Tennant(TNC) - 2019 Q1 - Quarterly Report

Financial Performance - Consolidated Net Sales for Q1 2019 totaled $262.5 million, a 3.8% decrease from $272.8 million in Q1 2018[119] - Gross Profit margin increased to 41.2%, up 120 basis points compared to Q1 2018, driven by pricing actions and a favorable product mix[124] - Net Earnings attributable to Tennant Company were $5.4 million, or $0.29 per diluted share, compared to $3.3 million, or $0.18 per diluted share in Q1 2018[118] - The effective tax rate decreased to 17.7% in Q1 2019 from 24.6% in Q1 2018, influenced by the mix of expected taxable earnings by country[131] - The debt-to-capital ratio was 53.1% as of March 31, 2019, slightly up from 53.0% at the end of 2018[135] Expenses - Research and Development Expense was $7.2 million, representing 2.8% of Net Sales, remaining flat as a percentage compared to Q1 2018[125] - Selling and Administrative Expense was $90.2 million, increasing to 34.4% of Net Sales from 33.2% in Q1 2018, primarily due to a $4.3 million restructuring charge[126] - Operating Activities used $11.6 million of cash in Q1 2019, driven by a $20.3 million increase in Inventories[136] - Investing activities used $29.6 million, including $20.5 million for net capital expenditures and $9.0 million for the acquisition of Gaomei businesses[138] Cash and Liquidity - Cash, Cash Equivalents, and Restricted Cash totaled $46.9 million as of March 31, 2019, down from $86.1 million at the end of 2018[135] Risks and Uncertainties - The company has identified various risks and uncertainties that could impact future performance, including strategic planning, IT system upgrades, and geopolitical factors[143] - The company faces challenges related to cybersecurity risks that could disrupt operations[144] - The strength of the U.S. dollar affects the cost of materials and products sold internationally, impacting financial performance[144] - There have been no material changes in market risk since December 31, 2018, indicating stability in this area[146] Forward-Looking Statements - The company emphasizes the importance of considering forward-looking statements carefully, as actual results may differ significantly due to known and unknown risks[144] - The company has no obligation to update forward-looking statements unless required by law, highlighting the unpredictability of future events[145] Strategic Focus - Key personnel retention and succession planning are critical for the company's growth and stability[143] - The company is focused on developing and commercializing innovative products and services to drive future growth[143] - There is a need for effective integration of acquisitions to enhance overall business performance[143] - The company must navigate compliance with laws and regulations, which is essential for maintaining operational integrity[144]