Tennant Co. (NYSE: TNC) reported Q3 EPS of $0.90, $0.54 better than the analyst estimate of $0.36. Revenue for the quarter came in at $261.9 million versus the consensus estimate of $237.6 million.

• Net sales of $261.9 million, a decrease of 7.1 percent organically
• GAAP net income of $11.7 million, or $0.63 diluted earnings per share; adjusted diluted EPS of $0.90 per share
• Adjusted EBITDA of $32.6 million, up 120 basis points to 12.4 percent of sales
• Cash flow from operations of $48.9 million
• Company reinstates 2020 guidance for net sales, adjusted

“In the third quarter, we saw encouraging trends across all our regions as our global teams worked hard and showed tremendous dedication in meeting the sales and operational challenges posed by the pandemic,” said Chris Killingstad, Tennant Company’s president and chief executive officer. “We continued to manage our costs effectively and our strategy is yielding improvements in our operating performance, resulting in adjusted EBITDA growth despite a year-over-year decline in organic sales. The way we have managed our business, while still meeting the urgent needs of our customers, demonstrates how we are executing on our enterprise strategy to win where we have competitive advantage, reduce complexity and build scalable processes, and innovate for profitable growth. By continuing to do so, we expect to drive long-term shareholder value.”

“In terms of innovating for profitable growth, the third quarter was a great example of our commitment to provide our customers with the innovative solutions they need to keep their facilities clean and safe during this unprecedented time. Together with our strategic partner, Brain Corp, we recently finalized agreements to provide two national retailers, and a separate regional retailer, with our autonomous floor scrubbers, including the T7AMR and the recently released T380AMR. These machines include powerful software features that deliver improved cleaning efficiency and flexibility for high-traffic commercial locations.”

“In the third quarter, we saw encouraging trends across all our regions as our global teams worked hard and showed tremendous dedication in meeting the sales and operational challenges posed by the pandemic,” said Chris Killingstad, Tennant Company’s president and chief executive officer. “We continued to manage our costs effectively and our strategy is yielding improvements in our operating performance, resulting in adjusted EBITDA growth despite a year-over-year decline in organic sales. The way we have managed our business, while still meeting the urgent needs of our customers, demonstrates how we are executing on our enterprise strategy to win where we have competitive advantage, reduce complexity and build scalable processes, and innovate for profitable growth. By continuing to do so, we expect to drive long-term shareholder value.”

“In terms of innovating for profitable growth, the third quarter was a great example of our commitment to provide our customers with the innovative solutions they need to keep their facilities clean and safe during this unprecedented time. Together with our strategic partner, Brain Corp, we recently finalized agreements to provide two national retailers, and a separate regional retailer, with our autonomous floor scrubbers, including the T7AMR and the recently released T380AMR. These machines include powerful software features that deliver improved cleaning efficiency and flexibility for high-traffic commercial locations.”

GUIDANCE:

Tennant Co. sees FY2020 EPS of $2.80-$3.00, versus the consensus of $2.67. Tennant Co. sees FY2020 revenue of $995-1005 million, versus the consensus of $974.83 million.

“When the pandemic started, our team was quick to respond by taking the necessary actions to adapt to this new environment in order to keep our employees and customers safe, to manage our costs and cash flow, and to preserve our ability to ramp up quickly as markets recover,” said Killingstad. “While the pandemic does create considerable uncertainty, especially as some markets are seeing spikes in new COVID-19 cases, we have a higher level of confidence in our near-term projections and as such are reinitiating our full-year guidance for 2020. This guidance not only reflects our expected revenue growth, but also incorporates our commitment to investing in our business to support our enterprise strategy.”

For 2020, Tennant provides guidance as follows:

• Net sales of $995.0 to $1,005.0 million, reflecting organic sales decline of 12.5 to 11.5 percent;
• GAAP earnings in the range of $2.00 to $2.20 per diluted share;
• Adjusted EPS in the range of $2.80 to $3.00 per diluted share;
• Adjusted EBITDA in the range of $116 to $121 million;
• Capital expenditures of approximately $35 million; and
• An effective tax rate of approximately 17 percent.

The guidance includes approximately $5 to $8 million of government benefits, primarily related to previously disclosed wage subsidies.

For earnings history and earnings-related data on Tennant Co. (TNC) click here.