gen 3 Elim-NOx®
Next
Generation
Manifold
(3 layer)
Hydrocarbon
Lean NOx
Catalyst
Low
Backpressure
Valve Muffler
Stationary
Engine
Aftertreatment
Urea Quality
and PM
Sensors
Enhanced
32 bit ECU
Multiwrap
Converter
Gasoline
Particulate
Filter
Integrated
Manifold /
Turbocharger
Housing
CVS Vaporizer
Solid SCR
Air Assist
Dosing System
Exhaust Gas
Heat Exchanger
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STRATEGIES TO LEAD THE INDUSTRY
IN EMISSION CONTROL SYSTEMS
• Full suite provider of emission control systems
– Hot end + dosing systems + electronics + software + OBD
– Packaged and delivered as a module
– Tier 3 -> Tier 4 final with minimal to no engine modifications
• Innovative value enhancing technologies
–
–
–
–
Elim-NOx SCR (DEF), HC-LNC, and Solid SCR
T.R.U.E.-Clean and DOC/ DPF with HC Injection
Vaporizer, passive and electrically actuated valves
Heat exchanger and lightweight systems
®
®
• Global applications engineering support
• Industry leading predictive and empirical design tools
– CFD, thermal modeling, spray modeling, uniformity, durability
– Plus best equipped laboratories in the industry
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LIGHT VEHICLE TECHNOLOGIES TO MEET
STRICTER EMISSIONS REGULATIONS
Hot-End EC Technology
Diesel aftertreatment
- DPF, DOC, SCR and NOx Adsorber
- Supplying 3/4 ton diesel pick-up trucks
Catalytic converter systems
- Full expertise for all converter manufacturing processes
- Developing advanced ultra-thin substrate converters
Fabricated manifolds
- Improved thermal management, torque and horsepower
- Up to 70% lighter than cast iron manifolds
Cold-End EC Technology
Lightweight products and systems (mufflers and thin-wall pipes)
- Reduce CO2 emissions by improving fuel efficiency
- All systems are designed to accommodate biofuels
Advanced acoustic engineering to create “signature sound” for vehicles
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LIGHT VEHICLE TECHNOLOGIES
TO MEET EVOLVING POWERTRAIN NEEDS
Micro, Mild, Full,
Plug-in
• Catalytic converter
systems
• Ultra-thin substrate
converters
• Semi-active valve
technology
• Fabricated manifolds
• Lightweight mufflers
and thin-wall pipes
• Catalytic converter
systems
• Ultra-thin substrate
converters
• Semi-active valve
technology
• Lightweight mufflers
and thin-wall pipes
• Fabricated manifolds
• Gasoline particulate
filters
• Heat exchangers
• HC-LNC for Lean GDI
• Diesel particulate
filters
• Diesel oxidation
catalysts
• Selective catalytic
reduction and HC-LNC
• NOx adsorber
• Lightweight mufflers
and thin-wall pipes
• Fabricated manifolds
• Heat exchangers
• Vaporizers
• Diesel aftertreatment
• Catalytic converter
systems
• Ultra-thin substrate
converters
• Semi-active valve
technology
• Fabricated manifolds
• Lightweight mufflers
and thin-wall pipes
• Heat exchangers
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CO2 REDUCTION THROUGH FUEL ECONOMY TECHNOLOGY
Improve fuel economy through:
• Reduced weight
• Reduced backpressure
Heat Exchanger
• Engine heat recuperation
Hydrocarbon Injection
Electric Exhaust Valve
Low Backpressure
Valve Muffler
Close Coupled
Tuned Manifold
Ultra Lightweight
Muffler
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FULL SUITE OF NOx REDUCTION TECHNOLOGY
TEN Technology
Urea SCR
NOx Adsorber
EGR
Solid SCR
HC-LNC
DOC
Yes
Yes
Yes
Yes
-
DPF
Yes
Yes
Yes
Yes
Yes
HC Injection
Yes
Yes
Yes
Yes
Yes
NOx Catalyst
Yes
Yes
-
Yes
Yes
T.R.U.E.-Clean ®
Optional
Optional
Optional
Optional
Yes
Vaporizer
Optional
Optional
Optional
Optional
Yes
Air Gap Pipe
Yes
Yes
Yes
Yes
Yes
Dosing System
Yes
-
-
Yes
Yes
Optional
Optional
Optional
Optional
Yes
Yes
-
-
Optional
Yes
Optional
Optional
Optional
Optional
Optional
Yes
Yes
Yes
Yes
Yes
ECU
Mixer
Electronic Valve
Sensors
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HC-LEAN NOx CATALYST TECHNOLOGY
Collaborative effort to develop
proprietary high performance NOx
aftertreatment that requires no driver
refilling of reductant
Utilizes no platinum group metals,
replacing DOC as well
Advantages of HC-LNC Technology
include:
Engine Evaluation Conditions: ULSD fuel, C:N = 5 (200ppm NOx), 7% H2O, 9% O2,
50K/hr Space Velocity. 50 hours thermally aged at 650C; E85 reductant.
All trademarks shown are the property of their respective owners.
Use of existing reductant infrastructure
E85 is readily available
Lower operating cost
Resistance to thermal and sulfur aging
Improved low temperature NOx conversion
Superior cold climate performance
Reduced electrical demand
Easier packaging; shorter mixing length
Lower cost materials
Developed for both on-road and
non-road applications
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TENNECO SOLID SCR SYSTEM –
WHY SOLID REDUCTANT?
Solid SCR Advantages
• Packaging
– Lower volumes / mass source for NH3
– Refill at maintenance interval
Lower complexity than liquid SCR
– No sophisticated injector requirement
– No thermolisis & hydrolysis reactions
– Easier packaging; shorter mixing length
Storage volume required for equal ammonia capacity
Functionality at very low
temperatures
– Better performance for cold start
response time
– No freeze / thaw concerns
It is commercially available and
inexpensive
High potential for better cost
and function
Pictured: Ammonia Carbamate
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THERMAL MANAGEMENT SOLUTIONS
• Active heat management
for DPF regeneration
• Sulfur tolerant, cost
effective alternative
to DOC
• HC secondary injection
leverages TEN
Elim-NOx® injector and
vaporizer technology
to promote reliable
DPF regeneration
• Heat Exchanger to
convert wasted energy
into accessible on-board
power
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®
T.R.U.E.-CLEAN APPLICATIONS
The system is used instead of a diesel oxidation catalyst to
create heat in the system for active DPF regeneration
Works with either EGR or SCR systems
- Enables enhanced EGR option for Tier IV final, US-10, or EUVI
- Low temperature SCR applications, which need a system for cold start
and improved NOx conversion
Applications for T.R.U.E.-Clean®:
- Non-road applications where exhaust temperatures < 300C
• Construction, Forestry, Ag, Forklifts, airport ground equipment
-
Regions with high sulfur fuel, which will poison a DOC
Any diesel application wanting to reduce PGM exposure
High altitude or cold climate DPF applications
Urban on-road applications where exhaust temperatures < 300C
• Refuse collection
• Door to door delivery
- Class 8 long haul trucks that experience extensive idle rest periods
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ADVANCED RIDE TECHNOLOGIES DRIVING GROWTH
Electronic Damping for Improved Ride Performance and Safety
• Continue to win and launch
new CES business
– Volvo V70, XC70, S80, XC60, S60, V60
– Audi A6, Allroad
– Ford S-Max, Galaxy, Mondeo
– Mercedes C-class, E-class and other models
– Volkswagen Passat, Golf and other models
– Additional launches in 2010 with
existing and two more customers
• Selling price is about 4-6 times
price for a standard shock
• Combination of Kinetic and CES
Kinetic
– Independent corner control
– Results in a more neutral steering
behavior
• Fully-active suspension with
ultimate comfort and excellent
handling
• Results in better body control
than H2CES
CES
– Semi-active body and wheel
hop control
– Results in a better compromise
between handling and comfort
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ADVANCED RIDE TECHNOLOGIES
DRIVING GROWTH
Suspension management with full suite of ride control technologies
and capabilities to address noise, vibration and harshness
Lightweight components
–
–
–
–
Hollow rod
Aluminum tube
Variable tube thickness
Plastic spring seat
High velocity compression damping
Market expansion
– A/B vehicle segment growth
– Growing in specialty markets including two-wheel market
Elastomer growth
– Integration of EC and RC capabilities; exhaust isolators
– Continued growth in commercial vehicle market
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LIGHT VEHICLE PLATFORM MIX – 2009
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NORTH AMERICA ON-ROAD DIESEL TRUCKS
Source: PSR 2010
Market Forecast
(April 2010)
Source: Global Insight
2010 Market Forecast
(April 2010)
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2010-2011 COMMERCIAL VEHICLE
BUSINESS GROWTH
Launching programs with 11 commercial vehicle customers
through 2011
– 4Q’09 launched:
• China Heavy Duty Truck Company
• Shanghai Diesel Engine Company
• Weichai Power
– Additional customers:
• Caterpillar
• Navistar
• Deutz
• FAW
• Four others
– Second half 2010 and into 2011
• North America, Europe, South America launches
Percent of TEN OE
revenue generated
by commercial
vehicle business
* See slide 29 for a discussion of key assumptions on which our revenue projections are based.
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TENNECO GLOBAL OE REVENUE GROWTH
Light Vehicle Production
Assumptions*
($ in Billions)
(Millions)
2009 ** 2010
8.6
10.6
2011
12.3
Europe
16.9
17.6
18.3
China
12.9
13.4
14.8
3.7
3.9
4.1
North America
South America
On-Road Commercial Vehicle
Production Assumptions*
(Thousands)
2009 ** 2010
**
North America
216.4
256.2
2011
355.0
Europe
264.3
360.2
576.1
China
876.2
946.8
991.6
**
* Source: Global Insight February 2010
** Actual
† See slide 29 for a discussion of key assumptions on which our revenue projections are based.
Currency assumption = $1.45/€
(January 2010)
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TENNECO’S OE REVENUE PROJECTIONS
In addition to the information set forth on slides 9, 26 and 27, Tenneco’s OE revenue projections are based on the 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, 2009. Please see that disclosure for
further information. Key additional assumptions and limitations described in that disclosure include:
• Tenneco’s revenue projections are as of February 2010. Tenneco provides revenue projections annually and does not
intend to update these projections until February 2011.
• 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; Tenneco’s status as supplier for the existing program and its relationship with
the customer; and the actual original equipment revenues achieved by the company for each of the last several years
compared to the amount of those revenues that the company estimated it would generate at the beginning of each year.
• 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, pricing and foreign currency.
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ORIGINAL EQUIPMENT VALUE-ADDED REVENUES
RECONCILIATION OF NON-GAAP RESULTS
$ Millions, Unaudited
FY 09
Net sales and operating revenues
$ 4,649
Less: Aftermarket revenues
1,036
Original equipment revenues
3,613
Less: Substrate sales
Original equipment value-added revenues
966
$ 2,647
Tenneco presents the above reconciliation of revenues in order to reflect OE value-added revenues. 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.
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