Segment and Geographic Area Information

12 Months Ended

Dec. 31, 2019

As previously announced, the Company intends to separate its businesses to form two new, independent, publicly traded companies, New Tenneco and DRiV. The New Tenneco business consists of two existing operating segments, Clean Air and Powertrain:


•	The Clean Air segment designs, manufactures, and distributes a variety of products and systems designed to reduce pollution and optimize engine performance, acoustic tuning, and weight on a vehicle for OEMs; and


•	The Powertrain segment focuses on original equipment powertrain products for automotive, heavy duty, and industrial applications.

The Company began to manage and report its DRiV businesses through two new operating segments, in the first quarter of 2019, as compared to the three operating segments it had previously reported. The DRiV operating segments are Motorparts and Ride Performance. The new Motorparts operating segment consists of the previously reported Aftermarket operating segment as well as the aftermarket portion of the previously reported Motorparts operating segment. The Ride Performance operating segment consists of the previously reported Ride Performance operating segment as well as the OE Braking business that was included in the previously reported Motorparts operating segment:


•	The Motorparts segment designs, manufactures, markets and distributes a broad portfolio of brand-name products in the global vehicle aftermarket within seven product categories including shocks and struts, steering and suspension, braking, sealing, engine, emissions, and maintenance; and


•	The Ride Performance segment designs, manufactures, markets, and distributes a variety of ride performance solutions and systems to a global OE customer base, including noise, vibration, and harshness performance materials, advanced suspension technologies, ride control, and braking.

Costs related to other business activities, primarily corporate headquarter functions, are disclosed separately from the four operating segments as "Corporate." Prior period operating segment results have been conformed to reflect the Company's current operating segments.

Management uses EBITDA including noncontrolling interests as the key performance measure of segment profitability and uses the measure in its financial and operational decision-making processes, for internal reporting, and for planning and forecasting purposes to effectively allocate resources. EBITDA including noncontrolling interests is defined as earnings before interest expense, income taxes, noncontrolling interests, and depreciation and amortization. Segment assets are not presented as it is not a measure reviewed by the Chief Operating Decision Maker in allocating resources and assessing performance.

EBITDA including noncontrolling interests should not be considered a substitute for results prepared in accordance with US GAAP and should not be considered an alternative to net income, which is the most directly comparable financial measure to

EBITDA including noncontrolling interests that is in accordance with US GAAP. EBITDA including noncontrolling interests, as determined and measured by the Company, should not be compared to similarly titled measures reported by other companies.

Segment results for 2019, 2018, and 2017 are as follows:



	Reportable Segments
	Clean Air		Powertrain		Ride Performance		Motorparts		Total Reportable Segments		Corporate			Reclass & Elims			Total
For the Year Ended December 31, 2019
Revenues from external customers	$	7,121	$	4,408	$	2,754	$	3,167	$	17,450	$	—		$	—		$	17,450
Intersegment revenues	$	—	$	160	$	158	$	40	$	358	$	—		$	(358	)	$	—
Equity in earnings of nonconsolidated affiliates, net of tax	$	—	$	32	$	4	$	7	$	43	$	—		$	—		$	43
EBITDA including noncontrolling interests	$	582	$	363	$	8	$	184	$	1,137	$	(343	)
For the Year Ended December 31, 2018
Revenues from external customers	$	6,707	$	1,112	$	2,164	$	1,780	$	11,763	$	—		$	—		$	11,763
Intersegment revenues	$	—	$	40	$	64	$	10	$	114	$	—		$	(114	)	$	—
Equity in earnings of nonconsolidated affiliates, net of tax	$	—	$	14	$	—	$	4	$	18	$	—		$	—		$	18
EBITDA including noncontrolling interests	$	599	$	93	$	69	$	161	$	922	$	(255	)
For the Year Ended December 31, 2017
Revenues from external customers	$	6,216	$	—	$	1,807	$	1,251	$	9,274	$	—		$	—		$	9,274
Intersegment revenues	$	—	$	—	$	22	$	—	$	22	$	—		$	(22	)	$	—
Equity in earnings of nonconsolidated affiliates, net of tax	$	—	$	—	$	—	$	—	$	—	$	(1	)	$	—		$	(1	)
EBITDA including noncontrolling interests	$	564	$	—	$	125	$	195	$	884	$	(245	)

Segment EBITDA including noncontrolling interests and the reconciliation to earnings before interest expense, income taxes, and noncontrolling interests are as follow:



	Year Ended December 31
	2019			2018			2017
EBITDA including noncontrolling interests by Segments:
Clean Air	$	582		$	599		$	564
Powertrain	363			93			—
Ride Performance	8			69			125
Motorparts	184			161			195
Total Reportable Segments	1,137			922			884
Corporate	(343		)	(255		)	(245		)
Depreciation and amortization	(673		)	(345		)	(226		)
Earnings before interest expense, income taxes, and noncontrolling interests	121			322			413
Interest expense	(322		)	(148		)	(77		)
Income tax (expense) benefit	(19		)	(63		)	(71		)
Net income (loss)	$	(220	)	$	111		$	265

The following customers accounted for 10% or more of the Company's net sales in the last three years. The net sales to both customers were across all segments.



Customer	2019		2018		2017
General Motors Company	11	%	12	%	14	%
Ford Motor Company	10	%	12	%	13	%



	Revenues from external customers ^(b)						Long-lived assets ^(c)
	Year Ended December 31						December 31
	2019		2018		2017		2019		2018
United States	$	6,203	$	4,488	$	3,632	$	1,363	$	1,234
China	2,377		1,553		1,283		768		687
Germany	2,227		1,212		798		539		543
Poland	925		731		488		331		319
United Kingdom	568		499		482		130		116
Mexico	959		543		416		277		239
India	475		316		216		182		167
Turkey	5		7		9		250		276
Other Foreign ^(a)	3,711		2,414		1,950		847		687
Consolidated	$	17,450	$	11,763	$	9,274	$	4,687	$	4,268


^(a)	Revenues from external customers and long-lived assets for individual foreign countries other than China, Germany, Poland, United Kingdom, Mexico, India, and Turkey are not individually material.


^(b)	Revenues are attributed to countries based on location of the shipper.


^(c)	Long-lived assets include all long-term assets except goodwill, intangibles and deferred tax assets.

Disaggregation of revenue

Original Equipment

Value added: OE revenue is generated from providing original equipment manufacturers and servicers with products for automotive, heavy duty, and industrial applications. Supply relationships typically extend over the life of the related vehicle, subject to interim design and technical specification revisions, and do not require the customer to purchase a minimum quantity.

Substrate/Passthrough sales: Generally, in connection with the sale of exhaust systems to certain OE manufacturers, the Company purchases catalytic converters and diesel particulate filters or components thereof including precious metals (“substrates”) on

behalf of its customers which are used in the assembled system. These substrates are included in inventory and are “passed through” to the customer at cost, plus a small margin. Since the Company takes title to the substrate inventory and has responsibility for both the delivery and quality of the finished product including the substrates, the revenues and related expenses are recorded at gross amounts.

Aftermarket

Aftermarket revenue is generated from providing products for the global vehicle aftermarket to a wide range of warehouse distributors, retail parts stores, and mass merchants that distribute these products to customers ranging from professional service providers to “do-it-yourself” consumers.

Revenue from contracts with customers is disaggregated by product lines, as it depicts the nature and amount of the Company’s revenue that is aligned with the Company's key growth strategies. In the following table, revenue is disaggregated accordingly:



	Reportable Segments
By Customer Type	Clean Air		Powertrain		Ride Performance		Motorparts		Total
Year Ended December 31, 2019
OE - Substrate	$	3,027	$	—	$	—	$	—	$	3,027
OE - Value add	4,094		4,408		2,754		—		11,256
Aftermarket	—		—		—		3,167		3,167
Total	$	7,121	$	4,408	$	2,754	$	3,167	$	17,450
Year Ended December 31, 2018
OE - Substrate	$	2,500	$	—	$	—	$	—	$	2,500
OE - Value add	4,207		1,112		2,164		—		7,483
Aftermarket	—		—		—		1,780		1,780
Total	$	6,707	$	1,112	$	2,164	$	1,780	$	11,763
Year Ended December 31, 2017
OE - Substrate	$	2,187	$	—	$	—	$	—	$	2,187
OE - Value add	4,029		—		1,807		—		5,836
Aftermarket	—		—		—		1,251		1,251
Total	$	6,216	$	—	$	1,807	$	1,251	$	9,274



	Reportable Segments
By Geography	Clean Air		Powertrain		Ride Performance		Motorparts		Total
Year Ended December 31, 2019
North America	$	3,031	$	1,503	$	873	$	2,018	$	7,425
Europe, Middle East, Africa, and South America	2,388		2,106		1,338		932		6,764
Asia Pacific	1,702		799		543		217		3,261
Total	$	7,121	$	4,408	$	2,754	$	3,167	$	17,450
Year Ended December 31, 2018
North America	$	2,981	$	386	$	770	$	1,117	$	5,254
Europe, Middle East, Africa, and South America	2,415		498		933		558		4,404
Asia Pacific	1,311		228		461		105		2,105
Total	$	6,707	$	1,112	$	2,164	$	1,780	$	11,763
Year Ended December 31, 2017
North America	$	2,866	$	—	$	674	$	786	$	4,326
Europe, Middle East, Africa, and South America	2,143		—		736		404		3,283
Asia Pacific	1,207		—		397		61		1,665
Total	$	6,216	$	—	$	1,807	$	1,251	$	9,274

The following table shows the asset expenditure information by reportable segments:



	Year Ended December 31, 2019
	Clean Air			Powertrain			Ride Performance			Motorparts			Other unallocated assets		Total
Prior year payable on assets	$	38		$	48		$	23		$	26		$	—	$	135
Asset additions	214			269			192			42			26		743
Less: Current year payable on assets	(44		)	(52		)	(31		)	(7		)	—		(134		)
Cash payments for property, plant, and equipment	$	208		$	265		$	184		$	61		$	26	$	744

	Year Ended December 31, 2018
	Clean Air			Powertrain			Ride Performance			Motorparts			Other unallocated assets		Total
Prior year payable on assets	$	33		$	—		$	22		$	4		$	—	$	59
Capex in accounts payable acquired	—			25			12			5			—		42
Asset additions	202			81			149			53			56		541
Less: Current year payable on assets	(38		)	(48		)	(23		)	(26		)	—		(135		)
Cash payments for property, plant, and equipment	$	197		$	58		$	160		$	36		$	56	$	507

	Year Ended December 31, 2017
	Clean Air			Powertrain			Ride Performance			Motorparts			Other unallocated assets		Total
Prior year payable on assets	$	43		$	—		$	19		$	5		$	1	$	68
Asset additions	212			—			145			27			26		410
Less: Current year payable on assets	(33		)	—			(22		)	(4		)	—		(59		)
Cash payments for property, plant, and equipment	$	222		$	—		$	142		$	28		$	27	$	419

The Other unallocated assets are comprised of software additions not included in segment information.