2017 SUMMARY ANNUAL REPORT Accelerating and Diversifying 1 TENNECO AT A GLANCE TOP PLATFORMS (MODELS) Diversified profile across products, 7% VW MQB/PQ35 (Golf, Jetta, Audi A3 passenger cars) 5% Ford T3/P558 HD geographic regions, applications, (Super Duty truck) 4% GM K2XX HD platforms and customers contributed (Silverado and Sierra trucks) 3% Ford T3/P552 LD to Tenneco's $9.3 billion revenue (F-150 truck) 3% Daimler MFA (A and B class passenger cars) in 2017. 3% GM D2XX/Delta (Cruze passenger car; Verano CUV) PRODUCT LINES TOP CUSTOMERS 2% GM C1XX/Lambda 70% Clean Air 14% General Motors 2% PSA Peugeot (Enclave and Acadia CUVs) 30% Ride Performance 13% Ford Motor Citroen 2% Ford C1 Company 2% John Deere (Focus passenger car; Escape and Kuga CUVs) GEOGRAPHY 8% Volkswagen Group 2% National Auto Parts 2% GM E2XX/Epsilon 47% North America (Malibu, Lacrosse and Insignia passenger cars) 6% Daimler AG Association 31% Europe 2% Jaguar PLA-D7a 5% Tata Motors 2% Advance Auto (XF and XS passenger cars; F-Pace CUV) 14% China Parts 5% Fiat Chrysler 4% South America 2% Land Rover PLA-D7u Automobiles 1% Beijing Automotive (Range Rover; RR Sport and Discovery CUVs) 4% Rest of World 4% SAIC Motor 1% BMW 2% Daimler MRA (E and C class passenger cars) PRODUCT APPLICATIONS 4% First Auto Works 1% O’Reilly Auto Parts (Value add revenue) 1% Toyota MC-M Toyota Motor 1% Geely Automobile 49% Clean Air LV 3% (Rav 4 and RX CUVs; Sienna MPV) 3% Renault/Nissan 1% Chang’an 1% GM 31XX/32XX LD 22% Ride Performance LV Automotive Caterpillar (Colorado and Canyon trucks) 11% CTOH 3% 1% VW PQ25/26 18% Aftermarket (Polo and Jetta passenger cars) 2 FINANCIAL SUMMARY FINANCIAL HIGHLIGHTS ($ in millions except share and per share data) 2012 2013 2014 2015 2016 2017 Net sales and operating revenues $7,320 $7,924 $8,381 $8,181 $8,599 $ 9,274 Earnings before interest expense, taxes and noncontrolling interests (EBIT) $ 428 $ 422 $ 489 $ 508 $ 516 $ 417 Depreciation and amortization $ 205 $ 205 $ 208 $ 203 $ 212 $ 224 Net income attributed to Tenneco Inc. $ 275 $ 182 $ 225 $ 241 $ 356 $ 207 Earnings per diluted share $ 4.50 $ 2.96 $ 3.64 $ 4.01 $ 6.31 $ 3.91 Cash flow from operations $ 365 $ 533 $ 379 $ 528 $ 484 $ 629 Capital expenditures $ 263 $ 254 $ 317 $ 295 $ 343 $ 385 Average diluted shares outstanding 61,083,510 61,594,062 61,782,508 60,193,150 56,407,436 53,026,911 Total debt $ 1,165 $1,089 $ 1,115 $1,210 $ 1,384 $ 1,441 Total cash $ 223 $ 280 $ 285 $ 288 $ 349 $ 318 Debt net of cash balances1 $ 942 $ 809 $ 830 $ 922 $ 1,035 $ 1,123 REVENUE 17 $9,274 ($ in millions) 16 $8,599 15 $8,181 14 $8,381 13 $7,924 12 $7,320 ADJUSTED EBIT 2 17 $647 ($ in millions) 16 $624 15 $575 14 $574 1 We present debt net of cash 13 $500 balances because management 12 $443 believes it is a useful measure of our credit position. The calculation is limited in that we may not always 17 $1,123 NET DEBT be able to use cash to repay debt Debt net of cash balances1 16 $1,035 on a dollar-per-dollar basis. ($ in millions) 15 $922 2 See page 21 for reconciliations of 14 $830 Generally Accepted Accounting 13 $809 Principles (GAAP) to non-GAAP 12 $942 financial measures. 1 Accelerating and Diversifying 2 TO OUR SHAREHOLDERS In 2017, we made significant progress toward our strategic goals, which led to another strong year for Tenneco with top line growth, higher earnings and improved cash flow. Our results for the year included record revenue of $9.3 billion, up seven percent in constant currency, outperforming industry production by five percentage points, with solid growth in both product lines. 3 SHAREHOLDER LETTER Opposite page (left to right) We also achieved record earnings, with As of December 31, 2017 Ben Patel, Vice President and adjusted EBIT of $647 million, adjusted Chief Technology Officer Elizabeth Williams, Senior net income of $365 million, and diluted Vice President, Strategy and adjusted earnings per share of $6.89, which Corporate Development Brandon Smith, Senior Vice reflects a 14 percent increase. Tenneco President, General Counsel and Corporate Secretary also delivered record operating cash flow Ken Trammell, Executive Vice President and Chief Financial of $629 million, an increase of 30 percent, Officer Steve Vielmetti, Vice President, and returned $222 million to shareholders Business Management Systems in the form of share repurchases and Patrick Guo, Executive Vice President, President Clean Air dividends. Gregg Bolt, Senior Vice President, Global HR & I am very pleased to report that our global Administration Brian Kesseler, Chief Executive team is executing well and is making strong Officer Jason Hollar, Senior Vice progress toward meeting our operations President, Finance Martin Hendricks, Executive excellence goals. Vice President, President Ride Performance Rusty Patel, Senior Vice President and Chief Information Officer Jane Ostrander, Vice President, Global Communications 4 TENNECO EXECUTIVE LEADERSHIP TEAM 5 TRENDS CREATE GROWTH OPPORTUNITIES Electrification/ Aftermarket Hybridization Evolution Tenneco Clean Air and Autonomous Ride Performance Mobility Driving technologies positioned to capture growth Emissions Emerging Regulations Markets 6 SHAREHOLDER LETTER Tenneco Positioned Our leading technologies and Tenneco has a history for Growth long-term strategy will allow The automotive sector is Tenneco to capitalize on the of outpacing industry undergoing a significant significant growth prospects transformation, as disruptive ahead of us, leverage our production, driven technologies from autonomous strong foundation we have driving, new mobility trends, created over the last 10- and electrification and plus years, and focus our by capitalizing hybridization change the investments on those areas transportation landscape. that will support these on market and While views differ as to the opportunities ahead. With timing and ultimate penetration that in mind, our strategy is technology macro of these advances, we have built upon three key areas, positioned Tenneco to not only accelerating core growth trends. benefit from these trends, but through multiple drivers, to be at the forefront of the leveraging our strong technology underlying these foundation, and focusing on transformations. Further, our key priorities to drive tightening emissions standards superior execution. globally for light vehicles, Accelerating Core Growth: commercial trucks and off- Four Pillars highway equipment offer From a growth perspective, significant opportunities for us. we have four drivers that are 7 Tenneco continues to launch Monroe Intelligent Suspension platforms including 10 new programs in 2018. 8 SHAREHOLDER LETTER critical to our success going opportunity. We are launching forward: Technology-Driven 10 new intelligent suspension Growth, New Market Growth, platforms in 2018 with Content Growth and Market additional development Expansion Growth. programs underway. An example is our CVSA2/Kinetic First, technology-driven system, which is in production growth, the cornerstone in several models of a well- of which is our OE Ride known British supercar. We are Performance product line, now working on development and specifically advanced programs with three additional suspension technologies customers to introduce this and NVH solutions. These technology on a sports car, a technologies present a very premium SUV and a battery exciting opportunity for electric vehicle. Tenneco with an expected 15% installation rate globally Second, new market by 2025 and a content growth, which is fueled multiplier of about four times by the global aftermarket, greater than a conventional particularly in China where we suspension. As a result, have tremendous potential. the content per vehicle for The China car parc is growing Tenneco goes from $50–$60 and aging, and by 2025, is to $200–$250 and translates expected to be the largest into a 25% revenue CAGR aftermarket in the world. We 9 SHAREHOLDER LETTER are investing and leveraging one percent of the time or The China car parc is our experience from mature all of the time – the engine markets to make sure we are has to meet the emissions growing and aging, and well positioned to capture that regulations and has a need anticipated growth. for our products. From a content perspective, the hybrid Third, content growth, which by 2025, is expected content per vehicle on a Euro is driven by Tenneco’s Clean VI equivalent will be at least Air product line. Tightening to be the largest on par with a standalone emissions regulations globally internal combustion engine, in and light vehicle hybridization aftermarket in the particular for plug-in hybrids, of the fleet continue to drive which offer an opportunity for higher content on customer higher content to meet unique world. programs. While electrification packaging requirements. has captured the headlines, the reality is that hybridization Lastly, market expansion of the fleet represents a far growth, will be propelled larger percentage of the by increasingly stringent electrified vehicles expected regulations in commercial to be produced over the truck and off-highway (CTOH). next decade than full battery Between now and 2030, there electric vehicles, and hybrids will be more CTOH powertrains are a good opportunity for coming under regulation Tenneco. It does not matter than are regulated today, whether the engine is running which presents a tremendous 10 11 TENNECO PRODUCTS IN A TYPICAL HYBRID POWERTRAIN Top Mount Mini Shear-Hub Isolator Muffler Controlled Torque Bushing Exhaust Isolator E-Valve Aftertreatment Components DOC, DPF, SCR (diesel engine shown) Catalytic Converter (gasoline engine) Top Mount Mounting Kit Protection Kit Compact Axial Hydroelastic Mount Coil Spring Strut Assembly Suspension Bushing 12 SHAREHOLDER LETTER opportunity for Tenneco. Performance, the Aftermarket PRODUCT APPLICATIONS Despite fewer units than light and Commercial Truck and Value Add Revenue vehicles, content per vehicle in Off-Highway. 12% CTOH is seven-to-nine times Built to Outperform: greater.