The largest acquisition in Tennant Co.’s history helped the company top $1 billion in annual revenue, a milestone in its plan for several years. However, it was not enough to pull the company out of the red.
The maker of industrial and commercial cleaning equipment on Thursday reported a 32 percent increase in fourth-quarter sales to $279.3 million. The net loss for the quarter ended Dec. 31 was $3.2 million, or 18 cents a share. The company made $15.4 million in the fourth quarter of 2016.
Adjusted for one-time costs from pension obligations, acquisitions and changes in the tax code, earnings per share were 34 cents, which met Wall Street expectations.
“We are pleased with the results we achieved in the fourth quarter,” said CEO Chris Killingstad in a statement. “We exceeded net sales of over $1 billion for the full year and made substantial progress with our initiatives to position the business for future growth.”
Golden Valley-based Tennant closed in April 2017 on its acquisition of IPC Group, an Italian maker of professional cleaning solutions for commercial contracts. The $353 million acquisition was the largest ever for Tennant.
Killingstad said the acquisition led to a revenue increase of 24 percent for the year. The loss for the year was $6.2 million, or 35 cents a share, compared with 2016 earnings of $46.6 million.
Tennant forecast 2018 revenue to be in a range of $1.07 billion to $1.1 billion, an increase of 6.6 to 9.7 percent.
“Looking to 2018, we are committed to realizing the structural and operational improvements we made in 2017 and are laser focused on maintaining our robust new product and technology pipeline,” Killingstad said.
In a conference call with analysts, Killingstad also addressed a proposal made by activist investor London-based PrimeStone Capital in mid-December to acquire competitor Nilfisk. The cost for Nilfisk would be more than the IPC Group purchase.
“Prior to announcing the IPC acquisition, we reviewed a range of potential transactions, including the same concept shared by PrimeStone,” Killingstad told analysts. “And we ultimately concluded that the acquisition of IPC was the best way to enhance shareholder value. ... We remain highly confident in that decision.”
Shares of Tennant were trading at $64.60, up 3.4 percent for the day. Year-to-date shares are down 11.7 percent.