Tennant Company's third quarter results were met with disappointment by the market, as revenue and non-GAAP profit both fell short of Wall Street expectations. Management cited the challenging comparison to the prior year’s backlog reduction and highlighted a sudden softening in North American industrial demand, where customers paused equipment purchases in response to tariff volatility. CEO Dave Huml explained, “We are clearly operating in a more complex trade environment with the continuing tariff volatility creating cost challenges and heightened uncertainty.” Despite these headwinds, the company saw order growth and noted that pricing actions and supply chain adjustments helped to partially offset increased costs.
Is now the time to buy TNC? Find out in our full research report (it’s free for active Edge members).
Tennant (TNC) Q3 CY2025 Highlights:
- Revenue: $303.3 million vs analyst estimates of $306 million (4% year-on-year decline, 0.9% miss)
- Adjusted EPS: $1.46 vs analyst expectations of $1.50 (2.9% miss)
- Adjusted EBITDA: $49.8 million vs analyst estimates of $50.35 million (16.4% margin, 1.1% miss)
- The company reconfirmed its revenue guidance for the full year of $1.23 billion at the midpoint
- Management reiterated its full-year Adjusted EPS guidance of $5.95 at the midpoint
- EBITDA guidance for the full year is $202.5 million at the midpoint, above analyst estimates of $199.5 million
- Operating Margin: 7.8%, down from 9.7% in the same quarter last year
- Market Capitalization: $1.35 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Tennant’s Q3 Earnings Call
- Steve Ferazani (Sidoti) inquired about the slowing year-over-year order growth and whether tariff uncertainty would continue to pressure the order book. CEO Dave Huml explained that the trend was primarily due to tough comparisons, but said, “We think it’s within reach” to achieve order growth in the next quarter.
- Steve Ferazani (Sidoti) asked for management’s perspective on customer sentiment and how tariff uncertainty is affecting future demand. Huml noted increased uncertainty, particularly in North American industrial sectors, with customers pausing capital spending.
- Steve Ferazani (Sidoti) questioned further potential for cost reductions. CFO Fay West indicated some sequential margin improvement is expected, but full-year gross margin gains will be limited due to a weaker mix and ongoing inflation.
- Steve Ferazani (Sidoti) asked about capital deployment and the aggressiveness of share buybacks. West confirmed the company will likely repurchase about 4.5% of shares this year, taking advantage of the strong balance sheet.
- Thomas Hayes (ROTH Capital) sought detail on the ERP rollout timeline and initial results. Huml confirmed APAC’s go-live was successful, with North America’s rollout underway and EMEA scheduled for the next quarter.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will watch (1) the pace of recovery in North American industrial orders amid ongoing tariff volatility, (2) execution and customer feedback from new product launches like the Z50 Citadel and expansion of AMR deployments, and (3) successful ERP rollouts in the Americas and EMEA regions. Additionally, supply chain adjustments and the ability to sustain pricing power will be key factors in Tennant’s performance.
Tennant currently trades at $74.58, down from $79.72 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
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