Tennant Company · NYSE:TNC
Tennant — Q3 2020 Earnings Presentation
23 slides from Tennant's earnings presentation, Oct 29, 2020
Slide 1: Earnings Release Call
Earnings Release Call Third Quarter 2020 Thursday, October 29, 2020
Slide 2: On the Call Today
On the Call Today Chris Killingstad Andy Cebulla Dave Huml President and CEO Interim CFO COO (unable to attend call) 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 Third Quarter 2020 4
Slide 5: Key Take-aways
Key Take-aways Celebrated 150th Anniversary in September 3 guiding principles related to pandemic: Keep our employees and customers safe Manage our costs and cash flow Position ourselves to ramp up quickly when markets recover Signs of recovery across all regions & plans in place to avoi
Slide 6: Innovating for Profitable Growth
Innovating for Profitable Growth Recent introduction of new T380AMR Smaller than current T7AMR platform Enhanced maneuverability and navigation Designed to help customers with smaller footprints Finalized agreements with two national, and one regional, retailer for full suite of autonomous
Slide 7: Third Quarter 2020
Third Quarter 2020 Hired Dan Glusick as SVP of Global Operations Reports to Dave Huml, COO Possesses expertise in operations, supply chain management and enterprise transformation Over 25 years of global operations leadership experience Dan’s hiring further supports our enterprise strategy
Slide 8: Financial Review
Financial Review Financial Results Conference Call Third Quarter 2020 8
Slide 9: Third Quarter 2020 – Sales | Adjusted EPS
Third Quarter 2020 – Sales | Adjusted EPS Q3 ‘20 Organic Decline of -7.1% Q3 '20 Q3 '19 CHANGE SALES $261.9 M $280.7 M -6.7% EPS Adjusted* $0.90 $0.85 +5.9% Significant sales trajectory improvement compared to -27.2% organic decline in Q2 2020 decline * See the Supplemental Non-GAAP Financial Tabl
Slide 10: Third Quarter 2020 – Geographies
Third Quarter 2020 – Geographies Americas EMEA APAC Sales decline 9.9%, or Sales decline 0.3%, or Sales decline 0.8%, or -8.8% organically -4.5% organically -2.3% organically Declines in direct industrial General market weakness, Declines in Southeast Asia businesses and distributor main
Slide 11: Third Quarter 2020 – Sales | Adjusted Gross Margin
Third Quarter 2020 – Sales | Adjusted Gross Margin Q3 '20 Q3 '19 CHANGE Sales $261.9 M $280.7 M -6.7% Gross Margin (% of sales) Adjusted* 40.2% 40.8% -60 bps Business Categories – Service and Parts and Consumables less impacted Equipment down 12% Aftermarket up 6% Gross margins driven by a n
Slide 12: Third Quarter 2020 – Sales | Adjusted S&A Expense
Third Quarter 2020 – Sales | Adjusted S&A Expense Q3 '20 Q3 '19 CHANGE Sales $261.9 M $280.7 M -6.7% S&A Expense (% of sales) Adjusted* 29.8% 31.2% -40 bps Reflects: Cost-containment efforts Adjustments to management incentives * See the Supplemental Non-GAAP Financial Table within Q3'20 Earni
Slide 13: Third Quarter 2020 – Adjusted EBITDA
Third Quarter 2020 – Adjusted EBITDA Q3 '20 Q3 '19 CHANGE Adjusted EBITDA* $32.6 M $31.4 M +3.8% Adjusted EBITDA Margin* 12.4% 11.2% +120 bps EBITDA increase due to lower sales, but rate improved due to cost-savings actions Adjustments to management incentives Reductions in discretionary spend
Slide 14: Third Quarter 2020 – Other Financial Metrics
Third Quarter 2020 – Other Financial Metrics Adjusted Effective Tax rate of 11.3% vs. 16.1% last year Increase in discrete tax items in the quarter and favorable mix of earnings. Cash from operations generation of $48.9 million As of September 30: $124.7 million in cash and cash equivalents
Slide 15: 2020 Guidance
2020 Guidance Full Year Sales of $995 million to $1,005 million (-12.5% to -11.5% organic) GAAP earnings of $2.00 to $2.20 per diluted share Adjusted EPS of $2.80 to $3.00 Adjusted EBITDA of $116 million to $121 million Other Key Assumptions • Capital expenditures of approximately $35 mill
Slide 16: Questions?
Questions? COMPANY LENNAN] | ae)
Slide 17: Tennant Company Financial Results Conference Call
Tennant Company Financial Results Conference Call Third Quarter 2020 17
Slide 18: Appendix
Appendix COMPANY LENNAN] | ae)
Slide 19: 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 19
Slide 20: Win where we have a competitive advantage
Focus investments & 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 20
Slide 21: 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 21
Slide 22: 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 22
Slide 23: 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 23