TENNANT CO
For the period ended Sep 30, 2026. Filed Nov 3, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2026 · Filed Nov 3, 2026
TNC$71.50+0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-06.
0000097134-26-000024
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-03.
0000097134-26-000029
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 97 previous paragraphs and 96 current paragraphs.
41 unchanged; 31 reworded; 24 added; 24 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (24)
Current report
During the third quarter of 2026, continued instability in the Middle East contributed to volatility in global energy markets, transportation routes, and supply chains. Although markets and supply chains continued to adapt, elevated energy, freight, and other input costs remained a source of pressure during the quarter.
Current report
Inflationary pressures remained elevated and varied by region and cost category, influenced in part by higher energy costs and ongoing trade-related uncertainty. In EMEA, economic conditions remained mixed, with demand and equipment volumes varying across markets and competitive pricing pressure continuing during the period. We also continued to experience higher input costs, including tariff-related material costs in the Americas. Foreign currency movements remained an additional source of uncertainty across the markets in which we operate.
Current report
We continue to take pricing, cost, and operational actions to mitigate these impacts and monitor changes in market conditions and input costs. While economic conditions have varied across regions and markets, persistent geopolitical, regulatory, and trade-related uncertainty, together with elevated costs, may continue to affect our business, financial condition, and results of operations.
Current report
We continue to operate in a dynamic environment characterized by elevated input costs, uncertainty in global trade and tariff policy, foreign currency volatility, and geopolitical developments. Customer demand and order activity have varied across regions, with strength in the Americas and continued interest in robotic and autonomous cleaning solutions, partially offset by softer conditions in certain EMEA and APAC markets. Operating performance will continue to depend on customer demand, regional market conditions, inflationary pressures, and our ability to mitigate higher costs through pricing, productivity, and other actions.
Current report
•Organic sales growth of 5.7% driven primarily by higher volumes in North America and, to a lesser extent, price realization, despite continued production and fulfillment constraints and softer demand in certain APAC markets;
Current report
•A net favorable impact from foreign currency exchange of approximately 0.1% as favorable currency movements in Latin America and APAC were substantially offset by unfavorable currency movements in EMEA.
Current report
Americas net sales were $221.0 million for the third quarter of 2026, an increase of 8.5% from the third quarter of 2025 driven by:
Current report
•Organic sales growth of 8.1%, primarily driven by higher volumes in North America and price realization, with additional volume growth in Latin America; and
Current report
•A net favorable impact from foreign currency exchange of approximately 0.4%.
Current report
Americas net sales were $633.7 million for the first nine months of 2026, an increase of 3.1% from the first nine months of 2025 driven by:
Current report
•A net favorable impact from foreign currency exchange of approximately 0.9%.
Current report
EMEA net sales were $82.5 million for the third quarter of 2026, an increase of 2.5% from the third quarter of 2025 driven by:
Current report
•Organic sales growth of 2.3%, driven primarily by price realization and higher volume across most European markets, partially offset by lower sales in Southern Europe; and
Current report
•A net unfavorable impact from foreign currency exchange of approximately 1.2%.
Current report
EMEA net sales were $255.9 million for the first nine months of 2026, an increase of 6.1% from the first nine months of 2025 driven by:
Current report
•A net favorable impact from foreign currency exchange of approximately 4.0%;
Current report
•Organic sales growth of 0.2%, as price realization more than offset lower volume, primarily in Southern Europe and export markets, with additional softness in certain other European markets.
Current report
•A net favorable impact from foreign currency exchange of approximately 2.7%.
Current report
APAC net sales were $54.6 million for the first nine months of 2026, a decrease of 3.0% from the first nine months of 2025 driven by:
Current report
•A net favorable impact from foreign currency exchange of approximately 3.1%.
Current report
Gross profit margin was 42.3% in the third quarter of 2026, down 40 basis points from the third quarter of 2025. The quarter included a $6.1 million tariff refund benefit, which increased gross profit margin by approximately 190 basis points. The underlying decline was approximately two-thirds attributable to North America and one-third to EMEA, primarily reflecting inflationary pressures, largely related to the Middle East conflict, and parts availability constraints that resulted in production inefficiencies and under-absorption, partially offset by pricing.
Current report
Gross profit margin was 40.0% in the first nine months of 2026, down 210 basis points from the first nine months of 2025, primarily reflecting ERP-related recovery costs, inflationary and operational pressures, and unfavorable volume and mix in EMEA, partially offset by pricing.
Current report
S&A expense was $290.3 million for the first nine months of 2026, an increase of $9.3 million compared to the first nine months of 2025. As a percentage of net sales, S&A expense for the first nine months of 2026 decreased 10 basis points to 30.7%. The increase primarily reflected higher employee-related costs, software licensing fees, unfavorable foreign currency effects, and investments in resources supporting robotics. These increases were partially offset by lower ERP modernization costs, the absence of legal contingency costs incurred in the prior-year period, and lower variable incentive compensation and bad debt expense.
Current report
The effective tax rate for the third quarter of 2026 was 24.7% compared to 23.2% for the third quarter of 2025. The increase was primarily due to a decrease in tax benefits from research tax credits.
Removed paragraphs (24)
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
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.
Previous report
•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.
Previous report
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:
Previous report
•A net favorable impact from foreign currency exchange of approximately 1.0%.
Previous report
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:
Previous report
•A net favorable impact from foreign currency exchange of approximately 1.2%; partly offset by
Previous report
•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.
Previous report
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:
Previous report
•A net favorable impact from foreign currency exchange of approximately 2.6%;
Previous report
•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.
Previous report
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:
Previous report
•A net favorable impact from foreign currency exchange of approximately 6.7%;
Previous report
•Organic sales decline of 1.0%, primarily due to lower equipment volumes in certain markets, including the UK and Export.
Previous report
•A net favorable impact from foreign currency exchange of approximately 2.8%.
Previous report
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:
Previous report
•A net favorable impact from foreign currency exchange of approximately 3.3%.
Previous report
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.
Previous report
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.
Previous report
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.
Reworded paragraphs (31)
Previous wording
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.
Current wording
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 September 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 acquisitions and 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.
Previous wording
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.
Current wording
Backlog remained elevated at the end of the third quarter, although it decreased modestly from the end of the second quarter. The timing and pace of further backlog reduction remain subject to supplier performance, material availability, changes in customer demand, and continued execution of our operational improvement efforts. We also continued to advance stabilization and optimization activities related to the North America ERP implementation.
Previous wording
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.
Current wording
On February 20, 2026, the United States Supreme Court ruled that the International Emergency Economic Powers Act (IEEPA) did not authorize the President to impose the challenged tariffs. Following the decision, the U.S. presidential administration imposed temporary tariffs under Section 122 of the Trade Act of 1974 for a 150-day period beginning February 24, 2026. The temporary tariffs expired on July 24, 2026, and subsequent tariff actions under Sections 301 and 232 and other statutory authorities have continued to create uncertainty regarding tariff rates and duration, refund eligibility, and the potential for additional tariffs or retaliatory measures.
Previous wording
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.
Current wording
During 2026, we submitted claims seeking refunds of certain previously paid IEEPA tariffs. During the third quarter of 2026, approximately $6.1 million of these claims were approved, and we received the related refunds. We recognized the benefit within cost of sales in our consolidated statements of income. Additional claims remain subject to legal, administrative, and governmental processes, and we cannot predict whether, when, or to what extent additional refunds will be approved or received.
Previous wording
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.
Current wording
We continue to monitor developments in U.S. and international trade policy, including changes in tariff rates and statutory authorities, refund procedures, replacement measures, and retaliatory actions. We are also evaluating sourcing, supply chain, pricing, and other commercial actions to reduce the potential impact of tariffs on our business, financial condition, and results of operations.
Previous wording
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.
Current wording
Fiscal year 2026 remains a period of operational transition as we focus on improving execution, optimizing the North America ERP platform, and realizing expected productivity and cost efficiencies. We continue to invest selectively in strategic growth initiatives while maintaining a disciplined approach to spending, working capital, liquidity, and capital allocation. The timing and extent of improved profitability will depend on our continued execution of these initiatives, as well as customer demand and broader macroeconomic conditions.
Previous wording
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):
Current wording
The following table compares the results of operations for the three and nine months ended September 30, 2026 and 2025, respectively (in millions, except per share data and percentages):
Previous wording
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:
Current wording
Consolidated net sales for the third quarter of 2026 totaled $322.3 million, a 6.2% increase as compared to consolidated net sales of $303.3 million in the third quarter of 2025. The components of the consolidated net sales change were as follows:
Previous wording
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:
Current wording
The 6.2% increase in consolidated net sales in the third quarter of 2026 as compared to the same period in 2025 was driven by:
Previous wording
•Acquisition related growth of 0.6% driven by the acquisitions of distributors in EMEA; partly offset by
Current wording
•Acquisition related growth of 0.4% driven by the acquisitions of distributors in EMEA; and
Previous wording
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:
Current wording
The 3.5% increase in consolidated net sales in the first nine months of 2026 as compared to the same period in 2025 was driven by:
Previous wording
•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
Current wording
•A net favorable impact from foreign currency exchange of approximately 1.9% primarily due to stronger average exchange rates for the euro, Brazilian real, and Mexican peso relative to the U.S. dollar compared with the prior-year period;
Previous wording
•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.
Current wording
•Organic sales growth of 1.1%, as price realization more than offset lower volume, primarily reflecting ERP-related production and fulfillment constraints in North America and softer demand in certain APAC markets, partially offset by volume growth in Latin America; and
Previous wording
•Acquisition related growth of 0.6% driven by the acquisitions of distributors in EMEA; partly offset by
Current wording
•Acquisition related growth of 0.5% driven by the acquisitions of distributors in EMEA.
Previous wording
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):
Current wording
The following table sets forth the net sales by geographic area for the three and nine months ended September 30, 2026 and 2025 (in millions, except percentages):
Previous wording
•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
Current wording
•Organic sales growth of 2.2%, as price realization and volume growth in Latin America more than offset lower volumes in North America, primarily reflecting ERP-related production and fulfillment constraints; and
Previous wording
•Acquisition related growth of 2.3% driven by acquisitions of distributors; partly offset by
Current wording
•Acquisition related growth of 1.4% driven by acquisitions of distributors; partly offset by
Previous wording
•Acquisition related growth of 2.2% driven by acquisitions of distributors; partly offset by
Current wording
•Acquisition related growth of 1.9% driven by acquisitions of distributors; and
Previous wording
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:
Current wording
APAC net sales were $18.8 million for the third quarter of 2026, a decrease of 2.1% from the third quarter of 2025 driven by:
Previous wording
•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
Current wording
•Organic sales decline of 4.8%, driven by lower equipment volume and unfavorable pricing across certain markets, reflecting softer market demand and distributor overstock, partially offset by volume growth in India; partly offset by
Previous wording
•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
Current wording
•Organic sales decline of 6.1%, driven primarily by lower equipment volume and continued softness in China, Australia, and Southeast Asia, together with modestly unfavorable pricing, partially offset by growth in certain markets; partly offset by
Previous wording
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.
Current wording
Selling and administrative expense ("S&A expense") was $92.7 million for the third quarter of 2026, a decrease of $3.9 million compared to the third quarter of 2025. As a percentage of net sales, S&A expense for the third quarter of 2026 decreased 300 basis points to 28.8%. The decrease primarily reflected lower ERP modernization costs and the absence of legal contingency costs incurred in the prior-year period, partially offset by higher employee-related costs, software licensing fees, investments in resources supporting robotics, and inflationary pressures.
Previous wording
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.
Current wording
Research and development expense ("R&D expense") was $12.4 million, or 3.8% of net sales, for the third quarter of 2026, with R&D expense as a percentage of net sales increasing 30 basis points compared to the third quarter of 2025. Research and development expense ("R&D expense") was $35.5 million, or 3.8% of net sales, for the first nine months of 2026, with R&D expense as a percentage of net sales increasing 50 basis points compared to the first nine months of 2025. The increase in both periods was primarily driven by continued investment in innovation, including robotics and autonomous solutions.
Previous wording
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):
Current wording
Interest expense, net was $5.0 million in the third quarter of 2026 compared to $2.4 million in the third 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 September 30, 2026 and 2025, respectively (in millions, except percentages):
Previous wording
Net Foreign Currency Transaction Loss
Current wording
Net Foreign Currency Transaction Gain (Loss)
Previous wording
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.
Current wording
Net foreign currency transaction gain was $0.2 million for the third quarter of 2026 compared to $0.0 million for the third quarter of 2025. Net foreign currency transaction loss was $0.5 million for the first nine months of 2026 compared to $1.0 million for the first nine months of 2025. The year-over-year improvement was primarily due to lower exchange-rate volatility affecting unhedged foreign-currency exposures compared with the prior-year period.
Previous wording
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.
Current wording
The effective tax rate for the first nine months of 2026 was 26.5% compared to 24.6% for the first nine months of 2025. The increase was primarily due to higher discrete tax costs associated with share-based compensation as well as a decrease in tax benefits from research tax credits recognized in the first nine months of 2025.
Previous wording
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 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.
Current wording
Cash and cash equivalents totaled $75.3 million at September 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 2.2 as of September 30, 2026 and 2.0 as of December 31, 2025. Our primary working capital, which is comprised of accounts receivable, inventories and accounts payable, was $389.0 million as of September 30, 2026 and $327.8 million as of December 31, 2025. Our debt-to-capital ratio was 39.5% as of September 30, 2026 compared to 31.2% as of December 31, 2025.
Previous wording
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.
Current wording
Net cash used in operating activities during the nine months ended September 30, 2026 was $14.3 million compared to net cash provided by operating activities of $50.8 million during the nine months ended September 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.
Previous wording
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.
Current wording
Net cash used in investing activities during the nine months ended September 30, 2026 was $22.0 million compared to net cash used in investing activities of $18.3 million during the nine months ended September 30, 2025. The increase was primarily attributable to cash paid for the acquisition of Clean Machine during the first quarter of 2026, partially offset by lower capital expenditures.
Previous wording
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.
Current wording
Net cash provided by financing activities during the nine months ended September 30, 2026 was $6.0 million compared to net cash used in financing activities of $36.0 million during the nine months ended September 30, 2025. The increase was driven by increased net proceeds from borrowing, partly offset by higher repurchases of common stock.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
•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