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1. Company Snapshot

1.a. Company Description

Tennant Company, together with its subsidiaries, designs, manufactures, and markets floor cleaning equipment in the Americas, Europe, the Middle East, Africa, and the Asia Pacific.The company offers a suite of products, including floor maintenance and cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance and repair services, specialty surface coatings, and asset management solutions.It also provides business solutions, such as financing, rental, and leasing programs, as well as machine-to-machine asset management solutions.


The company offers its products under the Tennant, Nobles, Alfa Uma Empresa Tennant, IRIS, VLX, IPC, Gaomei, and Rongen brands, as well as private-label brands.Its products are used in retail establishments and distribution centers; factories and warehouses; and public venues, such as arenas and stadiums, office buildings, schools and universities, hospitals and clinics, parking lots and streets, and other environments.It markets its products to contract cleaners and businesses through direct sales and service organizations, as well as through a network of authorized distributors.


Tennant Company was founded in 1870 and is headquartered in Eden Prairie, Minnesota.

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1.b. Last Insights on TNC

Tennant Company's recent performance was negatively impacted by a decline in net income, with a 78.7% decrease in the fourth quarter of 2024 compared to the same period in 2023. This decline was largely due to increased legal, restructuring, and modernization costs. Additionally, the company's Q4 2024 earnings call highlighted a decrease in profitability, with EBITDA being the only improving metric. Furthermore, the company's 2025 guidance indicates revenue and profitability declines, which may further exacerbate the negative trends.

1.c. Company Highlights

2. Revenue Growth Slows Amid Tariff Headwinds

The company's financial performance was mixed, with revenues coming in line with expectations, while earnings per share (EPS) was slightly below estimates at $1.46 versus $1.49. The revenue growth was impacted by demand softening in tariff-sensitive industries, but core commercial end markets such as retail, healthcare, and education remained robust. As Dave Huml noted, "We're addressing tariff exposure through pricing actions and supply chain adjustments and expect to mitigate most of the impact within the year." The company's aftermarket demand, both service and consumables, remained strong.

Publication Date: Nov -16

📋 Highlights
  • ERP and Legal Costs:: ERP project costs and legal expenses totaled $13.3M, including $5.3M for an IP dispute, with additional Q4 costs expected but deemed manageable.
  • Share Repurchase Plan:: $23M in share repurchases executed YTD, with a $25M debt-funded plan to buy 4.5% of outstanding shares by year-end.
  • Order Growth and Tariff Impact:: Q4 order book up 2.5% (midpoint guidance), but YTD order growth declined quarterly due to prior-year comparisons and tariff uncertainty.
  • AMR Business Growth Drivers:: Strong AMR growth attributed to new products, Generation 3 autonomy package, and a brain exclusivity agreement.
  • Margin Expansion:: 30-basis-point margin improvement achieved via pricing/tariff actions, though short of 30-basis-point target due to mix shifts and inflation.

Margin Pressure

The company's margin was under pressure due to mix shift and inflation, which offset the benefits of price and tariff-related pricing. The company saw a 30-basis point improvement in margin over the prior year, but this was not enough to meet their anticipated 30-basis point improvement. Fay West mentioned that the cost out efforts were impacted by mix shift and inflation, "We've seen a 30-basis point improvement in margin over the prior year, primarily due to price and tariff-related pricing."

ERP Implementation Costs

The company incurred $13.3 million in ERP implementation costs and other non-GAAP costs in the quarter, which impacted net income. The costs were primarily driven by continued ERP spend, legal contingency costs, and restructuring charges. The company expects to incur some additional costs associated with the ERP project in the fourth quarter, but believes these costs will be relatively manageable.

Outlook and Valuation

Analysts estimate next year's revenue growth at 5.8%. The company's current valuation multiples are 24.13x P/E, 1.08x P/S, and 13.41x EV/EBITDA. The ROE is 8.64%, and the ROIC is 6.5%. The dividend yield is 1.63%, and the free cash flow yield is 4.59%. These metrics suggest that the company's valuation is reasonable, but the growth outlook is moderate.

Segment Performance

The Industrial Sales segment in the Americas was impacted by demand softening in tariff-sensitive industries. However, the company is seeing strong demand in core commercial end markets, and the aftermarket demand remains robust. The AMR business saw strong growth due to the introduction of new products and the Generation 3 autonomy package.

3. NewsRoom

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Vision One Loads up on Tennant: Why the Dividend King Is Worth a Look

Nov -17

Source: fool.com

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Bailard Inc. Buys Shares of 8,400 Tennant Company $TNC

Nov -15

Source: defenseworld.net

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Head to Head Review: Parker-Hannifin (NYSE:PH) and Tennant (NYSE:TNC)

Nov -05

Source: defenseworld.net

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Tennant Company (TNC) Q3 2025 Earnings Call Transcript

Nov -04

Source: seekingalpha.com

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Tennant Company Reports Third Quarter 2025 Results

Nov -03

Source: businesswire.com

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3 Industrial Stocks Set to Outshine Q3 Earnings Estimates

Oct -30

Source: zacks.com

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Tennant Company Increases Dividend

Oct -29

Source: businesswire.com

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Tennant Company to Report Third Quarter 2025 Results on November 3, 2025

Oct -22

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.87%)

6. Segments

Equipment

Expected Growth: 2.8%

Tennant Company's equipment segment growth of 2.8% is driven by increasing demand for industrial cleaning solutions, expansion into emerging markets, and strategic product innovations. Additionally, the company's focus on sustainability and energy-efficient products resonates with environmentally conscious customers, contributing to the growth.

Parts and Consumables

Expected Growth: 2.9%

Tennant Company's 2.9% growth in Parts and Consumables is driven by increasing demand for cleaning and maintenance services, expansion into new markets, and a growing customer base in the industrial and commercial sectors. Additionally, the company's focus on innovative and sustainable products, as well as its strategic pricing and inventory management, contribute to the segment's growth.

Service and Other

Expected Growth: 3.1%

Tennant Company's Service and Other segment growth of 3.1% is driven by increasing demand for cleaning and maintenance services, expansion of its equipment rental business, and strategic acquisitions. Additionally, the company's focus on sustainability and energy-efficient solutions resonates with environmentally conscious customers, contributing to the segment's growth.

7. Detailed Products

Floor Cleaning Equipment

Tennant Company offers a wide range of floor cleaning equipment, including ride-on and walk-behind scrubbers, sweepers, and burnishers, designed to clean and maintain various types of floors.

Ride-on Scrubbers

Tennant's ride-on scrubbers are designed for high-performance cleaning of large areas, featuring advanced technology and ergonomic design.

Walk-behind Scrubbers

Tennant's walk-behind scrubbers are versatile and easy to maneuver, ideal for cleaning smaller areas, such as retail stores, offices, and healthcare facilities.

Sweepers

Tennant's sweepers are designed for efficient cleaning of large areas, featuring advanced filtration systems and ergonomic design.

Burnishers

Tennant's burnishers are designed for high-gloss floor finishing, featuring advanced technology and ergonomic design.

Cleaning Solutions

Tennant's cleaning solutions are designed to work in conjunction with their cleaning equipment, offering a range of eco-friendly and effective cleaning products.

Service and Maintenance

Tennant offers comprehensive service and maintenance programs, including training, technical support, and repair services.

8. Tennant Company's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Tennant Company is medium because while there are some substitutes available, they are not very attractive to customers.

Bargaining Power Of Customers

The bargaining power of customers for Tennant Company is high because customers have many options and can easily switch to competitors.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Tennant Company is low because the company has many suppliers to choose from and can negotiate good prices.

Threat Of New Entrants

The threat of new entrants for Tennant Company is medium because while it is possible for new companies to enter the market, there are some barriers to entry.

Intensity Of Rivalry

The intensity of rivalry for Tennant Company is high because the market is highly competitive and companies are constantly competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 29.58%
Debt Cost 6.30%
Equity Weight 70.42%
Equity Cost 9.38%
WACC 8.47%
Leverage 42.01%

11. Quality Control: Tennant Company passed 8 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Graham

A-Score: 5.1/10

Value: 3.3

Growth: 7.9

Quality: 5.9

Yield: 0.0

Momentum: 10.0

Volatility: 3.7

1-Year Total Return ->

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Enerpac Tool

A-Score: 5.1/10

Value: 4.5

Growth: 7.8

Quality: 6.5

Yield: 0.0

Momentum: 4.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Thermon

A-Score: 4.6/10

Value: 5.2

Growth: 5.8

Quality: 6.7

Yield: 0.0

Momentum: 4.0

Volatility: 6.0

1-Year Total Return ->

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Stock-Card
Tennant

A-Score: 4.6/10

Value: 4.3

Growth: 4.7

Quality: 5.6

Yield: 2.0

Momentum: 3.0

Volatility: 8.0

1-Year Total Return ->

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Stock-Card
Standex

A-Score: 4.2/10

Value: 1.5

Growth: 4.0

Quality: 5.4

Yield: 1.0

Momentum: 7.0

Volatility: 6.3

1-Year Total Return ->

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Stock-Card
Twin Disc

A-Score: 4.2/10

Value: 6.1

Growth: 4.8

Quality: 3.6

Yield: 1.0

Momentum: 7.0

Volatility: 2.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

74.5$

Current Price

74.5$

Potential

-0.00%

Expected Cash-Flows