Tennant Company · NYSE:TNC
Tennant — Q4 2018 Earnings Presentation
22 slides from Tennant's earnings presentation, Feb 21, 2019
Slide 1: Earnings Release Conference Call Fourth Quarter 2018
TENNANT COMPANY Earnings Release Conference Call Fourth Quarter 2018 Thursday, February 21, 2019 TENNANT COMPANY 1
Slide 2: On the Call Today
On the Call Today Chris Killingstad Keith Woodward President and CEO Senior VP and CFO TENNANT COMPANY 2
Slide 3: Forward Looking Statements & Non-GAAP Measures
Forward Looking 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 Statements & materially from those contai
Slide 4: Leadership Introductions
Fourth Quarter 2018 – Leadership Introductions • Mary Talbott • Started end of January • General Counsel • Keith Woodward • Started beginning of December • Chief Financial Officer TENNANT COMPANY 4
Slide 5: Full Year 2018 – Highlights
Full Year 2018 – Highlights • Full Year Illustrates • Strong topline growth • Disciplined expense management • Improved financial strength • Key Metrics • Net sales of over $1.1 billion • Organic growth across all geographies, which is the first time since 2014 • Strong improvements in our cash flow
Slide 6: Fourth Quarter 2018 – Revenue
Fourth Quarter 2018 – Revenue • Total Organic Growth of 4.3% • 6th consecutive quarter • Regional Organic Growth: • Americas: 5.7% • EMEA: 4.3% • APAC: (3.4%) TENNANT COMPANY 6
Slide 7: Fourth Quarter 2018 – Gaomei
Fourth Quarter 2018 – Gaomei • Acquisition Closed January 2019 • Gaomei Products: • Single-disk scrubbing machines • Vacuum cleaners • Carpet extractors • Blowers • High-pressure washers • Sweepers • Expands both our mid-tier product platform and geographic reach in critical markets TENNANT COMPANY
Slide 8: Fourth Quarter 2018 – Innovation
Fourth Quarter 2018 – Innovation T7 Autonomous Machine • Commercialized in Q4 2018 • Deployed in all geographies • Operating in high-traffic environments • Committed to industry-leading technology and innovation TENNANT COMPANY 8
Slide 9: Gross Margins and Expense
Fourth Quarter 2018 – Gross Margins and Expense Gross Margins Expenses • Raw material inflation • Improved expense leverage • Tight labor markets • Continue to invest in growth • Higher freight costs • Remains a critical focus in 2019 and • Tariffs beyond Efforts to Offset • Reduce cost and complexi
Slide 10: Earnings Release Conference Call Fourth Quarter 2018
TENNANT COMPANY Earnings Release Conference Call Fourth Quarter 2018 Thursday, February 21, 2019 TENNANT COMPANY 10
Slide 11: Sales | Adjusted EPS
Fourth Quarter 2018 – Sales | Adjusted EPS Q4 ‘18 Organic Growth of 4.3% Q4 ‘18 Q4 ‘17 CHANGE SALES $285.2 M $279.3 M +2.1% EPS Adjusted* $0.54 $0.34 +59% Q4 2018 Results • Organic results exclude unfavorable currency of 2% • Adjusted results exclude $2.3 million, or $0.12 per diluted share, of non-
Slide 12: Geographies – The Americas
Fourth Quarter 2018 – Geographies The Americas • Sales increased 4.2%, or 5.7% organically, driven by: • Expanded Strategic Accounts and Distributor channels • Strength in Service and Parts and Consumables • Broad-based strength in Latin America, specifically Mexico TENNANT COMPANY 12
Slide 13: Geographies – EMEA and APAC
Fourth Quarter 2018 – Geographies EMEA • Sales increased 1.0%, or 4.3% organically, driven by: • Germany and France • Continued IPC integration APAC • Sales decreased 6.8%, or decreased 3.4% organically, driven by: • Strong prior-year Q4 performance of 8.4% organic growth • Excited for legacy Tennan
Slide 14: Sales | Adjusted Gross Margin
Fourth Quarter 2018 – Sales | Adjusted Gross Margin Q4 ‘18 Q4 ‘17 CHANGE SALES $285.2 M $279.3 M +2.1% Gross Margin Adjusted* 39.3% 40.3% (100 bps) 2018 Results • Accounting reclassification between COGS and S&A (approx. 60 bps impact in 2017 Q4) – No impact to Operating Profit or EBITDA – Related t
Slide 15: Sales | Research and Development
Fourth Quarter 2018 – Sales | Research and Development Q4 ‘18 Q4 ‘17 CHANGE SALES $285.2 M $279.3 M +2.1% R&D Expense (% of sales) 2.6% 2.8% (20 bps) • Committed to maintaining our technology leadership and robust new product pipeline TENNANT COMPANY See the Supplemental Non-GAAP Financial Table wit
Slide 16: Sales | Selling and Administrative
Fourth Quarter 2018 – Sales | Selling and Administrative Q4 ‘18 Q4 ‘17 CHANGE SALES $285.2 M $279.3 M +2.1% S&A Expense (% of sales) - Adjusted* 30.7% 31.0% (30 bps) • Leverage improvement due to continued tight management of controllable expenses TENNANT COMPANY * See the Supplemental Non-GAAP Fina
Slide 17: Fourth Quarter/Full Year 2018 – EBITDA
Fourth Quarter/Full Year 2018 – EBITDA 2018 2017 CHANGE Q4 Adjusted EBITDA* $30.3M $30.9M (1.9%) Q4 Adjusted EBITDA* (% of sales) 10.6% 11.1% (50 bps) FY Adjusted EBITDA* $120.8M $101.6M +19% FY Adjusted EBITDA* (% of sales) 10.8% 10.1% +70 bps Tennant committed to improve profitability by: – Drivin
Slide 18: Other Financial Metrics
Fourth Quarter 2018 – Other Financial Metrics 2018 2017 CHANGE Q4 Cash from Operations $36.5M $22.1M +65% FY Cash from Operations $80.0M $54.2M +48% Fourth Quarter • Cash dividends of $4 million • Reduced debt by $8 million Full Year • Cash flow increased by 48% to $80M • Reduced debt by $38.3 milli
Slide 19: 2019 Guidance
2019 Guidance • Full Year Sales of $1.15 billion to $1.17 billion (2% to 3% organic) • Adjusted Earnings per Share of $2.30 to $2.50 • GAAP Earnings per Share of $2.05 to $2.25 • Adjusted EBITDA of $129 million to $133 million • Other Key Assumptions • Capital expenditures of approximately $40 to $4
Slide 20: Earnings Release Conference Call Fourth Quarter 2018
TENNANT COMPANY Earnings Release Conference Call Fourth Quarter 2018 Thursday, February 21, 2019 TENNANT COMPANY 20
Slide 21: Questions
Questions TENNANT COMPANY 21
Slide 22: Thank You
Thank You TENNANT COMPANY TENNANT Sy