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."
