Tennant Company Reports Third Quarter 2024 Results
Delivers Net Sales Growth
Reaffirms 2024 Guidance
(In millions, except per share data) |
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||||||
|
2024 |
|
2023 |
|
Incr /
|
|
2024 |
|
2023 |
|
Incr /
|
||||||||||
Net sales |
$ |
315.8 |
|
|
$ |
304.7 |
|
|
3.6 |
% |
|
$ |
957.8 |
|
|
$ |
932.2 |
|
|
2.7 |
% |
Net income |
$ |
20.8 |
|
|
$ |
22.9 |
|
|
(9.2 |
)% |
|
$ |
77.1 |
|
|
$ |
78.5 |
|
|
(1.8 |
)% |
Diluted EPS |
$ |
1.09 |
|
|
$ |
1.21 |
|
|
(9.9 |
)% |
|
$ |
4.03 |
|
|
$ |
4.19 |
|
|
(3.8 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjusted diluted EPS |
$ |
1.39 |
|
|
$ |
1.34 |
|
|
3.7 |
% |
|
$ |
5.05 |
|
|
$ |
4.65 |
|
|
8.6 |
% |
Adjusted EBITDA |
$ |
47.9 |
|
|
$ |
45.9 |
|
|
4.4 |
% |
|
$ |
161.4 |
|
|
$ |
151.4 |
|
|
6.6 |
% |
Adjusted EBITDA margin % |
|
15.2 |
% |
|
|
15.1 |
% |
|
10 bps |
|
|
16.9 |
% |
|
|
16.2 |
% |
|
70 bps |
||
Highlights
-
Delivered net sales of
$315.8 million for the third quarter of 2024, reflecting a 3.6% increase from the third quarter of 2023, or 2.7% on an organic basis, driven primarily by strong pricing realization in all regions and volume growth in theAmericas . -
Achieved Adjusted EBITDA of
$47.9 million , an increase of$2.0 million , or 4.4%, primarily due to strong sales growth. -
Generated operating cash flow of
$30.7 million , with over 100% conversion of net income to free cash flow. -
Announced a 5.4% increase in the Company's quarterly cash dividend to
$0.295 per share, marking the 53rd consecutive year the Company has increased its annual cash dividend payout. - Expanded the Company's portfolio of innovative products and solutions with the launch of the new T291 small walk-behind scrubber. Designed for use in both hard-to-reach spaces and open areas, the T291's versatility and compact size make it an excellent fit for mid-size retail, healthcare, and education environments.
“We are pleased to report Tennant's strong third quarter results, continuing the trend from the first half of 2024 of delivering growth in organic net sales and Adjusted EBITDA as we progress toward normalized backlog levels by the end of 2024," said
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||||||
Consolidated net sales for the third quarter of 2024 totaled |
||||||
|
|
Three Months Ended
|
|
Nine Months Ended
|
||
|
|
2024 vs. 2023 |
||||
Price |
|
1.8 |
% |
|
3.1 |
% |
Volume |
|
0.9 |
% |
|
(1.0 |
)% |
Organic growth |
|
2.7 |
% |
|
2.1 |
% |
Acquisitions |
|
1.3 |
% |
|
0.8 |
% |
Foreign currency |
|
(0.4 |
)% |
|
(0.2 |
)% |
Total growth |
|
3.6 |
% |
|
2.7 |
% |
Organic Sales |
|||||||||||||||||||||||
Organic sales, which exclude the effects of foreign currency and acquisitions, increased 2.7% compared to the prior year. This growth was driven by effective price realization across all geographies and volume growth in the |
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Three Months Ended
|
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Nine Months Ended
|
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|
|
|
EMEA |
|
APAC |
|
Total |
|
|
|
EMEA |
|
APAC |
|
Total |
||||||||
Organic net sales growth |
4.6 |
% |
|
(0.8 |
)% |
|
(4.3 |
)% |
|
2.7 |
% |
|
5.0 |
% |
|
(3.6 |
)% |
|
(6.2 |
)% |
|
2.1 |
% |
EMEA: The 0.8% decrease in EMEA, which includes
APAC: The 4.3% decrease in APAC, which includes
Operating Results
The gross profit margin of 42.4% declined 90 basis points compared to the third quarter of 2023. This decrease is attributed to inflationary pressure on materials and elevated freight costs. Additionally, unfavorable geographic and customer mix also contributed to the decline, but to a lesser extent. However, this was partially offset by price realization.
Selling and Administrative ("S&A") expense totaled
Adjusted EBITDA was
Net income was
Cash Flow, Liquidity and Capital Allocation
Tennant generated
Liquidity remained strong with a balance of
The Company continues to strategically deploy cash flow to meet operational capital requirements and to return capital to shareholders in alignment with its capital allocation priorities. During the third quarter, the Company invested
2024 Guidance |
|
For 2024, Tennant affirms the following guidance ranges: |
|
(In millions, except per share data) |
2024
|
Net sales |
|
Organic net sales growth |
2.5 % - 4.5 % |
Adjusted diluted net income per share* |
|
Adjusted EBITDA* |
|
Adjusted EBITDA margin |
16.0 % - 16.5 % |
Capital expenditures |
|
Adjusted effective tax rate* |
22 % - 27 % |
*Excludes ERP modernization costs, other certain nonoperational items and amortization expense. |
|
Conference Call
Tennant will host a conference call to discuss its 2024 third quarter results on
Company Profile
Founded in 1870,
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 the Company serves. Particular risks and uncertainties presently facing it include: economic uncertainty throughout the world; geopolitical tensions or health epidemics; the Company's ability to comply with global laws and regulations; the Company's ability to adapt pricing to the competitive marketplace and customer pricing sensitivities; the competition in the Company's business; fluctuations in the cost, quality or availability of raw materials and purchased components; increasing cost pressures; unforeseen product liability claims or product quality issues; the Company's ability to attract, retain and develop key personnel and create effective succession planning strategies; the Company's ability to effectively develop and manage strategic planning and growth processes and the related operational plans; the Company's ability to successfully upgrade and evolve its information technology systems; the Company's ability to successfully protect our information technology systems from cybersecurity risks; the occurrence of a significant business interruption; the Company's ability to maintain the health and safety of its workers; the Company's ability to integrate acquisitions; and the Company's ability to develop and commercialize new innovative products and services.
The Company cautions 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 the Company's results can be found in its 2023 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.
The Company undertakes 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 the Company in its filings with the
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.
The Company believes that disclosing 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. The Company uses 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). The Company calculates the Non-GAAP measures by adjusting for ERP modernization costs, transaction-related costs and amortization expense. The Company calculates income tax expense – as adjusted by adjusting for the tax effect of these Non-GAAP measures. The Company calculates 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. The Company calculates EBITDA margin – as adjusted by dividing EBITDA – as adjusted by net sales.
FINANCIAL TABLES FOLLOW
|
|||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) |
|||||||||||||||
(In millions, except shares and per share data) |
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net sales |
$ |
315.8 |
|
|
$ |
304.7 |
|
|
$ |
957.8 |
|
|
$ |
932.2 |
|
Cost of sales |
|
182.0 |
|
|
|
172.7 |
|
|
|
543.8 |
|
|
|
535.2 |
|
Gross profit |
|
133.8 |
|
|
|
132.0 |
|
|
|
414.0 |
|
|
|
397.0 |
|
Selling and administrative expense |
|
92.7 |
|
|
|
88.2 |
|
|
|
275.5 |
|
|
|
256.9 |
|
Research and development expense |
|
10.5 |
|
|
|
9.1 |
|
|
|
31.8 |
|
|
|
26.0 |
|
Operating income |
|
30.6 |
|
|
|
34.7 |
|
|
|
106.7 |
|
|
|
114.1 |
|
Interest expense, net |
|
(2.7 |
) |
|
|
(3.3 |
) |
|
|
(7.5 |
) |
|
|
(11.0 |
) |
Net foreign currency transaction (loss) gain |
|
(0.4 |
) |
|
|
(0.4 |
) |
|
|
0.1 |
|
|
|
0.5 |
|
Other (expense) income, net |
|
— |
|
|
|
(1.1 |
) |
|
|
0.2 |
|
|
|
(1.8 |
) |
Income before income taxes |
|
27.5 |
|
|
|
29.9 |
|
|
|
99.5 |
|
|
|
101.8 |
|
Income tax expense |
|
6.7 |
|
|
|
7.0 |
|
|
|
22.4 |
|
|
|
23.3 |
|
Net income |
$ |
20.8 |
|
|
$ |
22.9 |
|
|
$ |
77.1 |
|
|
$ |
78.5 |
|
|
|
|
|
|
|
|
|
||||||||
Net income per share |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
1.11 |
|
|
$ |
1.23 |
|
|
$ |
4.10 |
|
|
$ |
4.25 |
|
Diluted |
$ |
1.09 |
|
|
$ |
1.21 |
|
|
$ |
4.03 |
|
|
$ |
4.19 |
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding |
|
|
|
|
|
|
|
||||||||
Basic |
|
18,810,267 |
|
|
|
18,570,293 |
|
|
|
18,790,824 |
|
|
|
18,485,806 |
|
Diluted |
|
19,093,873 |
|
|
|
18,878,311 |
|
|
|
19,120,455 |
|
|
|
18,747,128 |
|
GEOGRAPHICAL |
|||||||||||||||||
|
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||||
|
2024 |
2023 |
|
% Change |
|
|
2024 |
|
2023 |
|
% Change |
||||||
|
$ |
218.7 |
|
$ |
211.2 |
|
3.6 |
% |
|
$ |
662.1 |
|
$ |
632.2 |
|
4.7 |
% |
|
|
76.3 |
|
|
72.0 |
|
6.0 |
% |
|
|
234.6 |
|
|
234.1 |
|
0.2 |
% |
|
|
20.8 |
|
|
21.5 |
|
(3.3 |
)% |
|
|
61.1 |
|
|
65.9 |
|
(7.3 |
)% |
Total |
$ |
315.8 |
|
$ |
304.7 |
|
3.6 |
% |
|
$ |
957.8 |
|
$ |
932.2 |
|
2.7 |
% |
(1) Net of intercompany sales. |
|||||||||||||||||
|
|||||||
CONSOLIDATED BALANCE SHEETS (Unaudited) |
|||||||
(In millions, except shares and per share data) |
|
|
|
||||
ASSETS |
|
|
|
||||
Cash, cash equivalents, and restricted cash |
$ |
91.3 |
|
|
$ |
117.1 |
|
Receivables, less allowances of |
|
260.2 |
|
|
|
247.6 |
|
Inventories |
|
201.8 |
|
|
|
175.9 |
|
Prepaid and other current assets |
|
40.6 |
|
|
|
28.5 |
|
Total current assets |
|
593.9 |
|
|
|
569.1 |
|
Property, plant and equipment, less accumulated depreciation of |
|
183.7 |
|
|
|
187.7 |
|
Operating lease assets |
|
52.1 |
|
|
|
41.7 |
|
|
|
198.4 |
|
|
|
187.4 |
|
Intangible assets, net |
|
66.4 |
|
|
|
63.1 |
|
Other assets |
|
121.6 |
|
|
|
64.4 |
|
Total assets |
$ |
1,216.1 |
|
|
$ |
1,113.4 |
|
LIABILITIES AND EQUITY |
|
|
|
||||
Current portion of long-term debt |
$ |
0.6 |
|
|
$ |
6.4 |
|
Accounts payable |
|
128.0 |
|
|
|
111.4 |
|
Employee compensation and benefits |
|
59.4 |
|
|
|
67.3 |
|
Other current liabilities |
|
85.5 |
|
|
|
88.6 |
|
Total current liabilities |
|
273.5 |
|
|
|
273.7 |
|
Long-term debt |
|
208.6 |
|
|
|
194.2 |
|
Long-term operating lease liabilities |
|
35.2 |
|
|
|
27.4 |
|
Employee benefits |
|
13.8 |
|
|
|
13.3 |
|
Deferred income taxes |
|
7.9 |
|
|
|
5.0 |
|
Other liabilities |
|
28.6 |
|
|
|
21.5 |
|
Total long-term liabilities |
|
294.1 |
|
|
|
261.4 |
|
Total liabilities |
$ |
567.6 |
|
|
$ |
535.1 |
|
Common Stock, |
|
7.1 |
|
|
|
7.0 |
|
Additional paid-in capital |
|
76.8 |
|
|
|
64.9 |
|
Retained earnings |
|
608.6 |
|
|
|
547.4 |
|
Accumulated other comprehensive loss |
|
(45.3 |
) |
|
|
(42.3 |
) |
|
|
647.2 |
|
|
|
577.0 |
|
Noncontrolling interest |
|
1.3 |
|
|
|
1.3 |
|
Total equity |
|
648.5 |
|
|
|
578.3 |
|
Total liabilities and total equity |
$ |
1,216.1 |
|
|
$ |
1,113.4 |
|
|
|||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) |
|||||||
(In millions) |
Nine Months Ended
|
||||||
|
2024 |
|
2023 |
||||
OPERATING ACTIVITIES |
|
|
|
||||
Net income |
$ |
77.1 |
|
|
$ |
78.5 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
||||
Depreciation expense |
|
29.6 |
|
|
|
26.4 |
|
Amortization expense |
|
11.4 |
|
|
|
11.0 |
|
Deferred income tax benefit |
|
(1.8 |
) |
|
|
(7.4 |
) |
Share-based compensation expense |
|
9.4 |
|
|
|
8.6 |
|
Bad debt and returns expense |
|
1.8 |
|
|
|
3.2 |
|
Other, net |
|
0.5 |
|
|
|
0.5 |
|
Changes in operating assets and liabilities: |
|
|
|
||||
Receivables |
|
(12.3 |
) |
|
|
7.9 |
|
Inventories |
|
(35.7 |
) |
|
|
3.5 |
|
Accounts payable |
|
17.9 |
|
|
|
(25.1 |
) |
Employee compensation and benefits |
|
(8.1 |
) |
|
|
18.3 |
|
Other assets and liabilities |
|
(37.6 |
) |
|
|
(0.8 |
) |
Net cash provided by operating activities |
|
52.2 |
|
|
|
124.6 |
|
INVESTING ACTIVITIES |
|
|
|
||||
Purchases of property, plant and equipment |
|
(11.5 |
) |
|
|
(15.3 |
) |
Purchase of investment |
|
(32.1 |
) |
|
|
— |
|
Payments made in connection with business acquisition, net of cash acquired |
|
(25.7 |
) |
|
|
— |
|
Investment in leased assets |
|
(0.4 |
) |
|
|
(0.5 |
) |
Cash received from leased assets |
|
0.6 |
|
|
|
0.6 |
|
Net cash used in investing activities |
|
(69.1 |
) |
|
|
(15.2 |
) |
FINANCING ACTIVITIES |
|
|
|
||||
Proceeds from borrowings |
|
40.0 |
|
|
|
20.0 |
|
Repayments of borrowings |
|
(32.5 |
) |
|
|
(98.7 |
) |
Payment of debt financing costs |
|
(2.2 |
) |
|
|
— |
|
Proceeds from exercise of stock options, net of employee tax withholdings obligations |
|
19.6 |
|
|
|
18.1 |
|
Repurchases of common stock |
|
(17.1 |
) |
|
|
(11.7 |
) |
Dividends paid |
|
(15.9 |
) |
|
|
(14.8 |
) |
Net cash used in financing activities |
|
(8.1 |
) |
|
|
(87.1 |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(0.8 |
) |
|
|
(2.7 |
) |
Net (decrease) increase in cash, cash equivalents and restricted cash |
|
(25.8 |
) |
|
|
19.6 |
|
Cash, cash equivalents and restricted cash at beginning of period |
|
117.1 |
|
|
|
77.4 |
|
Cash, cash equivalents and restricted cash at end of period |
$ |
91.3 |
|
|
$ |
97.0 |
|
|
|||||||||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL TABLES |
|||||||||||||||
Reported to Adjusted Net Income and Net Income Per Share |
|||||||||||||||
(In millions, except per share data) |
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net income - as reported |
$ |
20.8 |
|
$ |
22.9 |
|
$ |
77.1 |
|
$ |
78.5 |
||||
Adjustments: |
|
|
|
|
|
|
|
||||||||
Amortization expense |
|
2.6 |
|
|
2.5 |
|
|
8.4 |
|
|
7.9 |
||||
Restructuring-related charge (S&A expense) |
|
— |
|
|
— |
|
|
0.4 |
|
|
0.8 |
||||
ERP modernization costs (S&A expense) |
|
2.5 |
|
|
— |
|
|
7.0 |
|
|
— |
||||
Transaction and integration-related costs (S&A expense) |
|
0.7 |
|
|
— |
|
|
3.6 |
|
|
— |
||||
Net income - as adjusted |
$ |
26.6 |
|
$ |
25.4 |
|
$ |
96.5 |
|
$ |
87.2 |
||||
|
|
|
|
|
|
|
|
||||||||
Net income per share - as reported: |
|
|
|
|
|
|
|
||||||||
Diluted |
$ |
1.09 |
|
$ |
1.21 |
|
$ |
4.03 |
|
$ |
4.19 |
||||
Adjustments: |
|
|
|
|
|
|
|
||||||||
Amortization expense |
|
0.14 |
|
|
0.13 |
|
|
0.44 |
|
|
0.42 |
||||
Restructuring-related charge (S&A expense) |
|
— |
|
|
— |
|
|
0.02 |
|
|
0.04 |
||||
ERP modernization costs (S&A expense) |
|
0.13 |
|
|
— |
|
|
0.37 |
|
|
— |
||||
Transaction and integration-related costs (S&A expense) |
|
0.04 |
|
|
— |
|
|
0.19 |
|
|
— |
||||
Net income per diluted share - as adjusted |
$ |
1.39 |
|
$ |
1.34 |
|
$ |
5.05 |
|
$ |
4.65 |
||||
Reported Net Income to Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization |
|||||||||||||||
(EBITDA) |
|||||||||||||||
(In millions) |
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net income - as reported |
$ |
20.8 |
|
|
$ |
22.9 |
|
|
$ |
77.1 |
|
|
$ |
78.5 |
|
Less: |
|
|
|
|
|
|
|
||||||||
Interest expense, net |
|
2.7 |
|
|
|
3.3 |
|
|
|
7.5 |
|
|
|
11.0 |
|
Income tax expense |
|
6.7 |
|
|
|
7.0 |
|
|
|
22.4 |
|
|
|
23.3 |
|
Depreciation expense |
|
10.1 |
|
|
|
9.2 |
|
|
|
29.6 |
|
|
|
26.4 |
|
Amortization expense |
|
3.6 |
|
|
|
3.5 |
|
|
|
11.4 |
|
|
|
11.0 |
|
EBITDA |
|
43.9 |
|
|
|
45.9 |
|
|
|
148.0 |
|
|
|
150.2 |
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
Restructuring-related charge (S&A expense) |
|
— |
|
|
|
— |
|
|
|
0.6 |
|
|
|
1.2 |
|
ERP modernization costs (S&A expense) |
|
3.3 |
|
|
|
— |
|
|
|
9.2 |
|
|
|
— |
|
Transaction and integration-related costs (S&A expense) |
|
0.7 |
|
|
|
— |
|
|
|
3.6 |
|
|
|
— |
|
EBITDA - as adjusted |
$ |
47.9 |
|
|
$ |
45.9 |
|
|
$ |
161.4 |
|
|
$ |
151.4 |
|
EBITDA margin - as adjusted |
|
15.2 |
% |
|
|
15.1 |
% |
|
|
16.9 |
% |
|
|
16.2 |
% |
|
|||||||||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL TABLES |
|||||||||||||||
Reported to Adjusted Selling and Administrative Expense (S&A expense) and Operating Income |
|||||||||||||||
(In millions) |
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
S&A expense - as reported |
$ |
92.7 |
|
|
$ |
88.2 |
|
|
$ |
275.5 |
|
|
$ |
256.9 |
|
S&A expense as a percent of net sales - as reported |
|
29.4 |
% |
|
|
28.9 |
% |
|
|
28.8 |
% |
|
|
27.6 |
% |
Adjustments: |
|
|
|
|
|
|
|
||||||||
Restructuring-related charge (S&A expense) |
|
— |
|
|
|
— |
|
|
|
(0.6 |
) |
|
|
(1.2 |
) |
ERP modernization costs (S&A expense) |
|
(3.3 |
) |
|
|
— |
|
|
|
(9.2 |
) |
|
|
— |
|
Transaction and integration-related costs (S&A expense) |
|
(0.7 |
) |
|
|
— |
|
|
|
(3.6 |
) |
|
|
— |
|
S&A expense - as adjusted |
$ |
88.7 |
|
|
$ |
88.2 |
|
|
$ |
262.1 |
|
|
$ |
255.7 |
|
S&A expense as a percent of net sales - as adjusted |
|
28.1 |
% |
|
|
28.9 |
% |
|
|
27.4 |
% |
|
|
27.4 |
% |
|
|
|
|
|
|
|
|
||||||||
Operating income - as reported |
$ |
30.6 |
|
|
$ |
34.7 |
|
|
$ |
106.7 |
|
|
$ |
114.1 |
|
Operating margin - as reported |
|
9.7 |
% |
|
|
11.4 |
% |
|
|
11.1 |
% |
|
|
12.2 |
% |
Adjustments: |
|
|
|
|
|
|
|
||||||||
Restructuring-related charge (S&A expense) |
|
— |
|
|
|
— |
|
|
|
0.6 |
|
|
|
1.2 |
|
ERP modernization costs (S&A expense) |
|
3.3 |
|
|
|
— |
|
|
|
9.2 |
|
|
|
— |
|
Transaction and integration-related costs (S&A expense) |
|
0.7 |
|
|
|
— |
|
|
|
3.6 |
|
|
|
— |
|
Operating income - as adjusted |
$ |
34.6 |
|
|
$ |
34.7 |
|
|
$ |
120.1 |
|
|
$ |
115.3 |
|
Operating margin - as adjusted |
|
11.0 |
% |
|
|
11.4 |
% |
|
|
12.5 |
% |
|
|
12.4 |
% |
Reported to Adjusted Income Before Income Taxes and Income Tax Expense |
|||||||||||||||
(In millions) |
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Income before income taxes - as reported |
$ |
27.5 |
|
|
$ |
29.9 |
|
|
$ |
99.5 |
|
|
$ |
101.8 |
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
Amortization expense |
|
3.6 |
|
|
|
3.5 |
|
|
|
11.4 |
|
|
|
11.0 |
|
Restructuring-related charge (S&A expense) |
|
— |
|
|
|
— |
|
|
|
0.6 |
|
|
|
1.2 |
|
ERP modernization costs (S&A expense) |
|
3.3 |
|
|
|
— |
|
|
|
9.2 |
|
|
|
— |
|
Transaction and integration-related costs (S&A expense) |
|
0.7 |
|
|
|
— |
|
|
|
3.6 |
|
|
|
— |
|
Income before income taxes - as adjusted |
$ |
35.1 |
|
|
$ |
33.4 |
|
|
$ |
124.3 |
|
|
$ |
114.0 |
|
|
|
|
|
|
|
|
|
||||||||
Income tax expense - as reported |
$ |
6.7 |
|
|
$ |
7.0 |
|
|
$ |
22.4 |
|
|
$ |
23.3 |
|
Effective tax rate - as reported |
|
24.4 |
% |
|
|
23.4 |
% |
|
|
22.5 |
% |
|
|
22.9 |
% |
Adjustments (1): |
|
|
|
|
|
|
|
||||||||
Amortization expense |
|
1.0 |
|
|
|
1.0 |
|
|
|
3.0 |
|
|
|
3.1 |
|
Restructuring-related charge (S&A expense) |
|
— |
|
|
|
— |
|
|
|
0.2 |
|
|
|
0.4 |
|
ERP modernization costs (S&A expense) |
|
0.8 |
|
|
|
— |
|
|
|
2.2 |
|
|
|
— |
|
Income tax expense - as adjusted |
$ |
8.5 |
|
|
$ |
8.0 |
|
|
$ |
27.8 |
|
|
$ |
26.8 |
|
Effective tax rate - as adjusted |
|
24.2 |
% |
|
|
24.0 |
% |
|
|
22.4 |
% |
|
|
23.5 |
% |
(1) In determining the tax impact, we applied the statutory rate in effect for each jurisdiction where income or expenses were generated. |
|||||||||||||||
|
|||||||||||||||
SUPPLEMENTAL NON-GAAP FINANCIAL TABLES |
|||||||||||||||
Free Cash Flow Conversion |
|||||||||||||||
(In millions) |
Three Months Ended
|
|
Nine Months Ended
|
||||||||||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
||||||||
Net income - as reported |
$ |
20.8 |
|
|
$ |
22.9 |
|
|
$ |
77.1 |
|
|
$ |
78.5 |
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
ERP modernization costs (S&A expense) |
|
2.5 |
|
|
|
— |
|
|
|
7.0 |
|
|
|
— |
|
Net income - as adjusted |
$ |
23.3 |
|
|
$ |
22.9 |
|
|
$ |
84.1 |
|
|
$ |
78.5 |
|
|
|
|
|
|
|
|
|
||||||||
Cash provided by operating activities - as reported |
$ |
30.7 |
|
|
$ |
54.4 |
|
|
$ |
52.2 |
|
|
$ |
124.6 |
|
Less: |
|
|
|
|
|
|
|
||||||||
Capital expenditures |
|
(4.3 |
) |
|
|
(3.5 |
) |
|
|
(11.5 |
) |
|
|
(15.3 |
) |
Free cash flows |
$ |
26.4 |
|
|
$ |
50.9 |
|
|
$ |
40.7 |
|
|
$ |
109.3 |
|
Adjustments: |
|
|
|
|
|
|
|
||||||||
ERP modernization spend |
|
9.4 |
|
|
|
— |
|
|
|
25.6 |
|
|
|
— |
|
Free cash flows - as adjusted |
$ |
35.8 |
|
|
$ |
50.9 |
|
|
$ |
66.3 |
|
|
$ |
109.3 |
|
|
|
|
|
|
|
|
|
||||||||
Net income to free cash flows conversion |
|
154 |
% |
|
|
222 |
% |
|
|
79 |
% |
|
|
139 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20241031628084/en/
INVESTOR RELATIONS CONTACT:
Vice President, Finance and Investor Relations
investors@tennantco.com
763-540-1242
Source: