5106 CORP-6/10 (1) 1

Transcription

1 5106 CORP-6/10 (1) 1

2 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 CORP-6/10 (2) 2

3 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 5106 CORP-6/10 (3) 3

4 GLOBAL ENGINEERING NETWORK 5106 CORP-6/10 (4) 4

5 GLOBAL SUPPLIER OF EMISSION AND RIDE CONTROL SYSTEMS Revenues (Millions) $4,649 $5,916 Total Emission Control/ Ride Control Balance Original Equipment/ Aftermarket Balance 63/37 67/33 78/22 81/ CORP-6/10 (5) 5

6 TENNECO GLOBAL FOOTPRINT 5106 CORP-6/10 (6) 6

7 CUSTOMER MIX 5106 CORP-6/10 (7) 7

8 LEADING LIGHT VEHICLE MARKET POSITIONS 2009 Original Equipment North America #2 Faurecia/ EMCON, Calsonic Kansei Emission Control Europe #2 Faurecia/ EMCON, Eberspächer Original Equipment North America #1 Hitachi, ZF Sachs, KYB Ride Control Europe #2 ZF Sachs, KYB Aftermarket North America #1 AP Exhaust Products, IMCO Emission Control Europe** #1 Bosal, Klarius Group Aftermarket North America #1 KYB, Ride Control LLC Ride Control Europe** #1 KYB, ZF Sachs * Tenneco estimates for 2009: OEEC reflects Faurecia/EMCON merger in February 2010 ** Excludes OE Service 5106 CORP-6/10 (8) 8

9 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% 5106 CORP-6/10 (9) * 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 9

10 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 5106 CORP-6/10 (10) 10

11 REGULATORY-DRIVEN GROWTH OPPORTUNITIES CVS - Commercial Vehicle Systems LVS - Light Vehicle Systems * Phased in ** Estimated date 5106 CORP-6/10 (11) 11

12 REGULATORY-DRIVEN EMISSION CONTROL PRODUCT PIPELINE Active Burner DPF Retrofit NOx Aftertreatment (Production Ready) Turnkey SCR System Urea Injection and Dosing Module Retrofit Locomotive Aftertreatment Off-Road Diesel Oxidation Catalyst & DPF Off-Road Emissions Module Internet Based Retrofit Data Logger Fuel Vaporizer Hydrocarbon Injector Aftertreatment ECU Retrofit Marine Aftertreatment Electronic Exhaust Valve Next Generation Manifold (3 layer) Hydrocarbon Lean NOx Catalyst Low Backpressure Valve Muffler Solid SCR Stationary Engine Aftertreatment Urea Quality and PM Sensors Enhanced 32 bit ECU CVS Vaporizer Multiwrap Converter Gasoline Particulate Filter Integrated Manifold/ Turbocharger Housing Gen 3 Elim-NO x Air Assist Dosing System Exhaust Gas Heat Exchanger 5106 CORP-6/10 (12) 12

13 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 5106 CORP-6/10 (13) 13

14 LIGHT VEHICLE TECHNOLOGIES TO MEET STRICTER EMISSIONS REGULATIONS Hot-End EC Technology Diesel aftertreatment - DPF, DOC, SCR and NO x 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 CO 2 emissions by improving fuel efficiency - All systems are designed to accommodate biofuels Advanced acoustic engineering to create signature sound for vehicles 5106 CORP-6/10 (14) 14

15 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 5106 CORP-6/10 (15) 15

16 CO 2 REDUCTION THROUGH FUEL ECONOMY TECHNOLOGY Improve fuel economy through: Reduced weight Reduced backpressure Engine heat recuperation Heat Exchanger Hydrocarbon Injection Electric Exhaust Valve Low Backpressure Valve Muffler Close Coupled Tuned Manifold Ultra Lightweight Muffler 5106 CORP-6/10 (16) 16

17 FULL SUITE OF NOx REDUCTION TECHNOLOGY TEN Technology Urea SCR NO x 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 ECU Optional Optional Optional Optional Yes Mixer Yes - - Optional Yes Electronic Valve Optional Optional Optional Optional Optional Sensors Yes Yes Yes Yes Yes 5106 CORP-6/10 (17) 17

18 HC-LEAN NOx CATALYST TECHNOLOGY 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. 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: - 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 5106 CORP-6/10 (18) 18

19 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 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 Storage volume required for equal ammonia capacity Pictured: Ammonia Carbamate 5106 CORP-6/10 (19) 19

20 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 5106 CORP-6/10 (20) 20

21 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 5106 CORP-6/10 (21) 21

22 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 CES Semi-active body and wheel hop control Results in a better compromise between handling and comfort Fully-active suspension with ultimate comfort and excellent handling Results in better body control than H2CES 5106 CORP-6/10 (22) 22

23 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 5106 CORP-6/10 (23) 23

24 LIGHT VEHICLE PLATFORM MIX CORP-6/10 (24) 24

25 NORTH AMERICA ON-ROAD DIESEL TRUCKS Source: PSR 2010 Market Forecast (April 2010) Source: Global Insight 2010 Market Forecast (April 2010) 5106 CORP-6/10 (25) 25

26 COMMERCIAL VEHICLE BUSINESS GROWTH Launching programs with 11 commercial vehicle customers through Q 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 5106 CORP-6/10 (26) * See slide 29 for a discussion of key assumptions on which our revenue projections are based. 26

27 TENNECO GLOBAL OE REVENUE GROWTH ($ in Billions) Light Vehicle Production Assumptions* (Millions) 2009** North America Europe China South America On-Road Commercial Vehicle Production Assumptions* (Thousands) 2009** North America Europe China ** ** * Source: Global Insight February 2010 ** Actual See slide 29 for a discussion of key assumptions on which our revenue projections are based CORP-6/10 (27) Currency assumption = $1.45/ (January 2010) 27

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29 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, 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 Tenneco provides revenue projections annually and does not intend to update these projections until February 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 CORP-6/10 (29) 29

30 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 966 Original equipment value-added revenues $ 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 CORP-6/10 (30) 30