Tennant Company (TNC) Q1 2026 earnings summary

Executive summary

• Orders increased 10% year-over-year, with backlog up $32 million, reflecting strong demand and robotics momentum; robotics sales reached $27 million, now 9% of total net sales, driven by new product launches and expanded partnerships.

• Net sales grew 2.7% year-over-year to $297.9 million, driven by pricing, currency, and acquisitions, offset by North America volume declines due to ERP disruption.

• ERP stabilization in North America improved operational execution, with sequential gross margin and fulfillment improvements through the quarter.

• Net income dropped to $0.2 million from $13.1 million year-over-year, with diluted EPS at $0.01 versus $0.69, reflecting gross margin compression and higher expenses.

• Cash flow from operations was negative $31.2 million, primarily due to ERP disruption and working capital build.

Financial highlights

• Adjusted EBITDA was $29.1 million (9.8% margin), down from $41 million (14.1%) year-over-year, mainly due to gross margin compression and higher S&A expenses.

• Adjusted diluted EPS was $0.58, down from $1.12 in the prior year.

• Gross margin was 38.1%, down 330 bps year-over-year but improved sequentially from Q4 2025.

• Operating margin was 1.6% (down from 6.8%); S&A expense as a percent of sales increased to 32.9% (reported) and 29.6% (adjusted).

• Interest expense, net, rose to $3.4 million due to higher borrowings.

Outlook and guidance

• Full-year 2026 guidance reaffirmed: net sales $1.24–$1.28 billion (3–6.5% organic growth), adjusted EBITDA $175–$190 million (14.1–14.8% margin), GAAP EPS $4.05–$4.65, adjusted EPS $4.70–$5.30.

• Gross margin expected to expand through the year, reaching low 40% in the second half as ERP optimization and pricing actions take effect.

• Capital expenditures projected at ~$25 million; effective tax rate 24–29%.

• Results expected to be weighted toward the second half of the year.

• Management expects continued uncertainty from global economic conditions, energy/logistics costs, and evolving U.S. tariff programs.