Tennant Company (NYSE:TNC) Q3 2024 Earnings Conference Call November 1, 2024 10:00 AM ET Company Participants Lorenzo Bassi - Vice President, Finance & Investor Relations Dave Huml - President & Chief Executive Officer Fay West - Senior Vice President & Chief Financial Officer Conference Call Participants Steve Ferazani - Sidoti Tom Hayes - CL King Aaron Reed - Northcoast Research Operator Good morning. My name is Regina, and I will be your conference operator today. At this time, I would like to welcome ev ...

Tennant's future remains bright, even if the market was less than pleased with the company's third-quarter results.Shares of leading mechanized cleaning equipment manufacturer Tennant (TNC -4.99%) were down 5% today as of 4 p.m. ET Friday, according to data provided by S&P Global Market Intelligence.The Dividend King announced third-quarter earnings late Thursday afternoon and slightly missed analysts' expectations on both the top and bottom lines, spurring today's share price drop.Tennant's focus on autono ...

Financial Performance - Consolidated net sales for Q3 2024 totaled $315.8 million, a 3.6% increase from $304.7 million in Q3 2023[107]. - Organic sales growth for Q3 2024 was 2.7%, primarily due to price realization and higher equipment sales in the Americas[107]. - Gross profit margin for Q3 2024 was 42.4%, a decrease of 90 basis points compared to Q3 2023, attributed to higher inflationary pressure on materials[116]. - Selling and administrative expenses for Q3 2024 were $92.7 million, representing 29.4% of net sales, an increase of 50 basis points from Q3 2023[117]. - Research and development expenses for Q3 2024 were $10.5 million, or 3.3% of net sales, reflecting a 30 basis point increase compared to Q3 2023[118]. - Net income for Q3 2024 was $20.8 million, a decrease from $22.9 million in Q3 2023, resulting in diluted net income per share of $1.09[106]. Regional Sales Performance - Americas net sales for Q3 2024 were $218.7 million, a 3.6% increase from Q3 2023, driven by organic sales growth of 4.6%[111]. - EMEA net sales for Q3 2024 were $76.3 million, a 6.0% increase from Q3 2023, primarily due to inorganic sales from the acquisition of TCS[112]. - APAC net sales for Q3 2024 were $20.8 million, a decrease of 3.3% from Q3 2023, driven by organic sales decline in China and Australia[114]. Cash Flow and Liquidity - Net cash provided by operating activities for the nine months ended September 30, 2024, was $52.2 million, down from $124.6 million for the same period in 2023, attributed to working capital consumption and ERP modernization spending of $25.6 million[129]. - Net cash used in investing activities during the nine months ended September 30, 2024, was $69.1 million, compared to $15.2 million in the same period of 2023, primarily due to a $32.1 million investment in Brain Corp and a $25.7 million acquisition of TCS[130]. - The company's liquidity position included cash, cash equivalents, and restricted cash totaling $91.3 million as of September 30, 2024, down from $117.1 million at December 31, 2023[127]. Debt and Interest - The debt-to-capital ratio improved to 24.4% as of September 30, 2024, compared to 25.8% at December 31, 2023[127]. - Interest expense for the nine months ended September 30, 2024, was $3.6 million, down from $4.3 million in the same period of 2023[121]. - The average interest rate on borrowings increased to 6.54% for the nine months ended September 30, 2024, compared to 6.48% for the same period in 2023[121]. - The company has a notional amount of $120.0 million in interest rate swaps to manage floating rate debt exposure, exchanging variable rates for a fixed rate of 4.076%[121]. Tax and Currency - The effective tax rate for the third quarter of 2024 was 24.4%, an increase from 23.4% in the third quarter of 2023, mainly due to higher nondeductible executive compensation[123]. - The company reported a net foreign currency transaction loss of $0.4 million in the third quarters of 2024 and 2023, primarily due to the strengthening of the U.S. dollar against the Chinese renminbi and Mexican peso[122]. Business Outlook - The company remains confident in its long-term business health despite challenging economic conditions in EMEA and APAC[104]. - As of September 30, 2024, the company's order backlog was $76.8 million, a decrease from $186.2 million at December 31, 2023, due to improved production levels and component availability[126].

| --- | --- | --- | --- | --- | |-------------------------------------------------------------------|-------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | | | | | Earnings Release Call Third Quarter 2024 Results November 1, 2024 | | | | | 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 a ...

Tennant (TNC) came out with quarterly earnings of $1.39 per share, beating the Zacks Consensus Estimate of $1.38 per share. This compares to earnings of $1.34 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 0.72%. A quarter ago, it was expected that this maker of products for cleaning floors, parking lots and hospitals would post earnings of $1.78 per share when it actually produced earnings of $1.83, delivering a surprise of ...

Exhibit 99 Tennant Company Reports Third Quarter 2024 Results Delivers Net Sales Growth Reaffirms 2024 Guidance MINNEAPOLIS, MN (Oct. 31, 2024)—Tennant Company ("Tennant" or the "Company") (NYSE: TNC) today reported its financial results for the quarter ended September 30, 2024. | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |----------------------------------------------------|-------|-------|----------------|-------------|-----------------------------------------------|--------- ...

This Dividend King looks ready to restart its growth story. Tennant (TNC 1.46%) is the global leader in manufacturing mechanized cleaning equipment, such as scrubbers, sweepers, pressure washers, vacuums, and autonomous mobile robots. Since the turn of the century, Tennant has delivered total returns of over 700%, exceeding the S&P 500's mark of roughly 500% over the same time. This outperformance occurred in spite of the company's recent 25% share price drop from its 2024 highs. Following this drop, Tennan ...

Lebazele Very little in this world gives me the kind of joy that being able to upgrade a company does. It's exciting because I love to see businesses win, and I love to see investors have a bargain at their disposal. My latest upgrade involves a firm by the name of Tennant Company (NYSE:TNC). You see, back in April of this year, I ended up downgrading the firm from a 'buy' to a 'hold'. This came after the company experienced remarkable upside. Since the article that I had previously written about it and rat ...

Dublin, Aug. 21, 2024 (GLOBE NEWSWIRE) -- The "Commercial Scrubbers and Sweepers Market - Global Outlook & Forecast 2024-2029" report has been added to ResearchAndMarkets.com's offering. The global commercial scrubbers and sweepers market is expected to grow at a CAGR of 8.15% from 2023 to 2029. MARKET TRENDS & DRIVERS Market Opportunities & Trends Market Growth Enablers Market Restraints SEGMENTATION INSIGHTS INSIGHTS BY PRODUCT TYPE Growing Demand for Green Cleaning Technologies Availability of Robotic Cl ...

Financial Data and Key Metrics Changes - For Q2 2024, net sales increased by 2.9% to $331 million, and adjusted EBITDA rose to $58.6 million, resulting in an adjusted EBITDA margin of 17.7% [5][21][22] - GAAP net income for Q2 2024 was $27.9 million, down from $31.3 million in the prior year [17] - Adjusted net income increased by 1.4% to $35.2 million compared to $34.7 million in the prior year [18] Business Line Data and Key Metrics Changes - Equipment net sales grew by 3.7%, and service sales increased by 8.2%, while parts and consumables declined by 3% [19] - Organic sales in the Americas increased by 5.5%, while EMEA saw a decline of 0.3%, and APAC experienced an 11.9% decrease [20][21] Market Data and Key Metrics Changes - Order rates in the Americas were up double digits compared to the prior year, while EMEA faced sluggish demand with flat sales [7][8] - APAC faced significant challenges, particularly in China, leading to a decline in demand [9] Company Strategy and Development Direction - The company is focused on three pillars: growth, performance, and people, with a strong emphasis on pricing strategy and new product development [10][12] - The acquisition of TCS and investment in Brain Corp are part of the M&A strategy aimed at growing the core business and enhancing connected autonomy [13][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving backlog reduction targets and expects continued strong order growth in the second half of 2024 [6][25] - Despite challenges in the macroeconomic environment, demand for Tennant products remains strong, leading to an increase in full-year guidance for net sales and adjusted EBITDA [7][26] Other Important Information - The company is investing in ERP modernization to enhance operational efficiencies and scalability [16] - Sustainability efforts include a commitment to net zero goals and significant progress in reducing greenhouse gas emissions [15] Q&A Session Summary Question: Why was the high range of EPS guidance lowered? - Management indicated that tax rates, interest expenses, and overall expenses contributed to the decision [29] Question: Are there signs of recovery in EMEA? - Management noted sluggish demand but highlighted positive indicators in Italy and some improvement in the UK [30] Question: What is the current M&A pipeline? - Management confirmed a focus on M&A that aligns with core business growth and connected autonomy, with a funnel of over 800 target companies [31][32]