Tennant Co.: Q2 FY2026 earnings call

What management said about Q2 FY2026, from the documents filed with the SEC on 6 August 2026: press release. Guidance figures: 2 raised, 4 lowered, 2 kept. The quarter’s numbers.

Read the filing

Key takeaways

• Orders rose 6.6% in the quarter: Orders totaled $339.5 million, up 6.6%, with growth across most regions. Backlog built to $127 million. Source
• Adjusted diluted EPS declined: Adjusted diluted EPS was $0.83 against $1.49 a year earlier, with lower gross margin and higher operating costs partly offset by fewer shares. Source
• Adjusted EBITDA margin contracted 510 basis points: Adjusted EBITDA was $35.3 million, or 10.9% of net sales, against $51.0 million and 16.0% a year earlier. Source
• AMR sales near $31 million: AMR sales of approximately $31 million rose 37% year over year, which the company tied to progress toward a $250 million AMR revenue target by 2028. Source
• Gross margin down 260 basis points: Gross profit margin was 39.5%, down 260 basis points, driven by ERP recovery costs, supply constraints and higher North American freight and tariff-related material costs. Source
• ERP optimization benefits fell short: ERP stabilization held, but expected optimization benefits did not fully materialize, with residual North America inefficiencies and EMEA pricing and volume pressure weighing on results. Source

“Our second quarter results reflect solid demand and order growth, though margin recovery progressed more slowly than we expected,”

Dave Huml, Tennant President and Chief Executive Officer

Guidance

What changed from last quarter

• Guidance raised: Full-year net sales guidance raised to $1,270-$1,310 million from $1,240-$1,280 million; organic growth range raised to 3.5%-7.0%. Source
• Guidance lowered: Full-year Adjusted EBITDA guidance lowered to $155-$170 million from $175-$190 million, with the margin range cut to 12.2%-13.0%. Source
• Guidance lowered: Diluted EPS guidance lowered to $2.15-$2.80 from $4.05-$4.65; adjusted diluted EPS guidance lowered to $3.80-$4.45 from $4.70-$5.30. Source
• Guidance kept: Capital expenditures of about $25 and the adjusted effective tax rate range of 24% to 29% are the same as in the prior release. Source
• New: Equity method losses now appear as an adjustment to Other expense in this release; the prior release did not include this line. Source

Results and growth drivers

• Orders rose 6.6% in the quarter: Orders totaled $339.5 million, up 6.6%, with growth across most regions. Backlog built to $127 million. Source
• Net sales rose 1.7% on price: Net sales of $324.0 million rose 1.7%, helped by price and currency and partly offset by organic decline from softer EMEA and APAC volumes. Source
• Adjusted diluted EPS declined: Adjusted diluted EPS was $0.83 against $1.49 a year earlier, with lower gross margin and higher operating costs partly offset by fewer shares. Source
• Adjusted EBITDA margin contracted 510 basis points: Adjusted EBITDA was $35.3 million, or 10.9% of net sales, against $51.0 million and 16.0% a year earlier. Source

Segments and regions

• Americas organic sales up 1.4%: Americas organic sales rose 1.4% on price and Latin America, partly offset by North America volumes limited by production and fulfillment constraints. Source
• EMEA organic sales fell 2.8%: EMEA organic sales fell 2.8% on lower equipment volumes in parts of Southern Europe and the Benelux region, plus softer export demand. Source
• APAC organic sales fell 10.6%: APAC organic sales fell 10.6% on lower equipment volumes across most countries, reflecting softer demand and distributor overstock, partly offset by India. Source

“At the same time, residual ERP-related inefficiencies in North America and margin pressure in EMEA weighed on profitability more than we anticipated.”

Dave Huml, Tennant President and Chief Executive Officer

Demand, robotics and orders

• Orders grew across most regions: Orders grew across most regions, robotics revenue grew about 37%, and backlog continued to build, which management cited as underlying demand. Source
• AMR sales near $31 million: AMR sales of approximately $31 million rose 37% year over year, which the company tied to progress toward a $250 million AMR revenue target by 2028. Source
• Volume declined 3.5% in the quarter: Price added 3.0% while volume fell 3.5%, so organic sales declined 0.5%, with production and fulfillment constraints in North America cited. Source
• R&D spend rose on robotics: R&D expense was $12.5 million against $9.8 million a year earlier, reflecting investment in robotics and autonomous solutions. Source

Costs, margins and pricing

• Gross margin down 260 basis points: Gross profit margin was 39.5%, down 260 basis points, driven by ERP recovery costs, supply constraints and higher North American freight and tariff-related material costs. Source
• EMEA margin hit by price concessions: In EMEA, margin was pressured by competitive price concessions, volume deleverage and unfavorable mix, partly offset by price realization and cost actions. Source
• S&A rose on currency and people costs: S&A expense rose $5.8 million to $99.5 million, driven by currency, people-related costs and technology spend, partly offset by lower bad debt expense. Source
• Adjusted S&A rose to 29.1%: Adjusted S&A was 29.1% of net sales, up from 27.3% in the prior-year quarter. Source

“We are taking targeted actions to address these challenges.”

Dave Huml, Tennant President and Chief Executive Officer

ERP and operations

• ERP optimization benefits fell short: ERP stabilization held, but expected optimization benefits did not fully materialize, with residual North America inefficiencies and EMEA pricing and volume pressure weighing on results. Source
• ERP modernization expense lower: ERP modernization expense was $2.3 million in the quarter against $5.1 million a year earlier, and $6.4 million year to date against $9.6 million; these costs are excluded from adjusted results. Source
• Working capital hit by ERP inefficiencies: Working capital and cash conversion were hurt by process inefficiencies from the North America ERP implementation, and management is focused on improving working capital efficiency. Source

Cash, capital and shareholder returns

• Liquidity: cash and unused revolver: Cash and cash equivalents were $76.9 million at quarter end, with $289.4 million of unused revolving credit capacity. Source
• Capex and dividends in the quarter: The company invested $5.3 million in capital expenditures and returned $5.3 million to shareholders through dividends in the quarter. Source
• Leverage rose to 2.0 times: Net leverage ratio, adjusted net debt over TTM adjusted EBITDA, was 2.0 times at June 30, 2026, up from 1.78 times at March 31 in the prior release. Source
• Share count reduced through buybacks: Diluted weighted average shares fell about 1.5 million from a year earlier; first-half repurchases of common stock were $60.5 million. Source

Deals, legal and shareholder matters

• Acquisition integration costs excluded: Transaction and integration costs of $0.2 million in the quarter relate to acquisitions of Reinigungstechnik 4 You, Clean Machine Falkenberg AB and Repax AB. Source
• OWT legal settlement accrual: A legal settlement accrual on the Oxygenator Water Technologies intellectual property dispute added $0.1 million of S&A expense in the quarter, excluded from adjusted results. Source
• Vision One cooperation agreement fees: Third-party legal and advisory fees for a cooperation agreement with shareholder Vision One are excluded from adjusted results; none were recorded in the quarter. Source

Figures management reported

Risks management discussed

• Operational: Production and fulfillment constraints in North America limited volumes during the quarter. Source
• External: Middle East disruptions added freight and material costs that weighed on margin in the quarter. Source
• Demand: Export-market demand in EMEA was softer, which management linked to geopolitical developments in the Middle East. Source
• Financial: Leverage rose to 2.0 times TTM adjusted EBITDA, and management said it manages its debt diligently. Source

Earlier plans management reported on

• Delayed: Management said margin recovery progressed more slowly than it had expected. Source
• Missed: Management said the expected optimization benefits did not fully materialize in the quarter. Source
• Not stated: The prior release reaffirmed 2026 expectations; this release gives revised full-year ranges.

Other quarters

• Q1 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.