Exhibit 99
INVESTOR CONTACT:
Lorenzo Bassi
Vice President, Finance
lorenzo.bassi@tennantco.com
763-540-1600
Tennant Company Reports 2022 Fourth Quarter and Full Year Results and Provides Full Year 2023 Guidance
•Full year net income of $66.3 million on net sales of $1,092.2 million representing 0.1% growth, or 4.2% on an organic basis, and earnings per diluted share of $3.55
•Full year adjusted EBITDA of $133.7 million, or 12.2% of sales; adjusted diluted EPS of $4.10
•Fourth quarter net income of $23.8 million on net sales of $291.0 million representing 5.3% growth, or 9.7% on an organic basis, and earnings per diluted share of $1.27
•Fourth quarter adjusted EBITDA of $41.7 million, or 14.3% of sales; adjusted diluted EPS of $1.46
•Tennant announces full year 2023 guidance; adjusted net income of $3.70 to $4.50 per diluted share and adjusted EBITDA of $140 million to $160 million
MINNEAPOLIS, Feb. 23, 2023—Tennant Company (“Tennant” or the “Company”) (NYSE: TNC), a global leader in the design, manufacture and marketing of solutions that help create a cleaner, safer and healthier world, today reported its fourth quarter and full year results for 2022.
“Our team displayed great resourcefulness and perseverance to deliver organic sales growth in 2022 as we worked to navigate macroeconomic headwinds and meet the high level of demand for our innovative products,” said Tennant Company’s President and Chief Executive Officer, Dave Huml. “Targeted actions executed throughout the year, specifically those to address parts shortages, began to yield material results in the fourth quarter which enabled us to increase production and deliver higher sales and increased margins versus the third quarter and prior-year quarter."
“Our fourth quarter results provide positive momentum as we start 2023,” added Huml. “While our record backlog provides us with a significant buffer against the potential for moderating demand, we continue to face uncertainty about global macroeconomic challenges going forward. We are cautiously optimistic and fully committed to delivering improved sales and profit by focusing on recovery of backlog, launching innovative new products, driving price realization, and providing our customers with world-class service.”
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Page 2 – Tennant Company Reports 2022 Fourth Quarter and Full Year Results and Provides Full Year 2023 Guidance
2022 Full Year and Fourth Quarter Results
| (In millions) | Twelve Months Ended December 31, | Three Months Ended December 31, | |||||||||||||||||||||||||||||||||
| 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||||||||||||||||||||||||
| Net sales | $ | 1,092.2 | $ | 1,090.8 | +0.1 | % | $ | 291.0 | $ | 276.4 | +5.3 | % | |||||||||||||||||||||||
| Gross margin | 38.5 | % | 40.2 | % | -170bps | 39.6 | % | 36.4 | % | 320 bps | |||||||||||||||||||||||||
| Net income | $ | 66.3 | $ | 64.9 | +2.2 | % | $ | 23.8 | $ | 7.9 | +201.3 | % | |||||||||||||||||||||||
| Adjusted net income | $ | 76.5 | $ | 83.3 | (8.2) | % | $ | 27.2 | $ | 13.5 | +101.5 | % | |||||||||||||||||||||||
| Adjusted EBITDA | $ | 133.7 | $ | 140.2 | (4.6) | % | $ | 41.7 | $ | 28.4 | +46.8 | % | |||||||||||||||||||||||
| Adjusted EBITDA margin | 12.2 | % | 12.9 | % | -70 bps | 14.3 | % | 10.3 | % | 400 bps | |||||||||||||||||||||||||
For full year 2022, consolidated net sales of $1.09 billion increased 0.1% over the prior-year period, or 4.2% on an organic basis. The organic growth was partially offset by a net unfavorable foreign exchange effect of 4.0% and a negative divestiture impact of 0.1% related to the sale of the Company's coatings business in the first quarter of 2021. Higher selling prices and increased volumes in certain geographies, both in equipment and in parts and consumables, contributed to the overall increase in net sales, while consolidated volumes decreased year over year. Gross margin was 38.5% in 2022 compared to 40.2% in the prior year. The decrease in gross margin was mainly due to the broad effects of inflation on materials, labor, and freight costs, partially offset by higher selling prices and favorable sales mix.
Adjusted EBITDA was $133.7 million in 2022 compared to $140.2 million in 2021. The decrease in Adjusted EBITDA was primarily due to lower gross margins and unfavorable foreign currency impact of $12.1 million. Selling and administrative expenses of $306.3 million decreased $15.6 million over the prior year due to prudent cost management and lower incentive costs. Net income of $66.3 million increased $1.4 million compared to the prior-year period. Net income adjusted for amortization and certain nonoperational items, such as the gain on sale of assets or debt extinguishment costs, was $76.5 million in 2022 compared to $83.3 million in the prior-year period. The year-over-year decrease was primarily due to lower gross margins and higher income tax expense partially offset by the previously mentioned decline in selling and administrative expenses.
In the fourth quarter of 2022, consolidated net sales of $291.0 million increased 5.3% over the prior-year quarter, or 9.7% on an organic basis. This increase was partially offset by a net unfavorable foreign exchange effect of 4.4%. Gross profit margin of 39.6% was 320 basis points higher in the fourth quarter of 2022 compared to the prior-year quarter due to higher selling prices across all regions and favorable changes in sales mix, partially offset by unfavorable foreign exchange impact.
Adjusted EBITDA was $41.7 million in the fourth quarter of 2022 compared to $28.4 million in the prior-year quarter. The increase in Adjusted EBITDA was primarily due to higher margins, partially offset by unfavorable foreign currency impact, which adversely impacted adjusted EBITDA by approximately $3.8 million. Net income of $23.8 million increased $15.9 million over the prior-year quarter, driven by higher margins as a result of higher selling prices, as well as a lower effective tax rate due to a nonrecurring deferred tax-related
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Page 3 – Tennant Company Reports 2022 Fourth Quarter and Full Year Results and Provides Full Year 2023 Guidance
item. Adjusted net income was $27.2 million compared to $13.5 million in the prior-year quarter, driven by favorable operating results discussed above.
Organic Sales Results
| Twelve Months Ended December 31, 2022 | Three Months Ended December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||
| Americas | EMEA | APAC | Total | Americas | EMEA | APAC | Total | ||||||||||||||||||||||||||||||||||||||||
| Organic net sales growth | 7.4 | % | 2.5 | % | (11.4) | % | 4.2 | % | 16.0 | % | 2.3 | % | (7.5) | % | 9.7 | % | |||||||||||||||||||||||||||||||
Tennant groups its sales into three geographies: the Americas, which includes all of North America and Latin America; EMEA, which covers Europe, the Middle East and Africa; and APAC, which includes China, Japan, Australia and other Asian markets.
Regional results were as follows:
•Net sales in the Americas grew 7.4% organically for the full year and 16.0% in the fourth quarter. The increase for each period was mainly due to higher selling prices across the region and volume increases in Latin America. Fourth quarter growth was also driven by volume increase in North America as the Company procured key component parts to increase production levels.
•Europe, Middle East, and Africa (EMEA) net sales grew 2.5% organically for the full year and 2.3% in the fourth quarter. The increase for each period was primarily driven by higher selling prices in equipment and parts and consumables across the region, partially offset by volume declines as global supply-chain constraints limited the Company’s ability to increase production.
•Net sales in Asia Pacific (APAC) decreased 11.4% organically for the full year and 7.5% in the fourth quarter. The decline was primarily due to volume declines in China as government shutdowns related to COVID-19 continue to unfavorably impact demand. This was partly offset by higher selling prices across the region and volume growth in the Australian market.
Cash Flow, Capital Allocation and Liquidity
Net cash used in operating activities during the twelve months ended December 31, 2022, was $25.1 million, compared to net cash provided by operating activities of $69.4 million during the twelve months ended December 31, 2021. The increase in cash used was primarily driven by an increase in working capital attributable to investments in inventory to support an anticipated ramp in production; higher accounts receivables due to the sales timing; increased cash payments for employee compensation and benefits and income taxes. During the fourth quarter of 2022, Tennant generated $13.7 million in cash flow from operations, driven primarily by strong business performance. The Company continues to deploy cash flow toward operational capital needs and return capital to shareholders. During the twelve months ended December 31, 2022, the Company paid $18.9 million in dividends while repurchasing 79,756 shares for $5.0 million. Liquidity remained strong with a balance of $77.4 million in cash and cash equivalents as of December 31, 2022, and $242.2 million of unused borrowing capacity on the Company’s revolving credit facility.
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Page 4 – Tennant Company Reports 2022 Fourth Quarter and Full Year Results and Provides Full Year 2023 Guidance
As previously announced, Tennant’s Board of Directors authorized a quarterly cash dividend of $0.265 per share payable on March 15, 2023, to shareholders of record at the close of business on March 3, 2023.
2023 Guidance
| (In millions except per share data) | FY 2023 Guidance Range | ||||
| Net sales | $1,115 - $1,155 | ||||
| Organic net sales growth | 3.0% - 7.0% | ||||
| Adjusted diluted net income per share* | $3.70 - $4.50 | ||||
| Adjusted EBITDA* | $140 - $160 | ||||
| Capital expenditures | $20 - $25 | ||||
| Adjusted effective tax rate** | 20% - 25% | ||||
*Excludes certain nonoperational items and amortization expense
**Excludes certain nonoperational items and the amortization expense adjustment
Conference Call
Tennant will host a conference call to discuss its 2022 fourth quarter and full year results today, February 23, 2023, 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 replay of the conference call, with slides, will be available at investors.tennantco.com.
Company Profile
Founded in 1870, Tennant Company (TNC), headquartered in Eden Prairie, Minnesota, is a world leader in the design, manufacture and marketing of solutions that help create a cleaner, safer and healthier world. Its products include equipment for maintaining surfaces in industrial, commercial and outdoor environments; detergent-free and other sustainable cleaning technologies; and cleaning tools and supplies. Tennant's global field service network is the most extensive in the industry. Tennant Company had sales of $1.09 billion in 2022 and has approximately 4,250 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 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: geopolitical and economic uncertainty throughout the world; uncertainty surrounding the impacts and duration of the COVID-19 pandemic; our ability to comply with global laws and regulations; our ability to adapt to customer pricing sensitivities; the competition in our business; fluctuations in the cost, quality or availability of raw materials and purchased components; our ability to adjust pricing to respond to cost pressures; unforeseen product liability claims or product quality issues; our ability to attract, retain and develop key personnel and create effective succession planning strategies; our ability to effectively develop and manage strategic planning and growth processes and the related operational plans; our ability to successfully upgrade and evolve our information technology systems; our ability to successfully protect our information technology systems from cybersecurity risks; the occurrence of a significant business interruption; our ability to maintain the health and safety of our workers; our ability to integrate acquisitions; and our ability to develop and commercialize new innovative products and services.
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Page 5 – Tennant Company Reports 2022 Fourth Quarter and Full Year Results and Provides Full Year 2023 Guidance
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 2022 Form 10-K. 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 of a nonrecurring and/or nonoperational nature (hereinafter referred to as “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 gross profit - as adjusted, gross margin - as adjusted, selling and administrative (“S&A”) expense – as adjusted, S&A expense as a percent of net sales – as adjusted, operating income – as adjusted, operating margin – as adjusted, income before income taxes – as adjusted, income tax expense – as adjusted, net income – as adjusted, net income per diluted share – as adjusted, EBITDA – as adjusted, and EBITDA margin – as adjusted (collectively, the “Non-GAAP measures”), excluding the impacts from special items, is useful to investors as a measure of operating performance. We use these measures 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 the Non-GAAP measures by adjusting for gain on sale of assets, restructuring-related charges, acquisition-contingent consideration, loss on extinguishment of debt, and amortization expense. We calculate income tax expense – as adjusted by adjusting for the tax effect of these Non-GAAP measures. We calculate net income per diluted share – as adjusted by adjusting for the after-tax effect of these Non-GAAP measures and dividing the result by the diluted weighted average shares outstanding. We calculate EBITDA margin – as adjusted by dividing EBITDA – as adjusted by net sales.
FINANCIAL TABLES FOLLOW
Page 6 – Tennant Company Reports 2022 Fourth Quarter and Full Year Results and Provides Full Year 2023 Guidance
TENNANT COMPANY
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
| (In millions, except shares and per share data) | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net sales | $ | 291.0 | $ | 276.4 | $ | 1,092.2 | $ | 1,090.8 | |||||||||||||||
| Cost of sales | 175.8 | 175.8 | 671.3 | 652.8 | |||||||||||||||||||
| Gross profit | 115.2 | 100.6 | 420.9 | 438.0 | |||||||||||||||||||
| Selling and administrative expense | 79.2 | 79.4 | 306.3 | 321.9 | |||||||||||||||||||
| Research and development expense | 7.6 | 8.1 | 31.1 | 32.2 | |||||||||||||||||||
| Gain on sale of assets | — | — | (3.7) | (9.8) | |||||||||||||||||||
| Operating income | 28.4 | 13.1 | 87.2 | 93.7 | |||||||||||||||||||
| Interest expense, net | (3.4) | (0.7) | (7.1) | (7.3) | |||||||||||||||||||
| Net foreign currency transaction loss | (0.8) | (0.5) | (1.2) | (0.7) | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | (11.3) | |||||||||||||||||||
| Other income (expense), net | 0.5 | (0.3) | 0.6 | (0.3) | |||||||||||||||||||
| Income before income taxes | 24.7 | 11.6 | 79.5 | 74.1 | |||||||||||||||||||
| Income tax expense | 0.9 | 3.7 | 13.2 | 9.2 | |||||||||||||||||||
| Net income | $ | 23.8 | $ | 7.9 | $ | 66.3 | $ | 64.9 | |||||||||||||||
| Net income per share | |||||||||||||||||||||||
| Basic | $ | 1.29 | $ | 0.43 | $ | 3.58 | $ | 3.51 | |||||||||||||||
| Diluted | $ | 1.27 | $ | 0.42 | $ | 3.55 | $ | 3.44 | |||||||||||||||
| Weighted average shares outstanding | |||||||||||||||||||||||
| Basic | 18,490,547 | 18,440,776 | 18,494,356 | 18,499,674 | |||||||||||||||||||
| Diluted | 18,685,605 | 18,819,208 | 18,697,255 | 18,849,217 | |||||||||||||||||||
GEOGRAPHICAL NET SALES(1) (Unaudited)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||
| 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||||
| Americas | $ | 193.2 | $ | 166.6 | 16.0 | % | $ | 705.9 | $ | 658.3 | 7.2 | % | ||||||||
| Europe, Middle East and Africa | 76.6 | 85.1 | (10.0) | % | 301.6 | 331.9 | (9.1) | % | ||||||||||||
| Asia Pacific | 21.2 | 24.7 | (14.2) | % | 84.7 | 100.6 | (15.8) | % | ||||||||||||
| Total | $ | 291.0 | $ | 276.4 | 5.3 | % | $ | 1,092.2 | $ | 1,090.8 | 0.1 | % | ||||||||
(1) Net of intercompany sales.
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Page 7 – Tennant Company Reports 2022 Fourth Quarter and Full Year Results and Provides Full Year 2023 Guidance
TENNANT COMPANY
CONSOLIDATED BALANCE SHEETS (Unaudited)
| (In millions) | |||||||||||
| December 31 | 2022 | 2021 | |||||||||
| ASSETS | |||||||||||
| Cash, cash equivalents, and restricted cash | $ | 77.4 | $ | 123.6 | |||||||
Receivables, less allowances of $6.1 and $5.3, respectively | 251.5 | 211.4 | |||||||||
| Inventories | 206.6 | 160.6 | |||||||||
| Prepaid and other current assets | 39.8 | 31.2 | |||||||||
| Total current assets | 575.3 | 526.8 | |||||||||
Property, plant and equipment, less accumulated depreciation of $279.3 and $258.4, respectively | 179.9 | 172.8 | |||||||||
| Operating lease assets | 31.8 | 41.3 | |||||||||
| Goodwill | 182.0 | 193.1 | |||||||||
| Intangible assets, net | 76.4 | 98.0 | |||||||||
| Other assets | 39.7 | 29.7 | |||||||||
| Total assets | $ | 1,085.1 | $ | 1,061.7 | |||||||
| LIABILITIES AND TOTAL EQUITY | |||||||||||
| Current portion of long-term debt | $ | 5.2 | $ | 4.2 | |||||||
| Accounts payable | 126.1 | 121.5 | |||||||||
| Employee compensation and benefits | 44.0 | 60.6 | |||||||||
| Other current liabilities | 86.3 | 104.0 | |||||||||
| Total current liabilities | 261.6 | 290.3 | |||||||||
| Long-term debt | 295.1 | 263.4 | |||||||||
| Long-term operating lease liabilities | 17.1 | 25.4 | |||||||||
| Employee-related benefits | 13.2 | 16.3 | |||||||||
| Deferred income taxes | 11.5 | 20.6 | |||||||||
| Other liabilities | 14.5 | 10.6 | |||||||||
| Total long-term liabilities | 351.4 | 336.3 | |||||||||
| Total liabilities | 613.0 | 626.6 | |||||||||
Common stock, $0.375 par value per share, 60,000,000 shares authorized; 18,521,485 and 18,535,116 issued and outstanding, respectively | 7.0 | 7.0 | |||||||||
| Additional paid-in capital | 56.0 | 54.1 | |||||||||
| Retained earnings | 458.0 | 410.6 | |||||||||
| Accumulated other comprehensive loss | (50.2) | (37.9) | |||||||||
| Total Tennant Company shareholders' equity | 470.8 | 433.8 | |||||||||
| Noncontrolling interest | 1.3 | 1.3 | |||||||||
| Total equity | 472.1 | 435.1 | |||||||||
| Total liabilities and total equity | $ | 1,085.1 | $ | 1,061.7 | |||||||
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Page 8 – Tennant Company Reports 2022 Fourth Quarter and Full Year Results and Provides Full Year 2023 Guidance
TENNANT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
| (In millions) | |||||||||||
| Years ended December 31 | 2022 | 2021 | |||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 66.3 | $ | 64.9 | |||||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||||||||||
| Depreciation expense | 32.8 | 33.1 | |||||||||
| Amortization expense | 15.9 | 20.0 | |||||||||
| Deferred income tax benefit | (15.6) | (15.0) | |||||||||
| Share-based compensation expense | 7.8 | 9.5 | |||||||||
| Bad debt and returns expense | 2.3 | 1.5 | |||||||||
| Gain on sale of assets | (3.7) | (9.8) | |||||||||
| Acquisition contingent consideration adjustment | — | 0.7 | |||||||||
| Debt extinguishment cost | — | 11.3 | |||||||||
| Other, net | 1.0 | 1.6 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Receivables | (46.3) | (20.3) | |||||||||
| Inventories | (68.3) | (56.0) | |||||||||
| Accounts payable | 7.7 | 19.1 | |||||||||
| Employee compensation and benefits | (14.8) | 8.3 | |||||||||
| Other assets and liabilities | (10.2) | 0.5 | |||||||||
| Net cash (used in) provided by operating activities | (25.1) | 69.4 | |||||||||
| INVESTING ACTIVITIES | |||||||||||
| Purchases of property, plant and equipment | (25.0) | (19.4) | |||||||||
| Proceeds from disposals of property, plant and equipment | 0.1 | — | |||||||||
| Purchase of intangible asset | — | (0.1) | |||||||||
| Proceeds from sale of assets, net of cash divested | 4.1 | 24.7 | |||||||||
| Investment in leased assets | (4.3) | (3.7) | |||||||||
| Cash received from leased assets | 0.6 | 0.2 | |||||||||
| Net cash (used in) provided by investing activities | (24.5) | 1.7 | |||||||||
| FINANCING ACTIVITIES | |||||||||||
| Proceeds from borrowings | 52.0 | 315.8 | |||||||||
| Repayments of borrowings | (19.1) | (362.0) | |||||||||
| Debt extinguishment payment | — | (8.4) | |||||||||
| Contingent consideration payments | — | (2.5) | |||||||||
| Change in finance lease obligations | — | 0.1 | |||||||||
| (Repurchases) proceeds from exercise of stock options, net of employee tax withholdings obligations | (0.9) | 5.0 | |||||||||
| Dividends paid | (18.9) | (17.5) | |||||||||
| Repurchases of common stock | (5.0) | (15.0) | |||||||||
| Net cash provided by (used in) financing activities | 8.1 | (84.5) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | (4.7) | (4.0) | |||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | (46.2) | (17.4) | |||||||||
| Cash, cash equivalents and restricted cash at beginning of year | 123.6 | 141.0 | |||||||||
| Cash, cash equivalents and restricted cash at end of year | $ | 77.4 | $ | 123.6 | |||||||
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Page 9 – Tennant Company Reports 2022 Fourth Quarter and Full Year Results and Provides Full Year 2023 Guidance
TENNANT COMPANY
SUPPLEMENTAL NON-GAAP FINANCIAL TABLES
Reported to Adjusted Net Income and Net Income Per Share
| (In millions, except per share data) | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income - as reported | $ | 23.8 | $ | 7.9 | $ | 66.3 | $ | 64.9 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Gain on sale of assets | — | — | (2.8) | (7.5) | |||||||||||||||||||
| Amortization expense | 2.7 | 3.6 | 11.5 | 14.5 | |||||||||||||||||||
| Restructuring-related charge (Cost of sales) | 0.2 | 0.6 | 0.2 | 0.6 | |||||||||||||||||||
| Restructuring-related charge (S&A expense) | 0.5 | 1.4 | 1.3 | 2.0 | |||||||||||||||||||
| Acquisition contingent consideration adjustment | — | — | — | 0.2 | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | 8.6 | |||||||||||||||||||
| Net income - as adjusted | $ | 27.2 | $ | 13.5 | $ | 76.5 | $ | 83.3 | |||||||||||||||
| Net income per share - as reported: | |||||||||||||||||||||||
| Diluted | $ | 1.27 | $ | 0.42 | $ | 3.55 | $ | 3.44 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Gain on sale of assets | — | — | (0.15) | (0.40) | |||||||||||||||||||
| Amortization expense | 0.15 | 0.19 | 0.62 | 0.77 | |||||||||||||||||||
| Restructuring-related charge (Cost of sales) | 0.01 | 0.03 | 0.01 | 0.03 | |||||||||||||||||||
| Restructuring-related charge (S&A expense) | 0.03 | 0.07 | 0.07 | 0.10 | |||||||||||||||||||
| Acquisition contingent consideration adjustment | — | — | — | — | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | 0.45 | |||||||||||||||||||
| Net income per diluted share - as adjusted | $ | 1.46 | $ | 0.71 | $ | 4.10 | $ | 4.39 | |||||||||||||||
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Page 10 – Tennant Company Reports 2022 Fourth Quarter and Full Year Results and Provides Full Year 2023 Guidance
Reported Net Income to Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)
| (In millions) | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Net income - as reported | $ | 23.8 | $ | 7.9 | $ | 66.3 | $ | 64.9 | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Interest expense, net | 3.4 | 0.7 | 7.1 | 7.3 | |||||||||||||||||||
| Income tax expense | 0.9 | 3.7 | 13.2 | 9.2 | |||||||||||||||||||
| Depreciation expense | 8.8 | 8.6 | 32.8 | 33.1 | |||||||||||||||||||
| Amortization expense | 3.8 | 4.9 | 15.9 | 20.0 | |||||||||||||||||||
| EBITDA | 40.7 | 25.8 | 135.3 | 134.5 | |||||||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Gain on sale of assets | — | — | (3.7) | (9.8) | |||||||||||||||||||
| Restructuring-related charge (Cost of sales) | 0.3 | 0.8 | 0.3 | 0.8 | |||||||||||||||||||
| Restructuring-related charge (S&A expense) | 0.7 | 1.8 | 1.8 | 2.7 | |||||||||||||||||||
| Acquisition contingent consideration adjustment | — | — | — | 0.7 | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | 11.3 | |||||||||||||||||||
| EBITDA - as adjusted | $ | 41.7 | $ | 28.4 | $ | 133.7 | $ | 140.2 | |||||||||||||||
| EBITDA margin - as adjusted | 14.3 | % | 10.3 | % | 12.2 | % | 12.9 | % | |||||||||||||||
(more)
Page 11 – Tennant Company Reports 2022 Fourth Quarter and Full Year Results and Provides Full Year 2023 Guidance
TENNANT COMPANY
SUPPLEMENTAL NON-GAAP FINANCIAL TABLES
Reported to Adjusted Gross Profit, Selling and Administrative Expense (S&A expense) and Operating Income
| (In millions) | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Gross profit - as reported | $ | 115.2 | $ | 100.6 | $ | 420.9 | $ | 438.0 | |||||||||||||||
| Gross margin - as reported | 39.6 | % | 36.4 | % | 38.5 | % | 40.2 | % | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Restructuring-related charge (Cost of sales) | 0.3 | 0.8 | 0.3 | 0.8 | |||||||||||||||||||
| Gross profit - as adjusted | $ | 115.5 | $ | 101.4 | $ | 421.2 | $ | 438.0 | |||||||||||||||
| Gross margin - as adjusted | 39.7 | % | 36.7 | % | 38.6 | % | 40.2 | % | |||||||||||||||
| S&A expense - as reported | $ | 79.2 | $ | 79.4 | $ | 306.3 | $ | 321.9 | |||||||||||||||
| S&A expense as a percent of net sales - as reported | 27.2 | % | 28.7 | % | 28.0 | % | 29.5 | % | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Restructuring-related charge (S&A expense) | (0.7) | (1.8) | (1.8) | (2.7) | |||||||||||||||||||
| Acquisition contingent consideration adjustment | — | — | — | (0.7) | |||||||||||||||||||
| S&A expense - as adjusted | $ | 78.5 | $ | 77.6 | $ | 304.5 | $ | 318.5 | |||||||||||||||
| S&A expense as a percent of net sales - as adjusted | 27.0 | % | 28.1 | % | 27.9 | % | 29.2 | % | |||||||||||||||
| Operating income - as reported | $ | 28.4 | $ | 13.1 | $ | 87.2 | $ | 93.7 | |||||||||||||||
| Operating margin - as reported | 9.8 | % | 4.7 | % | 8.0 | % | 8.6 | % | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Restructuring-related charge (Cost of sales) | 0.3 | 0.8 | 0.3 | 0.8 | |||||||||||||||||||
| Gain on sale of assets | — | — | (3.7) | (9.8) | |||||||||||||||||||
| Restructuring-related charge (S&A expense) | 0.7 | 1.8 | 1.8 | 2.7 | |||||||||||||||||||
| Acquisition contingent consideration adjustment | — | — | — | 0.7 | |||||||||||||||||||
| Operating income - as adjusted | $ | 29.4 | $ | 15.7 | $ | 85.6 | $ | 88.1 | |||||||||||||||
| Operating margin - as adjusted | 10.1 | % | 5.7 | % | 7.8 | % | 8.1 | % | |||||||||||||||
(more)
Page 12 – Tennant Company Reports 2022 Fourth Quarter and Full Year Results and Provides Full Year 2023 Guidance
TENNANT COMPANY
SUPPLEMENTAL NON-GAAP FINANCIAL TABLES
Reported to Adjusted Income Before Income Taxes and Income Tax Expense
| (In millions) | Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||||||||||
| 2022 | 2021 | 2022 | 2021 | ||||||||||||||||||||
| Income before income taxes - as reported | $ | 24.7 | $ | 11.6 | $ | 79.5 | $ | 74.1 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
| Gain on sale of assets | — | — | (3.7) | (9.8) | |||||||||||||||||||
| Amortization expense | 3.8 | 4.9 | 15.9 | 20.0 | |||||||||||||||||||
| Restructuring-related charge (Cost of sales) | 0.3 | 0.8 | 0.3 | 0.8 | |||||||||||||||||||
| Restructuring-related charge (S&A expense) | 0.7 | 1.8 | 1.8 | 2.7 | |||||||||||||||||||
| Acquisition contingent consideration adjustment | — | — | — | 0.7 | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | 11.3 | |||||||||||||||||||
| Income before income taxes - as adjusted | $ | 29.5 | $ | 19.1 | $ | 93.8 | $ | 99.8 | |||||||||||||||
| Income tax expense - as reported | $ | 0.9 | $ | 3.7 | $ | 13.2 | $ | 9.2 | |||||||||||||||
| Effective tax rate - as reported | 3.6 | % | 31.9 | % | 16.6 | % | 12.5 | % | |||||||||||||||
Adjustments(1): | |||||||||||||||||||||||
| Gain on sale of assets | — | — | (0.9) | (2.3) | |||||||||||||||||||
| Amortization expense | 1.1 | 1.3 | 4.4 | 5.5 | |||||||||||||||||||
| Restructuring-related charge (Cost of sales) | 0.1 | 0.2 | 0.1 | 0.2 | |||||||||||||||||||
| Restructuring-related charge (S&A expense) | 0.2 | 0.4 | 0.5 | 0.7 | |||||||||||||||||||
| Acquisition contingent consideration adjustment | — | — | — | 0.5 | |||||||||||||||||||
| Loss on extinguishment of debt | — | — | — | 2.7 | |||||||||||||||||||
| Income tax expense - as adjusted | $ | 2.3 | $ | 5.6 | $ | 17.3 | $ | 16.5 | |||||||||||||||
| Effective tax rate - as adjusted | 7.8 | % | 29.3 | % | 18.4 | % | 16.5 | % | |||||||||||||||
(1) In determining the tax impact, we applied the statutory rate in effect for each jurisdiction where income or expenses were generated.
(###)