Financial Data and Key Metrics Changes - In Q1 2025, the company reported net sales of $290 million, reflecting a 6.8% decrease from $311 million in Q1 2024, with an organic decline of 5% [6][25] - Adjusted EBITDA for Q1 2025 was $41 million, or 14.1% of sales, down from $54.9 million and 17.7% in the prior year [31] - GAAP net income was $13.1 million compared to $28.4 million in the prior year, impacted by lower net sales and increased costs related to ERP projects and restructuring [23][24] Business Line Data and Key Metrics Changes - Equipment sales declined by 9%, and parts and consumables sales decreased by 4.7%, while service and other saw organic growth, but overall service revenue was down by 1.4% due to unfavorable foreign exchange impacts [26][27] - The AMR (Autonomous Mobile Robot) segment saw a 30% increase in sales compared to Q1 2024, contributing approximately 5% to net sales [16] Market Data and Key Metrics Changes - In The Americas, organic net sales decreased by 6.9%, but order rates increased by 20% compared to the prior year [10][28] - EMEA experienced a 2% growth on a constant currency basis, driven by acquisitions and pricing realization, while APAC saw a 7.5% decline due to demand issues in China and Australia [11][12][28] Company Strategy and Development Direction - The company is focused on executing its enterprise strategy, which includes pricing discipline, launching innovative products, and investing in go-to-market opportunities [12][15] - The introduction of the Clean360 program aims to make AMR adoption more accessible by offering a subscription model that includes equipment, software, and maintenance [19][75] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of tariffs and economic uncertainty but noted stable demand for products and strong order rates [20][21] - The company expects to grow orders by 3.5% to 7% in 2025, despite challenges in translating order growth into equivalent organic sales growth due to prior backlog reductions [9][22] Other Important Information - The company anticipates a full-year impact of approximately $40 million from tariffs, representing around 5% of total cost of goods sold, and is implementing mitigation strategies [34][35] - The company maintains a strong liquidity position with approximately $80 million in cash and $434 million in unused borrowing capacity [32] Q&A Session Summary Question: Concerns about margin guidance and inflationary pressures - Management explained that the margin decline was due to a backlog headwind and a mix of strategic customer shipments at lower margins, but they expect a return to a more normalized mix in future quarters [40][46] Question: Impact of price hikes on demand - Management noted that it is too early to assess the impact of announced price hikes on demand, but they are closely monitoring customer behavior [62] Question: Clarification on the Clean360 program - The program was developed in response to customer feedback regarding high initial costs of AMR products, aiming to provide a more accessible option for customers [72][75]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported net sales of $290 million, reflecting a 6.8% decrease from $311 million in Q1 2024, with an organic decline of 5% [7][25] - GAAP net income for the quarter was $13.1 million, down from $28.4 million in the prior year, impacted by lower net sales and increased costs related to ERP and restructuring [23][24] - Adjusted EBITDA was $41 million, or 14.1% of sales, compared to $54.9 million and 17.7% in the prior year [32] Business Line Data and Key Metrics Changes - Equipment sales declined by 9%, while parts and consumables sales decreased by 4.7%, with service and other categories showing a slight organic growth offset by unfavorable foreign exchange impacts [26][28] - The Americas saw a 6.9% decline in organic net sales, primarily due to lower sales of Industrial Equipment, although order rates increased by 20% [10][29] - EMEA experienced a 2% growth on a constant currency basis, driven by acquisitions and pricing realization, while APAC faced a 7.5% decline due to demand issues in China and Australia [11][12][29] Market Data and Key Metrics Changes - Order rates at the enterprise level increased by 13%, marking the fourth consecutive quarter of near or above double-digit order growth [8] - The company anticipates order growth in the range of 3.5% to 7% for 2025, despite the challenges posed by a $125 million backlog reduction from the previous year [9] Company Strategy and Development Direction - The company is focused on executing its enterprise strategy, which includes pricing discipline, innovative product launches, and targeted market investments [12][15] - The introduction of the Clean360 program aims to enhance AMR adoption by offering a subscription model that reduces upfront costs for customers [18][78] - The company is committed to navigating economic uncertainties and tariff impacts while maintaining strong order growth and market leadership [20][22] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing economic uncertainties due to tariffs and trade wars but expressed confidence in maintaining strong demand and order rates [20][63] - The company is implementing mitigation strategies to offset tariff impacts, including pricing actions and sourcing adjustments [35][57] - Management remains optimistic about achieving 2025 guidance, with net sales projected between $1.21 billion and $1.25 billion [37] Other Important Information - The company reported a gross margin of 41.4%, a decrease of 280 basis points from the prior year, primarily due to shifts in product mix and inflation [30] - Free cash flow for the period was negative $7.4 million, influenced by ERP investments, but the company expects to convert 100% of net income to free cash flow by year-end [33] Q&A Session Summary Question: Concerns about margin guidance and inflationary pressures - Management explained that the margin decline was influenced by a backlog headwind and a mix of strategic customer shipments, but they expect a return to normalized margins as the year progresses [43][46] Question: Insights on the Clean360 program and its potential impact - The Clean360 program was developed in response to customer feedback regarding high upfront costs, aiming to facilitate AMR adoption through a subscription model [76][78] Question: Observations on order influx following price hikes - Management noted that it is too early to assess the impact of announced price hikes on order volumes, as they are also returning to normal seasonal patterns [65][66]

Financial Performance - Net sales for Q1 2025 were $290.0 million[11], reflecting a 5.0% organic decline due to lapping a significant backlog reduction from the prior year[8, 11] - Adjusted EBITDA for Q1 2025 was $41.0 million, with a 14.1% adjusted EBITDA margin[11] - Adjusted diluted EPS for Q1 2025 was $1.12 per share, compared to $1.81 per share in Q1 2024[11] - Gross margin decreased by 280 bps to 41.4%, driven by product and customer mix and ongoing inflation[44] - Net income decreased from $28.4 million in Q1 2024 to $13.1 million in Q1 2025[33] Sales Performance by Region - Americas experienced a 6.9% organic net sales decline[39] - EMEA saw a 0.6% organic net sales increase[39] - APAC experienced a 7.5% organic net sales decline[39] Autonomous Mobile Robots (AMR) - Cumulative AMR sales exceeded $297 million[17] - Over 9,800 AMR units have been delivered to over 950 customers since 2018[18] - The X6 ROVR is launching in Q2 2025, offering 250% cleaning capacity per tank compared to the X4 ROVR[20, 24] Guidance and Outlook - Full-year order rates are expected to grow between 3.5% and 7%[13] - The company maintains its 2025 guidance, with an organic net sales decline of 1.0% to 4.0%[25, 27] - Adjusted EBITDA margin expansion is projected to be 0-50 bps for 2025[27]

Company Performance - Tennant reported quarterly earnings of $1.12 per share, missing the Zacks Consensus Estimate of $1.38 per share, and down from $1.81 per share a year ago, indicating a significant decline in profitability [1] - The earnings surprise for this quarter was -18.84%, contrasting with a previous quarter where the company exceeded expectations by 9.35% [2] - Revenues for the quarter were $290 million, surpassing the Zacks Consensus Estimate by 0.52%, but down from $311 million year-over-year [3] Market Position - Tennant shares have declined approximately 10.6% since the beginning of the year, compared to a decline of -5.5% for the S&P 500 [4] - The current Zacks Rank for Tennant is 3 (Hold), suggesting that the stock is expected to perform in line with the market in the near future [7] Future Outlook - The consensus EPS estimate for the upcoming quarter is $1.67 on revenues of $318.3 million, and for the current fiscal year, it is $5.89 on revenues of $1.24 billion [8] - The outlook for the Manufacturing - General Industrial industry, to which Tennant belongs, is currently in the bottom 40% of over 250 Zacks industries, which may negatively impact stock performance [9]

[First Quarter 2025 Results Overview](index=1&type=section&id=First%20Quarter%202025%20Results%20Overview) This section summarizes Tennant Company's first-quarter 2025 financial performance, including sales, profit, and shareholder returns [Financial Highlights](index=1&type=section&id=Financial%20Highlights) Tennant Company reported first-quarter 2025 net sales of $290.0 million, a 6.8% decrease from the prior year, primarily due to lapping a significant $50 million backlog reduction in Q1 2024. Despite the decline in reported sales and profits, the company highlighted strong underlying business performance with a 13% increase in order rates. The company returned $25.8 million to shareholders and reaffirmed its full-year 2025 guidance, expressing confidence in its ability to manage macroeconomic challenges Q1 2025 Financial Summary | (In millions, except per share data) | 2025 | 2024 | Incr / (Decr) | | :--- | :--- | :--- | :--- | | **Net sales** | $290.0 | $311.0 | (6.8)% | | **Net income** | $13.1 | $28.4 | (53.9)% | | **Diluted EPS** | $0.69 | $1.49 | (53.7)% | | **Adjusted diluted EPS** | $1.12 | $1.81 | (38.1)% | | **Adjusted EBITDA** | $41.0 | $54.9 | (25.3)% | | **Adjusted EBITDA margin %** | 14.1 % | 17.7 % | (360 bps) | - **Net sales decreased 6.8%** (**5.0% organic decline**) **primarily due to volume declines**, as the prior-year period benefited from a **$50 million backlog reduction**[6](index=6&type=chunk) - Despite the **sales decline**, the underlying base business remains **strong**, with **order rates increasing 13%** compared to **Q1 2024**[6](index=6&type=chunk) - The company **returned $25.8 million** to shareholders, consisting of **$5.6 million** in **dividends** and **$20.2 million** in **share repurchases**[6](index=6&type=chunk) - Tennant **reaffirmed its 2025 guidance** and is actively implementing **mitigation strategies**, including **supply-chain actions** and **pricing**, to address known **tariffs**[6](index=6&type=chunk)[7](index=7&type=chunk) [Detailed Financial Performance](index=3&type=section&id=Detailed%20Financial%20Performance) This section details Q1 2025 financial performance, including sales analysis, regional results, operating profitability, and cash flow [Net Sales Analysis](index=3&type=section&id=Net%20Sales%20Analysis) Consolidated net sales for Q1 2025 were $290.0 million, a 6.8% decrease from Q1 2024. The decline was driven by a 4.9% drop in volume and a 2.1% negative impact from foreign currency, resulting in a 5.0% organic sales decline. A minor 0.3% contribution from acquisitions was not enough to offset these factors Components of Consolidated Net Sales Change (Q1 2025 vs. Q1 2024) | Component | Change | | :--- | :--- | | Price | (0.1)% | | Volume | (4.9)% | | **Organic decline** | **(5.0)%** | | Acquisitions | 0.3% | | Foreign currency | (2.1)% | | **Total decline** | **(6.8)%** | - The **5.0% organic sales decline** was **primarily driven by lower volumes** across all geographic regions, especially in North America, which was compared against a period with a **significant backlog-reduction benefit**[8](index=8&type=chunk) [Regional Sales Performance](index=3&type=section&id=Regional%20Sales%20Performance) Organic sales performance varied significantly by region. The Americas saw a 6.9% decline, heavily impacted by lapping a $50 million backlog reduction in North America. EMEA posted a slight 0.6% organic growth due to price realization. APAC experienced the steepest decline at 7.5%, driven by market saturation and pricing pressure in China and slowing demand in Australia Organic Net Sales Growth by Region (Q1 2025) | Region | Organic Net Sales (Decline) Growth | | :--- | :--- | | Americas | (6.9)% | | EMEA | 0.6% | | APAC | (7.5)% | | **Total** | **(5.0)%** | - Americas: The **6.9% organic decline** was **mainly due to lower equipment volume** in North America, which was lapping a **$50 million backlog-reduction benefit** from the prior year[9](index=9&type=chunk) - EMEA: The **0.6% organic growth** was **driven by price realization** in parts, consumables, and service, which **offset volume declines** in equipment. **Growth** in the UK and Spain was partially **offset by declines** in France[10](index=10&type=chunk) - APAC: The **7.5% organic decline** was caused by **volume** and **price decreases** in China and Australia. China faces **market saturation** and **pricing pressure**, while Australia shows signs of **slowing demand** with customers delaying orders[11](index=11&type=chunk) [Operating Results and Profitability](index=4&type=section&id=Operating%20Results%20and%20Profitability) Profitability was significantly impacted by lower sales volumes and an unfavorable product mix compared to the prior year. Gross profit margin fell 280 basis points to 41.4%. Adjusted EBITDA decreased to $41.0 million from $54.9 million, with the margin contracting by 360 basis points to 14.1%. Net income fell to $13.1 million, or $21.2 million on an adjusted basis - **Gross profit margin declined by 280 basis points** to **41.4%**, **driven by unfavorable product/customer mix** and **inflation**. The prior-year quarter had benefited from a **backlog reduction** of higher-margin products[13](index=13&type=chunk) - **Adjusted S&A** as a percentage of **net sales increased** to **28.7%** from **27.6%** in the prior year, **driven by lower operating performance** despite diligent cost management[14](index=14&type=chunk) - **Adjusted EBITDA decreased** to **$41.0 million**, and the **Adjusted EBITDA margin fell 360 basis points** to **14.1%**, **primarily due to sales volume declines** and the **unfavorable gross margin impact**[14](index=14&type=chunk) - **Adjusted net income** was **$21.2 million**, a **decrease of $13.5 million** from **Q1 2024**, **mainly due to lower operating performance**, which was partly **offset by lower income taxes**[14](index=14&type=chunk) [Cash Flow, Liquidity and Capital Allocation](index=4&type=section&id=Cash%20Flow%2C%20Liquidity%20and%20Capital%20Allocation) The company experienced a net cash usage of $0.4 million from operating activities in Q1 2025, a decrease from the prior year, influenced by ERP modernization project investments and lower operating performance. Liquidity remains strong with $79.5 million in cash and $434.3 million in unused borrowing capacity. The company maintained a low net leverage ratio of 0.66x Adjusted EBITDA - **Cash used for operating activities** was **$0.4 million**, **impacted by ERP modernization investments**, **working capital changes**, and **lower operating performance**[15](index=15&type=chunk) - **Liquidity remained strong** with **$79.5 million** in **cash and cash equivalents** and **$434.3 million** of **unused borrowing capacity** on its revolving credit facility[15](index=15&type=chunk) - During the quarter, the company invested **$7.0 million** in **capital expenditures** and **returned $25.8 million** to shareholders via **dividends** and **share repurchases**[16](index=16&type=chunk) - The company's **net leverage ratio** was **0.66 times Adjusted EBITDA**, which is below its **target range of 1.0x to 2.0x**[16](index=16&type=chunk) [2025 Guidance](index=5&type=section&id=2025%20Guidance) This section reaffirms Tennant Company's full-year 2025 financial outlook, including projected sales, adjusted EPS, and Adjusted EBITDA [Reaffirmed 2025 Full-Year Outlook](index=5&type=section&id=Reaffirmed%202025%20Full-Year%20Outlook) Tennant Company reaffirmed its full-year 2025 guidance, signaling confidence in its operational plans despite macroeconomic uncertainties. The company expects net sales to be between $1,210 million and $1,250 million, with an adjusted diluted EPS in the range of $5.70 to $6.20. Adjusted EBITDA is projected to be between $196 million and $209 million 2025 Full-Year Guidance | (In millions, except per share data) | 2025 Guidance Ranges | | :--- | :--- | | Net sales | $1,210 - $1,250 | | Organic net sales decline | (1.0)% - (4.0)% | | Diluted net income per share | $3.80 - $4.30 | | Adjusted diluted net income per share | $5.70 - $6.20 | | Adjusted EBITDA | $196 - $209 | | Adjusted EBITDA margin | 16.2% - 16.7% | | Capital expenditures | ~$20 | | Adjusted effective tax rate | 23% - 27% | [Company Information and Disclosures](index=5&type=section&id=Company%20Information%20and%20Disclosures) This section outlines Tennant Company's profile, forward-looking statements, and the use of non-GAAP financial measures [Company Profile](index=5&type=section&id=Company%20Profile) Founded in 1870 and headquartered in Minnesota, Tennant Company is a global leader in designing and manufacturing cleaning solutions. With sales of $1.29 billion in 2024 and approximately 4,500 employees, the company sells its products in over 100 countries through direct sales and distributor networks - Tennant is a **world leader** in **cleaning solutions**, founded in **1870**, with products including equipment, sustainable cleaning technologies, and supplies[19](index=19&type=chunk) - The company achieved **sales of $1.29 billion** in **2024**, has around **4,500 employees**, and sells products in over **100 countries**[19](index=19&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This report contains forward-looking statements subject to various risks and uncertainties. Key risks highlighted include geopolitical and economic uncertainty, foreign currency exchange rate changes, competition, raw material costs, supply chain issues, cybersecurity risks, and potential complications with its new ERP system - The company identifies several **risks** that could affect future performance, including **geopolitical uncertainty**, **currency fluctuations**, **cost pressures**, **competition**, and **supply chain availability**[20](index=20&type=chunk) - Internal **risks** include the ability to manage **strategic growth**, successfully upgrade **IT systems** (including the new **ERP**), protect against **cybersecurity threats**, and **integrate acquisitions**[20](index=20&type=chunk) [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) The company uses non-GAAP financial measures to provide investors with a clearer understanding of its ongoing operating performance by excluding special, non-recurring, or non-operational items. These adjustments include costs related to its ERP modernization, restructuring charges, transaction costs, and amortization expense - Management believes **non-GAAP measures** allow for a more meaningful comparison of **operating performance** across periods by excluding **special items**[24](index=24&type=chunk) - Key **non-GAAP adjustments** include **ERP modernization costs**, **restructuring-related charges**, **transaction-related costs**, and **amortization expense**[25](index=25&type=chunk) [Financial Tables](index=7&type=section&id=Financial%20Tables) This section presents unaudited consolidated financial statements, including income, balance sheets, cash flows, and non-GAAP reconciliations [Consolidated Statements of Income (Unaudited)](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME%20(Unaudited)) This section provides the unaudited consolidated income statement for the three months ended March 31, 2025, compared to the same period in 2024, detailing net sales, costs, expenses, and net income [Geographical Net Sales (Unaudited)](index=7&type=section&id=GEOGRAPHICAL%20NET%20SALES%20(Unaudited)) This table breaks down net sales by geographic region (Americas, EMEA, Asia Pacific) for the three months ended March 31, 2025, and 2024 [Consolidated Balance Sheets (Unaudited)](index=8&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS%20(Unaudited)) This section presents the unaudited consolidated balance sheet as of March 31, 2025, compared to December 31, 2024, showing assets, liabilities, and equity [Consolidated Statements of Cash Flows (Unaudited)](index=9&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20(Unaudited)) This table details the cash flows from operating, investing, and financing activities for the three months ended March 31, 2025, and 2024 [Supplemental Non-GAAP Financial Tables](index=10&type=section&id=SUPPLEMENTAL%20NON-GAAP%20FINANCIAL%20TABLES) This section provides detailed reconciliations of reported GAAP financial measures to adjusted non-GAAP measures, including net income, EPS, EBITDA, operating income, and free cash flow, for the three months ended March 31, 2025 and 2024

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Q4 and Full-Year 2024 Results Full-Year 2025 Guidance February 18, 2025 www.investors.tennantco.com Earnings Release Call Tennant Company Safe Harbor Statement Certain statements contained in this document are considered "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements do not relate to strictly historical or current facts and provide current expectations or forecasts of future events. Any such expectations or forecasts of future events are sub ...

Financial Data and Key Metrics Changes - For the full year 2024, net sales reached $1.287 billion, adjusted EBITDA rose to $208.8 million, and adjusted EBITDA margin expanded to 16.2% [9][52]. - The full year organic growth rate was 3.2%, primarily driven by price growth across regions, with a volume growth of over 5% in Q4 [9][10]. - GAAP net income for Q4 2024 was $6.6 million, down from $31 million in the prior year, while full year GAAP net income was $83.7 million compared to $109.5 million in 2023 [34][35]. Business Line Data and Key Metrics Changes - AMR equipment sales reached a record $75 million in 2024, driven by new product launches like the X4 ROVR [12][26]. - Equipment sales grew by 4.2% and service revenue increased by 8.5% in 2024 compared to 2023 [48]. - Parts and consumables sales decreased by 1.9% year-over-year, partly due to distributor consolidations [48]. Market Data and Key Metrics Changes - In the Americas, organic sales increased by 10%, driven by volume and price growth [44]. - EMEA organic sales increased by 4%, while APAC experienced a 19% decline in organic sales due to demand declines in China and Australia [45][51]. - The company noted a significant backlog reduction of $125 million, stabilizing backlog levels for future order alignment with revenue [10]. Company Strategy and Development Direction - The company aims to grow top-line revenue and expand bottom-line margins through pricing discipline, innovative product launches, and improved channel reach [16][32]. - Strategic investments in AMR and product line extensions are expected to drive future growth, with a target of exceeding $100 million in annual AMR revenue by 2027 [29][30]. - The company is actively pursuing M&A opportunities to add $150 million in net sales growth over three years [24]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving order growth of 3.5% to 7% in 2025, despite anticipating a negative organic sales decline of 1% to 4% due to backlog headwinds [30][58]. - The company is focused on managing costs and expanding margins, with expectations for gross margin expansion through pricing actions and cost-saving initiatives [32][60]. - Management acknowledged challenges in the APAC region, particularly in China, and plans to pivot strategies to focus on less competitive areas [96][99]. Other Important Information - The company plans to implement a staggered go-live of its ERP project in 2025, with total project costs expected to be around $50 million [61][137]. - A new share repurchase program was authorized for 2 million shares, reflecting a strategic approach to capital allocation [56][84]. - The company maintains strong liquidity with $99.8 million in cash and $449.3 million of unused borrowing capacity [57]. Q&A Session Summary Question: How does the company plan to maintain or grow margins in a declining revenue environment? - Management indicated that cost management initiatives and pricing realization will help offset inflation and support margin expansion [70][72]. Question: What were the order rates in Q4 and trends for early 2025? - Order rates in Q4 were strong, with nearly double-digit growth in the second half of 2024, and management expects 5% to 6% order rates in 2025 [80][81]. Question: Can you elaborate on the share repurchase strategy? - The share repurchase program has no time limit and is primarily aimed at offsetting dilution, with flexibility for opportunistic purchases [82][84]. Question: What are the opportunities in the Asia-Pacific market for 2025? - Management acknowledged challenges in APAC, particularly in China, and plans to focus on vertical markets with less competition [96][99]. Question: Can you provide an update on the ERP project costs and timeline? - The total ERP project costs are expected to be around $50 million, with expenses likely to be evenly split throughout 2025 [112][114].

Company Operations - The Company operates 11 global manufacturing locations and serves three geographic areas: Americas, EMEA, and APAC[16]. - The Company has a diverse customer base with over 40,000 customers, including contract cleaners and businesses performing facilities maintenance[20]. - The Company employs local-for-local manufacturing strategies to mitigate cost inflation and supply chain challenges[24]. - The company operates through a large direct sales and service organization, supported by a network of authorized distributors worldwide[199]. Financial Performance - Consolidated net sales in 2024 totaled $1,286.7 million, a 3.5% increase compared to $1,243.6 million in 2023[118]. - Net income for 2024 was $83.7 million, a decrease of 23.6% from $109.5 million in 2023, with net income per share diluted at $4.38[117]. - Operating income decreased to $114.3 million in 2024 from $138.6 million in 2023, indicating a decline of 17.5%[188]. - Comprehensive income for 2024 was $53.3 million, significantly lower than $117.4 million in 2023, reflecting a decline of 54.6%[190]. - Total assets increased to $1,190.1 million in 2024, up from $1,113.4 million in 2023, reflecting a growth of about 6.9%[192]. - Cash, cash equivalents, and restricted cash totaled $99.8 million at December 31, 2024, down from $117.1 million at the end of 2023[132]. - Net cash provided by operating activities in 2024 was $89.7 million, a significant decrease from $188.4 million in 2023[134]. - Total current liabilities rose to $292.2 million in 2024, compared to $273.7 million in 2023, marking an increase of about 6.9%[192]. - Long-term debt increased slightly to $198.2 million in 2024 from $194.2 million in 2023, showing a growth of about 2.0%[192]. Research and Development - Research and development efforts are key drivers of success, with a focus on enhancing product functionality and sustainability[26]. - Research and Development expense was $43.8 million, or 3.4% of net sales, reflecting a 50 basis point increase compared to 2023[125]. - Research and development expenses increased to $43.8 million in 2024, up from $36.6 million in 2023, showing a growth of 19.6%[188]. - The company is committed to developing sustainable cleaning innovations and has a broad suite of products used in various environments, enhancing its market position[110]. Sustainability and Corporate Responsibility - The Company is committed to sustainability, focusing on high-performance solutions that minimize waste and enhance safety[17]. - Tennant Company focuses on sustainable cleaning innovations, enhancing its product suite including floor maintenance and cleaning equipment[197]. - Women represent 43% of the executive management team and 33% of the Board of Directors as of December 31, 2024[37]. Risks and Challenges - The company may face financial difficulties if the U.S. or global economies experience a long-term economic downturn, potentially leading to decreased revenues and profitability[53]. - International operations are at risk due to geopolitical tensions and regulatory changes, particularly in markets like Russia and China, which could negatively impact sales volume[54]. - Fluctuations in foreign currency exchange rates could adversely affect net sales and earnings, impacting financial stability[57]. - The competitive landscape and macroeconomic factors such as inflation may limit the company's ability to achieve pricing targets, affecting gross margin rates[59]. - Supply chain disruptions and increased costs of raw materials could negatively impact operating results and financial condition[62]. - The company is subject to risks associated with developing innovative products and technologies, which may impact sales volume and market share if not competitive[60]. - The company faces risks related to business transformation and strategic initiatives, including employee resistance and resource constraints, which could hinder effective execution[82]. Acquisitions and Goodwill - The company may consider acquisitions to achieve growth objectives, but successful integration of acquired businesses is critical for realizing operational efficiencies[78]. - The company has experienced challenges in integrating acquired businesses, which may not achieve expected revenue or profit levels, potentially impacting overall financial results[79]. - Significant goodwill or intangible assets may be recorded from acquisitions, requiring annual impairment tests that could materially affect operating results if values need to be written down[80]. - Goodwill was reported at $185.6 million and $187.4 million as of December 31, 2024, and 2023, respectively[150]. - The goodwill balance for the EMEA reporting unit was $151.1 million as of December 31, 2024, with no impairment recognized[176]. - No goodwill impairment was identified in any reporting units during the annual assessments for both 2023 and 2024[213][214]. Shareholder Returns - The company has paid cash dividends for 80 consecutive years, with an increase to $1.135 per share in 2024, marking a $0.06 increase from 2023[102]. - During the twelve months ended December 31, 2024, the company repurchased 198,352 shares for $19.6 million, with 623,061 shares remaining authorized for repurchase[103]. - The company's stock performance has shown a cumulative total shareholder return of $112 from an initial investment of $100 in 2019, compared to $149 for the S&P SmallCap 600[106]. Financial Reporting and Accounting - The company is evaluating the impact of new accounting standards on its financial disclosures, including ASU 2023-09 and ASU 2024-03[142][143]. - The company does not expect new accounting pronouncements to have a material impact on its financial position[144]. - The company has elected to not separate lease and non-lease components for all asset classes, impacting the calculation of operating lease assets and liabilities[210]. - Operating lease assets and liabilities are calculated based on the present value of future lease payments, using the company's incremental borrowing rate[210]. - The consolidated financial statements include all subsidiaries where the company has a controlling financial interest, ensuring comprehensive financial reporting[200].

Financial Performance - Fourth-quarter net sales increased by 5.6% to $328.9 million, with organic growth of 6.3% driven by volume growth in the Americas and EMEA[5] - Full-year net sales reached $1,286.7 million, a 3.5% increase from 2023, supported by organic growth of 3.2% from price growth across all regions[5] - Adjusted EBITDA for the full year was $208.8 million, an 8.2% increase compared to 2023, with an adjusted EBITDA margin of 16.2%, up 70 basis points year-over-year[5] - Net income for the year decreased to $83.7 million from $109.5 million in 2023, reflecting a decline in profitability[30] - Reported net income for Q4 2024 was $6.6 million, a decrease of 78.7% from $31.0 million in Q4 2023[34] - Adjusted net income for Q4 2024 was $29.0 million, compared to $36.2 million in Q4 2023, reflecting a decline of 19.9%[34] - Total net income for the full year 2024 was $83.7 million, a decrease from $109.5 million in 2023[38] - Adjusted net income for the full year 2024 was $94.2 million, compared to $110.7 million in 2023[38] Cash Flow and Liquidity - Operating cash flow for 2024 was $89.7 million, with free cash flow of $68.8 million, reflecting investments in ERP modernization[16] - The company maintained a strong liquidity position with $99.8 million in cash and $449.3 million of unused borrowing capacity as of the end of 2024[17] - The net leverage ratio was 0.48 times adjusted EBITDA, below the targeted range of 1x to 2x[18] - The company returned $41.0 million to shareholders in 2024 through dividends and share repurchases[18] - Cash and cash equivalents decreased to $99.8 million from $117.1 million, showing a reduction in liquidity[33] - The company reported a net cash provided by operating activities of $89.7 million, down from $188.4 million in 2023, reflecting reduced cash generation[33] - Cash provided by operating activities for Q4 2024 was $37.5 million, down from $63.8 million in Q4 2023[38] Sales and Revenue Trends - Net sales for Q4 2024 were $328.9 million, a 5.6% increase from $311.4 million in Q4 2023[30] - The Americas region saw a 5.7% increase in net sales for the year, totaling $888.5 million[31] - The Asia Pacific region experienced a 10.3% decline in net sales for the year, totaling $79.7 million, indicating market challenges[31] - For 2025, the company anticipates net sales between $1,210 million and $1,250 million, with an expected organic sales decline of 1.0% to 4.0%[19] Operating Performance - Operating income for Q4 2024 was $7.6 million, down from $24.5 million in Q4 2023, highlighting challenges in operational efficiency[30] - Gross profit for the year was $550.0 million, up from $527.8 million, reflecting a gross margin improvement[30] - Gross profit for Q4 2024 was $136.0 million, an increase of 3.9% from $130.8 million in Q4 2023[36] - Selling and administrative (S&A) expense for Q4 2024 was $116.4 million, up 21.6% from $95.7 million in Q4 2023[36] - EBITDA for Q4 2024 was $21.0 million, down 45.0% from $38.2 million in Q4 2023[35] - Adjusted EBITDA margin for Q4 2024 was 14.4%, compared to 13.3% in Q4 2023[35] Research and Development - Research and development expenses increased to $43.8 million for the year, compared to $36.6 million in 2023, indicating a focus on innovation[30] Future Outlook - The diluted net income per share guidance for 2025 is projected to be between $3.80 and $4.30[19] - The company announced the launch of the new X6 ROVR, a larger autonomous scrubber, expected to be commercially available in Q2 2025[5] Capital Expenditures and Investments - The company invested $37.3 million in ERP modernization initiatives in 2024, with $23.3 million capitalized[34] - Capital expenditures for Q4 2024 were $9.4 million, compared to $7.5 million in Q4 2023[38] - ERP modernization costs for Q4 2024 amounted to $3.5 million, up from $1.2 million in Q4 2023[38] Legal and Settlement Charges - Legal settlement charge related to an intellectual property dispute amounted to $14.5 million, awarded on November 25, 2024[34]