Company Overview - Tennant, founded in 1870, has evolved from a woodworking business to a leading manufacturer of commercial and industrial floor cleaning equipment, now headquartered in Eden Prairie, Minnesota [4] - In 2024, Tennant reported sales of $1.3 billion, a 3.5% increase, and a net income of $83.7 million [4] Research and Development - Over the past five years, Tennant has invested an average of 3% of its total revenue in research and development, with a record $43.8 million spent in 2024, representing 3.5% of total revenue [5] - The company aims to maintain a higher level of R&D spending as it is central to its growth strategy, targeting annual revenue growth of 3% to 5% [6][8] Product Innovation - Tennant has been a leader in the floor maintenance industry since 2018, launching its first robotic floor cleaner, the T7AMR Scrubber, and subsequently introducing the X4 ROVR and the latest X6 ROVR [3][9] - The X6 ROVR, designed for larger retail environments, was developed in just one year, showcasing the company's ability to accelerate product development through new digital design tools [10][12] Technological Advancements - The adoption of virtual reality headsets and electronic whiteboards has transformed Tennant's design process, allowing for faster prototyping and collaboration among geographically dispersed teams [2][15] - The use of these technologies has enabled the design team to create virtual prototypes quickly, enhancing communication and speeding up the design process [15][14] Market Strategy - Tennant's strategy focuses on automating cleaning processes to address labor shortages, with the X6 ROVR and XC1 docking station designed to improve operational efficiency [16][17] - The X6 ROVR features automatic navigation to its charging station, ensuring consistent availability and performance, which is crucial for maintaining cleaning operations [18][19]

Financial Performance - Net sales for Q1 2025 were $290.0 million[11], reflecting a 5.0% organic decline due to lapping a significant backlog reduction from the prior year[8, 11] - Adjusted EBITDA for Q1 2025 was $41.0 million, with a 14.1% adjusted EBITDA margin[11] - Adjusted diluted EPS for Q1 2025 was $1.12 per share, compared to $1.81 per share in Q1 2024[11] - Gross margin decreased by 280 bps to 41.4%, driven by product and customer mix and ongoing inflation[44] - Net income decreased from $28.4 million in Q1 2024 to $13.1 million in Q1 2025[33] Sales Performance by Region - Americas experienced a 6.9% organic net sales decline[39] - EMEA saw a 0.6% organic net sales increase[39] - APAC experienced a 7.5% organic net sales decline[39] Autonomous Mobile Robots (AMR) - Cumulative AMR sales exceeded $297 million[17] - Over 9,800 AMR units have been delivered to over 950 customers since 2018[18] - The X6 ROVR is launching in Q2 2025, offering 250% cleaning capacity per tank compared to the X4 ROVR[20, 24] Guidance and Outlook - Full-year order rates are expected to grow between 3.5% and 7%[13] - The company maintains its 2025 guidance, with an organic net sales decline of 1.0% to 4.0%[25, 27] - Adjusted EBITDA margin expansion is projected to be 0-50 bps for 2025[27]