Tennant Q3 Sales Rise as Robotics Revenue Jumps 71%

Tennant Company reported 5.7% organic sales growth for the third quarter of 2026 as strong robotics demand and North American orders lifted revenue, though inflation, parts constraints and higher investment weighed on adjusted earnings. The cleaning-equipment maker also projected full-year robotics revenue of $130 million to $145 million, supported by third-quarter growth of 71%.

Net sales rose to $322.3 million from $303 million a year earlier. Organic sales increased 8.1% in the Americas and 2.3% in Europe, the Middle East and Africa, while Asia-Pacific recorded a 4.8% decline.

Orders increased 9.5% year over year, led by an 18% gain in North America on demand for robotics and industrial products. Tennant exited the quarter with a backlog of approximately $118 million, which the company said provides visibility into the fourth quarter.

Robotics growth supports sales momentum

Robotics revenue reached $37.3 million in the quarter, up 71% from the prior-year period, with the X4 ROVR and X6 ROVR autonomous floor scrubbers leading growth. Year-to-date robotics revenue rose 61% to $95.3 million, already exceeding the roughly $85 million generated in all of 2025.

Tennant also launched its first autonomous vacuum, expanding its robotics portfolio into additional market segments. The company continues to target $250 million of robotics revenue in 2028, compared with its projected range of $130 million to $145 million for 2026.

Adjusted profit pressured by costs and investment

GAAP net income increased to $19.5 million from $14.9 million, while diluted earnings rose to $1.12 per share from $0.80. Tennant attributed the improvement partly to lower ERP modernization costs and the absence of legal contingency costs recorded in the prior-year quarter.

Adjusted diluted earnings were $1.40 per share, down from $1.46 a year earlier. Higher sales and approximately $6 million of tariff refunds provided support, but were partly offset by increased operating costs and interest expense. Cost pressures included materials and logistics inflation, production inefficiencies related to parts availability, residual ERP issues and higher selling and administrative and research and development spending, including investment in robotics.

Adjusted EBITDA decreased by $1 million to $48.8 million, producing a 15.1% margin. Higher volume, pricing and tariff refunds were more than offset by higher cost of goods sold and increased S&A and R&D investment.

Gross margin was 42.3%, down 40 basis points year over year but up 280 basis points sequentially. Tariff refunds contributed about 190 basis points to the quarterly gross margin. Excluding those refunds, the company said profitability was pressured by inflation, macroeconomic headwinds, parts constraints and remaining ERP inefficiencies, partially offset by favorable pricing. Adjusted S&A expense increased to 27.8% of sales from 27.5%, reflecting employee costs, ERP licensing fees, robotics investments and inflation.

ERP work shifts toward optimization

Tennant said its core ERP processes are operating as intended and that customer experience has remained insulated. Deployments have been paused since May, support tickets are declining and the company is reducing manual workarounds as teams address master-data and planning gaps.

Remaining project work is expected to conclude in the fourth quarter and is focused on warehouse management, invoicing and collections, master data and the support model. Some inefficiencies, particularly in parts planning and fabrication scheduling, will take longer to eliminate.

The company will not proceed with its planned ERP deployment in EMEA, citing the potential for greater value with less risk. It will instead concentrate resources on optimizing the North American system, while pursuing targeted automation, data-quality and process improvements in EMEA using existing systems.

Full-year outlook and balance sheet

Tennant’s full-year guidance calls for net sales of $1.27 billion to $1.31 billion and organic growth of 3.5% to 7%. The company expects adjusted EBITDA of $155 million to $170 million, representing an adjusted margin of 12.2% to 13.0%. Adjusted diluted EPS is projected at $3.80 to $4.45, while GAAP diluted EPS is expected to range from $2.15 to $2.80.

The outlook also includes approximately $25 million of capital expenditures and an adjusted effective tax rate of 24% to 29%.

Operating cash flow was $11.9 million in the quarter, increasing for the second consecutive quarter. Tennant ended the period with $75 million of cash, total debt of $358.7 million and net debt of $283.4 million. Net leverage was 2.0 times trailing 12-month adjusted EBITDA, at the upper end of the company’s target range of 1.0 to 2.0 times. Tennant returned $76.6 million to shareholders through dividends and share repurchases during the first nine months of the year.

Risks identified by the company include geopolitical and economic uncertainty, foreign-exchange movements, inflation and raw-material availability, customer pricing sensitivity, competition, remaining ERP complications, cybersecurity threats and the execution of strategic initiatives. Tennant also cautioned that parts constraints and residual operational inefficiencies continued to affect results during the quarter.