Tennant Company: Navigating Near-Term Challenges While Positioning for Long-Term Growth

Tennant Company (TNC) finds itself at a pivotal juncture in 2025, balancing near-term revenue headwinds with a compelling long-term growth story centered on its autonomous mobile robot (AMR) portfolio. While the company reported a 3.7% year-over-year decline in Q2 2025 net sales to $318.6 million, driven by volume reductions and lapping a $26 million backlog-reduction benefit in the prior-year period [1], its strategic initiatives and market dynamics suggest a resilient path forward.

Short-Term Challenges: Lapping Prior-Year Benefits and Macroeconomic Pressures

The immediate challenge for Tennant lies in the normalization of demand following the exceptional backlog-reduction tailwinds in 2024. Organic sales declined 4.5% in Q2 2025, with North America—the company’s largest market—experiencing the most pronounced impact [1]. This reflects broader macroeconomic headwinds, including global trade tensions and cautious capital spending in commercial and industrial sectors. However, the 4.0% year-over-year increase in order rates during the same period signals underlying demand strength, as customers continue to prioritize automation and operational efficiency [1].

Tennant’s management has proactively addressed these challenges through supply-chain optimization and pricing discipline. For instance, the company has implemented strategic price increases targeting 50–100 basis points of annual growth, while new product development is expected to contribute 150–200 basis points of incremental revenue [5]. These measures aim to offset margin pressures and position the company for sustainable growth.

Strategic Initiatives: Innovation and Market Expansion

Tennant’s long-term growth hinges on its aggressive expansion into the AMR market, a sector poised for disruption. The company’s AMR sales accounted for 6% of net sales in Q2 2025, with year-to-date growth of nearly 20% compared to the first half of 2024 [2]. This momentum is underscored by the sale of its 10,000th robotic scrubber in June 2025, a milestone that highlights the global demand for automation in commercial cleaning [4].

Key innovations include the launch of the X6 ROVR mid-sized scrubber and the Z50 Citadel™ Outdoor Sweeper, both designed to address unmet needs in large-scale and outdoor environments [1]. Complementing these hardware advancements is the Clean 360 program, which bundles AMR technology, navigation software, and maintenance services into a single monthly offering. By reducing the upfront cost barrier—a critical concern for many customers—this initiative is expected to accelerate adoption rates and expand Tennant’s addressable market [5].

Long-Term Growth: A $100 Million AMR Target by 2027

Tennant’s strategic vision is anchored on achieving $100 million in annual AMR sales by 2027, a target supported by its product pipeline and market positioning. The X4 ROVR, launched in 2024, and the X6 ROVR, introduced in 2025, are already contributing to this growth, with the latter capable of cleaning up to 75,000 square feet per cycle [4]. Additionally, the company’s partnership with Brain Corp to develop AI-enabled AMRs reinforces its technological leadership in the sector [4].

Analysts have noted that Tennant’s focus on pricing excellence and operational efficiency—such as ERP modernization and go-to-market initiatives—positions it to navigate macroeconomic volatility while maintaining profitability [5]. CEO Dave Hummel emphasized during the Q2 2025 earnings call that the company’s “robust AMR product lineup is a key area for market disruption,” even as it manages near-term challenges [1].

Balancing the Equation: A Prudent Outlook

While Tennant’s Q2 results reflect the cyclical nature of its markets, the company’s strategic investments and product innovation provide a strong foundation for long-term value creation. The Clean 360 program, in particular, addresses a critical pain point for customers, potentially unlocking new revenue streams through recurring service contracts. Meanwhile, the AMR segment’s 30% year-over-year growth in Q1 2025 [3] suggests that the company is well-positioned to capitalize on the broader shift toward automation.

Investors should monitor Tennant’s ability to execute its pricing and innovation strategies while navigating macroeconomic uncertainties. However, given its leadership in a high-growth sector and a clear roadmap to $100 million in AMR sales by 2027, the company’s long-term upside appears compelling despite near-term volatility.

Source:
[1] Tennant Company Reports Second Quarter 2025 Results [https://investors.tennantco.com/news/news-details/2025/Tennant-Company-Reports-Second-Quarter-2025-Results/]
[2] Tennant Q2 2025 slides: Sales decline 4.5% but company reaffirms full-year guidance [https://www.investing.com/news/company-news/tennant-q2-2025-slides-sales-decline-45-but-company-reaffirms-fullyear-guidance-93CH-4177956]
[3] 1st Quarter 2025 [https://www.datainsightsmarket.com/companies/TNC]
[4] Tennant Company Sells 10,000th Robotic Scrubber, Underscoring Global Demand for Cleaning Automation [https://investors.tennantco.com/news/news-details/2025/Tennant-Company-Sells-10000th-Robotic-Scrubber-Underscoring-Global-Demand-for-Cleaning-Automation/default.aspx]
[5] Tennant Company (TNC) Stock Price, ... [https://www.datainsightsmarket.com/companies/TNC]