Tennant’s first quarter was marked by lower-than-expected sales and profit, with management attributing the shortfall to challenging year-over-year comparisons and a shift in product and customer mix. CEO David Huml pointed out that the prior year’s results were boosted by a large backlog reduction of higher-margin industrial products, making this quarter’s performance appear weaker in comparison. The heavy concentration of shipments to major retail customers—who typically receive more favorable pricing—further impacted margins. Management described the quarter as one where “the margin mix from a customer perspective” was unusually unfavorable and highlighted ongoing inflation and currency headwinds as contributing factors.
Is now the time to buy TNC? Find out in our full research report (it’s free).
Tennant (TNC) Q1 CY2025 Highlights:
- Revenue: $290 million vs analyst estimates of $296.6 million (6.8% year-on-year decline, 2.2% miss)
- Adjusted EPS: $1.12 vs analyst expectations of $1.30 (14.1% miss)
- Adjusted EBITDA: $41 million vs analyst estimates of $48.45 million (14.1% margin, 15.4% miss)
- The company reconfirmed its revenue guidance for the full year of $1.23 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $5.95 at the midpoint
- EBITDA guidance for the full year is $202.5 million at the midpoint, in line with analyst expectations
- Operating Margin: 7.3%, down from 12.1% in the same quarter last year
- Market Capitalization: $1.55 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Tennant’s Q1 Earnings Call
- Steve Ferazani (Sidoti): Asked how Tennant will achieve margin guidance despite recent declines. CEO David Huml explained that normalization of customer mix and successful tariff mitigation through pricing and sourcing actions are key drivers.
- Ferazani (Sidoti): Inquired about the impact of announced price increases on demand. Huml said it is too early to see clear patterns but noted that distributors may buy ahead, while customers have not shown significant buying changes yet.
- Aaron Reed (Northcoast Research): Asked if the quarter’s results reflect normal business lumpiness or unique challenges. Huml clarified that while backlog and large account wins add volatility, order growth trends remain positive.
- Reed (Northcoast Research): Sought detail on the Clean 360 program’s origins and adoption potential. Huml said it was developed in response to customer concerns over upfront costs and is aimed at accelerating AMR adoption.
- Reed (Northcoast Research): Probed whether Clean 360 could significantly boost AMR sales beyond initial expectations. Huml expressed optimism, noting early uptake and potential to exceed long-term targets if adoption accelerates.
Catalysts in Upcoming Quarters
In upcoming quarters, the StockStory team will watch (1) whether Tennant can successfully pass through price increases to offset tariff costs without hurting order rates, (2) the pace of AMR and Clean 360 subscription adoption and its impact on revenue mix, and (3) any further shifts in customer or product mix that affect margins. Execution on supplier negotiations and resilience in international markets will also be important to monitor.
Tennant currently trades at $83.14, up from $72.10 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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