Tennant Company · NYSE:TNC
Tennant — Q2 2021 Earnings Presentation
24 slides from Tennant's earnings presentation, Aug 3, 2021
Slide 1: Earnings Release Call Second Quarter 2021
Earnings Release Call Second Quarter 2021 Tuesday, August 3, 2021
Slide 2: On the Call Today
On the Call Today Dave Huml Fay West Dan Glusick President and CEO SVP and CFO SVP, Global Operations 2
Slide 3: Forward-Looking Statements & Non-GAAP Measures
Forward-Looking Statements & Non-GAAP Measures 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 materiall
Slide 4: Tennant Company Financial Results Conference Call
Tennant Company Financial Results Conference Call Second Quarter 2021 4
Slide 5: Second Quarter 2021
Second Quarter 2021 ▪ Strong second quarter results across geographic markets ▪ Customer demand exceeded internal expectations ▪ Widespread global supply-chain constraints and commodity inflation did impact the quarter ▪ Headwinds included parts availability, material inflation, freight costs, and l
Slide 6: Addressing Macro-challenges: Parts Availability
Actions ▪ Leveraging our strategic partnerships to manage component and material availability Addressing ▪ Developing design alternatives and identifying additional sources for parts Macro-challenges ▪ Designing more robust sales and Parts Availability inventory operations plans to better align our
Slide 7: Addressing Macro-challenges: Material Inflation
Actions ▪ Working diligently to find additional partners and, where possible, consolidating vendors to drive leverage and scale Addressing Macro-challenges ▪ Value engineering to help reduce the parts and material that go into each machine Material Inflation Expect pressures to persist for foreseeab
Slide 8: Addressing Macro-challenges: Freight Costs and Labor Shortages
Actions ▪ Leveraging work completed for enterprise strategy to prioritize local-for-local and region-for- region manufacturing to help Addressing reduce freight costs Macro-challenges ▪ Adjusting wages in our Freight Costs and manufacturing areas Labor Shortages ▪ Investing in our equipment, process
Slide 9: Addressing Macro-challenges: Other Levers
Actions ▪ Carefully and thoughtfully managing our S&A: ▪ Still investing in the business, servicing customers and executing on our enterprise strategy Addressing Macro-challenges ▪ Implementing price increases, where appropriate, to help offset some of the costs that we’re not Other Levers able to a
Slide 10: Financial Review
Financial Review Financial Results Conference Call Second Quarter 2021 10
Slide 11: Second Quarter 2021 – Sales
Second Quarter 2021 – Sales Enterprise Q2 ‘21 Organic Increase of +27.5% Americas EMEA APAC ▪ Sales increased +22.7% ▪ Sales increased +55.5% ▪ Sales increased +16.6% ▪ Reflects divesture of Coatings ▪ FX impact of +15.3% ▪ FX impact of +7.0% business and positive impact of FX (-3.8% and +1.1%, resp
Slide 12: Second Quarter 2021 – Sales | Adjusted Gross Margin
Second Quarter 2021 – Sales | Adjusted Gross Margin Q2 '21 Q2 '20 CHANGE Sales $279.1 M $214.0 M +30.4% Gross Margin (% of sales) Adjusted* 41.2% 41.8% -60 bps ▪ Gross margin decline reflects: ▪ the impact of temporary government credits received, and cost-saving measures taken in response to the pa
Slide 13: Second Quarter 2021 – Sales | Adjusted S&A Expense
Second Quarter 2021 – Sales | Adjusted S&A Expense Q2 '21 Q2 '20 CHANGE Sales $279.1 M $214.0 M +30.4 % S&A Expense (% of sales) Adjusted* 30.3% 28.0% +230 bps ▪ YOY deleverage due to cost-savings actions we implemented in response to the pandemic in the second quarter of last year, including: ▪ Fur
Slide 14: Second Quarter 2021 – Adjusted EPS/EBITDA
Second Quarter 2021 – Adjusted EPS/EBITDA Q2 '21 Q2 '20 CHANGE Adjusted EPS* $1.18 $0.96 +22.9% Adjusted EBITDA* $35.1 M $35.3 M -0.6% Adjusted EBITDA Margin* 12.6% 16.5% -390 bps ▪ Results reflect savings in Q2 2020 of approximately $15 million due to: ▪ Furloughs/reduced work schedules ▪ Adjustmen
Slide 15: Second Quarter 2021 – Other Financial Metrics
Second Quarter 2021 – Other Financial Metrics ▪ Adjusted effective tax rate of 4.0% vs. 20.4% last year, driven by: ▪ Discrete tax benefit for a valuation allowance release as the result of a recent law change impacting Dutch tax loss carryovers ▪ Cash from operations generation of $19.4 million and
Slide 16: 2021 Guidance – Affirmed
2021 Guidance – Affirmed Guidance Revenue $1.09B to $1.11B Organic % 9.0% to 11.0% GAAP EPS $3.45 to $3.85 Adjusted EPS* $4.10 to $4.50 Adjusted EBITDA* $140M to $150M Capital Expenditures Approximately $20M Adj. Effective Tax %* Approximately 20% * Excludes certain non-operational items and amortiz
Slide 17: Questions?
Questions? COMPANY TENNANT | ane)
Slide 18: Tennant Company Financial Results Conference Call
Tennant Company Financial Results Conference Call Second Quarter 2021 18
Slide 19: Appendix
Appendix COMPANY TENNANT | ane)
Slide 20: Enterprise Strategy – Global Positioning Strategy (GPS)
Enterprise Strategy – Global Positioning Strategy (GPS) Win where we have a Reduce complexity & build Innovate for profitable competitive advantage scalable processes growth 20
Slide 21: Win where we have a competitive advantage
Focus investments and resources where we can create the most value Focus Areas Win where 1 2 3 we have a competitive Simplifying the Strengthening Optimizing advantage product portfolio local advantage go-to-market 21
Slide 22: Reduce complexity & build scalable processes
Simplify and standardize to gain efficiency and leverage Focus Areas Reduce 1 2 3 complexity & build scalable Leveraging Our Advancing Our Capturing processes Platform Product Design Supply Chain – Local for Local Operating Model Efficiencies 22
Slide 23: Innovate for profitable growth
Thinking Differently to Maximize Value for Customers and Tennant Innovate for Customer- New Unlocking profitable Driven Insights Innovation Approach Value for Customers growth and Tennant 23
Slide 24: Capitalizing on the Strategy: 2024 Growth Targets
Capitalizing on the Strategy: 2024 Growth Targets 2-3% 6-10% 50-100 BPS Organic EBITDA EBITDA Sales Growth Leverage Annually Annually Annually Consistent and predictable results to drive total shareholder return 24