Investor Presentation SAFE HARBOR STATEMENT This presentation - - PowerPoint PPT Presentation

investor presentation safe harbor statement
SMART_READER_LITE
LIVE PREVIEW

Investor Presentation SAFE HARBOR STATEMENT This presentation - - PowerPoint PPT Presentation

July 2015 Investor Presentation SAFE HARBOR STATEMENT 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


slide-1
SLIDE 1

July 2015

Investor Presentation

slide-2
SLIDE 2

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

  • r 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, 2014, and in Part II, Item 1A Risk Factors in our most recent quarterly report on Form 10-Q. 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

  • f 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 HARBOR STATEMENT

2

slide-3
SLIDE 3

KEY FACTS

  • 69 consecutive years of cash dividends
  • 43 consecutive years of increase in annual cash dividend payout
  • Strong balance sheet

AWARDS

  • 2014 IDEA Award – B5 Battery Burnisher

International Design Excellence Awards

  • 2013 GOOD DESIGN Award – T12 Rider Scrubber

Industrial Design Excellence

  • 2012 Australian Business Awards – Orbio 5000-Sc

Top Honours

  • 2011 R&D 100 Award Winner – 500ze

R&D Magazine

  • 2009 Manufacturer of the Year Award

ABM Industries, Inc.

  • 2009 Business Innovation of the Year – ec-H2O

European Business Awards

  • 2008 R&D 100 Award Winner – ec-H2O

R&D Magazine

  • 2007, 2008 & 2014 America’s 200 Best Small Companies

Forbes

  • 2007, 2014 & 2015 America’s Most Trustworthy Companies

Forbes

TENNANT COMPANY AT-A-GLANCE

Founded:

1870

2014 Revenues:

$822M

2014 Employees:

3,087

Manufacturing Sites:

7

NYSE Symbol:

TNC

3

slide-4
SLIDE 4

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

slide-5
SLIDE 5

COMPETITIVE LANDSCAPE

Worldwide Market Share 2011 Estimate – $4.6 Billion*

5

slide-6
SLIDE 6

UNIQUE CLEANING SOLUTIONS

6

slide-7
SLIDE 7

QUALITY PRODUCTS

7

slide-8
SLIDE 8

STRONG DIRECT SALES & SERVICE ORGANIZATIONS

8 100 200 300 400 500 600 2010 2011 2012 2013 2014 Americas EMEA APAC 100 200 300 400 500 600 700 800 900 2010 2011 2012 2013 2014 Americas EMEA APAC

slide-9
SLIDE 9

9

BROAD RANGE OF GLOBAL CUSTOMERS

9

slide-10
SLIDE 10

2014 REVENUE OF $822M

10

slide-11
SLIDE 11

Organic Growth Objective:

Achieve $1 Billion in revenue by 2017. Remain committed to 12% operating profit margin goal.

11

slide-12
SLIDE 12

$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%)

HOW WE WILL REACH $1B

12

slide-13
SLIDE 13

Reach new customers & new markets Continue delivering what we know works Don’t lose sight of the discipline we’ve established

1 2 3

13

slide-14
SLIDE 14

Reach new customers & new markets

1

14

slide-15
SLIDE 15

Product

Presence

Hit Rate Market Share

Frank Lynn & Associates Process

× × =

40% 19%

PPHSM Analysis

75%

67%

REACH NEW CUSTOMERS & NEW MARKETS Increasing Presence

15

slide-16
SLIDE 16

Industrial Education Healthcare Retail

REACH NEW CUSTOMERS & NEW MARKETS Focus on Key Verticals

16

slide-17
SLIDE 17

Your text here

  • Empower our

customers

  • Anticipate their needs
  • Enhance their

experience

  • New customers
  • New geographies
  • Expand products
  • Repurpose staff
  • Self-service
  • Reduce manual

interventions

  • Cost avoidance

Good Experience Increase Revenue Lower Cost of Sale

REACH NEW CUSTOMERS & NEW MARKETS New Channels – E-commerce

17

slide-18
SLIDE 18

2

Continue delivering what we know works

18

slide-19
SLIDE 19

RESEARCH AND DEVELOPMENT

19

slide-20
SLIDE 20

NEW PRODUCT GROWTH

18

in 2014 36 in 2015

Strongest product pipeline ever!

20

in 2013

17

in 2012

20

20+

In 2016

slide-21
SLIDE 21

T12 Rider Scrubber

NEW MODULAR PLATFORM

T17 Rider Scrubber

Faster Speed to Market

21

slide-22
SLIDE 22

SUSTAINABLE CLEANING

22

slide-23
SLIDE 23

ec-H2O NanoClean™

Launched April 2015

FIRST GENERATION EC-H2O™: 2008-2014

$740 million+

cumulative revenue

7,500+ customers

29,000+ sites 65,000+ machines

  • Next generation ec-H2O
  • Cleans more soils in

more applications

  • Nano-scale bubbles

drive cleaning performance

23

slide-24
SLIDE 24

MORE FLEXIBILITY | EASE OF USE | IMPROVED PRODUCTIVITY

TENNANT COMPANY

T300 SCRUBBER

24

slide-25
SLIDE 25

The Orbio 5000-Sc uses Orbio Split Stream Technology to electrically restructure water and salt, so you can create, store and dispense an environmentally friendly multipurpose cleaning solution – right on site!

Split Stream

25

slide-26
SLIDE 26

Small, simple, affordable On-Site Generation (OSG) technology

  • Generates both cleaning and

antimicrobial solutions

  • Fits into most janitorial closets
  • Flexibility to dispense in remote locations

26

slide-27
SLIDE 27

EMERGING MARKETS

Anticipating Solid Organic Growth

LATIN AMERICA

PROJECTED GROWTH RATE

+15%

next 5 years

CHINA

INCREASE MANUFACTURING EXPERTISE & EXPAND MARKET COVERAGE PROJECTED GROWTH RATE

+20%

next 5 years

27

slide-28
SLIDE 28

STRATEGIC ACCOUNTS

Duplicate Successful Framework

N.A.

Europe Brazil China

28

slide-29
SLIDE 29

3

Don’t lose sight of the discipline we’ve established

29

slide-30
SLIDE 30

PROFITABILITY FRAMEWORK 12%+ Operating Profit Margin Goal

30

slide-31
SLIDE 31

Collections Invoicing Pricing

Machine Configuration Installed a global invoicing structure tailored to the needs of our customers Implemented a global standardized process to manage payment & invoice disputes Standardized discount & rebate policies globally, while maintaining ability to compete regionally Standardized global product structure to simplify quoting, ordering and product data maintenance

STANDARDIZED & SIMPLIFIED GLOBAL PROCESSES

31

slide-32
SLIDE 32

LEAN OPERATIONS SUPPORTS GROWTH

Speed: Rapid market response, short lead-times Flexibility: Ability to configure & customize to customer requirements Quality: Highest & most consistent quality & reliability Cost: More than offset inflation across the supply chain; driving gross margin improvement

32

slide-33
SLIDE 33

*As adjusted

STRONG COST CONTROLS

Selling & Administrative Expense as a Percent of Sales*

33

slide-34
SLIDE 34

FINANCIAL SUMMARY

34

slide-35
SLIDE 35

35

SALES GROSS MARGIN R&D EXPENSE (% of sales) S&A EXPENSE (% of sales) (adjusted*) OPERATING PROFIT (adjusted*) OPERATING PROFIT MARGIN (adjusted*) DILUTED EPS (adjusted*)

2014 2013 CHANGE

$822.0 M 42.9% 3.6% 30.5% $72.1 M 8.8% $2.70 $752.0 M 43.3% 4.1% 30.6% $65.4 M 8.7% $2.26 +9.3% (40 bps) (50 bps) (10 bps) +10.2% +10 bps +19.5%

TENNANT COMPANY

2014 FULL YEAR

Organic Sales Grew 10.3%

* 2013 results are adjusted to exclude restructuring charges of $3,017K pre-tax ($2,938K after-tax or $0.15 per diluted share), and a tax benefit related to 2012 R&D tax credit of $582K (or $0.03 per diluted share). February 24, 2015, Earnings Release.

slide-36
SLIDE 36

SALES GROSS MARGIN R&D EXPENSE (% of sales) S&A EXPENSE (% of sales) OPERATING PROFIT OPERATING PROFIT MARGIN DILUTED EPS

Q2’15 Q2’14 CHANGE

$215.4 M 44.1% 3.9% 29.7% $22.6 M 10.5% $0.79 $219.1 M 43.5% 3.5% 29.4% $23.1 M 10.6% $0.83 (1.7%) +60 bps +40 bps +30 bps (2.4%) (10 bps) (4.8%)

TENNANT COMPANY

2015 SECOND QUARTER

Organic Sales Growth 3.8% | Strong Growth in North America

36

slide-37
SLIDE 37

SALES GROSS MARGIN OPERATING PROFIT OPERATING PROFIT MARGIN DILUTED EPS

Q2’15 Q2’14 CHANGE

$227.4 M 44.9% $26.0 M 11.4% $0.92 $219.1 M 43.5% $23.1 M 10.6% $0.83 +3.8% +140 bps +12.2% +80 bps +10.8%

TENNANT COMPANY

2015 SECOND QUARTER

“CONSTANT CURRENCY” VIEW (excludes estimated foreign exchange impact)

CONSTANT(1) CURRENCY

Q2’15

AS REPORTED

$215.4 M 44.1% $22.6 M 10.5% $0.79

(1)“Constant Currency”: estimated income statement which assumes

no change in exchange rates from prior year.

37

slide-38
SLIDE 38

38

SALES GROSS MARGIN R&D EXPENSE (% of sales) S&A EXPENSE (% of sales) OPERATING PROFIT OPERATING PROFIT MARGIN DILUTED EPS

1H’15 1H’14 CHANGE

$401.1 M 43.2% 4.0% 31.4% $30.8 M 7.7% $1.06 $403.1 M 42.7% 3.8% 30.9% $32.4 M 8.0% $1.14 (0.5%) +50 bps +20 bps +50 bps (4.7%) (30 bps) (7.0%)

TENNANT COMPANY

2015 FIRST HALF

Organic Sales Growth 5.0% | Strong Growth in North America

slide-39
SLIDE 39

39

SALES GROSS MARGIN OPERATING PROFIT OPERATING PROFIT MARGIN DILUTED EPS

1H’15 1H’14 CHANGE

$423.2 M 43.8% $36.1 M 8.5% $1.26 $403.1 M 42.7% $32.4 M 8.0% $1.14 +5.0% +110 bps +11.6% +50 bps +10.5%

TENNANT COMPANY

2015 FIRST HALF

“CONSTANT CURRENCY” VIEW (exclude estimated foreign exchange impact)

CONSTANT(1) CURRENCY

1H’15

AS REPORTED

$401.1 M 43.2% $30.8 M 7.7% $1.06

(1)“Constant Currency”: Estimated income statement which assumes

no change in exchange rates from prior year.

slide-40
SLIDE 40

Experienced negative quarter-over-quarter sales growth from 4Q’08 through 3Q’09 due to recession. 2011 returned to – and surpassed – prerecession sales levels. 2012 and 2013 impacted from economic headwinds in Europe. 2014 – Renewed focus on accelerating organic sales growth.

HISTORY OF SALES GROWTH

40

slide-41
SLIDE 41

IMPROVED PROFITABILITY & BALANCE SHEET LEVERAGE

Return on Invested Capital Improvement & Cash Generation ’09-’14

41

slide-42
SLIDE 42

2014 TOTAL SHAREHOLDER RETURN

42

slide-43
SLIDE 43

Reaffirmed 2015 EPS Guidance

43

slide-44
SLIDE 44

44