TNC 10-K & 10-Q changes, risk factors and insider trading

Changes in trade policy in the U.S. and other countries may adversely affect our business and results of operations.

Our business is exposed to a dynamic and uncertain global trade environment. Changes in U.S. or foreign trade policies, including the imposition of new, increased, or retaliatory tariffs, as well as potential amendments to trade agreements, may increase the cost of imported raw materials and components, disrupt established supply chains, and force us to seek alternative sourcing or manufacturing arrangements, which could be costly or time-consuming. Such measures could also reduce the attractiveness of certain markets, make our products less competitive, compress profit margins, and reduce demand, which in turn could adversely affect our financial condition, results of operations, and cash flows. The future relationship between the United States and other countries remains uncertain, and recent trade actions, including tariffs on multiple countries and retaliatory measures, highlight the unpredictable nature and potential volatility of the trade landscape. These developments may also contribute to broader financial market volatility, affect the availability and cost of capital, and create uncertainty in planning long-term investments or strategies. The ultimate impact of trade policy changes is difficult to predict and could materially and adversely affect our business, results of operations, financial condition, and prospects.

On February 20, 2026, the United States Supreme Court issued a decision concluding that the International Emergency Economic Powers Act does not provide authority for the President to impose tariffs. During 2025, certain tariffs that affected us were imposed under this statute pursuant to presidential executive order. The ultimate financial impact of this decision cannot be reasonably estimated at this time. The extent and timing of any potential recoveries of tariffs previously paid remain subject to further legal interpretation and administrative processes. We will continue to monitor developments and will evaluate the effect of the ruling on future reporting periods as additional information becomes available.

Adverse global economic conditions and geopolitical issues could have a negative effect on our business, and results of operations and financial condition.

Our business depends on a global supply chain for components, manufacturing, and distribution. Adverse global economic conditions and geopolitical developments, including armed conflicts, rising trade protectionism, economic sanctions, and political instability, may affect our operations. Such events include, but are not limited to, the war in Ukraine, the conflict in the Middle East, and tensions among major trading nations. These developments could disrupt or delay the sourcing, manufacture, or shipment of components and finished products. Such disruptions could impair our ability to deliver equipment to customers in a timely manner or at all, reduce product availability, and increase supply‑chain complexity. These factors could reduce our revenues, compress margins and cash flows, and impair our ability to meet customer demand. Because the timing, scope, and duration of geopolitical or macroeconomic events are inherently unpredictable, they could materially and adversely affect our business, financial condition, results of operations, and prospects.

In the first week of November 2025, we implemented a new enterprise resource planning (“ERP”) system in our largest region, North America, to replace legacy systems and support our long‑term operational objectives. The implementation caused disruption to our order‑management, fulfillment, and production‑scheduling processes from the the implementation date through November, with certain impacts extending into December and early 2026 as we stabilized system performance. These disruptions reduced our operating capacity, limited our ability to fulfill customer orders on a timely basis, created inefficiencies and increased costs in our operations, and negatively affected certain customer experiences.

Although core workflows have improved since the initial deployment and December revenue recovered from November levels, we incurred additional labor and support costs to stabilize the system. Certain impacts have continued into 2026 as we refine processes and enhance system performance. If we are unable to fully stabilize, optimize, and integrate the new ERP system as planned, or if additional issues emerge, our ability to meet customer expectations, operate efficiently, maintain effective controls, or achieve anticipated business benefits may be adversely affected.

See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — ERP System Implementation” in Part II, Item 7, of this Form 10‑K.

As noted above, in the first week of November 2025 we implemented a new ERP system in North America as part of a multi‑year project. The implementation caused operational and customer‑facing disruptions, and although we believe the primary issues have been addressed, the system continues to require refinement and optimization. Any significant disruption to the ERP system, or the need for additional improvements or upgrades, could require capital investments, divert key personnel, or cause short‑term operational impacts. Such outcomes could impair our ability to execute key initiatives and could adversely affect our sales, profitability, cash flows, or financial condition.

As a global company, we continue to be exposed to risks and uncertainties stemming from macroeconomic and geopolitical conditions. These factors include inflationary pressures, interest rate volatility, foreign currency exchange rate volatility, changes in capital markets conditions, and shifts in international trade policy. Collectively, these conditions create a dynamic operating environment that may affect the Company’s ability to drive growth, restore margins, and advance its transformation initiatives While overall inflationary pressures have generally moderated, the Company continues to experience a more concentrated and direct impact on the cost components of its products, which remain significant to its cost structure. Changes in trade policy, particularly tariffs, pose a significant risk to our operations. Tariff increases, changes to trade agreements, or potential retaliatory actions could raise supplier costs, weaken demand, and disrupt the Company’s operations. The Company has implemented, and expects to continue implementing, pricing actions, cost management initiatives, and supply chain measures to mitigate these pressures; however, such efforts may not fully offset the impact.

Global geopolitical instability continues to contribute to economic and operational uncertainty. Ongoing conflicts in Ukraine and the Middle East, rising tensions involving China and Taiwan, and the possibility of escalation in regions where the United States may be involved have increased the risk of wider economic disruption. These developments could result in supply chain volatility, logistics constraints, higher input costs, and changes in customer purchasing behavior. The timing, duration, and severity of these potential effects are uncertain and difficult to predict.

Demand trends across our major markets were mixed throughout the year. In China, after a period marked by uneven economic recovery and pricing pressure, organic growth returned late in the year. In EMEA and the broader APAC region, organic growth also improved in the latter part of the year, reversing earlier declines and reflecting resilience in select markets and effective responses to customer needs despite ongoing macroeconomic and competitive pressures.

Enterprise Resource Planning (ERP) System Implementation

In the first week of November 2025, the Company went live with the ERP system in its largest region, North America. The transition introduced unexpected challenges that constrained operating capacity post go-live, including order‑management and fulfillment disruptions, manufacturing scheduling issues, and reduced inventory visibility, particularly within Parts & Consumables and Service. The system transition also resulted in the loss of three weeks of machine order entry and parts shipping capability, as well as contributing to slower transaction processing and prolonged customer delays.

In response, the Company deployed cross‑functional recovery teams, implemented manual and system‑based workarounds, increased on‑site support, and adjusted production scheduling. Although December showed improvement as our mitigation efforts took hold, we were unable to fully offset the impact of the November disruptions.

While primary system issues have been addressed, certain customer‑related impacts and incremental support needs continued into early 2026, and we expect some temporary inefficiencies to persist as teams acclimate to the new platform and as optimization efforts continue.

The Company expects the macroeconomic and demand environment in 2026 to generally reflect the conditions experienced during 2025. Tariff‑related cost increases and inflationary input costs are expected to remain key elements of the cost structure. The Company has implemented targeted pricing and cost‑out initiatives intended to moderate these impacts, though the timing and magnitude of benefits may vary.

Following the North America ERP implementation in late 2025, certain operational inefficiencies and elevated support needs are expected to persist into the second quarter of 2026. As part of broader system‑stabilization efforts, the Company conducted a comprehensive physical inventory that required a two‑week shutdown of manufacturing operations in early January, which is expected to weigh on first‑quarter sales and costs. The Company also anticipates continued operating inefficiencies during the early stages of system stabilization, resulting in higher costs and margin pressure, most notably in the first quarter. As stabilization progresses and processes mature, the Company expects to transition toward a more normalized operating rhythm by mid‑year.

While these factors may influence near‑term results, operating margins are expected to improve through 2026 as ERP stabilization advances and as the cumulative benefits of pricing actions, cost‑management measures, and supply‑chain initiatives are realized. Margin performance is expected to strengthen gradually over the course of the year, with first‑quarter margins anticipated to be generally consistent with levels experienced in the fourth quarter of 2025 and improving thereafter as operational efficiency increases. The Company also expects ongoing margin pressure from tariffs implemented in the second half of 2025. To help offset these impacts, it has taken targeted actions across its supply chain and commercial pricing processes.

Additionally, the Company continues to invest in strategic priorities that support long‑term growth and competitiveness, including the ongoing expansion of its robotics portfolio and autonomous solutions.

•Organic sales decline of 7.3% primarily due to volume declines in North America, which lapped a significant backlog-reduction benefit in the prior-year period and was affected by transitional impacts related to the new ERP implementation. These factors were partly offset by price realization in the Americas and EMEA;

•Acquisition-related growth of 0.1% driven by TCS.

•Organic sales decline of 10.5%, primarily due to volume declines in North America, as a result of lapping a significant backlog-reduction benefit in the prior-year period, order fulfillment disruptions associated with our fourth quarter 2025 ERP transition, and softer underlying demand primarily in industrial equipment in the second half of 2025. This was partially offset by price realization; and

•Organic sales increase of 0.5%, due to price realization, partly offset by volume declines in Germany, Benelux, Scandinavia and France; and

•Inorganic sales growth of 0.3% driven by the acquisition of TCS.

Gross profit margin of 40.2% was 250 basis points lower in 2025 compared to 2024. The margin rate decrease was primarily driven by a shift in volume and mix dynamics. Additionally, the effects of the ERP transition in North America contributed to volume deleverage, as well as broader operational inefficiencies and cost impacts. Margin performance was also affected by higher material costs. The comparison to the prior year was further influenced by a significant backlog reduction in 2024 that carried a higher concentration of higher margin industrial products sold through direct channels. These factors were partially offset by favorable price realization, including pricing actions taken to address tariff-related cost increases.

Selling and Administrative expense ("S&A expense") was $374.8 million in 2025, a decrease of $17.1 million compared to 2024. The S&A expense decrease was driven by lower compensation-related costs and reductions in certain legal, integration, and restructuring expenses, partially offset by higher ERP spending and increased bad debt expense. As a percentage of net sales, S&A expense in 2025 increased 60 basis points to 31.1% from 30.5% in 2024, primarily due to net sales deleverage.

On October 31, 2016, the Board of Directors authorized the repurchase of 1,000,000 shares of our comment stock.

On February 11, 2025, our board of directors authorized the repurchase of up to 2,000,000 shares of our common stock.

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.

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 or 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.

For the 2025 annual goodwill impairment test for the North America and Latin America reporting units, we elected to perform a qualitative assessment to determine whether it was more likely than not that the fair value of each reporting unit was less than its carrying amount. In performing this assessment, we considered relevant events and circumstances, including industry, market and macroeconomic conditions, as well as company-specific and reporting unit-specific factors. Based on this evaluation, we concluded that it was not more likely than not that the fair value of either reporting unit was less than its carrying amount. Accordingly, a quantitative goodwill impairment test was not required, and no impairment of goodwill was recognized for these reporting units during 2025.

For the Europe, Middle East and Africa (“EMEA”) and Asia-Pacific (“APAC”) reporting units, we elected to bypass the qualitative assessment and perform a quantitative goodwill impairment test in accordance with our accounting policy. The quantitative analysis utilized a combination of the income approach and market approach, which reflect management’s current assumptions and inputs, including forecasts of future revenue, profit margins, long-term grown rate, discount rate, and EBITDA multiples.

The estimated fair value of the EMEA reporting unit exceeded its carrying amount by approximately $36.8 million, or 7.9%, as of the impairment testing date. The carrying amount of goodwill allocated to the EMEA reporting unit as of October 1, 2025 was $172.6 million. As the estimated fair value exceeded the carrying amount, no goodwill impairment was recognized. Although the EMEA reporting unit was not impaired, the reporting unit has a limited excess of fair value over carrying value and may be subject to future impairment if actual results do not meet projections or if assumptions used in the valuation, including discount rates or market conditions, deteriorate.

The estimated fair value of the APAC reporting unit exceeded its carrying amount by approximately $34.6 million, or 40.8%, as of the impairment testing date. The carrying amount of goodwill allocated to the APAC reporting unit as of October 1, 2025 was $15.4 million. Accordingly, no goodwill impairment was recognized for this reporting unit during 2025.

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.

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.

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.

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.

•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.

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.

•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

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.

•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

•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 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.

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.

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.