Tennant’s second quarter results triggered a negative market reaction, as both revenue and non-GAAP profit fell short of Wall Street’s expectations. Management attributed the year-over-year sales decline to tough comparisons, particularly as the prior-year quarter benefited from a significant backlog reduction in North America of higher-margin industrial equipment. CEO Dave Huml emphasized that despite the challenging comparison, underlying business activity remained solid, referencing a fifth consecutive quarter of order growth and robust demand in the Americas driven by new product launches and continued investments in sales and service. Huml also acknowledged ongoing pockets of weakness in international markets, especially in Europe and Asia-Pacific, noting, “We continue to see pockets of weakness in our international markets.”
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Tennant (TNC) Q2 CY2025 Highlights:
- Revenue: $318.6 million vs analyst estimates of $327.2 million (3.7% year-on-year decline, 2.6% miss)
- Adjusted EPS: $1.49 vs analyst expectations of $1.63 (8.6% miss)
- Adjusted EBITDA: $51 million vs analyst estimates of $53.5 million (16% margin, 4.7% miss)
- The company reconfirmed its revenue guidance for the full year of $1.23 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $5.95 at the midpoint
- EBITDA guidance for the full year is $202.5 million at the midpoint, above analyst estimates of $195.7 million
- Operating Margin: 11.7%, in line with the same quarter last year
- Market Capitalization: $1.53 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Tennant’s Q2 Earnings Call
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Stephen Michael Ferazani (Sidoti): Asked about Tennant’s confidence in second-half guidance despite economic and tariff uncertainty. CEO Dave Huml explained they see robust order momentum and have not observed demand signals indicating a downturn, but acknowledged variability across global markets.
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Ferazani (Sidoti): Inquired about the drivers of anticipated margin improvement in the second half. Huml responded that margin gains are expected from gross margin expansion, higher production volumes, and ongoing cost-out initiatives.
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Ferazani (Sidoti): Sought details on the backlog’s influence for the rest of 2025. Huml confirmed backlog comparisons will ease in the second half, with $50 million left to lap versus $75 million in the first half.
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Ferazani (Sidoti): Questioned the rationale for entering the outdoor sweeping market with the Z50 Citadel. Huml described the move as a return to a previously exited segment, based on market research and a belief in Tennant’s ability to compete profitably with existing sales channels.
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Aaron Bruce Reed (Northcoast Research): Asked about the reception of Tennant’s new leasing program (Clean360) for AMR products. Huml reported early positive traction, with several orders booked and a growing pipeline, positioning it as a complementary offering to traditional sales.
Catalysts in Upcoming Quarters
In coming quarters, the StockStory team will be watching (1) whether order growth in North America sustains its current trajectory, (2) the company’s ability to mitigate tariff-related costs through pricing and supply chain initiatives, and (3) progress in stabilizing EMEA and APAC performance amid ongoing competitive and macroeconomic pressures. Execution on new product launches and successful adoption of AMR solutions will also be key indicators of Tennant’s ability to achieve its full-year objectives.
Tennant currently trades at $83.11, in line with $82.56 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).
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