Tennant sees demand rebound, but supply issues constrain sales growth

Demand for Tennant Co.'s industrial cleaning equipment is back at pre-pandemic levels, but supply issues constrained sales growth in the latest quarter, the company said Tuesday.

The Eden Prairie-based company said its profit grew 80% to $21.5 million, or $1.14 per share, in the quarter ended Sept. 30. Its adjusted per-share profit was $1.33, up 48%, and far exceeded analysts' consensus expectation of 86 cents a share.

Supply and labor issues affected third quarter revenue which came in just below analyst expectations at $272 million, up 4.7% from a year ago.

Tennant's president and CEO Dave Huml said he felt confident in a long-term global recovery for industrial and commercial cleaning equipment.

"While we are encouraged by this business recovery, our third-quarter performance was impacted by the increasing global supply disruptions and labor constraints that have cut across virtually every industry," Huml said in a statement.

Those issues contributed to a record level of backlogged orders, he added.

The company narrowed and lowered its earnings guidance for the remainder of the year. It now says adjusted EPS will be in the range of $4.20 to $4.40 for the year, down from the $4.10 to $4.50 a share it was expecting when it released second quarter results in August.

"Our full-year guidance reflects what continues to be a challenging operational environment, which we expect to persist well into 2022," Huml said.

Last week, Tennant's board of directors approved a 9% increase to the company's quarterly cash dividend. The 25 cent dividend is payable Dec. 15 to shareholders of record on Nov. 30. The new dividend marks the 50th consecutive year of increasing annual dividends at Tennant.