TENNANT COTNC
TENNANT CO Revenue Disclosure
Revenue
Revenue is recognized upon the transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products and services. Generally, these criteria are met at the time the product is shipped.
We also enter into contracts that can include combinations of products and services, which are generally capable of being distinct and are accounted for as separate performance obligations. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.
Disaggregation of Revenue
The following tables illustrate the disaggregation of revenue by geographic area, groups of similar products and services and sales channels for the years ended December 31:
Net sales by geographic area
| 2025 | 2024 | 2023 | |||||||||||||||
| Americas | $ | 792.0 | $ | 888.5 | $ | 840.3 | |||||||||||
| Europe, Middle East and Africa (EMEA) | 334.6 | 318.5 | 314.4 | ||||||||||||||
| Asia Pacific (APAC) | 76.9 | 79.7 | 88.9 | ||||||||||||||
| Total | $ | 1,203.5 | $ | 1,286.7 | $ | 1,243.6 | |||||||||||
Net sales are attributed to each geographic area based on the end user country and are net of intercompany sales.
Net sales by groups of similar products and services
| 2025 | 2024 | 2023 | |||||||||||||||
| Equipment | $ | 714.7 | $ | 808.7 | $ | 776.4 | |||||||||||
| Parts and consumables | 275.6 | 274.3 | 279.5 | ||||||||||||||
| Service and other | 213.2 | 203.7 | 187.7 | ||||||||||||||
| Total | $ | 1,203.5 | $ | 1,286.7 | $ | 1,243.6 | |||||||||||
Net sales by sales channel
| 2025 | 2024 | 2023 | |||||||||||||||
| Sales direct to consumer | $ | 831.5 | $ | 905.7 | $ | 854.4 | |||||||||||
| Sales to distributors | 372.0 | 381.0 | 389.2 | ||||||||||||||
| Total | $ | 1,203.5 | $ | 1,286.7 | $ | 1,243.6 | |||||||||||
Contract Liabilities
Sales Returns
The right of return may exist explicitly or implicitly with our customers. When the right of return exists, we adjust the transaction price for the estimated effect of returns. We estimate the expected returns using the expected value method by assessing historical sales levels and the timing and magnitude of historical sales return levels as a percent of sales and projecting this experience into the future.
Sales Incentives
Our sales contracts may contain various customer incentives, such as volume-based rebates or other promotions. We reduce the transaction price for certain customer programs and incentive offerings that represent variable consideration. Sales incentives given to our customers are recorded using the most likely amount approach for estimating the amount of consideration to which the Company will be entitled. We forecast the most likely amount of the incentive to be paid at the time of sale, update this forecast quarterly, and adjust the transaction price accordingly to reflect the new amount of incentives expected to be earned by the customer. The majority of our customer incentives are settled within one year. We record our accruals for volume-based rebates and other promotions in other current liabilities on our consolidated balance sheets.
The change in our sales incentive accrual balance for the years ended December 31, 2025 and 2024 was as follows:
| 2025 | 2024 | ||||||||||
| Beginning balance | $ | 16.1 | $ | 21.2 | |||||||
| Additions to sales incentive accrual | 20.3 | 22.4 | |||||||||
| Contract payments | (22.4) | (27.2) | |||||||||
| Foreign currency fluctuations | 0.8 | (0.3) | |||||||||
| Ending balance | $ | 14.8 | $ | 16.1 | |||||||
Deferred Revenue
We provide separately priced prepaid contracts to our customers, collecting payment at the start of the agreement. Revenue recognition is deferred until we meet our future performance obligations. Our deferred revenue balance includes autonomous subscription sales and prepaid maintenance contracts on our machines ranging from 12 months to 60 months. In circumstances where prepaid contracts are sold simultaneously with machines, we use an observable price to determine stand-alone selling price for separate performance obligations.
The change in the deferred revenue balance for the years ended December 31, 2025 and 2024 was as follows:
| 2025 | 2024 | ||||||||||
| Beginning balance | $ | 20.6 | $ | 10.3 | |||||||
| Increase in deferred revenue representing our obligation to satisfy future performance obligations | 31.9 | 31.7 | |||||||||
| Decrease in deferred revenue for amounts recognized in net sales for satisfied performance obligations | (20.8) | (20.8) | |||||||||
| Foreign currency fluctuations | 0.7 | (0.6) | |||||||||
| Ending balance | $ | 32.4 | $ | 20.6 | |||||||
As of December 31, 2025, $16.6 million and $15.8 million of deferred revenue was reported in other current liabilities and other liabilities, respectively, on our consolidated balance sheets. Of this, we expect to recognize the following approximate amounts in net sales in the following periods:
| 2026 | $ | 16.7 | |||
| 2027 | 7.0 | ||||
| 2028 | 4.6 | ||||
| 2029 | 3.1 | ||||
| 2030 | 1.0 | ||||
| Thereafter | — | ||||
| Total | $ | 32.4 | |||
As of December 31, 2024, $9.8 million and $10.8 million of deferred revenue was reported in other current liabilities and other liabilities, respectively, on our consolidated balance sheets.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.