Financial Data and Key Metrics Changes - In Q4 2025, Tennant reported a GAAP net loss of $4.4 million, compared to a net income of $6.6 million in the prior year period [21] - Full year 2025 GAAP net income was $43.8 million, down from $83.7 million in 2024, primarily impacted by a 6.5% decrease in net sales and a contraction in gross margin [21][22] - Adjusted EBITDA for Q4 2025 was $25.6 million, a decrease of $21.8 million from the prior year, including an estimated $22 million negative impact from ERP implementation [26] - Full year 2025 adjusted EBITDA was $167.4 million, a decrease of $41.4 million from the prior year, with an adjusted EBITDA margin of 13.9%, down 230 basis points from the previous year [29] Business Line Data and Key Metrics Changes - Orders were reduced by approximately $15 million due to ERP challenges, impacting parts, consumables, and equipment sales [9] - Equipment sales declined 11.6% year-over-year, while service grew 4.7% and parts and consumables were modestly higher [28] - The Americas experienced a 22.3% organic sales decline, primarily due to the ERP implementation impact, while EMEA saw a 5.1% increase in organic sales [25] Market Data and Key Metrics Changes - EMEA grew 5.1% year-over-year, supported by price realization and steady commercial execution across multiple markets [13] - APAC returned to improved performance late in the year, with growth in Australia and India offsetting softer demands in parts of East Asia [13] - The Americas faced volume declines influenced by the prior year's backlog reduction and softer industrial demand [28] Company Strategy and Development Direction - The company is focusing on restoring full operating capability in North America and driving efficiency improvements post-ERP transition [17] - A dedicated TNC Robotics group was launched to accelerate the adoption and scaling of autonomous robotic cleaning solutions, aiming for $250 million in AMR revenue by 2028 [15][16] - The company remains committed to disciplined capital allocation, including share repurchases and dividends, while pursuing strategic acquisition opportunities [14][33] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the significant impact of the ERP transition on operations and customer relationships, emphasizing a commitment to recovery and stabilization [41] - The company expects challenges associated with the ERP transition to ease through the first half of 2026, with a focus on productivity improvements [17][35] - Management expressed confidence in the fundamentals of the business, highlighting strong global execution and a healthy balance sheet [41] Other Important Information - The company invested approximately $98 million in the ERP program since 2023, with expectations for 2026 spending to exceed $20 million due to additional stabilization needs [11] - The company recorded an incremental accrued expense of $6 million related to a legal contingency for an intellectual property dispute, which does not impact product sales [24] Q&A Session Summary Question: Is the ERP system stable as of now? - Management indicated that the system is stable in terms of core processes, with ongoing efforts to improve efficiency and stability [46][47] Question: What is the outlook for the $30 million sales impact from the ERP issues? - Management stated that approximately half of the $30 million impact is considered unrecoverable, with $15 million in backlog [48][51] Question: What are the objectives for the TNC Robotics group in FY 2026? - The group aims to accelerate product development, improve adoption efficiency, and generate demand, targeting $250 million in sales by 2028 [56][58][62] Question: How will gross margins progress through 2026? - Management expects Q1 gross margins to be comparable to Q4 2025, with anticipated year-over-year gross margin expansion as operations stabilize [63][64]