Tennant Company: A Dusting of Discomfort

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Now, I reckon there’s a lesson to be learned in most every misfortune, and the current predicament of the Tennant Company – purveyors of fine floor-scrubbing contraptions and cleaning solutions – is no exception. Seems this respectable establishment, a Dividend King no less – meaning they’ve been sharing the wealth with shareholders for half a century, a feat rarer than a sensible politician – has taken a tumble. A rather significant tumble, I might add, down some 26% as of late Tuesday.

The trouble, as near as I can figure it, stems from a newfangled “ERP transition” – a fancy term for rearranging the furniture in the counting house, if you ask me – that went sideways back in November. This digital tinkering disrupted operations, and not in a helpful way. Sales dipped 11%, profits followed suit with a precipitous drop of 46% and 68% respectively. Thirty million dollars in sales went missing, and half of that, they reckon, is gone for good. Seems customers don’t take kindly to promises unfulfilled, even when those promises involve sparkling clean floors.

It’s a peculiar thing, this devotion to dividends. Folks seem to believe a steady stream of pennies will somehow shield them from the storms of the market. Tennant’s long streak of dividend increases is admirable, of course, but even the most reliable clock can break down if you wind it too tight. It’s heartening to see Vision One, an activist firm, taking a 2% stake. Sometimes, a fresh pair of eyes – and a bit of prodding – is just what a company needs. Though, I’ve observed that such ‘activists’ are often more interested in rearranging the deck chairs on the Titanic than actually steering clear of the iceberg.

Before this digital kerfuffle, Tennant was already experiencing a bit of a slowdown. Revenue growth had cooled to a mere 3% annually over the past five years. It’s a reminder that even the most established companies aren’t immune to the whims of fortune. Now, management is predicting a stabilization by Q2 and a resurgence in sales by 2026, with earnings somewhere between $4.70 and $5.30 a share. This leaves the stock trading at around 12 times next year’s earnings. The market, it seems, is pricing in a good deal of uncertainty.

Despite these troubles, Tennant remains a leader in its niche – building machines to scrub floors, a task I suspect will remain necessary as long as folks continue to track dirt indoors. They’re even dabbling in these automated cleaning robots, a sign of the times, I suppose. Whether they can rein in this ERP mess and turn things around remains to be seen. The 2% dividend yield is still respectable, but a patient investor is required. It’s a situation that calls for prudence, not speculation. A bit like choosing a sturdy pair of boots for a long journey – you want something reliable, even if it’s not the flashiest thing on the shelf.

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2026-02-24 22:22