Financial Data and Key Metrics Changes - For Q3 2021, Tennant reported net sales of $272 million, an increase of 3.9% year-over-year, with organic sales growth of 4.7% [24][25] - Net income for the third quarter was $21.5 million, or $1.14 per diluted share, compared to $11.7 million, or $0.63 per diluted share in the prior year [32] - Adjusted EBITDA increased to $36 million, representing 13.2% of sales, compared to $32.6 million, or 12.4% of sales in Q3 of the previous year [33] Business Line Data and Key Metrics Changes - Sales in the Americas decreased by 0.6% year-over-year, with a negative divestiture impact of 3.1% and organic growth of 2% [26] - EMEA sales increased by 15.1%, or 14% organically, reflecting growth across all countries and product categories [27] - APAC sales decreased by 0.4%, or 2.9% organically, impacted by pandemic-related lockdowns in some markets [28] Market Data and Key Metrics Changes - North America faced the most significant supply chain and labor challenges, affecting overall sales performance [25][26] - Strong customer demand in Brazil and Mexico contributed to sales growth in Latin America [26] - The APAC region experienced strong results for parts and consumables, particularly in Australia, despite supply chain disruptions [29] Company Strategy and Development Direction - The company is focusing on local-for-local manufacturing and sourcing to mitigate supply chain disruptions and freight costs [12][13] - Investments are being made to enhance production efficiency, including new tooling and production capabilities in local markets [14][15] - The enterprise strategy includes a long-term move toward platform design to increase sourcing flexibility and adapt to available parts [16] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing global supply chain disruptions and labor constraints but expressed confidence in long-term growth and operational efficiency improvements [10][11] - The company expects macro headwinds to persist into 2022 but remains committed to meeting customer needs and executing its enterprise strategy [18] - Management highlighted the importance of innovation for profitable growth and the introduction of new products to meet evolving customer needs [19][20] Other Important Information - Tennant's adjusted effective tax rate for Q3 was 3.8%, down from 11.3% in the previous year, primarily due to a tax benefit from asset basis adjustments in Italy [34] - The company ended the quarter with $140.6 million in cash and cash equivalents, with a net leverage of 0.93 times adjusted EBITDA [36] - A 9% increase in the quarterly cash dividend was announced, marking the 50th consecutive year of dividend increases [37][38] Q&A Session Summary Question: Is there evidence of pre-buying by customers due to supply chain challenges? - Management noted that while there are instances of customers buying ahead, the majority of orders are driven by current demand rather than pre-buying [48] Question: How do supply chain challenges impact competitive positioning in the U.S. and Europe? - Management indicated that the ability to respond to supply chain challenges is more dependent on product platforming and local supply chains than on geographic headquarters [50][51] Question: What led to the change in EBITDA guidance? - The decision to lower guidance was based on the ongoing supply chain challenges and the trend observed over the past months [56][57] Question: How is SG&A expected to change in Q4? - SG&A is expected to return to a normal run rate of about $85 million per quarter, with no significant benefits anticipated as seen in Q3 [60] Question: How does the company view its capital allocation priorities? - The company remains focused on investing in growth, managing leverage, and returning excess cash to shareholders through dividends and share repurchases [64][66]

PART I - FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Tennant Company's unaudited consolidated financial statements as of September 30, 2021, showing increased net income and a stable balance sheet [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Net sales and income significantly increased for both the three and nine months ended September 30, 2021, driven by higher gross profit Consolidated Statements of Income Highlights (In millions, except per share data) | Metric | Three Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2020 | Nine Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2020 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $272.0 | $261.9 | $814.4 | $728.0 | | **Gross profit** | $109.2 | $103.6 | $337.4 | $296.0 | | **Operating income** | $23.9 | $18.4 | $80.6 | $55.7 | | **Net income attributable to Tennant Company** | $21.5 | $11.7 | $57.0 | $31.2 | | **Diluted EPS** | $1.14 | $0.63 | $3.02 | $1.68 | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of September 30, 2021, total assets slightly decreased, while inventories increased and total equity grew to $443.1 million Consolidated Balance Sheet Highlights (In millions) | Account | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total current assets** | $526.3 | $493.6 | | Inventories | $158.3 | $127.7 | | **Total assets** | $1,067.1 | $1,082.6 | | **Total current liabilities** | $276.2 | $254.3 | | Long-term debt | $264.7 | $297.6 | | **Total liabilities** | $624.0 | $676.5 | | **Total equity** | $443.1 | $406.1 | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to $62.9 million due to inventory increases, while investing activities provided cash and financing used cash for debt repayment Cash Flow Summary (Nine Months Ended Sep 30, In millions) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $62.9 | $97.5 | | **Net cash provided by (used in) investing activities** | $12.6 | $(25.5) | | **Net cash used in financing activities** | $(72.3) | $(24.5) | | Net (decrease) increase in cash | $(0.4) | $50.1 | | Cash at end of period | $140.6 | $124.7 | - The decrease in operating cash flow was significantly impacted by a **$48.9 million increase in inventories**, compared to a $13.1 million decrease in the prior year period[16](index=16&type=chunk) - Investing activities were positively impacted by **$24.7 million in proceeds from the sale of a business**, net of cash divested[16](index=16&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, the Coatings business sale, a major debt restructuring, and revenue growth, particularly in EMEA Net Sales by Geographic Area (Nine Months Ended Sep 30, In millions) | Region | 2021 | 2020 | | :--- | :--- | :--- | | Americas | $491.7 | $466.6 | | Europe, Middle East and Africa | $246.8 | $196.3 | | Asia Pacific | $75.9 | $65.1 | | **Total** | **$814.4** | **$728.0** | - On February 1, 2021, the company sold its Coatings business, resulting in a **pre-tax gain of $9.8 million**, which was included in selling and administrative expense[32](index=32&type=chunk)[47](index=47&type=chunk) - In April 2021, the company entered a new **$550 million credit facility** ($100M term loan, $450M revolver) and used the proceeds to redeem its **$300 million 5.625% Senior Notes**, resulting in an **$11.3 million loss on debt extinguishment**[54](index=54&type=chunk)[58](index=58&type=chunk) - The company repurchased **102,229 shares** of its common stock for **$7.5 million** during the nine months ended September 30, 2021[81](index=81&type=chunk) [Management's Discussion and Analysis (MD&A)](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A highlights increased net sales and improved gross profit margin, driven by organic growth and debt restructuring, despite ongoing COVID-19 cost pressures Q3 2021 vs Q3 2020 Performance Summary (In millions) | Metric | Q3 2021 | Q3 2020 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $272.0 | $261.9 | $10.1 | 3.9% | | **Gross Profit** | $109.2 | $103.6 | $5.6 | 5.4% | | **Operating Income** | $23.9 | $18.4 | $5.5 | 29.9% | | **Net Income** | $21.5 | $11.7 | $9.8 | 83.8% | - The company continues to actively manage the impacts of the COVID-19 pandemic, but expects increased costs for freight, materials, and labor to affect results in Q4 2021 and early 2022[91](index=91&type=chunk) [Results of Operations](index=28&type=section&id=Results%20of%20Operations) Q3 2021 net sales grew 3.9% organically, with EMEA leading, gross profit margin expanding, and a lower effective tax rate Net Sales Growth Drivers (Q3 2021 vs Q3 2020) | Driver | Impact on Sales Growth | | :--- | :--- | | Organic Sales | +4.7% | | Divestiture of Coatings Business | -2.0% | | Foreign Currency Exchange | +1.2% | | **Total Net Sales Growth** | **+3.9%** | - Gross profit margin increased by **50 basis points** YoY to **40.1%** in Q3 2021, despite supply and labor constraints, reflecting the lapping of prior-year strategic investments and productivity challenges[101](index=101&type=chunk) - S&A expense decreased by **$0.9 million** in Q3 2021, primarily due to adjustments to management incentives, partially offset by more normalized spending compared to the prior year[106](index=106&type=chunk) - Interest expense decreased to **$0.6 million** in Q3 2021 from $4.4 million in Q3 2020 due to the debt restructuring completed in Q2 2021[108](index=108&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$140.6 million** cash, an improved debt-to-capital ratio, and significant unused borrowing capacity Key Liquidity Metrics | Metric | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash, cash equivalents and restricted cash | $140.6M | $141.0M | | Working Capital | $250.1M | $239.3M | | Current Ratio | 1.9 | 1.9 | | Debt-to-Capital Ratio | 37.7% | 43.2% | - In Q2 2021, the company restructured its debt with a new credit agreement, providing greater flexibility and more favorable interest rates. As of September 30, 2021, unused borrowing capacity was approximately **$279.1 million**[116](index=116&type=chunk) - The Board of Directors authorized a quarterly cash dividend of **$0.25 per share**, payable in December 2021[117](index=117&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=34&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk have occurred since December 31, 2020, with further details available in the annual 10-K report - There have been **no material changes** in the company's market risk since December 31, 2020[127](index=127&type=chunk) [Controls and Procedures](index=34&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal controls - The CEO and Principal Financial and Accounting Officer concluded that the company's disclosure controls and procedures were **effective** as of September 30, 2021[128](index=128&type=chunk) - **No material changes** were made to the company's internal controls over financial reporting during the most recently completed fiscal quarter[129](index=129&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is not involved in any material pending legal proceedings beyond ordinary routine litigation incidental to its business - The company is not involved in any **material pending legal proceedings** outside of ordinary routine litigation[130](index=130&type=chunk) [Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the December 31, 2020 annual report on Form 10-K - **No material changes** to the company's risk factors have occurred since the filing of the 2020 Form 10-K[131](index=131&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q3 2021, the company repurchased **102,229 shares** for **$7.5 million**, with **1,288,167 shares** remaining for repurchase Share Repurchases (Quarter Ended Sep 30, 2021) | Period | Total Shares Purchased | Average Price Paid Per Share | Total Cost (approx.) | | :--- | :--- | :--- | :--- | | **July 2021** | 18 | $79.85 | $1,437 | | **August 2021** | 43,731 | $72.69 | $3.18M | | **September 2021** | 58,498 | $73.84 | $4.32M | | **Total** | **102,247** | **$73.35** | **$7.5M** | - As of September 30, 2021, **1,288,167 shares** were still available for repurchase under the company's publicly announced plans[133](index=133&type=chunk) [Exhibits](index=35&type=section&id=Item%206.%20Exhibits) Exhibits filed with Form 10-Q include CEO/CFO certifications and financial statements in iXBRL format - Exhibits filed include CEO and CFO certifications (Rule 13a-14(a)/15d-14(a) and Section 1350) and financial data in iXBRL format[134](index=134&type=chunk)

Tennant Company (NYSE:TNC) Q2 2021 Earnings Conference Call August 3, 2021 11:00 AM ET Company Participants William Prate - Investor Relations Dave Huml - President and CEO Fay West - SVP and CFO Conference Call Participants Chris Moore - CJS Securities Steve Ferazani - Sidoti & Company Operator Good morning. My name is Debra, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Tennant Company's 2021 Second Quarter Earnings Conference call. This call is being re ...

Earnings Release Call Second Quarter 2021 Tuesday, August 3, 2021 On the Call Today Dave Huml President and CEO Fay West SVP and CFO Dan Glusick SVP, Global Operations 2 Forward-Looking Statements & Non-GAAP Measures 3 Our remarks this morning and our answers to questions may contain forwardlooking statements regarding the company's expectations of future performance. Such statements are subject to risks and uncertainties, and our actual results may differ materially from those contained in the statements. ...

FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 For the transition period from ___________ to __________ Commission File Number 1-16191 ____________________________________ TENNANT COMPANY (Exact name of registrant as specified in its charter) Minnesota 41-0572550 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (State or other jurisdiction of incorporation or organization) (I.R.S. Employe ...

Reinventing how the world cleans. Sidoti Investor Conference June 2021 TENNAMA TENNANTCO.COM SAFE HARBOR STATEMENT 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 f ...

Tennant Company (NYSE:TNC) Q1 2021 Earnings Conference Call May 4, 2021 11:00 AM ET Company Participants William Prate - Investor Relations Dave Huml - President and CEO Fay West - SVP and CFO Conference Call Participants Mike Shlisky - Colliers Securities Chris Moore - CJS Securities Steve Ferazani - Sidoti & Company Marco Rodriguez - Stonegate Capital Operator Good morning. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to Tennant Company's ...

Earnings Release Call First Quarter 2021 Tuesday, May 4, 2021 On the Call Today Dave Huml President and CEO Fay West SVP and CFO 2 Forward-Looking Statements & Non-GAAP Measures 3 Our remarks this morning and our answers to questions may contain forwardlooking statements regarding the company's expectations of future performance. Such statements are subject to risks and uncertainties, and our actual results may differ materially from those contained in the statements. These risks and uncertainties are descr ...

For the transition period from ___________ to __________ Commission File Number 1-16191 ____________________________________ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 TENNANT COMPANY (Exact name of registrant as specified in its charter) Minn ...

Tennant Company (NYSE:TNC) Q4 2020 Earnings Conference Call February 25, 2021 11:00 AM ET Company Participants William Prate - Senior Director, Investor Relations Chris Killingstad - President and Chief Executive Officer Dave Huml - Senior Vice President and Chief Operating Officer Tom Paulson - Interim Chief Financial Officer Conference Call Participants Michael Shlisky - Colliers Securities Christopher Moore - CJS Securities, Inc Marco Rodriguez - Stonegate Capital Partners Operator Good morning. My name ...