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Tennant Company$62.25($.15)(.24%)

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 Tennant Company Reports 2017 Third Quarter Results
   Thursday, November 02, 2017 8:45:00 AM ET

--Earnings per share of $0.20 include special items primarily related to IPC Group acquisition that reduced earnings by $0.12 per share; Adjusted EPS of $0.32;

--Adjusted EBITDA of 10.7% improved over prior year by 40 basis points; Strong cash flow in the quarter enabled debt reduction of $23 million;

--Included in both reported and adjusted earnings per share is non-cash expense for amortization of IPC Group intangible assets of $0.29 per share;

--Company reaffirms 2017 full year net sales guidance range and lowers EPS guidance range to primarily reflect slower progress with gross margin improvements and accelerated non-cash purchase accounting amortization for IPC Group.

Tennant Company (TNC ), a world leader in designing, manufacturing and marketing of solutions that help create a cleaner, safer, healthier world, today reported net sales of $262 million, a record for a third quarter, and net income of $3.6 million, or $0.20 per share, for the quarter ended September 30, 2017.

The 2017 third quarter included special items that reduced earnings by a total of $0.12 per share for acquisition costs related to the IPC Group (IPC) acquisition. Further, the third quarter results also included $7.3 million, or $0.29 per share, which was $5.2 million, or $0.21 per share, higher than was included in the company’s prior guidance, from accelerated amortization for the intangible assets as the company refined its purchase accounting and related amortization method for the IPC acquisition. (See the Supplemental Non-GAAP Financial Table.)

"Our third quarter results reflect slower growth in North America attributed to timing of key strategic account deals, the restructuring of our field service team, continued manufacturing inefficiencies and raw material inflation, matters we continue to address," said Chris Killingstad, Tennant Company’s president and chief executive officer. "While we faced some near-term setbacks, we are staying the course strategically and positioning Tennant to be operationally stronger than ever before. We are ahead of our acquisition plans for IPC, our core Tennant EMEA business grew by 14.6 percent in the quarter and a steady stream of new products has raised our vitality index to 47 percent. I remain confident that we are building the right platform for long-term profitable growth."

Third Quarter Operating Review The company’s 2017 third quarter consolidated net sales of $262 million improved approximately 31 percent over the prior-year quarter, including 28.4 percent from acquisitions. Organic net sales, which exclude the impact of foreign currency exchange, acquisitions and divestitures, rose approximately 1.3 percent. 2017 third quarter growth was primarily driven by the company’s Europe, Middle East and Africa (EMEA) region, offset by slower sales in North America.

Geographically, sales in the Americas increased 5.7 percent, down 0.2 percent organically due to North American key strategic accounts timing, while sales in the EMEA region were up 169.0 percent, or up 14.6 organically, on strong sales performance in the Western European countries. Sales in the Asia Pacific (APAC) region increased by 18.9 percent, however declined 8.5 percent organically, reflecting declines in Korea, China and the Southeast Asia region.

Tennant’s gross margin in the 2017 third quarter was 39.9 percent, and the as-adjusted gross margin was 40.8 percent compared to 42.6 percent in the prior-year quarter. Results are driven by IPC and other geographic sales mix, as well as continued pressure from field service productivity, manufacturing inefficiencies and raw material inflation, matters the company continues to address.

Research and development (R&D) expense for the 2017 third quarter totaled $7.9 million, or 3.0 percent of sales, versus $8.4 million, or 4.2 percent of sales, a year ago. The company continues to invest in developing a robust pipeline of innovative new products and technologies.

Selling and administrative (S&A) expense in the 2017 third quarter was $85.7 million, or 32.7 percent of sales, which includes $23.4 million of IPC-related expenses, including $8.2 million of IPC-related amortization and other acquisition-related expenses. Excluding these costs and IPC-related revenue, S&A expenses were 30.2 percent of sales, as Tennant continues to balance disciplined spending control with investments in key growth initiatives. Tennant’s prior-year quarter S&A expense was $60.6, or 30.3 percent of sales.

Tennant’s 2017 third quarter operating profit was $11.0 million, or 4.2 percent of sales. Excluding operating profit (loss) related to IPC, Tennant’s operating profit was $16.7 million, or 8.1 percent of sales, compared to an operating profit of $16.3 million, or 8.1 percent of sales, in the year-ago quarter. The 2017 third quarter Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) as adjusted was $28.0 million, or 10.7 percent of sales, compared to $20.7 million, or 10.3 percent of sales, in the year-ago quarter. (See the Supplemental Non-GAAP Financial Table.)

During the 2017 third quarter, Tennant generated cash flow from operations of nearly $35 million, compared to nearly $21 million in the 2016 third quarter. In the 2017 third quarter, the company repaid approximately $23 million in outstanding debt and paid $3.7 million in cash dividends to shareholders. Capital expenditures in the 2017 third quarter totaled $7.1 million compared to $7.7 million in the same period last year.

New Product and Technology Pipeline This quarter, Tennant launched the new T350 Stand-On Commercial Scrubber, which is an ideal choice for customers who demand high productivity and maneuverability in obstructed spaces. The T350 is the category leader in productivity, cleaning more than 30,000 square feet per hour, and is equipped with Tennant’s exclusive ec-H2O NanoClean(R), Smart-Fill automated battery watering, IRIS(R) and Pro-Panel(R) technologies.

"The market is responding positively to our new products. Through the first nine months of 2017, 47 percent of our equipment sales stemmed from products released within the last three years, far ahead of our 30 percent target. With the inclusion of IPC, our product portfolio today addresses a much larger cross-section of the market and wider range of customers, especially in certain regions where mid-tier offerings are increasingly relevant. Tennant has a robust and highly promising new product pipeline and we expect to maintain our momentum in this vital area in 2018 and beyond. The improved diversity in our offerings, along with our continued investment in new technologies, such as remote diagnostics, telemetry-based asset management, lithium ion batteries and fuel cells, autonomous guided vehicles (AGV) and others, will play an important role in our growth," said Chris Killingstad.

2017 Business Outlook Killingstad concluded, "We’re continuing to execute on our strategies while advancing solid operating fundamentals within our business. As we move toward the end of 2017, we remain focused on several key areas: pursuing gross margin recovery through better productivity in our service organization, plants and supply chain, continuing our integration of IPC, solid sales execution across all geographies, and robust cash generation to enable reduction of our debt."

Tennant Company continues to estimate 2017 full year net sales in the range of $960 million to $990 million, reflecting an increase of 18.7 percent to 22.4 percent from fiscal 2016 results, which includes an approximate 1 percent to 2 percent of organic growth. Tennant now expects 2017 full year reported GAAP earnings in the range of $0.05 to $0.25 per share, and adjusted earnings per share in the range of $1.50 to $1.70, reflecting slower progress against our gross margin recovery initiatives. The difference between GAAP and adjusted earnings guidance is related to the year-to-date non-GAAP adjustments of $1.40 per share and anticipated fourth quarter integration expenses.

Previously, the company expected 2017 full year reported GAAP earnings in the range of $0.85 to $1.05 per share and adjusted earnings in the range of $2.20 to $2.40 per share. The change in guidance is attributed to continued operational challenges within our business, including field service productivity, manufacturing efficiencies, and raw material inflation, which accounted for approximately $0.37 per share. In addition, the company accelerated the amortization for certain of the IPC-related intangible assets as it continues to finalize the accounting for the IPC acquisition, which resulted in additional expense of $8.4 million, or $0.33 per share. In total the amortization expense related to IPC for 2017 is expected to be $15.7 million, or $0.61 per share. For the 2016 full year, earnings per share totaled $2.59 on net sales of $808.6 million.

Tennant’s 2017 annual financial outlook includes the following additional assumptions:

-- Continued stable economy in North America, modest improvement in Europe and a challenging business environment in APAC;

-- Foreign currency exchange impact net sales from 0 percent to negative 1 percent;

-- Gross margin performance in the range of 41 percent to 42 percent;

-- R&D expense in the range of 3 percent to 4 percent of sales;

-- Capital expenditures in the range of $20 million to $25 million; and

-- An effective tax rate of approximately 29 percent.

Conference Call Tennant will host a conference call to discuss the 2017 third quarter results today, November 2, at 10 a.m. Central Time (11 a.m. Eastern Time). The conference call and accompanying slides will be available via webcast on Tennant’s investor website. To listen to the call live and view the slide presentation, go to investors.tennantco.com and click on the link at the bottom of the Home page. A taped replay of the conference call with slides will be available at investors.tennantco.com for approximately three months after the call.

Company Profile Founded in 1870, Tennant Company (TNC), headquartered in Minneapolis, Minnesota, is a world leader in designing, manufacturing and marketing solutions that empower customers to achieve quality cleaning performance, significantly reduce their environmental impact and help create a cleaner, safer, healthier world. Its products include equipment for maintaining surfaces in industrial, commercial and outdoor environments; detergent-free and other sustainable cleaning technologies; cleaning tools and supplies; and coatings for protecting, repairing and upgrading surfaces. Tennant’s global field service network is the most extensive in the industry. Tennant Company had sales of $0.8 billion in 2016 and has approximately 3,200 employees. Tennant acquired IPC Group in April of 2017. IPC Group, headquartered in Italy, had sales of $0.2 billion in 2016 and has approximately 1,100 employees. Tennant has manufacturing operations throughout the world; and sells products directly in 15 countries and through distributors in more than 100 countries. For more information, visit www.tennantco.com and www.ipcworldwide.com. The Tennant Company logo and other trademarks designated with the symbol "(R)" are trademarks of Tennant Company registered in the United States and/or other countries.

Forward-Looking Statements Certain statements contained in this document, as well as other written and oral statements made by us from time to time, 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 we serve. Particular risks and uncertainties presently facing us include: geopolitical and economic uncertainty throughout the world; the competition in our business; our ability to attract, develop and retain key personnel; our ability to achieve operational efficiencies, including synergistic and other benefits of acquisitions; our substantial indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in the economy or our industry, expose us to interest rate risk to the extent of any variable rate debt, and prevent us from meeting our covenant and payment obligations related to our debt instruments; our ability to effectively manage organizational changes; our ability to successfully upgrade, evolve and protect our information technology systems; our ability to develop and commercialize new innovative products and services; unforeseen product liability claims or product quality issues; fluctuations in the cost, quality, or availability of raw materials and purchased components; foreign currency exchange rate fluctuations, particularly the relative strength of the U.S. dollar against other major currencies; the occurrence of a significant business interruption; our ability to comply with laws and regulations; and our ability to sufficiently remediate any material weaknesses or significant deficiencies in our internal control over financial reporting.

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. 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. For additional information about factors that could materially affect Tennant’s results, please see our other Securities and Exchange Commission filings, including disclosures under "Risk Factors."

We do not undertake to update any forward-looking statement except as required by law, and investors are advised to consult any further disclosures by us on this matter in our filings with the Securities and Exchange Commission and in other written statements we make from time to time. 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.

Non-GAAP Financial Measures This news release and the related conference call include presentation of non-GAAP measures that include or exclude 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.

We believe that disclosing Gross Margin - as adjusted, Profit from Operations - as adjusted, Operating Margin - as adjusted, Profit from Operations, excluding IPC-related profit - as adjusted, Operating Margin, excluding IPC-related profit - as adjusted, Profit Before Income Taxes - as adjusted, Income Tax Expense - as adjusted, Net Earnings Attributable to Tennant Company - as adjusted, and Net Earnings Attributable to Tennant Company per Share - as adjusted (collectively, the "Non-GAAP Measures"), excluding the impacts from inventory fair value adjustment, restructuring charge, acquisition costs, pension settlement, and debt financing costs write-off, are useful to investors as a measure of operating performance. We use these as one measure to monitor and evaluate operating performance. The Non-GAAP measures are financial measures that do not reflect United States Generally Accepted Accounting Principles (GAAP). We calculate Gross Margin - as adjusted, Profit from Operations - as adjusted, Operating Margin - as adjusted, and Profit Before Income Taxes - as adjusted by adding back the pre-tax effect of the inventory fair value adjustment, restructuring charge, acquisition costs, pension settlement, and debt financing costs write-off. We calculate Profit from Operations, excluding IPC-related profit - as adjusted and Operating Margin, excluding IPC-related profit - as adjusted by adding back the pre-tax effect of the inventory fair value adjustment, the restructuring charge, acquisition costs, pension settlement and IPC-related loss/profit from operations. We calculate Income Tax Expense - as adjusted by adding back the tax effect of the inventory fair value adjustment, restructuring charge, acquisition costs, pension settlement, and debt financing costs write-off. We calculate Net Earnings Attributable to Tennant Company - as adjusted by adding back the after-tax effect of the inventory fair value adjustment, restructuring charge, acquisition costs, pension settlement, and debt financing costs write-off. We calculate Net Earnings Attributable to Tennant Company per Share - as adjusted by adding back the after-tax effect of the inventory fair value adjustment, restructuring charge, acquisition costs, pension settlement, and debt financing costs write-off and dividing the result by the diluted weighted average shares outstanding.

We believe that disclosing Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) and EBITDA Margin, excluding the impact from inventory fair value adjustment, restructuring charge, acquisition costs, pension settlement, and acquisition-related currency loss (EBITDA - as adjusted), is useful to investors as a measure of operating performance. We use these measures to monitor and evaluate operating performance. EBITDA - as adjusted and EBITDA Margin are financial measures that do not reflect GAAP. We calculate EBITDA - as adjusted by adding back the pre-tax effect of the inventory fair value adjustment, restructuring charge, acquisition costs, pension settlement, acquisition-related currency loss, Interest Income, Interest Expense, Income Tax Expense, Depreciation Expense, and Amortization Expense to Net Earnings (Loss) - as Reported. We calculate EBITDA Margin - as adjusted by dividing EBITDA - as adjusted by Net Sales.

Investors should consider these non-GAAP financial measures in addition to, not as a substitute for or better than, financial measures prepared in accordance with GAAP. Reconciliations of the components of these measures to the most directly comparable GAAP financial measures are included in the Supplemental Non-GAAP Financial Table to this earnings release.

                                                                                                                                                                                                                     
TENNANT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                                                                                                                                                                                                                                                             
(In thousands, except shares and per share data)                                                                                                    Three Months Ended                                                                                                                                                       Nine Months Ended
                                                                                                                                                       September 30                                                                                                                                                            September 30
                                                                                    ---------------------------------------------------------------------------------------------------------------------------------------------------                     ---------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 2017                                                             2016                                                                                2017                                                             2016
                                                                                    ---------------------------------------------------------------                     ---------------------------------------------------------------                     ---------------------------------------------------------------                     ---------------------------------------------------------------
Net Sales                                                                           $                                 261,921                                           $                                 200,134                                           $                                 723,771                                           $                                 596,826
Cost of Sales                                                                                      157,317                                       114,839                                       434,877                                       338,740  
                                                                                    -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
    Gross Profit                                                                                   104,604                                        85,295                    288,894                    258,086  
                                                                                    -------------------- -------------------- --------------------                      -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
      Gross Margin                                                                                                       39.9 %                                                                              42.6 %                                                                              39.9 %                                                                              43.2 %
Operating Expense:
  Research and Development Expense                                                                                      7,907                                                                               8,418                                                                              24,239                                                                              24,712
  Selling and Administrative Expense                                                                                   85,651                                                                              60,623                                                                             247,067                                                                             187,315
  Loss on Sale of Business                                                                  --                                --                                --                                           149  
                                                                                    -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
    Total Operating Expense                                                                         93,558                                        69,041                                       271,306                                       212,176  
                                                                                    -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Profit from Operations                                                                                                 11,046                                                                              16,254                                                                              17,588                                                                              45,910
      Operating Margin                                                                                                    4.2 %                                                                               8.1 %                                                                               2.4 %                                                                               7.7 %
Other Income (Expense):
  Interest Income                                                                                                         698                                                                                 107                                                                               1,575                                                                                 188
  Interest Expense                                                                                                     (6,093 )                                                                              (329 )                                                                           (18,720 )                                                                              (919 )
  Net Foreign Currency Transaction (Losses) Gains                                                                        (842 )                                                                              (149 )                                                                            (2,375 )                                                                               175
  Other Expense, Net                                                                                  (482 )                                                            (10 )                                                           (700 )                                                           (360 )
                                                                                    -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
    Total Other Expense, Net                                                                        (6,719 )                                                           (381 )                                                        (20,220 )                                                           (916 )
                                                                                    -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Profit (Loss) Before Income Taxes                                                                                       4,327                                                                              15,873                                                                              (2,632 )                                                                            44,994
Income Tax Expense                                                                                     731                                         4,396                                           385                                        13,750  
                                                                                    -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Net Earnings (Loss) Including Noncontrolling Interest                                                                   3,596                                                                              11,477                                                                              (3,017 )                                                                            31,244
Net Earnings (Loss) Attributable to Noncontrolling Interest                                             37                                --                                           (28 )                                                 --  
                                                                                    -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------                      -------------------- -------------------- --------------------
Net Earnings (Loss) Attributable to Tennant Company                                 $                                   3,559                        $                                  11,477                        $                                  (2,989 )                                         $                                  31,244  
                                                                                    ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================
                                                                                                                                                                                                                                                                                                                                                 
Net Earnings (Loss) Attributable to Tennant Company per Share:
  Basic                                                                             $                                    0.20                        $                                    0.66                        $                                   (0.17 )                                         $                                    1.78  
                                                                                    ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================
  Diluted                                                                           $                                    0.20                        $                                    0.64                        $                                   (0.17 )                                         $                                    1.74  
                                                                                    ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================                      ==================== ==================== ====================
                                                                                                                                                                                                                                                                                                                                                 
Weighted Average Shares Outstanding:
  Basic                                                                                                            17,729,857                                                                          17,498,808                                                                          17,673,656                                                                          17,516,941
  Diluted                                                                                                          18,171,444                                                                          17,973,206                                                                          17,673,656                                                                          17,955,499
                                                                                                                                                                                                                                                                                                                                                 
Cash Dividends Declared per Common Share                                            $                                    0.21                                           $                                    0.20                                           $                                    0.63                                           $                                    0.60
                                                                           
-------------------------------------------------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                      
GEOGRAPHICAL NET SALES(1) (Unaudited)
                                                                                                                                                                                                                              
(In thousands)                                                                                                       Three Months Ended                                                                                                                                                               Nine Months Ended
                                                                                                                        September 30                                                                                                                                                                    September 30
                                                    ----------------------------------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                           2017                                                2016                            %                                              2017                                                2016                                   %
                                                    --------------------------------------------------                     --------------------------------------------------                     -----                      --------------------------------------------------                     --------------------------------------------------                     --------------------
Americas                                            $                    161,037                                           $                    152,294                                             5.7                      $                    472,953                                           $                    449,704                                                    5.2
Europe, Middle East and Africa                                            78,851                                                                 29,309                                            169.0                                          189,483                                                                 94,433                                                   100.7
Asia Pacific                                           22,033                           18,531                         18.9                         61,335                           52,689                                16.4
                                                    -------------------- ------- --------------------                      -------------------- ------- --------------------                      -----                      -------------------- ------- --------------------                      -------------------- ------- --------------------                      --------------------
  Total                                             $                    261,921                        $                    200,134                         30.9                      $                    723,771                        $                    596,826                                21.3
                                                    ==================== ======= ====================                      ==================== ======= ====================                      =====                      ==================== ======= ====================                      ==================== ======= ====================                      ====================
                                                                                                                                                                                                                                                                                                                                                                            
    (1) Net of intercompany sales.
                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                                 
TENNANT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
                                                                                                                                                                                                                                                            
(In thousands)                                                                                                       September 30,                                                                 December 31,                                                                  September 30,
                                                                                                                         2017                                                                          2016                                                                          2016
                                                                                               ---------------------------------------------------------                     ---------------------------------------------------------                     ---------------------------------------------------------
ASSETS
Current Assets:
  Cash and Cash Equivalents                                                                    $                            55,947                                           $                            58,033                                           $                            42,283
  Restricted Cash                                                                                                            1,292                                                                           517                                                                           549
  Net Receivables                                                                                                          193,725                                                                       149,134                                                                       135,458
  Inventories                                                                                                              141,519                                                                        78,622                                                                        87,284
  Prepaid Expenses                                                                                                          26,281                                                                         9,204                                                                        14,031
  Other Current Assets                                                                                    4,909                                   2,412                                   1,952  
                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Total Current Assets                                                                                423,673                                 297,922                                 281,557  
                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Property, Plant and Equipment                                                                                              389,391                                                                       298,500                                                                       308,922
  Accumulated Depreciation                                                                             (207,882 )                                                 (186,403 )                                                 (195,540 )
                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Property, Plant and Equipment, Net                                                                                     181,509                                                                       112,097                                                                       113,382
Deferred Income Taxes                                                                                                       19,857                                                                        13,439                                                                        13,217
Goodwill                                                                                                                   179,048                                                                        21,065                                                                        24,669
Intangible Assets, Net                                                                                                     175,752                                                                         6,460                                                                         2,887
Other Assets                                                                                             22,959                                  19,054                                  17,362  
                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Total Assets                                                                               $                         1,002,798                        $                           470,037                        $                           453,074  
                                                                                               ==================== ============== ====================                      ==================== ============== ====================                      ==================== ============== ====================
                                                                                                                                                                                                                                                            
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
  Short-Term Borrowings and Current Portion of Long-Term Debt                                  $                             5,281                                           $                             3,459                                           $                             3,461
  Accounts Payable                                                                                                          88,618                                                                        47,408                                                                        44,997
  Employee Compensation and Benefits                                                                                        35,085                                                                        35,997                                                                        30,861
  Income Taxes Payable                                                                                                      10,599                                                                         2,348                                                                           985
  Other Current Liabilities                                                                              63,327                                  43,617                                  42,585  
                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Total Current Liabilities                                                                           202,910                                 132,829                                 122,889  
                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Long-Term Liabilities:
  Long-Term Debt                                                                                                           383,252                                                                        32,735                                                                        32,744
  Employee-Related Benefits                                                                                                 25,247                                                                        21,134                                                                        20,579
  Deferred Income Taxes                                                                                                     62,167                                                                           171                                                                            85
  Other Liabilities                                                                                      32,686                                   4,625                                   4,556  
                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Total Long-Term Liabilities                                                                         503,352                                  58,665                                  57,964  
                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Total Liabilities                                                                                   706,262                                 191,494                                 180,853  
                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
Shareholders’ Equity:
  Preferred Stock                                                                                                   --                                                                --                                                                --
  Common Stock                                                                                                               6,690                                                                         6,633                                                                         6,611
  Additional Paid-In Capital                                                                                                12,062                                                                         3,653                                                                         3,032
  Retained Earnings                                                                                                        303,987                                                                       318,180                                                                       306,521
  Accumulated Other Comprehensive Loss                                                                  (28,426 )                                                  (49,923 )                                                  (43,943 )
                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Total Tennant Company Shareholders’ Equity                               294,313                                 278,543                                 272,221  
                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
  Noncontrolling Interest                                                                                 2,223                          --                          --  
                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Total Equity                                                                                        296,536                                 278,543                                 272,221  
                                                                                               -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Total Liabilities and Shareholders’ Equity                      $                         1,002,798                        $                           470,037                        $                           453,074  
                                                                                               ==================== ============== ====================                      ==================== ============== ====================                      ==================== ============== ====================
                                                                                                                                                                                                                                                                                                
                                                                        
TENNANT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
                                                                                             
(In thousands)                                                                                                                                         Nine Months Ended
                                                                                                                                                         September 30
                                                                                            ---------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      2017                                                       2016
                                                                                            ---------------------------------------------------------                     ---------------------------------------------------------
OPERATING ACTIVITIES
  Net (Loss) Earnings Including Noncontrolling Interest                                     $                            (3,017 )                                         $                            31,244
  Adjustments to reconcile Net (Loss) Earnings to Net Cash Provided by
  Operating Activities:
    Depreciation                                                                                                         18,515                                                                        13,150
    Amortization of Intangible Assets                                                                                    11,430                                                                           323
    Amortization of Debt Issuance Costs                                                                                     896                                                                --
    Debt Issuance Cost Charges Related to Short-Term Financing                                                            6,200                                                                --
    Fair Value Step-Up Adjustment to Acquired Inventory                                                                   8,445                                                                --
    Deferred Income Taxes                                                                                                (4,848 )                                                                        (676 )
    Share-Based Compensation Expense                                                                                      4,915                                                                         5,747
    Allowance for Doubtful Accounts and Returns                                                                             983                                                                           779
    Loss on Sale of Business                                                                                     --                                                                           149
    Other, Net                                                                                                              175                                                                          (418 )
    Changes in Operating Assets and Liabilities:
      Receivables                                                                                                          (524 )                                                                       5,752
      Inventories                                                                                                        (9,866 )                                                                      (4,873 )
      Accounts Payable                                                                                                    5,747                                                                        (6,415 )
      Employee Compensation and Benefits                                                                                 (9,462 )                                                                      (5,448 )
      Other Current Liabilities                                                                                          10,019                                                                        (3,097 )
      Income Taxes                                                                                                        4,149                                                                         2,248
      Other Assets and Liabilities                                                                   (11,634 )                                                   (5,183 )
                                                                                            -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Net Cash Provided by Operating Activities                                                                            32,123                                                                        33,282
                                                                                                                                                                           
INVESTING ACTIVITIES
  Purchases of Property, Plant and Equipment                                                                            (16,239 )                                                                     (22,499 )
  Proceeds from Disposals of Property, Plant and Equipment                                                                2,456                                                                           559
  Proceeds from Principal Payments Received on Long-Term Note                                                               500                                                                --
  Receivable
  Issuance of Long-Term Note Receivable                                                                                  (1,500 )                                                              --
  Acquisition of Businesses, Net of Cash Acquired                                                                      (354,073 )                                                                     (12,358 )
  Purchase of Intangible Asset                                                                                           (2,500 )                                                              --
  Proceeds from Sale of Business                                                                                 --                                                                           285
  (Increase) Decrease in Restricted Cash                                                                (133 )                                                      116  
                                                                                            -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Net Cash Used in Investing Activities                                                                              (371,489 )                                                                     (33,897 )
                                                                                                                                                                           
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                                                                        15,000
  Payments of Long-Term Debt                                                                                            (81,262 )                                                                      (3,452 )
  Payments of Debt Issuance Costs                                                                                       (16,465 )                                                              --
  Purchases of Common Stock                                                                                      --                                                                       (12,762 )
  Proceeds from Issuances of Common Stock                                                                                 4,728                                                                         2,893
  Excess Tax Benefit on Stock Plans                                                                              --                                                                           447
  Dividends Paid                                                                                     (11,204 )                                                  (10,583 )
                                                                                            -------------------- -------------- --------------------                      -------------------- -------------- --------------------
    Net Cash Provided by (Used in) Financing Activities                                                                 335,797                                                                        (8,457 )
                                                                                                                                                                           
                                                                                                                                                                                                               
Effect of Exchange Rate Changes on Cash and Cash Equivalents                                                              1,483                                                                            55
                                                                                                                                                                           
Net Decrease in Cash and Cash Equivalents                                                                                (2,086 )                                                                      (9,017 )
                                                                                                                                                                           
Cash and Cash Equivalents at Beginning of Period                                                                         58,033                                                                        51,300
                                                                                                                                                        
                                                                                            ---------------------------------------------------------                     ---------------------------------------------------------
Cash and Cash Equivalents at End of Period                                                  $                            55,947                        $                            42,283  
                                                                                            ==================== ============== ====================                      ==================== ============== ====================
                                                                                                                                                                                                               
                                                                                                                                                                                                              
TENNANT COMPANY
SUPPLEMENTAL NON-GAAP FINANCIAL TABLE
                                                                                                                                                                                                                                                      
(In thousands, except per share data)                                                                                                              Three Months Ended                                                                                                                                        Nine Months Ended
                                                                                                                                                      September 30                                                                                                                                             September 30
                                                                                         ---------------------------------------------------------------------------------------------------------------------------------------                     --------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   2017                                                       2016                                                                       2017                                                   2016
                                                                                         ---------------------------------------------------------                     ---------------------------------------------------------                     --------------------------------------------------                     ---------------------------------------------------------
                                                                                                                                                                                                                                                                                                                             
Gross Profit - as reported                                                               $                           104,604                                           $                            85,295                                           $                    288,894                                           $                           258,086
  Gross Margin - as reported                                                                                            39.9 %                                                                        42.6 %                                                                 39.9 %                                                                        43.2 %
Adjustments:
-------------------------------------------------------------------
  Inventory Step-Up                                                                                 2,246                          --                            8,445                          --  
                                                                                         -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------- --------------------                      -------------------- -------------- --------------------
Gross Profit - as adjusted                                                               $                           106,850                        $                            85,295                        $                    297,339                        $                           258,086  
                                                                                         -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------- --------------------                      -------------------- -------------- --------------------
  Gross Margin - as adjusted                                                      40.8 %                                  42.6 %                           41.1 %                                  43.2 %
------------------------------------------------------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                                                                             
Profit from Operations - as reported                                                     $                            11,046                                           $                            16,254                                           $                     17,588                                           $                            45,910
  Operating Margin - as reported                                                                                         4.2 %                                                                         8.1 %                                                                  2.4 %                                                                         7.7 %
Adjustments:
-------------------------------------------------------------------
  Inventory Step-Up                                                                                                    2,246                                                                --                                                                  8,445                                                                --
  Restructuring Charge                                                                                        --                                                                --                                                                  8,018                                                                --
  Acquisition Costs                                                                                                      885                                                                --                                                                  8,443                                                                --
  Pension Settlement                                                                       --                          --                              205                          --  
                                                                                         -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------- --------------------                      -------------------- -------------- --------------------
Profit from Operations - as adjusted                                                     $                            14,177                        $                            16,254                        $                     42,699                        $                            45,910  
                                                                                         -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------- --------------------                      -------------------- -------------- --------------------
  Operating Margin - as adjusted                                                   5.4 %                                   8.1 %                            5.9 %                                   7.7 %
------------------------------------------------------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                                                                             
Profit from Operations - as reported                                                     $                            11,046                                           $                            16,254                                           $                     17,588                                           $                            45,910
  Operating Margin - as reported                                                                                         4.2 %                                                                         8.1 %                                                                  2.4 %                                                                         7.7 %
Adjustments:
-------------------------------------------------------------------
  Inventory Step-Up                                                                                                    2,246                                                                --                                                                  8,445                                                                --
  IPC-Related Loss (Profit) from Operations                                                                            2,509                                                                --                                                                 (1,161 )                                                              --
  Restructuring Charge                                                                                        --                                                                --                                                                  8,018                                                                --
  Acquisition Costs                                                                                                      885                                                                --                                                                  8,443                                                                --
  Pension Settlement                                                                       --                          --                              205                          --  
                                                                                         -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------- --------------------                      -------------------- -------------- --------------------
Profit from Operations, Excluding IPC-Related Operating Profit - as                      $                            16,686                        $                            16,254                        $                     41,538                        $                            45,910  
adjusted
                                                                                         -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------- --------------------                      -------------------- -------------- --------------------
  Operating Margin, Excluding IPC-Related Operating Profit - as                    8.1 %                                   8.1 %                            6.8 %                                   7.7 %
  adjusted
------------------------------------------------------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                                                                             
Profit (Loss) Before Income Taxes - as reported                                          $                             4,327                                           $                            15,873                                           $                     (2,632 )                                         $                            44,994
Adjustments:
-------------------------------------------------------------------
  Inventory Step-Up                                                                                                    2,246                                                                --                                                                  8,445                                                                --
  Restructuring Charge                                                                                        --                                                                --                                                                  8,018                                                                --
  Acquisition Costs                                                                                                      885                                                                --                                                                  8,443                                                                --
  Pension Settlement                                                                                          --                                                                --                                                                    205                                                                --
  Financing Costs                                                                          --                          --                            7,378                          --  
                                                                                         -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------- --------------------                      -------------------- -------------- --------------------
Profit Before Income Taxes - as adjusted                              $                             7,458     $                            15,873     $                     29,857     $                            44,994  
------------------------------------------------------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------- -------------------- -------------------- -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                               
TENNANT COMPANY
SUPPLEMENTAL NON-GAAP FINANCIAL TABLE
                                                                                                                                                                                                                                                                                                                                                                 
(In thousands, except per share data)                                                                                                               Three Months Ended                                                                                                                                       Nine Months Ended
                                                                                                                                                       September 30                                                                                                                                            September 30
                                                                                          ---------------------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------------
                                                                                                                    2017                                                       2016                                                                      2017                                                   2016
                                                                                          ---------------------------------------------------------                     ---------------------------------------------------------                     -------------------------------------------------                     ---------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                 
Income Tax Expense - as reported                                                          $                               731                                           $                             4,396                                           $                       385                                           $                            13,750
Adjustments:
--------------------------------------------------------------------
  Inventory Step-Up(1)                                                                                                    627                                                                --                                                                 2,356                                                                --
  Restructuring Charge(1)                                                                                      --                                                                --                                                                 2,234                                                                --
  Acquisition Costs(1)                                                                                                    263                                                                --                                                                   263                                                                --
  Pension Settlement(1)                                                                                        --                                                                --                                                                    47                                                                --
  Financing Costs(1)                                                                        --                          --                           2,759                          --  
                                                                                          -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- -------------- --------------------
Income Tax Expense - as adjusted                                       $                             1,621     $                             4,396     $                     8,044     $                            13,750  
-------------------------------------------------------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- -------------- -------------------- -------------------- -------------------- ------ -------------------- -------------------- -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                 
Net Earnings (Loss) Attributable to Tennant Company - as reported                         $                             3,559                                           $                            11,477                                           $                    (2,989 )                                         $                            31,244
Adjustments:
--------------------------------------------------------------------
  Inventory Step-Up                                                                                                     1,619                                                                --                                                                 6,089                                                                --
  Restructuring Charge                                                                                         --                                                                --                                                                 5,784                                                                --
  Acquisition Costs                                                                                                       622                                                                --                                                                 8,180                                                                --
  Pension Settlement                                                                                           --                                                                --                                                                   158                                                                --
  Financing Costs                                                                           --                          --                           4,619                          --  
                                                                                          -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- -------------- --------------------
Net Earnings Attributable to Tennant Company - as adjusted                                $                             5,800                        $                            11,477                        $                    21,841                        $                            31,244  
                                                                                          -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                                      
-------------------------------------------------------------------- -------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- --------------------------------------------------------------------- --------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                 
Net Earnings (Loss) Attributable to Tennant Company per Share - as
reported:
                                                                                          $                              0.20                                           $                              0.64                                           $                     (0.17 )                                         $                              1.74
  Diluted
Adjustments:
--------------------------------------------------------------------
  Inventory Step-Up                                                                                                      0.09                                                                --                                                                  0.34                                                                --
  Restructuring Charge                                                                                         --                                                                --                                                                  0.32                                                                --
  Acquisition Costs                                                                                                      0.03                                                                --                                                                  0.47                                                                --
  Pension Settlement                                                                                           --                                                                --                                                                  0.01                                                                --
  Financing Costs                                                                           --                          --                            0.26                          --  
                                                                                          -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- -------------- --------------------
Net Earnings Attributable to Tennant Company per Share - as adjusted                      $                              0.32                        $                              0.64                        $                      1.23                        $                              1.74  
                                                                                          -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- -------------- --------------------
                                                                                                                                                                                                                                                                                                                                                                 
    (1) In determining the tax impact, we applied the
    statutory rate in effect for each jurisdiction where expenses were
    incurred and deductible for tax purposes.
                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                                              
TENNANT COMPANY
SUPPLEMENTAL NON-GAAP FINANCIAL TABLE
                                                                                                                                                                                                                                                      
(In thousands)                                                                                                                                     Three Months Ended                                                                                                                                       Nine Months Ended
                                                                                                                                                      September 30                                                                                                                                            September 30
                                                                                         ---------------------------------------------------------------------------------------------------------------------------------------                     -------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   2017                                                       2016                                                                      2017                                                   2016
                                                                                         ---------------------------------------------------------                     ---------------------------------------------------------                     -------------------------------------------------                     ---------------------------------------------------------
                                                                                                                                                                                                                                                                                                                            
Net Earnings (Loss) Including Noncontrolling Interest - as reported                      $                             3,596                                           $                            11,477                                           $                    (3,017 )                                         $                            31,244
Adjustments:
-------------------------------------------------------------------
  Interest Income                                                                                                       (698 )                                                                        (107 )                                                              (1,575 )                                                                        (188 )
  Interest Expense                                                                                                     6,093                                                                           329                                                                18,720                                                                           919
  Income Tax Expense                                                                                                     731                                                                         4,396                                                                   385                                                                        13,750
  Depreciation Expense                                                                                                 7,472                                                                         4,495                                                                18,515                                                                        13,150
  Amortization Expense                                                                                                 7,650                                                                            99                                                                11,430                                                                           323
  Inventory Step-Up                                                                                                    2,246                                                                --                                                                 8,445                                                                --
  Restructuring Charge                                                                                        --                                                                --                                                                 8,018                                                                --
  Acquisition Costs                                                                                                      885                                                                --                                                                 8,443                                                                --
  Pension Settlement                                                                                          --                                                                --                                                                   205                                                                --
  Acquisition Related Currency Loss                                                        --                          --                           1,178                          --  
                                                                                         -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- -------------- --------------------
Earnings Before Interest, Taxes, Depreciation & Amortization - as                        $                            27,975                        $                            20,689                        $                    70,747                        $                            59,198  
adjusted
                                                                                         -------------------- -------------- --------------------                      -------------------- -------------- --------------------                      -------------------- ------ --------------------                      -------------------- -------------- --------------------
  EBITDA Margin - as adjusted                                                                                           10.7 %                                                                        10.3 %                                                                 9.8 %                                                                         9.9 %
                                                                                                                                                                                                                                                                                                                                                                

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20171102005144r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20171102005144/en/

SOURCE: Tennant Company

Tennant Company 
Investor Contact: 
Tom Paulson, 763-540-1204 
Senior Vice President and Chief Financial Officer 
tom.paulson@tennantco.com 
or 
Media Contact: 
Kathryn Lovik, 763-540-1212 
Global Communications Director 
kathryn.lovik@tennantco.com


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