Post on 22-Jan-2018
TENNANTCO.COM
REINVENTINGthe future of cleaning.
GABELLI PRESENTATIONMarch 2016
This presentation contains certain statements that are considered “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally can be identified by the use of forward-looking
terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,”
“project,” or “continue” or similar words or the negative thereof. These statements do not
relate to strictly historical or current facts and provide current expectations of forecasts of
future events. Any such expectations or forecasts of future events are subject to a variety
of factors. We caution that forward-looking statements must be considered carefully and
that actual results may differ in material ways due to risks and uncertainties both known
and unknown. Information about factors that could materially affect our results can be
found in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year
ended December 31, 2015. Shareholders and potential investors are urged to consider
these factors in evaluating forward-looking statements and are cautioned not to place
undue reliance on such forward-looking statements.
We undertake no obligation to update or revise any forward-looking statement, whether
as a result of new information, future events or otherwise. Investors are advised to
consult any further disclosures by us in our filings with the Securities and Exchange
Commission and in other written statements on related subjects. It is not possible to
anticipate or foresee all risk factors, and investors should not consider any list of such
factors to be an exhaustive or complete list of all risks or uncertainties.
Safe HarborStatement
2
AboutTennant Company
Tennant Company, a Minnesota
corporation founded in 1870 and
incorporated in 1909, is a world leader
in designing, manufacturing and
marketing solutions that empower
customers to achieve quality cleaning
performance, significantly reduce
environmental impact and help create
a cleaner, safer, healthier world.
70consecutive years of cash dividends
44consecutive years of increase in annual cash dividend payout
Balance sheet
NYSE Symbol:
TNC
2015 Revenues:
$812M
3
2015 Employees:
3,164
OUR VISION
We will lead our global industry in
sustainable cleaning innovation that
empowers our customers to create a
cleaner, safer and healthier world.
4
5
Competitive Landscape2011 Global Market Size – $4.6 Billion*
5
17%Tennant | Nobles | Alfa
Nilfisk | Clarke | Viper
Hako | Minuteman |
PowerBoss
Karcher | Windsor |
TecServ | ProChem
Taski
of the market consists of others with a market share of 3% or less
*Market share data is based on company
revenue and estimates for like categories
18%
12%
7% 4%
42%
Broad Portfolio of Quality ProductsC
OM
ME
RC
IAL
IND
US
TR
IAL
AF
TE
RM
AR
KE
T
ES
SE
NT
IAL
S
OR
BIO
®
TE
CH
NO
LO
GIE
S
CO
AT
ING
S
6
STRONG DIRECT SALES& SERVICE ORGANIZATIONS
Strong Direct Sales & Service Organizations
Global Sales Employees Global Direct Service EmployeesGlobal Revenue by Sales Channel
25%
75%
Distribution
Direct
Distribution PartnersMore than 80 countries
around the world
Global Strategic AccountsCross-functional teams &
market specialists
Factory-Service DirectLocally based & factory-trained
service technicians
0
100
200
300
400
500
600
2012 2013 2014 2015
Americas EMEA APAC
0
100
200
300
400
500
600
700
800
900
2012 2013 2014 2015
Americas EMEA APAC
7
8
Broad Range of Global Customers
MARKETS
8
9
2015 Revenue of $812M
73%
17%
10%Americas
EMEA
APACNet Sales by Geography
22%14%
61%
3%
Service & Other
Equipment*
Coatings
Net Sales by Product Group
Parts & Consumables
*Equipment MixCommercial | 52%Industrial | 44%Outdoor | 4%
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We remain committed to organic
Sales goal of $1 Billion and 12% or
above Operating Profit Margin
Growth Strategy
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Strong new product and technology pipeline
Sales gains in emerging markets
Return to growth in Europe
Ongoing focus on strategic accounts
Expansion of global market coverage
$1B
$752M
GDP Growth
$60M (2%)
Go-To-Market
$70M (up to 3%)
New Products$80M (up to 3%)
Emerging Markets
$40M (up to 2%)
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Our Journey to $1 Billion
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Strategic Priorities
12
.
CRM & Marketing AutomationPerpetual Lead Generation
Speed-to-Lead• Better lead visibility and new
processes mean we can convert leads faster
• Keep the lead pipeline full with automated marketing capabilities embedded inside CRM
Prospecting• Leverage deep history to
prioritize the known
• Visualize the potential to discover the new
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e-CommerceCleaning solutions made easy online
• Empower our customers
• Anticipate their needs
• Enhance their experience
Good Experience Increase Revenue• New customers
• New geographies
• Expand products
Lower Cost of Sale• Self-service
• Reduce manual interventions
• Cost avoidance
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552012-2014
362015
New Product DevelopmentStrongest Product Pipeline Ever!
132016
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ec-H2O NanoClean™The Responsible Way to Clean
Next generation ec-H2O | Cleans more soils in more applications
HOW IT WORKS:EC-H2O™ SCRUBBERS | 2008-2015
$896 million+cumulative revenue
8,000+customers
30,000+ sites
77,000+machines
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Record Sales of $157M in 2015
ORBIO® TechnologiesOn-Site Generation Technology
FOCUS ON “3Cs”CAMPUS | CHAINS | CONTRACTORS
Improving health and safety for the environment, employees and people in their care while reducing costs.
GENERATEScleaner & disinfectant/sanitizer on-site
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• Improving cost & availability
• ROI for customer
• Reduced weight & footprint size
• Sustainability
• Productivity
• Game-changing solution
– +
Water RecyclingLithium-Ion Batteries Robotics (AGV)Asset Management
• Manage cleaning
programs better
• Fleet management
• Lower cost-to-clean
• Addresses labor costs
• Largest potential
growth opportunity
Advanced Product DevelopmentFuture Technologies
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Emerging Markets
China
Brazil
• Focused approach
• Long-term growth potential
despite economic headwinds
Organic Sales Growth
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20143.5%
20153.5%
201415%
20155.5%
Organic Sales Growth
FINANCIALSummary
Reinventing the future of cleaning.
20
SALES
GROSS MARGINAdjusted*OPERATING PROFITAdjusted*
OPERATING PROFIT MARGINAdjusted*
DILUTED EPS
2015 2014 CHANGE
CONSTANT(1)
CURRENCY
2015
AS REPORTED
(1)“Constant Currency”: estimated income statement which assumes no change in exchange rates from prior year.
*2015 results are adjusted to exclude restructuring charge in S&A of $3.7M pre-tax ($0.17 per diluted share) and non-cash long-lived asset impairment of $11.2M pre-tax ($0.58 per diluted share).
$857.1 M
43.8%
$81.4 M
9.5%
$3.00
$822.0 M
42.9%
$72.1 M
8.8%
$2.70
+4.3%
+90 bps
+12.9%
+70 bps
+11.1%
$811.8 M
43.0%
$68.1 M
8.4%
$2.49
2015 Full Year “Constant Currency” View(excludes estimated foreign exchange impact)
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22
History of Sales Growth2010-2015 Average Organic Sales Growth of 7%
22
$553$599
$664$701
$596
$668
$754 $739 $752
$822 $812
$0
$100
$200
$300
$400
$500
$600
$700
$800
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
‘16 Guidance
$795M to
$825M
NE
T S
AL
ES
(in
mill
ions
)
Organic Growth
8% 7% 6% 0%-4%<1.5%> <13%> 12% 10.5% 0% 3% 10.3% 4.3%
Anticipated Organic Growth
2016 Financial Outlook$2.25 to $2.55 | $795M to $825M
• Net sales in the range of $795M to $825M versus $811.8M in 2015.
• Slower economic growth in North America, modest improvement in Europe, and growth in emerging markets.
• Foreign currency impact on sales in the range of an unfavorable 1% to 2%.
• Sales decline from divestiture of approximately 1%.
• Organic sales growth, excluding foreign currency exchange impact and divestiture, in the range of 0% to 4%.
• Foreign currency exchange headwinds estimated to negatively impact operating profit in the range of $3M to $6M, or approximately $0.10 to $0.20 EPS.
• Gross margin of approximately 43%.
• R&D expense of approximately 4% of sales.
• Effective tax rate of approximately 31% (negatively impacting 2016 by approximately $0.05 EPS).
• Capital expenditures in the range of $25M to $30M.
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2016 EPS & Sales Guidance
2015 ACTUAL
$1.74EPS
$811.8MSALES
$2.49EPS
$811.8MSALES
As Reported As Adjusted
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Summary
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Anticipate foreign currency & global economic volatility remain challenging in coming quarters
Tennant has never been positioned better in the market with its innovative product and technology portfolio and go-to-market strategy
We remain committed to our goals of $1 Billion in organic sales & a 12% or above operating profit margin
$1B