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) ```

Tennant Company (TNC) Conference Summary Company Overview - Tennant Company is a global leader in the mechanized cleaning equipment industry, with a total addressable market (TAM) of approximately $9 billion and a market share of about 14% globally [4][8]. - The company has a strong presence in various regions: 25% market share in the Americas (approximately $3.5 billion market), 10% in EMEA, and 5% in the Asia Pacific region (approximately $1 billion market) [9][10]. Growth Strategy - Tennant Company aims for long-term organic revenue growth of 3% to 5% CAGR, supported by global megatrends such as automation, labor challenges, and modernization of cleaning practices [5][14]. - The company is committed to expanding its service aftermarket, which is a growing and profitable segment [6]. - Tennant is focusing on innovation, particularly in robotics and automation, to enhance productivity and address labor shortages in the cleaning industry [7][11]. Market Trends and Challenges - Labor availability and cost have become significant challenges post-pandemic, with turnover rates in cleaning services reaching up to 70% [11][12]. - There is a shift towards mechanized cleaning solutions in emerging markets as living standards rise, increasing demand for efficient cleaning technologies [13]. - The need for electrified products is growing, with advancements in battery technology allowing for the replacement of internal combustion engines in cleaning equipment [14]. Financial Performance and Projections - The company has a solid balance sheet and is focused on maintaining margins while expanding EBITDA by 50 to 100 basis points annually [15][19]. - Tennant has a target of adding $150 million in revenue through M&A over the next three years [18]. - The AMR (Autonomous Mobile Robots) segment has generated over $250 million in cumulative revenue, with a goal to exceed $100 million by 2027 [36][37]. Product Innovation - Tennant is investing heavily in robotics, with recent launches including the X4 and X6 Rover models, designed for high maneuverability and efficiency [21][25]. - The company has developed a "Clean 360" program, offering a subscription model for robotics that includes maintenance and software, making it easier for customers to adopt [41][43]. - The AMR products are positioned to provide significant cost savings for customers by reducing labor needs, with a payback period of less than three years [25]. Capital Allocation Strategy - Tennant prioritizes funding its business, paying dividends, and pursuing M&A opportunities, with a disciplined approach to capital allocation [56][59]. - The company has authorized a share buyback program of 2 million shares, representing over 10% of its float, to enhance shareholder value [55][60]. Conclusion - Tennant Company is well-positioned for future growth, leveraging its strong market position, innovative product offerings, and disciplined financial management to capitalize on emerging trends in the cleaning industry [63][64].

Company Overview - Tennant Company (NYSE: TNC) is recognized as a global leader in the mechanized cleaning industry [1]. Industry Insights - The focus of Crude Value Insights is on cash flow and companies that generate it, particularly in the oil and natural gas sector, highlighting value and growth prospects [1].