Tennant Q2 Earnings Call Highlights

Sales and orders grew in Q2 2026, with revenue up 1.7% to $324 million, orders up 6.6% and backlog reaching $127 million. However, parts shortages and ERP-related inefficiencies limited shipments and pressured profitability. Adjusted EPS fell to $0.83 and adjusted EBITDA margin dropped to 10.9% as Tennant faced higher costs, supply-chain disruptions, weak EMEA and APAC performance, and European pricing pressure. The company raised its sales outlook but cut adjusted EBITDA and EPS guidance. Robotics remained a major growth engine , with Q2 revenue up 37% to about $31 million and first-half revenue up 56%. Tennant expects full-year robotics revenue of $130 million to $145 million and is expanding deployments, including an agreement for 250 robots at Savers and Value Village stores.

Tennant NYSE: TNC reported second-quarter 2026 sales growth and stronger order activity, but profitability fell below management’s expectations as the company faced ERP-related operating inefficiencies, North American parts shortages, inflationary costs and competitive pricing pressure in Europe. Net sales rose 1.7% year over year to $324 million, while orders increased 6.6% to $339 million. The company said order momentum strengthened during the quarter, with June orders up 11% from a year earlier. Backlog reached $127 million at quarter-end, up $18 million from the first quarter and $50 million since year-end.

“Demand for our products and solutions remained strong throughout the quarter,” President and CEO Dave Huml said. “Parts shortages in North America limited our ability to fully ramp production output and convert demand into shipments,” which he characterized as a fulfillment issue rather than a demand issue. Profitability Pressured by Costs and ERP Challenges GAAP net income declined to $7.6 million from $20.2 million in the prior-year period. Adjusted diluted earnings per share fell to $0.83 from $1.49 a year earlier, while adjusted EBITDA declined to $35.3 million, or 10.9% of sales, from $51 million, or 16% of sales. Gross margin was 39.5%, down 260 basis points year over year but up 140 basis points sequentially from the first quarter. Chief Financial Officer Fay West said the annual decline reflected different pressures in North America and EMEA. In North America, Tennant continued to experience ERP-related inefficiencies, including elevated overtime, labor inefficiencies, overhead deleverage and premium freight. Master-data and planning issues also contributed to material and component shortages, production disruptions, rework and expedited freight costs. Huml said the company identified a systemic issue in which its system was not providing correct demand signals to suppliers. Tennant has implemented manual oversight and purchase orders while it works on a permanent solution. Higher-than-forecast demand for North American industrial equipment and stronger demand for the company’s X6 ROVR robotic platform added pressure to the supply chain. Management expects parts availability to begin improving during the middle of the third quarter, though shortages will continue to affect results during the period. West said third-quarter gross margin is expected to be roughly comparable to the second quarter’s 39.5%, with improvement anticipated in the fourth quarter. In EMEA, lower volumes, higher freight and material costs associated with the Middle East conflict, unfavorable product mix and negative net pricing weighed on margins. Huml said Tennant is implementing pricing actions, strengthening discount discipline and reducing costs in the region. He noted that the company faces low-end competition from Chines...