November 2014 Baird Presentation
SAFE HARBOR STATEMENT This presentation contains certain statements that are considered “forward - looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of forward- looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “project,” or “continue” or similar words or the negative thereof. These statements do not relate to strictly historical or current facts and provide current expectations of forecasts of future events. Any such expectations or forecasts of future events are subject to a variety of factors. We caution 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 our results can be found in Part I, Item 1A, Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2013, and in Part II, Item 1A Risk Factors in our most recent quarterly report on Form 10-Q. Shareholders and potential investors are urged to consider these factors in evaluating forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise. Investors are advised to consult any further disclosures by us in our filings with the Securities and Exchange Commission and in other written statements on related subjects. It is not possible to anticipate or foresee all risk factors, and investors should not consider any list of such factors to be an exhaustive or complete list of all risks or uncertainties. 2
TENNANT COMPANY AT-A-GLANCE KEY FACTS Founded: • 69 consecutive years of cash dividends 1870 • 43 consecutive years of increase in annual cash dividend payout • Strong balance sheet 2013 Revenues: AWARDS • 2014 IDEA Award – B5 Battery Burnisher $752M International Design Excellence Awards • 2013 GOOD DESIGN Award – T12 Rider Scrubber 2013 Employees: Industrial Design Excellence 2,931 • 2012 Australian Business Awards – Orbio 5000-Sc Top Honours • 2011 R&D 100 Award Winner – 500ze Manufacturing Sites: R&D Magazine 7 • 2009 Manufacturer of the Year Award ABM Industries, Inc. NYSE Symbol: • 2009 Business Innovation of the Year – ec-H2O TNC European Business Awards • 2008 R&D 100 Award Winner – ec-H2O R&D Magazine • 2007 & 2008 200 Best Small Companies Forbes • 2007 & 2014 America’s Most Trustworthy Companies Forbes 3
OUR VISION We will lead our global industry in sustainable cleaning innovation that empowers our customers to create a cleaner, safer and healthier world. 4
COMPETITIVE LANDSCAPE Worldwide Market Share 2011 Estimate – $4.6 Billion* 5
UNIQUE CLEANING SOLUTIONS 6
QUALITY PRODUCTS 7
STRONG DIRECT SALES & SERVICE ORGANIZATIONS 8
BROAD RANGE OF GLOBAL CUSTOMERS 9 9
2013 REVENUE OF $752M 10
Growth Objective: Achieve $1 billion in revenue by 2017 while achieving greater than 12% operating profit margin… While accelerating whenever possible. 11
HOW WE WILL REACH $1B $1B GDP Growth $60M (2%) Go-To-Market $70M (up to 3%) $752M New Products $80M (up to 3%) Emerging Markets $40M (up to 2%) 12
1 Reach new customers & new markets 2 Continue delivering what we know works 3 Don’t lose sight of the discipline we’ve established 13
1 Reach new customers & new markets 14
REACH NEW CUSTOMERS & NEW MARKETS Increasing Presence PPH SM Analysis × × = 67% 75% 40% 19% Product Hit Rate Market Share Presence Frank Lynn & Associates Process 15
REACH NEW CUSTOMERS & NEW MARKETS Focus on Key Verticals Industrial Education Healthcare Retail 16
REACH NEW CUSTOMERS & NEW MARKETS New Channels – E-commerce Good Experience Increase Revenue Lower Cost of Sale • • Self-service Empower our • New customers customers • New geographies • Reduce manual • Anticipate their needs • interventions Enhance their • Expand products experience • Repurpose staff • Cost avoidance Your text here 17
2 Continue delivering what we know works 18
RESEARCH AND DEVELOPMENT 19
NEW PRODUCT GROWTH Strongest product pipeline ever! in 2014 47 17 20 16 in 2012 in 2013 2015-2016 20
NEW MODULAR PLATFORM T12 Rider Faster Speed to Market Scrubber T17 Rider Scrubber 21
Sustainable Cleaning 22
Split Stream The Orbio 5000-Sc uses Orbio Split Stream Technology to electrically restructure water and salt, so you can create, store and dispense an environmentally friendly multipurpose cleaning solution – right on site! 23
Small, simple, affordable On-Site Generation (OSG) technology • Generates both cleaning and antimicrobial solutions • Fits into most janitorial closets • Flexibility to dispense in remote locations 24
EMERGING MARKETS Anticipating Solid Organic Growth CHINA INCREASE MANUFACTURING EXPERTISE & LATIN EXPAND MARKET AMERICA COVERAGE PROJECTED PROJECTED GROWTH RATE GROWTH RATE +15% +20% next 3 years next 3 years 25
STRATEGIC ACCOUNTS Duplicate Successful Framework China N.A. Europe Brazil 26
Don’t lose sight of 3 the discipline we’ve established 27
PROFITABILITY FRAMEWORK 12%+ Operating Profit Margin Goal 28
STANDARDIZED & SIMPLIFIED GLOBAL PROCESSES Implemented a global standardized process Collections to manage payment & invoice disputes Installed a global invoicing structure Invoicing tailored to the needs of our customers Standardized discount & rebate policies Pricing globally, while maintaining ability to compete regionally Standardizing global product structure to Machine simplify quoting, ordering and product Configuration data maintenance 29
LEAN OPERATIONS SUPPORTS GROWTH Quality: Highest & Flexibility: Ability to most consistent configure & customize quality & reliability to customer Speed: requirements Rapid market Cost: More response, short than offset lead-times inflation across the supply chain, driving margin 30
STRONG COST CONTROLS Selling & Administrative Expense as a Percent of Sales * *As adjusted 31
FINANCIAL SUMMARY 32
* 2013 results are adjusted to exclude restructuring charges of $3,017K pre-tax ($2,938K after-tax or $0.15 per diluted share), and a tax benefit related to 2012 R&D tax credit of $582K (or $0.03 per diluted share). * 2012 results are adjusted to exclude a gain on sale of business of $784K pre-tax ($508K after-tax or $0.03 per diluted share), a restructuring charge of $760K pre-tax ($670K after-tax or $0.04 pre diluted share), and tax benefits from an international entity restructuring of $2,043K (or $0.11 per diluted share). 33
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* YTD ‘13 results are adjusted to exclude European restructuring charge of $1,440K pre -tax ($1,023K after tax or $0.05 per diluted share) and a tax benefit related to 2012 R&D tax credit of $528K (or $0.03 per diluted share). October 23, 2013 release. 35
HISTORY OF SALES GROWTH Experienced negative quarter-over-quarter sales growth from 4Q’08 through 3Q’09 due to recession. 2011 returned to – and surpassed – prerecession sales levels. 2012 and 2013 impacted from economic headwinds in Europe. 2014 – Renewed focus on accelerating organic sales growth. 36
IMPROVED PROFITABILITY & BALANCE SHEET LEVERAGE Return on Invested Capital Improvement & Cash Generation ’09 - ’13 37
2013 TOTAL SHAREHOLDER RETURN 38
Current 2014 EPS Guidance 39
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