Key Takeaways The Industrial Products sector is expected to post 1.2% earnings and 9% revenue growth in Q3 2025.AptarGroup, Tennant and Sealed Air show positive Earnings ESPs and strong fundamentals for Q3.Demand across life sciences, automation and e-commerce packaging continues to fuel performance.The Zacks Industrial Products sector kicked off the third quarter of 2025 earnings season last week. The sector is anticipated to have performed well in the quarter, backed by strength across key end markets, gr ...

Core Insights - Steve Tennant has been appointed as CEO for Europe, the Middle East, and Africa (EMEA) at Grant Thornton Advisors, aiming to enhance service delivery and growth across the region [1][3] - The multinational platform of Grant Thornton Advisors has rapidly expanded across the Americas, Europe, and the Middle East, necessitating a new operating structure [2][4] - Tennant's leadership will focus on deepening cross-border capabilities and delivering multi-jurisdictional support to clients [3][5] Company Developments - The Grant Thornton Advisors multinational platform was established in January 2025 and has since expanded through transactions with various professional services firms in France, Spain, and Belgium [4][15] - The platform aims to provide seamless cross-border advisory and tax services, supported by independent audit practices and significant investments in technology and talent [5][8] - Grant Thornton Advisors is backed by an investor group led by New Mountain Capital, which manages approximately $55 billion in assets [6] Leadership and Strategy - Tennant's appointment reflects his proven leadership in innovation and client-centric growth, having previously served as managing partner of Grant Thornton Ireland since January 2024 [3][5] - The new operating structure will allow for a unified multinational platform that enhances collaboration and innovative capabilities across regions [5][8] - The platform is designed to deliver a singular client experience, leveraging a workforce of over 15,000 professionals [8]

Summary of Tennant Company Conference Call Company Overview - **Company**: Tennant Company - **Industry**: Cleaning Equipment Manufacturing - **CEO**: David Hummel - **Investor Relations**: Lorenzo Bassi - **Historical Context**: Established 155 years ago, continuously reinventing itself to remain relevant [3][4] Market Position and Growth Potential - **Total Addressable Market (TAM)**: $9 billion with a current global market share of approximately 14% [4][6] - **Geographic Market Shares**: - Americas: 25% - EMEA: 10% - Asia Pacific: 4% [6] - **Growth Aspirations**: Targeting 3% to 5% organic top-line growth, outpacing market growth rates of 1.5% to 2% [9][10] - **Order Growth**: - Q1 2025: Orders up 13% - Q2 2025: Orders up 4% - Incoming order rates for 2025 are around 7% [23][24] Strategic Initiatives - **Robotics Investment**: Significant focus on robotic cleaning equipment as a key growth area [5][4] - **Aftermarket Capabilities**: Strong service model that enhances customer loyalty and creates a competitive moat [5][34] - **New Product Innovation**: Emphasis on AMR (Autonomous Mobile Robots), small space cleaning, and product line extensions to drive growth [12][13] - **M&A Strategy**: Aiming to add $150 million in top-line net sales through acquisitions from 2024 to 2026, focusing on core mechanized cleaning and adjacent categories [11][15] Market Trends and Challenges - **Megatrends**: - **Automation**: Increasing demand for robotic solutions to address labor challenges [7][8] - **Modernization**: Post-pandemic demand for cleaner spaces [8] - **Electrification**: Shift towards battery-powered equipment to meet sustainability goals [9] - **Tariff Concerns**: Ongoing uncertainty regarding tariffs affecting customer operations and pricing strategies [25][26][30] - **Economic Environment**: Fed rate changes do not have a direct correlation with demand; tariff uncertainty poses a greater risk [32][30] Financial Performance and Projections - **EBITDA Expansion**: Committed to 50 to 100 basis points of bottom-line EBITDA expansion, with a focus on cost management and efficiency [10][62] - **Backlog Management**: Unwound approximately $125 million of backlog in 2024, impacting revenue trends but indicating healthy order rates [70][71] Competitive Advantages - **Brand Reputation**: Established trust and reliability in product performance contribute to a competitive moat [34][35] - **Service Capability**: Extensive factory-direct service organization enhances customer satisfaction and retention [36][37] - **Financial Discipline**: Strong balance sheet and fiscal discipline allow for strategic investments in growth areas [39][38] Future Outlook - **Robotics Market Potential**: Current robotic sales account for 6% of revenue, with significant growth opportunities anticipated [45][46] - **Geographic Expansion**: Exploring opportunities in Eastern Europe and Southeast Asia to enhance market presence [55][56][58] Conclusion - **Investment Thesis**: Tennant Company presents a compelling investment opportunity with a strong market position, innovative product pipeline, and strategic focus on robotics and geographic expansion [76][77]

Market Overview - Tennant Company (TNC) operates in a global addressable market estimated at approximately $9 billion[11] - TNC holds an approximate 14% market share in the Americas, where the market size is around $4 billion[11, 12] - In EMEA, TNC's market share is about 25%, within a market size of roughly $3 billion[12] - The APAC region presents a $2 billion market, where TNC has an approximate 4% market share[12] Financial Performance (Q2 2025) - Net sales for Q2 2025 reached $319 million, a decrease from $331 million in Q2 2024[45] - Net income for Q2 2025 was $20.2 million, compared to $27.9 million in Q2 2024[40] - Adjusted EPS for Q2 2025 was $1.49 per diluted share[40] - Adjusted EBITDA for Q2 2025 was $51 million, down from $59 million in Q2 2024[50] Financial Targets - The company targets organic net sales growth of 3%-5%[16] - The company aims for approximately $150 million in net sales added from mergers and acquisitions (M&A)[16]

Core Insights - The article highlights the collaboration between Loop and Hyosung TNC to support Loop's Infinite Loop™ India project, which aims to expand the customer base for sustainable textile solutions [1] Group 1: Company Initiatives - Loop is transforming textile waste into high-purity Twist™ polyester, which is a key component in sustainable textile production [1] - Hyosung TNC will utilize Loop's Twist™ polyester to produce high-performance yarns under its Regen™ portfolio, which is recognized by leading apparel and textile brands [1]

Core Insights - Tennant Company (TNC) has underperformed in share price compared to expectations, prompting a reevaluation of its investment potential [1] - In March, the company was identified as a "Buy" candidate, indicating previous optimism about its performance [1] Company Analysis - The focus of the analysis is on cash flow generation and the potential for value and growth within the oil and natural gas sector [1] - The investment service provided includes a model account with over 50 stocks and in-depth cash flow analyses of exploration and production (E&P) firms [2] Industry Context - The service aims to foster a community centered around oil and natural gas investments, emphasizing the importance of cash flow in identifying viable investment opportunities [1][2] - Subscribers are offered a two-week free trial to explore the investment service and gain insights into the oil and gas sector [3]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Tennant Company's unaudited consolidated financial statements for Q2 2025, including Income, Comprehensive Income, Balance Sheets, Cash Flows, Equity, and detailed Notes [Consolidated Statements of Income](index=4&type=section&id=Consolidated%20Statements%20of%20Income) Q2 2025 net sales decreased to **$318.6 million**, with net income falling to **$20.2 million** and diluted EPS to **$1.08**, reflecting a similar trend for the six-month period Consolidated Statements of Income (Q2 & H1 2025 vs 2024) | (In millions, except per share data) | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :---: | :---: | | | **2025** | **2024** | **2025** | **2024** | | **Net sales** | $318.6 | $331.0 | $608.6 | $642.0 | | **Gross profit** | $134.1 | $142.7 | $254.1 | $280.2 | | **Operating income** | $30.6 | $38.6 | $50.2 | $76.1 | | **Net income** | $20.2 | $27.9 | $33.3 | $56.3 | | **Diluted EPS** | $1.08 | $1.45 | $1.77 | $2.94 | [Consolidated Balance Sheets](index=6&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$1,241.5 million**, with total liabilities at **$587.8 million** and total equity at **$653.7 million** Consolidated Balance Sheet Highlights | (In millions) | June 30, 2025 | December 31, 2024 | | :--- | :---: | :---: | | **Total current assets** | $574.6 | $576.6 | | **Total assets** | $1,241.5 | $1,190.1 | | **Total current liabilities** | $274.8 | $292.2 | | **Total liabilities** | $587.8 | $568.0 | | **Total equity** | $653.7 | $622.1 | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 operating cash flow was **$22.1 million**, investing activities used **$10.6 million**, and financing activities used **$32.8 million**, resulting in a **$19.7 million** net cash decrease Cash Flow Summary (Six Months Ended June 30) | (In millions) | 2025 | 2024 | | :--- | :---: | :---: | | **Net cash provided by operating activities** | $22.1 | $21.5 | | **Net cash used in investing activities** | $(10.6) | $(64.9) | | **Net cash (used in) provided by financing activities** | $(32.8) | $12.4 | | **Net decrease in cash and cash equivalents** | $(19.7) | $(32.5) | | **Cash and cash equivalents at end of period** | $80.1 | $84.6 | [Notes to Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed notes explain accounting policies, financial results, revenue disaggregation, debt, derivatives, and recent segment reporting changes and acquisitions - The company designs, manufactures, and markets cleaning solutions for various environments, reaching customers through direct sales and a distributor network[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - Effective December 31, 2024, the company adopted ASU 2023-07, which enhances disclosures about reportable segments, although it had no impact on the consolidated financial statements themselves[33](index=33&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2025 financial results, noting a **3.7%** net sales decrease to **$318.6 million** and a 100 bps gross margin contraction, while managing macroeconomic challenges and maintaining strong liquidity - The company is facing macroeconomic challenges including geopolitical tensions, elevated interest rates, and trade policy uncertainty, particularly U.S. tariffs which could increase input costs[100](index=100&type=chunk)[101](index=101&type=chunk) - Demand trends are mixed globally: China's recovery is slow, uncertainty in Mexico is delaying spending, and Europe faces heightened competition[102](index=102&type=chunk) - To manage challenges, the company is focusing on cost control, operational improvements, proactive pricing, and supply-chain initiatives to mitigate tariff impacts[103](index=103&type=chunk)[106](index=106&type=chunk) [Results of Operations](index=31&type=section&id=Results%20of%20Operations) Q2 2025 net sales declined **3.7%** to **$318.6 million** due to lower volumes, gross margin contracted by **100 bps**, and operating income dropped to **$30.6 million** Net Sales Change Components (2025 vs. 2024) | | Three Months Ended June 30, | Six Months Ended June 30, | | :--- | :---: | :---: | | **Price** | 1.8% | 0.9% | | **Volume** | (6.3)% | (5.6)% | | **Organic decline** | (4.5)% | (4.7)% | | **Acquisitions** | —% | 0.2% | | **Foreign currency** | 0.8% | (0.7)% | | **Total** | (3.7)% | (5.2)% | Net Sales by Geographic Area (Q2 2025 vs 2024) | (In millions) | Q2 2025 | Q2 2024 | % Change | | :--- | :---: | :---: | :---: | | **Americas** | $213.5 | $227.8 | (6.3)% | | **EMEA** | $84.7 | $81.5 | 3.9% | | **Asia Pacific** | $20.4 | $21.7 | (6.0)% | | **Total** | $318.6 | $331.0 | (3.7)% | - The gross profit margin decrease was primarily attributed to a shift in product/customer mix, inflation, and lower productivity, partially offset by price realization. Prior-year periods benefited from a significant reduction in backlog of higher-margin products[112](index=112&type=chunk) - S&A expense increased in Q2 2025 due to strategic investments (including ERP costs) and a bad debt charge, partly offset by lower variable compensation[113](index=113&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, cash was **$80.1 million**, operating cash flow was **$22.1 million**, and financing activities used **$32.8 million**, with **$434.3 million** unused borrowing capacity - Cash and cash equivalents decreased to **$80.1 million** at June 30, 2025, from **$99.8 million** at December 31, 2024[123](index=123&type=chunk) - Net cash from operating activities for H1 2025 was **$22.1 million**, slightly up from **$21.5 million** in H1 2024, despite a **$28.4 million** spend on an ERP project[125](index=125&type=chunk) - Net cash used in financing activities was **$32.8 million** in H1 2025, a significant shift from **$12.4 million** provided in H1 2024, driven by increased common stock repurchases[127](index=127&type=chunk) - The company had approximately **$434.3 million** of unused borrowing capacity on its revolving facility as of June 30, 2025[124](index=124&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in the company's market risk have occurred since December 31, 2024 - There have been no material changes in the company's market risk since December 31, 2024[136](index=136&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls over financial reporting - Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective[137](index=137&type=chunk) - There were no changes in internal controls over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[138](index=138&type=chunk) [PART II - OTHER INFORMATION](index=37&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) No material developments in legal proceedings were reported during the quarter - There have been no material developments in any legal proceedings that require reporting in this Form 10-Q[139](index=139&type=chunk) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the company's risk factors have occurred since the 2024 Form 10-K filing - No material changes to the company's risk factors have occurred since the filing of the 2024 Form 10-K[140](index=140&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **183,749** shares at an average of **$73.85** per share in Q2 2025, with **2,207,371** shares remaining authorized for repurchase Share Repurchases for the Quarter Ended June 30, 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Publicly Announced Programs | | :--- | :---: | :---: | :---: | | April 1-30, 2025 | 58,263 | $72.17 | 58,169 | | May 1-31, 2025 | 66,413 | $73.78 | 62,582 | | June 1-30, 2025 | 59,073 | $75.57 | 59,073 | | **Total** | **183,749** | **$73.85** | **179,824** | - On February 11, 2025, the Board of Directors authorized the repurchase of an additional **2,000,000** shares of common stock[141](index=141&type=chunk) [Item 5. Other Information](index=37&type=section&id=Item%205.%20Other%20Information) No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement during Q2 2025 - No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[143](index=143&type=chunk) [Item 6. Exhibits](index=38&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with Form 10-Q, including CEO/CFO certifications and iXBRL financial data - The report includes CEO and CFO certifications (Rule 13a-14(a)/15d-14(a) and Section 1350) and financial statements in iXBRL format as exhibits[144](index=144&type=chunk)

Financial Data and Key Metrics Changes - The company achieved net sales of $319 million, representing an organic sales decline of 4.5% compared to the prior year [7][19] - GAAP net income for the quarter was $20.2 million, down from $27.9 million in the prior year [17] - Adjusted EPS was $1.49 per diluted share, compared to $1.83 per diluted share in the prior year [18] - Adjusted EBITDA was $51 million, with an adjusted EBITDA margin of 16%, down from 17.7% in the prior year [24] Performance by Business Line - Overall equipment net sales decreased by 6.5%, primarily due to a decline in industrial equipment sales [20] - Service sales increased by 1.4%, and parts and consumables grew by 1% compared to the prior year [20] - The decline in net sales was primarily driven by lower sales of industrial equipment, while commercial equipment saw volume growth [21] Performance by Market - In The Americas, orders increased by 9%, with North America experiencing double-digit order growth [9] - Organic sales in EMEA declined by 1.4%, with significant declines in Germany and the Middle East, partially offset by strong performance in the U.K. and Iberia [10][21] - In APAC, organic sales declined by 5%, primarily due to lower volumes in China, although Australia showed resilient demand [11][22] Company Strategy and Industry Competition - The company is focused on driving performance through strategic pricing initiatives and new product launches, including the X4 Rover and the Z50 Citadel Outdoor Sweeper [12][14] - The outdoor sweeping market is a new segment for the company, expanding its total addressable market [14][56] - The company is actively pursuing M&A opportunities to complement its long-term objectives while maintaining a strong balance sheet [15][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strategic plans for the second half of 2025, despite ongoing macroeconomic uncertainties and tariff-related pressures [16][29] - The company anticipates a full-year impact of approximately $20 million from tariffs, representing around 3% of total cost of goods sold [28] - Management reaffirmed full-year guidance, expecting net sales between $1.21 billion and $1.25 billion, reflecting an organic sales decline of 1% to 4% [29] Other Important Information - The company generated free cash flow of $18.7 million in the second quarter, converting 137.2% of net income into free cash flow [25] - The liquidity position remains strong, with cash and cash equivalents of $80.1 million and approximately $434 million of unused borrowing capacity [26] Q&A Session Summary Question: Concerns about global economic growth and potential slowdown - Management acknowledged economic uncertainty but noted that customer demand has not shown signs of paralysis, with a robust opportunity pipeline [33][34] Question: Margin lift expectations - Management indicated that margin growth is expected to come from gross margin expansion, increased volume absorption, and cost management initiatives [48][49] Question: Backlog conversion in the second half - Management confirmed that backlog conversion will be lower in the second half, with approximately $50 million remaining to lap [50] Question: Outdoor sweeper market entry - Management explained that the decision to enter the outdoor sweeping market was based on market evaluation and the potential for profitable competition [56] Question: AMR sales and leasing program - Management reported that AMR sales are up nearly 20% year-to-date and highlighted the positive reception of the Clean 360 leasing program [66][69] Question: Pricing strategy and semiconductor tariff considerations - Management stated that they are open to additional price increases if necessary to offset tariff impacts, while monitoring the potential semiconductor tariff situation [79][80]

Financial Performance - Net sales reached $3186 million, reflecting a 45% organic decline, primarily due to volume decreases across all regions [11] - Adjusted EBITDA was $510 million, resulting in a 160% adjusted EBITDA margin [11] - Adjusted diluted EPS was $149 per share, compared to $183 per share in Q2 2024 [11] - Gross margin decreased by 100 bps to 421% [46] - Adjusted S&A expenses increased by 90 bps to 273% of net sales [47] - Adjusted EBITDA margin decreased by 170 bps to 160% [48] Growth & Strategy - Orders grew by 4% during the second quarter and 8% year-to-date, with a book-to-bill ratio above 10 [12] - Autonomous Mobile Robot (AMR) sales accelerated to 6% of net sales in Q2 2025, with over 10000 units deployed [17] Outlook - The company reaffirms full-year 2025 guidance, expecting an organic net sales decline of 10% to 40% and adjusted EBITDA margin expansion of 0-50 bps [28]

```markdown [Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Q2 2025 net sales of $318.6 million declined 3.7% due to prior-year backlog, offset by 4.0% underlying order growth Q2 & H1 2025 Key Financial Metrics | (In millions, except per share data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $318.6 | $331.0 | (3.7)% | $608.6 | $642.0 | (5.2)% | | **Net income** | $20.2 | $27.9 | (27.6)% | $33.3 | $56.3 | (40.9)% | | **Diluted EPS** | $1.08 | $1.45 | (25.5)% | $1.77 | $2.94 | (39.8)% | | **Adjusted diluted EPS** | $1.49 | $1.83 | (18.6)% | $2.60 | $3.65 | (28.8)% | | **Adjusted EBITDA** | $51.0 | $58.6 | (13.0)% | $92.0 | $113.5 | (18.9)% | | **Adjusted EBITDA margin %** | 16.0% | 17.7% | (170 bps) | 15.1% | 17.7% | (260 bps) | - The organic sales decline of **4.5%** was driven by lapping a **$26 million** backlog-reduction benefit from the prior-year period, but underlying order demand grew **4.0%**, marking the **fifth consecutive quarter** of order growth at or above long-term targets[5](index=5&type=chunk)[6](index=6&type=chunk) - The company returned a total of **$18.8 million** to shareholders in Q2 2025, consisting of **$5.4 million** in dividends and **$13.4 million** in share repurchases[5](index=5&type=chunk)[13](index=13&type=chunk) - Tennant announced its entry into the outdoor sweeping market with the launch of the Z50 Citadel™ Outdoor Sweeper, aiming to unlock new growth opportunities[5](index=5&type=chunk) [Detailed Financial Performance](index=3&type=section&id=Detailed%20Financial%20Performance) Q2 2025 organic sales declined 4.5%, gross margin contracted 100 bps to 42.1%, impacting Adjusted EBITDA [Net Sales Analysis](index=3&type=section&id=Net%20Sales%20Analysis) Q2 2025 net sales decreased 3.7% to $318.6 million, with a 4.5% organic decline, notably in Americas Consolidated Net Sales Change Components (Q2 2025 vs. Q2 2024) | Component | Three Months Ended June 30, 2025 vs. 2024 | | :--- | :--- | | Price | 1.8% | | Volume | (6.3)% | | **Organic decline** | **(4.5)%** | | Acquisitions | —% | | Foreign currency | 0.8% | | **Total** | **(3.7)%** | Organic Sales Decline by Region (Q2 2025) | Region | Organic Sales Decline | | :--- | :--- | | Americas | (5.5)% | | EMEA | (1.4)% | | APAC | (5.0)% | | **Total** | **(4.5)%** | - The **5.5%** organic sales decrease in the Americas was primarily driven by volume declines in North America, which was lapping a **$26 million** backlog-reduction benefit from the prior-year period[9](index=9&type=chunk) [Operating Results](index=4&type=section&id=Operating%20Results) Q2 2025 gross margin declined 100 bps to 42.1%, impacting Adjusted EBITDA of $51.0 million - The gross profit margin of **42.1%** declined by **100 basis points** year-over-year, driven by product/customer mix, inflation, and lower productivity[10](index=10&type=chunk) - S&A expense increased by **$0.8 million** to **$93.7 million**, primarily due to strategic investments like the ERP project and a bad debt charge, partially offset by lower variable compensation[11](index=11&type=chunk) - Adjusted EBITDA decreased to **$51.0 million** from **$58.6 million** in Q2 2024, with the margin declining **170 basis points** to **16.0%**, mainly due to volume declines and a lower gross margin rate[11](index=11&type=chunk) [Cash Flow and Capital Allocation](index=4&type=section&id=Cash%20Flow%20and%20Capital%20Allocation) Q2 2025 operating cash flow was $22.5 million, with strong liquidity and $18.8 million returned to shareholders - Generated **$22.5 million** of cash flow from operating activities during Q2 2025, a **$3.9 million** increase compared to the prior-year period[12](index=12&type=chunk) - Liquidity remained strong with **$80.1 million** in cash and cash equivalents and **$434.3 million** of unused borrowing capacity on its revolving credit facility[12](index=12&type=chunk) - In Q2 2025, the company invested **$3.8 million** in capital expenditures and returned **$18.8 million** to shareholders through dividends and share repurchases[13](index=13&type=chunk) - The company maintained a strong balance sheet with a net leverage ratio of **0.66 times** Adjusted EBITDA[13](index=13&type=chunk) [2025 Full-Year Guidance](index=5&type=section&id=2025%20Full-Year%20Guidance) Tennant reaffirmed 2025 full-year guidance for net sales ($1,210-$1,250 million) and Adjusted EBITDA ($196-$209 million) 2025 Full-Year Guidance | Metric | 2025 Guidance Ranges | | :--- | :--- | | Net sales | $1,210 - $1,250 million | | 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 million | | Adjusted EBITDA margin | 16.2% - 16.7% | | Capital expenditures | ~$20 million | | Adjusted effective tax rate | 23% - 27% | [Financial Statements (Unaudited)](index=7&type=section&id=Financial%20Statements%20(Unaudited)) This section presents unaudited consolidated financial statements for Q2 2025, detailing financial position and performance [Consolidated Statements of Income](index=7&type=section&id=Consolidated%20Statements%20of%20Income) The Statements of Income detail revenues and expenses, showing Q2 2025 net income of $20.2 million Q2 2025 Statement of Income Highlights (in millions) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net sales | $318.6 | $331.0 | | Gross profit | $134.1 | $142.7 | | Operating income | $30.6 | $38.6 | | Net income | $20.2 | $27.9 | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) The Balance Sheets as of June 30, 2025, show total assets of $1,241.5 million and total equity of $653.7 million Balance Sheet Highlights (in millions) | Line Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $80.1 | $99.8 | | Total current assets | $574.6 | $576.6 | | Total assets | $1,241.5 | $1,190.1 | | Total liabilities | $587.8 | $568.0 | | Total equity | $653.7 | $622.1 | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For H1 2025, operating cash flow was $22.1 million, resulting in a $19.7 million net cash decrease Six Months Ended June 30, 2025 Cash Flow Summary (in millions) | Activity | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $22.1 | $21.5 | | Net cash used in investing activities | $(10.6) | $(64.9) | | Net cash (used in) provided by financing activities | $(32.8) | $12.4 | | **Net decrease in cash and cash equivalents** | **$(19.7)** | **$(32.5)** | [Non-GAAP Reconciliations](index=10&type=section&id=Non-GAAP%20Reconciliations) This section reconciles GAAP to non-GAAP financial measures for clearer operational performance insights - Management believes non-GAAP measures provide useful information by permitting a more meaningful comparison of operating performance across periods, excluding special items of a nonrecurring or non-operational nature[21](index=21&type=chunk) - Adjustments to GAAP figures include ERP modernization costs, restructuring-related charges, transaction-related costs, and amortization expense[22](index=22&type=chunk) ```