Tennant Company Reports Record Full-Year Net Sales and Expanded Adjusted EBITDA Margin in 2024
Tennant Company (“Tennant” or the “Company”) (NYSE: TNC) today reported its fourth-quarter and full-year financial results for 2024, showcasing strong performance across key metrics. The company delivered record full-year net sales and expanded its adjusted EBITDA margin, positioning itself for continued growth in 2025.
Record Full-Year Net Sales and Adjusted EBITDA
Tennant achieved record full-year net sales of $1.287 billion, marking a 3.5% increase from $1.244 billion in 2023. This growth was driven by organic sales growth of 3.2%, fueled by price realization across all regions, favorable product and channel mix, and volume growth in the Americas. The company also reported adjusted EBITDA of $208.8 million, representing an 8.2% increase from $192.9 million in 2023. The adjusted EBITDA margin expanded to 16.2%, an improvement of 70 basis points from 2023.
Strong Fourth-Quarter Performance
In the fourth quarter of 2024, Tennant posted $328.9 million in net sales, a 5.6% increase from $311.4 million in the same period in 2023. Organic growth in the quarter was 6.3%, with volume growth in the Americas and EMEA driving the performance. Despite these gains, net income for the quarter declined to $6.6 million, a 78.7% drop from $31.0 million in the fourth quarter of 2023. However, adjusted diluted earnings per share (EPS) came in at $1.52, a slight decrease from $1.92 in the previous year, reflecting ongoing cost management efforts.
Margins and Cash Flow
The company’s adjusted EBITDA margin expanded to 14.4% in the fourth quarter, up 110 basis points from the prior year. For the full year, the margin improved to 16.2%, a 70-basis-point increase from 2023. This margin expansion reflects the strong sales growth and improved operating leverage, despite challenges in certain regions like APAC. Tennant generated $89.7 million in operating cash flow for the year, down from $188.4 million in 2023, largely due to investments in the Enterprise Resource Planning (ERP) modernization project and working capital requirements. Free cash flow for the year was $68.8 million, with $37.3 million attributed to ERP modernization costs.
Strategic Initiatives and Product Launches
Tennant announced the launch of the X6 ROVR, a larger, purpose-built Autonomous Mobile Robot (AMR) scrubber designed for retail, education, healthcare, manufacturing, logistics, warehousing, and large public spaces. The X6 ROVR features a fully integrated autonomous charging station, eliminating the need for manual charging. Additionally, the company introduced the XC1, another innovative product aimed at enhancing cleaning efficiency. Both the X6 ROVR and XC1 are scheduled to be commercially available in the second quarter of 2025.
Regional Performance
- Americas: The region saw a 10% organic growth in the fourth quarter, driven by volume growth in equipment and service. Price realization also contributed to the growth, though to a lesser extent. Full-year organic growth in the Americas was 6.3%, supported by price realization and volume increases in equipment and service, partially offset by volume declines in parts and consumables in North America.
- EMEA: EMEA experienced a 4.0% increase in the fourth quarter, driven by volume growth and price realization across all product categories. However, the full-year organic growth was a decline of 1.6%, primarily due to volume declines in both equipment and parts and consumables, offset by price realization. Market conditions improved in the fourth quarter, leading to a rebound in equipment volumes.
- APAC: The region faced challenges, with a 19.0% decline in the fourth quarter and a 9.5% decline for the full year. Volume declines were the primary factor, exacerbated by market saturation in China and slowing demand in Australia. Pricing pressures and margin compression in China, along with market uncertainty in Australia, contributed to the decline.
Guidance for 2025
Looking ahead, Tennant provided full-year 2025 guidance:
- Net sales: Expected to range between $1.21 billion and $1.25 billion, with an organic sales decline of 1.0% to 4.0% on a constant currency basis.
- Diluted net income per share: Anticipated to be between $3.80 and $4.30.
- Adjusted diluted net income per share: Projected to be between $5.70 and $6.20.
- Adjusted EBITDA: Expected to be between $196 million and $209 million, with an adjusted EBITDA margin of 16.2% to 16.7%.
- Capital expenditures: Estimated at approximately $20 million.
- Adjusted effective tax rate: Expected to be between 23% and 27%.
Leadership Comments
Dave Huml, President and CEO of Tennant, commented on the company’s performance: “We are pleased to report on Tennant’s strong finish to a successful 2024. We achieved record results with strong organic sales growth and margin expansion aligned with our long-range targets. 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 continue executing our growth strategies, including new products and expanded channels.”
