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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. Tennant's ERP Implementation Challenges Impact Q4 Results

Publication Date: Mar -09

📋 Highlights
  • ERP Disruption Impact:: Q4 2025 adjusted EBITDA reduced by $22M, with $98M total ERP costs since 2023 and $20M+ expected in 2026.
  • Robotics Growth:: $85M in AMR sales in 2025, targeting $250M by 2028 through TNC Robotics venture.
  • Share Repurchases:: $88M spent to buy back 1.1M shares in 2025, reducing outstanding shares by ~6%.
  • 2025 Financial Decline:: Full-year adjusted EBITDA fell to $167.4M (-$41.4M YoY), with EPS dropping to $4.57 (-$2.00 YoY).
  • 2026 Guidance:: $1.24–1.28B net sales, $175–190M adjusted EBITDA, and EBITDA margin of 14.1–14.8% despite ERP recovery challenges.

Financial Performance

The company's financial performance was impacted by the ERP implementation, resulting in a decrease in adjusted EBITDA by an estimated $22 million. The full year 2025 GAAP net income was $43.8 million, down from $83.7 million in 2024. The adjusted EBITDA for the full year 2025 was $167.4 million, a decrease of $41.4 million from the prior year. The gross margin in 2025 decreased to 40.2%, primarily driven by lower volume and unfavorable mix.

ERP Implementation Update

The company has been working to resolve the issues related to the ERP implementation. Although critical issues have been solved, the company remains in hypercare in North America and is working toward achieving system stability by the end of Q1 2026. The ERP-related costs are expected to exceed $20 million in 2026, primarily due to stabilization and support resources.

Robotics and Growth Prospects

Tennant's robotics portfolio delivered roughly $85 million in AMR sales, inclusive of recurring autonomy fees. The company is investing in accelerating growth, with plans to reach $250 million in sales by 2028. The TNC Robotics venture will focus on accelerating NPD, improving NPD efficiency, and capturing demand. The company expects the robotics segment to drive growth and is working to maintain a competitive edge.

Valuation Metrics

Analyzing Tennant's valuation metrics, the P/E Ratio stands at 25.18, indicating a relatively high valuation. The P/S Ratio is 0.93, suggesting a reasonable valuation relative to sales. The EV/EBITDA ratio is 10.76, which is a moderate valuation multiple. The Dividend Yield is 1.97%, providing a relatively stable return. With the actual EPS coming in at $1.39, below estimates of $1.68, and analysts estimating next year's revenue growth at 5.0%, the company's prospects are being closely watched.

Guidance and Outlook

Tennant provides guidance for 2026, expecting net sales to be in the range of $1.24 billion to $1.28 billion, reflecting organic sales growth of 3% to 6.5%. Adjusted EBITDA is expected to be in the range of $175 million to $190 million. The guidance reflects the full year impact of known tariffs and an increase in absolute spending for S&A and R&D. The company expects to operate below optimal efficiency in the first quarter, leading to elevated costs and compressed margins, but anticipates improvement by mid-year.

3. NewsRoom

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Tennant Company and Brain Corp Agree to Accelerate Robotic Cleaning Innovation, Advancing Tennant's Transformation into a Robotics and Technology Leader

12:45

Source: businesswire.com

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Tennant Company $TNC Shares Purchased by Deprince Race & Zollo Inc.

08:30

Source: defenseworld.net

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$TNC Investigation Reminder: Tennant Company Investors are Reminded to Contact BFA Law after Company Investigated for Securities Fraud Over ERP System Issues

Apr -13

Source: globenewswire.com

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Tennant Company: CFO's Q4 Breakdown Proves Dividend Is Safe Despite The ERP Disaster

Apr -10

Source: seekingalpha.com

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TNC Securities Alert: Tennant Company Securities Fraud Investigation Focuses on ERP System Issues; BFA Law Notifies Investors to Contact the Firm

Apr -10

Source: globenewswire.com

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TENNANT INVESTIGATION ALERT: Bragar Eagel & Squire, P.C. Reminds Tennant Company Investors with Large Losses to Contact the Firm Regarding Ongoing Investigation

Apr -08

Source: globenewswire.com

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TNC Investor Announcement: Tennant Company Investigated After ERP System Issues Cause 23% Stock Drop – Investors with Losses Notified to Contact BFA Law

Apr -08

Source: globenewswire.com

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Tennant Company Unveils X16 SWEEP for Autonomous, Around-the-Clock Industrial Sweeping

Apr -07

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

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Enerpac Tool

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Value: 8.6

Growth: 6.8

Quality: 7.1

Yield: 0.0

Momentum: 3.0

Volatility: 7.3

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Thermon

A-Score: 5.0/10

Value: 4.1

Growth: 5.8

Quality: 7.4

Yield: 0.0

Momentum: 7.0

Volatility: 5.7

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Graham

A-Score: 5.0/10

Value: 3.3

Growth: 7.9

Quality: 5.6

Yield: 0.0

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Tennant

A-Score: 4.7/10

Value: 4.2

Growth: 4.7

Quality: 5.5

Yield: 3.0

Momentum: 3.0

Volatility: 8.0

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Standex

A-Score: 4.4/10

Value: 1.9

Growth: 3.9

Quality: 5.1

Yield: 2.0

Momentum: 7.0

Volatility: 6.3

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A-Score: 4.0/10

Value: 3.9

Growth: 4.8

Quality: 3.5

Yield: 1.0

Momentum: 8.0

Volatility: 3.0

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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

78.75$

Current Price

78.75$

Potential

-0.00%

Expected Cash-Flows