NYSE:TNC
TENNANT CO
Global leader in floor care equipment and industrial cleaning solutions driving hygiene standards across commercial sectors.
Key Metrics
Investment Thesis
Bull Case
The company benefits from secular trends in hygiene awareness and facility automation, offering a resilient business model with recurring service revenue streams; Strong balance sheet with $106.4M ending cash and minimal debt allows for strategic M&A or shareholder returns amidst economic uncertainty; Recent share buybacks and consistent dividend payments demonstrate a commitment to returning value to investors.
Bear Case
Declining net income from a peak of $109.5M in 2023 to $43.8M in 2025 raises concerns about profitability sustainability or unrecognized liabilities; Significant retained earnings deficit of $628.1M and negative other financing cash flows suggest potential capital structure stress; Heavy reliance on current assets like inventory ($198.5M) versus high accounts payable ($127.5M) could indicate working capital inefficiencies.
About TENNANT CO
TENNANT CO designs, manufactures, and markets cleaning equipment and services primarily serving commercial, industrial, and institutional sectors globally. With a diversified product portfolio including floor care systems and disinfection solutions, the company serves clients ranging from healthcare facilities to large-scale manufacturing plants. Revenue of $1.20B reflects strong brand equity in high-growth hygiene and safety markets.
Analysis
Management Discussion
While revenue grew from $1.09B in 2022 to $1.24B in 2023, the recent decline to $1.20B in 2025 coincides with a sharp drop in net income from $83.7M to $43.8M, suggesting potential margin compression or one-time charges. Operating profit of $68.3M indicates solid core business performance despite lower earnings, supported by robust cash flow from operations of $65.0M and significant share repurchases of $88.5M signaling management confidence in capital allocation.
Industry Overview
The industrial cleaning equipment industry is experiencing steady growth driven by increasing regulatory standards for sanitation in healthcare and food processing sectors. Competition remains moderate with consolidation trends favoring companies offering integrated solutions rather than single-product vendors. Technological advancements in automation and IoT connectivity are reshaping market dynamics, rewarding firms with superior R&D investments like TENNANT's $41.2M annual spend.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $1.09B | $1.24B | $1.29B | $1.20B |
| Cost of Revenue | $671.3M | $715.8M | $736.7M | $719.2M |
| Gross Profit | $420.9M | $527.8M | $550.0M | $484.3M |
| Operating Expenses | $333.7M | $389.2M | $435.7M | $416.0M |
| Operating Income | $87.2M | $138.6M | $114.3M | $68.3M |
| R&D | $31.1M | $36.6M | $43.8M | $41.2M |
| G&A | $306.3M | $352.6M | $391.9M | $374.8M |
| Stock-Based Comp | $7.8M | $11.6M | $11.9M | $10.4M |
| Depreciation | $32.8M | $36.4M | $40.1M | $45.0M |
| Amortization | $15.9M | $14.7M | $15.0M | $13.7M |
| Other OpEx | $-3.7M | $0 | $0 | $0 |
| Non-Operating Income | $-7.7M | $-14.8M | $-9.5M | $-10.4M |
| Pre-Tax Income | $79.5M | $123.8M | $104.8M | $57.9M |
| Income Tax | $13.2M | $14.3M | $21.1M | $14.1M |
| Continuing Ops | $66.3M | $109.5M | $83.7M | $43.8M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $66.3M | $109.5M | $83.7M | $43.8M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $66.3M | $109.5M | $83.7M | $43.8M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $575.3M | $569.1M | $576.6M | $599.7M |
| Accounts Receivable | $251.5M | $247.6M | $259.1M | $256.8M |
| Inventory | $206.6M | $175.9M | $183.8M | $198.5M |
| Prepaid Expenses | $39.8M | $28.5M | $33.9M | $38.0M |
| Other Current Assets | $77.4M | $117.1M | $99.8M | $106.4M |
| Long-Term Assets | $509.8M | $544.3M | $613.5M | $669.2M |
| Intangibles | $76.4M | $63.1M | $58.7M | $52.6M |
| Goodwill | $182.0M | $187.4M | $185.6M | $208.6M |
| Operating Leases | $31.8M | $41.7M | $54.6M | $56.9M |
| Other LT Assets | $219.6M | $252.1M | $314.6M | $351.1M |
| Total Assets | $1.09B | $1.11B | $1.19B | $1.27B |
| Current Liabilities | $261.6M | $273.7M | $292.2M | $293.1M |
| Accounts Payable | $126.1M | $111.4M | $126.9M | $127.5M |
| Current Leases | $15.0M | $14.4M | $18.5M | $21.7M |
| Deferred Revenue | $6.6M | $7.9M | $9.8M | $16.6M |
| Other Current Liab | $113.9M | $140.0M | $137.0M | $127.3M |
| Long-Term Liabilities | $351.4M | $261.4M | $275.8M | $372.4M |
| LT Operating Leases | $17.1M | $27.4M | $36.3M | $35.5M |
| Other LT Liab | $334.3M | $234.0M | $239.5M | $336.9M |
| Total Liabilities | $613.0M | $535.1M | $568.0M | $665.5M |
| Shareholders' Equity | $472.1M | $578.3M | $622.1M | $603.4M |
| Paid-In Capital | $56.0M | $64.9M | $76.7M | $0 |
| Retained Earnings | $458.0M | $547.4M | $609.7M | $628.1M |
| AOCI | $-50.2M | $-42.3M | $-72.7M | $-33.2M |
| Total L&E | $1.09B | $1.11B | $1.19B | $1.27B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $66.3M | $109.5M | $83.7M | $43.8M |
| Non-Cash Adjustments | $-209.1M | $103.3M | $-69.6M | $-7.9M |
| Working Capital Changes | $117.7M | $-24.4M | $75.6M | $29.1M |
| Cash from Operations | $-25.1M | $188.4M | $89.7M | $65.0M |
| Capital Expenditures | $25.0M | $22.8M | $20.9M | $21.7M |
| Cash from Investing | $-24.5M | $-23.2M | $-78.4M | $-22.7M |
| Debt Issuances | $52.0M | $20.0M | $40.9M | $85.0M |
| Share Buybacks | $5.0M | $21.7M | $19.6M | $88.5M |
| Dividends Paid | $18.9M | $20.1M | $21.4M | $21.9M |
| Cash from Financing | $8.1M | $-122.6M | $-25.2M | $-38.7M |
| FX Effect | $-4.7M | $-2.9M | $-3.4M | $3.0M |
| Net Change in Cash | $-46.2M | $39.7M | $-17.3M | $6.6M |
| Beginning Cash | $123.6M | $77.4M | $117.1M | $99.8M |
| Ending Cash | $77.4M | $117.1M | $99.8M | $106.4M |
Frequently Asked Questions
How does TENNANT CO make money?
Commercial Floor Care providing automated cleaning machines for retail and office spaces; Industrial Cleaning Solutions offering heavy-duty systems for manufacturing and distribution centers; Professional Services delivering training, maintenance contracts, and spare parts support to enhance customer lifecycle value.
What are the main risks for TNC?
Cyclical dependence on commercial real estate and manufacturing capital expenditure which impacts demand for new equipment; Exposure to foreign exchange fluctuations given significant international operations and sales; Rising raw material costs and supply chain disruptions affecting margins and inventory management.
What is TNC's competitive advantage?
Dominant market share in specialized industrial cleaning equipment with high switching costs due to proprietary technology; Strong recurring revenue from service contracts and consumables creating predictable cash flows; Established global distribution network ensuring rapid deployment and support for clients worldwide.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.