Tennant Company · NYSE:TNC
Tennant — Investor Presentation (2024)
29 slides from Tennant's investor presentation, Apr 10, 2024
Slide 1: Tennant Company Investor Presentation
TENNANTCO.COM Tennant Company Investor Presentation Reinventing how the world cleans
Slide 2: Safe Harbor Statement
2 SAFE HARBOR STATEMENT 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 o
Slide 3: Our Investment Thesis
Our Investment Thesis 3 We will lead our global industry in sustainable cleaning innovation that OUR VISION empowers our customers to create a cleaner, safer and healthier world Industry Leader Product Life Cycle & Service Innovation Growth Global product coverage, brand Value capture through entire
Slide 4: Global Coverage Through Tiered Brand and Product Range
4 Industry Leader Global Coverage Through Tiered Brand and Product Range GLOBAL NET SALES BY REGION (2023) AMERICAS EMEA APAC US/Canada/LatAm ~68% ~25% ~7% PREMIUM | MID-TIER PREMIUM | MID-TIER PREMIUM | MID-TIER PREMIUM & MID-TIER PRODUCTS for each region to meet diverse customer needs and uses
Slide 5: Access Target Markets with Multi-Channel Approach
5 Industry Leader Access Target Markets with Multi-Channel Approach CHANNELS Strategic Direct Distributor Service e-Commerce Accounts Sales 69% Direct (500+ reps) | 31% Distribution (100+ countries) CORE VERTICAL MARKETS Retail Healthcare Education Contract Cleaners Contract Cleaners Logistics & War
Slide 6: Serving Customers Through the Entire Product Lifecycle
Product 6 Life Cycle & Service Serving Customers Through the Entire Product Lifecycle Our ecosystem meets customers’ evolving needs and positions Tennant to capture highly profitable business RECON BUSINESS NEW AND GLOBAL PARTS PRE-OWNED DIRECT AND EQUIPMENT SERVICE CONSUMABLES Commercial and 900+ E
Slide 7: A Broad Portfolio of Solutions
Product 7 Life Cycle & Service A Broad Portfolio of Solutions Equipment Technologies Commercial | Industrial | Vacuums | Pressure Washers | Tools | Aftermarket | Small Spaces Autonomous Mobile Robots Supported by the industry’s largest, factory-direct service organization
Slide 8: Industry-Leading Service: Trusted. Responsive. Local.
Product 8 Life Cycle & Service Industry-Leading Service Trusted. Responsive. Local. Get the best return on investment with high-quality Tennant floor cleaning equipment — backed by the best service available 500+ service techs serving North America licensed • bonded • insured 60 hours annual trainin
Slide 9: Focus on Solving Customer Problems and Disciplined Process
9 Innovation Focus on Solving Customer Problems and Disciplined Process Innovation Vectors: Solving For: Proof Point Innovation: Robotics Customer Problems T16AMR Business Growth Addresses common Electrification labor challenges, Market Trends reduces the need for Data pre-sweeping, drives efficienc
Slide 10: Closing Out Enterprise Strategy a Year Early
Closing Out Enterprise Strategy a Year Early 10 Growth 2019-2023 Strategic Pillars Targets Achievement Win where we have a competitive advantage Revenue 2-3% ~3% Reduce complexity & build scalable processes EBITDA 6-10% ~9% EBITDA % 15% 15%+ Innovate for profitable growth Years 5 4
Slide 11: Launching New Enterprise Strategy 2024-2026
11 Growth Launching New Enterprise Strategy 2024-2026 GROWTH PERFORMANCE PEOPLE Customer-focused new product Modernize existing ERP systems Invest in our employee value innovation and create a scalable digital proposition to attract, retain and infrastructure develop top talent Channel expansion and
Slide 12: Long-Term Outlook
12 Growth Long-Term Outlook Long-Term Growth Targets 3 to 5% Organic Net Sales Net Sales Growth 50 to 100 bps Adj. EBITDA EBITDA Margin Improvement Above market Continued margin Target 100% FCF 100% Free Cash improvement Cash growth ratesFlow Conversion Flow Conversion
Slide 13: M&A Priorities
13 Growth Focused M&A Framework Close Product Gaps and Defend & Grow Strengthen our Channel Cleaning Core Position M&A Priorities Drive Value Grow Recurring Strategic Value Through Connected Revenue Potential Autonomy Operational Fit Financial Return Expand Mobile Leverage Existing Equipment Strengt
Slide 14: Tennant and Brain Corp sign exclusive technology agreement
Tennant Company and Brain Corp sign exclusive technology 14 Growth agreement to accelerate robotic floor cleaning innovation and adoption Tennant invests $32 million in Brain Corp to fuel the next generation of AI-enabled robotic cleaning technologies, enhance customer Return on Investment, and acce
Slide 15: Tennant acquires long-time distributor in Central and Eastern Europe
Tennant Company acquires long-time distributor to 15 Growth accelerate growth in Central and Eastern Europe Tennant acquired M&F Management and Financing GmbH, the parent company of Tennant Company’s largest Central and Eastern Europe distributor. Gives Tennant an established direct channel into cou
Slide 16: Organic Growth Despite Macroeconomic Headwinds
16 Growth Organic Growth Despite Macroeconomic Headwinds Revenue EBITDA (adjusted)** EBITDA % (adjusted)** $ Millions $ Millions ~6% CAGR* $1,244 $1,283 ~15% CAGR $205.5 15.5% 16.0% $1,091 $1,092 $192.9 $1,001 12.9% 11.9% 12.2% $140.2 $133.7 $119.4 2020 2021 2022 2023 2024*** 2020 2021 2022 2023 202
Slide 17: Leveraging Strong Cash Position to Drive Shareholder Value
17 Growth Leveraging Strong Cash Position to Drive Shareholder Value Free Cash Flow(1) Invest in the Business $ Millions 2021 2022 Strategic 2023 • Average $20M - $25M per year investments in ** working capital (supply-chain $165.6 related) Manage Debt $50.0 • 1.5x to 2.5x target leverage -$50.1 • A
Slide 18: Questions
COMPANY Questions
Slide 19: Appendix
COMPANY APPENDIX
Slide 20: Fourth-Quarter and Full-Year Financial Performance
20 Fourth-Quarter and Full-Year Financial Performance Net Income Adjusted Diluted EPS* Net Income ► Record high full-year net income of $109.5M $6.57 $109.5 Increase of $43.2M from 2022 driven by strong operating performance and gross margin expansion through price realization $66.3 $4.10 ► Q4 2023
Slide 21: Fourth Quarter 2023 Results
21 Fourth Quarter 2023 Results Net Sales Adjusted EBITDA* Region** Product Categories ► Gross margin* improved to 42.2% Primarily driven by price realization, cost-out activities and $47 M productivity increases which offset inflationary pressure +7.3% Americas $42 M Service $69 M $67 M ► S&A* as a
Slide 22: Full Year 2023 Results
22 Full Year 2023 Results Net Sales Adjusted EBITDA* Region** Product Categories ► Gross margin* improved to 42.5% Primarily driven by price realization, cost-out activities and $188 M productivity increases which offset inflationary pressure +18.9% Americas $165 M Service $280 M ► S&A* as a percent
Slide 23: Capital Deployment
23 Capital Deployment YE 2022 YE 2023 Total Debt $300M $201M Net Leverage 1.67x 0.43x Revolver Availability: $336.8M Net cash provided by Capital expenditures of Debt paydown of Returned capital to operating activities of ~$23M in line with ~$100M reducing shareholders via ~$188M driven by operating
Slide 24: 2024 Full-Year Guidance
24 2024 Full-Year Guidance 2024 Guidance Net Sales $1.27B - $1.295B Organic Net Sales Growth 2% - 4% Adjusted Diluted EPS(1) $6.05 - $6.65 Adjusted EBITDA(1) $198M - $213M Adjusted EBITDA Margin 15.6% - 16.4% Capital Expenditures(1) $20M - $25M Adjusted Effective Tax Rate(1) 22% - 27% (1) Excludes E
Slide 25: Non-GAAP Financial Measures
25 Non-GAAP Financial Measures This presentation includes Non-GAAP measures that include or exclude special items of a nonrecurring and/or nonoperational nature (hereinafter referred to as “special items”). Management believes that the Non-GAAP measures provide useful information to investors regard
Slide 26: Supplemental Non-GAAP Financial Tables
TENNANT COMPANY 26 SUPPLEMENTAL NON-GAAP FINANCIAL TABLES
Slide 27: Supplemental Non-GAAP Financial Tables
TENNANT COMPANY 27 SUPPLEMENTAL NON-GAAP FINANCIAL TABLES
Slide 28: Supplemental Non-GAAP Financial Tables
TENNANT COMPANY 28 SUPPLEMENTAL NON-GAAP FINANCIAL TABLES
Slide 29: Supplemental Non-GAAP Financial Tables
TENNANT COMPANY 29 SUPPLEMENTAL NON-GAAP FINANCIAL TABLES