Tennant(TNC) - 2024 Q4 - Annual Results

Financial Performance - Fourth-quarter net sales increased by 5.6% to $328.9 million, with organic growth of 6.3$1,286.7 million, a 3.5% increase from 2023, supported by organic growth of 3.2% from price growth across all regions[5] - Adjusted EBITDA for the full year was $208.8 million, an 8.2$83.7 million from $109.5 million in 2023, reflecting a decline in profitability[30] - Reported net income for Q4 2024 was$6.6 million, a decrease of 78.7% from $31.0 million in Q4 2023[34] - Adjusted net income for Q4 2024 was$29.0 million, compared to $36.2 million in Q4 2023, reflecting a decline of 19.9$83.7 million, a decrease from $109.5 million in 2023[38] - Adjusted net income for the full year 2024 was$94.2 million, compared to $110.7 million in 2023[38] Cash Flow and Liquidity - Operating cash flow for 2024 was$89.7 million, with free cash flow of $68.8 million, reflecting investments in ERP modernization[16] - The company maintained a strong liquidity position with$99.8 million in cash and $449.3 million of unused borrowing capacity as of the end of 2024[17] - The net leverage ratio was 0.48 times adjusted EBITDA, below the targeted range of 1x to 2x[18] - The company returned$41.0 million to shareholders in 2024 through dividends and share repurchases[18] - Cash and cash equivalents decreased to $99.8 million from$117.1 million, showing a reduction in liquidity[33] - The company reported a net cash provided by operating activities of $89.7 million, down from$188.4 million in 2023, reflecting reduced cash generation[33] - Cash provided by operating activities for Q4 2024 was $37.5 million, down from$63.8 million in Q4 2023[38] Sales and Revenue Trends - Net sales for Q4 2024 were $328.9 million, a 5.6$311.4 million in Q4 2023[30] - The Americas region saw a 5.7% increase in net sales for the year, totaling $888.5 million[31] - The Asia Pacific region experienced a 10.3$79.7 million, indicating market challenges[31] - For 2025, the company anticipates net sales between $1,210 million and$1,250 million, with an expected organic sales decline of 1.0% to 4.0%[19] Operating Performance - Operating income for Q4 2024 was $7.6 million, down from$24.5 million in Q4 2023, highlighting challenges in operational efficiency[30] - Gross profit for the year was $550.0 million, up from$527.8 million, reflecting a gross margin improvement[30] - Gross profit for Q4 2024 was $136.0 million, an increase of 3.9$130.8 million in Q4 2023[36] - Selling and administrative (S&A) expense for Q4 2024 was $116.4 million, up 21.6$95.7 million in Q4 2023[36] - EBITDA for Q4 2024 was $21.0 million, down 45.0$38.2 million in Q4 2023[35] - Adjusted EBITDA margin for Q4 2024 was 14.4%, compared to 13.3% in Q4 2023[35] Research and Development - Research and development expenses increased to $43.8 million for the year, compared to$36.6 million in 2023, indicating a focus on innovation[30] Future Outlook - The diluted net income per share guidance for 2025 is projected to be between $3.80 and$4.30[19] - The company announced the launch of the new X6 ROVR, a larger autonomous scrubber, expected to be commercially available in Q2 2025[5] Capital Expenditures and Investments - The company invested $37.3 million in ERP modernization initiatives in 2024, with$23.3 million capitalized[34] - Capital expenditures for Q4 2024 were $9.4 million, compared to$7.5 million in Q4 2023[38] - ERP modernization costs for Q4 2024 amounted to $3.5 million, up from$1.2 million in Q4 2023[38] Legal and Settlement Charges - Legal settlement charge related to an intellectual property dispute amounted to $14.5 million, awarded on November 25, 2024[34]