Tennant Co. (TNC) Tops Q1 EPS by 6c
Tennant Co. (NYSE: TNC) reported Q1 EPS of $0.31, $0.06 better than the analyst estimate of $0.25. Revenue for the quarter came in at $191.1 million versus the consensus estimate of $181.85 million.
2017 Business Outlook
Killingstad stated: “We are excited about our strategic plans, but remain cautious in our 2017 outlook on the global macroeconomic environment. Tennant is competitively well positioned in our markets, with exciting technologies and opportunities to expand our product portfolio and geographic presence, particularly in EMEA with the IPC Group acquisition. Through this acquisition and our restructuring actions, Tennant is positioned to accelerate revenue growth and improve profitability.”
Tennant Company is updating its full year 2017 outlook to include the 2017 first quarter restructuring charge, one-time acquisition and financing costs related to the IPC Group acquisition, and the April 2017 IPC Group acquisition, including the impact on earnings from preliminary estimates of purchase accounting valuations, and also the interest expense from the related financing. Tennant now estimates 2017 full year net sales in the range of $960 million to $990 million, up 18.7 percent to 22.4 percent, or up approximately 1 percent to 3 percent organically, assuming an unfavorable foreign currency exchange impact on sales of approximately 1 percent, an additional 0.8 percent inorganic growth from the 2016 Florock acquisition, and inorganic growth from the 2017 IPC acquisition in the range of 18.6 percent to 20.4 percent. Previously, Tennant anticipated 2017 full year net sales in the range of $810 million to $830 million. The company expects 2017 full year reported earnings in the range of $1.05 to $1.25 per diluted share. The company expects 2017 full year as adjusted earnings in the range of $2.40 to $2.60 per diluted share, excluding the following non-recurring costs totaling $30.8 million pre-tax, or $1.35 per diluted share:
1) $8.0 million restructuring charge (recorded in the 2017 first quarter in S&A Expense)
2) $7.5 million IPC acquisition costs ($2.9 million recorded in the 2017 first quarter in S&A Expense)
3) $8.1 million IPC related financing costs ($1.2 million recorded in the 2017 first quarter in Other Expense, Net)
4) $7.2 million IPC acquisition inventory step-up (to be recorded in Cost of Goods Sold)
Foreign currency exchange in 2017 is estimated to negatively impact operating profit by approximately $2.5 million, or a negative impact of approximately $0.10 per diluted share. On an as adjusted and “Constant Currency” basis (assuming no change in foreign exchange rates from the prior year), 2017 full year earnings are estimated to be in the range of $2.50 to $2.70 per diluted share. Previously, Tennant anticipated 2017 full year earnings on an as adjusted and “Constant Currency” basis to be in the range of $2.60 to $2.80 per diluted share. The decrease in the range of $0.10 per diluted share primarily reflects the anticipated as adjusted 2017 dilution from the IPC Group acquisition. For the 2016 full year, earnings per diluted share totaled $2.59 on net sales of $808.6 million.
Tennant’s 2017 annual financial outlook includes the following additional assumptions:
Commented Killingstad: “We made significant progress against our growth and profitability aspirations in the 2017 first quarter. Our acquisition of IPC Group will put us over our $1 billion sales target on an annualized basis. Additionally, our combined acquisition and restructuring actions will move us closer to our 12 percent operating profit margin goal. We remain committed to creating further value for Tennant’s shareholders.”
(Updated with guidance)
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