Tennant's Q4 Earnings: A Mixed Bag of Growth and Declining Profits

As the calendar turned to 2025, Tennant Company (NYSE: TNC) released its fourth-quarter and full-year financial results, painting a picture of both growth and decline. The company reported a 5.6% increase in net sales for the fourth quarter, driven by organic growth of 6.3% led by volume growth in the Americas and EMEA. However, net income and diluted EPS took a significant hit, with a 78.7% decrease compared to the same period in 2023. Let's dive into the key takeaways from Tennant's Q4 earnings snapshot.



Growth and Expansion

Tennant's fourth-quarter net sales increased by 5.6% to $328.9 million, with organic growth of 6.3% driven by volume growth in the Americas and EMEA. The company's full-year net sales marked a 3.5% increase from 2023, with organic growth of 3.2% driven by price growth across all regions, favorable product and channel mix, and volume growth in the Americas. Tennant's adjusted EBITDA for the full year increased by 8.2% compared to 2023, with a full-year adjusted EBITDA margin of 16.2% improved by 70 basis points.



Challenges and Declining Profits

Despite the growth in net sales and adjusted EBITDA, Tennant's net income and diluted EPS declined significantly. Net income decreased by 78.7% to $6.6 million, while diluted EPS fell by 78.7% to $0.35. The adjusted diluted EPS for Q4 2024 was $1.52, a decrease of 20.8% compared to $1.92 in Q4 2023. The company attributed the decline in profitability to a reduction of backlog of approximately $125 million in 2024 compared to $140 million in 2023.



Looking Ahead

Tennant's CEO, Dave Huml, expressed confidence in the company's plans to deliver mid-single-digit order growth in 2025. However, he acknowledged that the year-over-year impact of backlog reduction would result in a decrease in organic sales on a constant currency basis between 1% to 4%. The company anticipates delivering year-over-year margin expansion through prudent cost management and increased operating efficiencies.



In conclusion, Tennant's Q4 earnings snapshot reveals a mixed bag of growth and declining profits. While the company experienced organic sales growth and an increase in adjusted EBITDA, net income and diluted EPS took a significant hit. As Tennant looks ahead to 2025, investors will be watching closely to see if the company can successfully navigate the challenges it faces and deliver on its growth plans.