Creating a cleaner, safer, healthier world.

How One Corporation Cut FX Exposures by $25 M*

*By utilizing enhanced currency data to fuel cross-functional collaboration and an advanced

platform that supports evolving growth

TODAY’S PRESENTERSJON VINCENT, CTPSenior Treasury Analyst, Tennant Company

Vincent is a seasoned Senior Treasury Analyst with more than 17 years of experience in FX hedging, banking,

electronic payments, account reconciliation, forecasting, cash management, ECN and managing partnerships with

financial services partners. He earned his Bachelor of Science Degree in Finance from Metropolitan State University.

NEIL GRIFFITHSVice President of Account Management, FiREapps

As Vice President of Account Management with FiREapps, Griffiths works closely with corporate treasury teams

around the globe identifying their challenges and helping tailor solutions to meet their needs. His deep

understanding of FiREapps and its solutions has been shaped by the other leadership roles he has occupied with

the company: Vice President of Sales and Vice President of Client Services. Prior to joining FiREapps, he was Vice

President of Client Development at a privately held IT Consulting firm.

TENNANT COMPANY

• Headquartered in Minneapolis, Minnesota

• World leader in designing, manufacturing and marketing solutions

• Products include:

• Equipment for maintaining surfaces in industrial and commercial settings• Outdoor cleaning equipment• Detergent-free and other sustainable cleaning technologies• Cleaning tools and supplies• Coatings for protecting, repairing and upgrading surfaces

• Global field service network is the most extensive in the industry

• Manufacturing operations in U.S., Brazil, The Netherlands, Italy and China.

• Direct sales in 15 countries and through distributorships in more than 100 countries.

FiREapps• Enabling multinational companies to optimize their

FX risk management programs since 2001

• Protecting over $2.56 trillion in customer market cap

• FiREapps is the most deployed FX management

system globally – over 2,100 users, 38,000 entities

and 610 ERP connections

• Track record to reduce EPS@RISKTM and

EBITDA@RISKTM and foster material cost savings

• Global Banking Partners since 2012

Certifications & Client Awards

OVERVIEW

SESSION GOALS

• Tennant’s Milestones to Automation

• Establishing a Foreign Currency Risk Management Committee

• Risk Management Road Map

• Collaborating with FiREapps to Build an Automated Workflow

• Takeaways from Tennant’s Transition to an Optimized FX Program

• Current Industry Best Practices

• Q & A

THE STATE OF THE INDUSTRY

• 97% of financial professionals say spreadsheets are currently being used at their

companies to manage risk

• Only 28% of respondents think it’s an efficient way to manage risk

• Finance professionals view spreadsheets as “tried and tested” and “less risky”

• North American and European companies lost $5.27 billion due to ineffective currency

management programs and incomplete exposure data

TENNANT’S MILESTONES

TO AUTOMATION

TENNANT COMPANY PRE-AUTOMATION ENVIRONMENT

• Expanding global footprint

• Currency volatility was impacting bottom line

• Three treasury professionals managing the program

• 30 percent international revenues (less than 80 countries) and total revenues of $750 million

• Hedging balance sheet program only

• Tennant needed to implement technology that was customizable to fit their evolving needs

MILESTONE 1: CROSS-FUNCTIONAL COLLABORATION

• Tax was responsible for ensuring tax-efficient, intercompany cash flows and legal structures

• Accounting was responsible for ensuring that accounts and processes are consistent and standardized globally

• Legal was responsible for ensuring that the company’s risk management program is in line with compliance regulations

• Treasury was responsible for exposure identification and analysis, hedging strategy, execution and measurement of effectiveness

• The committee was responsible for driving a new, automated program and continues to assess program needs quarterly

Tennant developed a Foreign Currency Risk Management Committee

Evolving FX regulations pushed the committee to develop a more rigorous program and create a risk management road map.

MILESTONE 2: THE ROAD TO RISK MANAGEMENT

IDENTIFY & MEASURE RISK

• Building relationships with accounting and business units is critical

• Account set-up process needs operating controls

• Foundation for confidence in analyses

ESTABLISH RISK LIMITS & OBJECTIVES

• Senior managements’ expectation is $0.01 EPS

• Developing alignment on FX program directions involves top-down and bottom-up collaboration

• Senior management support critical to FX success

STRATEGY DESIGN & EXECUTION

• Cross-functional finance governance key to effective change management

• CoRE™ scorecard creates lingua franca between FX, finance and top management

PERFORMANCE MEASUREMENT

• Visibility and analytics enable continuous process improvement

• Break down factors and address over time

• Process control manages risk

1 2 3 4

Evolving FX regulations pushed the committee to develop a more rigorous program and create a risk management road map.

MILESTONE 3: CREATING AN AUTOMATED WORKFLOW WITH FiREapps

TENNANT COMPANY'S POST-AUTOMATION ENVIRONMENT

• Tennant was able to build a robust, customizable FX risk management program that rivaled

that of multinational companies twenty times their size

• Tennant eliminated 42 percent of exposure through organic methods, including exposure

offsetting and netting, as well as legal entity restructuring

• Identified 21 different currency pairs

• Treasury, tax, legal and accounting could conduct cross-functional collaboration

• Visibility and analytics enabled Tennant to reduce FX exposures organically by $25 million

THE CURRENT STATE OF TENNANT COMPANY'S FX PROGRAM

• Current hedged exposure is $55 million

• Currently hedge 8 currencies

• Expanded program to include cash flow hedging

• Acquisition of IPC in April 2017 – Tennant inherited 20 different ERP systems and new FX challenges

• 50 percent international revenues (in more than 100 countries) and total revenues of $1 billion

• As a result of the acquisition, Tennant executed a cross-currency swap

A MORE COST-EFFECTIVE HEDGING STRATEGY

Treasury uses Cost and Risk Efficiency (CoRETM) Analysis to determine the cost of hedging individual currencies as compared to the amount of risk that would be reduced by placing hedges.

• Utilize CoRE to discuss hedging options with the risk committee, then decide which currencies should or should not be hedged

• Quantify their exposure and determine the potential impact to earnings

• Identify opportunities to manage risk for the least cost and/or greatest potential economic return

• Optimize the level to which treasury can manage currency risk given the potential interest income or expense associated with management

COST & RISK EFFICIENCY (CoRE™) ANALYSIS

GROSS VaR REDUCED FROM $3.4 M to $0.5 M

The blue dot in the graph

represents where Tennant is

today in terms of risk and cost.

THE JOURNEY TO COMPLETE AUTOMATION

• After getting a better handle of IPC’s FX, Tennant is getting ready to integrate IPC’s data

into its current risk management program to get a better understanding of exposures

• As Tennant has grown and improved their FX risk management program, treasury is

looking to leverage cash flow exposure forecasting software

• Looking to leverage end-to-end automation, including connecting currency analytics

platform and trading platform

• Leveraging business intelligence (BI) to allow improved reporting, dashboards and

visualization to be shared with both the business and management

FiREappsBI™ – CORPORATE DASHBOARD

FiREappsBI™ – GLOBAL VIEW

FiREappsBI™ – ENTITY DETAIL

GENERAL RECOMMENDATIONS FOR TREASURY EXECUTIVES• If necessary, decide as a company what is the most important risk to manage – balance

sheet or cash flow

• Define tolerance levels by currency risk

• Evaluate different hedging alternatives and time horizons

• In our SOX environment documentation is key

• Automate what you can, it can be very important in the future (IPC)

• See the process though. The job doesn’t stop with placing the hedges

• Partner with experts to continue to build your FX program

QUESTIONS?