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Tennant shares clean up as profit exceeds estimates
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Tennant Co. shares rose nearly 12 percent Tuesday after the manufacturer raised its earnings projection for 2009 and beat Wall Street's expectations for the third quarter.
The maker of floor cleaning machines produced net earnings of $5.8 million, or 31 cents per share, for the quarter, far outdistancing analysts' consensus estimate of 18 cents.
While Tennant executives expect sales to remain sluggish, they projected that full year earnings -- excluding unusual items -- will be between 55 to 63 cents a share. That's up from an earlier estimate of 20 to 50 cents per share.
Sales for the third quarter fell 17 percent to $154.4 million.
"Our order patterns remain lumpy" or uneven, Tennant CEO Chris Killingstad said in an interview. "We haven't seen any sustained trend that gives us confidence that things are really improving."
But Killingstad said the company is signing up new customers, recently adding SuperValu, Kroger and Ikea. In particular, he added, Tennant is getting a good reception with its ec-water technology. The environmentally friendly process, which converts tap water to a chemical-free cleaning agent, is helping Tennant differentiate itself from competitors.
"We still are running the business conservatively," said Tom Paulson, the company's chief financial officer. Tennant has cut 10 percent of its salaried workforce since last December, and Paulson said Tennant will carefully control costs until its revenue base strengthens.
The stock closed Tuesday at $31.92, up $3.35 per share.
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