Tennant Co. missed fourth-quarter earnings expectations and gave a lackluster guidance for the year Tuesday that impressed few and sent the stock sliding.
The Golden Valley maker of street, floor and industrial cleaning equipment suffered a $1.6 million restructuring charge during the quarter and costs associated with enhanced marketing efforts in Europe.
Tennant also noted that comparisons to year-ago results were made tougher because of a large one-time tax benefit realized in late 2012.
Excluding such items, adjusted earnings were $12.2 million, or 65 cents a share, which was 6 cents less than analysts expected.
Including the one-time restructuring charge and tax cut, net earnings fell 26 percent to $10.3 million despite revenue that rose 4 percent to $195.1 million amid 20 new product introductions, stronger demand for industrial and eco-friendly scrubbers, and growth in China. Revenue fell short of the $198.1 million analysts expected on average.
The stock dropped $4.98, or 7.8 percent, to close at $59.02 Tuesday.
"We had record revenues for a fourth quarter, although they were slightly below our expectations," said CEO Chris Killingstad. "In order to accelerate future growth, we intentionally ramped up key strategic investments in anticipation of higher sales. Going forward, we expect our growth initiatives to produce clear benefits in 2014 and beyond."
Killingstad told analysts during a conference call Tuesday that fourth-quarter results were strongest in North America and Latin America. However, results in Europe proved "somewhat constrained" due to "challenging economic conditions."
For the full year ended Dec. 31, adjusted earnings rose 8.6 percent to $2.26 per share, which was below the $2.32 Wall Street expected. Net earnings were $40.2 million, down 3 percent. Revenue rose 2 percent to $752 million, which was just shy of the $755 million forecast by analysts.
Tennant now expects full-year 2014 adjusted earnings to rise 11 to 24 percent to reach $2.50 to $2.80 per share. On average, Wall Street analysts had been expecting adjusted earnings of $2.83. The company said full-year revenue should grow 4 to 6 percent to reach $780 million to $800 million. Wall Street had been expecting $792.8 million.