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This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made
except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
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Transaction Unlocks Significant Value
announces acquisition of
Acquisition expected to close in second half of 2018; separation expected to be complete in second half of 2019
Motorparts
Motorparts
2017 42%
• Over 20 strong market-leading brands in the
Revenue: $7.8B global vehicle aftermarket
EBITDA: $753M • Sells and distributes a broad portfolio of
Powertrain aftermarket products globally
58%
• Strong market position in OE braking
• Operates 33 manufacturing sites in 15 countries
and 33 distribution centers in 12 countries
Revenue by Geography* Revenue by End Market
APAC
15%
Industrial 10% Powertrain
CTOH 11% • One of the world’s leading powertrain
component and assembly providers
North • Market leading positions across product
America
44% Light Vehicle categories
Aftermarket 49%
EMEA 30% • Operates 87 manufacturing sites in 19 countries
41%
Motorparts
$10.7 (VA $8.5)
$9.3 (VA $7.1)
Tenneco 2017 Revenues $7.8 Powertrain Powertrain
Clean Air (CA): $6.2B 1 RP $6.4
Ride Performance (RP): $3.1B 1
Motorparts
Federal-Mogul 2017 Revenues RP
Powertrain: $4.5B
CA CA CA
Motorparts: $3.3B Powertrain
Motorparts
Tenneco
Tiger Federal-Mogul
Falcon Tenneco CombinedCo
CombinedCo AM &AM
Ride/ Performance
Chassis Powertrain
PowertrainTechnology
Tech
One of the world’s leading multi-line One of the largest global pure play
aftermarket and OE suppliers powertrain suppliers
• Premier aftermarket brands, broad product coverage • Portfolio of engine-to-tailpipe products and system
and strong distribution solutions
• Strong portfolio of OE braking and advanced • Excellent position to capture content growth from:
suspension technologies and capabilities 1. Demand for improved engine performance
2. Tightening fuel economy and criteria pollutant
• Outstanding strategic position to regulations
1. Improve go-to-market capabilities in Americas & EMEA 3. Light vehicle hybridization trends
2. Capture Asia Pacific aftermarket growth with a broad 4. Commercial truck and off-highway expansion
range of products opportunities
3. Capitalize on new OE trends in mobility and • Well positioned to further build out the product
electrification / autonomous driving portfolio in an evolving powertrain market
Creates two strong businesses with scale and strategic and financial flexibility to drive long-term value creation
7
Transformational Step –
Compelling Strategic Rationale
AM & RP PT
6
~6 • Broad product portfolio enables differentiated
5.6
customer and channel support
• Cross-category sales incentives with retailers and
3.7
4
warehouse distributors
Includes services, diagnostics, etc.
3.6
SKF
AM/Ride Performance
Bosch (est.)
JCI
Valvoline
Dorman
Mahler
SMP
Tiger
ZF
Delphi Tech.
Tenneco
3 1 2
Engine (Pistons, Sealing &
2 2 Bearings, Valves) Gaskets
Elastomers
5 6
1 3
Exhaust Systems 1 2 Ignition Underhood
Not shown: wipers Service
Ball joint
Bushings
Physical
Vehicle Systems Infrastructure
Chassis Roads and Highways
T
Interior Vehicle to
O Control Systems Infrastructure
T
M Energy
O
O
D
R
A
R
Y Vision and
O Sensing Connected
W Road Detection 5G
Sensor Fusion Vehicle to Vehicle
ADAS System Cybersecurity
AR/VR Over the air
• Combined strong “house of brands” will capture • Online channel is reshaping how AM parts are sold
growth in China
• New standards emerging for quality and customer
‒ Shared investments in salesforce & distribution experience in digital B2B & B2C
‒ Combined brand power & OE pedigree
• Scales investments and channel coverage to influence
‒ Product line & coverage consumer’s purchase process starting from online
‒ Wear and tear products (e.g. brake pads, ignition) research
can provide earlier entry into market
• Enhances opportunity to optimize order to delivery
Global Vehicles in Operation cycle time and working capital requirements
(Billions of vehicles)
Unprecedented growth
over next 15 years
led by China
1950 1960 1970 1980 1990 2000 2010 2020 2025 2030
Differentiated B2B & B2C channel support
China forecast to be largest AM market by 2025 enabled by strong brand portfolio
Source: OCIA, Frost & Sullivan
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Powertrain Technology Company
Full Exhaust
Systems
Pistons Bearings
Catalytic Converters
Ignition Valves
One of the largest pure play powertrain suppliers globally positioned
Electronic Valve
to capture content growth due to tightening fuel economy and criteria
pollutant regulations, light vehicle hybridization trends and
Gasoline System Sealing /
commercial truck and off-highway expansion opportunities Particulate Filters Protection Heat Shields
Leading positions in all geographies ~25% non-light vehicle Well represented across
all global OEMs
* EMEA includes Tenneco South America and APAC includes Federal-Mogul South America 15
Powertrain Technology –
Significant Ongoing Opportunity
Global light vehicle sales volume (M)
6 2 Sealing /
Pistons System
6 Protection Heat Shields
7 5
Selective Catalytic Diesel Oxidation
Reduction Catalyst
Key Trends
Key Trends Legend • CO2 / Fuel economy regulations
Tenneco Clean Air • Engine performance – downsized,
• Tightening emissions regulations higher output engines
Federal-Mogul Powertrain
• Electrification / Hybridization
• Strong OEM investments in ICE
• Strong OEM investments in powertrain
ICE powertrain
One of the largest pure powertrain suppliers with engine to tailpipe solutions,
addressing both greenhouse gas and criteria pollutant emissions
17
Stronger Together – Enhanced Commercial Truck
and Off Highway Product Offering
Tenneco Clean Air Federal-Mogul Powertrain
1 2
1 2 3
Catalytic Converters Hydrocarbon
Manifold Dosing
3 Bearings Valves Steel
4 pistons
Gasoline Diesel Particulate
Particulate Filters 2 1 2 4 5
Filters
3 4 5
5 6 3 4 1 Systems Sealing /
Selective Catalytic Mixers 6 Protection Heat Shields
5
Reduction (SCR)
Systems
Key Trends
Key Trends • Tightening emissions regulations,
• Tightening emissions regulations, especially diesel NOx emissions
Legend
especially in India and China • Technology: alternative fuels,
Tenneco Clean Air
• More newly regulated powertrains dual fuel, friction reduction
through 2025 than regulated today Federal-Mogul Powertrain • CTOH industry consolidation
• CTOH industry consolidation • Global engine programs
• Global engine programs
Enhanced capabilities to provide products and systems solutions for the CTOH markets
18
Controlled Power Technologies (CPT) Increases
Electrification and Hybridization Systems Capability
• Powertrain products drive lower fuel • Expected to generate strong cash flow
consumption / greenhouse gas emissions • Strategic opportunities for Powertrain
‒ Lighter weight products Technology:
‒ Products designed to withstand higher heat
and pressure required for higher output ‒ Continue to round out the CTOH
engines portfolio
• Clean Air portfolio addresses criteria pollutants ‒ Opportunities in other engine
• Combined offering allows for potential to applications
optimize engine performance and emissions
‒ Participate in new market trends
across the broader system
‒ Both greenhouse gas and criteria pollutant ‒ Other strategic opportunities as
emissions powertrain business continues to evolve
(1)
Ride Performance (Plus CA AM) $3.1 $3.1 $335 - -
F-M Motorparts 3.3 3.3 260 - -
Aftermarket & Ride Performance Company $6.4 $6.4 $595 $115 $710
1. The Clean Air Aftermarket business is intended to be allocated to the Ride Performance business.
2. Represents annual run rate synergies expected to be achieved within 24 months.
3. Additional one time working capital synergies of at least $250M expected.
22
Significant Synergy Potential
At least $200M1 earnings synergies expected within 24 months
Aftermarket & Ride Performance Breakdown Powertrain Technology Breakdown
($ in mm) ($ in mm)
$125 $125
$115
$75 $75
$25 $25
$35 $40 Supply Chain
Supply Chain
$0 $0
Estimated costs to achieve of ~$80mm Estimated costs to achieve of ~$70mm
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Substantial Value Creation Opportunity
(EV / 2018E
Aftermarket & Ride Performance Powertrain Technology
EBITDA)*
Comparables Comparables
16.0x
12.0x
9.9x
8.0x 7.0x
4.4x
4.0x
0.0x
Tiger Auto Aftermarket Powertrain Systems
Suppliers Suppliers
(1)
Adjustments (reflect non-GAAP measures)
Restructuring and related expenses 69 37 106
Pension and post retirement charges 13 - 13
Goodwill and intangible asset impairment 11 11 22
Antitrust settlement accrual 132 - 132
Warranty settlement 7 - 7
Gain on sale of unconsolidated JV (5) - (5)
Loss on debt extinguishment - 4 4
Gain on sale of assets - (7) (7)
Gain from termination of customer contract - (6) (6)
Warranty release - (4) (4)
Release of deferred purchase price payment - (3) (3)
EBITDA contribution of pending asset sales - (2) (2)
Other - 6 6
(2)
Adjusted EBITDA (non-GAAP Financial Measure) $868 $753 $1,620
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.
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