Tennant Company (TNC) Q4 2025 earnings summary

Executive summary

• Q4 and full-year 2025 results were significantly impacted by the North America ERP system go-live, causing operational disruptions, lost order entry, shipping delays, and customer service issues, with stabilization actions underway and improvements expected in 2026.

• Approximately $30 million in net sales were lost in Q4 due to ERP issues, with half unrecoverable and the remainder added to backlog.

• Despite challenges, international operations (EMEA and APAC) delivered solid growth, and the company maintained its strategic direction, including innovation and robotics expansion.

• Orders grew by 4% and backlog increased by $15 million year-over-year.

• Share repurchases totaled approximately $88 million in 2025, representing about 6% of outstanding shares.

Financial highlights

• Q4 2025 GAAP net loss was $4.4 million, compared to $6.6 million net income in Q4 2024; full-year net income was $43.8 million, down from $83.7 million in 2024.

• Q4 net sales were $291.6 million, down 11.3% year-over-year; full-year net sales were $1,203.5 million, down 6.5%.

• Adjusted EBITDA for Q4 was $25.6 million (8.8% margin), down $21.8 million year-over-year, with a $22 million negative impact from ERP issues; full-year Adjusted EBITDA was $167.4 million (13.9% margin), down 19.8%.

• Adjusted EPS for 2025 was $4.57, down from $6.57 in 2024; Q4 adjusted EPS was $0.48, including an estimated $0.91 negative impact from ERP issues.

• Free cash flow for 2025 was $43.3 million, with $59.1 million invested in ERP modernization.

Outlook and guidance

• 2026 net sales projected at $1.24–$1.28 billion, reflecting 3%–6.5% organic growth, with sales weighted toward the second half as ERP recovery progresses.

• Adjusted EBITDA expected between $175–$190 million, with margin of 14.1%–14.8%.

• Adjusted EPS guidance is $4.70–$5.30 per diluted share, with gross margin expansion anticipated year-over-year.

• Q1 2026 expected to be weak due to a two-week facility shutdown for physical inventory and ongoing ERP stabilization, with improvement ramping up in Q2–Q4.

• ERP stabilization in North America targeted for early 2026, with efficiency improvements expected through the first half.