Tennant Company — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales for the quarter ended September 30, 2026, totaled $322.3 million, a 6.2% increase year-over-year from $303.3 million.
• Net income was $19.5 million for the quarter, up 30.9% from $14.9 million in the prior-year period.
• Diluted earnings per share (EPS) were $1.12, a 40.0% increase from $0.80 in the prior year.
• Adjusted diluted EPS was $1.40, a 4.1% decrease from $1.46 in the prior year.
• Adjusted EBITDA was $48.8 million, a 2.0% decrease from $49.8 million in the prior year, though it improved sequentially from the second quarter.
• Adjusted EBITDA margin was 15.1%, down 130 basis points from 16.4% in the prior year.
• Gross profit margin was 42.3% for the quarter, down 40 basis points from the prior year; excluding a one-time $6.1 million tariff refund benefit, the margin was 40.4%.
• Selling and administrative (S&A) expense was $92.7 million, down $3.9 million from the prior year, representing 28.8% of net sales.
• Research and development (R&D) expense was $12.4 million, up from $10.5 million in the prior year.
• Operating cash flow for the quarter was $11.9 million, a $16.8 million decrease from the prior year.
• Cash and cash equivalents were $75.3 million at quarter-end, with $289.4 million of unused borrowing capacity.
• Net leverage ratio was 2.0 times as of September 30, 2026.

Guidance and Future Outlook:

• The Company reaffirmed its full-year 2026 guidance ranges.
• Full-year net sales guidance remains $1,270 million to $1,310 million.
• Full-year organic net sales growth guidance remains 3.5% to 7.0%.
• Full-year diluted net income per share guidance remains $2.15 to $2.80.
• Full-year adjusted diluted net income per share guidance remains $3.80 to $4.45.
• Full-year adjusted EBITDA guidance remains $155 million to $170 million.
• Full-year adjusted EBITDA margin guidance remains 12.2% to 13.0%.
• Full-year capital expenditures guidance remains approximately $25 million.
• Full-year adjusted effective tax rate guidance remains 24% to 29%.

Business Segments and Product Lines:

• Robotics sales reached approximately $37.3 million in the quarter, a 71% increase year-over-year.
• Robotics revenue growth was supported by equipment and autonomy subscriptions and customer adoption of autonomous cleaning solutions.
• The Company launched the P1 autonomous vacuum to expand its innovation portfolio and market coverage.
• Americas organic sales growth was 8.1%, driven by higher volumes in North America and price realization.
• EMEA organic sales growth was 2.3%, driven by price realization and volume across most European markets.
• APAC organic sales declined 4.8%, driven by lower equipment volume and unfavorable pricing due to softer demand and distributor overstock.
• Total backlog was approximately $118 million at the end of the quarter.

Market and Competitive Landscape:

• Order growth was 9.5% year-over-year, supported by broad-based demand across most regions.
• The Company noted strong Americas orders and an elevated backlog despite softer demand in EMEA and APAC.
• Market trends included continued customer adoption of autonomous cleaning solutions.

Risks and Challenges:

• Part availability constraints in North America impacted shipments and contributed to the $118 million backlog.
• Inflationary cost pressures, including freight and material costs, impacted cost of sales.
• Production inefficiencies and under-absorption were driven by part availability constraints.
• Higher S&A and R&D expenses, including ERP-related costs and robotics investments, offset volume and pricing gains.
• The North America ERP implementation caused working capital inefficiencies, affecting cash conversion.
• Geopolitical uncertainty, specifically the Middle East conflict, contributed to inflationary pressures.

Management Commentary and Tone:

• Dave Huml, President and CEO, stated that third-quarter performance demonstrated strong momentum with orders up 9.5% and record net sales up 6%.
• Management noted that gross margin recovery progressed ahead of expectations.
• Management expressed encouragement regarding strong Americas orders, elevated backlog, and continued robotics momentum.
• Management acknowledged taking disciplined action to address softer demand in EMEA and APAC.

Other Key Points:

• The Company returned $5.2 million to shareholders through dividends during the third quarter.
• Capital expenditures for the quarter were $6.7 million.
• The Company repurchased common stock during the quarter, contributing to a reduction in weighted average shares outstanding.
• A one-time benefit of approximately $6.1 million related to refunds of previously paid tariffs was included in gross profit.
• The Company had a net leverage ratio of 2.0 times as of September 30, 2026.
• The Company hosts a conference call on November 3, 2026, to discuss results.