Tennant Company Reports Second Quarter 2026 Results

Order Growth and Robotics Momentum Continued as Margin Recovery Progressed More Slowly Than Expected Net Sales of $324 Million, a 1.7% Increase over Prior-Year Period Adjusted EBITDA of $35 Million as Residual ERP and EMEA Cost Pressures Weighed on Margin Full-Year Net Sales Guidance Raised to $1.270 - $1.310 Billion; Adjusted EBITDA Guidance Lowered to $155 - $170 MillionMINNEAPOLIS--(BUSINESS WIRE)--Tennant Company ("Tennant" or the "Company") (NYSE: TNC) today reported its financial results for the quarter ended June 30, 2026. (In millions, except per share data) Three Months EndedJune 30, Six Months EndedJune 30, 2026 2025 Incr / (Decr) 2026 2025 Incr / (Decr) Net sales $ 324.0 $ 318.6 1.7 % $ 621.9 $ 608.6 2.2 % Net income $ 7.6 $ 20.2 (62.4 )% $ 7.8 $ 33.3 (76.6 )% Diluted EPS $ 0.44 $ 1.08 (59.3 )% $ 0.45 $ 1.77 (74.6 )% Adjusted diluted EPS(a) $ 0.83 $ 1.49 (44.3 )% $ 1.41 $ 2.60 (45.8 )% Adjusted EBITDA(a) $ 35.3 $ 51.0 (30.8 )% $ 64.4 $ 92.0 (30.0 )% Adjusted EBITDA(a) margin % 10.9 % 16.0 % (510) bps 10.4 % 15.1 % (470) bps Highlights ERP stabilization held during the quarter, though the expected optimization benefits did not fully materialize, with residual inefficiencies in North America and continued pricing and volume pressure in EMEA weighing on results. Orders of $339.5 million increased 6.6% year over year, growing across most regions and building backlog to $127 million, reinforcing healthy underlying demand. Net sales of $324.0 million increased 1.7% year over year, reflecting price realization and favorable foreign currency effects, partially offset by an organic sales decline driven by softer volumes in EMEA and APAC. Adjusted EBITDA(a) of $35.3 million, or 10.9% of net sales, declined compared to the prior year as gross margin and cost leverage fell short of expectations, driven by residual ERP-related inefficiencies in North America and pricing and cost pressure in EMEA. Adjusted diluted EPS(a) of $0.83 declined compared to the prior year, primarily due to lower gross margin rates and higher operating costs, partially offset by the benefit of share repurchases. Robotics momentum continued to build, with AMR sales of approximately $31 million increasing 37% year over year, underscoring progress toward the Company's $250 million AMR revenue target by 2028. a) See supplemental non-GAAP financial tables below for a reconciliation of adjusted non-GAAP financial measures to GAAP. “Our second quarter results reflect solid demand and order growth, though margin recovery progressed more slowly than we expected,” said Dave Huml, Tennant President and Chief Executive Officer. “Orders grew across most of our regions, robotics revenue grew approximately 37%, and backlog continued to build, underscoring the strength of underlying demand for our products. At the same time, residual ERP-related inefficiencies in North America and margin pressure in EMEA weighed on profitability more than we anticipated. We are taking targeted actions to address these challenges. Reflecting the strength of our order book, backlog, and continued robotics momentum, we are raising our full-year net sales guidance while lowering our full-year Adjusted EBITDA guidance range to reflect both the profitability impacts experienced in the first half of the year and a more measured pace of margin recovery in the second half.” Net Sales Consolidated net sales for the second quarter of 2026 totaled $324.0 million, a 1.7% increase compared to consolidated net sales of $318.6 million in the second quarter of 2025. The components of the consolidated net sales change were as follows: Three Months Ended June 30, Six Months Ended June 30, 2026 vs. 2025 Price 3.0% 3.6% Volume (3.5)% (4.8)% Organic decline (0.5)% (1.2)% Acquisitions 0.6% 0.6% Foreign currency 1.6% 2.8% Total 1.7% 2.2% Organic Sales Organic sales, which exclude the effects of foreign currency and acquisitions, decreased 0.5% in the second quarter compared to the prior year. This decrease was the result of price realization being more than offset by lower volume, reflecting production and fulfillment constraints in North America and softer demand in certain EMEA and APAC markets. Three Months Ended June 30, 2026 Six Months Ended June 30, 2026 Americas EMEA APAC Total Americas EMEA APAC Total Organic sales growth / (decline) 1.4% (2.8)% (10.6)% (0.5)% (0.7)% (1.0)% (6.8)% (1.2)% Americas(b): The 1.4% increase in the second quarter was primarily driven by price realization and continued strength in Latin America, partially offset by lower volumes in North America due to production and fulfillment constraints. EMEA(c): The 2.8% decrease in the second quarter was primarily due to lower equipment volumes in certain European markets, including parts of Southern Europe and the Benelux region, as well as softer demand in export markets impacted by geopolitical developments in the Middle East. APAC(d): The 10.6% decrease in the second quarter was primarily driven by lower equipment volumes across most countries, reflecting softer market demand and distributor overstock in certain markets, partially offset by price realization and volume growth in India. (a) See supplemental non-GAAP financial tables below for a reconciliation of adjusted non-GAAP financial measures to GAAP. (b) Includes North America and Latin America. (c) Includes Europe, the Middle East, and Africa. Operating Results The gross profit margin of 39.5% in the second quarter of 2026 was 260 basis points lower compared to the second quarter of 2025. The margin rate decline was driven primarily by ERP-related recovery costs, supply constraints, and elevated freight and tariff-related material costs in North America. In EMEA, margin was pressured by competitive price concessions, volume deleverage, and unfavorable mix. These impacts were partially offset by price realization and cost management actions. Selling and administrative ("S&A") expense totaled $99.5 million in the second quarter of 2026, a $5.8 million increase compared to the second quarter of 2025. The increase was primarily driven by unfavorable foreign currency, higher people-related costs and technology spend, partially offset by lower bad debt expense and other administrative expenses. S&A expense as a percentage of sales was 30.7% in the second quarter of 2026, compared to 29.4% in the second quarter of 2025. Adjusted S&A(a) as a percentage of net sales increased to 29.1% in the second quarter of 2026, compared to 27.3% in the second quarter of 2025. Research and development ("R&D") expense totaled $12.5 million in the second quarter of 2026, compared to $9.8 million in the second quarter of 2025. The increase was primarily driven by continued investment in innovation, including robotics and autonomous solutions. Adjusted EBITDA(a) was $35.3 million in the second quarter of 2026, compared to $51.0 million in the prior-year period. The decrease in Adjusted EBITDA(a) was primarily due to gross margin declines coupled with S&A deleverage. Adjusted EBITDA margin(a) for the second quarter of 2026 was 10.9%, down 510 basis points compared to 16.0% in the prior-year period. Net income was $7.6 million in the second quarter of 2026, compared to $20.2 million in the second quarter of 2025. Adjusted net income(a) was $14.4 million in the second quarter of 2026, a decrease of $13.4 million compared to the second quarter of 2025. The decrease was primarily driven by lower operating performance from gross margin compression coupled with S&A deleverage. Adjusted diluted EPS(a) was $0.83 in the second quarter of 2026, compared to $1.49 in the second quarter of 2025. The decrease was driven by lower adjusted net income resulting from gross margin compression and S&A deleverage, partially offset by a reduction of approximately 1.5 million diluted weighted average shares outstanding versus the prior-year period. Cash Flow, Liquidity and Capital Allocation Tennant generated $5.0 million of cash flow for operating activities during the second quarter of 2026, a $17.5 million decrease compared to the prior‑year period, primarily driven by lower operating performance and increased working capital requirements, including higher accounts receivable and inventory balances and lower accounts payable. Working capital levels and cash conversion were adversely affected by operational and process inefficiencies associated with the North America ERP implementation, and management remains focused on improving working capital efficiency as stabilization and fulfillment efforts progress. Liquidity remained strong with a balance of $76.9 million in cash and cash equivalents at the end of the second quarter, and $289.4 million of unused borrowing capacity under the Company's revolving credit facility. The Company continues to strategically deploy cash flow to meet operational capital requirements and to return capital to shareholders in alignment with its capital allocation priorities. During the second quarter of 2026, the Company invested $5.3 million in capital expenditures and returned $5.3 million to shareholders through dividends. The Company remains diligent in managing its debt and maintaining a strong balance sheet. The Company had a net leverage ratio (Adjusted Net Debt(a) / trailing twelve months (TTM) Adjusted EBITDA(a)) of 2.0 times as of June 30, 2026. (a) See supplemental non-GAAP financial tables below for a reconciliation of adjusted non-GAAP financial measures to GAAP. 2026 Guidance Our first-half results reflect solid demand and order growth, though gross margin recovery progressed more slowly than we anticipated. Residual ERP-related inefficiencies in North America, together with pricing and volume pressure in EMEA and incremental freight and material costs tied to Middle East disruptions, weighed on margin performance during the second quarter. Order momentum remained healthy, with orders up 6.6% year over year and backlog building to $127 million, and robotics revenue grew approximately 37% year over year. Based on our first-half performance and our outlook for the second half, we are raising our full-year net sales guidance, reflecting our order and backlog position and continued robotics momentum, while lowering our full-year Adjusted EBITDA guidance range to reflect the slower pace of margin recovery, as follows. (In millions, except per share data) 2026 Guidance Ranges Net sales $1,270 - $1,310 Organic net sales growth 3.5% - 7.0% Diluted net income per share $2.15 - $2.80 Adjusted diluted net income per share** $3.80 - $4.45 Adjusted EBITDA** $155 - $170 Adjusted EBITDA margin** 12.2% - 13.0% Capital expenditures ~$25 Adjusted effective tax rate** 24% - 29% **Non-GAAP Measures: see supplemental non-GAAP financial tables below for a reconciliation of adjusted non-GAAP financial measures to GAAP. Conference Call Tennant will host a conference call to discuss its 2026 second quarter results on August 6, 2026, at 9 a.m. Central Time (10 a.m. Eastern Time). The conference call and accompanying slides will be available via webcast on Tennant's investor website. To listen to the call live and view the slide presentation, go to investors.tennantco.com and click on the link at the bottom of the overview page. A replay of the conference call, with slides, will be available at investors.tennantco.com. Company Profile Founded in 1870, Tennant Company (TNC), headquartered in Eden Prairie, Minnesota, is a world leader in the design, manufacture and marketing of solutions that help create a cleaner, safer and healthier world. Its products include equipment for maintaining surfaces in industrial, commercial and outdoor environments; detergent-free and other sustainable cleaning technologies; and cleaning tools and supplies. Tennant's global field service network is the most extensive in the industry. Tennant Company had sales of $1.20 billion in 2025 and has approximately 4,500 employees. Tennant has manufacturing operations throughout the world and sells products directly in more than 21 countries and through distributors in more than 100 countries. For more information, visit www.tennantco.com and www.ipcworldwide.com. The Tennant Company logo and other trademarks designated with the symbol “®” are trademarks of Tennant Company registered in the United States and/or other countries. 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Tennant Company Reports Second Quarter 2026 Results

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