Tennant(TNC) - 2019 Q2 - Quarterly Report

Financial Performance - Consolidated Net Sales for Q2 2019 totaled $299.7 million, a 2.6% increase from $292.2 million in Q2 2018[141] - For the first six months of 2019, consolidated Net Sales were $562.1 million, a 0.5% decrease from $565.0 million in the same period of 2018[141] - Organic Net Sales increased by 3.8% in Q2 2019 and 1.6% for the first six months compared to the same periods in 2018[142] - Net Sales in the Americas for Q2 2019 were $189.5 million, a 6.0% increase from Q2 2018, while EMEA Net Sales decreased by 7.4% to $80.9 million[143][147] - APAC Net Sales increased by 12.7% to $29.3 million in Q2 2019, with an unfavorable foreign currency impact of approximately 5.6%[149] Profitability - Gross Profit margin for Q2 2019 was 40.3%, a 20 basis point increase from Q2 2018, driven by pricing actions and favorable product mix[151] - Research and Development Expense for Q2 2019 was $8.4 million, or 2.8% of Net Sales, remaining flat compared to Q2 2018[153] - Selling and Administrative Expense for Q2 2019 was $92.5 million, maintaining a flat percentage of 30.9% of Net Sales compared to Q2 2018[155] - S&A Expense was $182.7 million for the first six months of 2019, an increase of $1.7 million compared to the same period in 2018, representing 32.5% of Net Sales, up from 32.0%[158] Foreign Currency Impact - EMEA experienced a 5.9% unfavorable impact from foreign currency exchange in the first six months of 2019[148] - Net Foreign Currency Transaction Losses were $0.2 million in Q2 2019, down from $0.3 million in Q2 2018, and less than $0.1 million for the first six months of 2019 compared to $1.1 million in the same period of 2018[161] Interest and Other Income - Interest Income remained flat at $0.9 million in Q2 2019, consistent with Q2 2018, and totaled $1.7 million for the first six months of 2019, unchanged from the same period in 2018[159] - Interest Expense decreased to $5.4 million in Q2 2019 from $6.0 million in Q2 2018, and for the first six months of 2019, it was $10.5 million compared to $11.8 million in the same period of 2018, due to lower debt levels[160] - Other Income (Expense), Net was $1.4 million in Q2 2019, an increase of $1.9 million compared to Q2 2018, primarily due to a $1.8 million acquisition-related indemnification settlement[162] Taxation - The effective tax rate for Q2 2019 was 10.8%, up from 2.8% in Q2 2018, influenced by non-recurring expenses and changes in taxable earnings by country[163] Cash Flow and Liquidity - Cash, Cash Equivalents, and Restricted Cash totaled $55.4 million as of June 30, 2019, down from $86.1 million at the end of 2018, with a current ratio of 1.8[168] - Operating Activities provided $10.9 million of cash for the first six months of 2019, driven by net earnings and non-cash items, despite cash outflows from increased inventories and accounts receivable[169] - Investing activities used $34.6 million in the first six months of 2019, primarily for capital expenditures and the acquisition of Gaomei businesses[171] - Net cash used by financing activities was $8.3 million during the first six months of 2019, with significant debt repayments and dividend payments[173]