Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Tennant Company Reports 2020 Third-Quarter Results


Tennant Company ("Tennant") (NYSE: TNC), a world leader in the design, manufacture and marketing of solutions that help create a cleaner, safer and healthier world, today reported its third-quarter 2020 results. Tennant Company reported net sales of $261.9 million for the 2020 third quarter, representing a 7.1 percent organic decrease year over year, primarily due to the global business slowdown resulting from the coronavirus pandemic. Net income for the third quarter of 2020 was $11.7 million, or $0.63 per diluted share, compared with $14.6 million, or $0.79 per diluted share, in the year-ago period. Adjusted diluted earnings per share, which exclude certain non-operational items and amortization expense, were $0.90, compared with $0.85 in the third quarter of 2019. Excluding non-operational items, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the third quarter of 2020 were $32.6 million, or 12.4 percent of sales, compared with $31.4 million, or 11.2 percent of sales, in the year-ago period. In the third quarter of 2020, cash flow from operations provided $48.9 million, compared with $35.3 million in the prior-year third quarter. (See the Supplemental Non-GAAP Financial Table.)

"In the third quarter, we saw encouraging trends across all our regions as our global teams worked hard and showed tremendous dedication in meeting the sales and operational challenges posed by the pandemic," said Chris Killingstad, Tennant Company's president and chief executive officer. "We continued to manage our costs effectively and our strategy is yielding improvements in our operating performance, resulting in adjusted EBITDA growth despite a year-over-year decline in organic sales. The way we have managed our business, while still meeting the urgent needs of our customers, demonstrates how we are executing on our enterprise strategy to win where we have competitive advantage, reduce complexity and build scalable processes, and innovate for profitable growth. By continuing to do so, we expect to drive long-term shareholder value."

"In terms of innovating for profitable growth, the third quarter was a great example of our commitment to provide our customers with the innovative solutions they need to keep their facilities clean and safe during this unprecedented time. Together with our strategic partner, Brain Corp, we recently finalized agreements to provide two national retailers, and a separate regional retailer, with our autonomous floor scrubbers, including the T7AMR and the recently released T380AMR. These machines include powerful software features that deliver improved cleaning efficiency and flexibility for high-traffic commercial locations."

Third-Quarter Operating Review

Regional Sales Highlights

Profitability Measures and Related Factors ? (See the Supplemental Non-GAAP Financial Table)

Cash Flow, Capital Allocation and Other Items

During the third quarter, Tennant generated cash flow from operations of $48.9 million, primarily driven by strong operating performance and improvements in working capital. During the same period, the company reduced its outstanding debt by $16.8 million and paid $4.1 million in cash dividends to shareholders.

2020 Business Outlook

"When the pandemic started, our team was quick to respond by taking the necessary actions to adapt to this new environment in order to keep our employees and customers safe, to manage our costs and cash flow, and to preserve our ability to ramp up quickly as markets recover," said Killingstad. "While the pandemic does create considerable uncertainty, especially as some markets are seeing spikes in new COVID-19 cases, we have a higher level of confidence in our near-term projections and as such are reinitiating our full-year guidance for 2020. This guidance not only reflects our expected revenue growth, but also incorporates our commitment to investing in our business to support our enterprise strategy."

For 2020, Tennant provides guidance as follows:

The guidance includes approximately $5 to $8 million of government benefits, primarily related to previously disclosed wage subsidies.

Conference Call

Tennant will host a conference call to discuss its 2020 third-quarter results today, October 29, 2020, at 10 a.m. Central Time (11 a.m. Eastern Time). The conference call and accompanying slides will be available via webcast on Tennant's investor website. To listen to the call live and view the slide presentation, go to investors.tennantco.com and click on the link at the bottom of the home page. A recorded replay of the conference call, with accompanying slides, will be available at investors.tennantco.com.

Company Profile

Founded in 1870, Tennant Company (TNC), headquartered in Minneapolis, Minnesota, is a world leader in designing, manufacturing and marketing solutions that empower customers to achieve quality cleaning performance, reduce their environmental impact and help create a cleaner, safer, healthier world. Its products include equipment for maintaining surfaces in industrial, commercial and outdoor environments; detergent-free and other sustainable cleaning technologies; cleaning tools and supplies; and coatings for protecting, repairing and upgrading surfaces. Tennant's global field service network is the most extensive in the industry. Tennant Company had sales of $1.14 billion in 2019 and has approximately 4,400 employees. Tennant has manufacturing operations throughout the world and sells products directly in 15 countries and through distributors in more than 100 countries. For more information, visit www.tennantco.com and www.ipcworldwide.com. The Tennant Company logo and other trademarks designated with the symbol "®" are trademarks of Tennant Company registered in the United States and/or other countries.

Forward-Looking Statements

Certain statements contained in this document are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements do not relate to strictly historical or current facts and provide current expectations or forecasts of future events. Any such expectations or forecasts of future events are subject to a variety of factors. These include factors that affect all businesses operating in a global market as well as matters specific to us and the markets we serve. Particular risks and uncertainties presently facing us include: uncertainty surrounding the impacts and duration of the COVID-19 pandemic; our ability to effectively develop and manage strategic planning and growth processes and the related operational plans; our ability to successfully upgrade and evolve our information technology systems; fluctuations in the cost, quality or availability of raw materials and purchased components; geopolitical and economic uncertainty throughout the world; our ability to integrate acquisitions; our ability to attract, retain and develop key personnel and create effective succession planning strategies; our ability to successfully protect our information technology systems from cybersecurity risks; our ability to develop and commercialize new innovative products and services; the competition in our business; the occurrence of a significant business interruption; our ability to comply with global laws and regulations; the potential disruption of our business from actions of activist investors or others; unforeseen product liability claims or product quality issues; our ability to generate sufficient cash to satisfy our debt obligations; and foreign currency fluctuations.

We caution that forward-looking statements must be considered carefully and that actual results may differ in material ways due to risks and uncertainties both known and unknown. Information about factors that could materially affect our results can be found in our 2019 Form 10-K. Shareholders, potential investors and other readers are urged to consider these factors in evaluating forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.

We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. Investors are advised to consult any further disclosures by us in our filings with the Securities and Exchange Commission and in other written statements on related subjects. It is not possible to anticipate or foresee all risk factors, and investors should not consider any list of such factors to be an exhaustive or complete list of all risks or uncertainties.

Non-GAAP Financial Measures

This news release and the related conference call include presentation of Non-GAAP measures that include or exclude special items of a nonrecurring and/or non-operational nature (hereinafter referred to as "special items"). Management believes that the Non-GAAP measures provide useful information to investors regarding the Company's results of operations and financial condition because they permit a more meaningful comparison and understanding of Tennant Company's operating performance for the current, past or future periods. Management uses these Non-GAAP measures to monitor and evaluate ongoing operating results and trends and to gain an understanding of the comparative operating performance of the Company.

We believe that disclosing Gross Profit ? as adjusted, Gross Margin ? as adjusted, Selling and Administrative Expense ? as adjusted, Selling and Administrative Expense as a percent of Net Sales ? as adjusted, Profit from Operations ? as adjusted, Operating Margin ? as adjusted, Profit Before Income Taxes ? as adjusted, Income Tax Expense ? as adjusted, Net Earnings Attributable to Tennant Company ? as adjusted, Net Earnings Attributable to Tennant Company per Share ? as adjusted, Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) ? as adjusted, and EBITDA Margin ? as adjusted (collectively, the "Non-GAAP Measures"), excluding the impacts from special items, is useful to investors as a measure of operating performance. We use these as one measure to monitor and evaluate operating performance. The Non-GAAP measures are financial measures that do not reflect United States Generally Accepted Accounting Principles (GAAP).

We calculate Gross Profit ? as adjusted and Gross Margin ? as adjusted by adding back the discontinuation of product lines, restructuring charges recorded in Cost of Sales and an inventory step-up. We calculate Selling and Administrative Expense ? as adjusted, and Selling and Administrative Expense as a percent of Net Sales ? as adjusted by adding back acquisition and integration costs, certain non-operational professional services, restructuring charges recorded in S&A, a note receivable write-down and an acquisition-contingent consideration adjustment. We calculate Profit from Operations ? as adjusted and Operating Margin ? as adjusted by adding back the pre-tax effect of the discontinuation of product lines, restructuring charges, an inventory step-up, acquisition and integration costs, certain non-operational professional services, a note receivable write-down and an acquisition-contingent consideration adjustment. We calculate Profit Before Income Taxes ? as adjusted by adding back the pre-tax effect of the discontinuation of product lines, restructuring charges, an inventory step-up, acquisition and integration costs, certain non-operational professional services, a note receivable write-down, an acquisition-contingent consideration adjustment, and amortization expense. We calculate Income Tax Expense ? as adjusted by adding back the tax effect of the discontinuation of product lines, acquisition and integration costs, certain non-operational professional services, restructuring charges and amortization expense. We calculate Net Earnings Attributable to Tennant Company ? as adjusted by adding back the after-tax effect of the discontinuation of product lines, restructuring charges, an inventory step-up, acquisition and integration costs, certain non-operational professional services, a note receivable write-down, an acquisition-contingent consideration adjustment, and amortization expense. We calculate Net Earnings Attributable to Tennant Company per Share ? as adjusted by adding back the after-tax effect of the discontinuation of product lines, restructuring charges, an inventory step-up, acquisition and integration costs, certain non-operational professional services, a note receivable write-down, an acquisition-contingent consideration adjustment, and amortization expense and dividing the result by the diluted weighted average shares outstanding. We calculate EBITDA ? as adjusted by adding back the pre-tax effect of the discontinuation of product lines, restructuring charges, an inventory step-up, acquisition and integration costs, certain non-operational professional services, a note receivable write-down, an acquisition-contingent consideration adjustment, Interest Income, Interest Expense, Income Tax Expense, Depreciation Expense and Amortization Expense to Net Earnings Including Noncontrolling Interest ? as reported. We calculate EBITDA Margin ? as adjusted by dividing EBITDA ? as adjusted by Net Sales.

Investors should consider these Non-GAAP financial measures in addition to, not as a substitute for, or better than, financial measures prepared in accordance with GAAP. Reconciliations of the components of these measures to the most directly comparable GAAP financial measures are included in the Supplemental Non-GAAP Financial Table to this earnings release.

FINANCIAL TABLES FOLLOW

TENNANT COMPANY

CONSOLIDATED STATEMENTS OF EARNINGS (Unaudited)

(In millions, except shares and per share data)

 

Three Months Ended

 

Nine Months Ended

 

 

September 30

 

September 30

 

 

2020

 

2019

 

2020

 

2019

Net Sales

 

$

261.9

 

 

$

280.7

 

 

$

728.0

 

 

$

842.8

 

Cost of Sales

 

 

157.1

 

 

 

166.7

 

 

 

428.5

 

 

 

499.8

 

Gross Profit

 

 

104.8

 

 

 

114.0

 

 

 

299.5

 

 

 

343.0

 

Gross Margin

 

 

40.0

%

 

 

40.6

%

 

 

41.1

%

 

 

40.7

%

Operating Expense:

 

 

 

 

 

 

 

 

Research and Development Expense

 

 

7.4

 

 

 

8.2

 

 

 

21.4

 

 

 

23.8

 

Selling and Administrative Expense

 

 

79.0

 

 

 

84.3

 

 

 

222.4

 

 

 

267.0

 

Total Operating Expense

 

 

86.4

 

 

 

92.5

 

 

 

243.8

 

 

 

290.8

 

Profit from Operations

 

 

18.4

 

 

 

21.5

 

 

 

55.7

 

 

 

52.2

 

Operating Margin

 

 

7.0

%

 

 

7.7

%

 

 

7.7

%

 

 

6.2

%

Other Income (Expense):

 

 

 

 

 

 

 

 

Interest Income

 

 

0.8

 

 

 

0.8

 

 

 

2.5

 

 

 

2.5

 

Interest Expense

 

 

(5.2

)

 

 

(5.2

)

 

 

(15.9

)

 

 

(15.7

)

Net Foreign Currency Transaction Loss

 

 

(0.9

)

 

 

(0.6

)

 

 

(5.0

)

 

 

(0.6

)

Other (Expense) Income, Net

 

 

(0.2

)

 

 

0.1

 

 

 

(0.2

)

 

 

1.4

 

Total Other Expense, Net

 

 

(5.5

)

 

 

(4.9

)

 

 

(18.6

)

 

 

(12.4

)

Profit Before Income Taxes

 

 

12.9

 

 

 

16.6

 

 

 

37.1

 

 

 

39.8

 

Income Tax Expense

 

 

1.2

 

 

 

2.0

 

 

 

5.9

 

 

 

5.0

 

Net Earnings Including Noncontrolling Interest

 

 

11.7

 

 

 

14.6

 

 

 

31.2

 

 

 

34.8

 

Net Earnings Attributable to Tennant Company

 

$

11.7

 

 

$

14.6

 

 

$

31.2

 

 

$

34.8

 

 

 

 

 

 

 

 

 

 

Net Earnings Attributable to Tennant Company per Share:

 

 

 

 

 

 

 

 

Basic

 

$

0.64

 

 

$

0.81

 

 

$

1.70

 

 

$

1.93

 

Diluted

 

$

0.63

 

 

$

0.79

 

 

$

1.68

 

 

$

1.89

 

 

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding:

 

 

 

 

 

 

 

 

Basic

 

 

18,371,883

 

 

 

18,134,909

 

 

 

18,335,430

 

 

 

18,086,962

 

Diluted

 

 

18,648,328

 

 

 

18,487,948

 

 

 

18,623,967

 

 

 

18,402,929

 

GEOGRAPHICAL NET SALES(1) (Unaudited)

(In millions)

 

Three Months Ended

 

Nine Months Ended

 

 

September 30

 

September 30

 

 

2020

 

2019

 

%

 

2020

 

2019

 

%

Americas

 

$

167.7

 

$

186.1

 

(9.9

)

 

$

466.6

 

$

536.4

 

(13.0

)

Europe, Middle East and Africa

 

 

69.5

 

 

69.7

 

(0.3

)

 

 

196.3

 

 

228.6

 

(14.1

)

Asia Pacific

 

 

24.7

 

 

24.9

 

(0.8

)

 

 

65.1

 

 

77.8

 

(16.3

)

Total

 

$

261.9

 

$

280.7

 

(6.7

)

 

$

728.0

 

$

842.8

 

(13.6

)

(1)

Net of intercompany sales.

TENNANT COMPANY

CONSOLIDATED BALANCE SHEETS (Unaudited)

(In millions)

September 30,

 

December 31,

 

2020

 

2019

ASSETS

 

 

 

Current Assets:

 

 

 

Cash, Cash Equivalents and Restricted Cash

$

124.7

 

 

$

74.6

 

Receivables:

 

 

 

Trade, less Allowances of $3.9 and $3.6, respectively

 

198.0

 

 

 

216.5

 

Other

 

3.3

 

 

 

6.8

 

Net Receivables

 

201.3

 

 

 

223.3

 

Inventories

 

133.5

 

 

 

150.1

 

Prepaid and Other Current Assets

 

31.8

 

 

 

33.0

 

Total Current Assets

 

491.3

 

 

 

481.0

 

Property, Plant and Equipment

 

437.7

 

 

 

412.5

 

Accumulated Depreciation

 

(259.4

)

 

 

(239.2

)

Property, Plant and Equipment, Net

 

178.3

 

 

 

173.3

 

Operating Lease Assets

 

43.7

 

 

 

46.6

 

Goodwill

 

201.4

 

 

 

195.1

 

Intangible Assets, Net

 

126.6

 

 

 

137.7

 

Other Assets

 

22.2

 

 

 

29.2

 

Total Assets

$

1,063.5

 

 

$

1,062.9

 

 

 

 

 

LIABILITIES AND TOTAL EQUITY

 

 

 

Current Liabilities:

 

 

 

Current Portion of Long-Term Debt

$

16.0

 

 

$

31.3

 

Accounts Payable

 

86.0

 

 

 

94.1

 

Employee Compensation and Benefits

 

50.5

 

 

 

63.5

 

Other Current Liabilities

 

91.8

 

 

 

86.0

 

Total Current Liabilities

 

244.3

 

 

 

274.9

 

Long-Term Liabilities:

 

 

 

Long-Term Debt

 

307.6

 

 

 

307.5

 

Long-Term Operating Lease Liabilities

 

27.8

 

 

 

30.3

 

Employee-Related Benefits

 

18.0

 

 

 

19.4

 

Deferred Income Taxes

 

38.7

 

 

 

41.7

 

Other Liabilities

 

31.8

 

 

 

27.8

 

Total Long-Term Liabilities

 

423.9

 

 

 

426.7

 

Total Liabilities

 

668.2

 

 

 

701.6

 

Equity:

 

 

 

Common Stock

 

6.9

 

 

 

6.9

 

Additional Paid-In Capital

 

52.2

 

 

 

45.5

 

Retained Earnings

 

365.0

 

 

 

346.0

 

Accumulated Other Comprehensive Loss

 

(30.2

)

 

 

(38.5

)

Total Tennant Company Shareholders' Equity

 

393.9

 

 

 

359.9

 

Noncontrolling Interest

 

1.4

 

 

 

1.4

 

Total Equity

 

395.3

 

 

 

361.3

 

Total Liabilities and Total Equity

$

1,063.5

 

 

$

1,062.9

 

TENNANT COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In millions)

Nine Months Ended

 

September 30

 

2020

 

2019

OPERATING ACTIVITIES

 

 

 

Net Earnings Including Noncontrolling Interest

$

31.2

 

 

$

34.8

 

Adjustments to reconcile Net Earnings to Net Cash Provided by Operating Activities:

 

 

 

Depreciation

 

24.1

 

 

 

24.0

 

Amortization of Intangible Assets

 

15.3

 

 

 

16.6

 

Amortization of Debt Issuance Costs

 

1.1

 

 

 

1.0

 

Fair Value Step-Up Adjustment to Acquired Inventory

 

?

 

 

 

0.9

 

Deferred Income Taxes

 

(1.7

)

 

 

(2.7

)

Share-Based Compensation Expense

 

4.7

 

 

 

8.7

 

Allowance for Doubtful Accounts and Returns

 

0.9

 

 

 

1.6

 

Acquisition Contingent Consideration Adjustment

 

(0.3

)

 

 

(1.8

)

Note Receivable Writedown

 

?

 

 

 

2.7

 

Other, Net

 

1.8

 

 

 

(0.7

)

Changes in Operating Assets and Liabilities, Net of Assets Acquired:

 

 

 

Receivables, Net

 

23.4

 

 

 

(0.8

)

Inventories

 

13.1

 

 

 

(31.4

)

Accounts Payable

 

(7.8

)

 

 

(2.3

)

Employee Compensation and Benefits

 

(11.9

)

 

 

(0.8

)

Other Current Liabilities

 

6.8

 

 

 

(0.8

)

Other Assets and Liabilities

 

(3.2

)

 

 

(2.8

)

Net Cash Provided by Operating Activities

 

97.5

 

 

 

46.2

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

Purchases of Property, Plant and Equipment

 

(25.5

)

 

 

(28.3

)

Proceeds from Disposals of Property, Plant and Equipment

 

0.1

 

 

 

0.1

 

Proceeds from Principal Payments Received on Long-Term Note Receivable

 

?

 

 

 

0.1

 

Acquisition of Business, Net of Cash, Cash Equivalents and Restricted Cash Acquired

 

?

 

 

 

(8.9

)

Purchase of Intangible Assets

 

(0.1

)

 

 

(0.5

)

Net Cash Used in Investing Activities

 

(25.5

)

 

 

(37.5

)

 

 

 

 

FINANCING ACTIVITIES

 

 

 

Proceeds from Borrowings

 

126.4

 

 

 

25.0

 

Repayments of Debt

 

(142.3

)

 

 

(37.9

)

Change in Finance Lease Obligations

 

(0.1

)

 

 

(0.2

)

Proceeds from Issuances of Common Stock

 

3.6

 

 

 

2.8

 

Purchase of Noncontrolling Owner Interest

 

?

 

 

 

(0.5

)

Dividends Paid

 

(12.1

)

 

 

(12.0

)

Net Cash Used in Financing Activities

 

(24.5

)

 

 

(22.8

)

 

Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash

 

2.6

 

 

 

(0.3

)

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash

 

50.1

 

 

 

(14.4

)

Cash, Cash Equivalents and Restricted Cash at Beginning of Period

 

74.6

 

 

 

86.1

 

Cash, Cash Equivalents and Restricted Cash at End of Period

$

124.7

 

 

$

71.7

 

TENNANT COMPANY

SUPPLEMENTAL NON-GAAP FINANCIAL TABLE

(In millions, except per share data)

 

Three Months Ended

 

Nine Months Ended

 

 

September 30

 

September 30

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Gross Profit - as reported

 

$

104.8

 

 

$

114.0

 

 

$

299.5

 

 

$

343.0

 

Gross Margin - as reported

 

 

40.0

%

 

 

40.6

%

 

 

41.1

%

 

 

40.7

%

Adjustments:

 

 

 

 

 

 

 

 

Discontinuation of Product Lines

 

 

?

 

 

 

0.4

 

 

 

1.7

 

 

 

2.8

 

Restructuring Charge (Cost of Sales)

 

 

0.6

 

 

 

?

 

 

 

0.6

 

 

 

?

 

Inventory Step-Up

 

 

?

 

 

 

?

 

 

 

?

 

 

 

0.9

 

Gross Profit - as adjusted

 

$

105.4

 

 

$

114.4

 

 

$

301.8

 

 

$

346.7

 

Gross Margin - as adjusted

 

 

40.2

%

 

 

40.8

%

 

 

41.5

%

 

 

41.1

%

 

 

 

 

 

 

 

 

 

Selling and Administrative Expense - as reported

 

$

79.0

 

 

$

84.3

 

 

$

222.4

 

 

$

267.0

 

Selling and Administrative Expense as a percent of Net Sales - as reported

 

 

30.2

%

 

 

30.0

%

 

 

30.5

%

 

 

31.7

%

Adjustments:

 

 

 

 

 

 

 

 

Acquisition and Integration Costs

 

 

?

 

 

 

(0.6

)

 

 

?

 

 

 

(2.0

)

Professional Services

 

 

?

 

 

 

?

 

 

 

?

 

 

 

(0.1

)

Restructuring Charge (S&A Expense)

 

 

(1.0

)

 

 

?

 

 

 

(2.1

)

 

 

(4.3

)

Note Receivable Write-down

 

 

?

 

 

 

?

 

 

 

?

 

 

 

(2.7

)

Acquisition Contingent Consideration Adjustment

 

 

?

 

 

 

3.8

 

 

 

0.3

 

 

 

1.8

 

Selling and Administrative Expense - as adjusted

 

$

78.0

 

 

$

87.5

 

 

$

220.6

 

 

$

259.7

 

Selling and Administrative Expense as a percent of Net Sales - as adjusted

 

 

29.8

%

 

 

31.2

%

 

 

30.3

%

 

 

30.8

%

 

 

 

 

 

 

 

 

 

Profit from Operations - as reported

 

$

18.4

 

 

$

21.5

 

 

$

55.7

 

 

$

52.2

 

Operating Margin - as reported

 

 

7.0

%

 

 

7.7

%

 

 

7.7

%

 

 

6.2

%

Adjustments:

 

 

 

 

 

 

 

 

Discontinuation of Product Lines

 

 

?

 

 

 

0.4

 

 

 

1.7

 

 

 

2.8

 

Restructuring Charge (Cost of Sales)

 

 

0.6

 

 

 

?

 

 

 

0.6

 

 

 

?

 

Inventory Step-Up

 

 

?

 

 

 

?

 

 

 

?

 

 

 

0.9

 

Acquisition and Integration Costs

 

 

?

 

 

 

0.6

 

 

 

?

 

 

 

2.0

 

Professional Services

 

 

?

 

 

 

?

 

 

 

?

 

 

 

0.1

 

Restructuring Charge (S&A Expense)

 

 

1.0

 

 

 

?

 

 

 

2.1

 

 

 

4.3

 

Note Receivable Write-down

 

 

?

 

 

 

?

 

 

 

?

 

 

 

2.7

 

Acquisition Contingent Consideration Adjustment

 

 

?

 

 

 

(3.8

)

 

 

(0.3

)

 

 

(1.8

)

Profit from Operations - as adjusted

 

$

20.0

 

 

$

18.7

 

 

$

59.8

 

 

$

63.2

 

Operating Margin - as adjusted

 

 

7.6

%

 

 

6.7

%

 

 

8.2

%

 

 

7.5

%

TENNANT COMPANY

SUPPLEMENTAL NON-GAAP FINANCIAL TABLE

(In millions, except per share data)

 

Three Months Ended

 

Nine Months Ended

 

 

September 30

 

September 30

 

 

2020

 

2019

 

2020

 

2019

Profit Before Income Taxes - as reported

 

$

12.9

 

$

16.6

 

 

$

37.1

 

 

$

39.8

 

Adjustments:

 

 

 

 

 

 

 

 

Discontinuation of Product Lines

 

 

?

 

 

0.4

 

 

 

1.7

 

 

 

2.8

 

Restructuring Charge (Cost of Sales)

 

 

0.6

 

 

?

 

 

 

0.6

 

 

 

?

 

Inventory Step-Up

 

 

?

 

 

?

 

 

 

?

 

 

 

0.9

 

Acquisition and Integration Costs (S&A Expense)

 

 

?

 

 

0.6

 

 

 

?

 

 

 

2.0

 

Acquisition and Integration Costs (Other Income, Net)

 

 

?

 

 

?

 

 

 

?

 

 

 

(1.8

)

Professional Services

 

 

?

 

 

?

 

 

 

?

 

 

 

0.1

 

Restructuring Charge (S&A Expense)

 

 

1.0

 

 

?

 

 

 

2.1

 

 

 

4.3

 

Note Receivable Write-down

 

 

?

 

 

?

 

 

 

?

 

 

 

2.7

 

Acquisition Contingent Consideration Adjustment

 

 

?

 

 

(3.8

)

 

 

(0.3

)

 

 

(1.8

)

Amortization Expense

 

 

5.3

 

 

5.1

 

 

 

15.3

 

 

 

16.6

 

Profit Before Income Taxes - as adjusted

 

$

19.8

 

$

18.9

 

 

$

56.5

 

 

$

65.6

 

 

 

 

 

 

 

 

 

 

Income Tax Expense - as reported

 

$

1.2

 

$

2.0

 

 

$

5.9

 

 

$

5.0

 

Adjustments:

 

 

 

 

 

 

 

 

Discontinuation of Product Lines(1)

 

 

?

 

 

?

 

 

 

0.4

 

 

 

0.6

 

Restructuring Charge (Cost of Sales)(1)

 

 

0.2

 

 

?

 

 

 

0.2

 

 

 

?

 

Inventory Step-Up(1)

 

 

?

 

 

?

 

 

 

?

 

 

 

0.2

 

Acquisition and Integration Costs (S&A Expense)(1)

 

 

?

 

 

0.1

 

 

 

?

 

 

 

0.4

 

Acquisition and Integration Costs (Other Income, Net)(1)

 

 

?

 

 

?

 

 

 

?

 

 

 

?

 

Professional Services(1)

 

 

?

 

 

?

 

 

 

?

 

 

 

?

 

Restructuring Charge (S&A Expense)(1)

 

 

0.2

 

 

?

 

 

 

0.6

 

 

 

1.2

 

Note Receivable Write-down(1)

 

 

?

 

 

?

 

 

 

?

 

 

 

?

 

Acquisition Contingent Consideration Adjustment(1)

 

 

?

 

 

?

 

 

 

?

 

 

 

?

 

Amortization Expense(1)

 

 

1.4

 

 

1.1

 

 

 

4.2

 

 

 

4.2

 

Income Tax Expense - as adjusted

 

$

3.0

 

$

3.2

 

 

$

11.3

 

 

$

11.6

 

(1)

In determining the tax impact, we applied the statutory rate in effect for each jurisdiction where expenses were incurred and deductible for tax purposes.

TENNANT COMPANY

SUPPLEMENTAL NON-GAAP FINANCIAL TABLE

(In millions, except per share data)

 

Three Months Ended

 

Nine Months Ended

 

 

September 30

 

September 30

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Net Earnings Attributable to Tennant Company - as reported

 

$

11.7

 

$

14.6

 

 

$

31.2

 

 

$

34.8

 

Adjustments:

 

 

 

 

 

 

 

 

Discontinuation of Product Lines

 

 

?

 

 

0.4

 

 

 

1.3

 

 

 

2.2

 

Restructuring Charge (Cost of Sales)

 

 

0.4

 

 

?

 

 

 

0.4

 

 

 

?

 

Inventory Step-Up

 

 

?

 

 

?

 

 

 

?

 

 

 

0.7

 

Acquisition and Integration Costs (S&A Expense)

 

 

?

 

 

0.5

 

 

 

?

 

 

 

1.6

 

Acquisition and Integration Costs (Other Income, Net)

 

 

?

 

 

?

 

 

 

?

 

 

 

(1.8

)

Professional Services

 

 

?

 

 

?

 

 

 

?

 

 

 

0.1

 

Restructuring Charge (S&A Expense)

 

 

0.8

 

 

?

 

 

 

1.5

 

 

 

3.1

 

Note Receivable Write-down

 

 

?

 

 

?

 

 

 

?

 

 

 

2.7

 

Acquisition Contingent Consideration Adjustment

 

 

?

 

 

(3.8

)

 

 

(0.3

)

 

 

(1.8

)

Amortization Expense

 

 

3.9

 

 

4.0

 

 

 

11.1

 

 

 

12.4

 

Net Earnings Attributable to Tennant Company - as adjusted

 

$

16.8

 

$

15.7

 

 

$

45.2

 

 

$

54.0

 

 

 

 

 

 

 

 

 

 

Net Earnings Attributable to Tennant Company per Share - as reported:

 

 

 

 

 

 

 

 

Diluted

 

$

0.63

 

$

0.79

 

 

$

1.68

 

 

$

1.89

 

Adjustments:

 

 

 

 

 

 

 

 

Discontinuation of Product Lines

 

 

?

 

 

0.02

 

 

 

0.07

 

 

 

0.12

 

Restructuring Charge (Cost of Sales)

 

 

0.02

 

 

?

 

 

 

0.02

 

 

 

?

 

Inventory Step-Up

 

 

?

 

 

?

 

 

 

?

 

 

 

0.04

 

Acquisition and Integration Costs (S&A Expense)

 

 

?

 

 

0.03

 

 

 

?

 

 

 

0.09

 

Acquisition and Integration Costs (Other Income, Net)

 

 

?

 

 

?

 

 

 

?

 

 

 

(0.10

)

Professional Services

 

 

?

 

 

?

 

 

 

?

 

 

 

?

 

Restructuring Charge (S&A Expense)

 

 

0.04

 

 

?

 

 

 

0.08

 

 

 

0.17

 

Note Receivable Write-down

 

 

?

 

 

?

 

 

 

?

 

 

 

0.15

 

Acquisition Contingent Consideration Adjustment

 

 

?

 

 

(0.21

)

 

 

(0.02

)

 

 

(0.10

)

Amortization Expense

 

 

0.21

 

 

0.22

 

 

 

0.60

 

 

 

0.67

 

Net Earnings Attributable to Tennant Company per Share - as adjusted

 

$

0.90

 

$

0.85

 

 

$

2.43

 

 

$

2.93

 

TENNANT COMPANY

SUPPLEMENTAL NON-GAAP FINANCIAL TABLE

(In millions, except per share data)

 

Three Months Ended

 

Nine Months Ended

 

 

September 30

 

September 30

 

 

2020

 

2019

 

2020

 

2019

 

 

 

 

 

 

 

 

 

Net Earnings Including Noncontrolling Interest - as reported

 

$

11.7

 

 

$

14.6

 

 

$

31.2

 

 

$

34.8

 

Adjustments:

 

 

 

 

 

 

 

 

Interest Income

 

 

(0.8

)

 

 

(0.8

)

 

 

(2.5

)

 

 

(2.5

)

Interest Expense

 

 

5.2

 

 

 

5.2

 

 

 

15.9

 

 

 

15.7

 

Income Tax Expense

 

 

1.2

 

 

 

2.0

 

 

 

5.9

 

 

 

5.0

 

Depreciation Expense

 

 

8.4

 

 

 

8.1

 

 

 

24.1

 

 

 

24.0

 

Amortization Expense

 

 

5.3

 

 

 

5.1

 

 

 

15.3

 

 

 

16.6

 

Discontinuation of Product Lines

 

 

?

 

 

 

0.4

 

 

 

1.7

 

 

 

2.8

 

Restructuring Charge (Cost of Sales)

 

 

0.6

 

 

 

?

 

 

 

0.6

 

 

 

?

 

Inventory Step-Up

 

 

?

 

 

 

?

 

 

 

?

 

 

 

0.9

 

Acquisition and Integration Costs (S&A Expense)

 

 

?

 

 

 

0.6

 

 

 

?

 

 

 

2.0

 

Acquisition and Integration Costs (Other Income, Net)

 

 

?

 

 

 

?

 

 

 

?

 

 

 

(1.8

)

Professional Services

 

 

?

 

 

 

?

 

 

 

?

 

 

 

0.1

 

Restructuring Charge (S&A Expense)

 

 

1.0

 

 

 

?

 

 

 

2.1

 

 

 

4.3

 

Note Receivable Write-down

 

 

?

 

 

 

?

 

 

 

?

 

 

 

2.7

 

Acquisition Contingent Consideration Adjustment

 

 

?

 

 

 

(3.8

)

 

 

(0.3

)

 

 

(1.8

)

Earnings Before Interest, Taxes, Depreciation & Amortization - as adjusted

 

$

32.6

 

 

$

31.4

 

 

$

94.0

 

 

$

102.8

 

EBITDA Margin - as adjusted

 

 

12.4

%

 

 

11.2

%

 

 

12.9

%

 

 

12.2

%

 


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