Segment Information

3 Months Ended

Mar. 31, 2020

16. Segment Information

The Company intends to separate its businesses to form two independent companies: New Tenneco and DRiV. The future New Tenneco consists of two operating segments: Powertrain and Clean Air. DRiV also consists of two operating segments: Motorparts and Ride Performance. Costs related to other business activities, primarily corporate headquarter functions, are disclosed separately from the four operating segments as "Corporate."

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 U.S. 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 U.S. 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 the three months ended March 31, 2020 and 2019 are as follows:



	Reportable Segments
	Clean Air		Powertrain		Ride Performance		Motorparts		Total		Corporate		Reclass & Elims			Total
For the Three Months Ended March 31, 2020
Revenues from external customers	$	1,545	$	997	$	588	$	706	$	3,836	$	—	$	—		$	3,836
Intersegment revenues	$	6	$	38	$	29	$	9	$	82	$	—	$	(82	)	$	—
Equity in earnings of nonconsolidated affiliates, net of tax	$	—	$	11	$	—	$	2	$	13	$	—	$	—		$	13
For the Three Months Ended March 31, 2019
Revenues from external customers	$	1,779	$	1,175	$	733	$	797	$	4,484	$	—	$	—		$	4,484
Intersegment revenues	$	—	$	46	$	46	$	11	$	103	$	—	$	(103	)	$	—
Equity in earnings of nonconsolidated affiliates, net of tax	$	—	$	13	$	1	$	2	$	16	$	—	$	—		$	16

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



	Three Months Ended March 31,
	2020			2019
EBITDA including noncontrolling interests by Segments:
Clean Air	$	99		$	131
Powertrain	(70		)	113
Ride Performance	(577		)	(45		)
Motorparts	(40		)	45
Total Reportable Segments	(588		)	244
Corporate	(86		)	(99		)
Depreciation and amortization	(171		)	(169		)
Earnings (loss) before interest expense, income taxes, and noncontrolling interests	(845		)	(24		)
Interest expense	(75		)	(81		)
Income tax (expense) benefit	94			—
Net income (loss)	$	(826	)	$	(105	)

Disaggregated Revenue

Original Equipment

Value-Added Sales

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 customer type and geography, 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 tables, revenue is disaggregated accordingly:



	Reportable Segments
By Customer Type	Clean Air		Powertrain		Ride Performance		Motorparts		Total
Three Months Ended March 31, 2020
OE - Substrate	$	700	$	—	$	—	$	—	$	700
OE - Value add	845		997		588		—		2,430
Aftermarket	—		—		—		706		706
Total	$	1,545	$	997	$	588	$	706	$	3,836
Three Months Ended March 31, 2019
OE - Substrate	$	706	$	—	$	—	$	—	$	706
OE - Value add	1,073		1,175		733		—		2,981
Aftermarket	—		—		—		797		797
Total	$	1,779	$	1,175	$	733	$	797	$	4,484



	Reportable Segments
By Geography	Clean Air		Powertrain		Ride Performance		Motorparts		Total
Three Months Ended March 31, 2020
North America	$	704	$	344	$	198	$	476	$	1,722
Europe, Middle East and Africa	565		492		297		197		1,551
Rest of world	276		161		93		33		563
Total	$	1,545	$	997	$	588	$	706	$	3,836
Three Months Ended March 31, 2019
North America	$	793	$	405	$	232	$	507	$	1,937
Europe, Middle East and Africa	641		575		378		237		1,831
Rest of world	345		195		123		53		716
Total	$	1,779	$	1,175	$	733	$	797	$	4,484