Tennant Company · NYSE:TNC
Tennant — Q3 2021 Earnings Presentation
27 slides from Tennant's earnings presentation, Nov 2, 2021
Slide 1: Earnings Release Call Third Quarter 2021
Earnings Release Call Third Quarter 2021 Tuesday, November 2, 2021
Slide 2: On the Call Today
On the Call Today Dave Huml Fay West President and CEO SVP and CFO 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
Tennant Company Financial Results Conference Call Third Quarter 2021 4
Slide 5: Third Quarter 2021
Third Quarter 2021 Results reflect a return to pre-pandemic demand across the majority of our geographic markets and verticals Financial performance continued to be impacted by the unexpected and prolonged global supply disruptions, inflation and labor constraints Expect that these macro headw
Slide 6: Actions to address macro challenges
Prioritize local-for-local and region-for- region manufacturing and sourcing. Examples: Adding production capability to our China plant Actions to address macro challenges New investments in machines and tooling within our plants Working to improve freight costs, lead times, labor efficienci
Slide 7: Parts availability
Hydraulic pumps, chips and other electronic components are main issues currently Parts availability Parts availability is causing increased backlog and directly affecting our ability to deliver on our full-year potential 7
Slide 8: Platform design and labor challenges
Designing parts to allow for flexibility and availability, while Platform design balancing platform strategy Committed to maintaining quality, and labor safety and meeting customer needs challenges Labor shortages continue across the market Offering competitive wages and leveraging new ways
Slide 9: Innovating for profitable growth – new products
New Mid-tier Products Leverages IPC product portfolio Provides customers with a wider range of performance and price Innovating for Offers Tennant-branded experience profitable growth – new products AMR Portfolio 2 new products in last year Expanding to new verticals: Manufacturing
Slide 10: Winning where we have a competitive advantage
Recent value-realization exercise in Australia Winning where we Goal is to align customer have a competitive experience with our profitability goals advantage Realigned over 40% of strategic accounts and 80% distributor relationships 10
Slide 11: Financial Review
Financial Review Financial Results Conference Call Third Quarter 2021 11
Slide 12: Third Quarter 2021 – Sales
Third Quarter 2021 – Sales Enterprise Q3 ‘21 Organic Increase of 4.7% Americas EMEA APAC Sales decreased 0.6% Sales increased 16.1% Sales decreased 0.4% Reflects divesture of Coatings FX impact of +2.1% Reflects divesture and positive business and positive impact of impact of FX (-0.2% a
Slide 13: Third Quarter 2021 – Sales | Adjusted Gross Margin
Third Quarter 2021 – Sales | Adjusted Gross Margin Q3 '21 Q3 '20 CHANGE Sales $272.0 M $261.9 M +3.9% Gross Margin (% of sales) Adjusted* 40.1% 39.8% +30 bps Gross margins were favorable, but year-ago period was unfavorably impacted by certain strategic investments and pandemic-related productivit
Slide 14: Third Quarter 2021 – Sales | Adjusted S&A Expense
Third Quarter 2021 – Sales | Adjusted S&A Expense Q3 '21 Q3 '20 CHANGE Sales $272.0 M $261.9 M +3.9% S&A Expense (% of sales) Adjusted* 28.3% 29.3% -100 bps YOY leverage due to cost-savings actions and adjustment of management incentives * See the Supplemental Non-GAAP Financial Table within Q3'21
Slide 15: Third Quarter 2021 – Adjusted EPS/EBITDA
Third Quarter 2021 – Adjusted EPS/EBITDA Q3 '21 Q3 '20 CHANGE Adjusted EPS* $1.33 $0.90 +47.8% Adjusted EBITDA* $36.0 M $32.6 M +10.4% Adjusted EBITDA Margin* 13.2% 12.4% +80 bps Adjusted EPS driven by lower interest expense and increased business performance EBITDA driven by increased revenue b
Slide 16: Third Quarter 2021 – Other Financial Metrics
Third Quarter 2021 – Other Financial Metrics Adjusted effective tax rate of 3.8% vs. 11.3% last year, driven by: Tax benefit resulting from an election to step up the tax basis of certain assets for Italian tax purposes (excluding this impact: 26.2%) Cash from operations generation of $25.1 mi
Slide 17: Returning Capital to Shareholders
Returning Capital to Shareholders Dividend 9 percent increase in the Company’s quarterly cash dividend to $0.25 per share 50th consecutive year of increased annual cash dividend payout Share Repurchase Repurchased 102,229 shares of common stock for $7.5 million Aligned with our long-term c
Slide 18: 2021 Guidance
2021 Guidance Prior Guidance Guidance Revenue $1.09B to $1.11B $1.09B to $1.10B Organic % 9.0% to 11.0% 9.0% to 10.0% GAAP EPS $3.45 to $3.85 $3.50 to $3.70 Adjusted EPS* $4.10 to $4.50 $4.20 to $4.40 Adjusted EBITDA* $140M to $150M $137M to $142M Capital Expenditures Approximately $20M Approximatel
Slide 19: Tennant Company
Tennant Company Financial Results Conference Call Third Quarter 2021 19
Slide 20: Questions?
Questions? COMPANY TENNANT | 455 pot
Slide 21: Tennant Company
Tennant Company Financial Results Conference Call Third Quarter 2021 21
Slide 22: Appendix
Appendix COMPANY TENNANT | 455 pot
Slide 23: 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 23
Slide 24: 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 24
Slide 25: 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 25
Slide 26: 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 26
Slide 27: 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 27