Tennant Company (TNC) Sidoti September Small-Cap Virtual Conference summary

Market Position and Growth Strategy

• Holds a 14% share of an $8.6 billion global market, with significant upside for growth across all geographies and strong positions in the Americas, EMEA, and APAC.

• Committed to 3%-5% long-term top-line growth, outpacing the 1%-2% market growth rate, with 2024 organic growth guidance of 2.5%-4.5%.

• Growth initiatives include pricing excellence, new product innovation, expanding go-to-market channels, and tiered brand strategies.

• Multi-channel approach leverages direct sales, distribution, rentals, and e-commerce to maximize reach and profitability.

• Broad vertical market exposure and service differentiation, with 900+ field techs and recurring aftermarket revenue representing 80% of equipment price over machine life.

Innovation and Robotics Disruption

• Recognized as an innovation leader in robotic cleaning equipment, with over 7,000 units deployed and $200M+ in sales since 2019.

• Launched the X4 ROVR robot in 2024, with strong customer demand leading to doubled production capacity.

• Secured exclusivity on Generation 3 navigation software from Brain, reducing competitive risk and enhancing product differentiation.

• Robotics offers a less than three-year payback for customers and generates recurring revenue through software subscriptions.

• Robotics disruption is seen as inevitable due to labor challenges and productivity needs, though adoption pace remains uncertain.

Financial Performance and Capital Allocation

• Q2 2024 net income was $27.9M, down from $31.3M in Q2 2023, mainly due to ERP modernization and M&A costs; adjusted EPS was $1.83.

• Net sales for Q2 2024 grew 2.7% year-over-year to $331M, with Americas up 5.5%, EMEA down 0.3%, and APAC down 11.9%.

• 2024 full-year guidance raised: net sales expected at $1.280B–$1.305B, adjusted EPS $6.15–$6.55, and adjusted EBITDA $205M–$215M.

• Maintains a strong balance sheet with low debt leverage (net leverage ratio 0.61x), enabling self-funded growth, M&A, and shareholder returns.

• Prioritizes reinvestment in core business, consistent dividend growth, opportunistic share buybacks, and targets $150 million in top-line revenue from acquisitions over the next three years.