Tennant Company (TNC) Q2 2024 earnings summary

Executive summary

• Net sales reached $331.0 million in Q2 2024, up 2.9% year-over-year, driven by strong pricing, industrial equipment mix, and the TCS acquisition, despite weaker EMEA and APAC demand.

• Adjusted EBITDA increased to $58.6 million, up 1.7% from Q2 2023, with margin flat at 17.7%.

• Adjusted net income rose to $35.2 million, while reported net income declined to $27.9 million due to ERP and integration costs.

• Strong order demand and backlog reduction ahead of expectations, with double-digit order growth year-over-year and sequentially.

• Raised full-year 2024 guidance for net sales and adjusted EBITDA, reflecting continued momentum and strong demand.

Financial highlights

• Q2 2024 net sales: $331.0 million (+2.9% year-over-year); adjusted EBITDA: $58.6 million (17.7% margin); adjusted net income: $35.2 million; reported net income: $27.9 million.

• Adjusted diluted EPS was $1.83, down 1.6% year-over-year; reported diluted EPS was $1.45, down 13.7%.

• Gross margin was 43.1%, down 30 bps year-over-year due to inflation, partially offset by price realization.

• Equipment net sales grew 3.7%, service sales up 8.2%, while parts and consumables declined 3%.

• Cash and equivalents at June 30, 2024: $84.6 million; net leverage at 0.61x adjusted EBITDA.

Outlook and guidance

• Full-year 2024 net sales expected between $1.28 billion and $1.305 billion, organic growth of 2.5%–4.5%.

• Adjusted EBITDA guidance raised to $205–$215 million, with margin expected at 16.0%–16.5%.

• Adjusted diluted EPS forecasted at $6.15–$6.55 for 2024.

• Anticipates higher operating expenses in H2 2024, with focus on R&D and new product development.

• Capital expenditures expected to be ~$20 million; adjusted effective tax rate projected at 22%–27%.