Tennant(US:TNC)2024-11-01 18:30Financial Performance - Consolidated net sales for Q3 2024 totaled $315.8 million, a 3.6% increase from $304.7 million in Q3 2023[107]. - Organic sales growth for Q3 2024 was 2.7%, primarily due to price realization and higher equipment sales in the Americas[107]. - Gross profit margin for Q3 2024 was 42.4%, a decrease of 90 basis points compared to Q3 2023, attributed to higher inflationary pressure on materials[116]. - Selling and administrative expenses for Q3 2024 were $92.7 million, representing 29.4% of net sales, an increase of 50 basis points from Q3 2023[117]. - Research and development expenses for Q3 2024 were $10.5 million, or 3.3% of net sales, reflecting a 30 basis point increase compared to Q3 2023[118]. - Net income for Q3 2024 was $20.8 million, a decrease from $22.9 million in Q3 2023, resulting in diluted net income per share of $1.09[106]. Regional Sales Performance - Americas net sales for Q3 2024 were $218.7 million, a 3.6% increase from Q3 2023, driven by organic sales growth of 4.6%[111]. - EMEA net sales for Q3 2024 were $76.3 million, a 6.0% increase from Q3 2023, primarily due to inorganic sales from the acquisition of TCS[112]. - APAC net sales for Q3 2024 were $20.8 million, a decrease of 3.3% from Q3 2023, driven by organic sales decline in China and Australia[114]. Cash Flow and Liquidity - Net cash provided by operating activities for the nine months ended September 30, 2024, was $52.2 million, down from $124.6 million for the same period in 2023, attributed to working capital consumption and ERP modernization spending of $25.6 million[129]. - Net cash used in investing activities during the nine months ended September 30, 2024, was $69.1 million, compared to $15.2 million in the same period of 2023, primarily due to a $32.1 million investment in Brain Corp and a $25.7 million acquisition of TCS[130]. - The company's liquidity position included cash, cash equivalents, and restricted cash totaling $91.3 million as of September 30, 2024, down from $117.1 million at December 31, 2023[127]. Debt and Interest - The debt-to-capital ratio improved to 24.4% as of September 30, 2024, compared to 25.8% at December 31, 2023[127]. - Interest expense for the nine months ended September 30, 2024, was $3.6 million, down from $4.3 million in the same period of 2023[121]. - The average interest rate on borrowings increased to 6.54% for the nine months ended September 30, 2024, compared to 6.48% for the same period in 2023[121]. - The company has a notional amount of $120.0 million in interest rate swaps to manage floating rate debt exposure, exchanging variable rates for a fixed rate of 4.076%[121]. Tax and Currency - The effective tax rate for the third quarter of 2024 was 24.4%, an increase from 23.4% in the third quarter of 2023, mainly due to higher nondeductible executive compensation[123]. - The company reported a net foreign currency transaction loss of $0.4 million in the third quarters of 2024 and 2023, primarily due to the strengthening of the U.S. dollar against the Chinese renminbi and Mexican peso[122]. Business Outlook - The company remains confident in its long-term business health despite challenging economic conditions in EMEA and APAC[104]. - As of September 30, 2024, the company's order backlog was $76.8 million, a decrease from $186.2 million at December 31, 2023, due to improved production levels and component availability[126].