TNC · Tennant Company

Tennant Company's first quarter 2026 results reflect a company in the midst of operational recovery from a disruptive ERP system implementation. Net sales grew 2.7% year-over-year to $297.9 million, driven by 4.2% pricing and 4.1% favorable foreign currency, which more than offset a 6.1% volume decline. The volume decline was concentrated in North America due to ERP-related disruptions earlier in the quarter, though orders surged 10% to $327 million, signaling robust end-market demand. Gross profit margin contracted 330 basis points to 38.1%, as incremental labor, freight, and expediting costs from ERP recovery efforts and a shift toward strategic accounts weighed on profitability. Selling and administrative expenses rose 8.2% to $98.1 million, driven by unfavorable FX, legal and advisory costs, and higher compensation. Adjusted EBITDA fell 29% to $29.1 million, with margin down 430 bps to 9.8%. Net income plummeted 98.5% to $0.2 million, while adjusted diluted EPS of $0.58 declined 48.2% from $1.12. Management highlighted that ERP stabilization progressed throughout the quarter, with margin impacts decreasing each month, and reaffirmed full-year 2026 guidance: net sales of $1.24-$1.28 billion, adjusted EBITDA of $175-$190 million, and adjusted EPS of $4.70-$5.30. The company returned $65.5 million to shareholders via $60 million in share repurchases and $5.5 million in dividends. Cash flow from operations was negative $31.2 million due to lower performance and working capital builds. The net leverage ratio stood at 1.78x. Overall, the quarter demonstrates that while the ERP disruption is receding, its financial impact remains significant, but the strong order book and reaffirmed guidance suggest a recovery trajectory.