Tennant(US:TNC)2025-11-03 21:19Financial Performance - Tennant Company reported net sales of $303.3 million for Q3 2025, a 4.0% decrease from $315.8 million in Q3 2024, with a 5.4% organic decline[5]. - Adjusted EBITDA for Q3 2025 was $49.8 million, an increase of 4.0% from $47.9 million in Q3 2024, with an adjusted EBITDA margin of 16.4%, up 120 basis points[5]. - Organic sales declined by 5.4% in Q3 2025, driven by volume decreases across geographies, particularly in North America[8]. - Gross profit margin improved to 42.7% in Q3 2025, a 30 basis point increase compared to Q3 2024, primarily due to strong price realization[10]. - Operating income decreased to $22.3 million in Q3 2025 from $30.6 million in Q3 2024, reflecting a decline in operating margin[26]. - Reported net income for Q3 2025 was $14.9 million, a decrease of 28.4% from $20.8 million in Q3 2024[30]. - Adjusted net income for Q3 2025 was $27.3 million, compared to $26.6 million in Q3 2024, reflecting a 2.6% increase[30]. - EBITDA for Q3 2025 was $36.5 million, down 16.8% from $43.9 million in Q3 2024[31]. - Free cash flow for Q3 2025 was $22.3 million, compared to $26.4 million in Q3 2024, reflecting a decrease of 15.6%[34]. - Free cash flow - as adjusted for Q3 2025 was $36.3 million, an increase of 1.4% from $35.8 million in Q3 2024[34]. - Net income for the nine months ended September 30, 2025, was $48.2 million, compared to $77.1 million for the same period in 2024, representing a 37.5% decrease[29]. Shareholder Returns - The company returned $28 million to shareholders during the quarter, marking a 5.1% increase in the quarterly cash dividend to $0.31 per share[5]. Expenses - Selling and administrative expenses totaled $96.6 million in Q3 2025, a $3.9 million increase from the prior year, influenced by legal contingency costs and strategic investments[11]. - Selling and administrative expenses for Q3 2025 were $96.6 million, up from $92.7 million in Q3 2024, indicating a 4.2% increase[26]. - Research and development expenses remained stable at $10.5 million for both Q3 2025 and Q3 2024[26]. - Adjusted S&A expense for Q3 2025 was $83.3 million, a decrease of 6.1% from $88.7 million in Q3 2024[32]. Cash Flow - Tennant generated $28.7 million in cash flow from operating activities in Q3 2025, with free cash flow of $22.3 million after accounting for $14 million in ERP project investments[12]. - The company reported a net cash provided by operating activities of $50.8 million for the nine months ended September 30, 2025, compared to $52.2 million for the same period in 2024[29]. - Net income to free cash flow conversion for Q3 2025 was 183.3%, up from 153.6% in Q3 2024[34]. Guidance and Projections - The company reaffirmed its 2025 guidance for net sales between $1.210 billion and $1.250 billion, with expected organic net sales decline of 3.0% to 5.0%[14][16]. Product Development - New product launch includes the T360 walk-behind scrubber, aimed at enhancing the mid-tier growth strategy[5]. Balance Sheet - The net leverage ratio was reported at 0.69 times adjusted EBITDA, indicating strong balance sheet management[13]. - Total assets increased to $1,256.9 million as of September 30, 2025, compared to $1,190.1 million at the end of 2024[28]. - Cash and cash equivalents at the end of Q3 2025 were $99.4 million, slightly down from $99.8 million at the end of 2024[28]. Regional Performance - The Americas region reported a 6.9% decline in net sales for Q3 2025, totaling $203.6 million compared to $218.7 million in Q3 2024[27].