Gabelli presentation march 2016

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

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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.

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Broad Portfolio of Quality ProductsC

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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

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Broad Range of Global Customers

MARKETS

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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

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.

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.

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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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History of Sales Growth2010-2015 Average Organic Sales Growth of 7%

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$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

Gabelli presentation march 2016

Investor Relations

Transcript of Gabelli presentation march 2016