Tennant (TNC) Q4 2025 Earnings Call Transcript
The Motley Fool
by newsfeedback@fool.com (Motley Fool Transcribing)February 24, 2026
AI-Generated Deep Dive Summary
Tennant (TNC) reported a challenging Q4 2025 due to an unexpected $30 million decline in net sales and a $22 million drop in adjusted EBITDA, primarily caused by a North America ERP system disruption. The implementation issues led to significant operational disruptions, including order entry, production, and shipping delays for three weeks. Of the lost revenue, $15 million is deemed unrecoverable, with the remaining $15 million added to the backlog. This setback also hurt customer trust, prompting management to apologize for the "strain this has caused." Despite these challenges, the company maintained a strong balance sheet, ending the year with a net leverage ratio of 1x adjusted EBITDA and $374 million in unused credit facility capacity.
The regional performance highlighted both opportunities and challenges. While The Americas faced a steep 22.3% organic sales decline, EMEA and APAC showed resilience, growing by 3% and 11%, respectively. Key markets like France, the UK, Spain, Australia, China, South Korea, and India contributed to this growth. However, gross margin pressure remained a concern, with $13.5 million in losses due to lower volumes and $8.5 million from operational inefficiencies, higher labor costs, and freight expenses.
The company also announced its 2026 guidance, projecting net sales between $1.24 billion and $1.28 billion, representing a 3% to 6.5% organic growth. Adjusted EBITDA is expected to range from $175 million to $190 million, with a margin target of 14.1% to 14.8%. Additionally, Tennant aims for gross margin expansion throughout the year and has set
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Originally published on The Motley Fool on 2/24/2026