Tennant (TNC) Begins Implementing Restructuring Program; to Cut 240 Jobs; Suspends Buyback; Guides Q4, FY08
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Tennant Company (NYSE: TNC) announced today that it has begun implementing a restructuring program to resize the company's workforce based on current global economic realities. Specifically, Tennant is reducing its worldwide employee base by approximately 8 percent, or about 240 people. When completed, this measure is estimated to save at least $20 million annually. The company anticipates taking a total charge of up to $20 million pretax, or $0.88 per diluted share, most of which would be recognized in Q408, to cover severance and related costs for the affected workers, as well as additional unusual items.
Of the $20 million pretax charge, approximately $15 million is related to the workforce reduction. Tennant also expects to have additional unusual items in the 2008 fourth quarter of approximately $5 million. These unusual items include increased reserves for accounts receivable due to the continued credit crisis and expenses related to technology investments that are being replaced by new or different technical solutions.
Tennant is accomplishing the workforce reduction chiefly through the elimination of salaried positions across the organization. Affected employees will be offered severance and outplacement services. Additionally, early retirements, elimination of contracted positions and attrition will account for some of the eliminated positions and contribute to annualized savings.
Tennant is not closing any additional plants as part of the restructuring, but has already reduced production work schedules at locations with excess capacity. In addition, the company is currently not planning any wage or salary increases in 2009. Other cost-containment initiatives that Tennant started earlier in 2008 are continuing. These include worldwide reductions of discretionary expenses and a hiring freeze on all non-critical positions.
To preserve cash for operations and growth initiatives, the company has temporarily suspended repurchases of stock under its ongoing repurchase program, but has no plans to reduce its quarterly dividend. Management has also reduced capital expenditures to approximately $22 million in 2008 versus the most recent guidance of $25 million to $27 million. In 2009, Tennant anticipates capital expenditures of $20 million or less.
Sees Q4 sales down 15-20% from Q407, implying revenue of $140-$155 million, versus the Street estimate of $175 million. Tennant sees a Q4 loss of $0.98-$1.08, versus the consensus of a $0.34 gain.
For FY08, the company sees sales of $688-$703 million and EPS of $0.40-$0.50, including the $0.88 per diluted share charge announced today, as well as the $0.09 per diluted share net benefit of unusual items recorded in the first nine months of 2008 and the impact of the three 2008 acquisitions, which are expected to be dilutive for the year due to economic conditions. The Street is expecting FY08 sales of $734.55 million and EPS of $1.98.
Tennant Company designs, manufactures, and markets cleaning solutions.
Of the $20 million pretax charge, approximately $15 million is related to the workforce reduction. Tennant also expects to have additional unusual items in the 2008 fourth quarter of approximately $5 million. These unusual items include increased reserves for accounts receivable due to the continued credit crisis and expenses related to technology investments that are being replaced by new or different technical solutions.
Tennant is accomplishing the workforce reduction chiefly through the elimination of salaried positions across the organization. Affected employees will be offered severance and outplacement services. Additionally, early retirements, elimination of contracted positions and attrition will account for some of the eliminated positions and contribute to annualized savings.
Tennant is not closing any additional plants as part of the restructuring, but has already reduced production work schedules at locations with excess capacity. In addition, the company is currently not planning any wage or salary increases in 2009. Other cost-containment initiatives that Tennant started earlier in 2008 are continuing. These include worldwide reductions of discretionary expenses and a hiring freeze on all non-critical positions.
To preserve cash for operations and growth initiatives, the company has temporarily suspended repurchases of stock under its ongoing repurchase program, but has no plans to reduce its quarterly dividend. Management has also reduced capital expenditures to approximately $22 million in 2008 versus the most recent guidance of $25 million to $27 million. In 2009, Tennant anticipates capital expenditures of $20 million or less.
Sees Q4 sales down 15-20% from Q407, implying revenue of $140-$155 million, versus the Street estimate of $175 million. Tennant sees a Q4 loss of $0.98-$1.08, versus the consensus of a $0.34 gain.
For FY08, the company sees sales of $688-$703 million and EPS of $0.40-$0.50, including the $0.88 per diluted share charge announced today, as well as the $0.09 per diluted share net benefit of unusual items recorded in the first nine months of 2008 and the impact of the three 2008 acquisitions, which are expected to be dilutive for the year due to economic conditions. The Street is expecting FY08 sales of $734.55 million and EPS of $1.98.
Tennant Company designs, manufactures, and markets cleaning solutions.
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