|
[
ü
]
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the quarterly period ended June 30, 2018
|
OR
|
|
[ ]
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
For the transition period from ___________ to __________
|
Minnesota
|
41-0572550
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
Yes
|
ü
|
No
|
|
Yes
|
ü
|
No
|
|
Large accelerated filer
|
ü
|
|
Accelerated filer
|
|
Non-accelerated filer
|
|
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
|
Emerging growth company
|
|
|
|
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Yes
|
|
No
|
ü
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PART I - FINANCIAL INFORMATION
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Page
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Item 1.
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Item 2.
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|||||
Item 3.
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Item 4.
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PART II - OTHER INFORMATION
|
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Item 1.
|
|
|
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Item 1A.
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Item 2.
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||||
Item 6.
|
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Item 1.
|
Financial Statements
|
TENNANT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
||||||||||||||||
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In thousands, except shares and per share data)
|
|
June 30
|
|
June 30
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net Sales
|
|
$
|
292,197
|
|
|
$
|
270,791
|
|
|
$
|
565,044
|
|
|
$
|
461,850
|
|
Cost of Sales
|
|
173,398
|
|
|
166,237
|
|
|
335,608
|
|
|
277,560
|
|
||||
Gross Profit
|
|
118,799
|
|
|
104,554
|
|
|
229,436
|
|
|
184,290
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating Expense:
|
|
|
|
|
|
|
|
|
||||||||
Research and Development Expense
|
|
7,906
|
|
|
7,886
|
|
|
15,902
|
|
|
16,332
|
|
||||
Selling and Administrative Expense
|
|
91,864
|
|
|
87,326
|
|
|
184,133
|
|
|
161,282
|
|
||||
Total Operating Expense
|
|
99,770
|
|
|
95,212
|
|
|
200,035
|
|
|
177,614
|
|
||||
Profit from Operations
|
|
19,029
|
|
|
9,342
|
|
|
29,401
|
|
|
6,676
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
||||||||
Interest Income
|
|
952
|
|
|
793
|
|
|
1,701
|
|
|
877
|
|
||||
Interest Expense
|
|
(6,005
|
)
|
|
(11,833
|
)
|
|
(11,750
|
)
|
|
(12,627
|
)
|
||||
Net Foreign Currency Transaction Losses
|
|
(337
|
)
|
|
(336
|
)
|
|
(1,086
|
)
|
|
(1,533
|
)
|
||||
Other Expense, Net
|
|
(510
|
)
|
|
(384
|
)
|
|
(760
|
)
|
|
(352
|
)
|
||||
Total Other Expense, Net
|
|
(5,900
|
)
|
|
(11,760
|
)
|
|
(11,895
|
)
|
|
(13,635
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Profit (Loss) Before Income Taxes
|
|
13,129
|
|
|
(2,418
|
)
|
|
17,506
|
|
|
(6,959
|
)
|
||||
Income Tax Expense (Benefit)
|
|
363
|
|
|
238
|
|
|
1,440
|
|
|
(346
|
)
|
||||
Net Earnings (Loss) Including Noncontrolling Interest
|
|
12,766
|
|
|
(2,656
|
)
|
|
16,066
|
|
|
(6,613
|
)
|
||||
Net Earnings (Loss) Attributable to Noncontrolling Interest
|
|
22
|
|
|
(65
|
)
|
|
48
|
|
|
(65
|
)
|
||||
Net Earnings (Loss) Attributable to Tennant Company
|
|
$
|
12,744
|
|
|
$
|
(2,591
|
)
|
|
$
|
16,018
|
|
|
$
|
(6,548
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Net Earnings (Loss) Attributable to Tennant Company per Share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.71
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.90
|
|
|
$
|
(0.37
|
)
|
Diluted
|
|
$
|
0.69
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.88
|
|
|
$
|
(0.37
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted Average Shares Outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
17,943,450
|
|
|
17,693,102
|
|
|
17,867,641
|
|
|
17,645,090
|
|
||||
Diluted
|
|
18,371,538
|
|
|
17,693,102
|
|
|
18,303,960
|
|
|
17,645,090
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash Dividend Declared per Common Share
|
|
$
|
0.21
|
|
|
$
|
0.21
|
|
|
$
|
0.42
|
|
|
$
|
0.42
|
|
TENNANT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited)
|
|||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
(In thousands)
|
June 30
|
|
June 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net Earnings (Loss) Including Noncontrolling Interest
|
$
|
12,766
|
|
|
$
|
(2,656
|
)
|
|
$
|
16,066
|
|
|
$
|
(6,613
|
)
|
Other Comprehensive (Loss) Income:
|
|
|
|
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(19,473
|
)
|
|
13,640
|
|
|
(11,092
|
)
|
|
16,040
|
|
||||
Pension and retiree medical benefits
|
11
|
|
|
152
|
|
|
93
|
|
|
162
|
|
||||
Cash flow hedge
|
1,376
|
|
|
(4,506
|
)
|
|
(1,339
|
)
|
|
(4,579
|
)
|
||||
Income Taxes:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments
|
261
|
|
|
—
|
|
|
244
|
|
|
—
|
|
||||
Pension and retiree medical benefits
|
(3
|
)
|
|
(4
|
)
|
|
(154
|
)
|
|
(22
|
)
|
||||
Cash flow hedge
|
(319
|
)
|
|
1,681
|
|
|
(820
|
)
|
|
1,708
|
|
||||
Total Other Comprehensive (Loss) Income, net of tax
|
(18,147
|
)
|
|
10,963
|
|
|
(13,068
|
)
|
|
13,309
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Total Comprehensive (Loss) Income Including Noncontrolling Interest
|
(5,381
|
)
|
|
8,307
|
|
|
2,998
|
|
|
6,696
|
|
||||
Comprehensive Income (Loss) Attributable to Noncontrolling Interest
|
22
|
|
|
(65
|
)
|
|
48
|
|
|
(65
|
)
|
||||
Comprehensive (Loss) Income Attributable to Tennant Company
|
$
|
(5,403
|
)
|
|
$
|
8,372
|
|
|
$
|
2,950
|
|
|
$
|
6,761
|
|
TENNANT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|||||||
|
June 30,
|
|
December 31,
|
||||
(In thousands, except shares and per share data)
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
||||
Current Assets:
|
|
|
|
||||
Cash and Cash Equivalents
|
$
|
53,901
|
|
|
$
|
58,398
|
|
Restricted Cash
|
543
|
|
|
653
|
|
||
Accounts Receivable, less Allowances of $2,655 and $3,241, respectively
|
215,323
|
|
|
209,516
|
|
||
Inventories
|
139,406
|
|
|
127,694
|
|
||
Prepaid Expenses
|
27,382
|
|
|
19,351
|
|
||
Other Current Assets
|
8,707
|
|
|
7,503
|
|
||
Total Current Assets
|
445,262
|
|
|
423,115
|
|
||
Property, Plant and Equipment
|
381,607
|
|
|
382,768
|
|
||
Accumulated Depreciation
|
(212,625
|
)
|
|
(202,750
|
)
|
||
Property, Plant and Equipment, Net
|
168,982
|
|
|
180,018
|
|
||
Deferred Income Taxes
|
13,721
|
|
|
11,134
|
|
||
Goodwill
|
185,715
|
|
|
186,044
|
|
||
Intangible Assets, Net
|
157,674
|
|
|
172,347
|
|
||
Other Assets
|
14,730
|
|
|
21,319
|
|
||
Total Assets
|
$
|
986,084
|
|
|
$
|
993,977
|
|
LIABILITIES AND TOTAL EQUITY
|
|
|
|
||||
Current Liabilities:
|
|
|
|
||||
Current Portion of Long-Term Debt
|
$
|
30,969
|
|
|
$
|
30,883
|
|
Accounts Payable
|
103,602
|
|
|
96,082
|
|
||
Employee Compensation and Benefits
|
41,289
|
|
|
37,257
|
|
||
Income Taxes Payable
|
2,809
|
|
|
2,838
|
|
||
Other Current Liabilities
|
66,753
|
|
|
69,447
|
|
||
Total Current Liabilities
|
245,422
|
|
|
236,507
|
|
||
Long-Term Liabilities:
|
|
|
|
||||
Long-Term Debt
|
328,699
|
|
|
345,956
|
|
||
Employee-Related Benefits
|
22,583
|
|
|
23,867
|
|
||
Deferred Income Taxes
|
50,444
|
|
|
53,225
|
|
||
Other Liabilities
|
36,739
|
|
|
35,948
|
|
||
Total Long-Term Liabilities
|
438,465
|
|
|
458,996
|
|
||
Total Liabilities
|
683,887
|
|
|
695,503
|
|
||
Commitments and Contingencies (Note 13)
|
|
|
|
|
|
||
Equity:
|
|
|
|
||||
Common Stock, $0.375 par value; 60,000,000 shares authorized; 18,073,713 and 17,881,177 shares issued and outstanding, respectively
|
6,778
|
|
|
6,705
|
|
||
Additional Paid-In Capital
|
22,273
|
|
|
15,089
|
|
||
Retained Earnings
|
306,667
|
|
|
297,032
|
|
||
Accumulated Other Comprehensive Loss
|
(35,391
|
)
|
|
(22,323
|
)
|
||
Total Tennant Company Shareholders' Equity
|
300,327
|
|
|
296,503
|
|
||
Noncontrolling Interest
|
1,870
|
|
|
1,971
|
|
||
Total Equity
|
302,197
|
|
|
298,474
|
|
||
Total Liabilities and Total Equity
|
$
|
986,084
|
|
|
$
|
993,977
|
|
TENNANT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|||||||
|
Six Months Ended
|
||||||
(In thousands)
|
June 30
|
||||||
|
2018
|
|
2017
|
||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net Earnings (Loss) Including Noncontrolling Interest
|
$
|
16,066
|
|
|
$
|
(6,613
|
)
|
Adjustments to Reconcile Net Earnings (Loss) to Net Cash Provided by (Used in) Operating Activities:
|
|
|
|
||||
Depreciation
|
16,340
|
|
|
11,043
|
|
||
Amortization of Intangible Assets
|
11,657
|
|
|
3,780
|
|
||
Amortization of Debt Issuance Costs
|
1,307
|
|
|
466
|
|
||
Debt Issuance Cost Charges Related to Short-Term Financing
|
—
|
|
|
6,200
|
|
||
Fair Value Step-Up Adjustment to Acquired Inventory
|
—
|
|
|
6,199
|
|
||
Deferred Income Taxes
|
(7,857
|
)
|
|
(6,032
|
)
|
||
Share-Based Compensation Expense
|
4,115
|
|
|
3,622
|
|
||
Allowance for Doubtful Accounts and Returns
|
940
|
|
|
697
|
|
||
Other, Net
|
280
|
|
|
64
|
|
||
Changes in Operating Assets and Liabilities, Net of Assets Acquired:
|
|
|
|
||||
Receivables, Net
|
(6,832
|
)
|
|
(6,016
|
)
|
||
Inventories
|
(17,039
|
)
|
|
(9,854
|
)
|
||
Accounts Payable
|
9,827
|
|
|
6,190
|
|
||
Employee Compensation and Benefits
|
4,075
|
|
|
(8,262
|
)
|
||
Other Current Liabilities
|
(3,772
|
)
|
|
5,252
|
|
||
Income Taxes
|
(973
|
)
|
|
(1,617
|
)
|
||
Other Assets and Liabilities
|
(2,170
|
)
|
|
(7,614
|
)
|
||
Net Cash Provided by (Used in) Operating Activities
|
25,964
|
|
|
(2,495
|
)
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Purchases of Property, Plant and Equipment
|
(7,726
|
)
|
|
(9,145
|
)
|
||
Proceeds from Disposals of Property, Plant and Equipment
|
102
|
|
|
2,428
|
|
||
Proceeds from Principal Payments Received on Long-Term Note Receivable
|
706
|
|
|
—
|
|
||
Issuance of Long-Term Note Receivable
|
—
|
|
|
(1,500
|
)
|
||
Acquisition of Businesses, Net of Cash, Cash Equivalents and Restricted Cash Acquired
|
—
|
|
|
(353,535
|
)
|
||
Purchase of Intangible Assets
|
(1,195
|
)
|
|
(2,500
|
)
|
||
Net Cash Used in Investing Activities
|
(8,113
|
)
|
|
(364,252
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from Short-Term Debt
|
—
|
|
|
300,000
|
|
||
Repayments of Short-Term Debt
|
—
|
|
|
(300,000
|
)
|
||
Proceeds from Issuance of Long-Term Debt
|
—
|
|
|
440,000
|
|
||
Payments of Long-Term Debt
|
(18,133
|
)
|
|
(58,471
|
)
|
||
Payments of Debt Issuance Costs
|
—
|
|
|
(16,039
|
)
|
||
Change in Capital Lease Obligations
|
59
|
|
|
—
|
|
||
Proceeds from Issuance of Common Stock
|
3,724
|
|
|
3,843
|
|
||
Dividends Paid
|
(7,553
|
)
|
|
(7,463
|
)
|
||
Net Cash (Used in) Provided by Financing Activities
|
(21,903
|
)
|
|
361,870
|
|
||
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
|
(555
|
)
|
|
875
|
|
||
Net Decrease in Cash, Cash Equivalents and Restricted Cash
|
(4,607
|
)
|
|
(4,002
|
)
|
||
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
|
59,051
|
|
|
58,550
|
|
||
Cash, Cash Equivalents and Restricted Cash at End of Period
|
$
|
54,444
|
|
|
$
|
54,548
|
|
|
|
|
|
1.
|
Summary of Significant Accounting Policies
|
2.
|
Newly Adopted Accounting Pronouncements
|
|
As Reported
|
|
Balances Without Adoption of ASC 606
|
|
Effect of Change
Higher/(Lower)
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Accounts Receivable
|
$
|
215,323
|
|
|
$
|
214,175
|
|
|
$
|
1,148
|
|
Total Current Assets
|
445,262
|
|
|
444,114
|
|
|
1,148
|
|
|||
Total Assets
|
$
|
986,084
|
|
|
$
|
984,936
|
|
|
$
|
1,148
|
|
LIABILITIES
|
|
|
|
|
|
||||||
Other Current Liabilities
|
$
|
66,753
|
|
|
$
|
65,605
|
|
|
$
|
1,148
|
|
Total Current Liabilities
|
245,422
|
|
|
244,274
|
|
|
1,148
|
|
|||
Total Liabilities
|
$
|
683,887
|
|
|
$
|
682,739
|
|
|
$
|
1,148
|
|
|
June 30,
|
||
|
2018
|
||
Cash and Cash Equivalents
|
$
|
53,901
|
|
Restricted Cash
|
543
|
|
|
Total Cash, Cash Equivalents and Restricted Cash at end of period shown in the Condensed Consolidated Statements of Cash Flows
|
$
|
54,444
|
|
3.
|
Revenue from Contracts with Customers
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30
|
|
June 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Americas
|
$
|
178,752
|
|
|
$
|
169,146
|
|
|
$
|
341,390
|
|
|
$
|
311,916
|
|
Europe, Middle East and Africa
|
87,410
|
|
|
77,356
|
|
|
176,226
|
|
|
110,632
|
|
||||
Asia Pacific
|
26,035
|
|
|
24,289
|
|
|
47,428
|
|
|
39,302
|
|
||||
Total
|
$
|
292,197
|
|
|
$
|
270,791
|
|
|
$
|
565,044
|
|
|
$
|
461,850
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30
|
|
June 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Equipment
|
$
|
192,078
|
|
|
$
|
176,767
|
|
|
$
|
364,152
|
|
|
$
|
290,108
|
|
Parts and Consumables
|
57,411
|
|
|
52,922
|
|
|
114,852
|
|
|
95,725
|
|
||||
Specialty Surface Coatings
|
7,840
|
|
|
7,803
|
|
|
14,295
|
|
|
14,484
|
|
||||
Service and Other
|
34,868
|
|
|
33,299
|
|
|
71,745
|
|
|
61,533
|
|
||||
Total
|
$
|
292,197
|
|
|
$
|
270,791
|
|
|
$
|
565,044
|
|
|
$
|
461,850
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30
|
|
June 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Sales Direct to Consumer
|
$
|
187,468
|
|
|
$
|
174,426
|
|
|
$
|
366,178
|
|
|
$
|
318,049
|
|
Sales to Distributors
|
104,729
|
|
|
96,365
|
|
|
198,866
|
|
|
143,801
|
|
||||
Total
|
$
|
292,197
|
|
|
$
|
270,791
|
|
|
$
|
565,044
|
|
|
$
|
461,850
|
|
|
Six Months Ended
|
||||
|
June 30
|
||||
|
2018
|
||||
Beginning balance
|
$
|
13,466
|
|
||
Additions to sales incentive accrual
|
14,904
|
|
|||
Contract payments
|
(16,785
|
)
|
|||
Foreign currency fluctuations
|
(195
|
)
|
|||
Ending balance
|
$
|
11,390
|
|
|
Six Months Ended
|
||||
|
June 30
|
||||
|
2018
|
||||
Beginning balance
|
$
|
7,787
|
|
||
Increase in deferred revenue representing our obligation to satisfy future performance obligations
|
7,475
|
|
|||
Decrease in deferred revenue for amounts recognized in Net Sales for satisfied performance obligations
|
(6,951
|
)
|
|||
Foreign currency fluctuations
|
(86
|
)
|
|||
Ending balance
|
$
|
8,225
|
|
4.
|
Management Actions
|
|
|
Severance and Related Costs
|
||
2017 restructuring actions
|
|
$
|
9,558
|
|
Cash payments
|
|
(6,312
|
)
|
|
Foreign currency adjustments
|
|
190
|
|
|
December 31, 2017 balance
|
|
$
|
3,436
|
|
2018 utilization:
|
|
|
||
Cash payments
|
|
(1,119
|
)
|
|
Foreign currency adjustments
|
|
(53
|
)
|
|
June 30, 2018 balance
|
|
$
|
2,264
|
|
5.
|
Acquisition
|
ASSETS
|
|
|
||
Receivables
|
|
$
|
39,984
|
|
Inventories
|
|
46,442
|
|
|
Other Current Assets
|
|
7,456
|
|
|
Assets Held for Sale
|
|
2,247
|
|
|
Property, Plant and Equipment
|
|
63,890
|
|
|
Intangible Assets Subject to Amortization:
|
|
|
||
Trade Name
|
|
26,753
|
|
|
Customer Lists
|
|
123,061
|
|
|
Technology
|
|
9,631
|
|
|
Other Assets
|
|
2,000
|
|
|
Total Identifiable Assets Acquired
|
|
321,464
|
|
|
LIABILITIES
|
|
|
||
Accounts Payable
|
|
32,227
|
|
|
Accrued Expenses
|
|
18,130
|
|
|
Deferred Income Taxes
|
|
56,950
|
|
|
Other Liabilities
|
|
10,964
|
|
|
Total Identifiable Liabilities Assumed
|
|
118,271
|
|
|
Net Identifiable Assets Acquired
|
|
203,193
|
|
|
Noncontrolling Interest
|
|
(1,896
|
)
|
|
Goodwill
|
|
152,472
|
|
|
Total Purchase Price, net of Cash Acquired
|
|
$
|
353,769
|
|
Pro Forma Financial Information (Unaudited)
|
|||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||
(In thousands, except per share data)
|
June 30
|
|
June 30
|
||||
|
2017
|
|
2017
|
||||
Net Sales
|
|
|
|
||||
Pro forma
|
$
|
270,791
|
|
|
$
|
517,163
|
|
As reported
|
270,791
|
|
|
461,850
|
|
||
|
|
|
|
||||
Net Earnings (Loss) Attributable to Tennant Company
|
|
|
|
||||
Pro forma
|
$
|
10,308
|
|
|
$
|
10,260
|
|
As reported
|
(2,591
|
)
|
|
(6,548
|
)
|
||
|
|
|
|
||||
Net Earnings (Loss) Attributable to Tennant Company per Share
|
|
|
|
||||
Pro forma
|
$
|
0.58
|
|
|
$
|
0.58
|
|
As reported
|
(0.15
|
)
|
|
(0.37
|
)
|
•
|
incremental depreciation and amortization expense related to the fair value of the property, plant and equipment and identified intangible assets;
|
•
|
exclusion of the purchase accounting impact of the inventory step-up related to the sale of acquired inventory;
|
•
|
incremental interest expense related to additional debt used to finance the acquisition;
|
•
|
exclusion of non-recurring acquisition-related transaction and financing costs; and
|
•
|
pro forma adjustments tax affected based on the jurisdiction where the costs were incurred.
|
6.
|
Inventories
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Inventories carried at LIFO:
|
|
|
|
||||
Finished goods
|
$
|
49,428
|
|
|
$
|
43,439
|
|
Raw materials, production parts and work-in-process
|
29,266
|
|
|
23,694
|
|
||
LIFO reserve
|
(28,609
|
)
|
|
(28,429
|
)
|
||
Total LIFO inventories
|
50,085
|
|
|
38,704
|
|
||
Inventories carried at FIFO:
|
|
|
|
|
|
||
Finished goods
|
51,226
|
|
|
54,161
|
|
||
Raw materials, production parts and work-in-process
|
38,095
|
|
|
34,829
|
|
||
Total FIFO inventories
|
89,321
|
|
|
88,990
|
|
||
Total inventories
|
$
|
139,406
|
|
|
$
|
127,694
|
|
7.
|
Goodwill and Intangible Assets
|
|
Goodwill
|
|
Accumulated
Impairment
Losses
|
|
Total
|
||||||
Balance as of December 31, 2017
|
$
|
227,224
|
|
|
$
|
(41,180
|
)
|
|
$
|
186,044
|
|
Purchase accounting adjustments
|
4,627
|
|
|
—
|
|
|
4,627
|
|
|||
Foreign currency fluctuations
|
(6,089
|
)
|
|
1,133
|
|
|
(4,956
|
)
|
|||
Balance as of June 30, 2018
|
$
|
225,762
|
|
|
$
|
(40,047
|
)
|
|
$
|
185,715
|
|
|
Customer Lists
|
|
Trade Names
|
|
Technology
|
|
Total
|
||||||||
Balance as of June 30, 2018
|
|
|
|
|
|
|
|
||||||||
Original cost
|
$
|
145,455
|
|
|
$
|
31,105
|
|
|
$
|
15,554
|
|
|
$
|
192,114
|
|
Accumulated amortization
|
(25,990
|
)
|
|
(3,894
|
)
|
|
(4,556
|
)
|
|
(34,440
|
)
|
||||
Carrying value
|
$
|
119,465
|
|
|
$
|
27,211
|
|
|
$
|
10,998
|
|
|
$
|
157,674
|
|
Weighted average original life (in years)
|
15
|
|
|
10
|
|
|
11
|
|
|
|
|
||||
Balance as of December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|||||
Original cost
|
$
|
149,355
|
|
|
$
|
31,968
|
|
|
$
|
14,589
|
|
|
$
|
195,912
|
|
Accumulated amortization
|
(17,870
|
)
|
|
(2,436
|
)
|
|
(3,259
|
)
|
|
(23,565
|
)
|
||||
Carrying value
|
$
|
131,485
|
|
|
$
|
29,532
|
|
|
$
|
11,330
|
|
|
$
|
172,347
|
|
Weighted average original life (in years)
|
15
|
|
|
10
|
|
|
11
|
|
|
|
|
Remaining 2018
|
$
|
10,854
|
|
2019
|
21,206
|
|
|
2020
|
19,756
|
|
|
2021
|
18,165
|
|
|
2022
|
16,020
|
|
|
Thereafter
|
71,673
|
|
|
Total
|
$
|
157,674
|
|
8.
|
Debt
|
|
June 30,
2018 |
|
December 31,
2017 |
||||
Long-Term Debt:
|
|
|
|
||||
Senior unsecured notes
|
$
|
300,000
|
|
|
$
|
300,000
|
|
Credit facility borrowings
|
62,000
|
|
|
80,000
|
|
||
Capital lease obligations
|
3,110
|
|
|
3,279
|
|
||
Total Long-Term Debt
|
365,110
|
|
|
383,279
|
|
||
Less: unamortized debt issuance costs
|
(5,442
|
)
|
|
(6,440
|
)
|
||
Less: current maturities of credit facility borrowings, net of debt issuance costs
(1)
|
(29,611
|
)
|
|
(29,413
|
)
|
||
Less: current maturities of capital lease obligations
(1)
|
(1,358
|
)
|
|
(1,470
|
)
|
||
Long-term portion
|
$
|
328,699
|
|
|
$
|
345,956
|
|
(1)
|
Current maturities of long-term debt include
$30,000
of current maturities, less
$389
of unamortized debt issuance costs, under our 2017 Credit Agreement and
$1,358
of current maturities of capital lease obligations.
|
9.
|
Warranty
|
|
Six Months Ended
|
||||||
|
June 30
|
||||||
|
2018
|
|
2017
|
||||
Beginning balance
|
$
|
12,676
|
|
|
$
|
10,960
|
|
Additions charged to expense
|
7,227
|
|
|
5,815
|
|
||
Acquired warranty obligations
|
—
|
|
|
384
|
|
||
Foreign currency fluctuations
|
(153
|
)
|
|
154
|
|
||
Claims paid
|
(6,491
|
)
|
|
(5,872
|
)
|
||
Ending balance
|
$
|
13,259
|
|
|
$
|
11,441
|
|
10.
|
Derivatives
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
|
Fair Value Asset Derivatives
|
|
Fair Value Liability Derivatives
|
|
Fair Value Asset Derivatives
|
|
Fair Value Liability Derivatives
|
||||||||
Derivatives designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency option contracts
(1)
|
|
$
|
212
|
|
|
$
|
—
|
|
|
$
|
86
|
|
|
$
|
—
|
|
Foreign currency forward contracts
(1)
|
|
7,108
|
|
|
31,189
|
|
|
7,218
|
|
|
34,961
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward contracts
(1)
|
|
$
|
909
|
|
|
$
|
136
|
|
|
$
|
442
|
|
|
$
|
425
|
|
(1)
|
Contracts that mature within the next 12 months are included in Other Current Assets and Other Current Liabilities for asset derivatives and liability derivatives, respectively, on our Condensed Consolidated Balance Sheets. Contracts with maturities greater than 12 months are included in Other Assets and Other Liabilities for asset derivatives and liability derivatives, respectively, in our Condensed Consolidated Balance Sheets. Amounts included in our Condensed Consolidated Balance Sheets are recorded net where a right of offset exists with the same derivative counterparty.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30, 2018
|
|
June 30, 2018
|
||||||||||||
|
|
Foreign Currency Option Contracts
|
|
Foreign Currency Forward Contracts
|
|
Foreign Currency Option Contracts
|
|
Foreign Currency Forward Contracts
|
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
||||||||
Net gain recognized in Other Comprehensive (Loss) Income, net of tax
(1)
|
|
$
|
33
|
|
|
$
|
9,373
|
|
|
$
|
49
|
|
|
$
|
3,676
|
|
Net (loss) gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Sales
|
|
(43
|
)
|
|
13
|
|
|
(84
|
)
|
|
(1
|
)
|
||||
Net gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Interest Income
|
|
—
|
|
|
467
|
|
|
—
|
|
|
858
|
|
||||
Net gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Foreign Currency Transaction Losses
|
|
—
|
|
|
7,912
|
|
|
—
|
|
|
3,985
|
|
||||
Net gain recognized in earnings
(2)
|
|
1
|
|
|
3
|
|
|
8
|
|
|
6
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||||||
Net gain recognized in earnings
(3)
|
|
$
|
—
|
|
|
$
|
3,210
|
|
|
$
|
—
|
|
|
$
|
1,832
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
|
June 30, 2017
|
|
June 30, 2017
|
||||||||||||
|
|
Foreign Currency Option Contracts
|
|
Foreign Currency Forward Contracts
|
|
Foreign Currency Option Contracts
|
|
Foreign Currency Forward Contracts
|
||||||||
Derivatives in cash flow hedging relationships:
|
|
|
|
|
|
|
|
|
||||||||
Net loss recognized in Other Comprehensive Income (Loss), net of tax
(1)
|
|
$
|
(47
|
)
|
|
$
|
(9,517
|
)
|
|
$
|
(137
|
)
|
|
$
|
(9,534
|
)
|
Net gain (loss) reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Sales
|
|
43
|
|
|
(83
|
)
|
|
1
|
|
|
(102
|
)
|
||||
Net gain reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Interest Income
|
|
—
|
|
|
449
|
|
|
—
|
|
|
449
|
|
||||
Net loss reclassified from Accumulated Other Comprehensive Loss into earnings, net of tax, effective portion to Net Foreign Currency Transaction Losses
|
|
—
|
|
|
(7,148
|
)
|
|
—
|
|
|
(7,148
|
)
|
||||
Net (loss) gain recognized in earnings
(2)
|
|
(4
|
)
|
|
3
|
|
|
(5
|
)
|
|
5
|
|
||||
Derivatives not designated as hedging instruments:
|
|
|
|
|
|
|
|
|
||||||||
Net loss recognized in earnings
(3)
|
|
$
|
—
|
|
|
$
|
(3,939
|
)
|
|
$
|
(1,132
|
)
|
|
$
|
(5,307
|
)
|
(1)
|
Net change in the fair value of the effective portion classified in Other Comprehensive (Loss) Income.
|
(2)
|
Ineffective portion and amount excluded from effectiveness testing classified in Net Foreign Currency Transaction Losses.
|
(3)
|
Classified in Net Foreign Currency Transaction Losses.
|
11.
|
Fair Value Measurements
|
•
|
Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
|
•
|
Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
|
•
|
Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
|
|
Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward exchange contracts
|
$
|
8,017
|
|
|
$
|
—
|
|
|
$
|
8,017
|
|
|
$
|
—
|
|
Foreign currency option contracts
|
212
|
|
|
—
|
|
|
212
|
|
|
—
|
|
||||
Total Assets
|
$
|
8,229
|
|
|
$
|
—
|
|
|
$
|
8,229
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency forward exchange contracts
|
$
|
31,325
|
|
|
$
|
—
|
|
|
$
|
31,325
|
|
|
$
|
—
|
|
Total Liabilities
|
$
|
31,325
|
|
|
$
|
—
|
|
|
$
|
31,325
|
|
|
$
|
—
|
|
|
Fair
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Foreign currency forward exchange contracts
|
$
|
7,660
|
|
|
$
|
—
|
|
|
$
|
7,660
|
|
|
$
|
—
|
|
Foreign currency option contracts
|
86
|
|
|
—
|
|
|
86
|
|
|
—
|
|
||||
Total Assets
|
$
|
7,746
|
|
|
$
|
—
|
|
|
$
|
7,746
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Foreign currency forward exchange contracts
|
$
|
35,386
|
|
|
$
|
—
|
|
|
$
|
35,386
|
|
|
$
|
—
|
|
Total Liabilities
|
$
|
35,386
|
|
|
$
|
—
|
|
|
$
|
35,386
|
|
|
$
|
—
|
|
12.
|
Retirement Benefit Plans
|
|
|
Three Months Ended
|
||||||||||||||||||||||
|
|
June 30
|
||||||||||||||||||||||
|
|
Pension Benefits
|
|
Postretirement
|
||||||||||||||||||||
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Medical Benefits
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
35
|
|
|
$
|
24
|
|
|
$
|
14
|
|
|
$
|
20
|
|
Interest cost
|
|
11
|
|
|
390
|
|
|
87
|
|
|
129
|
|
|
75
|
|
|
90
|
|
||||||
Expected return on plan assets
|
|
—
|
|
|
(586
|
)
|
|
(82
|
)
|
|
(101
|
)
|
|
—
|
|
|
—
|
|
||||||
Amortization of net actuarial loss
|
|
11
|
|
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost
|
|
—
|
|
|
—
|
|
|
32
|
|
|
49
|
|
|
—
|
|
|
—
|
|
||||||
Foreign currency
|
|
—
|
|
|
—
|
|
|
(23
|
)
|
|
234
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic cost (credit)
|
|
22
|
|
|
(185
|
)
|
|
49
|
|
|
335
|
|
|
89
|
|
|
110
|
|
||||||
Settlement charge
|
|
—
|
|
|
205
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net benefit cost
|
|
$
|
22
|
|
|
$
|
20
|
|
|
$
|
49
|
|
|
$
|
335
|
|
|
$
|
89
|
|
|
$
|
110
|
|
|
|
Six Months Ended
|
||||||||||||||||||||||
|
|
June 30
|
||||||||||||||||||||||
|
|
Pension Benefits
|
|
Postretirement
|
||||||||||||||||||||
|
|
U.S. Plans
|
|
Non-U.S. Plans
|
|
Medical Benefits
|
||||||||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||
Service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
72
|
|
|
$
|
48
|
|
|
$
|
28
|
|
|
$
|
40
|
|
Interest cost
|
|
22
|
|
|
780
|
|
|
158
|
|
|
219
|
|
|
150
|
|
|
181
|
|
||||||
Expected return on plan assets
|
|
—
|
|
|
(1,171
|
)
|
|
(191
|
)
|
|
(197
|
)
|
|
—
|
|
|
—
|
|
||||||
Amortization of net actuarial loss
|
|
24
|
|
|
21
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Amortization of prior service cost
|
|
—
|
|
|
—
|
|
|
106
|
|
|
96
|
|
|
—
|
|
|
—
|
|
||||||
Foreign currency
|
|
—
|
|
|
—
|
|
|
(94
|
)
|
|
229
|
|
|
—
|
|
|
—
|
|
||||||
Net periodic cost (credit)
|
|
46
|
|
|
(370
|
)
|
|
51
|
|
|
395
|
|
|
178
|
|
|
221
|
|
||||||
Settlement charge
|
|
50
|
|
|
205
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Net benefit cost (credit)
|
|
$
|
96
|
|
|
$
|
(165
|
)
|
|
$
|
51
|
|
|
$
|
395
|
|
|
$
|
178
|
|
|
$
|
221
|
|
13.
|
Commitments and Contingencies
|
14.
|
Accumulated Other Comprehensive Loss
|
|
June 30, 2018
|
|
December 31, 2017
|
||||
Foreign currency translation adjustments
|
$
|
(26,626
|
)
|
|
$
|
(15,778
|
)
|
Pension and retiree medical benefits
|
(1,671
|
)
|
|
(1,610
|
)
|
||
Cash flow hedge
|
(7,094
|
)
|
|
(4,935
|
)
|
||
Total Accumulated Other Comprehensive Loss
|
$
|
(35,391
|
)
|
|
$
|
(22,323
|
)
|
|
Foreign Currency Translation Adjustments
|
|
Pension and Post Retirement Benefits
|
|
Cash Flow Hedge
|
|
Total
|
||||||||
December 31, 2017
|
$
|
(15,778
|
)
|
|
$
|
(1,610
|
)
|
|
$
|
(4,935
|
)
|
|
$
|
(22,323
|
)
|
Other comprehensive (loss) income before reclassifications
|
(10,848
|
)
|
|
19
|
|
|
3,725
|
|
|
(7,104
|
)
|
||||
Amounts reclassified from Accumulated Other Comprehensive Loss
|
—
|
|
|
57
|
|
|
(4,758
|
)
|
|
(4,701
|
)
|
||||
Adjustments to Accumulated Other Comprehensive Loss for disproportionate income tax effects recognized from the adoption of ASU 2018-02
|
—
|
|
|
(137
|
)
|
|
(1,126
|
)
|
|
(1,263
|
)
|
||||
Net current period other comprehensive loss
|
(10,848
|
)
|
|
(61
|
)
|
|
(2,159
|
)
|
|
(13,068
|
)
|
||||
June 30, 2018
|
$
|
(26,626
|
)
|
|
$
|
(1,671
|
)
|
|
$
|
(7,094
|
)
|
|
$
|
(35,391
|
)
|
15.
|
Income Taxes
|
16.
|
Share-Based Compensation
|
17.
|
Earnings (Loss) Attributable to Tennant Company Per Share
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
June 30
|
|
June 30
|
||||||||||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Numerator:
|
|
|
|
|
|
|
|
||||||||
Net Earnings (Loss) Attributable to Tennant Company
|
$
|
12,744
|
|
|
$
|
(2,591
|
)
|
|
$
|
16,018
|
|
|
$
|
(6,548
|
)
|
Denominator:
|
|
|
|
|
|
|
|
||||||||
Basic - Weighted Average Shares Outstanding
|
17,943,450
|
|
|
17,693,102
|
|
|
17,867,641
|
|
|
17,645,090
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||||
Share-based compensation plans
|
428,088
|
|
|
—
|
|
|
436,319
|
|
|
—
|
|
||||
Diluted - Weighted Average Shares Outstanding
|
18,371,538
|
|
|
17,693,102
|
|
|
18,303,960
|
|
|
17,645,090
|
|
||||
Basic Earnings (Loss) per Share
|
$
|
0.71
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.90
|
|
|
$
|
(0.37
|
)
|
Diluted Earnings (Loss) per Share
|
$
|
0.69
|
|
|
$
|
(0.15
|
)
|
|
$
|
0.88
|
|
|
$
|
(0.37
|
)
|
18.
|
Segment Reporting
|
19.
|
Separate Financial Information of Guarantor Subsidiaries
|
Condensed Consolidated Statement of Operations
|
|||||||||||||||||||
For the three months ended June 30, 2018
|
|||||||||||||||||||
(in thousands)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
||||||||||
Net Sales
|
$
|
126,293
|
|
|
$
|
163,865
|
|
|
$
|
151,074
|
|
|
$
|
(149,035
|
)
|
|
$
|
292,197
|
|
Cost of Sales
|
85,053
|
|
|
137,144
|
|
|
100,255
|
|
|
(149,054
|
)
|
|
173,398
|
|
|||||
Gross Profit
|
41,240
|
|
|
26,721
|
|
|
50,819
|
|
|
19
|
|
|
118,799
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Expense:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and Development Expense
|
6,422
|
|
|
342
|
|
|
1,142
|
|
|
—
|
|
|
7,906
|
|
|||||
Selling and Administrative Expense
|
28,625
|
|
|
19,343
|
|
|
43,896
|
|
|
—
|
|
|
91,864
|
|
|||||
Total Operating Expense
|
35,047
|
|
|
19,685
|
|
|
45,038
|
|
|
—
|
|
|
99,770
|
|
|||||
Profit from Operations
|
6,193
|
|
|
7,036
|
|
|
5,781
|
|
|
19
|
|
|
19,029
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in Earnings of Affiliates
|
10,026
|
|
|
588
|
|
|
1,382
|
|
|
(11,996
|
)
|
|
—
|
|
|||||
Interest (Expense) Income, Net
|
(5,388
|
)
|
|
—
|
|
|
345
|
|
|
(10
|
)
|
|
(5,053
|
)
|
|||||
Intercompany Interest Income (Expense)
|
3,643
|
|
|
(1,436
|
)
|
|
(2,207
|
)
|
|
—
|
|
|
—
|
|
|||||
Net Foreign Currency Transaction (Losses) Gains
|
(639
|
)
|
|
(5
|
)
|
|
307
|
|
|
—
|
|
|
(337
|
)
|
|||||
Other (Expense) Income, Net
|
(706
|
)
|
|
(546
|
)
|
|
778
|
|
|
(36
|
)
|
|
(510
|
)
|
|||||
Total Other Income (Expense), Net
|
6,936
|
|
|
(1,399
|
)
|
|
605
|
|
|
(12,042
|
)
|
|
(5,900
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Profit Before Income Taxes
|
13,129
|
|
|
5,637
|
|
|
6,386
|
|
|
(12,023
|
)
|
|
13,129
|
|
|||||
Income Tax Expense (Benefit)
|
363
|
|
|
1,391
|
|
|
(19
|
)
|
|
(1,372
|
)
|
|
363
|
|
|||||
Net Earnings Including Noncontrolling Interest
|
12,766
|
|
|
4,246
|
|
|
6,405
|
|
|
(10,651
|
)
|
|
12,766
|
|
|||||
Net Earnings Attributable to Noncontrolling Interest
|
22
|
|
|
—
|
|
|
22
|
|
|
(22
|
)
|
|
22
|
|
|||||
Net Earnings Attributable to Tennant Company
|
$
|
12,744
|
|
|
$
|
4,246
|
|
|
$
|
6,383
|
|
|
$
|
(10,629
|
)
|
|
$
|
12,744
|
|
Condensed Consolidated Statement of Operations
|
|||||||||||||||||||
For the six months ended June 30, 2018
|
|||||||||||||||||||
(in thousands)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
||||||||||
Net Sales
|
$
|
239,983
|
|
|
$
|
312,298
|
|
|
$
|
291,469
|
|
|
$
|
(278,706
|
)
|
|
$
|
565,044
|
|
Cost of Sales
|
162,284
|
|
|
260,269
|
|
|
190,500
|
|
|
(277,445
|
)
|
|
335,608
|
|
|||||
Gross Profit
|
77,699
|
|
|
52,029
|
|
|
100,969
|
|
|
(1,261
|
)
|
|
229,436
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Expense:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and Development Expense
|
12,529
|
|
|
546
|
|
|
2,827
|
|
|
—
|
|
|
15,902
|
|
|||||
Selling and Administrative Expense
|
57,713
|
|
|
39,060
|
|
|
87,360
|
|
|
—
|
|
|
184,133
|
|
|||||
Total Operating Expense
|
70,242
|
|
|
39,606
|
|
|
90,187
|
|
|
—
|
|
|
200,035
|
|
|||||
Profit from Operations
|
7,457
|
|
|
12,423
|
|
|
10,782
|
|
|
(1,261
|
)
|
|
29,401
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in Earnings of Affiliates
|
14,401
|
|
|
1,094
|
|
|
4,029
|
|
|
(19,524
|
)
|
|
—
|
|
|||||
Interest (Expense) Income, Net
|
(10,496
|
)
|
|
—
|
|
|
466
|
|
|
(19
|
)
|
|
(10,049
|
)
|
|||||
Intercompany Interest Income (Expense)
|
7,368
|
|
|
(2,858
|
)
|
|
(4,510
|
)
|
|
—
|
|
|
—
|
|
|||||
Net Foreign Currency Transaction (Losses) Gains
|
(285
|
)
|
|
(6
|
)
|
|
(795
|
)
|
|
—
|
|
|
(1,086
|
)
|
|||||
Other (Expense) Income, Net
|
(939
|
)
|
|
(1,137
|
)
|
|
1,376
|
|
|
(60
|
)
|
|
(760
|
)
|
|||||
Total Other Income (Expense), Net
|
10,049
|
|
|
(2,907
|
)
|
|
566
|
|
|
(19,603
|
)
|
|
(11,895
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Profit Before Income Taxes
|
17,506
|
|
|
9,516
|
|
|
11,348
|
|
|
(20,864
|
)
|
|
17,506
|
|
|||||
Income Tax Expense
|
1,440
|
|
|
2,290
|
|
|
1,570
|
|
|
(3,860
|
)
|
|
1,440
|
|
|||||
Net Earnings Including Noncontrolling Interest
|
16,066
|
|
|
7,226
|
|
|
9,778
|
|
|
(17,004
|
)
|
|
16,066
|
|
|||||
Net Earnings Attributable to Noncontrolling Interest
|
48
|
|
|
—
|
|
|
48
|
|
|
(48
|
)
|
|
48
|
|
|||||
Net Earnings Attributable to Tennant Company
|
$
|
16,018
|
|
|
$
|
7,226
|
|
|
$
|
9,730
|
|
|
$
|
(16,956
|
)
|
|
$
|
16,018
|
|
Condensed Consolidated Statement of Operations
|
|||||||||||||||||||
For the three months ended June 30, 2017
|
|||||||||||||||||||
(in thousands)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
||||||||||
Net Sales
|
$
|
120,153
|
|
|
$
|
156,515
|
|
|
$
|
131,201
|
|
|
$
|
(137,078
|
)
|
|
$
|
270,791
|
|
Cost of Sales
|
82,182
|
|
|
129,779
|
|
|
91,844
|
|
|
(137,568
|
)
|
|
166,237
|
|
|||||
Gross Profit
|
37,971
|
|
|
26,736
|
|
|
39,357
|
|
|
490
|
|
|
104,554
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Expense:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and Development Expense
|
6,579
|
|
|
73
|
|
|
1,234
|
|
|
—
|
|
|
7,886
|
|
|||||
Selling and Administrative Expense
|
30,135
|
|
|
19,734
|
|
|
37,457
|
|
|
—
|
|
|
87,326
|
|
|||||
Total Operating Expense
|
36,714
|
|
|
19,807
|
|
|
38,691
|
|
|
—
|
|
|
95,212
|
|
|||||
Profit from Operations
|
1,257
|
|
|
6,929
|
|
|
666
|
|
|
490
|
|
|
9,342
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in Earnings of Affiliates
|
3,145
|
|
|
796
|
|
|
—
|
|
|
(3,941
|
)
|
|
—
|
|
|||||
Interest (Expense) Income, Net
|
(10,827
|
)
|
|
—
|
|
|
(201
|
)
|
|
(12
|
)
|
|
(11,040
|
)
|
|||||
Intercompany Interest Income (Expense)
|
3,499
|
|
|
(1,441
|
)
|
|
(2,058
|
)
|
|
—
|
|
|
—
|
|
|||||
Net Foreign Currency Transaction Gains (Losses)
|
1,033
|
|
|
(4
|
)
|
|
(1,365
|
)
|
|
—
|
|
|
(336
|
)
|
|||||
Other (Expense) Income, Net
|
(525
|
)
|
|
(150
|
)
|
|
326
|
|
|
(35
|
)
|
|
(384
|
)
|
|||||
Total Other Expense, Net
|
(3,675
|
)
|
|
(799
|
)
|
|
(3,298
|
)
|
|
(3,988
|
)
|
|
(11,760
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) Profit Before Income Taxes
|
(2,418
|
)
|
|
6,130
|
|
|
(2,632
|
)
|
|
(3,498
|
)
|
|
(2,418
|
)
|
|||||
Income Tax Expense
|
238
|
|
|
1,898
|
|
|
3,622
|
|
|
(5,520
|
)
|
|
238
|
|
|||||
Net (Loss) Earnings Including Noncontrolling Interest
|
(2,656
|
)
|
|
4,232
|
|
|
(6,254
|
)
|
|
2,022
|
|
|
(2,656
|
)
|
|||||
Net Loss Attributable to Noncontrolling Interest
|
(65
|
)
|
|
—
|
|
|
(65
|
)
|
|
65
|
|
|
(65
|
)
|
|||||
Net (Loss) Earnings Attributable to Tennant Company
|
$
|
(2,591
|
)
|
|
$
|
4,232
|
|
|
$
|
(6,189
|
)
|
|
$
|
1,957
|
|
|
$
|
(2,591
|
)
|
Condensed Consolidated Statement of Operations
|
|||||||||||||||||||
For the six months ended June 30, 2017
|
|||||||||||||||||||
(in thousands)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
||||||||||
Net Sales
|
$
|
225,858
|
|
|
$
|
295,595
|
|
|
$
|
200,035
|
|
|
$
|
(259,638
|
)
|
|
$
|
461,850
|
|
Cost of Sales
|
153,779
|
|
|
242,511
|
|
|
140,426
|
|
|
(259,156
|
)
|
|
277,560
|
|
|||||
Gross Profit
|
72,079
|
|
|
53,084
|
|
|
59,609
|
|
|
(482
|
)
|
|
184,290
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Operating Expense:
|
|
|
|
|
|
|
|
|
|
||||||||||
Research and Development Expense
|
14,525
|
|
|
160
|
|
|
1,647
|
|
|
—
|
|
|
16,332
|
|
|||||
Selling and Administrative Expense
|
62,199
|
|
|
39,806
|
|
|
59,277
|
|
|
—
|
|
|
161,282
|
|
|||||
Total Operating Expense
|
76,724
|
|
|
39,966
|
|
|
60,924
|
|
|
—
|
|
|
177,614
|
|
|||||
(Loss) Profit from Operations
|
(4,645
|
)
|
|
13,118
|
|
|
(1,315
|
)
|
|
(482
|
)
|
|
6,676
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity in Earnings of Affiliates
|
4,795
|
|
|
1,125
|
|
|
—
|
|
|
(5,920
|
)
|
|
—
|
|
|||||
Interest Expense, Net
|
(11,591
|
)
|
|
—
|
|
|
(147
|
)
|
|
(12
|
)
|
|
(11,750
|
)
|
|||||
Intercompany Interest Income (Expense)
|
4,968
|
|
|
(2,869
|
)
|
|
(2,099
|
)
|
|
—
|
|
|
—
|
|
|||||
Net Foreign Currency Transaction Gains (Losses)
|
196
|
|
|
(2
|
)
|
|
(1,727
|
)
|
|
—
|
|
|
(1,533
|
)
|
|||||
Other (Expense) Income, Net
|
(682
|
)
|
|
(225
|
)
|
|
590
|
|
|
(35
|
)
|
|
(352
|
)
|
|||||
Total Other Expense, Net
|
(2,314
|
)
|
|
(1,971
|
)
|
|
(3,383
|
)
|
|
(5,967
|
)
|
|
(13,635
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
(Loss) Profit Before Income Taxes
|
(6,959
|
)
|
|
11,147
|
|
|
(4,698
|
)
|
|
(6,449
|
)
|
|
(6,959
|
)
|
|||||
Income Tax (Benefit) Expense
|
(346
|
)
|
|
3,469
|
|
|
2,598
|
|
|
(6,067
|
)
|
|
(346
|
)
|
|||||
Net (Loss) Earnings Including Noncontrolling Interest
|
(6,613
|
)
|
|
7,678
|
|
|
(7,296
|
)
|
|
(382
|
)
|
|
(6,613
|
)
|
|||||
Net Loss Attributable to Noncontrolling Interest
|
(65
|
)
|
|
—
|
|
|
(65
|
)
|
|
65
|
|
|
(65
|
)
|
|||||
Net (Loss) Earnings Attributable to Tennant Company
|
$
|
(6,548
|
)
|
|
$
|
7,678
|
|
|
$
|
(7,231
|
)
|
|
$
|
(447
|
)
|
|
$
|
(6,548
|
)
|
Condensed Consolidated Statement of Comprehensive (Loss) Income
|
|||||||||||||||||||
For the three months ended June 30, 2018
|
|||||||||||||||||||
(in thousands)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
||||||||||
Net Earnings Including Noncontrolling Interest
|
$
|
12,766
|
|
|
$
|
4,246
|
|
|
$
|
6,405
|
|
|
$
|
(10,651
|
)
|
|
$
|
12,766
|
|
Other Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
(19,473
|
)
|
|
(326
|
)
|
|
(24,292
|
)
|
|
24,618
|
|
|
(19,473
|
)
|
|||||
Pension and retiree medical benefits
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||
Cash flow hedge
|
1,376
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,376
|
|
|||||
Income Taxes:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
261
|
|
|
—
|
|
|
260
|
|
|
(260
|
)
|
|
261
|
|
|||||
Pension and retiree medical benefits
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||||
Cash flow hedge
|
(319
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(319
|
)
|
|||||
Total Other Comprehensive Loss, net of tax
|
(18,147
|
)
|
|
(326
|
)
|
|
(24,032
|
)
|
|
24,358
|
|
|
(18,147
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Comprehensive (Loss) Income Including Noncontrolling Interest
|
(5,381
|
)
|
|
3,920
|
|
|
(17,627
|
)
|
|
13,707
|
|
|
(5,381
|
)
|
|||||
Comprehensive Income Attributable to Noncontrolling Interest
|
22
|
|
|
—
|
|
|
22
|
|
|
(22
|
)
|
|
22
|
|
|||||
Comprehensive (Loss) Income Attributable to Tennant Company
|
$
|
(5,403
|
)
|
|
$
|
3,920
|
|
|
$
|
(17,649
|
)
|
|
$
|
13,729
|
|
|
$
|
(5,403
|
)
|
Condensed Consolidated Statement of Comprehensive (Loss) Income
|
|||||||||||||||||||
For the six months ended June 30, 2018
|
|||||||||||||||||||
(in thousands)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
||||||||||
Net Earnings Including Noncontrolling Interest
|
$
|
16,066
|
|
|
$
|
7,226
|
|
|
$
|
9,778
|
|
|
$
|
(17,004
|
)
|
|
$
|
16,066
|
|
Other Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
(11,092
|
)
|
|
(490
|
)
|
|
(16,439
|
)
|
|
16,929
|
|
|
(11,092
|
)
|
|||||
Pension and retiree medical benefits
|
93
|
|
|
—
|
|
|
19
|
|
|
(19
|
)
|
|
93
|
|
|||||
Cash flow hedge
|
(1,339
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,339
|
)
|
|||||
Income Taxes:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
244
|
|
|
—
|
|
|
244
|
|
|
(244
|
)
|
|
244
|
|
|||||
Pension and retiree medical benefits
|
(154
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(154
|
)
|
|||||
Cash flow hedge
|
(820
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(820
|
)
|
|||||
Total Other Comprehensive Loss, net of tax
|
(13,068
|
)
|
|
(490
|
)
|
|
(16,176
|
)
|
|
16,666
|
|
|
(13,068
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Comprehensive Income (Loss) Including Noncontrolling Interest
|
2,998
|
|
|
6,736
|
|
|
(6,398
|
)
|
|
(338
|
)
|
|
2,998
|
|
|||||
Comprehensive Income Attributable to Noncontrolling Interest
|
48
|
|
|
—
|
|
|
48
|
|
|
(48
|
)
|
|
48
|
|
|||||
Comprehensive Income (Loss) Attributable to Tennant Company
|
$
|
2,950
|
|
|
$
|
6,736
|
|
|
$
|
(6,446
|
)
|
|
$
|
(290
|
)
|
|
$
|
2,950
|
|
Condensed Consolidated Statement of Comprehensive (Loss) Income
|
|||||||||||||||||||
For the three months ended June 30, 2017
|
|||||||||||||||||||
(in thousands)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
||||||||||
Net (Loss) Earnings Including Noncontrolling Interest
|
$
|
(2,656
|
)
|
|
$
|
4,232
|
|
|
$
|
(6,254
|
)
|
|
$
|
2,022
|
|
|
$
|
(2,656
|
)
|
Other Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
13,640
|
|
|
303
|
|
|
11,276
|
|
|
(11,579
|
)
|
|
13,640
|
|
|||||
Pension and retiree medical benefits
|
152
|
|
|
—
|
|
|
141
|
|
|
(141
|
)
|
|
152
|
|
|||||
Cash flow hedge
|
(4,506
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,506
|
)
|
|||||
Income Taxes:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Pension and retiree medical benefits
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|||||
Cash flow hedge
|
1,681
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,681
|
|
|||||
Total Other Comprehensive Income, net of tax
|
10,963
|
|
|
303
|
|
|
11,417
|
|
|
(11,720
|
)
|
|
10,963
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Comprehensive Income Including Noncontrolling Interest
|
8,307
|
|
|
4,535
|
|
|
5,163
|
|
|
(9,698
|
)
|
|
8,307
|
|
|||||
Comprehensive (Loss) Income Attributable to Noncontrolling Interest
|
(65
|
)
|
|
—
|
|
|
65
|
|
|
(65
|
)
|
|
(65
|
)
|
|||||
Comprehensive Income Attributable to Tennant Company
|
$
|
8,372
|
|
|
$
|
4,535
|
|
|
$
|
5,098
|
|
|
$
|
(9,633
|
)
|
|
$
|
8,372
|
|
Condensed Consolidated Statement of Comprehensive (Loss) Income
|
|||||||||||||||||||
For the six months ended June 30, 2017
|
|||||||||||||||||||
(in thousands)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
||||||||||
Net (Loss) Earnings Including Noncontrolling Interest
|
$
|
(6,613
|
)
|
|
$
|
7,678
|
|
|
$
|
(7,296
|
)
|
|
$
|
(382
|
)
|
|
$
|
(6,613
|
)
|
Other Comprehensive Income (Loss):
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
16,040
|
|
|
404
|
|
|
(9,421
|
)
|
|
9,017
|
|
|
16,040
|
|
|||||
Pension and retiree medical benefits
|
162
|
|
|
—
|
|
|
141
|
|
|
(141
|
)
|
|
162
|
|
|||||
Cash flow hedge
|
(4,579
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,579
|
)
|
|||||
Income Taxes:
|
|
|
|
|
|
|
|
|
|
||||||||||
Foreign currency translation adjustments
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Pension and retiree medical benefits
|
(22
|
)
|
|
—
|
|
|
(14
|
)
|
|
14
|
|
|
(22
|
)
|
|||||
Cash flow hedge
|
1,708
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,708
|
|
|||||
Total Other Comprehensive Income (Loss), net of tax
|
13,309
|
|
|
404
|
|
|
(9,294
|
)
|
|
8,890
|
|
|
13,309
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total Comprehensive Income (Loss) Including Noncontrolling Interest
|
6,696
|
|
|
8,082
|
|
|
(16,590
|
)
|
|
8,508
|
|
|
6,696
|
|
|||||
Comprehensive (Loss) Income Attributable to Noncontrolling Interest
|
(65
|
)
|
|
—
|
|
|
65
|
|
|
(65
|
)
|
|
(65
|
)
|
|||||
Comprehensive Income (Loss) Attributable to Tennant Company
|
$
|
6,761
|
|
|
$
|
8,082
|
|
|
$
|
(16,655
|
)
|
|
$
|
8,573
|
|
|
$
|
6,761
|
|
Condensed Consolidated Balance Sheet
|
|||||||||||||||||||
As of June 30, 2018
|
|||||||||||||||||||
(in thousands)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and Cash Equivalents
|
$
|
18,998
|
|
|
$
|
1,858
|
|
|
$
|
33,045
|
|
|
$
|
—
|
|
|
$
|
53,901
|
|
Restricted Cash
|
—
|
|
|
—
|
|
|
543
|
|
|
—
|
|
|
543
|
|
|||||
Net Receivables
|
763
|
|
|
92,295
|
|
|
122,265
|
|
|
—
|
|
|
215,323
|
|
|||||
Intercompany Receivables
|
38,717
|
|
|
134,113
|
|
|
—
|
|
|
(172,830
|
)
|
|
—
|
|
|||||
Inventories
|
37,145
|
|
|
16,372
|
|
|
96,099
|
|
|
(10,210
|
)
|
|
139,406
|
|
|||||
Prepaid Expenses
|
16,567
|
|
|
677
|
|
|
10,138
|
|
|
—
|
|
|
27,382
|
|
|||||
Other Current Assets
|
4,790
|
|
|
333
|
|
|
3,584
|
|
|
—
|
|
|
8,707
|
|
|||||
Total Current Assets
|
116,980
|
|
|
245,648
|
|
|
265,674
|
|
|
(183,040
|
)
|
|
445,262
|
|
|||||
Property, Plant and Equipment
|
226,599
|
|
|
12,581
|
|
|
142,427
|
|
|
—
|
|
|
381,607
|
|
|||||
Accumulated Depreciation
|
(153,143
|
)
|
|
(6,280
|
)
|
|
(53,202
|
)
|
|
—
|
|
|
(212,625
|
)
|
|||||
Property, Plant and Equipment, Net
|
73,456
|
|
|
6,301
|
|
|
89,225
|
|
|
—
|
|
|
168,982
|
|
|||||
Deferred Income Taxes
|
1,970
|
|
|
3,236
|
|
|
8,515
|
|
|
—
|
|
|
13,721
|
|
|||||
Investment in Affiliates
|
398,205
|
|
|
11,674
|
|
|
18,732
|
|
|
(428,611
|
)
|
|
—
|
|
|||||
Intercompany Loans
|
304,630
|
|
|
—
|
|
|
3,490
|
|
|
(308,120
|
)
|
|
—
|
|
|||||
Goodwill
|
12,869
|
|
|
1,739
|
|
|
171,107
|
|
|
—
|
|
|
185,715
|
|
|||||
Intangible Assets, Net
|
2,842
|
|
|
2,791
|
|
|
152,041
|
|
|
—
|
|
|
157,674
|
|
|||||
Other Assets
|
4,872
|
|
|
—
|
|
|
9,858
|
|
|
—
|
|
|
14,730
|
|
|||||
Total Assets
|
$
|
915,824
|
|
|
$
|
271,389
|
|
|
$
|
718,642
|
|
|
$
|
(919,771
|
)
|
|
$
|
986,084
|
|
LIABILITIES AND TOTAL EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Portion of Long-Term Debt
|
$
|
29,611
|
|
|
$
|
—
|
|
|
$
|
1,358
|
|
|
$
|
—
|
|
|
$
|
30,969
|
|
Accounts Payable
|
43,558
|
|
|
4,248
|
|
|
55,796
|
|
|
—
|
|
|
103,602
|
|
|||||
Intercompany Payables
|
134,113
|
|
|
2,311
|
|
|
36,406
|
|
|
(172,830
|
)
|
|
—
|
|
|||||
Employee Compensation and Benefits
|
12,399
|
|
|
11,553
|
|
|
17,337
|
|
|
—
|
|
|
41,289
|
|
|||||
Income Taxes Payable
|
347
|
|
|
—
|
|
|
2,462
|
|
|
—
|
|
|
2,809
|
|
|||||
Other Current Liabilities
|
22,317
|
|
|
13,174
|
|
|
31,262
|
|
|
—
|
|
|
66,753
|
|
|||||
Total Current Liabilities
|
242,345
|
|
|
31,286
|
|
|
144,621
|
|
|
(172,830
|
)
|
|
245,422
|
|
|||||
Long-Term Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-Term Debt
|
326,948
|
|
|
—
|
|
|
1,751
|
|
|
—
|
|
|
328,699
|
|
|||||
Intercompany Loans
|
3,490
|
|
|
128,000
|
|
|
176,630
|
|
|
(308,120
|
)
|
|
—
|
|
|||||
Employee-Related Benefits
|
12,197
|
|
|
1,972
|
|
|
8,414
|
|
|
—
|
|
|
22,583
|
|
|||||
Deferred Income Taxes
|
—
|
|
|
—
|
|
|
50,444
|
|
|
—
|
|
|
50,444
|
|
|||||
Other Liabilities
|
28,647
|
|
|
2,715
|
|
|
5,377
|
|
|
—
|
|
|
36,739
|
|
|||||
Total Long-Term Liabilities
|
371,282
|
|
|
132,687
|
|
|
242,616
|
|
|
(308,120
|
)
|
|
438,465
|
|
|||||
Total Liabilities
|
613,627
|
|
|
163,973
|
|
|
387,237
|
|
|
(480,950
|
)
|
|
683,887
|
|
|||||
Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common Stock
|
6,778
|
|
|
—
|
|
|
11,131
|
|
|
(11,131
|
)
|
|
6,778
|
|
|||||
Additional Paid-In Capital
|
22,273
|
|
|
77,551
|
|
|
384,460
|
|
|
(462,011
|
)
|
|
22,273
|
|
|||||
Retained Earnings
|
306,667
|
|
|
31,024
|
|
|
(11,489
|
)
|
|
(19,535
|
)
|
|
306,667
|
|
|||||
Accumulated Other Comprehensive Loss
|
(35,391
|
)
|
|
(1,159
|
)
|
|
(54,567
|
)
|
|
55,726
|
|
|
(35,391
|
)
|
|||||
Total Tennant Company Shareholders' Equity
|
300,327
|
|
|
107,416
|
|
|
329,535
|
|
|
(436,951
|
)
|
|
300,327
|
|
|||||
Noncontrolling Interest
|
1,870
|
|
|
—
|
|
|
1,870
|
|
|
(1,870
|
)
|
|
1,870
|
|
|||||
Total Equity
|
302,197
|
|
|
107,416
|
|
|
331,405
|
|
|
(438,821
|
)
|
|
302,197
|
|
|||||
Total Liabilities and Total Equity
|
$
|
915,824
|
|
|
$
|
271,389
|
|
|
$
|
718,642
|
|
|
$
|
(919,771
|
)
|
|
$
|
986,084
|
|
Condensed Consolidated Balance Sheet
|
|||||||||||||||||||
As of December 31, 2017
|
|||||||||||||||||||
(in thousands)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
||||||||||
ASSETS
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and Cash Equivalents
|
$
|
18,469
|
|
|
$
|
507
|
|
|
$
|
39,422
|
|
|
$
|
—
|
|
|
$
|
58,398
|
|
Restricted Cash
|
—
|
|
|
—
|
|
|
653
|
|
|
—
|
|
|
653
|
|
|||||
Net Receivables
|
683
|
|
|
88,629
|
|
|
120,204
|
|
|
—
|
|
|
209,516
|
|
|||||
Intercompany Receivables
|
53,444
|
|
|
133,778
|
|
|
—
|
|
|
(187,222
|
)
|
|
—
|
|
|||||
Inventories
|
29,450
|
|
|
12,695
|
|
|
94,542
|
|
|
(8,993
|
)
|
|
127,694
|
|
|||||
Prepaid Expenses
|
8,774
|
|
|
1,172
|
|
|
9,405
|
|
|
—
|
|
|
19,351
|
|
|||||
Other Current Assets
|
4,030
|
|
|
—
|
|
|
3,473
|
|
|
—
|
|
|
7,503
|
|
|||||
Total Current Assets
|
114,850
|
|
|
236,781
|
|
|
267,699
|
|
|
(196,215
|
)
|
|
423,115
|
|
|||||
Property, Plant and Equipment
|
225,064
|
|
|
12,155
|
|
|
145,549
|
|
|
—
|
|
|
382,768
|
|
|||||
Accumulated Depreciation
|
(146,320
|
)
|
|
(6,333
|
)
|
|
(50,097
|
)
|
|
—
|
|
|
(202,750
|
)
|
|||||
Property, Plant and Equipment, Net
|
78,744
|
|
|
5,822
|
|
|
95,452
|
|
|
—
|
|
|
180,018
|
|
|||||
Deferred Income Taxes
|
1,308
|
|
|
2,669
|
|
|
7,157
|
|
|
—
|
|
|
11,134
|
|
|||||
Investment in Affiliates
|
392,486
|
|
|
11,273
|
|
|
20,811
|
|
|
(424,570
|
)
|
|
—
|
|
|||||
Intercompany Loans
|
304,822
|
|
|
—
|
|
|
4,983
|
|
|
(309,805
|
)
|
|
—
|
|
|||||
Goodwill
|
12,869
|
|
|
1,739
|
|
|
171,436
|
|
|
—
|
|
|
186,044
|
|
|||||
Intangible Assets, Net
|
2,105
|
|
|
2,898
|
|
|
167,344
|
|
|
—
|
|
|
172,347
|
|
|||||
Other Assets
|
10,363
|
|
|
—
|
|
|
10,956
|
|
|
—
|
|
|
21,319
|
|
|||||
Total Assets
|
$
|
917,547
|
|
|
$
|
261,182
|
|
|
$
|
745,838
|
|
|
$
|
(930,590
|
)
|
|
$
|
993,977
|
|
LIABILITIES AND TOTAL EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Portion of Long-Term Debt
|
$
|
29,413
|
|
|
$
|
—
|
|
|
$
|
1,470
|
|
|
$
|
—
|
|
|
$
|
30,883
|
|
Accounts Payable
|
39,927
|
|
|
3,018
|
|
|
53,137
|
|
|
—
|
|
|
96,082
|
|
|||||
Intercompany Payables
|
133,778
|
|
|
1,963
|
|
|
51,481
|
|
|
(187,222
|
)
|
|
—
|
|
|||||
Employee Compensation and Benefits
|
8,311
|
|
|
10,355
|
|
|
18,591
|
|
|
—
|
|
|
37,257
|
|
|||||
Income Taxes Payable
|
366
|
|
|
—
|
|
|
2,472
|
|
|
—
|
|
|
2,838
|
|
|||||
Other Current Liabilities
|
20,183
|
|
|
15,760
|
|
|
33,504
|
|
|
—
|
|
|
69,447
|
|
|||||
Total Current Liabilities
|
231,978
|
|
|
31,096
|
|
|
160,655
|
|
|
(187,222
|
)
|
|
236,507
|
|
|||||
Long-Term Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Long-Term Debt
|
344,147
|
|
|
—
|
|
|
1,809
|
|
|
—
|
|
|
345,956
|
|
|||||
Intercompany Loans
|
—
|
|
|
128,000
|
|
|
181,805
|
|
|
(309,805
|
)
|
|
—
|
|
|||||
Employee-Related Benefits
|
11,160
|
|
|
3,992
|
|
|
8,715
|
|
|
—
|
|
|
23,867
|
|
|||||
Deferred Income Taxes
|
—
|
|
|
—
|
|
|
53,225
|
|
|
—
|
|
|
53,225
|
|
|||||
Other Liabilities
|
31,788
|
|
|
2,483
|
|
|
1,677
|
|
|
—
|
|
|
35,948
|
|
|||||
Total Long-Term Liabilities
|
387,095
|
|
|
134,475
|
|
|
247,231
|
|
|
(309,805
|
)
|
|
458,996
|
|
|||||
Total Liabilities
|
619,073
|
|
|
165,571
|
|
|
407,886
|
|
|
(497,027
|
)
|
|
695,503
|
|
|||||
Equity:
|
|
|
|
|
|
|
|
|
|
||||||||||
Common Stock
|
6,705
|
|
|
—
|
|
|
11,131
|
|
|
(11,131
|
)
|
|
6,705
|
|
|||||
Additional Paid-In Capital
|
15,089
|
|
|
72,483
|
|
|
384,460
|
|
|
(456,943
|
)
|
|
15,089
|
|
|||||
Retained Earnings
|
297,032
|
|
|
23,797
|
|
|
(21,219
|
)
|
|
(2,578
|
)
|
|
297,032
|
|
|||||
Accumulated Other Comprehensive Loss
|
(22,323
|
)
|
|
(669
|
)
|
|
(38,391
|
)
|
|
39,060
|
|
|
(22,323
|
)
|
|||||
Total Tennant Company Shareholders' Equity
|
296,503
|
|
|
95,611
|
|
|
335,981
|
|
|
(431,592
|
)
|
|
296,503
|
|
|||||
Noncontrolling Interest
|
1,971
|
|
|
—
|
|
|
1,971
|
|
|
(1,971
|
)
|
|
1,971
|
|
|||||
Total Equity
|
298,474
|
|
|
95,611
|
|
|
337,952
|
|
|
(433,563
|
)
|
|
298,474
|
|
|||||
Total Liabilities and Total Equity
|
$
|
917,547
|
|
|
$
|
261,182
|
|
|
$
|
745,838
|
|
|
$
|
(930,590
|
)
|
|
$
|
993,977
|
|
Condensed Consolidated Statement of Cash Flows
|
|||||||||||||||||||
For the six months ended June 30, 2018
|
|||||||||||||||||||
(in thousands)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
||||||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Cash Provided by (Used in) Operating Activities
|
$
|
26,960
|
|
|
$
|
1,409
|
|
|
$
|
(2,405
|
)
|
|
$
|
—
|
|
|
$
|
25,964
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of Property, Plant and Equipment
|
(2,288
|
)
|
|
(58
|
)
|
|
(5,380
|
)
|
|
—
|
|
|
(7,726
|
)
|
|||||
Proceeds from Disposals of Property, Plant and Equipment
|
17
|
|
|
—
|
|
|
85
|
|
|
—
|
|
|
102
|
|
|||||
Proceeds from Principal Payments Received on Long-Term Note Receivable
|
—
|
|
|
—
|
|
|
706
|
|
|
—
|
|
|
706
|
|
|||||
Purchase of Intangible Assets
|
(1,000
|
)
|
|
—
|
|
|
(195
|
)
|
|
—
|
|
|
(1,195
|
)
|
|||||
Loan Payments from Parent
|
—
|
|
|
—
|
|
|
1,493
|
|
|
(1,493
|
)
|
|
—
|
|
|||||
Net Cash Used in Investing Activities
|
(3,271
|
)
|
|
(58
|
)
|
|
(3,291
|
)
|
|
(1,493
|
)
|
|
(8,113
|
)
|
|||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Loan Payments to Subsidiaries
|
(1,493
|
)
|
|
—
|
|
|
—
|
|
|
1,493
|
|
|
—
|
|
|||||
Payments of Long-Term Debt
|
(18,000
|
)
|
|
—
|
|
|
(133
|
)
|
|
—
|
|
|
(18,133
|
)
|
|||||
Change in Capital Lease Obligations
|
—
|
|
|
—
|
|
|
59
|
|
|
—
|
|
|
59
|
|
|||||
Proceeds from Issuances of Common Stock
|
3,724
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,724
|
|
|||||
Dividends Paid
|
(7,553
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,553
|
)
|
|||||
Net Cash (Used in) Provided by Financing Activities
|
(23,322
|
)
|
|
—
|
|
|
(74
|
)
|
|
1,493
|
|
|
(21,903
|
)
|
|||||
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
|
162
|
|
|
—
|
|
|
(717
|
)
|
|
—
|
|
|
(555
|
)
|
|||||
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
|
529
|
|
|
1,351
|
|
|
(6,487
|
)
|
|
—
|
|
|
(4,607
|
)
|
|||||
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
|
18,469
|
|
|
507
|
|
|
40,075
|
|
|
—
|
|
|
59,051
|
|
|||||
Cash, Cash Equivalents and Restricted Cash at End of Period
|
$
|
18,998
|
|
|
$
|
1,858
|
|
|
$
|
33,588
|
|
|
$
|
—
|
|
|
$
|
54,444
|
|
Condensed Consolidated Statement of Cash Flows
|
|||||||||||||||||||
For the six months ended June 30, 2017
|
|||||||||||||||||||
(in thousands)
|
Parent
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Eliminations
|
|
Total Tennant Company
|
||||||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Cash (Used in) Provided by Operating Activities
|
$
|
(29,401
|
)
|
|
$
|
188
|
|
|
$
|
26,718
|
|
|
$
|
—
|
|
|
$
|
(2,495
|
)
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Purchases of Property, Plant and Equipment
|
(4,639
|
)
|
|
—
|
|
|
(4,506
|
)
|
|
—
|
|
|
(9,145
|
)
|
|||||
Proceeds from Disposals of Property, Plant and Equipment
|
14
|
|
|
—
|
|
|
2,414
|
|
|
—
|
|
|
2,428
|
|
|||||
Issuance of Long-Term Note Receivable
|
—
|
|
|
—
|
|
|
(1,500
|
)
|
|
—
|
|
|
(1,500
|
)
|
|||||
Acquisition of Businesses, Net of Cash Acquired
|
(304
|
)
|
|
—
|
|
|
(353,231
|
)
|
|
—
|
|
|
(353,535
|
)
|
|||||
Purchase of Intangible Asset
|
(2,500
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,500
|
)
|
|||||
Change in Investments in Subsidiaries
|
(193,639
|
)
|
|
—
|
|
|
—
|
|
|
193,639
|
|
|
—
|
|
|||||
Loan Payments to Subsidiaries and Parent
|
(159,780
|
)
|
|
—
|
|
|
(1,771
|
)
|
|
161,551
|
|
|
—
|
|
|||||
Net Cash Used in Investing Activities
|
(360,848
|
)
|
|
—
|
|
|
(358,594
|
)
|
|
355,190
|
|
|
(364,252
|
)
|
|||||
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
||||||||||
Proceeds from Short-Term Debt
|
300,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
|||||
Repayments of Short-Term Debt
|
(300,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(300,000
|
)
|
|||||
Loan Borrowings from Subsidiaries and Parent
|
1,771
|
|
|
—
|
|
|
159,780
|
|
|
(161,551
|
)
|
|
—
|
|
|||||
Change in Subsidiary Equity
|
—
|
|
|
—
|
|
|
193,639
|
|
|
(193,639
|
)
|
|
—
|
|
|||||
Proceeds from Issuance of Long-Term Debt
|
440,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
440,000
|
|
|||||
Payments of Long-Term Debt
|
(58,393
|
)
|
|
—
|
|
|
(78
|
)
|
|
—
|
|
|
(58,471
|
)
|
|||||
Payments of Debt Issuance Costs
|
(16,039
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,039
|
)
|
|||||
Proceeds from Issuance of Common Stock
|
3,843
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,843
|
|
|||||
Dividends Paid
|
(7,463
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,463
|
)
|
|||||
Net Cash Provided by Financing Activities
|
363,719
|
|
|
—
|
|
|
353,341
|
|
|
(355,190
|
)
|
|
361,870
|
|
|||||
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
|
(176
|
)
|
|
—
|
|
|
1,051
|
|
|
—
|
|
|
875
|
|
|||||
Net (Decrease) Increase in Cash, Cash Equivalents and Restricted Cash
|
(26,706
|
)
|
|
188
|
|
|
22,516
|
|
|
—
|
|
|
(4,002
|
)
|
|||||
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
|
38,484
|
|
|
226
|
|
|
19,840
|
|
|
—
|
|
|
58,550
|
|
|||||
Cash, Cash Equivalents and Restricted Cash at End of Period
|
$
|
11,778
|
|
|
$
|
414
|
|
|
$
|
42,356
|
|
|
$
|
—
|
|
|
$
|
54,548
|
|
20.
|
Subsequent Event
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||||||||||
|
June 30
|
|
June 30
|
||||||||||||||||||||||||
|
2018
|
|
%
|
|
2017
|
|
%
|
|
2018
|
|
%
|
|
2017
|
|
%
|
||||||||||||
Net Sales
|
$
|
292,197
|
|
|
100.0
|
|
|
$
|
270,791
|
|
|
100.0
|
|
|
$
|
565,044
|
|
|
100.0
|
|
|
$
|
461,850
|
|
|
100.0
|
|
Cost of Sales
|
173,398
|
|
|
59.3
|
|
|
166,237
|
|
|
61.4
|
|
|
335,608
|
|
|
59.4
|
|
|
277,560
|
|
|
60.1
|
|
||||
Gross Profit
|
118,799
|
|
|
40.7
|
|
|
104,554
|
|
|
38.6
|
|
|
229,436
|
|
|
40.6
|
|
|
184,290
|
|
|
39.9
|
|
||||
Operating Expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Research and Development Expense
|
7,906
|
|
|
2.7
|
|
|
7,886
|
|
|
2.9
|
|
|
15,902
|
|
|
2.8
|
|
|
16,332
|
|
|
3.5
|
|
||||
Selling and Administrative Expense
|
91,864
|
|
|
31.4
|
|
|
87,326
|
|
|
32.2
|
|
|
184,133
|
|
|
32.6
|
|
|
161,282
|
|
|
34.9
|
|
||||
Total Operating Expense
|
99,770
|
|
|
34.1
|
|
|
95,212
|
|
|
35.2
|
|
|
200,035
|
|
|
35.4
|
|
|
177,614
|
|
|
38.5
|
|
||||
Profit from Operations
|
19,029
|
|
|
6.5
|
|
|
9,342
|
|
|
3.4
|
|
|
29,401
|
|
|
5.2
|
|
|
6,676
|
|
|
1.4
|
|
||||
Other Income (Expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Interest Income
|
952
|
|
|
0.3
|
|
|
793
|
|
|
0.3
|
|
|
1,701
|
|
|
0.3
|
|
|
877
|
|
|
0.2
|
|
||||
Interest Expense
|
(6,005
|
)
|
|
(2.1
|
)
|
|
(11,833
|
)
|
|
(4.4
|
)
|
|
(11,750
|
)
|
|
(2.1
|
)
|
|
(12,627
|
)
|
|
(2.7
|
)
|
||||
Net Foreign Currency Transaction Losses
|
(337
|
)
|
|
(0.1
|
)
|
|
(336
|
)
|
|
(0.1
|
)
|
|
(1,086
|
)
|
|
(0.2
|
)
|
|
(1,533
|
)
|
|
(0.3
|
)
|
||||
Other Expense, Net
|
(510
|
)
|
|
(0.2
|
)
|
|
(384
|
)
|
|
(0.1
|
)
|
|
(760
|
)
|
|
(0.1
|
)
|
|
(352
|
)
|
|
(0.1
|
)
|
||||
Total Other Expense, Net
|
(5,900
|
)
|
|
(2.0
|
)
|
|
(11,760
|
)
|
|
(4.3
|
)
|
|
(11,895
|
)
|
|
(2.1
|
)
|
|
(13,635
|
)
|
|
(3.0
|
)
|
||||
Profit (Loss) Before Income Taxes
|
13,129
|
|
|
4.5
|
|
|
(2,418
|
)
|
|
(0.9
|
)
|
|
17,506
|
|
|
3.1
|
|
|
(6,959
|
)
|
|
(1.5
|
)
|
||||
Income Tax Expense (Benefit)
|
363
|
|
|
0.1
|
|
|
238
|
|
|
0.1
|
|
|
1,440
|
|
|
0.3
|
|
|
(346
|
)
|
|
(0.1
|
)
|
||||
Net Earnings (Loss) Including Noncontrolling Interest
|
12,766
|
|
|
4.4
|
|
|
(2,656
|
)
|
|
(1.0
|
)
|
|
16,066
|
|
|
2.8
|
|
|
(6,613
|
)
|
|
(1.4
|
)
|
||||
Net Earnings (Loss) Attributable to Noncontrolling Interest
|
22
|
|
|
—
|
|
|
(65
|
)
|
|
—
|
|
|
48
|
|
|
—
|
|
|
(65
|
)
|
|
—
|
|
||||
Net Earnings (Loss) Attributable to Tennant Company
|
$
|
12,744
|
|
|
4.4
|
|
|
$
|
(2,591
|
)
|
|
(1.0
|
)
|
|
$
|
16,018
|
|
|
2.8
|
|
|
$
|
(6,548
|
)
|
|
(1.4
|
)
|
Net Earnings (Loss) Attributable to Tennant Company per Share
|
$
|
0.69
|
|
|
|
|
$
|
(0.15
|
)
|
|
|
|
|
$
|
0.88
|
|
|
|
|
$
|
(0.37
|
)
|
|
|
|
2018 v. 2017
|
||
|
Three Months Ended
|
|
Six Months Ended
|
|
June 30
|
|
June 30
|
Organic Growth:
|
|
|
|
Volume
|
3.7%
|
|
4.3%
|
Price
|
1.5%
|
|
1.5%
|
Organic Growth
|
5.2%
|
|
5.8%
|
Foreign Currency
|
2.7%
|
|
2.8%
|
Acquisitions
|
—%
|
|
13.7%
|
Total
|
7.9%
|
|
22.3%
|
•
|
An organic sales increase of approximately
5.2%
, which excludes the effects of foreign currency exchange and acquisitions, resulting from an approximate
3.7%
volume increase and a
1.5%
price increase. The volume increase was primarily due to broad-based equipment sales growth in the Americas and increased sales of commercial equipment in the EMEA region, mostly attributed to strong sales through strategic accounts in these regions. These regions also experienced increased sales of parts and consumables as well as higher service sales. Sales of new products introduced within the past three years totaled 35% of equipment revenue for the second quarter of 2018, compared to 49% in the 2017 second quarter. The price increase was the result of selling price increases, which averaged 3% in most geographies, with an effective date of February 1, 2018. We expect the increase in selling prices to increase Net Sales in the range of 1% to 2% for the 2018 full year. The impact to gross margin is estimated to be minimal as these selling price increases were taken to offset inflation.
|
•
|
A favorable impact from foreign currency exchange of approximately
2.7%
.
|
•
|
13.7%
from the second quarter 2017 acquisition of the IPC Group.
|
•
|
An organic sales increase of approximately
5.8%
, which excludes the effects of foreign currency exchange and acquisitions, resulting from an approximate
4.3%
volume increase and a
1.5%
price increase. The volume increase was primarily due to increased sales of commercial equipment in the Americas and EMEA regions, mostly attributed to strong sales through strategic accounts in these regions. These regions also experienced increased sales of parts and consumables as well as higher service sales. Sales of new products introduced within the past three years totaled 39% for the first six months of 2018, compared to 45% for the first six months of 2017. The price increase was the result of selling price increases, which averaged 3% in most geographies, with an effective date of February 1, 2018. We expect the increase in selling prices to increase Net Sales in the range of 1% to 2% for the 2018 full year. The impact to gross margin is estimated to be minimal as these selling price increases were taken to offset inflation.
|
•
|
A favorable impact from foreign currency exchange of approximately
2.8%
.
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||||||
|
|
June 30
|
|
June 30
|
||||||||||||||||
|
|
2018
|
|
2017
|
|
%
|
|
2018
|
|
2017
|
|
%
|
||||||||
Americas
|
|
$
|
178,752
|
|
|
$
|
169,146
|
|
|
5.7
|
|
$
|
341,390
|
|
|
$
|
311,916
|
|
|
9.4
|
Europe, Middle East and Africa
|
|
87,410
|
|
|
77,356
|
|
|
13.0
|
|
176,226
|
|
|
110,632
|
|
|
59.3
|
||||
Asia Pacific
|
|
26,035
|
|
|
24,289
|
|
|
7.2
|
|
47,428
|
|
|
39,302
|
|
|
20.7
|
||||
Total
|
|
$
|
292,197
|
|
|
$
|
270,791
|
|
|
7.9
|
|
$
|
565,044
|
|
|
$
|
461,850
|
|
|
22.3
|
•
|
an increase in Net Sales of
7.9%
in the
second
quarter of
2018
compared to the
second
quarter of
2017
;
|
•
|
gross profit margin improvement of
210
basis points in the
second
quarter of
2018
compared to the
second
quarter of
2017
;
|
•
|
an
80
basis point decrease in S&A Expense as a percentage of Net Sales in the
second
quarter of
2018
compared to the
second
quarter of
2017
; and
|
•
|
a favorable impact from a
$5.8 million
decrease in Interest Expense in the
second
quarter of
2018
compared to the
second
quarter of
2017
.
|
•
|
an increase in Net Sales of
22.3%
in the
first
six
months of
2018
compared to the
first
six
months of
2017
;
|
•
|
gross profit margin improvement of
70
basis points in the
first
six
months of
2018
compared to the
first
six
months of
2017
; and
|
•
|
a
230
basis point decrease in S&A Expense as a percentage of Net Sales in the
first
six
months of
2018
compared to the
first
six
months of
2017
.
|
|
Six Months Ended
|
||||||
|
June 30
|
||||||
|
2018
|
|
2017
|
||||
Operating Activities
|
$
|
25,964
|
|
|
$
|
(2,495
|
)
|
Investing Activities:
|
|
|
|
||||
Purchases of Property, Plant and Equipment, Net of Disposals
|
(7,624
|
)
|
|
(6,717
|
)
|
||
Proceeds from Principal Payments Received on Long-Term Note Receivable
|
706
|
|
|
—
|
|
||
Issuance of Long-Term Note Receivable
|
—
|
|
|
(1,500
|
)
|
||
Acquisition of Business, Net of Cash, Cash Equivalents and Restricted Cash Acquired
|
—
|
|
|
(353,535
|
)
|
||
Purchase of Intangible Assets
|
(1,195
|
)
|
|
(2,500
|
)
|
||
Financing Activities
|
(21,903
|
)
|
|
361,870
|
|
||
Effect of Exchange Rate Changes on Cash, Cash Equivalents and Restricted Cash
|
(555
|
)
|
|
875
|
|
||
Net Decrease in Cash, Cash Equivalents and Restricted Cash
|
$
|
(4,607
|
)
|
|
$
|
(4,002
|
)
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
For the Quarter Ended June 30, 2018
|
|
Total Number
of Shares
Purchased
(1)
|
|
Average Price
Paid Per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
|
|||||
April 1 - 30, 2018
|
|
3,360
|
|
|
$
|
64.47
|
|
|
—
|
|
|
1,392,892
|
|
May 1 - 31, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,392,892
|
|
|
June 1 - 30, 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,392,892
|
|
|
Total
|
|
3,360
|
|
|
$
|
64.47
|
|
|
—
|
|
|
1,392,892
|
|
(1)
|
Includes 3,360 shares delivered or attested to in satisfaction of the exercise price and/or tax withholding obligations by employees who exercised stock options or restricted stock under employee share-based compensation plans.
|
Item 6.
|
Exhibits
|
Item #
|
|
Description
|
|
Method of Filing
|
|
3i
|
|
|
|
Incorporated by reference to Exhibit 3i to the Company’s report on Form 10-Q for the quarterly period ended June 30, 2006.
|
|
3ii
|
|
|
|
Incorporated by reference to Exhibit 3iii to the Company’s Form 8-K dated December 14, 2010.
|
|
3iii
|
|
|
|
Incorporated by reference to Exhibit 3iii to the Company's report on Form 10-Q for the quarterly period ended March 31, 2018.
|
|
4.1
|
|
|
|
Incorporated by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed April 24, 2017.
|
|
10.1
|
|
|
|
Filed herewith electronically.
|
|
31.1
|
|
|
|
Filed herewith electronically.
|
|
31.2
|
|
|
|
Filed herewith electronically.
|
|
32.1
|
|
|
|
Filed herewith electronically.
|
|
32.2
|
|
|
|
Filed herewith electronically.
|
|
101
|
|
|
The following financial information from Tennant Company's Quarterly Report on Form 10-Q for the period ended June 30, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2018 and 2017; (ii) Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended June 30, 2018 and 2017; (iii) Condensed Consolidated Balance Sheets as of June 30, 2018 and December 31, 2017; (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017; and (v) Notes to the Condensed Consolidated Financial Statements.
|
|
Filed herewith electronically.
|
|
|
|
|
TENNANT COMPANY
|
|
|
|
|
|
Date:
|
|
August 1, 2018
|
|
/s/ H. Chris Killingstad
|
|
|
|
|
H. Chris Killingstad
President and Chief Executive Officer
|
|
|
|
|
|
Date:
|
|
August 1, 2018
|
|
/s/ Thomas Paulson
|
|
|
|
|
Thomas Paulson
Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)
|
|
Name of Participant:
|
|
No. of Units:
|
Grant Date:
|
Vesting Date:
______, 20_ (settlement and payment of units will be in accordance with the deferral election form)
|
1.
|
Grant
. The Participant is granted the number of Units specified above. Unless and until these Units vest as provided in Section 3 below, they are subject to the restrictions provided for in this Agreement and are referred to as “Restricted Stock Units.” Each Unit represents the right to receive one Share. Prior to their settlement or forfeiture in accordance with the terms of this Agreement, the Units granted to the Participant will be credited to an account in the Participant’s name maintained by the Company. This account shall be unfunded and maintained for book-keeping purposes only, with the Units simply representing an unfunded and unsecured contingent obligation of the Company.
|
2.
|
Fair Market Value of Units
. The fair market value of a Unit subject to this Agreement shall at all times be equal to the Fair Market Value of a Share of the Company’s Stock.
|
3.
|
Vesting and Payment
.
|
a.
|
Generally
. Except as otherwise provided herein, if Participant remains a Non-Employee Director continuously from the Grant Date specified above (the “Grant Date”) to the Vesting Date also specified above (the “Vesting Date”), the Units will vest on the Vesting Date.
|
b.
|
Accelerated Vesting
.
|
i.
|
If a Participant’s service as a Non-Employee Director of the Company (“Service”) terminates prior to the Vesting Date due to his or her death or Disability, then all of the Units subject this Agreement shall immediately vest in full.
|
ii.
|
If a Participant’s Service terminates prior to the Vesting Date due to his or her Retirement (as defined below), then the Participant shall be entitled to have a pro rata portion of the Units vest on the Vesting Date, and the balance of the Units shall be forfeited. The pro rata portion shall be determined by utilizing a fraction the numerator of which is the number of days between the Grant Date and the date Participant’s Service ended, and the denominator of which is the number of days between such Grant Date and the Vesting Date. As used herein, “Retirement” means a Participant’s voluntary separation from Service.
|
iii.
|
Upon the occurrence of a Change of Control (as defined in Section 2.1(f) of the Plan after giving effect to the last sentence thereof) prior to the Vesting Date and while the Participant’s service to the Company continues, all of the Units subject to this Agreement shall immediately vest and be paid in full.
|
c.
|
Forfeiture
. If a Participant’s Service terminates prior to the Vesting Date specified at the beginning of the Agreement other than as a result of an action described in Section 3(b), the Participant shall forfeit all Units and dividend equivalents subject to this Agreement.
|
d.
|
Settlement and Payment of Units
. Subject to Section 5 below, payment of vested Units subject to this Agreement shall be made by the Company delivering one Share of Common Stock for each vested Unit to the Participant (i) as soon as administratively practicable after the Units vest (but no later than the 15
th
day of the third calendar month after the date the Units vest, and the Participant will have no power to affect such timing) or (ii) if the Participant has previously submitted to the Company no later than the December 31 immediately prior to the calendar year in which the Grant Date occurs a Deferral Election Form in the form attached hereto as Exhibit A, as soon as administratively practicable (but no later than ten days after) such other settlement date as set forth in the Deferral Election Form, and the Participant shall have no power to affect the timing of such issuance. Such issuance shall be evidenced by a stock certificate to the Participant, appropriate entry on the books of the Company or a duly authorized transfer agent of the Company with a notice of issuance provided to the Participant or by the electronic delivery of the Shares to a brokerage account the Participant designates, and shall be in complete satisfaction of such vested Units. If the Units that vest and become payable include a fractional Unit, the Company shall round the number of vested Units to the nearest whole Unit prior to delivery of Shares as provided herein. If the ownership of or issuance of Shares to the Participant as provided herein is not feasible or practical due to applicable exchange controls, securities or tax laws or other provisions of applicable law, as determined by the Committee in its sole discretion, the Participant or his/her legal representative shall receive cash proceeds in an amount equal to the Fair Market Value (as of the date vesting occurs or, if the Participant has elected a deferred settlement date, as of such settlement date) of the Shares otherwise issuable to the Participant.
|
e.
|
Effect
. Whenever the Company shall become obligated to make payment in respect of a Unit subject to this Agreement, all rights of the Participant with respect to such Unit, other than the right to such payment, shall terminate and be of no further force or effect and such Unit shall be cancelled.
|
f.
|
Payments on Death.
Any payment due under this Agreement following the death of the Participant shall be paid to the Successor of the Participant.
|
4.
|
Dividend Equivalents
. In the event the Company shall pay cash dividends on its Shares on or after the date of this Agreement, the Company shall credit, as of the dividend record date, an amount of cash dividend equivalents to the Participant’s account. The amount of the dividend equivalents credited shall be determined by multiplying the number of Units credited to the Participant’s account as of the dividend record date times the dollar amount of the cash dividend per Share. The Participant’s right to receive such accrued dividend equivalents shall vest, and the amount of the accrued dividend equivalents shall be paid in cash, to the same extent and at the same time as the underlying Units to which the dividend equivalents relate, as provided in Section 3 of this Agreement. No interest shall accrue on any unpaid dividend equivalents. Any dividend equivalents accrued on Units that are forfeited in accordance with this Agreement shall also be forfeited.
|
5.
|
Adjustments for Changes in Capitalization
. The Units subject to this Agreement shall be subject to adjustments for changes in the Company’s capitalization as provided in Section 16 of the Plan.
|
6.
|
No Transfer
. The Units may not be pledged, assigned or transferred except as expressly provided in Section 6.3 of the Plan.
|
7.
|
No Shareholder Rights Until Payment
. The Participant shall not have any of the rights of a shareholder of the Company in connection with the award of Units or dividend equivalents subject to this Agreement unless and until the Participant becomes the holder of record of the Common Stock issued in payment of the Units.
|
8.
|
Service as a Director
. This Agreement shall not give the Participant a right to continued service on the Board, nor will it interfere in any way with any right of the Board, the Company or its shareholders to terminate such service.
|
9.
|
Restricted Stock Units Subject to Plan, Articles of Incorporation and By-Laws
. The Participant acknowledges that this Award is subject to the Plan, the Articles of Incorporation, as amended from time to time, and the By-Laws, as amended from time to time, of the Company, and any applicable federal or state laws, rules or regulations.
|
10.
|
Obligation to Reserve Sufficient Shares
. The Company shall at all times during the term of this Award reserve and keep available a sufficient number of Shares to satisfy this Agreement.
|
11.
|
Binding Effect
. This Agreement shall be binding in all respects on the heirs, representatives, successors and assigns of the Participant, and on the successors and assigns of the Company.
|
12.
|
Choice of Law
. This Agreement is entered into under the laws of the State of Minnesota and shall be construed and interpreted thereunder (without regard to its conflict of law principles).
|
13.
|
Section 409A of the Code
. The provisions of this Agreement shall be interpreted and construed in a manner intended to comply with Section 409A of the Code, and shall specifically be subject to Section 27 of the Plan.
|
14.
|
Interpretation of This Agreement
. All decisions and interpretations made by the Committee with regard to any question arising hereunder or under the Plan shall be binding and conclusive upon the Company and the Participant. This Agreement is subject to and shall be construed in accordance with the terms of the Plan. If there is any inconsistency between the provisions of this Agreement and the Plan, the provisions of the Plan shall govern.
|
15.
|
Nature of the Award
. The Participant understands that the value that may be realized, if any, from the Award is contingent, and depends on the future market price of the Common Stock, among other factors. The Participant further confirms his or her understanding that the Award is intended to promote stock ownership and to align Non-Employee Directors’ interests with those of the Company’s shareholders. The Participant acknowledges that the Award is subject to vesting conditions and will be cancelled if vesting conditions are not satisfied. The Participant also understands that (i) the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (ii) all decisions with respect to any future award will be at the sole discretion of the Company; (iii) his or her participation in the Plan is voluntary; and (iv) no claim or entitlement to compensation or damages arises from termination of this Award or diminution in value of this Award, and he or she irrevocably releases the Company, and its subsidiaries from any such claim that may arise.
|
16.
|
Electronic Delivery and Acceptance
. The Company may deliver any documents related to this Award by electronic means and request the Participant’s acceptance of this Agreement by electronic means. The Participant hereby consents to receive all applicable documentation by electronic delivery and to participate in the Plan through an on-line (and/or voice activated) system established and maintained by the Company or the Company’s third-party stock plan administrator.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Tennant Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
|
August 1, 2018
|
|
/s/ H. Chris Killingstad
|
|
|
|
|
H. Chris Killingstad
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Tennant Company;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
|
August 1, 2018
|
|
/s/ Thomas Paulson
|
|
|
|
|
Thomas Paulson
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
|
August 1, 2018
|
|
/s/ H. Chris Killingstad
|
|
|
|
|
H. Chris Killingstad
|
|
|
|
|
President and Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in this periodic report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Date:
|
|
August 1, 2018
|
|
/s/ Thomas Paulson
|
|
|
|
|
Thomas Paulson
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|