Tennant Co. lowered its profit guidance for the year Wednesday after reporting third-quarter results that badly missed Wall Street expectations.
The Golden Valley maker of scrubbers and floor cleaners said slowing European and American sales and a restructuring charge lowered earnings to $8.7 million, or 46 cents a share, down from a profit of $9.7 million a year ago. On average, analysts expected earnings of 63 cents a share.
Tennant's third-quarter sales fell 4.7 percent to $178.3 million.
News of the lackluster results hurt Tennant's stock in early trading Wednesday, falling $3 midday before recovering to close at $38.36, up 8 cents a share.
CEO Chris Killingstad blamed the quarter's disappointing results on slowing sales in North America, Tennant's biggest sales territory.
"We had expected to see an improving North American economy in the third quarter, but instead the sales cycle slowed and some customers delayed capital equipment purchases," Killingstad told analysts during a conference call Wednesday. "Sales ... were adversely impacted by economic uncertainty in the third quarter."
Sales growth in Europe declined for a fourth consecutive quarter and prompted more belt-tightening in the company's factories there, officials said.
Tennant lowered overall sales expectations for the year. It now expects revenue of $735 million to $745 million for 2012 and earnings of $2.00 to $2.15 a share. That's down from the prior guidance of $2.30 to $2.45 a share.
Despite the slashed forecast, Killingstad said he expects sales to rebound in the fourth quarter and pointed out "bright spots" during the most recent quarter such as higher margins, strong cash holdings, significant sales growth in China and Latin America and slightly stronger sales of Tennant's water-based floor scrubber.
Killingstad told analysts that the company plans to unleash 17 new products next quarter and another 25 new products next year.
The company boosted its quarterly cash dividend to 18 cents a share.
Dee DePass 612-673-7725
3rd quarter FY2012, 9/302012 2011 % chg. Revenue $178.3 $187.0 -4.7 Income 8.7 9.7 -10.1 Earn/share 0.46 0.50 -8
9 monthsRevenue $551.5 $560.8 -1.7 Income 27.7 21.4 +29.3 Earn/share 1.45 1.10 +31.8
Figures in millions except for earnings per share.