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January 2015 Needham Presentation
Tennant Company
Tom Paulson
Sr. Vice President and Chief Financial Officer
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, 2013, 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
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 HARBOR STATEMENT
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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 Best Small Companies
Forbes
• 2007 & 2014 America’s Most Trustworthy Companies Forbes
TENNANT COMPANY AT-A-GLANCE
Founded:
1870
2013 Revenues:
$752M
2013 Employees:
2,931
Manufacturing Sites:
7
NYSE Symbol:
TNC
3
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
Growth Objective: Achieve $1 billion in revenue by 2017
while achieving greater than 12%
operating profit margin…
While accelerating
whenever possible.
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$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
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Reach new customers
& new markets
Continue delivering
what we know works
Don’t lose sight of the
discipline we’ve established
1
2
3
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Product Presence Hit Rate Market Share
Frank Lynn & Associates Process
× × =
40%
19%
PPHSM Analysis
75%
67%
REACH NEW CUSTOMERS & NEW MARKETS Increasing Presence
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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
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NEW PRODUCT GROWTH
16 in 2014
47 2015-2016
Strongest product pipeline ever!
20 in 2013
17 in 2012
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NEXT GEN ec-H2O Coming Soon – Q1’15!
$720 million+ cumulative revenue
7,500+ customers
29,000+ sites
62,000+ machines
Previewed Prototype at November 2014 ISSA Tradeshow
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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
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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
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EMERGING MARKETS Anticipating Solid Organic Growth
LATIN AMERICA
PROJECTED GROWTH RATE
+15% next 3 years
CHINA INCREASE
MANUFACTURING EXPERTISE &
EXPAND MARKET COVERAGE
PROJECTED GROWTH RATE
+20% next 3 years
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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
Standardizing global product structure to simplify quoting, ordering and product data maintenance
STANDARDIZED & SIMPLIFIED GLOBAL PROCESSES
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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 margin
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* 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).
* 2012 results are adjusted to exclude a gain on sale of business of $784K pre-tax ($508K after-tax or $0.03 per diluted
share), a restructuring charge of $760K pre-tax ($670K after-tax or $0.04 pre diluted share), and tax benefits from an
international entity restructuring of $2,043K (or $0.11 per diluted share). 33
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* YTD ‘13 results are adjusted to exclude European restructuring charge of $1,440K pre-tax ($1,023K after tax or $0.05
per diluted share) and a tax benefit related to 2012 R&D tax credit of $528K (or $0.03 per diluted share). October 23,
2013 release.
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
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IMPROVED PROFITABILITY & BALANCE SHEET LEVERAGE Return on Invested Capital Improvement & Cash Generation ’09-’13
36