随着关税波动背景下数字化转型的推进，Tennant的目标是全年净销售额为12.1亿-12.5亿美元

Earnings Call Insights: Tennant Company (TNC) Q3 2025

Management View

• CEO David Huml reported net sales of $303 million, noting an organic decline of 5.4%, and emphasized ongoing resilience and execution in a complex trade environment. "We delivered net sales of $303 million with an organic decline of 5.4%. It is important to note that we're comparing against a prior year quarter that benefited from a $33 million backlog reduction, primarily in our North American Industrial business. Our order rates reflect steady underlying demand. We achieved 2% growth compared to Q3 2024, extending our track record of 6 consecutive quarters with order growth." (President, CEO & Director David Huml)
• Huml highlighted the impact of tariff volatility on both costs and customer behavior, stating, "We're confident in our ability to address a significant portion of direct tariff impacts through targeted supply chain adjustments and pricing actions in 2025... What's new this quarter is the customer demand impact, where we're seeing some industrial customers in North America specifically citing tariff uncertainty as a reason for delaying planned purchases."
• The company expanded gross margin by 30 basis points and adjusted EBITDA margin by 120 basis points. Tennant returned $28 million to shareholders through dividends and share repurchases.
• Regional performance was mixed, with Americas orders up 1%, EMEA orders up 8% with new product traction, and ongoing challenges in APAC, particularly China. Huml announced, "Our enterprise strategy continues advancing on multiple fronts. We launched our latest new product innovation, the T360 midsized walk-behind scrubber... We are growing our AMR robotics business year-to-date with sales increased 9% and unit volumes increased 25%."
• ERP modernization marked a milestone with APAC go-live, setting the stage for further digital enhancements.
• CFO Fay West stated, "In the third quarter of 2025, Tennant delivered GAAP net income of $14.9 million compared to $20.8 million in the prior year period... Adjusted net income in the third quarter of 2025 was $27.3 million compared to $26.6 million in the prior year period, a 2.6% year-over-year increase."

Outlook

• The company reiterated full-year net sales guidance of $1.21 billion to $1.25 billion, with organic growth expected to be marginally below the negative 1% to negative 4% initial guidance due to positive currency effects.
• CFO West explained, "We are nevertheless positioned to deliver full year net sales within our previously guided range of $1.21 billion to $1.25 billion through strong fourth quarter performance... we now project organic growth to be marginally below our negative 1% to negative 4% guidance, reflecting a more significant contribution from favorable foreign currency movements."
• Adjusted EBITDA is expected near the lower end of the $196 million to $209 million range, driven by continued cost management and sales momentum.

Financial Results

• Net sales for the quarter were $303.3 million, down from $315.8 million in the prior year. Gross margin improved to 42.7%, up 30 basis points. Adjusted EBITDA was $49.8 million, with a margin of 16.4% of net sales.
• Equipment sales decreased 8.7%, service sales increased 5.9%, and parts and consumables grew 2.5%.
• Legal contingency expenses of $5.3 million related to an intellectual property dispute were recorded, but management stated the ruling does not impact product sales or expected long-term performance.
• Free cash flow was $22.3 million, including $14 million ERP spend. The company returned $28.1 million to shareholders in the quarter and announced a 5.1% increase to the annual dividend.

Q&A

• Steve Ferazani, Sidoti & Company, LLC, raised concerns about the trend in order growth, asking if tariff uncertainty would continue to pressure the order book. President Huml responded that order growth is affected by prior year comps and stated, "We think it's within reach. And actually, we have a fair amount of confidence we can deliver on that kind of order growth."
• Ferazani asked about customer feedback and demand outlook, with Huml noting, "We are operating in a much higher level of uncertainty... there's this theme of deferring and delaying planned purchases, freezing automation budgets... which is slowing the conversion of our opportunity funnel."
• On cost reductions, Ferazani noted margin improvement despite lower revenue. CFO West responded, "We do expect to see sequential improvement versus Q3 and Q4. So we expect to see sequential improvement as well as margin improvement versus prior year fourth quarter."
• Questions also covered capital deployment, ERP rollout, product launches (Z50 Citadel), and AMR segment growth, with Huml highlighting rapid order conversion and global rollout for the Z50 and strong AMR growth in key markets.

Sentiment Analysis

• Analysts expressed slight concern over order growth deceleration and tariff impacts, with a focus on demand trends and the sustainability of margin improvements.
• Management maintained a confident but cautious tone, frequently referencing resilience, execution, and confidence in hitting targets: "I'm confident in our strategy, proud of our team's execution and optimistic about our ability to navigate this environment while continuing to deliver value for all stakeholders." (President Huml)
• Compared to the previous quarter, management's tone in prepared remarks was similarly confident, but Q&A reflected heightened caution regarding macro uncertainty. Analysts' tone shifted from generally positive in Q2 to more probing and slightly negative in Q3, especially on order momentum and tariff effects.

Quarter-over-Quarter Comparison

• Guidance for full-year sales and EBITDA range was maintained, but the outlook for organic growth was revised to be slightly below the initial negative 1% to negative 4% range.
• Management's tone shifted from confident in Q2 about order pipelines and margin expansion, to more cautious in Q3 due to observed industrial softness and tariff-driven customer delays.
• Analysts in Q2 were focused on margin drivers and backlog conversion, while in Q3 their attention shifted to order momentum, demand stabilization, and the effectiveness of cost control.
• AMR segment continued strong growth, but industrial segment in North America showed new softness attributed to tariffs. ERP rollout advanced from planning in Q2 to APAC go-live in Q3.

Risks and Concerns

• Tariff volatility remains a top risk, affecting both cost structure and industrial customer demand, particularly in North America.
• Legal contingency costs increased due to an intellectual property dispute, though management asserted this does not impact product sales or long-term outlook.
• Macroeconomic volatility and potential for further demand softening in certain sectors were cited as ongoing risks, with mitigation through pricing actions, supply chain adjustments, and dual sourcing strategies.

Final Takeaway

Tennant Company management reiterated confidence in achieving full-year sales and EBITDA targets despite ongoing tariff and macroeconomic headwinds. The company delivered improved gross margin, strong cost discipline, and advanced its digital transformation with the APAC ERP go-live. While tariff-related customer delays introduced new uncertainty in the North American industrial segment, Tennant's portfolio of new products, expanding AMR business, and continued capital returns position it well for long-term value creation as it navigates a challenging operating environment.

Read the full Earnings Call Transcript