Tennant Company (NYSE: TNC) reported fourth‑quarter 2025 net sales of $291.6 million, a 11.3% decline from $328.9 million in the same period a year earlier. Adjusted diluted earnings per share fell to $0.48, missing the consensus estimate of $1.68 by $1.20. Adjusted EBITDA for the quarter was $25.6 million, a 46.0% drop from $47.4 million in Q4 2024.
The sharp EPS miss reflects the impact of production disruptions during the North America ERP transition, which compressed margins and reduced volumes. In Q4 2024 the company earned an adjusted diluted EPS of $1.52, and the full‑year 2024 adjusted diluted EPS was $6.57, underscoring the severity of the current quarter’s performance gap.
Gross profit margin contracted to 34.6% in Q4 2025 from 41.3% in Q4 2024, while adjusted EBITDA margin fell to 8.8% from 14.4% a year earlier. The decline is driven by higher tariff‑related material costs, lower operating leverage during the ERP rollout, and a shift toward lower‑margin product mix.
Management guided 2026 net sales to $1,240 million–$1,280 million and adjusted EBITDA to $175 million–$190 million, while adjusted EPS guidance of $4.70–$5.30 reflects a cautious outlook. "Our fourth‑quarter performance fell short of expectations due to production disruptions during the North America ERP transition," said CEO Dave Huml. "We have taken targeted and decisive actions to stabilize operations, and we are seeing steady improvement across our core processes. As we continue to strengthen system performance and support our customers, we expect to return to a more normalized operating rhythm and predictable performance through the first half of 2026."
Tennant is also advancing its robotics and autonomous mobile robot (AMR) business, reporting $85 million in AMR sales in 2025 with a target of $250 million by 2028. The company’s ERP modernization is expected to strengthen its operational foundation, enable scalable growth, and improve data consistency, but the transition has exposed short‑term vulnerabilities. Headwinds include the ERP rollout, tariff‑related material costs, and softer industrial demand in North America, while tailwinds stem from the growing robotics portfolio and potential cost‑out initiatives.
Investors reacted negatively, citing the significant EPS miss and margin compression as key concerns. The market’s response highlights the weight of the ERP‑related operational challenges and the need for a swift recovery to restore confidence in the company’s earnings trajectory.
The content on EveryTicker is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.