tnc-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to __________

Commission File Number 1-16191

__________________________________________

TENNANT COMPANY

(Exact name of registrant as specified in its charter)


Minnesota			41-0572550
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

10400 Clean Street

Eden Prairie, Minnesota 55344

(Address of principal executive offices)

(Zip Code)

(763) 540-1200

(Registrant’s telephone number, including area code)

____________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.375 per share

TNC

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.


			o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

As of April 25, 2025, there were 18,653,506 shares of common stock outstanding.

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TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION (Unaudited)		Page
Item 1.	Financial Statements	3
	Consolidated Statements of Income	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Equity	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 5.	Other Information	32
Item 6.	Exhibits	33
Signatures		34

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

TENNANT COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


(In millions, except shares and per share data)	Three Months Ended March 31,
	2025		2024
Net sales	$	290.0	$	311.0
Cost of sales	170.0		173.5
Gross profit	120.0		137.5
Selling and administrative expense	90.7		89.9
Research and development expense	9.7		10.1
Operating income	19.6		37.5
Interest expense, net	(2.3)		(2.3)
Net foreign currency transaction loss	(0.2)		(0.2)
Other income, net	0.1		0.1
Income before income taxes	17.2		35.1
Income tax expense	4.1		6.7
Net income	$	13.1	$	28.4

Net income per share
Basic	$	0.70	$	1.52
Diluted	$	0.69	$	1.49

Weighted average shares outstanding
Basic	18,702,438		18,665,570
Diluted	18,960,007		19,077,767

See accompanying notes to consolidated financial statements.

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TENNANT COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


(In millions)	Three Months Ended March 31,
	2025		2024
Net income	$	13.1	$	28.4
Other comprehensive income (loss):
Foreign currency translation adjustments (net of related tax benefit (expense) of $0.2 and $(0.2), respectively)	15.5		(8.2)
Pension and postretirement medical benefits (net of related tax expense of $0.0 and $0.0, respectively)	(0.1)		—
Derivative financial instruments (net of related tax benefit (expense) of $0.0 and $(0.3), respectively)	(0.1)		1.0
Total other comprehensive income (loss), net of tax	15.3		(7.2)

Total comprehensive income including noncontrolling interest	28.4		21.2
Foreign currency translation adjustments attributable to noncontrolling interest	0.4		—
Comprehensive income attributable to Tennant Company	$	28.0	$	21.2

See accompanying notes to consolidated financial statements.

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TENNANT COMPANY

CONSOLIDATED BALANCE SHEETS


	(Unaudited)
(In millions, except shares and per share data)	March 31, 2025		December 31, 2024
ASSETS
Cash and cash equivalents	$	79.5	$	99.8
Receivables, less allowances of $7.5 and $7.1, respectively	251.2		259.1
Inventories	191.3		183.8
Prepaid and other current assets	28.9		33.9
Total current assets	550.9		576.6
Property, plant and equipment, less accumulated depreciation of $323.8 and $310.9, respectively	185.7		184.4
Operating lease assets	54.3		54.6
Goodwill	192.8		185.6
Intangible assets, net	57.3		58.7
Other assets	139.3		130.2
Total assets	$	1,180.3	$	1,190.1
LIABILITIES AND EQUITY
Current portion of long-term debt	$	0.5	$	1.3
Accounts payable	115.3		126.9
Employee compensation and benefits	39.3		53.1
Other current liabilities	102.3		110.9
Total current liabilities	257.4		292.2
Long-term debt	213.3		198.2
Long-term operating lease liabilities	35.4		36.3
Employee benefits	14.2		13.5
Deferred income taxes	5.1		4.9
Other liabilities	28.8		22.9
Total long-term liabilities	296.8		275.8
Total liabilities	$	554.2	$	568.0
Commitments and contingencies (Note 12)
Common Stock, $0.375 par value; 60,000,000 shares authorized; 18,703,285 and 18,849,456 shares issued and outstanding, respectively	7.0		7.1
Additional paid-in capital	57.6		76.7
Retained earnings	617.2		609.7
Accumulated other comprehensive loss	(57.4)		(72.7)
Total Tennant Company shareholders' equity	624.4		620.8
Noncontrolling interest	1.7		1.3
Total equity	626.1		622.1
Total liabilities and total equity	$	1,180.3	$	1,190.1

See accompanying notes to consolidated financial statements.

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TENNANT COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


(In millions)	Three Months Ended March 31,
	2025		2024
OPERATING ACTIVITIES
Net income	$	13.1	$	28.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense	10.6		9.6
Amortization expense	3.4		3.9
Deferred income tax benefit	0.5		(1.0)
Share-based compensation expense	3.2		3.2
Bad debt and returns expense	0.7		0.3
Other, net	0.2		0.1
Changes in operating assets and liabilities:
Receivables	10.9		(10.1)
Inventories	(8.2)		(9.2)
Accounts payable	(8.7)		13.9
Employee compensation and benefits	(14.5)		(20.7)
Other assets and liabilities	(11.6)		(15.5)
Net cash (used in) provided by operating activities	(0.4)		2.9
INVESTING ACTIVITIES
Purchases of property, plant and equipment	(7.0)		(3.0)
Purchase of investment	—		(32.1)
Payments made in connection with business acquisition, net of cash acquired	—		(25.5)
Investment in leased assets	(0.1)		(0.2)
Cash received from leased assets	0.2		0.2
Net cash used in investing activities	(6.9)		(60.6)
FINANCING ACTIVITIES
Proceeds from borrowings	15.0		40.0
Repayments of borrowings	(0.8)		(26.2)
(Repurchases) proceeds from exercise of stock options, net of employee tax withholdings obligations of $2.6 and $3.5, respectively	(2.1)		19.5
Repurchases of common stock	(20.2)		(1.1)
Dividends paid	(5.6)		(5.3)
Net cash (used in) provided by financing activities	(13.7)		26.9
Effect of exchange rate changes on cash and cash equivalents	0.7		2.5
Net decrease in cash and cash equivalents	(20.3)		(28.3)
Cash and cash equivalents at beginning of period	99.8		117.1
Cash and cash equivalents at end of period	$	79.5	$	88.8

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SUPPLEMENTAL CASH FLOW INFORMATION	Three Months Ended March 31,
(In millions)	2025		2024
Cash paid for income taxes	$	3.5	$	1.6
Cash paid for interest	2.9		4.5
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	5.8		4.7
Lease assets obtained in exchange for new operating lease liabilities	4.0		3.8
Lease assets obtained in exchange for new financing lease liabilities	0.1		—
Supplemental non-cash investing and financing activities:
Capital expenditures in accounts payable	1.6		2.1

See accompanying notes to consolidated financial statements.

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TENNANT COMPANY

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

(In millions, except shares and per share data)


	Tennant Company Shareholders
	Common Shares	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Tennant Company Shareholders' Equity		Noncontrolling Interest		Total Equity
Balance, December 31, 2024	18,849,456	$	7.1	$	76.7	$	609.7	$	(72.7)	$	620.8	$	1.3	$	622.1
Net income		—		—		13.1		—		13.1		—		13.1
Other comprehensive income		—		—		—		15.3		15.3		—		15.3
Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of 29,497 shares	89,695	(0.1)		(2.1)		—		—		(2.2)		—		(2.2)
Share-based compensation		—		3.2		—		—		3.2		—		3.2
Repurchases of common stock	(235,866)	—		(20.2)		—		—		(20.2)		—		(20.2)
Dividends paid $0.295 per common share		—		—		(5.6)		—		(5.6)		—		(5.6)
Other		—		—		—		—		—		0.4		0.4
Balance, March 31, 2025	18,703,285	$	7.0	$	57.6	$	617.2	$	(57.4)	$	624.4	$	1.7	$	626.1


	Tennant Company Shareholders
	Common Shares	Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Tennant Company Shareholders' Equity		Noncontrolling Interest		Total Equity
Balance, December 31, 2023	18,631,384	$	7.0	$	64.9	$	547.4	$	(42.3)	$	577.0	$	1.3	$	578.3
Net income		—		—		28.4		—		28.4		—		28.4
Other comprehensive income		—		—		—		(7.2)		(7.2)		—		(7.2)
Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of 27,808 shares	388,179	0.1		19.5		—		—		19.6		—		19.6
Share-based compensation		—		3.2		—		—		3.2		—		3.2
Repurchases of common stock	(12,725)	—		(1.1)		—		—		(1.1)		—		(1.1)
Dividends paid $0.280 per common share		—		—		(5.3)		—		(5.3)		—		(5.3)
Balance, March 31, 2024	19,006,838	$	7.1	$	86.5	$	570.5	$	(49.5)	$	614.6	$	1.3	$	615.9

See accompanying notes to consolidated financial statements.

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TENNANT COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(In millions, except shares and per share data)

1. Summary of Significant Accounting Policies

Tennant Company ("the Company", "we", "us", or "our") is a world leader in designing, manufacturing and marketing solutions that help create a cleaner, safer, healthier world. The Company is committed to creating and commercializing breakthrough, sustainable cleaning innovations to enhance its broad suite of products, including floor maintenance and cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance and repair service, and asset management solutions.

Our products are used in many types of environments, including factories and warehouses, distribution centers, office buildings, public venues such as arenas and stadiums, schools and universities, hospitals and clinics, and more.

Customers include contract cleaners to whom organizations outsource facilities maintenance as well as businesses that perform facilities maintenance themselves. The Company reaches these customers through the industry's largest direct sales and service organization and through a strong and well-supported network of authorized distributors worldwide.

Basis of Presentation – The accompanying unaudited consolidated financial statements have been prepared in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements for interim reporting. In our opinion, the consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary for the fair presentation of our financial position and results of operations.

These statements should be read in conjunction with the consolidated financial statements and notes included in our annual report on Form 10-K for the year ended December 31, 2024. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Reclassification – Certain prior period amounts have been reclassified to conform to the current period presentation (e.g. payroll tax accruals are now classified from Employee Compensation and Benefits to Other Current Liabilities).

These reclassifications had no effect on previously reported results of operations, total assets, total liabilities or stockholders' equity.

2. Newly Adopted Accounting Pronouncements

Segment Reporting

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which amends the existing segment reporting guidance (ASC Topic 280 — Segment Reporting (“ASC 280”)) to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount for other segment items by reportable segment and a description of its composition, the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources. We have adopted the new standard effective December 31, 2024. While the adoption has no impact on our consolidated financial statements, it has resulted in incremental disclosures within the footnotes to our consolidated financial statements. Refer to Note 17, Segment Reporting, for the inclusion of the new required disclosures.

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3. Revenue

Disaggregation of Revenue

The following tables illustrate the disaggregation of revenue by geographic area, groups of similar products and services and sales channels:

Net sales by geographic area


	Three Months Ended March 31,
	2025		2024
Americas	$	197.3	$	215.6
Europe, Middle East and Africa	76.0		76.8
Asia Pacific	16.7		18.6
Total	$	290.0	$	311.0

Net sales are attributed to each geographic area based on the end-user country and are net of intercompany sales.

Net sales by groups of similar products and services


	Three Months Ended March 31,
	2025		2024
Equipment	$	172.8	$	189.8
Parts and consumables	67.3		70.6
Service and other	49.9		50.6
Total	$	290.0	$	311.0

Net sales by sales channel


	Three Months Ended March 31,
	2025		2024
Sales direct to consumer	$	205.1	$	221.4
Sales to distributors	84.9		89.6
Total	$	290.0	$	311.0

Contract Liabilities

Sales Returns

The right of return may exist explicitly or implicitly with our customers. When the right of return exists, we adjust the transaction price for the estimated effect of returns. We estimate the expected returns using the expected value method by assessing historical sales levels and the timing and magnitude of historical sales return levels as a percent of sales and projecting this experience into the future.

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Sales Incentives

Our sales contracts may contain various customer incentives, such as volume-based rebates or other promotions. We reduce the transaction price for certain customer programs and incentive offerings that represent variable consideration. Sales incentives given to our customers are recorded using the most likely amount approach for estimating the amount of consideration to which the Company will be entitled. We forecast the most likely amount of the incentive to be paid at the time of sale, update this forecast quarterly, and adjust the transaction price accordingly to reflect the new amount of incentives expected to be earned by the customer. A majority of our customer incentives are settled within one year. We record our accruals for volume-based rebates and other promotions in other current liabilities on our consolidated balance sheets.

The change in our sales incentive accrual balance was as follows:


	Three Months Ended March 31,
	2025		2024
Beginning balance	$	16.1	$	21.2
Additions to sales incentive accrual	5.7		6.3
Contract payments	(7.9)		(11.3)
Foreign currency fluctuations	(0.3)		(0.4)
Ending balance	$	13.6	$	15.8

Deferred Revenue

We sell separately priced prepaid contracts to our customers where we receive payment at the inception of the contract and defer recognition of the consideration received because we have to satisfy future performance obligations. Our deferred revenue balance includes autonomous subscription sales and prepaid maintenance contracts on our machines ranging from 12 months to 60 months. In circumstances where prepaid contracts are bundled with machines, we use an observable price to determine stand-alone selling price for separate performance obligations.

The change in the deferred revenue balance was as follows:


	Three Months Ended March 31,
	2025		2024
Beginning balance	$	20.6	$	10.3
Increase in deferred revenue representing our obligation to satisfy future performance obligations	5.7		5.0
Decrease in deferred revenue for amounts recognized in net sales for satisfied performance obligations	(3.9)		(4.3)
Foreign currency fluctuations	0.1		(0.1)
Ending balance	$	22.5	$	10.9

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As of March 31, 2025, $10.8 million and $11.7 million of deferred revenue was reported in other current liabilities and other liabilities, respectively, on our consolidated balance sheets. Of these amounts, we expect to recognize the following approximate amounts in net sales in the following periods:


Remaining 2025	$	8.8
2026	5.7
2027	4.1
2028	2.3
2029	1.5
Thereafter	0.1
Total	$	22.5

As of December 31, 2024, $9.8 million and $10.8 million of deferred revenue was reported in other current liabilities and other liabilities, respectively, on our consolidated balance sheets.

4. Management Actions

Restructuring Actions

During the three months ended March 31, 2025, we incurred restructuring expenses as part of our ongoing global reorganization efforts. The following pre-tax restructuring charges were included in selling and administrative expense in the consolidated statements of income.


	Three Months Ended March 31,
	2025		2024
Severance-related costs	$	1.5	$	—
Total pre-tax restructuring costs	$	1.5	$	—

Our restructuring actions represent the continued execution of a multi-year enterprise strategy to drive increased productivity throughout our operations. The charges in 2025 impacted all operating segments and were related to a global workforce realignment to support our key strategic initiatives.

A reconciliation of the beginning and ending liability balances for severance-related costs is as follows:


	Three Months Ended March 31,
	2025		2024
Beginning balance	$	8.6	$	2.4
New charges	1.7		—
Cash payments	(3.0)		(0.4)
Foreign currency fluctuations	0.2		(0.1)
Adjustments to accrual	(0.2)		—
Ending balance	$	7.3	$	1.9

5. Acquisitions

On February 29, 2024, we acquired 100% of M&F Management and Financing GmbH ("M&F"), the parent company of TCS EMEA GmbH ("TCS"), as we seek to accelerate growth in the EMEA region.

Based in Austria, TCS was Tennant Company's largest Central and Eastern Europe distributor. The acquisition gives Tennant a knowledgeable and experienced sales force and an established direct channel into countries including Romania, Hungary, Czech Republic, and Slovakia, along with an expanded network in Austria,

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Switzerland, Poland, and other nations in the region, as well as the Middle East and Africa. The pro forma impact of this acquisition is immaterial to our operations.

The purchase price was allocated based on the estimated fair value of assets acquired and liabilities assumed at the date of the acquisition.

The following table summarizes the fair value measurement of the assets acquired and liabilities assumed:


Components of purchase price:
Cash paid	$	31.0
Settlement of preexisting transactions	3.9
Total purchase price	34.9

ASSETS
Cash	5.4
Other current assets	8.9
Intangible assets subject to amortization
Customer lists	13.2
Backlog	0.6
Other assets	5.7
Total identifiable assets acquired	33.8
LIABILITIES
Current liabilities	(1.6)
Long-term liabilities	(6.7)
Total identifiable liabilities assumed	(8.3)
Net assets acquired	25.5

Goodwill	$	9.4

Included in the total purchase price is cash paid of $31.0 million and the settlement of $3.9 million of preexisting transactions.

The goodwill is not deductible for income tax purposes. The useful lives of the acquired intangible assets is 3 months and 10 years for backlog and customer lists, respectively, and are being amortized on a straight-line basis.

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6. Inventories

Inventories are valued at the lower of cost or net realizable value and consisted of the following:


	March 31, 2025		December 31, 2024
Inventories carried at LIFO:
Finished goods(a)	$	81.0	$	85.4
Raw materials and work-in-process	36.9		38.4
Excess of FIFO over LIFO cost(b)	(49.7)		(50.4)
Total LIFO inventories	$	68.2	$	73.4

Inventories carried at FIFO:
Finished goods(a)	$	59.9	$	53.2

SEC Form 10-Q filed by Tennant Company