Tennant 2025 Q2 Earnings Misses Targets, Net Income Drops 27.6%

Tennant (TNC) reported its fiscal 2025 Q2 earnings on Aug 07th, 2025. The results fell short of expectations, with a 3.7% revenue decline and a 27.6% drop in net income. The company maintained its full-year guidance despite the challenging conditions, expressing cautious optimism about future margin expansion and market resilience.

Revenue
Tennant's total revenue for Q2 2025 dropped 3.7% year-over-year to $318.60 million. The Equipment segment remained the largest contributor with $197 million in revenue, followed by Parts and consumables at $69.50 million. Service and other revenue added $52.10 million, rounding out the total. The decline was attributed in part to the lapping of a $26 million backlog benefit from the prior year’s industrial equipment segment, underscoring the softer performance in international markets, particularly in APAC.

Earnings/Net Income
Tennant’s earnings per share (EPS) dropped 25.2% to $1.10 in Q2 2025, down from $1.47 in the same period last year. The company’s net income also declined significantly, falling to $20.20 million, a 27.6% decrease from $27.90 million in Q2 2024. These results indicate a challenging earnings performance relative to the prior year.

Price Action
The stock price of Tennant has underperformed in the recent period, with a 4.25% drop in the latest trading day and a 3.42% decline for the full week. The stock has also fallen 2.05% month-to-date, reflecting investor concerns following the earnings report.

Post Earnings Price Action Review
A 30-day buy-and-hold strategy executed after the quarterly earnings report has yielded poor returns over the past three years, with a compound annual growth rate (CAGR) of -1.21% and a total return of -3.53% compared to a benchmark return of 50.18%. The strategy exhibited a Sharpe ratio of -0.06 and 18.63% volatility, with a maximum drawdown of 0.00%. The results suggest that the market has not responded favorably to the earnings releases in recent periods.

CEO Commentary
Dave Huml, President and Chief Executive Officer, noted that Q2 results were in line with expectations despite a 4.5% organic sales decline. The company highlighted strong order growth of 4% year-over-year, driven by resilience in North American demand and strategic investments in sales, service, and new products such as the X4 Rover. Challenges, particularly in international markets and China's competitive pricing, were acknowledged. Huml also emphasized the company's confidence in margin expansion through pricing, productivity, and supply chain initiatives.

Guidance
Tennant reaffirmed its 2025 guidance, targeting net sales of $1.21 billion to $1.25 billion with an organic decline of -1% to -4%. GAAP EPS is expected to range between $3.80 and $4.30, while adjusted EPS is projected to be between $5.70 and $6.20. Adjusted EBITDA is forecasted to be between $196 million and $209 million, with a 16.2% to 16.7% adjusted EBITDA margin. The company anticipates margin expansion in the second half of the year through cost improvements, volume absorption, and pricing actions.

Additional News
On August 7, 2025, the earnings call transcript for Tennant’s Q2 2025 results was released. The transcript is accessible with JavaScript and cookies enabled. No M&A activity or C-level changes were reported in the 21-day period following the earnings release. Additionally, there were no significant dividend or buyback announcements. The earnings call primarily focused on the company’s Q2 performance and future guidance.