Tennant Company's 2024 Results: A Mixed Bag of Growth and Challenges

Tennant Company (NYSE: TNC), a leading industrial cleaning equipment manufacturer, recently reported its 2024 fourth-quarter and full-year financial results. The company's performance was a mix of growth and challenges, with some regions showing strong performance while others faced headwinds. Here's a closer look at Tennant's results and the key takeaways for investors.

Strong Sales Growth and Margin Expansion

Tennant's full-year net sales reached $1,286.7 million, up 3.5% from 2023, driven by a reduction of backlog, price growth across regions, and volume growth in the Americas. The company's organic growth of 3.2% was driven by price growth across all regions and volume growth in the Americas. Tennant's adjusted EBITDA reached $208.8 million, an 8.2% increase compared to 2023, with a margin expansion to 16.2%.



Mixed Regional Performance

Tennant's regional performance varied in 2024, with the Americas segment showcasing robust demand for equipment and services, indicating healthy end-market conditions. The Americas segment's 10% Q4 organic growth was driven primarily by volume growth in equipment and service, with pricing realization also contributing to the organic growth. However, APAC's 19% decline reflected concerning market dynamics in China and Australia.

Launch of X6 ROVR Autonomous Scrubber

Tennant announced the new X6 ROVR, a larger purpose-built AMR scrubber targeting high-value sectors like healthcare and logistics. The X6 ROVR also features a fully integrated autonomous charging station, eliminating the daily need for an operator to remember to charge the machine. Both the X6 ROVR and XC1 will be commercially available in the second quarter of 2025.

Looking Ahead to 2025

Tennant anticipates a stable demand environment outside of APAC and is confident in its plans to deliver mid-single-digit order growth. However, this will not fully offset the year-over-year impact of backlog reduction, resulting in a decrease in organic sales on a constant currency basis between 1% to 4%. The company expects to deliver year-over-year margin expansion through prudent cost management and increased operating efficiencies.

In conclusion, Tennant Company's 2024 results demonstrated strong operational execution despite mixed regional performance. The company's margin expansion and launch of the X6 ROVR autonomous scrubber are positive developments, but investors should be aware of the challenges in the APAC region and the potential impact on organic sales in 2025. As always, it's essential to stay informed and conduct thorough research before making investment decisions.