TNC Q3 deep dive: robotics momentum and ERP progress drive margin recovery
Industrial cleaning equipment manufacturer Tennant Company missed Wall Street’s revenue expectations in Q3 2026, but sales rose 6.3% year on year to $322.3 million. On the other hand, the company’s outlook for the full year was close to analysts’ estimates with revenue guided to $1.29 billion at the midpoint. Its non-GAAP profit of $1.40 per share was 42.9% above analysts’ consensus estimates.
Is now the time to buy TNC? Find out in our full research report (it’s free for active Edge members).
Tennant (TNC) Q3 2026 highlights:
- Revenue $322.3 million vs S&P analysts’ estimates of $330.8 million (6.3% year-on-year growth, 2.6% miss)
- Adjusted EPS $1.40 vs S&P analysts’ estimates of $0.98 (42.9% beat)
- Adjusted EBITDA $48.8 million vs analyst estimates of $40.38 million (15.1% margin, 20.9% beat)
- Revenue guidance The company reconfirmed its revenue guidance for the full year of $1.29 billion at the midpoint
- Adjusted EPS guidance Management reiterated its full-year adjusted EPS guidance of $4.13 at the midpoint
- EBITDA guidance $162.5 million at the midpoint for the full year, above analyst estimates of $150.5 million
- Operating margin 9.7%, up from 7.8% in the same quarter last year
- Market capitalization $1.17 billion
StockStory’s take
Tennant’s third quarter results were well received by the market, reflecting robust demand and notable improvements in operational efficiency. Management attributed the company’s performance to strong order momentum in North America, with order growth of 18% and broad-based equipment demand. CEO Dave Huml pointed to the expansion of the robotics business and progress in recovering from earlier ERP system disruptions as key factors supporting higher gross margins and improved production output. Management highlighted that, while certain challenges remain, the company’s actions to address supply chain bottlenecks and streamline operational processes are beginning to yield results.
Looking ahead, Tennant’s guidance is underpinned by expectations for continued order strength, further backlog conversion, and incremental improvements in ERP efficiency. Management is focusing on capturing the benefits from its ERP investment, expanding its robotics portfolio, and driving productivity gains across its business. CEO Dave Huml emphasized, “Our focus is increasingly shifting from stabilization and recovery to value realization, improving productivity, capturing operating efficiencies, and unlocking working capital benefits.” The company is also monitoring inflationary pressures and supply chain risks, which management expects to persist but believes can be managed through targeted initiatives.
Key insights from management’s remarks
Tennant’s management credited the quarter’s operational improvements to ongoing ERP recovery, order momentum in North America, and rapid robotics segment growth, while also addressing margin pressures from inflation and supply chain issues.
- North America order momentum: Order volume in North America grew 18%, driven by both industrial and commercial equipment demand. Management noted that recent product launches, such as the X2 and X16, have generated strong customer engagement and contributed to expanding the opportunity funnel for future quarters.
- ERP recovery progress: The company reported significant progress in addressing ERP-related inefficiencies, reducing associated costs from $10 million in the first half of the year to roughly $2 million in the third quarter. CEO Dave Huml stated that ERP challenges have largely shifted from broad disruptions to isolated operational issues, with the focus now on productivity gains and long-term value realization.
- Robotics business acceleration: Tennant’s robotics revenue surged 71% year over year to $37 million, led by the X4 and X6 robots. The introduction of the P1 VAC, the company’s first autonomous robotic vacuum, marks an expansion into soft floor cleaning and addresses a more price-sensitive segment through distribution channels.
- Margin improvement drivers: Normalized gross margin improved to 40.4%, supported by pricing realization and operational execution, though still pressured by material and logistics inflation tied to macroeconomic and geopolitical factors. Management cited easing parts shortages but acknowledged ongoing production inefficiencies.
- Strategic product portfolio expansion: The rollout of the new Performance Series (P-Series) robots, including the P1 VAC, positions Tennant to serve both premium and value segments. The company leverages its partnership with Brain Corp for advanced autonomy while targeting accessible price points for broader market coverage.
Drivers of future performance
Tennant’s outlook is shaped by sustained demand in core markets, further robotics expansion, and the ongoing transition from ERP recovery to operational optimization, tempered by persistent cost inflation and supply chain risks.
- Backlog conversion and order pipeline: Management expects that converting the existing elevated backlog, along with continued strong order activity, will be central to meeting fourth quarter and full-year targets. CEO Dave Huml noted that the company’s opportunity funnel and new product orders provide increased visibility into future sales.
- Robotics scaling and new launches: The growing robotics business, particularly with the launch of the X2, X16, and P1 VAC models, is anticipated to contribute incremental revenue and broaden Tennant’s addressable market. Management aims to reach $250 million in robotics revenue by 2028, with new products designed to appeal to both existing and new customers.
- Inflation and supply chain headwinds: Persistent material and freight cost inflation, as well as ongoing component availability challenges, remain risks to margin improvement. The company is implementing cost management, sourcing, and productivity initiatives to mitigate these pressures but acknowledges that not all cost increases can be fully offset in the near term.
Catalysts in upcoming quarters
In coming quarters, the StockStory team will watch (1) the pace of backlog conversion and new product adoption, particularly in robotics; (2) progress on ERP-related productivity initiatives and their impact on operating leverage; and (3) management’s ability to navigate ongoing cost inflation and component availability challenges. The trajectory of the robotics business and execution on targeted market expansion will also be key markers for Tennant’s financial performance.
Tennant currently trades at $73.18, up from $68.73 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
High quality stocks for all market conditions
WHILE YOU’RE HERE: Top 9 Market-Beating Stocks. The best stocks don’t just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.
But our AI platform says the party isn’t over. Find out which 9 stocks made the cut this week — FREE. Get Our Top 9 Market-Beating Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+271% between June 2020 and June 2025). Find your next big winner with StockStory today.