Slow product launches and sluggish sales caused Tennant Co. to disappoint Wall Street Monday with missed earnings and sales expectations for the first quarter.
Earnings for the Golden Valley maker of industrial floor and street-cleaning machines fell 5 percent to $5.1 million or 27 cents a share. Excluding one-time items, adjusted earnings were 29 cents, which missed analysts' average expectations of 36 cents a share. Included in the first-quarter results were a $1.4 million charge to downsize European operations and a $600,000 tax credit.
Revenues fell 3.3 percent during the quarter to $168 million. Analysts had expected $174 million. Tennant shares closed Monday at $46.01, down 62 cents or 1.3 percent.
CEO Chris Killingstad said March sales were lower than expected because of a slow transition to new products and sluggish sales of municipal cleaning equipment.
"We expected increased sales, even though our first quarter is traditionally our slowest and most unpredictable," Killingstad said. "The first two months came in as anticipated, but March sales were a bit below our expectations."
In addition, Tennant had experienced a large sales increase to China during the first quarter of 2012. As a result, comparable sales for first quarter 2013 fell 15 percent, officials said.
Killingstad said the company has momentum in new-product orders and growth among key global customers. He predicted that the second half of the year would be stronger than the first half and said Tennant will introduce 25 new products by year end.
As a result, Tennant retained its previous guidance for the full year. It still expects earnings of $2.18 to $2.48 a share and sales of $750 million to $770 million. That compares to 2012 earnings of $2.08 a share and 2012 sales of $739 million.
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