Tennant(TNC) - 2025 Q1 - Quarterly Report

Financial Performance - Consolidated net sales for Q1 2025 totaled $290.0 million, a 6.8$311.0 million in Q1 2024[99] - Organic sales declined by 5.0%, primarily due to volume declines across all geographies, especially in North America[99] - Gross profit margin for Q1 2025 was 41.4%, down 280 basis points from 44.2% in Q1 2024, attributed to product mix shifts and inflation[101] - Net income for Q1 2025 was $13.1 million, a decrease from$28.4 million in Q1 2024, with diluted net income per share dropping to $0.69 from$1.49[98] Expenses - Selling and administrative expenses increased to $90.7 million, representing 31.3$9.7 million, or 3.3% of net sales, reflecting continued investment in innovative products[104] Cash Flow and Liquidity - Cash and cash equivalents decreased to $79.5 million as of March 31, 2025, down from$99.8 million at the end of 2024[109] - Net cash used in operating activities was $0.4 million in Q1 2025, compared to$2.9 million provided in Q1 2024, driven by ERP modernization costs[111] Tax and Debt - The effective tax rate increased to 23.8% in Q1 2025 from 19.1% in Q1 2024, primarily due to reduced discrete tax benefits[107] - The debt-to-capital ratio was 25.5% as of March 31, 2025, compared to 24.3% at the end of 2024[109] Accounting Standards - The FASB issued ASU 2023-09, effective for fiscal years beginning after December 15, 2024, aimed at enhancing income tax disclosures, particularly rate reconciliation and income taxes paid information[116] - ASU 2024-03 requires disaggregation of certain income statement expense captions, effective for annual periods beginning after December 15, 2026, with prospective or retrospective application options[117] - No new accounting pronouncements are expected to materially impact the company's results of operations or financial position[118] Risks and Uncertainties - The company faces various risks including geopolitical and economic uncertainty, competition, and the ability to develop innovative products and services[120] - The company cautions that actual results may differ materially from forward-looking statements due to known and unknown risks[121] - There have been no material changes in market risk since December 31, 2024[123]