Tennant Company (NYSE: TNC) posts weaker earnings and higher debt in Q2 2026
Rhea-AI Filing Summary
Tennant Company reported modest Q2 2026 revenue growth but sharply lower profitability. Net sales rose to $324.0 million from $318.6 million, driven by pricing, acquisitions and foreign currency, while volumes declined. Gross margin fell to 39.5% and operating margin to 4.9% as ERP-related recovery costs, supply constraints, freight and tariff pressures, and competitive pricing in EMEA weighed on results. Net income declined to $7.6 million, or $0.44 per diluted share, from $20.2 million, or $1.08.
For the first half, net sales were $621.9 million and net income $7.8 million, down from $33.3 million. Operating cash flow shifted to an outflow of $26.2 million, reflecting weaker earnings and higher receivables and inventories tied to an elevated backlog and North America ERP inefficiencies. Total debt increased to $358.9 million, including $357.5 million drawn on the up to $650.0 million revolving facility, raising the debt‑to‑capital ratio to 40.1%. Tennant also maintains an accrued liability of approximately $20.5 million as of December 31 2025 for an adverse intellectual property verdict involving Oxygenator Water Technologies, plus $0.4 million of additional interest‑related accruals in 2026, while continuing to invest in robotics, autonomous solutions, acquisitions in EMEA, and derivative hedging programs.
Positive
- None.
Negative
- Profitability declined sharply, with Q2 2026 net income of $7.6 million vs. $20.2 million a year earlier and operating margin falling to 4.9% from 9.6%.
- First‑half operating cash flow turned negative, with a $26.2 million outflow compared with $22.1 million provided in the prior‑year period, driven by weaker earnings and higher working capital.
- Total debt rose to $358.9 million and the debt‑to‑capital ratio increased to 40.1% from 31.2% at December 31 2025, alongside higher interest expense.
- Tennant carries an accrued intellectual property litigation liability of about $20.5 million as of December 31 2025 related to Oxygenator Water Technologies, plus $0.4 million of additional interest‑related accruals in 2026.
Filing Explained
At June 30, 2026, Tennant had 17,049,303 shares outstanding, $357.5 million in revolver borrowings, and $289.4 million unused capacity.
Tennant Company’s unaudited Form 10-Q reports its position at
The quarter’s repurchase table records 5,515 shares purchased, none under publicly announced programs, with 2,564,293 shares still authorized; that authorization is remaining capacity, not completed purchases.
At
Two unresolved items have defined follow-up paths: tariff-refund claims had been submitted but were not approved and produced no recognized benefit as of
Key Figures
Net Sales Q2 2026: $324.0 million
Net Income Q2 2026: $7.6 million
Diluted EPS Q2 2026: $0.44
+5 more
8 metrics
Net Sales Q2 2026
$324.0 million
Three months ended June 30, 2026 consolidated net sales
Net Income Q2 2026
$7.6 million
Three months ended June 30, 2026 net income attributable to Tennant Company
Diluted EPS Q2 2026
$0.44
Three months ended June 30, 2026 diluted earnings per share
Net Sales H1 2026
$621.9 million
Six months ended June 30, 2026 consolidated net sales
Operating Cash Flow H1 2026
$(26.2) million
Net cash used in operating activities for six months ended June 30, 2026
Total Debt
$358.9 million
Debt outstanding including current portion as of June 30, 2026
Debt-to-Capital Ratio
40.1%
Ratio as of June 30, 2026 compared with 31.2% at December 31, 2025
OWT Litigation Accrual
$20.5 million
Accrued liability for Oxygenator Water Technologies matter as of December 31, 2025
Key Terms
organic sales decline, supersedeas bond, equity method of accounting, cross-currency swaps, +1 more
5 terms
organic sales decline financial
"Organic sales decline of 0.5%, as price realization was more than offset by lower volume"
supersedeas bond regulatory
"To stay execution of the judgment pending appeal, the Company has obtained a supersedeas bond"
equity method of accounting financial
"the Company accounts for its investment in Brain Corp under the equity method of accounting"
An equity method of accounting is the way a company reports its financial interest in another business when it has significant influence but not full control, typically owning between about 20% and 50% of the voting stock. Instead of listing the investment at purchase cost or consolidating every line item, the investor records its proportional share of the other company’s profits or losses and adjusts the investment value for dividends or impairments, so investors see the economic impact of that stake. This matters because it changes reported earnings and asset values in a way that reflects ongoing performance—similar to showing your share of a small business’s monthly profit on your own books rather than just the amount you originally paid for your share—and helps gauge how much influence that stake has on the investor’s financial health.
cross-currency swaps financial
"we entered into Euro to U.S. dollar foreign exchange cross-currency swaps associated with an intercompany loan"
A cross-currency swap is a contract where two parties agree to exchange loan payments and principal in different currencies over a set period, effectively swapping the currency and often the interest rate of their obligations. For investors, it matters because it lets companies and funds lock in predictable cash flows and shield returns or debt costs from exchange-rate swings—like trading the payments on a foreign mortgage so currency moves don’t suddenly change what you owe or receive.
cash flow hedges financial
"The Company manages exposure to variability in cash flows related to its floating rate debt through the use of interest rate swaps designated as cash flow hedges"
A cash flow hedge is an accounting label companies use when they enter financial contracts—like currency or interest-rate agreements—to protect expected future cash payments or receipts from unpredictable moves. For investors, it signals that the company is trying to smooth out future cash variability (think of locking in a price to avoid surprises), which can reduce reported profit swings but also means the company has exposure to derivative instruments and their associated risks.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Tennant Company (TNC) perform financially in Q2 2026?
Tennant generated Q2 2026 net sales of $324.0 million, up slightly from $318.6 million, but net income fell to $7.6 million ($0.44 diluted EPS) from $20.2 million ($1.08 diluted EPS) as gross and operating margins declined.
What drove the revenue and margin changes for Tennant Company (TNC) in Q2 2026?
Revenue increased 1.7%, helped by 3.0% price, acquisitions and favorable currency, while volume declined 3.5%. Gross margin fell to 39.5%, pressured by ERP recovery costs, supply constraints, higher freight and tariff costs, and competitive price concessions in EMEA.
What was Tennant Company’s (TNC) cash flow and debt position at June 30, 2026?
For the first half of 2026, Tennant reported operating cash outflow of $26.2 million versus $22.1 million inflow a year earlier. Total debt was $358.9 million, including $357.5 million drawn on the revolving credit facility, with a debt‑to‑capital ratio of 40.1%.
What is the status and size of the Oxygenator Water Technologies litigation for Tennant Company (TNC)?
A jury returned a verdict against Tennant and the court enhanced damages, leading to an accrued liability of about $20.5 million as of December 31 2025 plus $0.4 million of additional interest‑related accruals in 2026. Both parties have appealed, and a $20.3 million supersedeas bond was obtained.
How are macroeconomic factors and tariffs affecting Tennant Company (TNC)?
Tennant notes ongoing inflation, tariff‑related material cost pressure, and geopolitical uncertainty, including Middle East tensions and changing U.S. tariff rules. The company has submitted claims for certain tariff refunds but has not recognized any related benefit as of June 30 2026.
What operational challenges is Tennant Company (TNC) facing with its ERP system?
The North America ERP platform is causing operational inefficiencies, affecting planning, production flow, order fulfillment and working capital. Management reports elevated backlog and higher receivables and inventories, and is focused on stabilizing the system and realizing expected productivity benefits.
What strategic investments did Tennant Company (TNC) make recently?
In Q1 2026 Tennant acquired EMEA distributors Clean Machine Falkenberg AB and Repax AB for $7.7 million. The company also maintains a $19.5 million equity‑method investment in Brain Corp and continues to invest in robotic and autonomous cleaning solutions.
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the quarterly period ended June 30, 2026
OR
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the transition period from ___________ to __________
Commission File Number 1-16191
__________________________________________
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
(Address of principal executive offices)
(Zip Code)
(763 ) 540-1200
(Registrant’s telephone number, including area code)
____________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| þ | No | o | ||||||||||||
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
| þ | No | o | ||||||||||||
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| þ | Accelerated filer | o | ||||||||||||
| Non-accelerated filer | o | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
| o | ||||||||
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| Yes | o | No | ||||||||||||
As of July 31, 2026, there were 17,049,303 shares of common stock outstanding.
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TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION (Unaudited) | Page | |||||||
Item 1. | Financial Statements | 3 | ||||||
Consolidated Statements of Income | 3 | |||||||
Consolidated Statements of Comprehensive Income | 4 | |||||||
Consolidated Balance Sheets | 5 | |||||||
Consolidated Statements of Cash Flows | 6 | |||||||
Consolidated Statements of Equity | 8 | |||||||
Notes to Consolidated Financial Statements | 10 | |||||||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | 27 | ||||||
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 34 | ||||||
Item 4. | Controls and Procedures | 35 | ||||||
PART II - OTHER INFORMATION | ||||||||
Item 1. | Legal Proceedings | 35 | ||||||
Item 1A. | Risk Factors | 35 | ||||||
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 35 | ||||||
| Item 5. | Other Information | 36 | ||||||
Item 6. | Exhibits | 36 | ||||||
Signatures | 37 | |||||||
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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
TENNANT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| (In millions, except shares and per share data) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net sales | $ | $ | $ | $ | |||||||||||||||||||
| Cost of sales | |||||||||||||||||||||||
| Gross profit | |||||||||||||||||||||||
| Selling and administrative expense | |||||||||||||||||||||||
| Research and development expense | |||||||||||||||||||||||
| Operating income | |||||||||||||||||||||||
| Interest expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Net foreign currency transaction loss | ( | ( | ( | ( | |||||||||||||||||||
| Other expense, net | ( | ( | ( | ( | |||||||||||||||||||
| Income before income taxes | |||||||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Net income per share | |||||||||||||||||||||||
| Basic | $ | $ | $ | $ | |||||||||||||||||||
| Diluted | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average shares outstanding | |||||||||||||||||||||||
| Basic | |||||||||||||||||||||||
| Diluted | |||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
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TENNANT COMPANY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| (In millions) | Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Other comprehensive (loss) income: | |||||||||||||||||||||||
Foreign currency translation adjustments (net of related tax (expense) benefit of $( | ( | ( | |||||||||||||||||||||
Pension and postretirement medical benefits (net of related tax expense of $ | |||||||||||||||||||||||
Derivative financial instruments (net of related tax (expense) benefit of $( | ( | ( | |||||||||||||||||||||
| Total other comprehensive (loss) income, net of tax | ( | ( | |||||||||||||||||||||
| Total comprehensive income including noncontrolling interest | |||||||||||||||||||||||
| Foreign currency translation adjustments attributable to noncontrolling interest | |||||||||||||||||||||||
| Comprehensive income attributable to Tennant Company | $ | $ | $ | $ | |||||||||||||||||||
See accompanying notes to consolidated financial statements.
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TENNANT COMPANY
CONSOLIDATED BALANCE SHEETS
| (Unaudited) | |||||||||||
| (In millions, except shares and per share data) | June 30, 2026 | December 31, 2025 | |||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
Receivables, less allowances of $ | |||||||||||
| Inventories | |||||||||||
| Prepaid and other current assets | |||||||||||
| Total current assets | |||||||||||
Property, plant and equipment, less accumulated depreciation of $ | |||||||||||
| Operating lease assets | |||||||||||
| Goodwill | |||||||||||
| Intangible assets, net | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND EQUITY | |||||||||||
| Current portion of long-term debt | $ | $ | |||||||||
| Accounts payable | |||||||||||
| Employee compensation and benefits | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Long-term debt | |||||||||||
| Long-term operating lease liabilities | |||||||||||
| Employee benefits | |||||||||||
| Deferred income taxes | |||||||||||
| Other liabilities | |||||||||||
| Total long-term liabilities | |||||||||||
| Total liabilities | $ | $ | |||||||||
| Commitments and contingencies (Note 13) | |||||||||||
Common Stock, $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Retained earnings | |||||||||||
| Accumulated other comprehensive loss | ( | ( | |||||||||
| Total Tennant Company shareholders' equity | |||||||||||
| Noncontrolling interest | |||||||||||
| Total equity | |||||||||||
| Total liabilities and total equity | $ | $ | |||||||||
See accompanying notes to consolidated financial statements.
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TENNANT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| (In millions) | Six Months Ended June 30, | ||||||||||
| 2026 | 2025 | ||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net income | $ | $ | |||||||||
| Adjustments to reconcile net income to net cash used in operating activities: | |||||||||||
| Depreciation expense | |||||||||||
| Amortization expense | |||||||||||
| Loss from equity method investments | |||||||||||
| Deferred income tax expense (benefit) | ( | ||||||||||
| Share-based compensation expense | |||||||||||
| Bad debt and returns expense | |||||||||||
| Other, net | |||||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Receivables | ( | ( | |||||||||
| Inventories | ( | ( | |||||||||
| Accounts payable | ( | ( | |||||||||
| Employee compensation and benefits | ( | ||||||||||
| Other assets and liabilities | ( | ( | |||||||||
| Net cash (used in) provided by operating activities | ( | ||||||||||
| INVESTING ACTIVITIES | |||||||||||
| Purchases of property, plant and equipment | ( | ( | |||||||||
| Payments made in connection with business acquisition, net of cash acquired | ( | ||||||||||
| Investment in leased assets | ( | ( | |||||||||
| Cash received from leased assets | |||||||||||
| Net cash used in investing activities | ( | ( | |||||||||
| FINANCING ACTIVITIES | |||||||||||
| Proceeds from borrowings | |||||||||||
| Repayments of borrowings | ( | ( | |||||||||
Repurchases from exercise of stock options, net of employee tax withholdings obligations of $ | ( | ( | |||||||||
| Repurchases of common stock | ( | ( | |||||||||
| Dividends paid | ( | ( | |||||||||
| Net cash provided by (used in) financing activities | ( | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | |||||||||||
| Net decrease in cash and cash equivalents | ( | ( | |||||||||
| Cash and cash equivalents at beginning of period | |||||||||||
| Cash and cash equivalents at end of period | $ | $ | |||||||||
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| SUPPLEMENTAL CASH FLOW INFORMATION | Six Months Ended June 30, | ||||||||||
| (In millions) | 2026 | 2025 | |||||||||
| Cash paid for income taxes | $ | $ | |||||||||
| Cash paid for interest | |||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||
| Operating cash flows from operating leases | |||||||||||
| Financing cash flows from financing leases | |||||||||||
| Lease assets obtained in exchange for new operating lease liabilities | |||||||||||
| Lease assets obtained in exchange for new financing lease liabilities | |||||||||||
| Supplemental non-cash investing and financing activities: | |||||||||||
| Capital expenditures in accounts payable | |||||||||||
See accompanying notes to consolidated financial statements.
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TENNANT COMPANY
CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
(In millions, except shares and per share data)
| Tennant Company Shareholders | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Tennant Company Shareholders' Equity | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock, including excise tax | ( | ( | ( | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
Dividends paid $ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | — | — | — | ( | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock, including excise tax | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||
Dividends paid $ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Other | — | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2026 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
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| Tennant Company Shareholders | |||||||||||||||||||||||||||||||||||||||||||||||
| Common Shares | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Tennant Company Shareholders' Equity | Noncontrolling Interest | Total Equity | ||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issue stock for directors, employee benefit and stock plans, net of related tax withholdings of | ( | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock, including excise tax | ( | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Dividends paid $ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issue stock for directors, employee benefit and stock plans, net of related tax withholdings and repurchases of | — | ( | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||
| Share-based compensation | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
| Repurchases of common stock, including excise tax | ( | — | ( | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
Dividends paid $ | — | — | — | ( | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||
| Other | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2025 | $ | $ | $ | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
See accompanying notes to consolidated financial statements.
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TENNANT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(In millions, except shares and per share data)
1. Nature of Business
Tennant Company ("the Company", "we", "us", or "our") is a world leader in designing, manufacturing and marketing solutions that help create a cleaner, safer, healthier world. The Company is committed to creating and commercializing breakthrough, sustainable cleaning innovations to enhance its broad suite of products, including floor maintenance and cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance and repair service, and asset management solutions.
Our products are used in many types of environments, including retail establishments, distribution centers, factories and warehouses, public venues such as arenas and stadiums, office buildings, schools and universities, hospitals and clinics, and more.
Customers include contract cleaners to whom organizations outsource facilities maintenance as well as businesses that perform facilities maintenance themselves. The Company reaches these customers through the industry's largest direct sales and service organization and through a strong and well-supported network of authorized distributors worldwide.
2. Significant Accounting Policies
Basis of Presentation – The accompanying unaudited consolidated financial statements have been prepared in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements for interim reporting. In our opinion, the consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary for the fair presentation of our financial position and results of operations.
These statements should be read in conjunction with the consolidated financial statements and notes included in our annual report on Form 10-K for the year ended December 31, 2025. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.
There are no newly adopted accounting pronouncements during the three months ended June 30, 2026 that impacted the Company.
3. Revenue
Disaggregation of Revenue
The following tables illustrate the disaggregation of revenue by geographic area, groups of similar products and services and sales channels:
Net sales by geographic area
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Americas | $ | $ | $ | $ | |||||||||||||||||||
| Europe, Middle East and Africa | |||||||||||||||||||||||
| Asia Pacific | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
Net sales are attributed to each geographic area based on the end-user country and are net of intercompany sales.
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Net sales by groups of similar products and services
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Equipment | $ | $ | $ | $ | |||||||||||||||||||
| Parts and consumables | |||||||||||||||||||||||
| Service and other | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
Net sales by sales channel
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Sales direct to consumer | $ | $ | $ | $ | |||||||||||||||||||
| Sales to distributors | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | |||||||||||||||||||
Contract Liabilities
Sales Returns
The right of return may exist explicitly or implicitly with our customers. When the right of return exists, we adjust the transaction price for the estimated effect of returns. We estimate the expected returns using the expected value method by assessing historical sales levels and the timing and magnitude of historical sales return levels as a percent of sales and projecting this experience into the future.
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Sales Incentives
Our sales contracts may contain various customer incentives, such as volume-based rebates or other promotions. We reduce the transaction price for certain customer programs and incentive offerings that represent variable consideration. Sales incentives given to our customers are recorded using the most likely amount approach for estimating the amount of consideration to which the Company will be entitled. We forecast the most likely amount of the incentive to be paid at the time of sale, update this forecast quarterly, and adjust the transaction price accordingly to reflect the new amount of incentives expected to be earned by the customer. A majority of our customer incentives are settled within one year. We record our accruals for volume-based rebates and other promotions in other current liabilities on our consolidated balance sheets.
The change in our sales incentive accrual balance was as follows:
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Beginning balance | $ | $ | |||||||||
| Additions to sales incentive accrual | |||||||||||
| Contract payments | ( | ( | |||||||||
| Foreign currency fluctuations | ( | ||||||||||
| Ending balance | $ | $ | |||||||||
Deferred Revenue
Deferred revenue represents consideration received or billed in advance of satisfying performance obligations that are recognized over time.
Our deferred revenue balance primarily consists of (i) amounts related to Autonomous Robotic Machine ("AMR") arrangements that are recognized over time and (ii) prepaid service and maintenance contracts for our machines. Service and maintenance contracts generally provide routine maintenance, parts coverage, and support services and are recognized ratably over the contractual service period, which typically ranges from 12 months to 60 months.
Prior to March 1, 2026, certain AMR customer arrangements required an active autonomy subscription for customers to benefit from autonomous functionality. Amounts allocated to these subscription-based arrangements were recognized over the contractual subscription period and included in deferred revenue. Effective March 1, 2026, the Company amended its AMR arrangements such that customers receive full rights to the embedded autonomy software upon delivery of the machine along with ongoing connectivity services. Revenue associated with the embedded autonomy software is recognized at the time of sale. Revenue related to connectivity services (which include cloud connectivity, software updates, diagnostic, monitoring and support services) is recognized on a straight line basis over the period the services are made available.
In arrangements that include multiple performance obligations, the transaction price is allocated to each performance obligation based on relative standalone selling prices.
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The change in the deferred revenue balance was as follows:
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Beginning balance | $ | $ | |||||||||
| Increase in deferred revenue representing our obligation to satisfy future performance obligations | |||||||||||
| Decrease in deferred revenue for amounts recognized in net sales for satisfied performance obligations | ( | ( | |||||||||
| Foreign currency fluctuations | ( | ||||||||||
| Ending balance | $ | $ | |||||||||
As of June 30, 2026, $16.0 million and $13.6 million of deferred revenue was reported in other current liabilities and other liabilities, respectively, on our consolidated balance sheets. Of these amounts, we expect to recognize the following approximate amounts in net sales in the following periods:
Remaining 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
As of December 31, 2025, $16.6 million and $15.8 million of deferred revenue was reported in other current liabilities and other liabilities, respectively, on our consolidated balance sheets.
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4. Management Actions
Restructuring Actions
During the three and six months ended June 30, 2026, we incurred restructuring expenses as part of our ongoing global reorganization efforts. The following pre-tax restructuring charges were included in selling and administrative expense in the consolidated statements of income.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Severance-related costs | $ | $ | ( | $ | $ | ||||||||||||||||||
| Total pre-tax restructuring costs | $ | $ | ( | $ | $ | ||||||||||||||||||
Our restructuring actions represent the execution of a multi-year enterprise strategy to drive increased productivity throughout our operations. The charges in 2026 and 2025 impacted all operating segments and were related to a global workforce realignment to support our key strategic initiatives.
A reconciliation of the beginning and ending net liability balances for severance-related costs is as follows:
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Beginning balance | $ | $ | |||||||||
| New charges | |||||||||||
| Cash payments | ( | ( | |||||||||
| Foreign currency fluctuations | ( | ||||||||||
| Adjustments to accrual | ( | ( | |||||||||
| Ending balance | $ | $ | |||||||||
5. Acquisitions
Clean Machine
On February 2, 2026, we acquired 100 % of our distributors, Clean Machine Falkenberg AB and Repax AB (collectively, "Clean Machine"), as we continue to expand our footprint in the EMEA region. The total purchase price was $7.7 million. The financial results for Clean Machine have been included in our consolidated financial statements since the acquisition date. The acquisition was not material to our consolidated financial statements.
R4Y
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6. Inventories
Inventories are valued at the lower of cost or net realizable value and consisted of the following:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Inventories carried at LIFO: | |||||||||||
Finished goods(a) | $ | $ | |||||||||
| Raw materials and work-in-process | |||||||||||
Excess of FIFO over LIFO cost(b) | ( | ( | |||||||||
| Total LIFO inventories | $ | $ | |||||||||
| Inventories carried at FIFO: | |||||||||||
Finished goods(a) | $ | $ | |||||||||
| Raw materials and work-in-process | |||||||||||
| Total FIFO inventories | $ | $ | |||||||||
| Total inventories | $ | $ | |||||||||
(a)Finished goods include machines, parts and consumables and component parts that are used in our products.
(b)The difference between replacement cost and the stated LIFO inventory value is not materially different from the reserve for the LIFO valuation method.
7. Goodwill and Intangible Assets
The changes in the carrying amount of goodwill for the six months ended June 30, 2026 were as follows:
| Goodwill | Accumulated Impairment Losses | Total | |||||||||||||||
Balance as of December 31, 2025 | $ | $ | ( | $ | |||||||||||||
| Additions | — | ||||||||||||||||
| Foreign currency fluctuations | ( | ( | |||||||||||||||
Balance as of June 30, 2026 | $ | $ | ( | $ | |||||||||||||
The balances of acquired intangible assets, excluding goodwill, were as follows:
| Customer Lists | Trade Names | Technology | Total | ||||||||||||||||||||
Balance as of June 30, 2026 | |||||||||||||||||||||||
| Original cost | $ | $ | $ | $ | |||||||||||||||||||
| Accumulated amortization | ( | ( | ( | ( | |||||||||||||||||||
| Carrying value | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average original life (in years) | |||||||||||||||||||||||
Balance as of December 31, 2025 | |||||||||||||||||||||||
| Original cost | $ | $ | $ | $ | |||||||||||||||||||
| Accumulated amortization | ( | ( | ( | ( | |||||||||||||||||||
| Carrying value | $ | $ | $ | $ | |||||||||||||||||||
| Weighted average original life (in years) | |||||||||||||||||||||||
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Amortization expense on intangible assets for the three and six months ended June 30, 2026 was $3.3 million and $6.8 million, respectively. Amortization expense on intangible assets for the three and six months ended June 30, 2025 was $3.4 million and $6.8 million, respectively.
Estimated aggregate amortization expense based on the current carrying value of amortizable intangible assets for each of the five succeeding years and thereafter is as follows:
Remaining 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total | $ | ||||
8. Debt
On August 7, 2024, we and certain of our foreign subsidiaries entered into an Amended and Restated Credit Agreement (the "2024 Credit Agreement"), which amends and restates the Amended and Restated Credit Agreement, dated April 5, 2021, as amended on November 10, 2022. The 2024 Credit Agreement provides us and certain of our foreign subsidiaries access to a senior secured credit facility until August 7, 2029, consisting of a revolving facility in an amount up to $650.0 million, with an option to expand the revolving facility or obtain incremental term loans by up to $325.0 million, with the consent of the lenders willing to provide additional borrowings in the form of increases to their revolving facility commitment or funding of incremental term loans. Borrowings may be denominated in U.S. dollars or certain other currencies.
The fee for undrawn committed funds under the revolving facility of the 2024 Credit Agreement ranges from an annual rate of 0.15 % to 0.30 %, depending on our leverage ratio. Borrowings denominated in U.S. dollars under the 2024 Credit Agreement bear interest at a rate per annum equal to (a) the greatest of (i) the prime rate, (ii) the NYFRB Rate (as defined in the 2024 Credit Agreement) plus 0.50 % and (iii) the Adjusted Term SOFR Rate (as defined in the 2024 Credit Agreement) for a one month period plus 1 %; but in any case not less than 1 %, plus an additional spread of 0.25 % to 1 %, depending on our leverage ratio, (b) the Adjusted Term SOFR Rate plus an additional spread of 1.25 % to 2 %, depending on our leverage ratio, or (c) the Adjusted Daily Simple RFR (as defined in the 2024 Credit Agreement) plus an additional spread of 1.25 % to 2 %, depending on our leverage ratio.
In connection with the 2024 Credit Agreement, we reaffirmed our security interest in favor of the lenders in substantially all its personal property and pledged the stock of certain of its domestic and foreign subsidiaries. The obligations under the 2024 Credit Agreement are also guaranteed by certain of the Company’s subsidiaries and those subsidiaries also provided a security interest in their similar personal property.
The 2024 Credit Agreement contains customary representations, warranties and covenants, including but not limited to covenants restricting the Company’s ability to incur indebtedness and liens and merge or consolidate with another entity. Further, the 2024 Credit Agreement contains the following covenants:
•a covenant requiring us to maintain an indebtedness to EBITDA ratio, determined as of the end of each of its fiscal quarters, of no greater than 3.75 to 1.00, with certain alternative requirements for permitted acquisitions of at least $50.0 million;
•a covenant requiring us to maintain an EBITDA to interest expense ratio for a period of four consecutive fiscal quarters as of the end of each quarter of no less than 3.00 to 1; and
•a covenant restricting us from paying dividends or repurchasing stock if, after giving effect to such payments and assuming no default exists or would result from such payment, our leverage ratio is greater than 2.50 to 1, in such case limiting such payments to the greater of 10% of consolidated total assets and $100.0 million during any fiscal year.
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We were in compliance with the above financial covenants as of June 30, 2026.
Debt Outstanding
Debt outstanding consisted of the following:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Credit facility borrowings: | |||||||||||
| Revolving credit facility borrowings | $ | $ | |||||||||
| Finance lease liabilities | |||||||||||
| Total debt | |||||||||||
Less: current portion of long-term debt(a) | ( | ( | |||||||||
| Long-term debt | $ | $ | |||||||||
(a)As of June 30, 2026, the Company was required to repay $0.5 million of finance lease liabilities over the next 12 months.
As of June 30, 2026, we had outstanding borrowings of $357.5 million under our revolving credit facility. We had letters of credit and bank guarantees outstanding in the amount of $3.1 million, leaving approximately $289.4 million of unused borrowing capacity on our revolving facility. Commitment fees on unused lines of credit for the six months ended June 30, 2026 were $0.3 million. The overall weighted average cost of debt was approximately 5.2 % and net of related cross-currency swap instruments and fixed rate interest rate swap instruments was approximately 4.2 %. Further details regarding the cross-currency swap instrument and fixed rate interest rate swap instrument are discussed in Note 10.
9. Warranty
We record a liability for warranty claims at the time of sale. The amount of the liability is based on the trend in the historical ratio of claims to sales, the historical length of time between the sale and resulting warranty claim, new product introductions and other factors. Warranty terms on machines generally range from to four years . The majority of the liability for estimated warranty claims represents amounts to be paid out in the near term for qualified warranty issues.
The changes in warranty reserves were as follows:
| Six Months Ended June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Beginning balance | $ | $ | |||||||||
| Additions charged to expense | |||||||||||
| Foreign currency fluctuations | |||||||||||
| Claims paid | ( | ( | |||||||||
| Ending balance | $ | $ | |||||||||
10. Derivatives
We report all derivative instruments as either assets or liabilities in our consolidated balance sheets at fair value. As a global organization, we are exposed to market risks, including fluctuations in foreign currency exchange rates and interest rates. To manage the volatility associated with these exposures, we enter into derivative instruments from time to time in accordance with our risk management policies.
We designate instruments as hedges on a transaction basis to support hedge accounting when the applicable criteria are met. The changes in fair value on these hedging instruments are intended to offset, in part or in whole, the corresponding changes in the fair value or cash flows of the underlying exposures being hedged.
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Gains and losses resulting from changes in fair value are accounted for based on the nature and use of the derivative and whether it is designed and qualifies for hedge accounting.
We assess hedge effectiveness at the inception of the hedging relationship and on an ongoing basis, both prospectively and retrospectively, in accordance with our policy. Any ineffective portion of a hedging instrument is recorded in the same line item of the consolidated statements of income as the item being hedged.
Our hedging policy also establishes maximum limits for each counterparty to reduce concentration of credit risk. We do not purchase, hold, or sell derivative financial instruments for trading purposes.
Cash Flow Hedges
The Company manages exposure to variability in cash flows related to its floating rate debt through the use of interest rate swaps. As of June 30, 2026, the Company had interest rate swaps with an aggregate notional amount of $120.0 million that effectively convert a portion of its variable rate debt to a fixed interest rate of 3.443 %.
The interest rate swaps are designated as cash flow hedges under ASC 815. Changes in the fair value of the swaps, net of tax, are recorded in accumulated other comprehensive loss and are reclassified to interest expense, net, in the periods in which the hedged interest payments affect earnings. The swaps are scheduled to mature on October 1, 2029.
Fair Value Hedges
On April 5, 2022, we entered into Euro to U.S. dollar foreign exchange cross-currency swaps associated with an intercompany loan to a wholly owned European subsidiary. We enter into these foreign exchange cross-currency swaps to hedge the foreign currency risk associated with this intercompany loan, and accordingly, they are not speculative in nature. These cross-currency swaps are designated as fair value hedges.
As of June 30, 2026 and December 31, 2025, these cross-currency swaps included €75.0 1.9 million. These swaps are scheduled to mature in April 2027.
Net Investment Hedges
On April 5, 2022, we entered into Euro to U.S. dollar foreign exchange cross-currency swaps to hedge our exposure to adverse foreign currency exchange rate movements between Tennant Company and its European subsidiaries. We enter into these fixed-to-fixed cross-currency swap agreements to protect a designated monetary amount of the Company’s net investment in its Euro functional currency subsidiaries against the risk of changes in the Euro to U.S. dollar foreign exchange rate. These cross-currency swaps are designated as net investment hedges.
As of June 30, 2026 and December 31, 2025, the cross-currency swaps included €75.0
Foreign Currency Forward Contracts Not Designated as Hedges
We hedge our net recognized foreign currency denominated assets and liabilities with foreign currency forward contracts to reduce the risk that the value of these assets and liabilities will be adversely affected by changes in exchange rates. These contracts hedge assets and liabilities that are denominated in foreign currencies and are carried at fair value as either assets or liabilities on the consolidated balance sheets with changes in the fair value recorded to net foreign currency transaction gain (loss) in our consolidated statements of income. These contracts do not subject us to material balance sheet risk due to exchange rate movements because gains and losses on these derivatives are intended to offset gains and losses on the assets and liabilities being hedged.
At June 30, 2026 and December 31, 2025, the notional amounts of foreign currency forward contracts outstanding not designated as hedging instruments were $94.6 million and $92.9 million, respectively.
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Balance Sheet Classification
Derivatives are classified as either current or non-current assets or liabilities based on their anticipated settlement dates.
The following table summarizes the location and respective fair values of the Company's derivative financial instruments on a gross basis:
| June 30, 2026 | |||||||||||||||||||||||
| Other Current Assets | Other Current Liabilities | Other Assets | Other Liabilities | ||||||||||||||||||||
| Derivatives designated as cash flow hedges: | |||||||||||||||||||||||
| Interest rate swaps | $ | $ | $ | $ | |||||||||||||||||||
| Derivatives designated as fair value hedges: | |||||||||||||||||||||||
| Cross-currency swaps | |||||||||||||||||||||||
| Derivatives designated as net investment hedges: | |||||||||||||||||||||||
| Cross-currency swaps | |||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||
| Foreign currency forward contracts | |||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||
| Other Current Assets | Other Current Liabilities | Other Assets | Other Liabilities | ||||||||||||||||||||
| Derivatives designated as cash flow hedges: | |||||||||||||||||||||||
| Interest rate swaps | $ | $ | $ | $ | |||||||||||||||||||
| Derivatives designated as fair value hedges: | |||||||||||||||||||||||
| Cross-currency swaps | |||||||||||||||||||||||
| Derivatives designated as net investment hedges: | |||||||||||||||||||||||
| Cross-currency swaps | |||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||
| Foreign currency forward contracts | |||||||||||||||||||||||
The amount of the gains and losses on hedging instruments and the classification of those gains and losses within our consolidated financial statements for the three and six months ended June 30, 2026 were as follows. Gains and losses on hedging instruments are located within interest expense, net on our consolidated income statements.
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| Gain (Loss) Recognized in Accumulated Other Comprehensive Loss, net of tax | Gain (Loss) Reclassified into Income | ||||||||||||||||||||||
| Three Months Ended June 30, | Three Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Derivatives designated as cash flow hedges: | |||||||||||||||||||||||
| Interest rate swaps | $ | $ | $ | ( | $ | ||||||||||||||||||
| Derivatives designated as fair value hedges: | |||||||||||||||||||||||
| Cross-currency swaps | ( | ( | |||||||||||||||||||||
| Derivatives designated as net investment hedges: | |||||||||||||||||||||||
| Cross-currency swaps | ( | ||||||||||||||||||||||
| Gain (Loss) Recognized in Accumulated Other Comprehensive Income | Gain (Loss) Reclassified into Income | ||||||||||||||||||||||
| Six Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Derivatives designated as cash flow hedges: | |||||||||||||||||||||||
| Interest rate swaps | $ | $ | ( | $ | ( | $ | |||||||||||||||||
| Derivatives designated as fair value hedges: | |||||||||||||||||||||||
| Cross-currency swaps | ( | ( | |||||||||||||||||||||
| Derivatives designated as net investment hedges: | |||||||||||||||||||||||
| Cross-currency swaps | ( | ||||||||||||||||||||||
The amount of gains and losses on derivative instruments not designated as hedging instruments and the classification of those gains and losses within our consolidated financial statements during the three and six months ended June 30, 2026 were as follows. Gains and losses on foreign currency forward contracts not designated as hedging instruments were reclassified into income as net foreign currency transaction gains or losses.
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Derivatives not designated as hedging instruments: | |||||||||||||||||||||||
| Foreign currency forward contracts | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
During the next twelve-month period, net (losses) gains expected to be reclassified into earnings are shown below:
| Interest rate swaps | $ | ||||
| Cross-currency swaps | |||||
| Total | $ | ||||
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11. Fair Value Measurements
Financial Instruments
The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, accounts receivable, other current assets, accounts payable and other current liabilities approximate fair value due to their short-term nature.
On February 21, 2024, the Company acquired certain investment securities in Brain Corp, a privately held autonomous technology company located in San Diego, California. The investment securities include $12.1 million of redeemable convertible preferred stock, $12.2 million of non-redeemable convertible preferred stock, and $7.8 million of warrants. The redeemable convertible preferred stock is accounted for as an available-for-sale debt security. The non-redeemable convertible preferred stock and warrants are accounted for as equity securities. All securities were recorded at their allocated fair value at the acquisition date.
In December 2025, following achievement of a contractual milestone under the Company’s warrant agreement with Brain Corp, the Company concluded that it had obtained the ability to exercise significant influence over Brain Corp under ASC 323, Investments – Equity Method and Joint Ventures, and adopted the equity method of accounting for its equity securities investment (see Note 12 – Equity Method Investments).
The available-for-sale debt security is carried at fair value with changes in fair value recognized in accumulated other comprehensive loss. The Company estimates fair value using Level 3 inputs.
As of June 30, 2026 and December 31, 2025, the cost and market values of our debt and equity securities were as follows:
| Cost | Fair Value | Gross Unrealized Gains | Gross Unrealized Losses | ||||||||||||||||||||
Balance as of June 30, 2026 | |||||||||||||||||||||||
| Available-for-sale debt securities | $ | $ | $ | $ | ( | ||||||||||||||||||
| Total debt securities | $ | $ | $ | $ | ( | ||||||||||||||||||
Balance as of December 31, 2025 | |||||||||||||||||||||||
| Available-for-sale debt securities | $ | $ | $ | $ | ( | ||||||||||||||||||
| Total debt securities | $ | $ | $ | $ | ( | ||||||||||||||||||
The aggregate unrealized gains and losses on available-for-sale debt securities, net of tax effects, are classified in accumulated other comprehensive loss within shareholders' equity.
Scheduled maturities of our debt securities were as follows:
| Cost | Fair Value | |||||||
| After 5 years through 10 years | $ | $ | ||||||
| Total debt securities | $ | $ | ||||||
Fair Value Measurements and Financial Statement Presentation
Estimates of fair value for financial assets and financial liabilities are based on the framework established in the accounting guidance for fair value measurements. The framework defines fair value, provides guidance for measuring fair value and requires certain disclosures. The framework discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow) and the cost approach (cost to replace the service capacity of an asset or replacement cost). The
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framework utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.
•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.
•Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.
Our population of assets and liabilities subject to fair value measurements at June 30, 2026 was as follows:
| Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Debt securities | |||||||||||||||||||||||
| Foreign currency forward contracts | |||||||||||||||||||||||
| Cross-currency swaps | |||||||||||||||||||||||
| Interest rate swaps | |||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign currency forward contracts | |||||||||||||||||||||||
| Cross-currency swaps | |||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
Our population of assets and liabilities subject to fair value measurements at December 31, 2025 was as follows:
| Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Debt securities | |||||||||||||||||||||||
| Foreign currency forward contracts | |||||||||||||||||||||||
| Cross-currency swaps | |||||||||||||||||||||||
| Total assets | |||||||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Foreign currency forward contracts | |||||||||||||||||||||||
| Cross-currency swaps | |||||||||||||||||||||||
| Interest rate swaps | |||||||||||||||||||||||
| Total liabilities | $ | $ | $ | $ | |||||||||||||||||||
Our foreign currency forward contracts, cross-currency swaps and interest rate swaps are valued using observable Level 2 market expectations at the measurement date and standard valuation techniques to convert future amounts to a single present value amount. Further details regarding our derivative instruments are discussed in Note 10.
There were no transfers into or out of Level 3 investments in the periods ended June 30, 2026 and December 31, 2025.
The fair value and carrying value of total debt, including current portion, was $386.3 million and $358.9 million, respectively, as of June 30, 2026. The fair value and carrying value of total debt, including current portion, was $281.4 million and $273.6 million, respectively, as of December 31, 2025. The fair value was estimated using
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Level 3 inputs based on the borrowing rates currently available to us for bank loans with similar terms and remaining maturities.
12. Equity Method Investments
On February 21, 2024, the Company acquired certain investment securities of Brain Corp, as further described in Note 11 - Fair Value Measurements. The investment consists of $12.2 million of non-redeemable convertible preferred stock and $7.8 million of warrants to purchase common shares.
Prior to the vesting of all warrants on December 9, 2025, the Company accounted for the investment as an equity security under the measurement alternative. Upon vesting of the warrants, the Company's voting interest in Brain Corp increased to approximately 18 % and its overall ownership interest increased to approximately 12 %. Based on the voting interest, together with the board representation obtained in connection with the investment, the Company concluded that it has the ability to exercise significant influence over Brain Corp's operating and financial policies, but does not have controlling financial interest. Accordingly, beginning on December 9, 2025, the Company accounts for its investment in Brain Corp under the equity method of accounting.
Due to the timing and availability of Brain Corp's financial information, the Company recognizes its share of Brain Corp's earnings or losses on a three-month lag, based on the investee's most recently available financial statements. The Company recognized equity method losses of $0.5
13. Commitments and Contingencies
In the ordinary course of business, we are subject to the effects of certain contractual stipulations, events, transactions, and laws and regulations that may, at times, require the recognition of liabilities, such as those related to self-insurance estimated liabilities and claims, legal and contractual issues, environmental laws and regulations, guarantees, and indemnities. We establish estimated liabilities when the associated costs related to uncertainties or guarantees become probable and can be reasonably estimated.
Oxygenator Water Techs vs. Tennant Company
The Company is a defendant in an intellectual property litigation matter with Oxygenator Water Technologies, Inc. (OWT) in the United States District Court for the District of Minnesota. In November 2024, a jury returned a verdict against the Company, and in September 2025, the Court issued a post‑trial ruling enhancing damages. As of December 31, 2025 the Company has recorded a total accrued liability of approximately $20.5 million related to this matter.
In the three and six months ended June 30, 2026, the Company recorded an incremental accrued expense and corresponding liability of $0.2 million and $0.4 million, respectively, based on updated estimates of interest costs.
The Company and OWT have appealed certain aspects of the Court’s decisions. To stay execution of the judgment pending appeal, the Company has obtained a supersedeas bond in the amount of $20.3 million. The bond was issued by a third‑party surety, and no cash collateral has been posted.
While the ultimate resolution of this matter is uncertain, management believes it has appropriately accrued for its current estimate of probable loss. The ruling does not restrict the Company’s ability to sell its products and is not expected to impact its long‑term business objectives.
Other Matters
Except as described above, there have been no material changes in the Company’s estimated liabilities for self-insurance, litigation, environmental matters, guarantees, or indemnities, or in the related events and circumstances.
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14. Shareholders' Equity
Accumulated Other Comprehensive Loss
The changes in components of accumulated other comprehensive loss, net of tax, are as follows:
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||||||||
| Foreign Currency Translation Adjustments | Pension and Post- Retirement Medical Benefits | Derivative Financial Instruments | Unrealized Loss on Debt Securities | Total | |||||||||||||||||||||||||
| Beginning balance | $ | ( | $ | $ | ( | $ | ( | $ | ( | ||||||||||||||||||||
| Other comprehensive (loss) income before reclassifications | ( | ( | |||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | ( | ( | ( | ||||||||||||||||||||||||||
| Net current period other comprehensive (loss) income | ( | ( | |||||||||||||||||||||||||||
| Ending balance | $ | ( | $ | $ | $ | ( | $ | ( | |||||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||
Foreign Currency Translation Adjustments (1) | Pension and Post- Retirement Medical Benefits | Derivative Financial Instruments | Unrealized Gain on Debt Securities | Total | |||||||||||||||||||||||||
| Beginning balance | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ||||||||||||||||||||||||||||
| Amounts reclassified from accumulated other comprehensive loss | ( | ( | |||||||||||||||||||||||||||
| Net current period other comprehensive income (loss) | ( | ||||||||||||||||||||||||||||
| Ending balance | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||
(1) Includes foreign currency translation adjustments attributable to noncontrolling interests of $0.4 million.
15. Income Taxes
We and our subsidiaries are subject to U.S. federal income tax as well as income tax of numerous state and foreign jurisdictions. We are generally no longer subject to U.S. federal tax examinations for taxable years before 2019. The number of years which remain open for audit for U.S. state or foreign tax purposes varies by jurisdiction but generally ranges from to five years . We are currently undergoing income tax examinations in various U.S state and foreign jurisdictions. Although the outcome of these examinations cannot be currently determined, we believe that we have adequate reserves with respect to these examinations.
We recognize potential accrued interest and penalties related to unrecognized tax benefits in income tax expense. In addition to the liability of $6.0 million for unrecognized tax benefits as of June 30, 2026, there was approximately $1.0 million for accrued interest and penalties. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of June 30, 2026 was $5.5 million. To the extent interest and penalties are not assessed with respect to uncertain tax positions, amounts accrued will be revised and reflected as an adjustment of the income tax expense.
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16. Share-Based Compensation
17. Income Attributable to Tennant Company Per Share
The computations of basic and diluted earnings per share were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Numerator: | |||||||||||||||||||||||
| Net income | $ | $ | $ | $ | |||||||||||||||||||
| Denominator: | |||||||||||||||||||||||
| Basic - weighted average shares outstanding | |||||||||||||||||||||||
| Effect of dilutive securities | |||||||||||||||||||||||
| Diluted - weighted average shares outstanding | |||||||||||||||||||||||
| Basic earnings per share | $ | $ | $ | $ | |||||||||||||||||||
| Diluted earnings per share | $ | $ | $ | $ | |||||||||||||||||||
Excluded from the dilutive securities presented above were options to purchase and shares to be paid out under share-based compensation plans totaling 21,850 and 278,450 shares of common stock for the three months ended June 30, 2026 and 2025, respectively. Excluded from the dilutive securities presented above were options to purchase and shares to be paid out under share-based compensation plans totaling 253,430 and 157,775 shares of common stock for the six months ended June 30, 2026 and 2025, respectively. These instruments were excluded when their exercise prices exceeded the average market price of our common stock for the period, when the number of shares we can repurchase under the treasury stock method exceeded the weighted average shares outstanding, or during periods of net loss, as their inclusion would have been anti-dilutive.
18. Segment Reporting
We are organized into four operating segments: North America; Latin America; Europe, Middle East, Africa; and Asia Pacific. We combine our North America and Latin America operating segments into the "Americas" for reporting net sales by geographic area. In accordance with the objective and basic principles of the applicable accounting guidance, we aggregate our operating segments into one reportable segment that consists of the design, manufacture and sale of products used primarily in the maintenance of nonresidential surfaces.
The Company's chief operating decision maker ("CODM") is our chief executive officer. The CODM evaluates segment performance and makes resource allocation decisions using both net income and gross profit. Net income, which is also reported as consolidated net income on the consolidated statements of income, is regularly reviewed to assess segment performance. Additionally, the CODM uses gross profit to evaluate pricing and compare actual results to historical and forecasted data.
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19. Subsequent event
On July 28, 2026, we amended and extended four existing EUR-USD cross-currency interest rate swap agreements with an aggregate pay notional amount of €150.0 million and aggregate receive notional amount of $159.8 million. The amended swaps became effective on July 28, 2026 and mature in July 2029 and July 2030. The amendments did not change the aggregate notional amounts or the EUR-USD exchange rate of 1.0652 .
Due to changes in the economic terms, we discontinued the previous hedge accounting relationships and prospectively redesignated the amended swaps in new hedging relationships under ASC 815. Two swaps were designated as net investment hedges of the Company’s Euro functional currency subsidiaries, and two swaps were designated as fair value hedges of foreign currency risk associated with an intercompany loan to a wholly owned European subsidiary.
The amended swaps will be recorded at fair value each period and accounted for in accordance with the Company’s derivative instruments accounting policies.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) provides a comparison of the Company's results of operations, as well as liquidity and capital resources for the quarters ended June 30, 2026 and 2025. The MD&A should be read in conjunction with the Company's consolidated financial statements and notes included in Item 1 of this Quarterly Report. Throughout this MD&A, the Company refers to measures used by management to evaluate performance, including financial measures that are not defined under generally accepted accounting principles (GAAP) in the U.S. Net sales excluding foreign currency translation (i.e., organic sales) is not a measure of financial performance under GAAP; however, the Company believes it is useful in understanding its financial results and provides comparable measures for understanding the operating results of the Company between different periods.
Overview
Tennant Company is a world leader in designing, manufacturing and marketing solutions that help create a cleaner, safer, healthier world. The Company is committed to creating and commercializing breakthrough, sustainable cleaning innovations to enhance its broad suite of products, including floor maintenance and cleaning equipment, detergent-free and other sustainable cleaning technologies, aftermarket parts and consumables, equipment maintenance and repair service, and asset management solutions. Our products are used in many types of environments, including retail establishments, distribution centers, factories and warehouses, public venues such as arenas and stadiums, office buildings, schools and universities, hospitals and clinics, and more. Customers include contract cleaners to whom organizations outsource facilities maintenance as well as businesses that perform facilities maintenance themselves. The Company reaches these customers through the industry's largest direct sales and service organization and through a strong and well-supported network of authorized distributors worldwide.
Macroeconomic Events
As a global company, we are exposed to risks and uncertainties arising from macroeconomic, geopolitical, and regulatory conditions, including inflationary pressures, interest rate volatility, foreign currency fluctuations, changes in global capital markets, supply chain conditions, and evolving international trade and tariff policies. These factors continue to influence our operating environment and may impact revenue growth, margins, liquidity, and the execution of our strategic initiatives.
During the second quarter of 2026, geopolitical conflict involving Iran and heightened tensions in the Middle East remained volatile but did not materially escalate from levels experienced earlier in the year. These developments continued to create uncertainty in global energy markets, transportation routes, and supply chains, and contributed to freight and material cost pressure during the quarter.
Inflationary pressures remained elevated in many markets, varying by region and cost category. In EMEA, particularly Europe, economic conditions remained mixed, with lower equipment volumes in certain markets, export softness impacted by geopolitical developments in the Middle East, and competitive price concessions contributing to margin pressure. We also continued to experience input cost pressure, including tariff-related material cost pressure in the Americas.
We continue to implement cost management and productivity initiatives to mitigate these impacts and are actively monitoring customer demand, supply chain conditions, sourcing strategies, input costs, foreign currency movements, and the broader macroeconomic environment. While certain macroeconomic pressures, including energy costs and broader inflation indicators, moderated late in the quarter, ongoing geopolitical, regulatory, and trade-related uncertainty may continue to impact our business, financial condition, and results of operations.
Backlog remained elevated, reflecting increased demand and future-ship orders that outpaced material availability and supplier responsiveness. The ongoing stabilization of the North America ERP implementation also affected planning, production flow, and order fulfillment. The timing and pace of backlog reduction remain subject to supplier performance, long lead-time components, changes in customer demand, and continued execution of our optimization efforts.
As described in Part I, Item 1A - Risk Factors in the annual report on Form 10-K for the fiscal year ended December 31, 2025, we may encounter financial difficulties if the United States or other global economies
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experience an additional or continued long-term economic downturn as our product sales are sensitive to declines in capital spending by our customers. Any sustained adverse impacts to our business, the industries in which we operate, market demand for our products, and/or certain suppliers or customers may also affect our future results of operations, financial position, or cash flows. Changes in foreign currency may also adversely impact our net sales, earnings, and financial condition. We are actively monitoring the global macroeconomic environment, including geopolitical conflict, the potential impact of global supply chain constraints on material inflation, and changes in demand for our products.
Tariffs
On February 20, 2026, the United States Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act (IEEPA). Following the decision, the U.S. presidential administration announced new temporary tariffs based on different statutory authority for a 150-day period beginning February 24, 2026. These actions, together with ongoing legal and administrative developments related to the refund process for previously paid IEEPA tariffs, have continued to create uncertainty regarding tariff levels, duration, refund eligibility, and the potential for additional actions or retaliatory measures.
During the second quarter of 2026, we submitted claims seeking refunds of certain previously paid IEEPA tariffs. As of June 30, 2026, these claims had not been approved, and we had not recognized any benefit related to potential tariff refunds in our consolidated financial statements. The availability, timing, and amount of any refunds remain uncertain and subject to further legal, administrative, and governmental processes.
We continue to monitor developments in U.S. and international trade policy, including the status of temporary tariffs, tariff refund procedures, potential replacement measures, and retaliatory actions. We are also continuing to evaluate mitigation strategies, including sourcing, supply chain, pricing, and other commercial actions, to reduce the potential impact of tariffs on our business, financial condition, and results of operations.
Outlook
The Company continues to operate in a dynamic macroeconomic environment characterized by elevated input costs, uncertainty in global trade and tariff policy, foreign currency volatility, and geopolitical developments that may affect energy, freight, and logistics costs. During the second quarter, these pressures remained mixed across regions and cost categories, with continued freight and material cost pressure associated with geopolitical developments in the Middle East. The operating environment remains uncertain and continues to require disciplined execution and active cost management, though the Company may not be able to fully offset all cost increases through pricing actions, productivity initiatives, and other mitigation efforts.
Customer demand and order activity remained generally constructive, primarily driven by activity in the Americas, supported by our broad portfolio of products and solutions, core end-market demand, and continued interest in robotic and autonomous cleaning solutions. However, second quarter results reflected continued margin pressure and lower profitability compared to the prior-year period, driven by inflationary pressures, volume and mix, operational inefficiencies, and pricing and volume deleverage in EMEA.
The North America ERP platform continued to affect operational efficiency during the second quarter, as targeted productivity gains and cost efficiencies have taken longer to realize than expected. The Company incurred incremental support and technology-related costs to address process and system gaps. Management remains focused on optimizing the platform, improving execution and fulfillment, and accelerating realization of the expected productivity and operating leverage benefits.
While fiscal year 2026 remains a transition period, we believe the fundamentals of the business remain sound. The Company continues to invest selectively in strategic growth initiatives, including robotic and autonomous cleaning solutions, while maintaining a disciplined approach to spending, liquidity, working capital, and capital allocation. We believe these actions support the Company’s ability to improve operating performance over time, although the timing and pace of improvement will depend on execution, customer demand, and the broader macroeconomic environment.
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Results
The following table compares the results of operations for the three and six months ended June 30, 2026 and 2025, respectively (in millions, except per share data and percentages):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2026 | % | 2025 | % | 2026 | % | 2025 | % | ||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 324.0 | 100.0 | $ | 318.6 | 100.0 | $ | 621.9 | 100.0 | $ | 608.6 | 100.0 | |||||||||||||||||||||||||||||||||||
| Cost of sales | 196.1 | 60.5 | 184.5 | 57.9 | 380.4 | 61.2 | 354.5 | 58.2 | |||||||||||||||||||||||||||||||||||||||
| Gross profit | 127.9 | 39.5 | 134.1 | 42.1 | 241.5 | 38.8 | 254.1 | 41.8 | |||||||||||||||||||||||||||||||||||||||
| Selling and administrative expense | 99.5 | 30.7 | 93.7 | 29.4 | 197.6 | 31.8 | 184.4 | 30.3 | |||||||||||||||||||||||||||||||||||||||
| Research and development expense | 12.5 | 3.9 | 9.8 | 3.1 | 23.1 | 3.7 | 19.5 | 3.2 | |||||||||||||||||||||||||||||||||||||||
| Operating income | 15.9 | 4.9 | 30.6 | 9.6 | 20.8 | 3.3 | 50.2 | 8.2 | |||||||||||||||||||||||||||||||||||||||
| Interest expense, net | (4.3) | (1.3) | (2.2) | (0.7) | (7.7) | (1.2) | (4.5) | (0.7) | |||||||||||||||||||||||||||||||||||||||
| Net foreign currency transaction loss | (0.3) | (0.1) | (0.8) | (0.3) | (0.7) | (0.1) | (1.0) | (0.2) | |||||||||||||||||||||||||||||||||||||||
| Other expense, net | (1.0) | (0.3) | (0.3) | (0.1) | (1.2) | (0.2) | (0.2) | — | |||||||||||||||||||||||||||||||||||||||
| Income before income taxes | 10.3 | 3.2 | 27.3 | 8.6 | 11.2 | 1.8 | 44.5 | 7.3 | |||||||||||||||||||||||||||||||||||||||
| Income tax expense | 2.7 | 0.8 | 7.1 | 2.2 | 3.4 | 0.5 | 11.2 | 1.8 | |||||||||||||||||||||||||||||||||||||||
| Net income | $ | 7.6 | 2.3 | $ | 20.2 | 6.3 | $ | 7.8 | 1.3 | $ | 33.3 | 5.5 | |||||||||||||||||||||||||||||||||||
| Net income per share - diluted | $ | 0.44 | $ | 1.08 | $ | 0.45 | $ | 1.77 | |||||||||||||||||||||||||||||||||||||||
Net Sales
Consolidated net sales for the second quarter of 2026 totaled $324.0 million, a 1.7% increase as compared to consolidated net sales of $318.6 million in the second quarter of 2025. The components of the consolidated net sales change were as follows:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
| 2026 vs. 2025 | |||||||||||
| Price | 3.0% | 3.6% | |||||||||
| Volume | (3.5)% | (4.8)% | |||||||||
| Organic decline | (0.5)% | (1.2)% | |||||||||
| Acquisitions | 0.6% | 0.6% | |||||||||
| Foreign currency | 1.6% | 2.8% | |||||||||
| Total | 1.7% | 2.2% | |||||||||
The 1.7% increase in consolidated net sales in the second quarter of 2026 as compared to the same period in 2025 was driven by:
•A net favorable impact from foreign currency exchange of approximately 1.6% primarily due to stronger average exchange rates for the Euro, Brazilian real, and Mexican peso relative to the U.S. dollar; and
•Acquisition related growth of 0.6% driven by the acquisitions of distributors in EMEA; partly offset by
•Organic sales decline of 0.5%, as price realization was more than offset by lower volume, reflecting production and fulfillment constraints in North America and softer demand in certain EMEA and APAC markets.
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The 2.2% increase in consolidated net sales in the first six months of 2026 as compared to the same period in 2025 was driven by:
•A net favorable impact from foreign currency exchange of approximately 2.8% primarily due to stronger average exchange rates for the Euro, Brazilian real, and Mexican peso relative to the U.S. dollar compared to the prior-year period; and
•Acquisition related growth of 0.6% driven by the acquisitions of distributors in EMEA; partly offset by
•Organic sales decline of 1.2%, as price realization was more than offset by lower volume, reflecting ERP-related and production fulfillment constraints in North America, together with softer demand in certain EMEA and APAC markets.
The following table sets forth the net sales by geographic area for the three and six months ended June 30, 2026 and 2025 (in millions, except percentages):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2026 | 2025 | % Change | 2026 | 2025 | % Change | ||||||||||||||||||||||||||||||
| Americas | $ | 218.7 | $ | 213.5 | 2.4 | % | $ | 412.7 | $ | 410.8 | 0.5 | % | |||||||||||||||||||||||
| Europe, Middle East and Africa | 86.5 | 84.7 | 2.1 | % | 173.4 | 160.7 | 7.9 | % | |||||||||||||||||||||||||||
| Asia Pacific | 18.8 | 20.4 | (7.8) | % | 35.8 | 37.1 | (3.5) | % | |||||||||||||||||||||||||||
| Total | $ | 324.0 | $ | 318.6 | 1.7 | % | $ | 621.9 | $ | 608.6 | 2.2 | % | |||||||||||||||||||||||
Americas
Americas net sales were $218.7 million for the second quarter of 2026, an increase of 2.4% from the second quarter of 2025 driven by:
•Organic sales growth of 1.4%, primarily driven by price realization and continued strength in Latin America, partially offset by lower volumes in North America due to production and fulfillment constraints; and
•A net favorable impact from foreign currency exchange of approximately 1.0%.
Americas net sales were $412.7 million for the first six months of 2026, an increase of 0.5% from the first six months of 2025 driven by:
•A net favorable impact from foreign currency exchange of approximately 1.2%; partly offset by
•Organic sales decline of 0.7%, as price realization and growth in Latin America were more than offset by North America ERP-related and fulfillment constraints.
Europe, Middle East and Africa ("EMEA")
EMEA net sales were $86.5 million for the second quarter of 2026, an increase of 2.1% from the second quarter of 2025 driven by:
•A net favorable impact from foreign currency exchange of approximately 2.6%;
•Acquisition related growth of 2.3% driven by acquisitions of distributors; partly offset by
•Organic sales decline of 2.8%, primarily due to lower equipment volumes in certain European markets, including parts of Southern Europe and the Benelux region, as well as softer demand in export markets impacted by geopolitical developments in the Middle East.
EMEA net sales were $173.4 million for the first six months of 2026, an increase of 7.9% from the first six months of 2025 driven by:
•A net favorable impact from foreign currency exchange of approximately 6.7%;
•Acquisition related growth of 2.2% driven by acquisitions of distributors; partly offset by
•Organic sales decline of 1.0%, primarily due to lower equipment volumes in certain markets, including the UK and Export.
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Asia Pacific ("APAC")
APAC net sales were $18.8 million for the second quarter of 2026, a decrease of 7.8% from the second quarter of 2025 driven by:
•Organic sales decline of 10.6%, primarily driven by lower equipment volumes across most countries, reflecting softer market demand and distributor overstock in certain markets, partially offset by price realization and volume growth in India; and
•A net favorable impact from foreign currency exchange of approximately 2.8%.
APAC net sales were $35.8 million for the first six months of 2026, a decrease of 3.5% from the first six months of 2025 driven by:
•Organic sales decline of 6.8%, primarily driven by lower equipment volumes and continued softness in China, Australia, and Southeast Asia, partially offset by price realization and growth in certain markets; partly offset by
•A net favorable impact from foreign currency exchange of approximately 3.3%.
Gross Profit
Gross profit margin of 39.5% was 260 basis points lower in the second quarter of 2026 compared to the second quarter of 2025. Gross profit margin of 38.8% was 300 basis points lower in the first six months of 2026 compared to the first six months of 2025. The margin rate decline in both periods was driven primarily by ERP-related recovery costs, supply constraints, and elevated freight and tariff-related material costs in North America. In EMEA, margin was pressured by competitive price concessions, volume deleverage, and unfavorable mix. These impacts were partially offset by price realization and cost management actions.
Operating Expense
Selling and Administrative Expense
Selling and administrative expense ("S&A expense") was $99.5 million for the second quarter of 2026, an increase of $5.8 million compared to the second quarter of 2025. As a percentage of net sales, S&A expense for the second quarter of 2026 increased 130 basis points to 30.7% from 29.4% in the second quarter of 2025. The increase in S&A expense was primarily driven by unfavorable foreign currency, higher people-related costs and technology spend, partially offset by lower bad debt expense and other administrative expenses.
S&A expense was $197.6 million for the first six months of 2026, an increase of $13.2 million compared to the first six months of 2025. As a percentage of net sales, S&A expense for the first six months of 2026 increased 150 basis points to 31.8% from 30.3% in the first six months of 2025. The increase in S&A expense was primarily driven by unfavorable foreign currency, higher people-related costs, technology spend, vehicle-related expense, and travel, partially offset by lower bad debt expense, professional fees, and other administrative expenses.
Research and Development Expense
Research and development expense ("R&D expense") was $12.5 million, or 3.9% of net sales, for the second quarter of 2026, with R&D expense as a percentage of net sales increasing 80 basis points compared to the second quarter of 2025. Research and development expense ("R&D expense") was $23.1 million, or 3.7% of net sales, for the first six months of 2026, with R&D expense as a percentage of net sales increasing 50 basis points compared to the first six months of 2025. The increase was primarily driven by continued investment in innovation, including robotics and autonomous solutions.
We continue to invest in developing innovative products and technologies at levels necessary to propel our technology and innovative leadership position and drive growth.
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Total Other Expense, Net
Interest Expense, Net
Interest expense, net was $4.3 million in the second quarter of 2026 compared to $2.2 million in the second quarter of 2025. The increase was the result of higher weighted average outstanding borrowings, including incremental borrowings to fund share repurchases, partly offset by a lower average interest rate. The following table compares the debt levels, average interest rate, interest income and interest expense for the three months ended June 30, 2026 and 2025, respectively (in millions, except percentages):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Weighted Average Outstanding Borrowings | $ | 365.5 | $ | 213.8 | $ | 336.5 | $ | 209.3 | |||||||||||||||
| Average interest rate | 5.2 | % | 5.7 | % | 5.2 | % | 5.7 | % | |||||||||||||||
| Interest expense | 5.2 | 3.0 | 9.6 | 6.2 | |||||||||||||||||||
| Interest income | (0.9) | (0.8) | (1.9) | (1.7) | |||||||||||||||||||
| Interest expense, net | $ | 4.3 | $ | 2.2 | $ | 7.7 | $ | 4.5 | |||||||||||||||
Our debt portfolio as of June 30, 2026 was comprised of debt predominantly in U.S. dollars. The Company manages its floating rate debt exposure using fixed rate interest rate swaps to reduce the Company's risk of the possibility of increased interest costs. The Company has an aggregate $120.0 million notional amount of interest rate swaps that exchange a variable rate of interest for a fixed rate of interest of 3.44% over the term of the agreements.
Net Foreign Currency Transaction Loss
Net foreign currency transaction loss was $0.3 million for the second quarter of 2026 compared to $0.8 million for the second quarter of 2025. Net foreign currency transaction loss was $0.7 million for the first six months of 2026 compared to $1.0 million for the first six months of 2025. The favorable impact was primarily due to volatile currency markets driving larger than normal exchange rate fluctuations on small unhedged exposures in the prior year.
Income Taxes
The effective tax rate for the second quarter of 2026 was 26.3% compared to 26.0% for the second quarter of 2025. The increase was primarily due to unfavorable changes in the mix of forecasted earnings by country, partially offset by an increase in discrete tax benefits recognized in the second quarter of 2026.
The effective tax rate for the first six months of 2026 was 30.5% compared to 25.2% for the first six months of 2025. The increase was primarily due to higher discrete tax costs associated with share-based compensation recognized in the first six months of 2026, as well as unfavorable changes in the mix of forecasted earnings by country.
In general, it is our practice and intention to permanently reinvest the earnings of our foreign subsidiaries and repatriate earnings only when the tax impact is zero or immaterial. No deferred taxes have been provided for withholding taxes or other taxes that would result upon repatriation of our foreign investments to the U.S.
Liquidity and Capital Resources
Liquidity
Cash and cash equivalents totaled $76.9 million at June 30, 2026 compared to $106.4 million as of December 31, 2025. Wherever possible, cash management is centralized and intercompany financing is used to provide working capital to subsidiaries as needed. Our current ratio was 2.0 as of June 30, 2026 and 2.0 as of December 31, 2025. Our primary working capital, which is comprised of accounts receivable, inventories and
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accounts payable, was $375.3 million as of June 30, 2026 and $327.8 million as of December 31, 2025. Our debt-to-capital ratio was 40.1% as of June 30, 2026 compared to 31.2% as of December 31, 2025.
As of June 30, 2026, we had letters of credit and bank guarantees outstanding in the amount of $3.1 million, leaving approximately $289.4 million of unused borrowing capacity on our revolving facility.
Cash Flow from Operating Activities
Net cash used in operating activities during the six months ended June 30, 2026 was $26.2 million compared to net cash provided by operating activities of $22.1 million during the six months ended June 30, 2025. The change was primarily driven by lower operating performance and increased working capital requirements, including higher accounts receivable and inventory balances and lower accounts payable. Working capital levels and cash conversion were adversely affected by operational and process inefficiencies associated with the North America ERP implementation, and management remains focused on improving working capital efficiency as stabilization and fulfillment efforts progress.
Cash Flow from Investing Activities
Net cash used in investing activities during the six months ended June 30, 2026 was $15.4 million compared to net cash used in investing activities of $10.6 million during the six months ended June 30, 2025. The increase was primarily due to the acquisition of Clean Machine in the first quarter of 2026, partly offset by lower capital expenditures.
Cash Flow from Financing Activities
Net cash provided by financing activities during the six months ended June 30, 2026 was $11.4 million compared to net cash used in financing activities of $32.8 million during the six months ended June 30, 2025. The increase was driven by increased net proceeds from borrowing, partly offset by higher repurchases of common stock.
Newly Issued Accounting Guidance
See Note 2 to the consolidated financial statements for information on new accounting pronouncements.
In October 2023, the FASB issued ASU 2023-06 Disclosure Improvements: Codification Amendments in Response to the SEC's Disclosure Update and Simplification Initiative, which aims to clarify or improve disclosure and presentation requirements on a variety of topics and align the requirements in the FASB accounting standard with the Securities and Exchange Commission regulations. This guidance is effective for the Company no later than June 30, 2027. We do not expect the amendments in this update to have a material impact on our consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03 Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Topic 220) - Disaggregation of Income Statement Expenses, which requires disaggregation of certain income statement expense captions into specified categories to be disclosed within the notes to the financial statements, but does not change the expense captions on the consolidated income statement. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively to consolidated financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the consolidated financial statements. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.
In November 2025, the FASB issued ASU 2025-09 Derivatives and Hedging (Topic 815): Hedge Accounting Improvements, which includes amendments to more closely align hedge accounting with the economics of an entity's risk management activities. The ASU is effective for annual periods beginning after December 15, 2026, and interim periods within those fiscal years. Early adoption is permitted. The amendments should be applied on a prospective basis. We are evaluating the impact of the ASU to determine its impact on our consolidated financial statements and related disclosures.
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In December 2025, the FASB issued ASU 2025-11 Interim Reporting (Topic 270): Narrow-Scope Improvements, which clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements in accordance with U.S. generally accepted accounting principles. The amendment does not intend to change the fundamental nature of interim reporting or expand or reduce current interim reporting disclosure requirements, but rather aims to provide clarity and improve navigability of the existing interim reporting requirements. The update will be effective for interim periods within annual periods beginning after December 15, 2027. Adoption of this ASU can either be applied prospectively or retrospectively to any or all prior periods presented in the financial statements. We are evaluating the impact of the ASU to determine its impact on our consolidated financial statements and related disclosures.
In December 2025, the FASB issued ASU 2025-12 Codification Improvements, which aims to update the FASB Accounting Standards Codification for a broad range of topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. The ASU is effective for annual periods beginning after December 15, 2026, including interim periods within those fiscal years. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures.
No other new accounting pronouncements issued but not yet effective have had, or are expected to have, a material impact on our results of operations or financial position.
Cautionary Statement Relevant to Forward-Looking Information
This Quarterly Report, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 2, contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe,” “project,” or “continue” or similar words or the negative thereof. These statements do not relate to strictly historical or current facts and provide current expectations or forecasts of future events. Any such expectations or forecasts of future events are subject to a variety of factors. These include factors that affect all businesses operating in a global market as well as matters specific to us and the markets the Company serves. Particular risks and uncertainties presently facing us include: geopolitical and economic uncertainty throughout the world; our ability to comply with global laws and regulations; changes in foreign currency exchange rates; our ability to adapt to customer pricing sensitivities; the competition in our business; fluctuations in the cost, quality or availability of raw materials and purchased components; our ability to adjust pricing to respond to cost pressures; unforeseen product liability claims or product quality issues; our ability to attract, retain and develop key personnel and create effective succession planning strategies; our ability to effectively develop and manage strategic planning and growth processes and the related operational plans; our ability to successfully upgrade and evolve our information technology systems; our ability to successfully protect our information technology systems from cybersecurity risks; complications with our new ERP system; the occurrence of a significant business interruption; our ability to maintain the health and safety of our workers; our ability to integrate acquisitions; our ability to develop and commercialize new innovative products and services; and risks related to our business transformation and strategic initiatives.
We caution that forward-looking statements must be considered carefully and that actual results may differ in material ways due to risks and uncertainties both known and unknown. Shareholders, potential investors and other readers are urged to consider these factors in evaluating forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Additional information about factors that could materially affect our results can be found in Part I, Item 1A, Risk Factors in our annual report on Form 10-K for the year ended December 31, 2025.
We undertake no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except as required by law. Investors are advised to consult any further disclosures by us in our filings with the SEC and in other written statements on related subjects. It is not possible to anticipate or foresee all risk factors, and investors should not consider any list of such factors to be an exhaustive or complete list of all risks or uncertainties.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in our market risk since December 31, 2025. For additional information, refer to Item 7A of our annual report on Form 10-K for the year ended December 31, 2025.
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Item 4. Controls and Procedures
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2026 (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and our principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Controls
There were no changes in our internal control over financial reporting during the fiscal quarter ended June 30, 2026 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
Refer to Note 17, Commitments and Contingencies, to the Consolidated Financial Statements in the Company’s Form 10-K for information regarding the Company’s legal proceedings. There have been no material developments in any legal proceedings that require reporting in this Form 10-Q.
Item 1A. Risk Factors
We documented our risk factors in Item 1A of Part I of our annual report on Form 10-K for the year ended December 31, 2025. There have been no material changes to our risk factors since the filing of that report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Share repurchases are made from time to time in the open market or through privately negotiated transactions. On February 11, 2025, the Board of Directors authorized the repurchase of 2,000,000 shares of our common stock. On April 29, 2026, the Board of Directors authorized the repurchase of an additional 2,000,000 shares of our common stock. Under the 2025 and 2026 share repurchase programs, 564,293 and 2,000,000 shares remain authorized, respectively.
| For the Quarter Ended June 30, 2026 | Total Number of Shares Purchased(1) | Average Price Paid Per Share(2) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | ||||||||||
| April 1-30, 2026 | 2,459 | $ | 78.81 | — | 2,564,293 | |||||||||
| May 1-31, 2026 | 2,755 | $ | 86.50 | — | 2,564,293 | |||||||||
| June 1-30, 2026 | 301 | $ | 84.01 | — | 2,564,293 | |||||||||
| Total | 5,515 | $ | 82.94 | — | 2,564,293 | |||||||||
(1)The total number of shares purchased includes 3,059 shares withheld to cover withholding taxes related to the exercise of stock options and the vesting of restricted stock under employee share-based compensation plans and 2,456 shares acquired in connection with a swap option transaction.
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(2)The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposes a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. During the three months ended June 30, 2026, the Company reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in other current liabilities on the consolidated balance sheets. All dollar amounts presented exclude such excise taxes.
Item 5. Other Information
During the three months ended June 30, 2026, no director or officer of the Company adopted terminated
Item 6. Exhibits
| Item # | Description | Method of Filing | ||||||||||||
| 3.1 | Restated Articles of Incorporation | Incorporated by reference to Exhibit 3i to the Company’s report on Form 10-Q for the quarterly period ended June 30, 2006. | ||||||||||||
| 3.2 | Amended and Restated By-Laws | Incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K dated January 19, 2023. | ||||||||||||
| 3.3 | Articles of Amendment of Restated Articles of Incorporation of Tennant Company | Incorporated by reference to Exhibit 3iii to the Company's report on Form 10-Q for the quarterly period ended March 31, 2018. | ||||||||||||
| 31.1 | Rule 13a-14(a)/15d-14(a) Certification of CEO | Filed herewith electronically. | ||||||||||||
| 31.2 | Rule 13a-14(a)/15d-14(a) Certification of CFO | Filed herewith electronically. | ||||||||||||
| 32.1 | Section 1350 Certification of CEO | Filed herewith electronically. | ||||||||||||
| 32.2 | Section 1350 Certification of CFO | Filed herewith electronically. | ||||||||||||
| 101 | The following financial information from Tennant Company's Quarterly Report on Form 10-Q for the period ended June 30, 2026, formatted in Inline eXtensible Business Reporting Language (iXBRL): (i) Consolidated Statements of Income for the three and six months ended June 30, 2026 and 2025; (ii) Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2026 and 2025; (iii) Consolidated Balance Sheets as of June 30, 2026 and December 31, 2025; (iv) Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025; (v) Consolidated Statements of Equity for the six months ended June 30, 2026 and 2025; and (vi) Notes to the Consolidated Financial Statements | Filed herewith electronically. | ||||||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Filed herewith electronically. | ||||||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| TENNANT COMPANY | ||||||||||||||
| Date: | August 6, 2026 | /s/ Fay West | ||||||||||||
Fay West Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) | ||||||||||||||
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HIDDEN IXBRL
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