Tennant stock plunges 25% after it discloses flawed software rollout

The rollout of a major new software system at Eden Prairie-based Tennant caused major manufacturing disruptions and led to a quarterly loss.

As a result, the company’s stock lost a quarter of its value on Feb. 24 after it shared disappointing fourth quarter and year-end results. It’s the biggest one-day drop in Tennant’s share price in 15 years. Shares recovered a bit to close at $63.02, down 23.4%.

Tennant, which makes floor cleaning equipment, installed a new $98 million enterprise resource planning system, or ERP, to connect information about operations across the company.

It was supposed to drive greater efficiencies. Instead, it caused disruptions that included problems with orders, manufacturing and shipping and required manual workarounds, company officials said.

When the company rolled out the system in Asia in September, problems were fixed within a week. But after the North American deployment, it quickly began having issues fulfilling orders, determining accurate shipment dates and serving customers.

“The complexity and scale of the North American business created unique challenges,” said CEO Dave Huml in the earnings call with investors.

Tennant still expects long-term benefits from the new system and Huml said issues in the rollout are fixed, but it will take up to the first half of the year to deal with all the issues.

“We remain in hypercare in North America, and while teams are identifying and fixing issues daily, the system is becoming more reliable and improving each week,” Huml said.

Investments in ERP systems can be expensive and testing and rollout can take more than a year. However, they are tricky to implement and many companies have stumbled over companywide rollouts.

Tennant also said they are pausing the rollout of the software system to its Europe, Middle East and Africa region so it can concentrate on continuing to improve functions in North America.

The software rollout marred an otherwise strong 2025. The company said it rolled out four new products and saw good adoption.

It also launched a dedicated robotics group and expects it to achieve $250 million in sales by 2028.

Sales declined 11.3% to $291.6 million, much attributed to the software rollout but some also to volume decline. For the year sales declined 6.5% to $1.2 billion.

The company estimated the difficulty with the ERP rollout lead to a $30 million hit on fourth quarter sales and a $22 million impact on adjusted earnings.