REINVENTING the future of cleaning - INVESTOR PRESENTATION
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REINVENTING
the future of cleaning.
INVESTOR PRESENTATION
March 2017
TENNANTCO.COM
This presentation contains certain statements that are considered “forward-looking
Safe Harbor 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
Statement
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, 2016. 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
72 45
About consecutive years
of cash dividends
consecutive years of
increase in annual
Balance sheet
Tennant Company cash dividend payout
Tennant Company, a Minnesota
corporation founded in 1870 and
incorporated in 1909, is a world leader
2016 Revenues:
in designing, manufacturing and
marketing solutions that empower
$809M
customers to achieve quality cleaning 2016 Employees:
performance, significantly reduce
environmental impact and help create 3,236
a cleaner, safer, healthier world.
NYSE Symbol:
TNC
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
2015 $5B Global Cleaning Equipment Market*
Tennant | Nobles | 18%
Alfa | Orbio
Nilfisk | Advance |
Clarke | Viper
17% 42%
of the market
Karcher | Windsor | consists of
TecServ | ProChem others with a
market share
of 3% or less.
Hako | Minuteman | 11% * Estimated market size in
“constant currency” U.S. dollars
PowerBoss for Tennant-like equipment
9%
categories and aftermarket.
3%
Taski
5
6
COMMERCIAL
INDUSTRIAL
ESSENTIALS
ORBIO®
TECHNOLOGIES
Broad Portfolio of Quality Products
COATINGS
AFTERMARKET
STRONG DIRECT SALES
Strong Direct Sales & Service
& SERVICE ORGANIZATIONS
Organizations
Global Revenue by Sales Channel Global Sales Employees Global Direct Service Employees
600 900
800
500
700
Direct 400 600
75% 500
300
400
200 300
200
100
100
25% 0
2012 2013 2014 2015 2016
0
2012 2013 2014 2015 2016
Distribution Americas EMEA APAC Americas EMEA APAC
Distribution Partners Global Strategic Accounts Factory-Service Direct
More than 80 countries Cross-functional teams & Locally based & factory-trained
around the world market specialists service technicians
7
Broad Range of Global Customers
MARKETS
8
8
2016 Revenue of $809M
61% *Equipment Mix
Equipment* Commercial | 52%
EMEA Industrial | 46%
Outdoor | 2%
16%
Net Sales by Net Sales by
Geography APAC Product Group
Americas 9% 4%
75% Coatings
Service
& Other Parts &
21%
14% Consumables
9
9
Growth Strategy
We remain committed to organic
Sales goal of $1 Billion and 12% or
above Operating Profit Margin
• Reach new markets and new customers
• Deliver a strong product & technology pipeline
• Build Tennant’s e-Business capabilities
• Be disciplined about improving margins &
controlling expenses
10Our Journey to $1 Billion
GDP Growth $1B
$60M (2%)
Go-To-Market
$70M (up to 3%)
$752M New Products
$80M (up to 3%)
Emerging Markets
$40M (up to 2%)
11
11Strategic .
Priorities
12Sales & Service Coverage
Increasing our Presence
3 COMPONENTS OF ENHANCED
MARKET SHARE GO-TO-MARKET STRATEGY
VERTICAL MARKETS & MARKETING ANALYTICS
Industrial Retail
Product Hit
Portfolio Rate
Market Education
×
Healthcare
Coverage
(Presence)
13Emerging Markets
• Focused approach
• Long-term growth potential China Organic Sales Growth
despite economic headwinds 2014 2015
15% 5.5%
2016
(5%)
Organic Sales Growth Latin
America
2014 2015
6.5% (5.5%)
2016
13.0%
14Operations Efficiency
Strategy Deployment to Drive Four Key Initiatives
VELOCITY & LEAN SUPPLY CHAIN
OPTIMIZATION
Be the absolute leader for
serving the customer!
QUALITY
SERVICE LEVELS FOCUS
15CRM & Marketing Automation
Perpetual Lead Generation
Prospecting Speed-to-Lead
• Leverage deep history to • Better lead visibility and new
prioritize the known processes mean we can
convert leads faster
• Visualize the potential to
discover the new • Keep the lead pipeline full
with automated marketing
capabilities embedded
inside CRM
16e-Commerce
Cleaning solutions made easy online
Good Experience Increase Revenue
• Empower our customers • New customers
• Anticipate their needs • New geographies
• Enhance their experience • Expand products
Lower Cost of Sale
• Self-service
• Reduce manual interventions
• Cost avoidance
17Reconditioned Equipment
Attracting a New Set of Customers
New Commercial Recon Facility New e-Commerce Website
18
18Attract & Retain Talent
Tennant Employee Value Proposition Talent Management Focus
Commitment 1 Build a world-class talent acquisition function
to Innovation
A Focus on 2 Develop leadership & key talent capabilities
Stewardship
Rewarding work
with opportunity Align high-performance culture with
for career growth 3 business strategy
Strong
Legacy
4 Reward performance that creates value
19Sustainable Enterprise
Tennant Industry
Company Average
DISCLOSURE SCORE 68 49
2013
Our Focus Areas Tennant Corporate
Sustainability Report
PERFORMANCE BAND D C
DISCLOSURE SCORE 80 53
2014
PERFORMANCE BAND C C
DISCLOSURE SCORE 95 60
2015
PERFORMANCE BAND C D
2016
SCORE B D
20New Product Development
Strongest Product Pipeline Ever!
91
2012-2015
10
2016
31
2017 Plan
21Tennant Company
New Products
– Launched new family of T500
commercial walk-behind scrubbers
comprised of 20 new products and
product variants
• Five unique scrubbing heads on four
different models
• Smart-Fill™ automatic battery watering
system
• ec-H2O NanoClean® technology option
22IRIS®
Web-based Fleet Management System
– Launched enhanced system
• Monitor and manage machines with full
visibility of user’s fleet
• Track machine productivity and
maintenance needs
• Lower cost to clean
• Pro-Panel™ LCD touch screen with on-
demand tutorials
• Zone Settings™ to help deliver
predictable cleaning results
23ec-H2O NanoClean ®
The Responsible Way to Clean
Next generation ec-H2O | Cleans more soils in more applications
ec-H2O™ SCRUBBERS | 2008 thru 2016
HOW IT WORKS:
$1.1 billion+ 88,000+
cumulative revenue machines
Sales of $155M in 2016
8,000+ 30,000+
customers sites
24ORBIO® Technologies
On-Site Generation Technology
Improving health and safety for the environment, employees
and people in their care while reducing costs.
GENERATES FOCUS ON “3Cs”
cleaner & disinfectant/sanitizer on-site CAMPUS | CHAINS | CONTRACTORS
25Customer Insights
Reinventing the Way the World Cleans
PRODUCTS SOLUTIONS
FEATURES & FUNCTIONAL EMOTIONAL
BENEFITS BENEFITS BENEFITS
Traditional Approach NEW Thinking
Voice of customer & needs • Acknowledge the reality of our customer’s business
identification to shape new • Deploy new tools for better insights
product development • Think solutions, not just products
• Objective research from innovation experts
• Challenge status quo – new lens for opportunities
• Embrace a holistic view of our customers
26Advanced Product Development
Future Technologies
– +
Asset Management Battery Technologies Water Recycling Robotics (AGV)
• Manage cleaning • Lithium-Ion, Fuel Cell, etc. • Sustainability • Addresses labor costs
programs better • Improving cost & availability • Productivity • Largest potential growth
• Fleet management • ROI for customer • Game-changing solution opportunity
• Lower cost-to-clean • Reduced weight & footprint size
27Acquisitions
Strategic Filters
Sales & Service Underserved Complementary Technology
Coverage Markets Products Platforms
282016 Third Quarter Acquisitions
• Acquired Florock® Brand
• Expanded our commercial floor coatings business
• Combination of Tennant Coatings and Florock opens new markets
and strengthens value proposition
• Acquired Assets of Dofesa Barrido Mecanizado
• Long-time distributor of Tennant equipment in central Mexico
• Acquisition is a key investment for growth in Latin America
• Enhances Tennant’s sales and service capabilities
29Pending 2017 Acquisition of IPC Group
• Signed definitive agreement with private equity fund Ambienta
• All-cash transaction $350M or €330M
• IPC Group – privately held designer and manufacturer of innovative
professional cleaning equipment, tools and other solutions, based in Italy
• IPC Group 2016 annual sales of about $203M or €192M
• Largest acquisition in Tennant Company history
• Anticipate acquisition will be accretive to 2018 full year earnings per share
30IPC Group Overview
2016A Revenue Mix
Key Facts and Figures
IPC Group produces machines and equipment for the professional cleaning sector
Revenue by Geography
—Cleaning machines: floor sweepers and scrubbers, vacuum cleaners, high- pressure
RoW
washers and related aftermarket parts and services
9%
—Cleaning tools and supplies: trolleys, window cleaning tools and consumables Americas
11%
2016A Revenue: €192mm EMEA
80%
2016A Adjusted EBITDA: €28mm (~14% margin)
4 manufacturing plants; 11 international branches with sales to over 100 countries
~1,000 Employees 2016A Revenue by Product
Geographic Coverage High Pressure
18%
Eagle Soteco Benelux Foma Norge Sweepers & Scrubbers
Eagan, Minnesota Wommelgem Langhus 42%
Cleaning Tools and
Gansow Supplies
Unna 19%
Vacuum Cleaners
21%
2016A Revenue by Type
ICA Tools and Supplies
Épône Cedex China Trade Corporation 19%
Fo Shan, Guangdong
Machinery
Industria e Comercio
Machinery Aftermarket 59%
Pinhais Parana
22%
Cleaning España Western Floor PVT
Barcelona New Delhi
31Overview of IPC Group Product Portfolio
IPC Sweepers and Scrubbers IPC Vacuum Cleaners
Scrubbers: 15L to 230L (tank size) Dry Vacuum Cleaners: 750W to 1,400W
Sweepers: 460mm to 1,200mm (brush size) Wet & Dry Vacuum Cleaners: 1,300W to 3,600W
Multiple Power Systems: Electric cables, batteries, Single motor to three motor models
diesel, petrol and hybrid Dry Wet & Dry Industrial
Ride On Walk-Behind
Sweeper Scrubber Sweeper Scrubber
IPC Tools
IPC Pressure Washers Mops and
Trolleys Equipment Cloths
Range of 2.5HP to 13HP
– Diesel versions up to 900 liters per hour
– Gasoline versions up to 1,260 liters per hour
Hot Water Cold Water
Carts for Window and mirror Surface and
manual tools surface cleaning floor cleaning
IPC Group sells its products under the brand names IPC, IPC Foma, IPC Eagle, IPC Gansow,
Hydro-cleaners with high Hydro-cleaners with ICA, Vaclensa, Portotecnica, Sirio and Soteco, Readysystem, Euromop, and Pulex.
temperature water jets and cold water jets
internal heaters
32FINANCIAL
Summary
Reinventing the future of cleaning.
332016 Fourth Quarter
Organic Sales Growth 3.2% | Organic Sales up 4.8% in Americas, up 3.7% in EMEA
Q4’16 Q4’15 CHANGE
SALES $211.7 M $205.9 M +2.9%
GROSS MARGIN 44.2% 42.4% +180 bps
R&D EXPENSE (% of sales) 4.7% 3.9% +80 bps
Adjusted*
S&A EXPENSE (% of sales) 28.8% 28.9% (10 bps)
Adjusted*
OPERATING PROFIT $22.6 M $19.7 M +14.5%
Adjusted*
OPERATING PROFIT MARGIN 10.7% 9.6% $110 bps
Adjusted*
DILUTED EPS $0.85 $0.78 +9.0%
*Q4’15 results are adjusted to exclude restructuring charge in S&A of $2.0M pre-tax ($0.09 loss per
diluted share) and asset impairment favorable tax true-up of $0.7M ($0.04 per diluted share).
342016 Full Year
Organic Sales Growth 1.1% | Organic Sales up 2.4% in Americas, up 0.2% in EMEA
2016 2015 CHANGE
SALES $808.6 M $811.8 M (0.4%)
GROSS MARGIN 43.5% 43.0% +50 bps
R&D EXPENSE (% of sales) 4.3% 4.0% +30 bps
Adjusted*
S&A EXPENSE (% of sales) 30.7% 30.6% +10 bps
Adjusted*
OPERATING PROFIT $68.5 M $68.1 M +0.6%
Adjusted*
OPERATING PROFIT MARGIN 8.5% 8.4% +10 bps
Adjusted*
DILUTED EPS $2.59 $2.49 +4.0%
*2015 results are adjusted to exclude restructuring charge in S&A of $3.7M pre-tax ($0.17 per diluted
share) and non-cash long-lived asset impairment of $11.2M pre-tax ($0.58 per diluted share).
352016 Full Year “Constant Currency” View
(excludes estimated foreign exchange impact)
AS CONSTANT(1)
REPORTED CURRENCY
2016 2016 2015 CHANGE
SALES $808.6 M $816.4 M $811.8 M +0.6%
GROSS MARGIN 43.5% 43.5% 43.0% +50 bps
Adjusted*
OPERATING PROFIT $68.5 M $69.9 M $68.1 M +2.6%
Adjusted*
OPERATING PROFIT MARGIN 8.5% 8.6% 8.4% +20 bps
Adjusted*
DILUTED EPS $2.59 $2.63 $2.49 +5.6%
(1)“Constant Currency”: estimated income statement which assumes no change in exchange rates from prior year.
2016 Organic Sales Growth of 1.1%: excluding change in exchange rates from prior year and impact from acquisition and divestiture.
*2015 results are adjusted to exclude restructuring charge in S&A of $3.7M pre-tax ($0.17 per diluted share) and non-cash
long-lived asset impairment of $11.2M pre-tax ($0.58 per diluted share).
361.1% Organic Sales Growth in 2016 Full Year
Americas EMEA APAC
2016 Organic Sales 2016 Organic Sales 2016 Organic Sales
2.4% 0.2% (10.0%)
37TENNANT COMPANY
Strong Balance Sheet
38History of Sales Growth
2010-2016 Average Organic Sales Growth of 6%
39
39Improved Profitability & Balance Sheet Leverage
Return on Invested Capital Improvement 2009 – 2016*
AVERAGE INVESTED CAPITAL
*On a “Constant Currency” basis, 2016 ROIC would have been 27.9%.
40
40Operating Profit Margin Goal
Remain committed to at least 12% OP Margin
Sales Gross R&D S, G & A
Growth Margins Expense
5-9% 43-44% 3-4% 27-28%
Drive organic revenue Hold fixed costs essentially flat in Continue to invest in Standardize & simplify
growth in mid- to high- manufacturing as volume rises innovative new products processes to improve
single digits & technologies scalability of business model
Strive for zero net inflation
at gross profit line
412017 EPS & Sales Guidance
2016 2017 Financial Outlook
ACTUAL As Adjusted “Constant Currency” $2.60 to $2.80/$817M to $832M
As Reported As Reported $2.20 to $2.43/$810M to $830M
$2.59 EPS KEY EXPECTATIONS FOR 2017 (does not yet include the impact of the IPC Group acquisition)
• Net sales in the range of $810M to $830M versus $808.6M in 2016.
$808.6M SALES • Stable economy in North America, modest improvement in Europe, and challenging environment in
APAC.
• Unfavorable foreign currency impact on sales in the range of 1% to 2%.
• Sales increase from 2016 Florock acquisition of approximately 0.8%.
• Organic sales growth, excluding foreign currency exchange impact and acquisition, in the range of
1% to 3%.
• Foreign currency exchange headwinds estimated to negatively impact operating profit by
approximately $2.5M, or approximately $0.10 EPS.
• Restructuring Actions in 1Q17 in the range of $7M to $8M pre-tax, or $0.27 to $0.30 EPS.
• Gross margin performance in the range of 43% to 44%.
• R&D expense of approximately 4% of sales.
• Effective tax rate of approximately 31%.
• Capital expenditures in the range of $20M to $25M.
42Summary
$1B
Anticipate foreign Tennant has never been We remain committed to
currency & global positioned better in the our goals of $1 Billion in
economic volatility market with its innovative organic sales & a 12%
remain challenging product and technology or above operating profit
portfolio and go-to- margin
market strategy
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