Tennant Co.: Q1 FY2026 earnings call

What management said about Q1 FY2026, from the documents filed with the SEC on 4 May 2026: press release. Guidance figures: 8 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Net sales rose on price and currency: Net sales were $297.9 million, up 2.7%. Price added 4.2% and currency 4.1%, while volume subtracted 6.1%, leaving organic sales down 1.9%. Source
• Adjusted EBITDA margin fell 430 basis points: Adjusted EBITDA was $29.1 million against $41.0 million, a margin of 9.8% against 14.1%. The decline was attributed to gross margin and S&A deleverage. Source
• Americas fell on North America ERP: Americas net sales were $194.0 million, down 1.7%. Organic sales fell 3.0% on lower North America volumes from ERP impacts, partly offset by pricing and Latin America rental and equipment volumes. Source
• Gross margin down 330 basis points: Gross margin was 38.1%, 330 basis points lower than the prior-year quarter. Management attributed the decline to ERP recovery costs and a customer mix shift. Source
• Orders rose 10% year over year: Orders were $327 million, up 10% year over year. Management described demand momentum as broad-based. Source
• North America shutdown then improvement: A two-week shutdown of North American facilities for physical inventory preceded improved execution in February and March. Production and fulfillment capabilities were described as normalized. Source
• Operating cash use rose to $31.2 million: Operating cash flow was negative $31.2 million, against $0.4 million used a year earlier. Management cited lower operating performance and higher working capital investment, including receivables and inventory builds. Source
• Net leverage rose to 1.78 times: The net leverage ratio was 1.78 times at March 31, 2026, against 1.00 at December 31, 2025, with adjusted net debt of $276.1 million. Source

“Our first quarter results reflect strong net sales growth and solid order demand as we advanced key strategic priorities across the business,”

Dave Huml, Tennant President and Chief Executive Officer

Guidance

What changed from last quarter

• Guidance kept: Full-year 2026 guidance was reaffirmed; the ranges match those in the February 23, 2026 release. Source
• New: Management said the ERP focus is moving from stabilization to optimization and efficiency. Source
• New: Legal and financial advisory fees relate to a cooperation agreement with Vision One, a shareholder, negotiated and executed in the quarter. Source

Results and growth drivers

• Net sales rose on price and currency: Net sales were $297.9 million, up 2.7%. Price added 4.2% and currency 4.1%, while volume subtracted 6.1%, leaving organic sales down 1.9%. Source
• Earnings declined year over year: Net income was $0.2 million against $13.1 million; diluted EPS was $0.01 against $0.69. Adjusted diluted EPS was $0.58 against $1.12. Source
• Adjusted EBITDA margin fell 430 basis points: Adjusted EBITDA was $29.1 million against $41.0 million, a margin of 9.8% against 14.1%. The decline was attributed to gross margin and S&A deleverage. Source

Segments and regions

• Americas fell on North America ERP: Americas net sales were $194.0 million, down 1.7%. Organic sales fell 3.0% on lower North America volumes from ERP impacts, partly offset by pricing and Latin America rental and equipment volumes. Source
• EMEA grew on price and equipment: EMEA net sales were $86.9 million, up 14.3%. Organic sales rose 1.0%, on price realization and equipment volume increases in France and Germany. Source
• APAC declined on China pricing: APAC net sales were $17.0 million, up 1.8%. Organic sales fell 2.0% on lower China equipment pricing and softer demand, partly offset by volume growth in India and Korea. Source

“During the quarter, we achieved meaningful ERP stabilization, with margin impacts decreasing each month as recovery efforts progressed, and we are now turning our focus toward optimization and efficiency.”

Dave Huml, Tennant President and Chief Executive Officer

Margins and costs

• Gross margin down 330 basis points: Gross margin was 38.1%, 330 basis points lower than the prior-year quarter. Management attributed the decline to ERP recovery costs and a customer mix shift. Source
• Strategic account mix lowered margin: Management said a shift in customer mix toward strategic accounts contributed to the margin rate, because those accounts carry a different margin profile. Source
• S&A deleveraged on currency and legal: S&A was 32.9% of sales against 31.3%; adjusted S&A was 29.6% against 28.7%. Drivers included unfavorable currency, legal and advisory costs, compensation and software subscription fees. Source

Orders, demand and pricing

• Orders rose 10% year over year: Orders were $327 million, up 10% year over year. Management described demand momentum as broad-based. Source
• Double-digit order growth in two regions: Management said order growth was double-digit across the Americas and EMEA, reflecting underlying demand throughout the quarter. Source
• Pricing discipline held across categories: Management said pricing discipline held firm across product categories, helping offset tariff and ERP recovery cost pressures. Source

“We are encouraged by this positive trajectory exiting the quarter and reaffirm our 2026 expectations.”

Dave Huml, Tennant President and Chief Executive Officer

ERP recovery and operations

• North America shutdown then improvement: A two-week shutdown of North American facilities for physical inventory preceded improved execution in February and March. Production and fulfillment capabilities were described as normalized. Source
• ERP recovery labor and freight costs: Incremental labor, freight and expediting costs tied to ERP recovery early in the quarter were the primary driver of the gross margin rate decline. Source
• Operating income fell to $4.9 million: Adjusted net income was $10.3 million, down $10.9 million; operating income was $4.9 million against $19.6 million in the prior-year quarter. Source

Cash, liquidity and shareholder returns

• Operating cash use rose to $31.2 million: Operating cash flow was negative $31.2 million, against $0.4 million used a year earlier. Management cited lower operating performance and higher working capital investment, including receivables and inventory builds. Source
• Repurchases reached about 5% of shares: Repurchases of $60.0 million year to date equal about 5% of shares outstanding at the start of the year. Dividends were $5.5 million, for total returns of $65.5 million. Source
• Liquidity held with revolver capacity: Cash was $82.6 million and unused revolver capacity was $289.3 million. Long-term debt rose to $358.3 million from $273.2 million at year-end. Source
• Net leverage rose to 1.78 times: The net leverage ratio was 1.78 times at March 31, 2026, against 1.00 at December 31, 2025, with adjusted net debt of $276.1 million. Source
• Capital spending and cash deployment: Capital expenditures were $3.2 million in the quarter. Management said cash flow is deployed for operational capital needs and shareholder returns, in line with its priorities. Source

Strategy, legal and shareholder matters

• Robotics growth cited among priorities: Management cited robotics growth and other developments within key growth initiatives, without giving figures. Source
• Acquisition integration costs and payments: Due diligence and integration costs were $0.1 million for acquisitions of Reinigungstechnik 4 You, Clean Machine Falkenberg AB and Repax AB. Acquisition payments were $7.2 million. Source
• Vision One cooperation agreement costs: Legal and financial advisory costs of $2.2 million related to a cooperation agreement with Vision One, a shareholder; these are excluded from adjusted results. Source
• Oxygenator dispute settlement accrual: A $0.2 million legal settlement accrual relates to an intellectual property dispute with Oxygenator Water Technologies over ec-H2O technology. Source

Figures management reported

Risks management discussed

• Operational: Management cited ERP-related inefficiencies and elevated labor and freight costs as continuing pressure on results. Source
• External: Management said ongoing cost pressures from tariffs and ERP recovery activities continue. Source
• Demand: Management cited softer underlying demand in China, Australia and Southeast Asia. Source

Earlier plans management reported on

• Not stated: Set in the February release. The first quarter release says production and fulfillment capabilities were normalized, without a status label.
• Not stated: The February release expected gradual margin improvement from the fourth-quarter run rate. The first quarter release says margin impacts decreased each month.
• Met: Management said it achieved meaningful ERP stabilization during the quarter, against its February expectation of stabilization in the first half. Source

Other quarters

• Q2 FY2026 earnings call
• Q4 FY2025 earnings call
• Q3 FY2025 earnings call
• Q2 FY2025 results

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.