Tennant Company Reports Record 2023 Fourth-Quarter and Full-Year Results
Tennant Company has announced an exceptional close to 2023, showcasing strong fourth-quarter results and marking record achievements for the full year. This outstanding performance sets a new precedent for the company, highlighting significant advancements in net sales, adjusted EBITDA, and EBITDA margin. The company witnessed organic growth across all geographical locations and product categories. Price realization was a key driver behind offsetting inflationary pressures, backed by strategic pricing and product innovations.
Dave Huml, the President and Chief Executive Officer of Tennant, expressed his satisfaction with the fourth-quarter results, which continued the trend of positive outcomes over the past six quarters. Huml attributes this success to the exceptional teamwork and dedication across the company, especially in efforts to significantly reduce backlog. Moving into 2024, Tennant sets its sights on further growth and margin expansion, driven by new product innovation, expanded go-to-market strategies, and disciplined pricing.
2023 Financial Highlights
The fourth quarter of 2023 saw consolidated net sales of $311.4 million, marking a 7.0% increase from the previous year. The full year consolidated net sales reached $1,243.6 million, a 13.9% increase from 2022. This growth was primarily driven by price realization across all regions and volume growth in equipment sales, particularly in the Americas. Organic sales also saw an uptick, excluding the effects of foreign currency, driven largely by price realization.
Gross profit margins for Q4 rose to 42.0%, with a 240-basis-point improvement over 2022. This enhancement was credited to price realization, cost-out activities, and plant productivity which offset inflationary pressures. Adjusted EBITDA for the full year 2023 stood at $192.9 million, reflecting significant improvements driven by sales growth and gross margin expansion. Net income also saw an increase, reaching $31.0 million for Q4 and $109.5 million for the full year, largely due to favorable operating results and a lower tax rate.
Strategic Capital Allocation and Liquidity
In 2023, Tennant generated $188.4 million from operations, marking a significant increase from the previous year, driven by strong operating performance and moderating investments in working capital. The company also demonstrated strong liquidity with $117.1 million in cash and cash equivalents by the year-end, alongside a disciplined approach to capital allocation, which includes strategic investments, returning cash to shareholders, and managing debt levels. Over the year, Tennant invested $22.8 million in capital expenditures and reduced outstanding debt by $100.0 million, returning $41.8 million to shareholders.
Looking Ahead
For 2024, Tennant targets organic net sales growth between 2% and 4%, aiming for a balanced contribution from price and volume growth. The company anticipates a reduction in backlog and expects to continue seeing strong price realization and cost-saving activities bolstering gross margins. Focus will be on maintaining disciplined spending, with a keen eye on growth and operational efficiencies.
About Tennant Company
Founded in 1870 and headquartered in Eden Prairie, Minnesota, Tennant Company stands as a global leader in designing, manufacturing, and marketing solutions that contribute to a cleaner, safer, and healthier world. With products ranging from surface maintenance equipment, sustainable cleaning technologies to cleaning tools and supplies, Tennant has cemented its place in the industry. Boasting sales of $1.24 billion in 2023 and around 4,457 employees, the company’s commitment to innovation and sustainability continues to drive its success.
As Tennant embarks on 2024, anchored by a record-setting performance in 2023, the company is poised for rigorous execution of its new growth strategy. By continuously aiming to reduce backlog, align capital with strategic priorities, and pursue growth-inducing acquisitions, Tennant is well-positioned to maintain its trajectory of success and industry leadership.
