tennant companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 tennant...
TRANSCRIPT
![Page 1: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/1.jpg)
TENNANT COMPANYEarnings Release Conference Call
First Quarter 2015
Monday, April 27, 2015
1
![Page 2: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/2.jpg)
Chris KillingstadPresident and CEO
Tom PaulsonSenior VP, CFO
2
TENNANT COMPANY
ON THE CALL TODAY
![Page 3: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/3.jpg)
Our remarks this morning and our answers to questions may contain forward-looking statements regarding the company’s expectations of future performance. Such statements are subject to risks and uncertainties, and our actual results may differ materially from those contained in the statements. These risks and uncertainties are described in today’s news release and the documents we file with the Securities and Exchange Commission. We encourage you to review those documents, particularly our Safe Harbor statement, for a description of the risks and uncertainties that may affect our results.
3
TENNANT COMPANY
FORWARD LOOKING STATEMENTS
![Page 4: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/4.jpg)
• Consolidated net sales of $185.7M– 6% organic sales growth over prior year quarter– Record sales for a first quarter
• Growth led by – Robust strategic account sales in Americas– Continued demand for new products– Increased global sales of outdoor equipment
4
TENNANT COMPANY
FIRST QUARTER 2015 SALES
![Page 5: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/5.jpg)
On track to reach organic growth goal of $1 Billion and remain committed to 12% or above OP margin
5
TENNANT COMPANY
STRATEGIC OVERVIEW
![Page 6: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/6.jpg)
• Americas– Sales up 11.5% organically– Robust sales to two leading big box retailers
in U.S.– LatAm declined due to challenging economy– Brazil positioned for growth with strong
market share
6
TENNANT COMPANY2015 FIRST QUARTER BY REGION
![Page 7: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/7.jpg)
Small, simple, affordable On-Site
Generation (OSG) technology
• Generates both cleaning and
antimicrobial solutions
• Fits into most janitorial closets
• Flexibility to dispense in remote locations 7
![Page 8: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/8.jpg)
• EMEA– Sales down 5% organically– Strong outdoor equipment sales– Order patterns improved throughout the quarter
• APAC– Sales down 1.3% organically – Weak economy in Australia– Slower sales in China
8
TENNANT COMPANY2015 FIRST QUARTER BY REGION
![Page 9: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/9.jpg)
18 in 2014
362015
Strongest product pipeline ever!
20in 2013
17in 2012
NEW PRODUCT GROWTH
Sales of equipment launched in past three years totaled 14% of equipment revenue for 1Q 20159
![Page 10: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/10.jpg)
Available NOW
ec-H2O NanoClean™FIRST GENERATIONEC-H2O™: 2008-2014
$740 million+ cumulative revenue
7,500+ customers
29,000+ sites
65,000+ machines
• Next generation ec-H2O• Cleans more soils in
more applications
• Nano-scale bubbles drive cleaning
performance
10
![Page 11: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/11.jpg)
11
MORE FLEXIBILITY | EASE OF USE | IMPROVED PRODUCTIVITY
TENNANT COMPANY
T300 SCRUBBER
![Page 12: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/12.jpg)
Jeffrey Moorefield
Senior VP, Global Operations
12
TENNANT COMPANY
WELCOME
![Page 13: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/13.jpg)
• New products in core and Orbio
• Sales gains in emerging markets
• Growth in Europe
• Focus on Strategic Accounts
• Expand global market coverage and customer base
13
TENNANT COMPANY
GROWTH DRIVERS
![Page 14: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/14.jpg)
14
14
SALES
GROSS MARGIN
R&D EXPENSE (% of sales)
S&A EXPENSE (% of sales)
OPERATING PROFIT
OPERATING PROFIT MARGIN
DILUTED EPS
Q1’15 Q1’14 CHANGE
$185.7 M
42.0%
4.2%
33.4%
$8.3 M
4.4%
$0.27
$184.0 M
41.8%
4.1%
32.7%
$9.2 M
5.0%
$0.31
+1.0%
+20 bps
+10 bps
+70 bps
(10.6%)
(60 bps)
(12.9%)
TENNANT COMPANY
2015 FIRST QUARTEROrganic Sales Growth 6.0% | Strong Growth in North America
![Page 15: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/15.jpg)
AMERICAS1Q’15 – 11.5%
2014 FY – 11.6%
TENNANT COMPANY
ORGANIC SALES GROWTH2015 First Quarter 6.0% | 2014 Full Year 10.3%
APAC1Q’15 – <1.3%>2014 FY – 12.8%
EMEA1Q’15 – <5.0%>2014 FY – 4.4%
15
![Page 16: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/16.jpg)
16
16
SALES
GROSS MARGIN
R&D EXPENSE (% of sales)
S&A EXPENSE (% of sales)
OPERATING PROFIT
OPERATING PROFIT MARGIN
DILUTED EPS
Q1’15 Q1’14 CHANGE
$185.7 M
42.0%
4.2%
33.4%
$8.3 M
4.4%
$0.27
$184.0 M
41.8%
4.1%
32.7%
$9.2 M
5.0%
$0.31
+1.0%
+20 bps
+10 bps
+70 bps
(10.6%)
(60 bps)
(12.9%)
TENNANT COMPANY
2015 FIRST QUARTEROrganic Sales Growth 6.0% | Strong Growth in North America
![Page 17: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/17.jpg)
17
17
SALES
GROSS MARGIN
OPERATING PROFIT
OPERATING PROFIT MARGIN
DILUTED EPS
Q1’15 Q1’14 CHANGE
$195.0 M
42.6%
$10.2 M
5.2%
$0.34
$184.0 M
41.8%
$9.2 M
5.0%
$0.31
+6%
+80 bps
+10%
+20 bps
+10%
TENNANT COMPANY
2015 FIRST QUARTER“CONSTANT CURRENCY” VIEW (excludes estimated foreign exchange impact)
CONSTANT(1)
CURRENCY
Q1’15
AS REPORTED
$185.7 M
42.0%
$8.3 M
4.4%
$0.27
(1) “Constant Currency”: estimated income statement which assumes no change in exchange rates from prior year.
![Page 18: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/18.jpg)
• Remain committed to at least 12% OP margin – Drive organic revenue growth in mid- to high-single digits– Hold fixed costs essentially flat in manufacturing as
volume rises– Strive for zero net inflation at gross profit line– Standardize and simplify processes to improve scalability
of business model
18
TENNANT COMPANY
OPERATING PROFIT MARGIN GOAL
![Page 19: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/19.jpg)
• Overall effective tax rate for 2015 first quarter of 32.4%
• Base tax rate of 31.8 % (excl. routine discrete items)
• No benefit in 1Q for Federal R&D tax credit –not yet re-enacted
19
TENNANT COMPANYSUCCESSFUL TAX STRATEGIES
![Page 20: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/20.jpg)
20
TENNANT COMPANYSTRONG BALANCE SHEET
COMMITMENT TO SHAREHOLDER RETURN
FY’14 1Q’14 1Q’15
(20.0)
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
FY14 1Q14 1Q15
Net Receivables 152.4 144.0 134.0
Net Inventory 80.5 73.8 85.6
Cash from Operations 59.4 (3.9) (2.1)
Capital Expenditures 19.6 3.5 4.1
Dividends 14.5 3.5 3.7
Share Repurchases 14.1 3.6 4.1
Cash 93.0 63.4 76.8
Debt 28.1 28.2 26.1
$ Millions
![Page 21: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/21.jpg)
21
TENNANT COMPANYREAFFIRMS 2015 EPS GUIDANCE
2014ACTUAL
$2.70
2015 OUTLOOK$2.40 to $2.70
KEY EXPECTATIONS FOR 2015• Net sales in the range of $825M to $850M versus $822M in ‘14.• Economic strength in North America and modest improvement in Europe,
and growth in emerging markets.• Foreign currency impact on sales in the range of an unfavorable 4% to 6%.• Organic sales growth, excluding foreign currency exchange impact, in the
range of 5% to 9%.• Foreign currency exchange headwinds estimated to negatively impact
operating profit in the range of $10M to $12M, or approximately $0.37 to $0.44 EPS.
• Minimal inflation net of cost-saving initiatives and selling price increases.• Gross margin of approximately 43%. • R&D expense of approximately 4% of sales.• Effective tax rate of approximately 31% vs. 27.2% in 2014 (Negatively
impacting 2015 by approximately $0.14).• Capital expenditures in the range of $25M to $28M.
![Page 22: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/22.jpg)
• Ongoing focus on accelerating organic sales growth
• Investments in direct sales, distribution, marketing
• Assumption it will take us into second quarter to further improve “growing pains” in supply chain
• Estimated significant unfavorable impact from foreign exchange rates
22
TENNANT COMPANYOUR GUIDANCE REFLECTS
![Page 23: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/23.jpg)
• Increase selling prices in affected markets
• Evaluate potential to expand the scope of hedging strategies
• Explore feasibility of producing and shipping products from locations with more favorable Fx pairing
23
TENNANT COMPANYLOOKING AT MITIGATION OF Fx
![Page 24: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/24.jpg)
QUESTIONS?
24
![Page 25: Tennant Companys2.q4cdn.com/.../doc_presentations/2015/jsdjsdpresentation_v001_j1… · 21 TENNANT COMPANY REAFFIRMS 2015 EPS GUIDANCE 2014 ACTUAL $2.70 2015 OUTLOOK $2.40 to $2.70](https://reader034.vdocuments.us/reader034/viewer/2022051806/5ffbfde8e6ba415f6017455e/html5/thumbnails/25.jpg)
• Organic sales grew 6% in 2015 first quarter
• We remain on track to reach our organic growth goal of $1 Billion in sales by 2017
• We remain committed to the goal of a 12% or above operating profit margin
• Will update you in July with second quarter results
25
TENNANT COMPANY
SUMMARY
THANK YOU