Market Overview

Tennant Company Reports 2018 Second Quarter Results

Share:

Net sales of $292.2 million in the second quarter, up 7.9 percent

Organic sales rose 5.2 percent, reflecting growth across all
geographic regions

Second quarter GAAP diluted earnings per share of $0.69; Adjusted
EPS excluding special items of $0.82

Adjusted EBITDA of $35.7 million, or 12.2 percent of sales, up 120
basis points

Cash flow from operations of $20.4 million

Company increases 2018 full year guidance ranges for net sales,
adjusted net earnings and adjusted EBITDA

Tennant Company ("Tennant") (NYSE:TNC), a world leader in designing,
manufacturing and marketing of solutions that help create a cleaner,
safer, healthier world, today reported net sales of $292.2 million and
net earnings of $12.7 million, or $0.69 per share, and adjusted net
earnings of $15.1 million, or $0.82 per share, for the quarter ended
June 30, 2018. The 2018 second quarter reported results reflected $3.1
million in pre-tax expenses, or $0.13 per share, related to
non-operational special items, primarily IPC acquisition integration
costs. Additionally, the 2018 second quarter results included pre-tax
expense of $5.5 million, or $0.23 per share, from amortization of the
intangible assets related to the IPC acquisition and discrete tax
benefits of approximately $3.0 million, or $0.16 per share. Adjusted
earnings before interest, taxes, depreciation and amortization (EBITDA)
in the 2018 second quarter climbed to $35.7 million, or 12.2 percent of
sales, from $29.8 million, or 11.0 percent of sales, in the year-ago
quarter. (See the Supplemental Non-GAAP Financial Table).

"Our strategy is to take full advantage of Tennant's broader geographic
footprint and product platform to support two main objectives: driving
sustainable growth and operational effectiveness," said Chris
Killingstad, Tennant Company's president and chief executive officer.
"During the second quarter, we again made broad progress across these
strategies. We posted organic revenue growth in every geographic region
for the third consecutive quarter. We had revenue growth across all of
our channels, with particular strength in our strategic accounts. We
continued improving our field-service utilization and manufacturing
productivity. We also made efficient use of our expense structure and
substantially improved our cash flow. We are pleased with our progress
to date and are confident in the underlying performance of the business."

Second Quarter Operating Review
The
company's 2018 second quarter consolidated net sales of $292.2 million
grew approximately 7.9 percent over the same period last year. This
includes a 2.7 percent benefit from foreign currency and an organic
growth of 5.2 percent. Organic growth was driven by improvement in all
regions, with notable performance in the Americas and EMEA regions.

Sales in the Americas region improved 5.7 percent, or 6.0 percent
organically, reflecting the strength in all channels, especially
strategic accounts and North American service, parts and consumables
business. Sales in the Americas region also reflects 16.9 percent
organic growth in the Latin American region led by industrial equipment
sales in South America and broad-based strength in Brazil. Sales in the
Europe, Middle East and Africa (EMEA) region were up 13.0 percent, or
3.6 percent organically, reflecting strong growth across the entire
region. Sales in the Asia Pacific (APAC) region rose 7.2 percent, or 5.1
percent organically.

Gross margin in the 2018 second quarter was 40.7 percent, compared to
38.6 percent in the same period last year. The prior year gross margin
rate included a $6.2 million, or 230-basis-point, acquisition-related
charge. Excluding the charge, the prior year gross margin rate was 40.9
percent. The 20-basis-point decline reflects robust strategic account
sales impacting the company's mix and manufacturing productivity issues
associated with raw material and labor shortages. These factors were
partially offset by improved operational performance in both
manufacturing and service that are the result of Tennant's operational
effectiveness strategies. The company remains intently focused on gross
margin expansion. (See the Supplemental Non-GAAP Financial Table.)

Research and development (R&D) expense for the 2018 second quarter
totaled $7.9 million, or 2.7 percent of sales, versus $7.9 million, or
2.9 percent of sales, a year ago. The R&D expense ratio for the second
quarter compared to last year reflects the impact of 2018 higher revenue
and the timing of anticipated project spend in 2018. Tennant remains
committed to investing in a robust pipeline of new products and
technologies.

Selling and administrative (S&A) expense in the 2018 second quarter was
$91.9 million, or 31.4 percent of sales, compared to $87.3 million, or
32.2 percent of sales, a year ago. The second quarters of 2018 and 2017
included non-operational costs of $3.1 million and $4.9 million,
respectively. Excluding these items, S&A expense as a percent of sales
was flat at 30.4 percent. (See the Supplemental Non-GAAP Financial
Table.) In addition, the second quarter of 2018 included a non-cash
amortization expense related to the IPC acquisition of $5.5 million, or
1.9 percent of sales, compared to $3.1 million, or 1.1 percent of sales,
in last year's second quarter. Tennant continues to leverage disciplined
spending control with investments in key growth initiatives.

During the 2018 second quarter, Tennant realized two discrete tax
benefits, totaling approximately $3.0 million, or $0.16 per share,
resulting from a favorable ruling from Italian tax authorities related
to the deductibility of interest expense in Italy and higher levels of
soon-to-expire stock options that were exercised in the quarter. These
items positively impacted the adjusted tax rate by approximately 18
percentage points.

Tennant's 2018 second quarter net earnings were $12.7 million, compared
to a net loss of $2.6 million in the 2017 second quarter. Excluding the
non-operational items, the 2018 second quarter net earnings were $15.1
million, up 42 percent compared to $10.6 million in the 2017 second
quarter. (See the Supplemental Non-GAAP Financial Table.)

During the 2018 second quarter, Tennant generated cash flow from
operations of $20.4 million, compared to net cash flow from operations
of $8.6 million in the 2017 second quarter. The company also repaid
$14.0 million in outstanding debt and paid $3.8 million in cash
dividends to shareholders during the second quarter.

2018 Business Outlook
Killingstad
concluded, "We remain confident in our key global strategies:
maintaining our robust new product and technology leadership;
successfully completing the integration of IPC; expanding and
diversifying our global market coverage; improving operating
effectiveness; and strengthening our financial position. We have more
progress to make; however, these strategies have created significant
momentum for Tennant Company to date and they remain essential to
generating value for our shareholders. While we anticipate headwinds in
the back half of 2018 from tariff impacts and raw material and labor
availability constraints, we are pleased with the platform we are
building, which gives us the confidence to increase our previously
announced 2018 full year guidance ranges for net sales, EPS, adjusted
EPS and adjusted EBITDA."

Tennant is increasing the low and high end of the previously announced
2018 full year guidance range for net sales by $20 million and $10
million, respectively. The company anticipates net sales to be in the
range of $1.10 billion to $1.12 billion, up 9.7 percent to 11.7 percent
compared to the prior year and reflecting organic growth of 4.0 percent
to 4.5 percent. Based on the anticipated higher level of sales, Tennant
is increasing the low and high end of adjusted earnings per share to a
range of $1.95 to $2.10. This excludes $4.0 million to $5.0 million of
special items, including IPC acquisition and integration costs. The
company also is increasing the 2018 full year reported GAAP earnings to
a range of $1.75 to $1.90 per share and adjusted EBITDA to a range of
$117 million to $121 million.

Tennant's 2018 annual financial outlook includes the following
additional assumptions:

  • Reasonable growth in all regions, especially strategic accounts in
    North America;
  • Gross margin performance of approximately 41.0 percent;
  • R&D expense of approximately 3.0 percent of sales;
  • Capital expenditures in the range of $25 million to $30 million; and
  • An effective tax rate of approximately 20 percent.

Conference Call
Tennant will
host a conference call to discuss 2018 second quarter results today,
July 25, 2018 at 10 a.m. Central Time (11 a.m. Eastern Time). The
conference call and accompanying slides will be available via webcast on
Tennant's investor website. To listen to the call live and view the
slide presentation, go to investors.tennantco.com
and click on the link at the bottom of the home page. A taped replay of
the conference call, with slides, will be available at investors.tennantco.com
until August 25, 2018.

Company Profile
Founded in
1870, Tennant Company (TNC), headquartered in Minneapolis, Minnesota, is
a world leader in designing, manufacturing and marketing solutions that
empower customers to achieve quality cleaning performance, reduce their
environmental impact and help create a cleaner, safer, healthier world.
Its products include equipment for maintaining surfaces in industrial,
commercial and outdoor environments; detergent-free and other
sustainable cleaning technologies; cleaning tools and supplies; and
coatings for protecting, repairing and upgrading surfaces. Tennant's
global field service network is the most extensive in the industry.
Tennant Company had sales of $1.0 billion in 2017 and has approximately
4,300 employees. Tennant has manufacturing operations throughout the
world; and sells products directly in 15 countries and through
distributors in more than 100 countries. For more information, visit www.tennantco.com
and www.ipcworldwide.com.
The Tennant Company logo and other trademarks designated with the symbol
"®" are trademarks of Tennant Company registered in the United States
and/or other countries.

Forward-Looking Statements
Certain
statements contained in this document, as well as other written and oral
statements made by us from time to time, 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 and provide current expectations or forecasts of future
events. Any such expectations or forecasts of future events are subject
to a variety of factors. These include factors that affect all
businesses operating in a global market as well as matters specific to
us and the markets we serve. Particular risks and uncertainties
presently facing us include: our ability to effectively manage
organizational changes; our ability to attract, retain and develop key
personnel and create effective succession planning strategies; the
competition in our business; fluctuations in the cost, quality or
availability of raw materials and purchased components; our ability to
successfully upgrade and evolve our information technology systems; our
ability to develop and commercialize new innovative products and
services; our ability to integrate acquisitions, including IPC; our
ability to generate sufficient cash to satisfy our debt obligations;
geopolitical and economic uncertainty throughout the world; our ability
to successfully protect our information technology systems from cyber
security risks; the occurrence of a significant business interruption;
our ability to comply with laws and regulations; the potential
disruption of our business from actions of activist investors or others;
the relative strength of the U.S. dollar, which affects the cost of our
materials and products purchased and sold internationally; unforeseen
product liability claims or product quality issues; and our internal
control over financial reporting risks resulting from our acquisition of
IPC.

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 our 2017 Form 10-K
or 2017 Form 10-Qs. Shareholders, potential investors and other readers
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, except as required by law. 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.

Non-GAAP Financial Measures
This
news release and the related conference call include presentation of
non-GAAP measures that include or exclude special items. Management
believes that the non-GAAP measures provide useful information to
investors regarding the company's results of operations and financial
condition because they permit a more meaningful comparison and
understanding of Tennant Company's operating performance for the
current, past or future periods. Management uses these non-GAAP measures
to monitor and evaluate ongoing operating results and trends, and to
gain an understanding of the comparative operating performance of the
company.

We believe that disclosing Selling and Administrative Expense - as
adjusted, Profit from Operations - as adjusted, Operating Margin - as
adjusted, Profit Before Income Taxes - as adjusted, Income Tax Expense -
as adjusted, Net Earnings Attributable to Tennant Company - as adjusted,
and Net Earnings Attributable to Tennant Company per Share - as adjusted
(collectively, the "Non-GAAP Measures"), excluding the impacts from
restructuring charge, acquisition costs, certain non-operational
professional services, and debt financing costs write-off, are useful to
investors as a measure of operating performance. We use these as one
measure to monitor and evaluate operating performance. The non-GAAP
measures are financial measures that do not reflect United States
Generally Accepted Accounting Principles (GAAP). We calculate Selling
and Administrative Expense - as adjusted, Profit from Operations - as
adjusted, Operating Margin - as adjusted, and Profit Before Income Taxes
- as adjusted by adding back the pre-tax effect of the restructuring
charge, acquisition costs, and certain non-operational professional
services. We calculate Income Tax Expense - as adjusted by adding back
the tax effect of the restructuring charge, acquisition costs, certain
non-operational professional services and debt financing costs
write-off. We calculate Net Earnings Attributable to Tennant Company -
as adjusted by adding back the after-tax effect of the restructuring
charge, acquisition costs, certain non-operational professional
services, and debt financing costs write-off. We calculate Net Earnings
Attributable to Tennant Company per Share - as adjusted by adding back
the after-tax effect of the restructuring charge, acquisition costs,
certain non-operational professional services, debt financing costs
write-off and dividing the result by the diluted weighted average shares
outstanding.

We believe that disclosing Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA) and EBITDA Margin, excluding the impact from
restructuring charge, acquisition costs, certain non-operational
professional services, and debt financing costs write-off (EBITDA - as
adjusted) and EBITDA margin - as adjusted, is useful to investors as a
measure of operating performance. We use these measures to monitor and
evaluate operating performance. EBITDA - as adjusted and EBITDA Margin -
as adjusted are financial measures that do not reflect GAAP. We
calculate EBITDA - as adjusted by adding back the pre-tax effect of the
restructuring charge, acquisition costs, certain non-operating
professional services, debt financing costs write-off Interest Income,
Interest Expense, Income Tax Expense, Depreciation Expense and
Amortization Expense to Net Earnings (Loss) - as Reported. We calculate
EBITDA Margin - as adjusted by dividing EBITDA - as adjusted by Net
Sales.

Investors should consider these non-GAAP financial measures in addition
to, not as a substitute for, or better than, financial measures prepared
in accordance with GAAP. Reconciliations of the components of these
measures to the most directly comparable GAAP financial measures are
included in the Supplemental Non-GAAP Financial Table to this earnings
release.

TENNANT COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

   
(In thousands, except shares and per share data) Three Months Ended Six Months Ended
June 30 June 30
2018   2017 2018   2017
Net Sales $ 292,197 $ 270,791 $ 565,044 $ 461,850
Cost of Sales 173,398   166,237   335,608   277,560  
Gross Profit 118,799   104,554     229,436     184,290  
Gross Margin 40.7 % 38.6 % 40.6 % 39.9 %
Operating Expense:
Research and Development Expense 7,906 7,886 15,902 16,332
Selling and Administrative Expense 91,864   87,326     184,133     161,282  
Total Operating Expense 99,770   95,212     200,035     177,614  
Profit from Operations 19,029 9,342 29,401 6,676
Operating Margin 6.5 % 3.4 % 5.2 % 1.4 %
Other Income (Expense):
Interest Income 952 793 1,701 877
Interest Expense (6,005 ) (11,833 ) (11,750 ) (12,627 )
Net Foreign Currency Transaction Losses (337 ) (336 ) (1,086 ) (1,533 )
Other Expense, Net (510 ) (384 )   (760 )   (352 )
Total Other Expense, Net (5,900 ) (11,760 )   (11,895 )   (13,635 )
Profit (Loss) Before Income Taxes 13,129 (2,418 ) 17,506 (6,959 )
Income Tax Expense (Benefit) 363   238     1,440     (346 )
Net Earnings (Loss) Including Noncontrolling Interest 12,766 (2,656 ) 16,066 (6,613 )
Net Earnings (Loss) Attributable to Noncontrolling Interest 22   (65 )   48     (65 )
Net Earnings (Loss) Attributable to Tennant Company $ 12,744   $ (2,591 )   $ 16,018     $ (6,548 )
 
Net Earnings (Loss) Attributable to Tennant Company per Share:
Basic $ 0.71   $ (0.15 ) $ 0.90   $ (0.37 )
Diluted $ 0.69   $ (0.15 ) $ 0.88   $ (0.37 )
 
Weighted Average Shares Outstanding:
Basic 17,943,450 17,693,102 17,867,641 17,645,090
Diluted 18,371,538 17,693,102 18,303,960 17,645,090
 
Cash Dividends Declared per Common Share $ 0.21 $ 0.21 $ 0.42 $ 0.42
                                 
 

GEOGRAPHICAL NET SALES(1) (Unaudited)

   
 
(In thousands) Three Months Ended Six Months Ended
June 30 June 30
2018   2017   % 2018   2017   %
Americas $ 178,752 $ 169,146 5.7 $ 341,390 $ 311,916 9.4
Europe, Middle East and Africa 87,410 77,356 13.0 176,226 110,632 59.3
Asia Pacific 26,035   24,289   7.2 47,428   39,302   20.7
Total $ 292,197   $ 270,791   7.9 $ 565,044   $ 461,850   22.3
 

(1) Net of intercompany sales.

 

TENNANT COMPANY

   

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

 
(In thousands) June 30, December 31,
2018 2017
ASSETS
Current Assets:
Cash and Cash Equivalents $ 53,901 $ 58,398
Restricted Cash 543 653
Net Receivables 215,323 209,516
Inventories 139,406 127,694
Prepaid Expenses 27,382 19,351
Other Current Assets 8,707   7,503  
Total Current Assets 445,262   423,115  
Property, Plant and Equipment 381,607 382,768
Accumulated Depreciation (212,625 ) (202,750 )
Property, Plant and Equipment, Net 168,982 180,018
Deferred Income Taxes 13,721 11,134
Goodwill 185,715 186,044
Intangible Assets, Net 157,674 172,347
Other Assets 14,730   21,319  
Total Assets $ 986,084   $ 993,977  
 
LIABILITIES AND TOTAL EQUITY
Current Liabilities:
Current Portion of Long-Term Debt $ 30,969 $ 30,883
Accounts Payable 103,602 96,082
Employee Compensation and Benefits 41,289 37,257
Income Taxes Payable 2,809 2,838
Other Current Liabilities 66,753   69,447  
Total Current Liabilities 245,422   236,507  
Long-Term Liabilities:
Long-Term Debt 328,699 345,956
Employee-Related Benefits 22,583 23,867
Deferred Income Taxes 50,444 53,225
Other Liabilities 36,739   35,948  
Total Long-Term Liabilities 438,465   458,996  
Total Liabilities 683,887   695,503  
Equity:
Common Stock 6,778 6,705
Additional Paid-In Capital 22,273 15,089
Retained Earnings 306,667 297,032
Accumulated Other Comprehensive Loss (35,391 ) (22,323 )
Total Tennant Company Shareholders' Equity 300,327   296,503  
Noncontrolling Interest 1,870   1,971  
Total Equity 302,197   298,474  
Total Liabilities and Total Equity $ 986,084   $ 993,977  
 

TENNANT COMPANY

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 
(In thousands) Six Months Ended
June 30
2018   2017
OPERATING ACTIVITIES
Net Earnings (Loss) Including Noncontrolling Interest $ 16,066 $ (6,613 )

Adjustments to reconcile Net Earnings (Loss) to Net Cash Provided
by (Used in) Operating Activities:

Depreciation 16,340 11,043
Amortization of Intangible Assets 11,657 3,780
Amortization of Debt Issuance Costs 1,307 466
Debt Issuance Cost Charges Related to Short-Term Financing 6,200
Fair Value Step-Up Adjustment to Acquired Inventory 6,199
Deferred Income Taxes (7,857 ) (6,032 )
Share-Based Compensation Expense 4,115 3,622
Allowance for Doubtful Accounts and Returns 940 697
Other, Net 280 64
Changes in Operating Assets and Liabilities, Net of Assets Acquired:
Receivables, Net (6,832 ) (6,016 )
Inventories (17,039 ) (9,854 )
Accounts Payable 9,827 6,190
Employee Compensation and Benefits 4,075 (8,262 )
Other Current Liabilities (3,772 ) 5,252
Income Taxes (973 ) (1,617 )
Other Assets and Liabilities (2,170 ) (7,614 )
Net Cash Provided by (Used in) Operating Activities 25,964 (2,495 )
 
INVESTING ACTIVITIES
Purchases of Property, Plant and Equipment (7,726 ) (9,145 )
Proceeds from Disposals of Property, Plant and Equipment 102 2,428
Proceeds from Principal Payments Received on Long-Term Note
Receivable
706
Issuance of Long-Term Note Receivable (1,500 )
Acquisition of Business, Net of Cash, Cash Equivalents and
Restricted Cash Acquired
(353,535 )
Purchase of Intangible Assets (1,195 ) (2,500 )
Net Cash Used in Investing Activities (8,113 ) (364,252 )
 
FINANCING ACTIVITIES
Proceeds from Short-Term Debt 300,000
Repayments of Short-Term Debt (300,000 )
Proceeds from Issuance of Long-Term Debt 440,000
Payments of Long-Term Debt (18,133 ) (58,471 )
Payments of Debt Issuance Costs (16,039 )
Change in Capital Lease Obligations 59
Proceeds from Issuances of Common Stock 3,724 3,843
Dividends Paid (7,553 ) (7,463 )
Net Cash (Used in) Provided by Financing Activities (21,903 ) 361,870
 
Effect of Exchange Rate Changes on Cash, Cash Equivalents and
Restricted Cash
(555 ) 875
 
Net Decrease in Cash, Cash Equivalents and Restricted Cash (4,607 ) (4,002 )
 
Cash, Cash Equivalents and Restricted Cash at Beginning of Period 59,051 58,550
   
Cash, Cash Equivalents and Restricted Cash at End of Period $ 54,444   $ 54,548  
 

TENNANT COMPANY

   

SUPPLEMENTAL NON-GAAP FINANCIAL TABLE

 
(In thousands, except per share data) Three Months Ended Six Months Ended
June 30 June 30
2018   2017 2018   2017
 
Gross Profit - as reported $ 118,799 $ 104,554 $ 229,436 $ 184,290
Gross Margin - as reported 40.7 % 38.6 % 40.6 % 39.9 %

Adjustments:

Inventory Step-Up   6,199     6,199  
Gross Profit - as adjusted $ 118,799   $ 110,753   $ 229,436   $ 190,489  
Gross Margin - as adjusted   40.7 %   40.9 %   40.6 %   41.2 %
 
Selling and Administrative Expense - as reported $ 91,864 $ 87,326 $ 184,133 $ 161,282
Selling and Administrative Expense as a percent of Net Sales - as
reported
31.4 % 32.2 % 32.6 % 34.9 %

Adjustments:

Restructuring Charge (8,018 )
Acquisition and Integration Costs (2,800 ) (4,684 ) (3,815 ) (7,558 )
Professional Services (312 ) (1,556 )
Pension Settlement   (205 )   (205 )
Selling and Administrative Expense - as adjusted $ 88,752   $ 82,437   $ 178,762   $ 145,501  
Selling and Administrative Expense as a percent of Net Sales - as
adjusted
  30.4 %   30.4 %   31.6 %   31.5 %
 
Profit from Operations - as reported $ 19,029 $ 9,342 $ 29,401 $ 6,676
Operating Margin - as reported 6.5 % 3.4 % 5.2 % 1.4 %

Adjustments:

Inventory Step-Up 6,199 6,199
Restructuring Charge 8,018
Acquisition and Integration Costs 2,800 4,684 3,815 7,558
Professional Services 312 1,556
Pension Settlement   205     205  
Profit from Operations - as adjusted $ 22,141   $ 20,430   $ 34,772   $ 28,656  
Operating Margin - as adjusted   7.6 %   7.5 %   6.2 %   6.2 %
 
Profit (Loss) Before Income Taxes - as reported $ 13,129 $ (2,418 ) $ 17,506 $ (6,959 )

Adjustments:

Inventory Step-Up 6,199 6,199
Restructuring Charge 8,018
Acquisition and Integration Costs 2,800 4,684 3,815 7,558
Professional Services 312 1,556
Pension Settlement 205 205
Financing Costs   6,221     7,378  
Profit Before Income Taxes - as adjusted   $ 16,241     $ 14,891     $ 22,877     $ 22,399  
 

TENNANT COMPANY

   

SUPPLEMENTAL NON-GAAP FINANCIAL TABLE

 
(In thousands, except per share data) Three Months Ended Six Months Ended
June 30 June 30
2018   2017 2018   2017
 
Income Tax Expense (Benefit) - as reported $ 363 $ 238 $ 1,440 $ (346 )

Adjustments:

Inventory Step-Up(1) 1,729 1,729
Restructuring Charge(1) 2,234
Acquisition and Integration Costs(1)(2) 663 917
Professional Services(1) 77 382
Pension Settlement(1) 47 47
Financing Costs(1)   2,326     2,759  
Income Tax Expense - as adjusted   $ 1,103     $ 4,340     $ 2,739     $ 6,423  
 
Net Earnings (Loss) Attributable to Tennant Company - as reported $ 12,744 $ (2,591 ) $ 16,018 $ (6,548 )

Adjustments:

Inventory Step-Up 4,470 4,470
Restructuring Charge 5,784
Acquisition and Integration Costs 2,137 4,684 2,898 7,558
Professional Services 235 1,174
Pension Settlement 158 158
Financing Costs   3,895     4,619  
Net Earnings Attributable to Tennant Company - as adjusted   $ 15,116     $ 10,616     $ 20,090     $ 16,041  
 
Net Earnings (Loss) Attributable to Tennant Company per Share - as
reported:
Diluted $ 0.69 $ (0.15 ) $ 0.88 $ (0.37 )

Adjustments:

Inventory Step-Up 0.25 0.25
Restructuring Charge 0.32
Acquisition and Integration Costs 0.12 0.27 0.16 0.44
Professional Services 0.01 0.06
Pension Settlement 0.01 0.01
Financing Costs 0.22 0.26
Adjustment from Impact of Using Diluted Shares   (0.02 )       (0.04 )
Net Earnings Attributable to Tennant Company per Share - as adjusted   $ 0.82     $ 0.58     $ 1.10     $ 0.87  
 
     

(1)

  In determining the tax impact, we applied the statutory rate in
effect for each jurisdiction where expenses were incurred and
deductible for tax purposes.
 

(2)

2017 Acquisition Costs were nondeductible for tax purposes.
 

TENNANT COMPANY

   

SUPPLEMENTAL NON-GAAP FINANCIAL TABLE

 
(In thousands, except per share data) Three Months Ended Six Months Ended
June 30 June 30
2018   2017 2018   2017
 
Net Earnings (Loss) Including Noncontrolling Interest - as reported $ 12,766 $ (2,656 ) $ 16,066 $ (6,613 )

Adjustments:

Interest Income (952 ) (793 ) (1,701 ) (877 )
Interest Expense 6,005 11,833 11,750 12,627
Income Tax Expense (Benefit) 363 238 1,440 (346 )
Depreciation Expense 8,632 6,550 16,340 11,043
Amortization Expense 5,819 3,536 11,657 3,780
Inventory Step-Up 6,199 6,199
Restructuring Charge 8,018
Acquisition and Integration Costs 2,800 4,684 3,815 7,558
Professional Services 312 1,556
Pension Settlement 205 205
Acquisition Related Currency Loss   46     1,178  
Earnings Before Interest, Taxes, Depreciation & Amortization - as
adjusted
$ 35,745   $ 29,842   $ 60,923   $ 42,772  
EBITDA Margin - as adjusted   12.2 %   11.0 %   10.8 %   9.3 %

View Comments and Join the Discussion!