Q2 2025 Tennant Co Earnings Call
joining me on the call today are Dave HL president and CEO and Fay West Senior vice president and CFO today, we will review our second quarter performance for 2025
Dave will discuss our results and Enterprise strategy and they will cover our financial.
After our preferred remarks, we will open the call to question.
Our earnings press release and live presentation. That accompany this conference call are available on our investor relations website.
Before we begin, please be advised that our remarks this morning and our answers to questions may contain forward-looking statements regarding the company's expectations of the future performance.
Such statements are subject to risks and uncertainties and are actual results May differ materially from those contained, in the statements,
This risk and uncertainty are described in. Today's news release and the documents we filed with the Securities and Exchange Commission.
We encourage you to review this documents, particularly our Safe Harbor statement for a description of the risks and uncertainties that may affect our results.
Additionally, on this conference call, we will discuss non-gaap measures that include or exclude certain items.
Our 2025 second quarter earnings release and presentation include the comparable, gaap measures, and a Reconciliation of these non-gaap measures to our Gap results.
I will now turn the call over today.
Thank you, Lorenzo, and good morning everyone. Thank you for joining our Q2 2025 earnings call. Today, I'm excited to share our second quarter highlights progress on our Enterprise strategy, and our outlook for the remainder of 2025.
Our Q2 results aligned with expectations, keeping us on track to deliver full-year guidance. As we continue to return to normalized seasonal product and channel mix patterns.
We achieved net sales of $319 million, representing an organic sales decline of 4.5%. It's important to note that we are lapping the prior year quarter that benefited from a $26 million backlog reduction, concentrated in North America and comprised of higher-margin industrial machines.
As evidenced by order rates. Our underlying business performance remains robust primarily driven by demand strength in North America,
4% compared to the prior year quarter marking our fifth consecutive quarter of order growth.
Year-to-date orders, grew 8% positioning us above the growth rate needed to deliver our full year guidance.
Additionally, our book-to-bill ratio remained above 1, as order patterns returned to normalized seasonality.
While demand has been generally resilient, we continue to see pockets of weakness in our International markets.
Turning to our performance by region in the Americas orders increased by a strong 9%. Compared to the prior year. Led by North America where we saw double digit order growth.
This sustained momentum from q1 reflects the impact of our strategic investments in sales and service new product introductions like the X4 Rover and the strength of customer preference for our industrial product portfolio.
Strong order activity, reinforces our confidence in sustained demand and further strengthens our leadership position across the region.
Organic. Net sales, declined 5.5%, primarily due to lapping last year's significant backlog reduction in North America and ongoing demand softness in the Mexico Market.
Ina organic sales declined, 1.4% with orders down 7.4%.
Reflecting varied results by country and a highly competitive environment in the region.
Revenue declines were primarily isolated to Germany and the middle east region, partly offset by strong performance in the UK and Iberia.
Foreign exchange provided a positive 5.3% benefit as the Euro strengthened against the dollar looking ahead. We remain confident in our strategic plans to drive performance in the second half.
In APAC, organic sales declined 5%, with orders down 3.5%.
In Australia, we saw volume growth driven, primarily by equipment reflecting resilient customer demand, despite growing economic uncertainty.
However, this strength was more than offset by ongoing demand softness in China, where elevated competitive pricing continues to weigh on performance.
Challenging market, dynamics and APAC are expected to persist with no growth anticipated for the full year.
At the enterprise level, our 16% EBITDA margin was in line with expectations. Gross margin was impacted by product mix, reflecting a return to normal seasonality, as well as ongoing cost pressures.
However, pricing actions and discipline cost management supported Eva performance consistent with our guidance range.
Turning to a brief update on our Enterprise growth strategy.
Our pricing initiative is delivered results in both the Americas and DEA contributing 1.8% impact at the Enterprise level in Q2.
this primarily reflects price increases implemented early in the year as Q2 North American tariff related increases only began reading through in June
We anticipate price growth for the remainder of 2025 to align with our long-term target of 50 to 100 basis points annually.
New products continue to be a key driver of enterprise growth, with both our product line extensions and our AMR products delivering in line with our expectations.
We maintain a strong opportunity pipeline for the Rover platform. The successful early quarter launch of the X6 Rover, midsize robotic scrubber received positive Market feedback. Strengthening our presence in large retail and small to mid-size industrial sectors.
AMR sales accelerated to 6% of Enterprise net sales in Q2 2025 with cumulative, deployed units, exceeding 10,000 highlighting AMR as a key driver of our long-term growth,
In June, we announced the launch of our new outdoor sweeping machine, the Z50, Citadel outdoor, sweeper a market-leading solution purpose-built for industrial and Municipal outdoor environments.
The Z50 marks tennis entry into the outdoor sleeping market, expanding our total addressable market and introducing us to a new set of customers.
With Advanced dust and debris, control intuitive, operator features and robust performance. The Z50 is designed to meet the needs of demanding outdoor applications.
With the strong pipeline of Innovations. We remain on track to achieve our long-term goal of driving 150 to 200 basis points of annual growth from new products.
With our robust organic growth strategy. Reading out, we continue to actively pursue m&a opportunities. That complement, our long-term objectives in line with our Capital, allocation priorities. We are supporting near-term, business needs while returning Capital to shareholders through dividends and share repurchases.
Now shifting to guidance for the remainder of the year.
Certainty and tariff related pressures.
We are closely monitoring market, demand and taking proactive steps to limit potential trade War impacts on our p&l.
Our pricing actions along with procurement and supply chain initiatives are currently positioned to effectively manage tariff driven cost inflation in the full year contributing to our financial resilience.
I remain confident in our growth strategies and in our team's agility to navigate the current environment of uncertainty
based on our Q2 performance and current Outlook, we are reaffirming our full year 2025 guidance.
And now, I'll turn the call over to Fay for a deeper explanation of the financials.
Thank you, Dave. And good morning everyone.
In the second quarter of 2025 tenant delivered, gaap, net income of 20.2 million compared to 27.9 million in the prior year period.
Net income for the quarter was impacted by volume declines across all geographies, particularly in North America, where we are comparing against a prior year that benefited from a significant backlog reduction.
This backlog was primarily in higher margin industrial equipment sold through direct channels which impacted our growth margin performance in the quarter as compared to the prior year.
Beyond operating income, our effective tax rate was 26% in the second quarter of 2025 compared to 24.4% in the prior year.
The rate increase resulted from a discrete tax benefit tied to share based compensation. In the prior year, that did not occur in the second quarter of 2025.
Income tax expense was 1.9 million lower compared to the second quarter of 2024, primarily due to lower operating performance.
Additionally, interest expense was slightly lower than the prior-year period.
Adjusted net income. Excluding non-gaap costs, such as those related to our Erp project, resulted in adjusted EPS of a $1.49 per diluted share for the second quarter of 2025 compared to a $183 per diluted share in the prior year period.
Looking a little more closely at our quarterly results.
For the second quarter of 2025, consolidated net sales were $318.6 million, a decrease of $83.7 million compared to the $331 million reported in the second quarter of 2024.
Currency movements. Notably the Euros appreciation against the US dollar provided a favorable Tailwind of 08 percentage.
Excluding this currency benefit net sales contracted by 4.5%.
This constant currency decline was primarily attributed to a 6.3% reduction in sales volumes across all regions, which outweighed the 1.8% positive contribution from strategic pricing initiatives implemented during the period.
As a reminder, we group our net sales into the following categories equipment.
Parts, and consumables and service and other.
in the second quarter overall equipment, net sales, decreased 6.5%, primarily driven by a decline in industrial equipment sales in contrast, both the service and parts, and consumables categories, experience, growth, compared to the prior year, with service sales, increasing 1.4%, and part and consumables growing by 1%,
Shifting to Regional performance organic sales in the America's decreased 5.5% compared to the same period last year.
The decline in net sales, this period was primarily driven by lower sales of industrial equipment. As we lap a significant contribution from backlog in the second quarter of 2024. This was partially offset by Price realization and volume growth in commercial equipment.
Outside the Americas, organic sales, decrease 1.4%, in AA, primarily due to volume declines in Germany and the middle east region. These declines were partly offset by volume increases in the UK and Iberia and price realization.
Organic sales and APAC decreased 5%, primarily due to lower volumes in China, due to continued competitive pressures. This was partly offset by higher equipment sales in Australia, where demand remained resilient
Growth margin was 42.1% in the second quarter. A 100 basis point decrease compared to the prior year quarter.
This decrease was primarily driven by shifts in our product and customer mix, as well as ongoing inflation and lower productivity.
Margin performance benefited from a large concentration of higher margin Industrial Products sold through direct channels. This was partly offset by Price realization.
sna expense totaled 93.7 million in the second quarter of 2025 8.8 million increase compared to the second quarter of 2024
this increase was primarily driven by higher cost linked to our strategic Investments, including Erp costs and buy a bad debt charge and was partially offset by lower variable compensation expenses and discretionary spending,
Excluding non-gaap costs. Adjusted sna expense in the quarter totaled, 86.9 million 8.6 million decrease compared to the second quarter of 2024.
Adjusted sna expense as a percent of net sales increased to 27.3% compared to 26.4% in the prior year. Period.
this beverage was primarily driven by a bad debt charge related to an insolvent distributor
adjusted ebita for the second quarter of 2025 was 51 million compared to 58.6% of 2024.
Adjusted IBA margin for the second quarter of 2025 was 16% of net sales down, 170 basis points compared to the 17.7%, recorded in the prior year. Period.
Turning now to Capital deployment.
Net cash provided by operating activities with 22.5 million. During the second quarter. A 3.9 million increase compared to the prior year period primarily driven by a smaller, net investment in working capital and partly offset by higher. Spend on our Erp project,
We generated free cash flow of $18.7 million in the second quarter, including ERP spend of $16 million.
Excluding these non-operational, cash flows. We converted 137.2% of net income into free cash flow during the quarter.
We remain on track to achieve our 2025 goal of converting 100% of net income to free cash flow.
The company continues to deploy cash flow towards operational Capital needs and to return Capital to shareholders in line with its capital allocation priorities.
during the second quarter, the company invested, 3.8 million in capital expenditures, and returned 18.8 million to shareholders through, share repurchases and dividends
Tenants liquidity remains strong with a cash and cash equivalent balance of 80.1 million. At the end of the second quarter, and approximately 434 million of unused borrowing capacity on the company's revolving credit facility.
The company continues to effectively, manage debt and maintain a strong balance sheet. Our net leverage was 666, times, adjusted IBA, providing the company with increased flexibility and capability to fund growth through m&a and create value for our stakeholders.
Moving to 2025 guidance. As Dave mentioned discussions around Global tariffs remain active and ongoing trade tensions. Continue to fuel economic uncertainty as we enter the second half of 2025. We expect many of these same challenges to persist including macroeconomic, volatility and tariff related pressures. That said we're closely monitoring market, demand, and proactively, taking steps to limit potential impacts on our results.
As we head into the second half of the year, we have reassessed our outlook on tariff related impacts.
Based on current tariffs in place, we estimate a full year. 2025 impact of approximately 20 million dollars or around. 3% of our total cost of goods sold
With the combination of strategic supply, chain actions, targeted, procurement efforts, and market-based pricing initiatives, we remain confident in our ability to manage and offset tariff driven cost inflation.
While we continue to navigate an uncertain macroeconomic backdrop, our Focus remains squarely on growing net sales in the second half of the Year through sustained order growth and continued price realization,
Additionally, we anticipate that cost improvements and increased productivity will drive margin expansion in the back half of the year.
The collective impact of these actions, including those to address tariffs, underpin our expectations of delivering, our full year 2025 results within our guidance range.
For 2025 tenant reaffirms, the following guidance.
10 million to 1,250 million reflecting organic sales, decline of negative - 1 to negative 4%.
Gaap EPS of $3.80 per share to $4.30 per diluted share.
adjusted EPS of $5.70 per share to $6.20 per diluted share, which excludes Erp costs and amortization expense,
Adjusted. EBA in the range of 196 million to 209 million.
Adjusted ebitda margin in the range of 16.2% to 16.7%.
Capital expenditures of approximately 20 million and an adjusted effective tax rate of approximately 23 to 27%, which excludes an adjustment for amortization. Expense with that, I will turn the call back today.
Thank you, Faye before we conclude and open up for questions. I want to thank our Global tenant team for their outstanding execution and commitment your focus on delivering results, driving efficiency, and serving our customers with Excellence continues to set us apart.
To our customers around the world, thank you for your ongoing trust and support. We're proud to be your partner and are committed to earning that trust every day as we support your success.
I believe our performance this quarter reflects the momentum behind our Enterprise growth strategy, the strength of our operating discipline and our ability to successfully navigate Dynamic market conditions.
We are tracking well against our 2025 Financial targets and remain focused on driving profitable growth, expanding margins and delivering strong returns.
Our opportunities ahead are compelling and we are, well, positioned to capitalize on them with that. We'll open the call to questions. Operator, please go ahead.
At this time, I would like to remind everyone in order to ask a question. Press star, then the number 1 on your telephone keypad, we'll pause for just a moment to compile the Q&A roster.
And your first question comes from Steve karzahni with sidoti. Please go ahead.
Good morning everyone, appreciate the detail on the call. Um,
You know, Dave and Faye, you mentioned the sort of growing Global uncertainty around tariffs. Certainly there's there's concerns around US economic growth and a potential slowdown historically your first half and second half have looked similar.
Obviously, the guide implies a much stronger second half.
Confidence level on that. And how you get there given the sort of economic uncertainty.
And thanks for the questions. Steve, there's there's no shortage of economic uncertainty and you, you know, the tariffs in particular, I think there's there's 2 components to the Tariff conversation as we talked to customers. 1 is, they are trying to assess the Tariff impact, just like we are and establish their offsetting and mitigating actions. But the other Dynamic is this ongoing uncertainty and unpredictability and, and ability to predict their business and, and the future. And, and we're all, uh, working through that largely speaking, we have not seen that paralyze. Our customer base, we've seen them moving forward with with ordering, and with projects. And so, the opportunity of pipeline is, is robust and full.
Even despite this economic uncertainty, you know, driven by the the Tariff, a tariff Outlook. If that's a sort of a broad general statement about the the market as a whole. A customers are certainly talking about tariffs. We have yet to see demand signals in our business that would indicate uh that would indicate a downturn driven by by tariffs specifically.
But I think about our confidence in the second half. I'll make some comments on on orders specifically, because that's where the, that's where we drive the business. Very, very strong first half, and I'll go by recently, because I think that's a way to think about the business. That's certainly how the market is organized and, and how we run it, um, I I'll start in Asia Pacific. You know, we had a tough first half the story in Asia,
Specific it really uh driven around to China Dynamic. Uh China as a as a market is challenged and this proliferation of price points, um, competition within China and that is now being exported to other geographies as well. So we've, we've been challenged to deliver growth in in China, and, and also event in Japan similar dynamic.
reports from China price point units, but he said that we see
strength in office.
Australia business.
Um, across the board, we have a, a solid first half and anticipate a solid second half, the pipeline of opportunity with strong there and we've got a couple significant strategic account with
Some reasons for optimism as well. So I'm calling that kind of a kind of a flat-ish market. I was looking at in India's going really well for us. So you know, we said the script were not anticipating any um, Improvement in APAC or growth in the second half. Uh, but it's really a mixed bag. And so we got some geographies that we would point to for, for reasons to believe. We could to leave a can deliver the second half
Turning towards the in Maya, really? We need, uh, we need a strong second half of the man. Let me tell you about kind of how we came through the first half, and and reasons. We're excited to believe. We can deliver the second half in a May
We mentioned in the script, our first half challenges were predominantly in the Middle East and Germany. That's a combination of of external factors macroeconomic as well as some, some internal factors we are re-imaging our business deploying, our growth playbook in these geographies. And and so we're we're experiencing some business disruption in ourselves in the least in Germany, confident that we're on the right track and and making solid changes for the long term but some short-term disruption, um,
Anticipating our, our TCS acquisition will deliver growth in the second half. That's our, that's a reminder. That's our Eastern European geographies uh really proud of the team in France. We delivered a a strong Q2 and we had we need a strong second half out of France. We've been on a transformational journey in our business in France so we believe we've turned the corner there and really strong performance first half and we expect you to continue to the second half in the UK Ireland and uh, Spain and Portugal. You know, we would call our South cluster.
Strong businesses, their strong Market position. We're we're winning, uh, orders winning business, across channels, and as well as cross product categories. When I look at, if I take a step back and look at Amaya as a whole,
we are seeing the China price point Imports across the geography. And that that is representing a competitive threat. We have our product line extensions which as a reminder, are our platforms from our acquired businesses in Italy. As well as China, we have cost Point platforms. We have deployed into the tenant brand in these geographies to compete against the price point china competition. So, we've got, we've got the tools and the tool bag to to compete effectively there. Um, in addition to that, we are seeing strong interest in our AMR products across the region. Um, and so we think we've got a significant upside in AMR specifically, as we move through the second half, um, in Europe as well and where we see the, the most growth in Europe, we can point specifically to our Elevate growth initiatives. Um, and I mentioned places like the UK and in Spain and Portugal. These are areas where we have, uh, more mature deployment of our growth Playbook and our Enterprise level growth initiatives. And so it gives us confidence that much of the second
Is within our control, um, in Europe and, uh, and globally. I'll just touch on North America, really strong. Uh, first half, you know, kudos to congratulations to the team. Uh, no shortage of reasons to, to be concerned in the North America. But we, again, we see no demand signals from the North American Business of of any tipping in demand. Um, we had a really strong first half in the Americas, uh, led by double digit growth in North America, and that's a very broad-based growth across our channels to Market our, our product categories, um, our new products, our Elevate growth strategies. We're, we're growing a distribution. We mentioned in the call returning to normal seasonality, and what that means to us, uh, as a business is a Q2 and Q4 have historically been our strongest quarters. Um, and I think we're seeing that drive some of our Q2 results as well, as we saw a rebound in commercial, particularly in North America, uh, driven by retail bsc's as well as education, uh, vertical and there's a strong pipeline of opportunity in industrial.
As well. So yeah, I feel like we we've got our arms around where we're where we're winning and uh, and we've got solid plans in place to continue to drive the growth into the second half.
Okay. That's, that's a great Round Up. Um, in terms of the the the margin lift your, your sort of the guide, kind of implies
Is that pricing driven? Is it mix driven? Is it cost reduction driven? Or is it all three?
I can answer that Steve. Um so from from a margin standpoint we anticipate growth in our even the margin in the second half, right? As you pointed out in line with our guided range and I think that the drivers uh include 1 expansion of our gross margin rates. Uh, so we anticipate driving that through pricing ramp as we expect the impact of tariff related cost increases to unfold in the second half.
Cost management to sort of Max RS in in R&D level. So you know, overall,
In design the second up. That's that's how we anticipate growing. Our margin in a second.
Okay, and and how much, um, backlog conversion. Do you have left to lap in the second? Half? Its much lower, right?
Yeah, it's lower than the first half. You know uh roughly I'm call it. 75 million dollars was uh was lapped in the first off and then we have an additional 50 in the second half. So so you're you're correct it's a lower comp from a backlog. Okay.
Okay, that's helpful. And if I could get in 1 more just in terms of uh, you know, 1 of the things I would not have predicted was the outdoor sweeper.
Um, that was a little bit of a surprise. How long was that in planning? Was that a customer pull? Why did you go into that market now? Have you ever? It's kind of never been in that market before?
Yeah, great, great question. So if you're, you know, I've been here 10 years. And so, when you go back at my history at 10 company, we, we did participate in the outdoor Market, with a mixed bag of products that as we came through, um, a period of Enterprise strategy where we 80/20 in the business, we made the Strategic decision to, to exit those product categories. And I could, we could spend a whole lot of time going into it. But broadly speaking, we, we were challenged to compete effectively in that Marketplace both from a cost perspective and also a channel go to market perspective. So,
How did we decide to move into outdoor? Um, you listen, we we set up a growth strategy and we evaluated all of the market opportunities and this, this outdoor space, and it's important when we say outdoor sweeping, when we talk about outdoor sweeping we're talking about industrial outdoor sweeping. There's also City cleaning and street sweeping that that you could say are outdoor cleaning. You know, we'll probably sell some units in those applications. Those are, those are sold broadly through municipalities but where we're targeting is really the industrial sweeping, um, segment of the market, that's about a hundred million dollar tan. And so when we looked at it, we said you know this is an interesting and attractive space we've been here before we have some other products that have found their way into these vertical markets or adjacent vertical markets. We've got the aftermarket service capability to keep these machines up and running, which is highly valued in these industrial outdoor sweeping applications. So the market was attractive and we had a right to win there. So we we looked at our opportunities that
To the market and we formed a strategic partnership to get a product into play that is built to our specifications, but is also costed at a point that we could compete effectively. So it's kind of a win a win-win for us. And so we as we evaluate the opportunity as a chance to to participate grow, our Tam participate and compete, effectively and profitably and we think it could be an interesting you know, over the long term we could we could Envision additional new products into the
Space to move in the other segments. But right now this is a, this is an industrial outdoor sweeping space. That is a a very complimentary product in our line and fits very well in our go to market, both our sales channels and our aftermarket service
To your serving the same industrial customers. You don't need to expand the sales force
Okay. Yep. We don't need to expand the sales force to to reach these customers. Um, either we're already serving them with other products and other applications or they're, they're in a geography where we're already competing and we have sales coverage and, and our our sales force globally. Um, but especially in North America and, you know, it's Latin America and traditionally Middle East Side and and Asia, they are Adept at selling. We are Adept at selling Industrial Equipment, large capex, heavy duty strong aftermarket components. You know, I really place to our strength in Industrial Sales and Service. And so we looked at and said we don't need to build out an entirely new, go to market. We also don't need to build out a bunch of new capability from an aftermarket service perspective so it's really a nice complimentary fit and I I really applaud the team as as they looked at this opportunity and and brought it up. Um, you know, we weren't sort of restricting ourselves to our past and saying, oh, you know, we exited this product 10 years ago and you know,
Tenants should never play there. Again, we went out and did a, a market back Market based research about what what the options were in the marketplace, what customers were demanding in their application? And the team looked at it and said, we're fully capable of competing very well in this space and we can service customers very well. So, we decided to go for it. You know, I think this is 1 of the points. I would 1 of the points. I would point out when you pivot towards growth, you take a new look at the market opportunities, you know, just look in the rearview mirror, we're looking in the, in the windshield for opportunities, on every front.
Great. Thanks Dave. Thanks.
Thank you. Thanks Steve.
Hi. Dave ereno, uh, thanks for taking my call here. So, 1 of the things I wanted to uh, follow up on more is you said around 6% of
uh,
Sales to North America is, is AMR, is that correct? And I was wondering if you could tell us a little bit more about the, uh, deployment of the, uh, leasing program. And how that well that's been received and if that's really, uh, increasing sales or opening up opportunities, that weren't necessarily available. So that's pretty new right now.
Yeah, happy to thanks. Thanks Aaron for the question. And just to just to clarify the 6%. Number is an Enterprise Global number so they are
Okay, just to just clarify the data points. Um, yeah, you know, really pleased with the continued to be very pleased with our progress in AMR. Uh but unsatisfied from the standpoint of disrupting spark it, we have a significant Head Start and a significant upside opportunity for in front of us as we move decisively to disrupt this Market with uh, with AMR specifically, you're talking about the, the EAS offering we call or equipment as a service offer when we call clean 360, we just developed that program and launched it in in North America, um, kind of coming into the quarter. Uh, We've trained the team on how to sell it and and how to sell the program they are out, uh, pitching it? Uh, We've, we've booked a handful of orders on the clean 360 program, um, with the significantly more orders, uh, in the pipeline where the customer is contemplating, whether they want to do a capex purchase or, or move into equipment.
As a service offering. So, you know, we're pleased with the early returns. I think the team is, is capable very capable of selling it, but I think it could be a very attractive alternative for some of our AMR customers, as they contemplate contemplate adoption. But to me, it's just another tool in the tool bag. If you think about our, our entire go to market and our entire product portfolio in AMR, we are really well. Positioned, we've got 6 products, um, in the Suites globally. Um,
Led by most recently the X4 and X6 Rover which deliver a differentiated performance for the customer in their application. So lots of reasons to be excited about the X4 Rover. I'll give you a data point on AMR. Since you asked our our year-over-year sales in AMR are up almost 20% um year to date through the first half. And so that's a combination of both reorders, and new sales up to generation 2 products and the Generation 3 products are X4 and X6 Rover. That's a, it's a really strong first half performance and we think we've got a really strong opportunity pipeline.
as we look out in the second half,
great super helpful. And then another part I got maybe it'll turn around in this. It sounded like, um, in terms of, you know what, what segments were kind of underperforming here in the first half it? It was, uh, think space. That is the Industrials were not doing too well, but then you said that, um, you're seeing really strong pipeline of orders going into the industrial space, they just make make sure I understood that correctly. Um, it was kind of a little bit weaker in the first half.
You're seeing a stronger Rebound in the second.
Yeah, but so industrial is where we're lapping the backlog reduction, most predominantly because the backlog was was comprised of industrial North America. So you better be careful when we talk about industrial strength. We're we're behind last year because we were buoyed, by all of the backlog redo backlog, reduction benefit in the, um, in the first 2 quarters. And as Lorenzo said, it was about 75 million that were lapping in the first half. Now, we're going to lap another uh, 50 million in the second half. So, you know, on a year-over-year comparison, you're going to see industrial lapping a difficult lap and being behind my comment, was more around the order activity and the pipeline of opportunities that have not yet materialized in orders. Um, we're you know, we're on the constant lookout for demand signals from the business that would indicate strength or flattening or weakening. And as we look at our our CRM and look at the opportunities that have been developed talk to our, our customer facing Industrial Sales, team, they're still bullish on, on the year to date, and they're bullish on the second half and the opportunities we have.
So my my comment was more about the um, pipeline of opportunity and the order Outlook and into the second half where we're still bullish on Industrial, even though optically, we're going to show the sales being behind here over here. Does that make sense there? Yeah, make make total sense. Um and I guess the last part is so it sounds like you're orders are picking up. Things are doing well again the lapping of the backlog kind of distorts what? What? It's looking at here
Um, but again second half is looking good.
From the time that the orders are placed to, you know, revenue being recognized. You know, what's kind of the lead time on that? Um, just in general.
Um, when you think about our broadly, speaking our commercial line, those lead times are between days and up to a couple weeks.
Um, you know how maybe 3 to 4 weeks, so think about in terms of days, weeks, and months on the commercial products. When we get into our industrial products, it's more like, you know, 8 to 10 weeks lead time between order placement and shipments. And when you go off to the Z50 outdoor sweeper, um, if we don't have the exact model in stock, you're talking about, you know, over a quarter, you know, 4 or 5 months lead time between placing the order and our committed shipment date. So there's a pretty broad range across the spectrum of the product line. Again, if we've got the exact configuration in stock, and then some of our highest moving products, we will stock those so that we can service fast-turn orders. But we have a range of market competitive lead times across our entire product portfolio, okay? And, and, and one last question on pricing. So again, sounds like you're able to pass on pricing. That was successful. Um, you know, do you expect to have any additional, you know, price increases later on in the year? And then, the other part too is, um, is there any unique?
Or, or particular considerations, you are having to address, uh, due to the potential semiconductor, uh, tariff. That's been recently proposed, um, you know, possibly hitting the AMR product category, a little bit harder.
Yeah. Haven't um, haven't evaluated the semiconductor. Um tariff situation. I will tell you our um quantification of the potential tariff impact is exhaustive and comprehensive. So we look across all of the uh primary export products as well as if there's a derivative impact meaning that our supplier buys a component that takes a tariff and then we get the end product. So we're we're monitoring both and how we try to dimensionalized what the Tariff impact? What the Tariff impact will be on pricing, specifically on, on the first part of your question. The pricing increase, we put through in North America. In in Q2 was driven by and a necessity to help offset, projected tariff impact. Now, there's a lot of moving Parts on the Tariff impact as well as pricing realization and how the tariffs, how the cost moves through and how the, how the pricing moves through the offset of it. But we have a level of confidence that that, uh, that we're in a position to use price, as 1 of the weapons, to offset tariff, driven impact in our p&l. And that's, that's why we're comfortable and competent.
I'm reaffirming guidance. We are open-minded about another move on price, um, both in North America and the us as well as elsewhere, depending on what the business dictates and requires in order to preserve and protect our, our profitability. Um, if if tariffs settle down and there's a reasonable amount of certainty, then we probably wouldn't have to in in the Outlook, we probably wouldn't have to move on price but we're not reacting to every tweet but there's certainly been a lot of movement in tariff and act.
And then delays and effectivity. And so it's it's really difficult to predict. I would just say we are open-minded reserve the right to move on price as needed to help offset tariff impact in the second half.
Great. Thank you.
Thank you, Aaron.
Since there are no more questions at this time, I would like to turn the call over to management for closing remarks.
Thank you, this concludes our earnings call. If you'd like to learn more about tenant, we will be participating in the Zod. Small cap investor conference on September 17th.
Thank you for your continued interest in our company and have a great day.
This concludes today's conference call, you may now disconnect