for the Future
Tenneco, an $8.2 billion global manufacturing company, is pioneering global ideas for cleaner air, and smoother, quieter and safer transportation. We lead by a demonstrated commitment to shareholder value, customers’ success, employee engagement and sustainability.
We are well-positioned to increase shareholder value with disciplined execution on our strategies for accelerated growth and cost leadership, all led by a high-performing global team.
1 We present debt net of cash balances because management believes it is a useful measure of our credit position. The calculation is limited in that we may not always be able to use cash to repay debt on a dollar-per-dollar basis.
2 See the Investor Relations section for reconciliations of Generally Accepted Accounting Principles (GAAP) to non-GAAP financial measures.
At Tenneco, Leadership is in our DNA. It is a shared focus and a key driver of our success—it can be found within every level of our organization and in every job description. It thrives in our engineering centers, on plant floors and in every office; it distinguishes our original equipment products as well as our leading aftermarket brands.
In 2015, we demonstrated leadership by partnering with our customers, delivering growth, developing innovative products and technologies, improving operational performance, and recognizing employees for leading by example.
Our strength lies in balance—across product lines, geographic regions, applications, and within our diverse customer base.
Tenneco benefits from a diverse portfolio of business with the world’s leading original equipment manufacturers and aftermarket distributors and installers. We supply more than 340 OE programs globally, with no single customer representing more than 15 percent of revenue in 2015.
Helping us to achieve this balance are the men and women of Tenneco’s commercial sales teams who work tirelessly as strategic partners with our customers, delivering the high levels of performance, value and quality our customers have come to expect.
And this work does not go unnoticed. General Motors’ selection of Tenneco as a Supplier of the Year, John Deere’s recognition of Tenneco as a Partner-Level Supplier and more than a dozen additional awards and honors received in 2015 all demonstrate that our customers recognize and value Tenneco as a leading supplier of Clean Air and Ride Performance products.
Tenneco is well-positioned to accelerate profitable growth with strategies for the Clean Air and Ride Performance product lines that leverage four structural growth drivers.
1. Revenue growth that outpaces industry production
In 2015, Tenneco launched 144 programs with 70 customers. Our strong platform position with leading manufacturers, content on global platforms, and diversified customer base enabled us to outpace aggregate industry production in 2015 by 4 percentage points, excluding the negative impact of currency exchange rates.
Customers need suppliers with strong global capabilities. Our ability to carry out these important launches was fueled by a strong global engineering network and manufacturing footprint. In 2015, we opened new manufacturing facilities and expanded operations in North America, Europe and Asia Pacific to successfully execute new vehicle launches and support customer growth.
2. Regulatory-driven growth
Emissions regulations throughout the world are driving organic growth and higher technology content for Tenneco. Looking forward, the regulatory timeline clearly demonstrates that this trend will continue—and Tenneco has the solutions in place today to meet these requirements.
The regulatory focus in 2015 centered on off-highway applications. Tier 4 Final and Stage 4 regulations continued to drive growth in North America and Europe, respectively, and we began supplying SCR systems to Kubota in Japan.
For commercial truck, we announced new diesel aftertreatment programs with MAN Trucks India and two additional customers in India to support BS IV regulations. Additionally, we are working on diesel aftertreament development programs for marine and stationary power engine applications to demonstrate our ability to meet the next wave of emissions regulations.
Developing Clean Air solutions for light vehicle customers remained a core focus. We ramped up our launch for the Ford F150 pickup truck and introduced important technologies in Europe to support Euro 6c and Real Driving Emissions regulations, including the gasoline particulate filter and electronic modular valves for low-pressure EGR.
Right: Stan Kenner, Director, OE Ride Performance Sales and Marketing, Monroe, Michigan
3. Increased demand for electronic suspension technologies
During 2015, our Ride Performance business continued to benefit from growing demand for our full suite of Monroe® Intelligent Suspension products for enhanced vehicle ride and handling.
We launched production on four new platforms, including Continuously Variable Semi-Active Suspension on the Volvo XC90 and Renault Talisman. We continue to build on the success of these advanced technologies, which have been engineered for more than 40 vehicle models, with four additional platforms launching in 2016 including Dual Mode Adaptive Suspension for the Ford Focus RS.
4. Growing global car parc
The growing number of total vehicles in service globally, or car parc, creates opportunities in the aftermarket for Tenneco to lead in mature regions with our brand strength, while investing in countries with rapidly emerging growth potential, such as China and India.
Global aftermarket revenue grew 6 percent in 2015, excluding the impact of currency exchange rates, driven by our premium products, growth with new customers, and the strength of our distribution channel. 2016 marks the 100th anniversary of Tenneco’s Monroe brand, one of the iconic aftermarket brands representing premium products, quality and customer service.
We continue to invest in leading products and brands that exceed our customers’ expectations and deliver the greatest value. For both the Clean Air and Ride Performance product lines, globally linked engineering centers support research and development anywhere in the world, serving as the foundation of our product leadership.
To meet the demands of increasingly stringent global emissions regulations, we’re partnering with our customers to provide the technology solutions for any powertrain application. Tenneco’s commitment to product leadership includes investing in the core sciences underpinning emission control, including combustion and thermal management, materials science, and thermoelectrical energy. This advanced research helps us develop creative solutions that meet our customers’ current and future needs including:
- Custom-engineered mixing technologies, which ensure consistent performance of liquid urea selective catalytic reduction (SCR) aftertreatment in diesel engine exhaust systems.
- Gasoline particulate filters designed for gasoline direct injection (GDI) engines to reduce particulate emissions.
- Waste heat recovery solutions, including technology that can be integrated into Rankine Cycle systems and can aid in improving fuel economy.
We are building on the success and responding to the growing demand for advanced Ride Performance technologies, with the full suite of Monroe® Intelligent Suspension products, as well as highly engineered elastomer NVH products that meet the need for smoother, quieter and safer vehicle technology including:
- Continuously variable semi-active suspension, enabling increased tuning range for greater vehicle dynamics and higher comfort levels.
- Dual Mode adaptive suspension, offering drivers a choice of suspension modes for improved comfort or a sportier ride.
- Lightweight exhaust system isolators that reduce noise, vibration and harshness while offering full vehicle-life durability.
Our 2015 results demonstrated a strong focus on continuously improving our operational performance while delivering solutions that provide cleaner air and enhanced mobility.
The Tenneco Business System supports our profitable growth by driving efficiency, consistency and common business processes across functions and geographies.
The Tenneco Business System is a holistic approach to working that starts—and ends—with the customer. It consists of four critical value streams: Sales and Commercial Operations; Product Development and Launch; Manufacturing Operations and Integrated Supply Chain. Each value stream incorporates business improvement tools and training so employees within those functions understand and apply problem-solving methodologies and tools to drive execution, discipline, growth and excellence in their jobs.
By using standardized procedures and problem-solving tools that optimize our product development, manufacturing operations and sales activities, we’re enabling a culture that accelerates growth, achieves cost leadership and engages a high-performance team throughout our organization. The results: stronger performance, speed and efficiency, and ultimately, greater value for customers and shareholders.
2015 TEN10 Global Winners
We strive to lead in every aspect of our business as we build a sustainable model for lasting success.
The building blocks of our business and the factors we control remain constant and position Tenneco for continued growth. We have a solid foundation, a clear strategic direction, the capabilities to execute on our opportunities, and a unique combination of factors driving revenue.
Tenneco’s dedicated team of 30,000 employees around the world are united by the company’s vision and values and share a commitment to helping our customers achieve success. To celebrate their efforts, we launched a new program in 2015 called TEN10 to celebrate those who exemplify leadership through our shared values. More than 7,000 nominations were submitted for employees who demonstrate passion, innovation, accountability, transparency, teamwork, perseverance, integrity, trust, results, and commitment to health and safety. Ten individual finalists and one team were selected that stood out as exceptional examples of our values in action.
In addition to the financial results achieved in 2015, we also made significant progress in the areas of quality, safety and sustainability. We improved our global quality performance as measured by PPM (defects per million parts produced) from 29 PPM in 2014 to only 18 PPM in 2015. Our focus on employee safety resulted in an improvement in our global injury rate of 52 percent over the past five years. We’ve also reduced greenhouse gas emissions within our global facilities by more than 33 percent in the past seven years, and will continue to seek ways to improve our environmental footprint and consume fewer resources, both in our manufacturing facilities and in the communities we serve.
As an organization, we are always leading. And as we look ahead, leadership will continue to serve as the foundation for our future, helping us to realize our exciting vision for Tenneco.
Tenneco at a Glance
Our unique combination of products, geography, applications, platforms and customers contributed to our $8.2 billion revenue in 2015.
Board of Directors
Executive Vice President, Finance and Administration, Abbott
Retired Executive Vice President and Chief Financial Officer, Anixter International Inc.
Chairman, President and Chief Executive Officer, USG Corporation
IBM Professor of Business and Government, Harvard University
Chief Executive Officer and President, Birdet Price, LLC
Chairman and Chief Executive
Officer, Tenneco Inc.
Retired Chairman and Chief Executive Officer, Packaging Corporation of America
Retired Executive Vice President, Illinois Tool Works Inc.
Retired President and Chief Executive Officer, Dana Holding Corporation
1 Audit Committee
2 Compensation/Nominating/Governance Committee
Highlighted numbers indicate committee chair.
For stockholder services such as exchange of certificates, issuance of certificates, lost certificates, change of address, change in registered ownership or share balance, write, call, or e-mail the company’s transfer agent:
Wells Fargo Bank, N.A.
1110 Centre Point Curve
Mendota Heights, MN 55120
866.839.3259 (Toll Free)
Information about Tenneco Inc. is available on the company’s website www.tenneco.com, including the company’s latest quarterly earnings press release and other company information.
Tenneco’s common stock is listed under the NYSE ticker symbol TEN. TEN is traded primarily on the New York Stock Exchange and also on the Chicago Stock Exchange. As of February 19, 2016, there were approximately 15,712 stockholders of record of the company’s common stock, par value $0.01 per share, including brokers and other nominees.
Securities analysts, portfolio managers and representatives of financial institutions seeking information about the company should contact the Investor Relations department: 847.482.5162.
Safe Harbor Statement
Please see the Safe Harbor Statement and Risk Factors in Item 1A in our Annual Report on Form 10-K for the year ended December 31, 2015 and in our quarterly reports on Form 10-Q, as filed with the Securities and Exchange Commission.
1 Tenneco presents the above reconciliation of revenues in order to reflect value-add revenues separately from substrate sales. 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.
2 Tenneco presents the above reconciliations of non-GAAP results in order 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. 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 measure 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.
3 Tenneco presents adjusted EBIT as a percentage of value-add revenue to assist investors in evaluating the company’s operational performance without the impact of substrate sales.
4 Net income attributable to Tenneco Inc.