TNC Tennant Co

Record Full-Year Net Sales and Adjusted EBITDA

Expanded Adjusted EBITDA Margin to 16.2%

Introduces Full-Year Guidance for 2025

Tennant Company ("Tennant" or the "Company") (NYSE: TNC) today reported its fourth-quarter and full-year financial results for 2024.

(In millions, except per share data)

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2024

 

 

 

2023

 

 

Incr / (Decr)

 

 

2024

 

 

 

2023

 

 

Incr / (Decr)

Net sales

$

328.9

 

 

$

311.4

 

 

5.6

%

 

$

1,286.7

 

 

$

1,243.6

 

 

3.5

%

Net income

$

6.6

 

 

$

31.0

 

 

(78.7

)%

 

$

83.7

 

 

$

109.5

 

 

(23.6

)%

Diluted EPS

$

0.35

 

 

$

1.64

 

 

(78.7

)%

 

$

4.38

 

 

$

5.83

 

 

(24.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted diluted EPS(a)

$

1.52

 

 

$

1.92

 

 

(20.8

)%

 

$

6.57

 

 

$

6.57

 

 

—

%

Adjusted EBITDA(a)

$

47.4

 

 

$

41.5

 

 

14.2

%

 

$

208.8

 

 

$

192.9

 

 

8.2

%

Adjusted EBITDA margin(a)

 

14.4

%

 

 

13.3

%

 

110 bps

 

 

16.2

%

 

 

15.5

%

 

70 bps

Highlights

• Fourth-quarter net sales increased 5.6% to $328.9 million. Organic growth of 6.3% led by volume growth in the Americas and EMEA.
• Delivered full-year net sales of $1,286.7 million, marking a 3.5% increase from 2023. Organic growth of 3.2% driven by price growth across all regions, favorable product and channel mix, and volume growth in the Americas.
• Achieved full-year adjusted EBITDA(a) of $208.8 million, an 8.2% increase compared to 2023. Full-year adjusted EBITDA margin(a) of 16.2% improved by 70 basis points, driven by strong sales growth driving increased operating leverage year over year.
• Generated full-year operating cash flow of $89.7 million and returned $41.0 million of capital to shareholders in 2024 through dividends and share repurchases. Board of Directors authorized new share repurchase program of 2,000,000 shares of the Company's common stock, in addition to approximately 580,000 shares remaining under its current repurchase program.
• Tennant announces the new X6 ROVR, a larger purpose-built AMR scrubber targeting retail, education, healthcare, manufacturing, logistics, warehousing, and large public spaces. The X6 ROVR also features a fully integrated autonomous charging station, eliminating the daily need for an operator to remember to charge the machine. Both the X6 ROVR and XC1 will be commercially available in the second quarter of 2025.

“We are pleased to report on Tennant's strong finish to a successful 2024. We achieved record results in 2024 with strong organic sales growth and margin expansion aligned with our long-range targets,” said Dave Huml, Tennant President and Chief Executive Officer. “In the fourth quarter, we maintained our positive trajectory, achieving the third quarter of near double-digit order growth and shifting our mix to volume-driven growth. Our talented global team is well-positioned to build on this momentum and to continue executing our growth strategies, including new products and expanded channels.

"Looking forward to 2025, we anticipate a stable demand environment outside of APAC and we are confident in our plans to deliver mid-single-digit order growth. However, this will not fully offset the year-over-year impact of backlog reduction, resulting in a decrease in organic sales on a constant currency basis between 1% to 4%. We anticipate that through prudent cost management and increased operating efficiencies we will deliver year-over-year margin expansion."

Net Sales

Consolidated net sales for the fourth quarter of 2024 totaled $328.9 million, a 5.6% increase compared to consolidated net sales of $311.4 million in the fourth quarter of 2023. Consolidated net sales for the full year 2024 totaled $1,286.7 million, a 3.5% increase compared to consolidated net sales of $1,243.6 million in 2023. Net sales performance benefited from a reduction of backlog of approximately $125 million in 2024 compared to $140 million in 2023. The components of the consolidated net sales change were as follows:

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2024 vs. 2023

Price

 

0.8%

 

2.5%

Volume

 

5.5%

 

0.7%

Organic growth

 

6.3%

 

3.2%

Acquisitions

 

0.1%

 

0.7%

Foreign currency

 

(0.8)%

 

(0.4)%

Total growth

 

5.6%

 

3.5%

Organic Sales

Organic sales, which exclude the effects of foreign currency and acquisitions, grew in both the fourth quarter and full year 2024 compared to 2023. Growth in the fourth quarter of 2024 was driven by volume growth in the Americas and EMEA, partially offset by price and volume declines in APAC. Full year 2024 growth was driven by price realization in all geographies and volume growth in the Americas, which was partially offset by volume declines in EMEA and APAC.

 

Three Months Ended December 31, 2024

 

Twelve Months Ended December 31, 2024

 

Americas

 

EMEA

 

APAC

 

Total

 

Americas

 

EMEA

 

APAC

 

Total

Organic net sales growth

10.0%

 

4.0%

 

(19.0)%

 

6.3%

 

6.3%

 

(1.6)%

 

(9.5)%

 

3.2%

Americas: The 10% growth in the Americas during the fourth quarter was driven primarily by volume growth in equipment and service. Pricing realization also contributed to the organic growth, but to a lesser extent. The 6.3% growth during the full year was driven by price realization and volume increases in equipment and service, partially offset by volume declines in parts and consumables in North America.

EMEA: The 4.0% increase in EMEA during the fourth quarter was driven by volume growth and price realization across all product categories. The 1.6% decline for the full year was due to volume declines in both equipment and parts and consumables partially offset by price realization in all product categories. During the first three quarters, equipment volumes were affected by weaker-than-expected market conditions and the effects of a stronger backlog reduction in the prior period. However, in the fourth quarter, market conditions improved, leading to a rebound in equipment volumes.

APAC: The 19.0% decrease in APAC during the fourth quarter and the 9.5% decline during the full year were mainly due to volume declines, partly offset by price realization in China and Australia. In China, market saturation continues to cause pricing pressure and margin compression as demand for our mid-tier products decreases. In Australia, there are signals of slowing demand due to market uncertainty, with some specific instances of customers delaying equipment orders or opting for rental units instead.

Operating Results

Gross profit margin decreased to 41.3% in the fourth quarter, down from 42.0% in the prior year. This decline was primarily due to inflation on materials and services, partially offset by a restructuring-related charge in the prior-year period. For the full year 2024, gross profit margin increased to 42.7%, compared to 42.4% in 2023. The adjusted gross profit margin(a) increased by 20 basis points compared to 2023, as pricing and cost-out initiatives more than offset the impact of inflation during the year.

Selling and Administrative ("S&A") expense was $116.4 million in the fourth quarter of 2024, a $20.7 million increase compared to the fourth quarter of 2023. S&A expense for the full year 2024 was $391.9 million, a $39.3 million increase compared to 2023. The increase in both periods was primarily driven by Enterprise Resource Planning ("ERP") modernization costs, legal contingency costs, restructuring-related charges and transaction and integration costs. When excluding these items, Adjusted S&A expense(a) as a percentage of net sales for the fourth quarter 2024 improved to 27.4% compared to 29.9% in 2023. Full-year adjusted S&A expense(a) as a percentage of net sales improved to 27.4%, compared to 28.0% in 2023. This positive S&A expense leverage in both periods was primarily driven by improved operating performance and diligent cost management throughout the year.

Adjusted EBITDA(a) was $47.4 million in the fourth quarter of 2024, compared to $41.5 million in 2023. Adjusted EBITDA margin(a) for the fourth quarter 2024 was 14.4%, a 110-basis-point increase from 2023. For the full year 2024, Adjusted EBITDA(a) was $208.8 million, compared to $192.9 million in 2023, an increase of $15.9 million. Adjusted EBITDA margin(a) for the full year 2024 was 16.2%, a 70-basis-point increase from 2023. The increase in both periods was primarily driven by strong sales growth and improved S&A leverage throughout the year.

Net income was $6.6 million in the fourth quarter of 2024, a $24.4 million decrease compared to the fourth quarter of 2023. Net income for the full year 2024 was $83.7 million, a decrease of $25.8 million compared to 2023. The decrease in both periods was primarily driven by higher nonoperating costs discussed above, partly offset by higher net sales. Additionally, there were discrete noncash exceptional tax items that favorably impacted income taxes in both years, with a larger impact in the prior year.

Adjusted net income(a) was $29.0 million in the fourth quarter of 2024, a $7.2 million decrease compared to the fourth quarter of 2023. The decrease was primarily driven by an increase in income tax expense, partly offset by improved operating performance in the fourth quarter of 2024. Adjusted net income(a) for the full year 2024 was $125.5 million, an increase of $2.1 million compared to 2023. The increase was primarily driven by higher net sales and improvements in gross margin, partly offset by higher S&A costs, research and development ("R&D") costs, as well as a higher effective tax rate.

Cash Flow, Liquidity and Capital Allocation

Tennant generated $89.7 million in cash flow from operations in 2024 compared to $188.4 million in 2023. Operating cash flow in 2024 was impacted by investments in the ERP modernization project as well as working capital investments related to inventory. Tennant generated free cash flow of $68.8 million in 2024, which included investments in ERP modernization of $37.3 million. When excluding ERP modernization cash flows, the Company converted 113% of net income to free cash flow in 2024.

Liquidity remained strong with a balance of $99.8 million in cash and cash equivalents as of the end of 2024, and $449.3 million of unused borrowing capacity under its revolving credit facility.

The Company continues to strategically deploy cash flow to meet operational capital requirements and to return capital to shareholders in alignment with its capital allocation priorities. In 2024, the Company invested $20.9 million in capital expenditures and returned $41.0 million to shareholders through dividends and share repurchases. The Company remains diligent in managing its debt and maintaining a strong balance sheet. The Company's net leverage ratio was 0.48 times Adjusted EBITDA, which is below its targeted range of 1x to 2x Adjusted EBITDA.

2025 Guidance

For 2025, Tennant provides the following guidance ranges:

(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%

**Excludes ERP modernization costs and amortization expense.

Conference Call

Tennant will host a conference call to discuss its 2024 fourth-quarter and full-year results on February 18, 2025, at 9 a.m. Central Time (10 a.m. Eastern Time). The conference call and accompanying slides will be available via webcast on Tennant's investor website. To listen to the call live and view the slide presentation, go to investors.tennantco.com and click on the link at the bottom of the overview page. A replay of the conference call, with slides, will be available at investors.tennantco.com.

Company Profile

Founded in 1870, Tennant Company (TNC), headquartered in Eden Prairie, Minnesota, is a world leader in the design, manufacture and marketing of solutions that help create a cleaner, safer and healthier world. Its products include equipment for maintaining surfaces in industrial, commercial and outdoor environments; detergent-free and other sustainable cleaning technologies; and cleaning tools and supplies. Tennant's global field service network is the most extensive in the industry. Tennant Company had sales of $1.29 billion in 2024 and has approximately 4,500 employees. Tennant has manufacturing operations throughout the world and sells products directly in more than 21 countries and through distributors in more than 100 countries. For more information, visit www.tennantco.com and www.ipcworldwide.com. The Tennant Company logo and other trademarks designated with the symbol “®” are trademarks of Tennant Company registered in the United States and/or other countries.

Forward-Looking Statements

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 subject to a variety of factors. These include factors that affect all businesses operating in a global market as well as matters specific to us and the markets the Company serves. Particular risks and uncertainties presently facing it include: economic uncertainty throughout the world; geopolitical tensions or health epidemics; the Company's ability to comply with global laws and regulations; the Company's ability to adapt pricing to the competitive marketplace and customer pricing sensitivities; the competition in the Company's business; fluctuations in the cost, quality or availability of raw materials and purchased components; increasing cost pressures; unforeseen product liability claims or product quality issues; the Company's ability to attract, retain and develop key personnel and create effective succession planning strategies; the Company's ability to effectively develop and manage strategic planning and growth processes and the related operational plans; the Company's ability to successfully upgrade and evolve its information technology systems; the Company's ability to successfully protect our information technology systems from cybersecurity risks; the occurrence of a significant business interruption; the Company's ability to maintain the health and safety of its workers; the Company's ability to integrate acquisitions; and the Company's ability to develop and commercialize new innovative products and services.

The Company cautions that forward-looking statements must be considered carefully and that actual results may differ in material ways due to risks and uncertainties both known and unknown. Information about factors that could materially affect the Company's results can be found in its 2024 Form 10-K. Shareholders, potential investors and other readers are urged to consider these factors in evaluating forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.

The Company undertakes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. Investors are advised to consult any further disclosures by the Company in its filings with the Securities and Exchange Commission and in other written statements on related subjects. It is not possible to anticipate or foresee all risk factors, and investors should not consider any list of such factors to be an exhaustive or complete list of all risks or uncertainties.

Non-GAAP Financial Measures

This news release and the related conference call include presentation of Non-GAAP measures that include or exclude special items of a nonrecurring and/or nonoperational nature (hereinafter referred to as “special items”). Management believes that the Non-GAAP measures provide useful information to investors regarding the Company’s results of operations and financial condition because they permit a more meaningful comparison and understanding of Tennant Company’s operating performance for the current, past or future periods. Management uses these Non-GAAP measures to monitor and evaluate ongoing operating results and trends and to gain an understanding of the comparative operating performance of the Company.

The Company believes that disclosing selling and administrative (“S&A”) expense – as adjusted, S&A expense as a percent of net sales – as adjusted, operating income – as adjusted, operating margin – as adjusted, income before income taxes – as adjusted, income tax expense – as adjusted, net income – as adjusted, net income per diluted share – as adjusted, EBITDA – as adjusted, and EBITDA margin – as adjusted (collectively, the “Non-GAAP measures”), excluding the impacts from special items, is useful to investors as a measure of operating performance. The Company uses these measures to monitor and evaluate operating performance. The Non-GAAP measures are financial measures that do not reflect United States Generally Accepted Accounting Principles (GAAP). The Company calculates the Non-GAAP measures by adjusting for legal contingency costs, ERP modernization costs, restructuring-related costs, transaction-related costs and amortization expense. The Company calculates income tax expense – as adjusted by adjusting for the tax effect of these Non-GAAP measures. The Company calculates net income per diluted share – as adjusted by adjusting for the after-tax effect of these Non-GAAP measures and dividing the result by the diluted weighted average shares outstanding. The Company calculates EBITDA margin – as adjusted by dividing EBITDA – as adjusted by net sales.

(a) See Supplemental non-GAAP financial tables below for a reconciliation of adjusted non-GAAP financial measures to GAAP.

FINANCIAL TABLES FOLLOW

TENNANT COMPANY

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)

 

(In millions, except shares and per share data)

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net sales

$

328.9

 

 

$

311.4

 

 

$

1,286.7

 

 

$

1,243.6

 

Cost of sales

 

192.9

 

 

 

180.6

 

 

 

736.7

 

 

 

715.8

 

Gross profit

 

136.0

 

 

 

130.8

 

 

 

550.0

 

 

 

527.8

 

Selling and administrative expense

 

116.4

 

 

 

95.7

 

 

 

391.9

 

 

 

352.6

 

Research and development expense

 

12.0

 

 

 

10.6

 

 

 

43.8

 

 

 

36.6

 

Operating income

 

7.6

 

 

 

24.5

 

 

 

114.3

 

 

 

138.6

 

Interest expense, net

 

(1.6

)

 

 

(2.5

)

 

 

(9.1

)

 

 

(13.5

)

Net foreign currency transaction (loss) gain

 

—

 

 

 

(0.2

)

 

 

0.1

 

 

 

0.3

 

Other (expense) income, net

 

(0.7

)

 

 

0.2

 

 

 

(0.5

)

 

 

(1.6

)

Income before income taxes

 

5.3

 

 

 

22.0

 

 

 

104.8

 

 

 

123.8

 

Income tax (benefit) expense

 

(1.3

)

 

 

(9.0

)

 

 

21.1

 

 

 

14.3

 

Net income

$

6.6

 

 

$

31.0

 

 

$

83.7

 

 

$

109.5

 

 

 

 

 

 

 

 

 

Net income per share

 

 

 

 

 

 

 

Basic

$

0.36

 

 

$

1.67

 

 

$

4.46

 

 

$

5.92

 

Diluted

$

0.35

 

 

$

1.64

 

 

$

4.38

 

 

$

5.83

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

Basic

 

18,775,004

 

 

 

18,579,763

 

 

 

18,786,871

 

 

 

18,509,523

 

Diluted

 

19,044,968

 

 

 

18,906,887

 

 

 

19,096,138

 

 

 

18,783,633

 

GEOGRAPHICAL NET SALES(1) (Unaudited)

 

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2024

 

 

 

2023

 

 

% Change

 

 

2024

 

 

 

2023

 

 

% Change

Americas

$

226.4

 

$

208.1

 

8.8

%

 

$

888.5

 

$

840.3

 

5.7

%

Europe, Middle East and Africa

 

83.9

 

 

 

80.3

 

 

4.5

%

 

 

318.5

 

 

 

314.4

 

 

1.3

%

Asia Pacific

 

18.6

 

 

 

23.0

 

 

(19.1

)%

 

 

79.7

 

 

 

88.9

 

 

(10.3

)%

Total

$

328.9

 

 

$

311.4

 

 

5.6

%

 

$

1,286.7

 

 

$

1,243.6

 

 

3.5

%

(1) Net of intercompany sales.

TENNANT COMPANY

CONSOLIDATED BALANCE SHEETS (Unaudited)

 

(In millions, except shares and per share data)

 

 

 

December 31

 

2024

 

 

 

2023

 

ASSETS

 

 

 

Cash, cash equivalents, and restricted cash

$

99.8

 

 

$

117.1

 

Receivables, less allowances of $7.1 and $7.2, respectively

 

259.1

 

 

 

247.6

 

Inventories

 

183.8

 

 

 

175.9

 

Prepaid and other current assets

 

33.9

 

 

 

28.5

 

Total current assets

 

576.6

 

 

 

569.1

 

Property, plant and equipment, less accumulated depreciation of $310.9 and $304.0, respectively

 

184.4

 

 

 

187.7

 

Operating lease assets

 

54.6

 

 

 

41.7

 

Goodwill

 

185.6

 

 

 

187.4

 

Intangible assets, net

 

58.7

 

 

 

63.1

 

Other assets

 

130.2

 

 

 

64.4

 

Total assets

$

1,190.1

 

 

$

1,113.4

 

LIABILITIES AND TOTAL EQUITY

 

 

 

Current portion of long-term debt

$

1.3

 

 

$

6.4

 

Accounts payable

 

126.9

 

 

 

111.4

 

Employee compensation and benefits

 

60.5

 

 

 

67.3

 

Other current liabilities

 

103.5

 

 

 

88.6

 

Total current liabilities

 

292.2

 

 

 

273.7

 

Long-term debt

 

198.2

 

 

 

194.2

 

Long-term operating lease liabilities

 

36.3

 

 

 

27.4

 

Employee-related benefits

 

13.5

 

 

 

13.3

 

Deferred income taxes

 

4.9

 

 

 

5.0

 

Other liabilities

 

22.9

 

 

 

21.5

 

Total long-term liabilities

 

275.8

 

 

 

261.4

 

Total liabilities

$

568.0

 

 

$

535.1

 

Common Stock, $0.375 par value; 60,000,000 shares authorized; 18,849,456 and 18,631,384 shares issued and outstanding, respectively

 

7.1

 

 

 

7.0

 

Additional paid-in capital

 

76.7

 

 

 

64.9

 

Retained earnings

 

609.7

 

 

 

547.4

 

Accumulated other comprehensive loss

 

(72.7

)

 

 

(42.3

)

Total Tennant Company shareholders' equity

 

620.8

 

 

 

577.0

 

Noncontrolling interest

 

1.3

 

 

 

1.3

 

Total equity

 

622.1

 

 

 

578.3

 

Total liabilities and total equity

$

1,190.1

 

 

$

1,113.4

 

TENNANT COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

(In millions)

 

December 31

 

2024

 

 

 

2023

 

OPERATING ACTIVITIES

 

 

 

Net income

$

83.7

 

 

$

109.5

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation expense

 

40.1

 

 

 

36.4

 

Amortization expense

 

15.0

 

 

 

14.7

 

Deferred income tax benefit

 

(9.8

)

 

 

(26.9

)

Share-based compensation expense

 

11.9

 

 

 

11.6

 

Bad debt and returns expense

 

3.4

 

 

 

3.4

 

Other, net

 

0.6

 

 

 

1.3

 

Changes in operating assets and liabilities:

 

 

 

Receivables

 

(15.0

)

 

 

4.1

 

Inventories

 

(33.0

)

 

 

14.3

 

Accounts payable

 

15.4

 

 

 

(15.3

)

Employee compensation and benefits

 

(5.2

)

 

 

22.3

 

Other assets and liabilities

 

(17.4

)

 

 

13.0

 

Net cash provided by operating activities

 

89.7

 

 

 

188.4

 

INVESTING ACTIVITIES

 

 

 

Purchases of property, plant and equipment

 

(20.9

)

 

 

(22.8

)

Purchase of investment

 

(32.1

)

 

 

—

 

Payments made in connection with business acquisition, net of cash acquired

 

(25.7

)

 

 

—

 

Investment in leased assets

 

(0.5

)

 

 

(1.2

)

Cash received from leased assets

 

0.8

 

 

 

0.8

 

Net cash used in investing activities

 

(78.4

)

 

 

(23.2

)

FINANCING ACTIVITIES

 

 

 

Proceeds from borrowings

 

40.9

 

 

 

20.0

 

Repayments of borrowings

 

(42.5

)

 

 

(120.0

)

Payment of debt financing costs

 

(2.2

)

 

 

—

 

Change in finance lease obligations

 

—

 

 

 

0.2

 

Proceeds from exercise of stock options, net of employee tax withholdings obligations of $3.8, $1.7, and $2.0, respectively

 

19.6

 

 

 

19.0

 

Repurchases of common stock

 

(19.6

)

 

 

(21.7

)

Dividends paid

 

(21.4

)

 

 

(20.1

)

Net cash used in financing activities

 

(25.2

)

 

 

(122.6

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

(3.4

)

 

 

(2.9

)

Net (decrease) increase in cash, cash equivalents and restricted cash

 

(17.3

)

 

 

39.7

 

Cash, cash equivalents and restricted cash at beginning of year

 

117.1

 

 

 

77.4

 

Cash, cash equivalents and restricted cash at end of year

$

99.8

 

 

$

117.1

 

TENNANT COMPANY

SUPPLEMENTAL NON-GAAP FINANCIAL TABLES

 

Reported to Adjusted Net Income and Net Income Per Share

 

(In millions, except per share data)

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net income - as reported

$

6.6

 

$

31.0

 

$

83.7

 

$

109.5

Adjustments:

 

 

 

 

 

 

 

Amortization expense

 

2.6

 

 

 

2.7

 

 

 

11.0

 

 

 

10.6

 

Restructuring-related charge (Cost of sales) (2)

 

—

 

 

 

0.5

 

 

 

—

 

 

 

0.5

 

Restructuring-related charge (S&A expense) (2)

 

5.6

 

 

 

0.8

 

 

 

6.0

 

 

 

1.6

 

ERP modernization costs (S&A expense) (3)

 

3.5

 

 

 

1.2

 

 

 

10.5

 

 

 

1.2

 

Transaction and integration-related costs (S&A expense) (4)

 

0.4

 

 

 

—

 

 

 

4.0

 

 

 

—

 

Legal contingency costs (S&A expense) (5)

 

10.3

 

 

 

—

 

 

 

10.3

 

 

 

—

 

Net income - as adjusted

$

29.0

 

 

$

36.2

 

 

$

125.5

 

 

$

123.4

 

 

 

 

 

 

 

 

 

Net income per share - as reported:

 

 

 

 

 

 

 

Diluted

$

0.35

 

 

$

1.64

 

 

$

4.38

 

 

$

5.83

 

Adjustments:

 

 

 

 

 

 

 

Amortization expense

 

0.14

 

 

 

0.14

 

 

 

0.58

 

 

 

0.56

 

Restructuring-related charge (Cost of sales) (2)

 

—

 

 

 

0.03

 

 

 

—

 

 

 

0.03

 

Restructuring-related charge (S&A expense) (2)

 

0.29

 

 

 

0.05

 

 

 

0.31

 

 

 

0.09

 

ERP modernization costs (S&A expense) (3)

 

0.18

 

 

 

0.06

 

 

 

0.55

 

 

 

0.06

 

Transaction and integration-related costs (S&A expense) (4)

 

0.02

 

 

 

—

 

 

 

0.21

 

 

 

—

 

Legal contingency costs (S&A expense) (5)

 

0.54

 

 

 

—

 

 

 

0.54

 

 

 

—

 

Net income per diluted share - as adjusted

$

1.52

 

 

$

1.92

 

 

$

6.57

 

 

$

6.57

 

(2) Restructuring expenses reflect our ongoing global reorganization efforts to align our expense structure with key strategic initiatives and long-term business objectives. These restructuring actions are expected to generate annualized cost savings beginning in 2025.

(3) Enterprise Resource Planning (ERP) modernization initiative investment. In 2024, the Company invested $37.3 million in ERP initiatives. Of this amount, $23.3 million was capitalized, while the remaining $14.0 million was recorded as a Selling and Administration expense in the Consolidated Statements of Income. This investment is expected to drive future operational efficiencies across the organization.

(4) Due diligence and integration costs associated with the acquisition of TCS, and costs associated with the investment in Brain Corp, Inc., a privately held autonomous technology company.

(5) Legal settlement charge related to an intellectual property dispute regarding ec-H2O™ option on commercial floor cleaning machines sold between 2015 and 2023. On November 25, 2024, a jury ruled against the Company in a case brought by Oxygenator Water Technologies, Inc. (OWT), awarding $14.5 million in damages and interest. The ruling does not impact the Company's ability to sell its products or affect its long-term business objectives. For further details, see Note 16, Commitments and Contingencies, in "Item 8. Financial Statement and Supplementary Data" of the 2024 Form 10-K.

TENNANT COMPANY

SUPPLEMENTAL NON-GAAP FINANCIAL TABLES

 

Reported Net Income to Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA)

 

(In millions)

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net income - as reported

$

6.6

 

 

$

31.0

 

 

$

83.7

 

 

$

109.5

 

Less:

 

 

 

 

 

 

 

Interest expense, net

 

1.6

 

 

 

2.5

 

 

 

9.1

 

 

 

13.5

 

Income tax (benefit) expense

 

(1.3

)

 

 

(9.0

)

 

 

21.1

 

 

 

14.3

 

Depreciation expense

 

10.5

 

 

 

10.0

 

 

 

40.1

 

 

 

36.4

 

Amortization expense

 

3.6

 

 

 

3.7

 

 

 

15.0

 

 

 

14.7

 

EBITDA

 

21.0

 

 

 

38.2

 

 

 

169.0

 

 

 

188.4

 

Adjustments:

 

 

 

 

 

 

 

Restructuring-related charge (Cost of sales) (2)

 

—

 

 

 

0.7

 

 

 

—

 

 

 

0.7

 

Restructuring-related charge (S&A expense) (2)

 

7.6

 

 

 

1.0

 

 

 

8.2

 

 

 

2.2

 

ERP modernization costs (S&A expense) (3)

 

4.8

 

 

 

1.6

 

 

 

14.0

 

 

 

1.6

 

Transaction and integration-related costs (S&A expense) (4)

 

0.5

 

 

 

—

 

 

 

4.1

 

 

 

—

 

Legal contingency costs (S&A expense) (5)

 

13.5

 

 

 

—

 

 

 

13.5

 

 

 

—

 

EBITDA - as adjusted

$

47.4

 

 

$

41.5

 

 

$

208.8

 

 

$

192.9

 

EBITDA margin - as adjusted

 

14.4

%

 

 

13.3

%

 

 

16.2

%

 

 

15.5

%

TENNANT COMPANY

SUPPLEMENTAL NON-GAAP FINANCIAL TABLES

 

Reported to Adjusted Selling and Administrative Expense (S&A expense) and Operating Income

 

(In millions)

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Gross profit - as reported

$

136.0

 

 

$

130.8

 

 

$

550.0

 

 

$

527.8

 

Gross margin - as reported

 

41.3

%

 

 

42.0

%

 

 

42.7

%

 

 

42.4

%

Adjustments:

 

 

 

 

 

 

 

Restructuring-related charge (Cost of sales) (2)

 

—

 

 

 

0.7

 

 

 

—

 

 

 

0.7

 

Gross profit - as adjusted

$

136.0

 

 

$

131.5

 

 

$

550.0

 

 

$

528.5

 

Gross margin - as adjusted

 

41.3

%

 

 

42.2

%

 

 

42.7

%

 

 

42.5

%

 

 

 

 

 

 

 

 

S&A expense - as reported

$

116.4

 

 

$

95.7

 

 

$

391.9

 

 

$

352.6

 

S&A expense as a percent of net sales - as reported

 

35.4

%

 

 

30.7

%

 

 

30.5

%

 

 

28.4

%

Adjustments:

 

 

 

 

 

 

 

Restructuring-related charge (S&A expense) (2)

 

(7.6

)

 

 

(1.0

)

 

 

(8.2

)

 

 

(2.2

)

ERP modernization costs (S&A expense) (3)

 

(4.8

)

 

 

(1.6

)

 

 

(14.0

)

 

 

(1.6

)

Transaction and integration-related costs (S&A expense) (4)

 

(0.5

)

 

 

—

 

 

 

(4.1

)

 

 

—

 

Legal contingency costs (S&A expense) (5)

 

(13.5

)

 

 

—

 

 

 

(13.5

)

 

 

—

 

S&A expense - as adjusted

$

90.0

 

 

$

93.1

 

 

$

352.1

 

 

$

348.8

 

S&A expense as a percent of net sales - as adjusted

 

27.4

%

 

 

29.9

%

 

 

27.4

%

 

 

28.0

%

 

 

 

 

 

 

 

 

Operating income - as reported

$

7.6

 

 

$

24.5

 

 

$

114.3

 

 

$

138.6

 

Operating margin - as reported

 

2.3

%

 

 

7.9

%

 

 

8.9

%

 

 

11.1

%

Adjustments:

 

 

 

 

 

 

 

Restructuring-related charge (Cost of sales) (2)

 

—

 

 

 

0.7

 

 

 

—

 

 

 

0.7

 

Restructuring-related charge (S&A expense) (2)

 

7.6

 

 

 

1.0

 

 

 

8.2

 

 

 

2.2

 

ERP modernization costs (S&A expense) (3)

 

4.8

 

 

 

1.6

 

 

 

14.0

 

 

 

1.6

 

Transaction and integration-related costs (S&A expense) (4)

 

0.5

 

 

 

—

 

 

 

4.1

 

 

 

—

 

Legal contingency costs (S&A expense) (5)

 

13.5

 

 

 

—

 

 

 

13.5

 

 

 

—

 

Operating income - as adjusted

$

34.0

 

 

$

27.8

 

 

$

154.1

 

 

$

143.1

 

Operating margin - as adjusted

 

10.3

%

 

 

8.9

%

 

 

12.0

%

 

 

11.5

%

TENNANT COMPANY

SUPPLEMENTAL NON-GAAP FINANCIAL TABLES

 

Reported to Adjusted Income Before Income Taxes and Income Tax Expense

 

(In millions)

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Income before income taxes - as reported

$

5.3

 

 

$

22.0

 

 

$

104.8

 

 

$

123.8

 

Adjustments:

 

 

 

 

 

 

 

Amortization expense

 

3.6

 

 

 

3.7

 

 

 

15.0

 

 

 

14.7

 

Restructuring-related charge (Cost of sales) (2)

 

—

 

 

 

0.7

 

 

 

—

 

 

 

0.7

 

Restructuring-related charge (S&A expense) (2)

 

7.6

 

 

 

1.0

 

 

 

8.2

 

 

 

2.2

 

ERP modernization costs (S&A expense) (3)

 

4.8

 

 

 

1.6

 

 

 

14.0

 

 

 

1.6

 

Transaction and integration-related costs (S&A expense) (4)

 

0.5

 

 

 

—

 

 

 

4.1

 

 

 

—

 

Legal contingency costs (S&A expense) (5)

 

13.5

 

 

 

—

 

 

 

13.5

 

 

 

—

 

Income before income taxes - as adjusted

$

35.3

 

 

$

29.0

 

 

$

159.6

 

 

$

143.0

 

 

 

 

 

 

 

 

 

Income tax (benefit) expense - as reported

$

(1.3

)

 

$

(9.0

)

 

$

21.1

 

 

$

14.3

 

Effective tax rate - as reported

 

(24.5

)%

 

 

(40.9

)%

 

 

20.1

%

 

 

11.6

%

Adjustments (6):

 

 

 

 

 

 

 

Amortization expense

 

1.0

 

 

 

1.0

 

 

 

4.0

 

 

 

4.1

 

Restructuring-related charge (Cost of sales) (2)

 

—

 

 

 

0.2

 

 

 

—

 

 

 

0.2

 

Restructuring-related charge (S&A expense) (2)

 

2.0

 

 

 

0.2

 

 

 

2.2

 

 

 

0.6

 

ERP modernization costs (S&A expense) (3)

 

1.3

 

 

 

0.4

 

 

 

3.5

 

 

 

0.4

 

Transaction and integration-related costs (S&A expense) (4)

 

0.1

 

 

 

—

 

 

 

0.1

 

 

 

—

 

Legal contingency costs (S&A expense) (5)

 

3.2

 

 

 

—

 

 

 

3.2

 

 

 

—

 

Income tax expense (benefit) - as adjusted

$

6.3

 

 

$

(7.2

)

 

$

34.1

 

 

$

19.6

 

Effective tax rate - as adjusted

 

17.8

%

 

 

(24.8

)%

 

 

21.4

%

 

 

13.7

%

(6) For determining the tax impact, the statutory tax rate was applied for each jurisdiction where income or expenses were generated.

TENNANT COMPANY

SUPPLEMENTAL NON-GAAP FINANCIAL TABLES

 

Free Cash Flow Conversion

 

(In millions)

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net income - as reported

$

6.6

 

 

$

31.0

 

 

$

83.7

 

 

$

109.5

 

Adjustments:

 

 

 

 

 

 

 

ERP modernization costs (S&A expense) (3)

 

3.5

 

 

 

1.2

 

 

 

10.5

 

 

 

1.2

 

Net income - as adjusted

$

10.1

 

 

$

32.2

 

 

$

94.2

 

 

$

110.7

 

 

 

 

 

 

 

 

 

Cash provided by operating activities - as reported

$

37.5

 

 

$

63.8

 

 

$

89.7

 

 

$

188.4

 

Less:

 

 

 

 

 

 

 

Capital expenditures

 

(9.4

)

 

 

(7.5

)

 

 

(20.9

)

 

 

(22.8

)

Free cash flows (7)

$

28.1

 

 

$

56.3

 

 

$

68.8

 

 

$

165.6

 

Adjustments:

 

 

 

 

 

 

 

ERP modernization spend

 

11.7

 

 

 

1.8

 

 

 

37.3

 

 

 

1.8

 

Free cash flows - as adjusted

$

39.8

 

 

$

58.1

 

 

$

106.1

 

 

$

167.4

 

 

 

 

 

 

 

 

 

Net income to free cash flows conversion

 

394

%

 

 

180

%

 

 

113

%

 

 

151

%

(7) Free Cash Flow reflects cash provided by operating activities less capital expenditures

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20250217800732/en/

INVESTOR RELATIONS CONTACT: Lorenzo Bassi Vice President, Finance and Investor Relations investors@tennantco.com 763-540-1242