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Investor Presentation March 2025 www.investors.tennantco.com
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Tennant Company Safe Harbor Statement Certain statements contained in this document are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. These statements do not relate to strictly historical or current facts and provide current expectations or forecasts of future events. Any such expectations or forecasts of future events are subject to a variety of factors. These include factors that affect all businesses operating in a global market as well as matters specific to us and the markets the Company serves. Particular risks and uncertainties presently facing it include: economic uncertainty throughout the world; geopolitical tensions or health epidemics; the Company's ability to comply with global laws and regulations; the Company's ability to adapt pricing to the competitive marketplace and customer pricing sensitivities; the competition in the Company's business; fluctuations in the cost, quality or availability of raw materials and purchased components; increasing cost pressures; unforeseen product liability claims or product quality issues; the Company's ability to attract, retain and develop key personnel and create effective succession planning strategies; the Company's ability to effectively develop and manage strategic planning and growth processes and the related operational plans; the Company's ability to successfully upgrade and evolve its information technology systems; the Company's ability to successfully protect our information technology systems from cybersecurity risks; the occurrence of a significant business interruption; the Company's ability to maintain the health and safety of its workers; the Company's ability to integrate acquisitions; and the Company's ability to develop and commercialize new innovative products and services. We caution that forward-looking statements must be considered carefully and that actual results may differ in material ways due to risks and uncertainties both known and unknown. Information about factors that could materially affect the Company’s results can be found in our 2024 Form 10-K. Shareholders, potential investors and other readers are urged to consider these factors in evaluating forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. Investors are advised to consult any further disclosures by the Company in its filings with the Securities and Exchange Commission and in other written statements on related subjects. It is not possible to anticipate or foresee all risk factors, and investors should not consider any list of such factors to be an exhaustive or complete list of all risks or uncertainties.
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3 Differentiated Product Portfolio & Service Offering Global Leader in an Expanding Market ABOUT US Drives Growth and a Strong Competitive Advantage World-Class Service Model Underpinned by Global Megatrends Compelling Growth Opportunities Driving the Future of Mechanized Cleaning Disruptive Innovation Maximizing Shareholder Value Growth Strategy Enabled by Strong Financial Position Creating a cleaner, safer, healthier world Unique Value Proposition
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TNC Investor Presentation | March 2025 Tennant Company A Global Leader in the Mechanized Cleaning Space 4 ~14% TNC Market Share* ~$8.6B Addressable Global Market* Americas ~~25% Market Share ~$3.4B Market * Refer to endnotes for definitions of certain terms used in this presentation. EMEA ~~~10% Market Share ~$3.4B Market APAC ~~5% Market Share ~$1.8B Market Solid positions in major geographies With significant growth opportunities
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TNC Investor Presentation | March 2025 Tennant Company Multi-Channel Strategy Maximizes Growth Opportunities 5 Market-Leading Brands SERVICE E-COMMERCE RENTAL DIRECT DISTRIBUTOR #1 Contract Cleaners #2 Retail #3 Manufacturing #4 Logistics #5 Healthcare 2024 Net Sales by Product Category Multi-Channel Approach Diverse Vertical Markets Strong Aftermarket Business 2024 Net Sales ($USD)
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TNC Investor Presentation | March 2025 6 Tennant Company Megatrend Driving Innovation and Growth Opportunities Labor availability and cost challenges driving automationAutomation Increased desire for more environmentally friendly solutions Sustainability Customer-led push from internal combustion engines to battery-powered mechanized cleaning Electrification Modernization Shift to mechanized cleaning in developing countries Strategically positioned to capitalize on megatrends Innovation focused on high growth opportunities X4 ROVR Robotic Floor Scrubber
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TNC Investor Presentation | March 2025 Tennant Company Service as a Competitive Advantage 7 Differentiated Offering Attractive Recurring Revenue 2024 Net Sales ($USD) Local 900+ Field Service Techs Experienced 9+ Years Average Tenue Efficient Mobile capable and AI-driven virtual service Aftermarket Opportunity ~80% Aftermarket value = 80% of equipment price over machine life Upside Potential ~70% Capture of aftermarket today
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TNC Investor Presentation | March 2025 Tennant Company Product Innovation Focused on High Growth Segments 8 Product Line Extensions Leverage acquired platforms to expand market reach Small Space Lead the mechanization of small-space cleaning AMR Lead the disruption of robotic cleaning Go-to-Market Coverage Channel Strength Brand Portfolio Right to Win Focusing on the faster growth segments of the market Opportunity to grow above market rates T380 AMR Robotic Floor Scrubber
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TNC Investor Presentation | March 2025 Tennant Company Automating Cleaning to Create and Capture Value 9 Manual Cleaning Mechanized Cleaning Robotic Cleaning Fully Autonomous Cleaning 2x labor productivity 10x labor productivity Typical Floorcare Costs 6x labor productivity Typical Floorcare Costs Typical Floorcare Costs Typical Floorcare Costs Tennant solutions deliver significant productivity increase and strong customer ROI Addressing customer needs and growing market share
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TNC Investor Presentation | March 2025 Tennant Company Strong FCF Provides Foundation and Flexibility for Growth-Focused Capital Allocation 10 Invest in the business and organic growth ► New product innovation ► Manufacturing optimization ► Capex $20-$25m per year FCF and Net Leverage Acquisitions ► Leverage core competencies into adjacencies Shareholder Return ► Strong dividend history (50+ years of increases) ► Opportunistic share repurchases to offset dilution Strong Balance Sheet ► Strong FCF generation ► Net leverage ratio target of 1x – 2x Adjusted EBITDA ► Provides M&A capacity ~
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TNC Investor Presentation | March 2025 Tennant Company Strategic Focus on Driving Organic Net Sales Growth 11 ~1% ~1% ~1% ~1%-2% Net Sales $M 3-5% CAGR New Business Models New Channels & Markets Product Innovation Pricing Excellence Favorable Megatrends Drivers
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TNC Investor Presentation | March 2025 Tennant Company Strategic M&A Priorities Aligned to Enterprise Strategy 12 Defend & Grow Cleaning Core Maintain and Enhance Strong Margins & Growth Drive Value Through Connected Autonomy Gain Share and Increase Recurring Revenue Models Expand Portfolio into Mobile Equipment Adjacencies Diversify and Grow Addressable Market ~$8.6B Market ~$3-4B Market ~$6B Market 1 2 3 Q1 ‘24 Q1 ‘24 Grow TAM Enhance Resilient Revenue Accelerate Growth Expand Margins Sustained Value-Add
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TNC Investor Presentation | March 2025 Tennant Company Strong Track Record of Financial Performance 13 Grow TAM 1 - Net sales excludes divestiture of coatings business in Q1 2021 ** - Estimated based on the midpoint of guidance range Net Sales ($M)1 Adjusted EBITDA ($M) & Margin (%) Net Income-to-FCF Conversion Adjusted EPS ($) ** ** ** ** **
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TNC Investor Presentation | March 2025 14 Significant momentum ► Order demand growing above long-range targets ► Execution on enterprise growth strategies of pricing, new product development and go-to-market investments Strong financial position ► Healthy balance sheet and strong cash flow generation provides opportunities M&A opportunities Margin expansion initiatives ► Continue to prioritize investments aligned with long-term growth drivers while maintaining spending discipline ► Margin expansion through both gross margin (~30bps) and S&A (~45bps) Organic Net Sales Growth 3% - 5% Adj. EBITDA Margin Expansion* 50-100bps Free Cash Flow Conversion 100% Net Sales added from M&A ~$150m Long-Term Growth Targets T291 Small Walk-behind Scrubber *Non-GAAP Measures: refer to the Appendix of this presentation for additional information and reconciliation Tennant Company Attractive Long-Term Model
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TNC Investor Presentation | March 2025 15 APPENDIX www.investors.tennantco.com
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TNC Earnings Release Call | Fourth Quarter and Full Year 2024 Fourth-quarter and full-year net income decreased compared to prior year periods ► Higher operating costs associated with ERP modernization costs, legal contingency accruals, restructuring and M&A transaction and integration costs. Partly offset by sales growth. ► Interest expense decreased due to reduced interest rates ► Fourth quarter tax benefit of ~$4m due to a discrete noncash exceptional tax item Fourth quarter adjusted EPS of $1.52 per diluted share ► $1.92/share in Q4 2023 Full year adjusted EPS of $6.57 per diluted share ► Flat compared to 2023 Tennant Company Fourth-Quarter and Full-Year Financial Performance Net Income In millions of USD Adjusted EPS 16
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TNC Earnings Release Call | Fourth Quarter and Full Year 2024 Adjusted Gross Margin* decreased 90 bps to 41.3% ► Attributed to inflationary pressure on materials and elevated freight costs partially offset by price realization Adjusted S&A* as a percent of net sales improved 250 bps to 27.4% ► Driven primarily by lower variable compensation Adjusted EBITDA Margin* increased 110 bps to 14.4% Tennant Company Fourth-Quarter 2024 Results Net Sales Adjusted EBITDA *Non-GAAP Measures: refer to the Appendix of this presentation for additional information and reconciliation **Organic net sales growth ***Volume includes inorganic impact from M&A activity 17 +10.0% Americas +4.0% EMEA -19.0% APAC +6.3% Total By Region** Product Categories
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TNC Earnings Release Call | Fourth Quarter and Full Year 2024 Adjusted Gross Margin* increased 20 bps to 42.7% ► Pricing and cost-out initiative efforts more than offset the impact of inflation for the full year Adjusted S&A* as a percent of net sales improved 60 bps to 27.4% ► Driven by operating performance partly offset by incremental compensation and benefits expense Adjusted EBITDA Margin* increased 70 bps to 16.2% Tennant Company Full-Year 2024 Results Net Sales Adjusted EBITDA *Non-GAAP Measures: refer to the Appendix of this presentation for additional information and reconciliation **Organic net sales growth *** Volume includes inorganic impact from M&A activity 18 +6.3% Americas -1.6% EMEA -9.5% APAC +3.2% Total By Region** Product Categories
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TNC Earnings Release Call | Fourth Quarter and Full Year 2024 Tennant Company Capital Deployment Cash Flow 19 YE 2023 YE 2024 Total Debt $201M $200M Net Leverage 0.43x 0.48x Revolver Availability $449.3M Capital Allocation Priorities Invest in the Business ► $21M of capital expenditures ► $37M spent on ERP modernization ► $44M spent on R&D investments Targeted Acquisition Strategy ► $32M investment in Brain Corp to fuel the next gen of AI-enabled robotic cleaning ► $26M acquisition of long-time distributor (TCS) to accelerate growth in EMEA Shareholder Return ► $21M of Dividends ► $20M on repurchases of ~200k shares of common stock Includes ~$37M of ERP modernization spend
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TNC Earnings Release Call | Fourth Quarter and Full Year 2024 20 2025 Full-Year Guidance $1.210B - $1.250B Net Sales (1.0)% – (4.0)% Organic Net Sales Decline $5.70 - $6.20 Adjusted Diluted EPS(1) $196M - $209M Adjusted EBITDA(1) 16.2% - 16.7% Adjusted EBITDA Margin(1) ~$20M Capital Expenditures(1) 23% - 27% Adjusted Effective Tax Rate(1) (1) Excludes ERP modernization costs and certain nonoperational items and amortization expense $3.80 - $4.30 Diluted EPS
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TNC Earnings Release Call | Fourth Quarter and Full Year 2024 Tennant Company Endnotes 21 TNC's estimated market share and the estimated total addressable market include mechanized cleaning equipment and other adjacencies (scrubbers, sweepers, AMR, vacuums & extractors, floor machines & burnishers, specialty equipment, industrial vacs, high-pressure washers, tools, outdoor, and aftermarket products). Market share estimated as of 2023. Information is based on information (self-reported and voluntary) from certain trade groups and associations and market research conducted by third party (commissioned by Tennant) and are estimates only. AMR, small space, and product line extensions market sizes are estimated as of 2023. Information based on information (self-reported and voluntary) from certain trade groups and associations and market research conducted by third party (commissioned by Tennant) and are estimates only. CAGR estimates are based on input from industry experts and their understanding of the current state of business and future growth expectations; therefore, subject to change. Cleaning core, connected autonomy, and mobile equipment adjacencies market sizes are estimates based on market research conducted by third party (commissioned by Tennant). Sources include market reports, S&P CapIQ, Orbis, Company websites. Cleaning core market refers to total addressable market of mechanized cleaning equipment and other adjacencies. Connected autonomy market refers to the autonomy technology software stack including robotics. Mobile equipment adjacencies refers to compact ergonomic equipment, non-cleaning industrial autonomous vehicles, and other viable, non B2C equipment spaces.
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Tennant Company Non-GAAP Financial MeasuresThis presentation and the related conference call include presentation of Non-GAAP measures that include or exclude special items of a nonrecurring and/or nonoperational nature (hereinafter referred to as “special items”). Management believes that the Non-GAAP measures provide useful information to investors regarding the Company’s results of operations and financial condition because they permit a more meaningful comparison and understanding of Tennant Company’s operating performance for the current, past or future periods. Management uses these Non-GAAP measures to monitor and evaluate ongoing operating results and trends and to gain an understanding of the comparative operating performance of the Company. The Company believes that disclosing selling and administrative (“S&A”) expense – as adjusted, S&A expense as a percent of net sales – as adjusted, operating income – as adjusted, operating margin – as adjusted, income before income taxes – as adjusted, income tax expense – as adjusted, net income – as adjusted, net income per diluted share – as adjusted, EBITDA – as adjusted, and EBITDA margin – as adjusted (collectively, the “Non-GAAP measures”), excluding the impacts from special items, is useful to investors as a measure of operating performance. The Company uses these measures to monitor and evaluate operating performance. The Non-GAAP measures are financial measures that do not reflect United States Generally Accepted Accounting Principles (GAAP). The Company calculates the Non-GAAP measures by adjusting for legal contingency costs, ERP modernization costs, restructuring-related costs, transaction-related costs and amortization expense. The Company calculates income tax expense – as adjusted by adjusting for the tax effect of these Non-GAAP measures. The Company calculates net income per diluted share – as adjusted by adjusting for the after-tax effect of these Non-GAAP measures and dividing the result by the diluted weighted average shares outstanding. The Company calculates EBITDA margin – as adjusted by dividing EBITDA – as adjusted by net sales.
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TNC Earnings Release Call | Fourth Quarter and Full Year 2024 Tennant Company SUPPLEMENTAL NON-GAAP FINANCIAL TABLES 23
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TNC Earnings Release Call | Fourth Quarter and Full Year 2024 Tennant Company SUPPLEMENTAL NON-GAAP FINANCIAL TABLES 24
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TNC Earnings Release Call | Fourth Quarter and Full Year 2024 Tennant Company SUPPLEMENTAL NON-GAAP FINANCIAL TABLES 25
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TNC Earnings Release Call | Fourth Quarter and Full Year 2024 Tennant Company SUPPLEMENTAL NON-GAAP FINANCIAL TABLES 26
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TNC Earnings Release Call | Fourth Quarter and Full Year 2024 Tennant Company SUPPLEMENTAL NON-GAAP FINANCIAL TABLES 27