TNC - Earnings call transcript Q2 2020

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Operator

Good morning. My name is Christine, and I will be your conference operator today. At this time, I would like to welcome everyone to Tennant Company's 2020 Second Quarter Earnings Conference Call. This call is being recorded. [Operator Instructions] Thank you for participating in Tennant Company's 2020 Second Quarter Earnings Conference Call. Mr. is, meeting today's Beginning William Prate, and Planning Analysis Global Director Relations for of Investor Financial Tennant and Senior Company. Mr. Prate you may begin.

William Prate

Thank welcome to Earnings morning, and Analysis, everyone, Second Financial Relations. of Good William XXXX Investor Director I'm Conference you, Quarter Call. Planning Senior Global and Tennant Christine. Company's Prate, and

quarter Chris broader Tennant's operations, update making After on and accompanies Andy CFO. impact call and and we will CEO; our our me coronavirus will website Cebulla, Huml, strategy, Chief Investor Joining pandemic. discuss note interim call Dave our financials. Killingstad, our will this Andy, conference brief today Relations Dave we Please will presentation regarding the performance our of open the you progress on second our our at you are, business and President and slide Operating Officer; Chris available remarks, the is investors.tennantco.com. Today, to we're will cover questions. enterprise a on

be documents, risks described of results. our our statements. Securities description we those that file release in remarks future Safe performance. Before you and encourage a contain to the from results of expectations begin, may in These to our this with company's uncertainties Harbor for the and forward-looking statements Exchange contained uncertainties statements, particularly differ that, are may uncertainties, risks answers our and may and are please those risks review Such to subject questions we the the actual news and regarding morning, advised and statement, materially today's our the documents and Commission. affect We

call, items. include, we conference discuss will on that certain non-GAAP or exclude Additionally measures this

these a to includes measures and non-GAAP GAAP quarter comparable earnings results. release reconciliation Our XXXX measures second our GAAP of

posted earnings our Relations release Investor at on also Wire, morning is was investors.tennantco.com. Business Our website via and this issued

to Now, call the I'll turn Chris. over

Chris Killingstad

staying safe by you this providing Tennant customers keep all, everyone XXX-year its pandemic. we customer and us has deep are during history, and for affects to us a healthy. today. our William, parts and demonstrated their health equipment, commitment hope global and Thank to crisis the honor commitment facilities In safe clean you joining and you, thank The that service service. We need

health a what priority top much our how discussing we're partners. of and the financial to is will as as and fluid and results, employees, situation. unpredictable seeing safety we Our what In and customers we about can context we're to today's provide be continues responding business

the in revenue in patterns While in our down saw year-over-year, that June are was significantly our we fact in we quarter less April than by what consistent with second July decline was and are order the encouraged June. Furthermore, May.

we the the profitability not do and actions globally, second to possible, At savings, some board for laws government programs in In when implemented pay As we applicable in we year. will and the recover. reductions included we our half and actions, we discretionary time, manage quickly, combination where processes while of Because the work-from-home implemented expect a these project programs of and our our for second and most cost second to employees which only, furlough the preserving travel appropriate. adjusted costs measures flow, of These incentives participated expected consistent where in ramp-up reduced also regulations. work executives of reduced directors. quarter for actions senior schedules with took to cash our eventually same limited and management our sizable last call, of ability markets global quarter, our reflect trips business-critical outlined certain repeat spending, non-essential

times. of managing of our small amount on is company Operating position no through determination, these Tennant commitment sacrifice of am a with I health certainly our consistent by uncertainty. that any Furthermore, environment emerge. our have to top part our team are of trying personal dedication reflect they successfully they in the the but a period this Huml Dave employees, members dedicated However, responded during way our emerge positioned have not to led further with year. resilient anticipate through cost actions the in need crisis And we and reductions. second as result, for and continues a team worldwide in proud staying successfully will a us our broad-based do from Tennant of half as on strong they this response the resourcefulness. COVID to support challenge, of is navigate COO, a the locations issues These

continue last we and carriers. experienced our partners, no to-date, we've And closely to customers, disruptions. with work As quarter, we outlined supply chain major

provide to strategy, shift want to enterprise the we we current on particularly an work our financials, to our we environment. update navigate as Before

I the more For turn on Huml. that, over to Dave will call

our competitive have which enterprise where pandemic In and winning, initiatives strategy team, of leads building heading the response addition Dave we to our for complexity advantage, and our scalable supports processes the key up dedicated innovating locations with growth. world, associated reducing profitable around

to as our with has within ahead. areas, I The please initiatives but drive through control. to the is launched not mentioned to our not quarter, last the well. because enable efforts can much pandemic, and go model a entirely these operating As continue accomplish emerge Dave, of in will only us help derailed manage pandemic what stronger we we us have

Dave Huml

you, Chris, hello Thank everyone. and

As start push the to it can central Chris with grow we enterprise noted, ultimately because recover. markets is forward as how to we business to continue strategy, our

Although, actions strategic significant reduction continued took expense the resource our second in and quarter, we we to efforts. fund

customers and new product in will stock This return year, normal. our volumes of our globally, operational in pricing year, ordering for improves relationship the simplify made last to most first and portfolio ease are XXXX all XXXX manufacture important took that we strategic to we with to products with analyzing announced reaping we of actions of In significant as the that, made fast ability us I'd in and half In margin-diluting results. We've like are expect and how progress established have in and from you. for to margins with from exits which benefits highlight popular progress them we've configurations deliver product will lead addition actions changes last gross we improved further delivery. we keeping standard and business for our to products service to allow our improved machines, sell, our our fact,

our acquired market and combined which our the serving Tennant begin in provide China, profitability to improve focus local will have order efficiency channel on that potential Specifically while XX/XX into a structure to we wholly optimization Japan in maximize business, footprint products, consolidation part best this go-to-market very of This organization align time, the our us distribution restructured our leverage infrastructure in in channel profitability. channels segment using channel. China and focusing This early new same new geographic also and our customers, the At we've we North leverage to base account as customer portfolio we're Gaomei will and local to better partners us to important of competitive market. of the indirect customers. and us enable to XXXX. discounting share of market. business American cost will singular partners. in helps strength of brands This our local how in best allow It methodology unwarranted reducing strategic the on In a initiative, to manufacturing the

consolidated deliver and leverage of the China the Additionally, chain business. supply operations to on footprint profitability will synergies our improve cost

by markets Tennant both and which first positive competitive and In this is terms product. the this these floor like enable time IPC the result we've offer these IPC small and branded and Tennant restrooms, IPC world. to entry-level from mop branded food year. sweeping shops. which SXX well sweeper, price, battery suited space customers of relatively launched looking scrubbers warehousing. under This our and products are an brands. earlier launched beverage a industrial products features of marks of us CSX products, excited design These in small professional alternative customers a are like Both an platform space new well we spaces the tell efficient lithium the CTX At the to new products to technology for they and for coffee and and have launch and restaurants attractive that cleaning ride-on COVID-XX a our markets cleaning new recently we ion we're the in floor Also, bucket applications fared and despite pandemic response vertical leveraged

robot we're of on EMEA North American our began markets. to TXAMR. Lastly, mobile cleaners autonomous in customers and We the success APAC introducing the building

our team our model despite show While world are our working turn pandemic to interest Andy strategic pandemic-related our discuss towards over operating thank our and our hampered AMR members plans business the and and our very remain improving the who offering. to expand now hard the demonstrate that to track have simplifying to I will Overall, in for we hard high on customer work will their and restrictions around call regard. the aggressively financials. want remains efforts I AMR, pilot Tennant

Andy Cebulla

basis. comments and fully are Thank note any hello Dave, non-GAAP that you, earnings diluted GAAP share references per a everyone. Please on today my in to both and

noted, impact reflect the of coronavirus results pandemic. Tennant's negative quarter Chris second As the

decline The quarter reported the May the sales quarter For slowdowns dropping sales XXXX disruption in of $XXX customers' in XX% in currency June. the and the XX.X% second our two first widespread declined effect, months quarter and amid in was decline end to impact approximately sales greater exclude of in Tennant in the the during quarter. net quarter the result respectively of of down markets the of the month last The April operations. which the XX.X%. revenue Organic of some in year-over-year. for to second than continued was XX.X% XXXX, sales in million, XX.X% sales of decline Organic with declined

are in currently level in are decline the seeing we with order that saw addition, In consistent we rates July a June.

encouraged are rate the year that of we these whether experienced of the quarter, the of we the second trends in the by say declines continue pandemic. the in cannot month-to-month half will reduction sales given in unpredictability we While the

Turning and $XX.X $X.XX earnings line $X.XX year nonoperational period. million $X.XX or We expense million ago $X.XX amortization to EPS the down items which second reported compared in totaled the $XX.X or in share year. quarter. bottom the from per per net for with prior the excludes share of certain Adjusted

geography. quarter closer second a Let's our by results take at sales look

reminder, or East sales overall and and both America. which which we Asia-Pacific Americas, America declined North markets. Japan, and geographies, down across which in covers America of Australia Europe a organically with the group Africa; Latin Asian XX.X% America; XX.X% into includes EMEA, the all Americas includes three China, other the declines Latin As North and and Sales Middle

recovery Europe April the While service Tennant's negative Africa with more XX.X% were with in to and consumables approximately directives. year-over-year, quarter in North region in accordance effects early by pandemic America, this and were Middle Shutdowns Tennant's Overall, to local the in Asia decreased XX.X% broad autonomous businesses organically, the pandemic. our region or declines and in impacted. were we due due continued the machines for to East businesses of to and the decreases XX.X% cleaning our Japan primarily in experience or of sales in less the organically, result were offset Asia-Pacific economic demand all for and pandemic. from as significant down days government of business of and while Italy was entire strong manufacturing along than customer Southeast second facilities XX.X% categories the impact parts region. due comparatively export-dependent the widespread down China eight the closed Sales slower were a in Sales across in in primarily facilities

the year-over-year, revenue helping was down consumables and their meet were customers from equipment the period. approximately XX% sales reflects over parts equipment same down cleaning needs and efforts maintenance during service in down This and revenue XX% While Tennant's XX% our is pandemic.

pandemic. gross margins. year-over-year from furloughs, benefits and actions related and and well cost These were government quarters during and as our related strategy, to XXXX pricing of employee response actions XX.X% of margin second cost primarily XX.X% hours Now increase included The to respectively. the Adjusted enterprise to work the as reduced initiatives, reflects including onto programs. XXXX Tennant's

Turning expenses. to

During mainly incentives. to were efforts, XX.X% the our S&A sales, second programs cost a management compared of containment period, and net result from with quarter, of government XX.X% the benefits year-ago adjusted as adjustments expenses in

already a not XXXX to of As spending the we response in from S&A an Combining including results, of million, savings implemented second discussed, approximately part quarter or percent to work management programs, furloughs adjusted compared was pandemic. $XX.X the of XX.X% discretionary adjustments of the will Chris management sales, quarter We actions of future EBITDA these as savings careful our with our noted, sales, benefits is XXXX. and in estimate the increase, in in reduced of other to repeat reductions $XX.X that sales, schedules, of quarter. important million, incentives second The was or cost attributed that million we employee and the quarters. $XX government XX.X%

As release of second year allowance had the XXXX. a as adjusted amortization XX.X% for we which the quarter, the of an our ago the mentioned, in to with a period, compared In EPS, partial adjusted expense, the excludes tax was XX.X% tax quarter on XXXX, non-operational $X.XX effective of in second certain our compared deferred In realized items benefit, period. $X.XX with ago quarter valuation assets. our the of second and in rate, tax company rate discrete due tax year

cash the flow to primarily of the from generated million quarter, repaid performance. million in XXXX, flow, from a and precautionary business Tennant drawn million second quarter capital allocation the items. driven had measure balance operations, our company revolver. Also previously second as in sheet $XXX $XXX the In cash now $XX.X by Turning we

in $XX.X equivalents XX, had funds undrawn $XXX cash and revolver. June approximately As million on our cash of million we of and

Lastly to guidance. turning

year ability previously and on pandemic. total for the up necessary the we As as Operator, to the cannot guidance the to and the financial had businesses ongoing announced, quickly At please preserve the open do that, we remainder is impact still recover. liquidity markets XXXX. time, XXXX, full sufficient predict fiscal With ramp call results will maintain our withdrew due this Nevertheless, will on now to nature ahead. uncertain provided February of of our XX, to we we what questions. to go we

Operator

Thank Shlisky the comes question you. [Operator from Colliers Mike line Securities. Instructions] of Your from first

open. is line Your

Mike Shlisky

and you Thank morning, everybody. good

Chris Killingstad

morning. Good

Dave Huml

Good morning.

Mike Shlisky

Just it will not you basis XX, on then, part lump the I come to the one must back? to back quarters, And on an that come will guess, on the just gradually got million repeat there. bold is a I sure, cost maybe, quarter, other in will basis? -- annualized been million quarterly in comments, future your have it reductions in expense actions, right. I wanted start $XX here all make Andy, about big that sales slide secondly, come third kind that the savings in first, really, that $XX of, and as or or back

Andy Cebulla

Mike. question, your for thanks So,

result. So, the savings off, the in $XX in our the experienced, million we we had that first quarter, helped is the EBITDA second quarter that boost

And question. so, part your that's the first of

And took in you The that able expenses. to actions, advantage quarter were not furloughs quarter, is expecting reduce government that repeat we reductions second part, $X future the savings to was we million of That we're about of. the take to things like of the in example of our in that think quarters. the another savings some work or programs employee

we quarters. actions at just any not we're those that It’s planning see future the examples. wouldn't couple broad-base savings current kind to Does of sense? of make Chris in mentioned, expect As a time, so

Mike Shlisky

would if orders than this I better then, better quarter that'll have offset and at little a okay. some of costs least Okay, you suppose those get obviously, coming back. sales bit

So, to I line less, million won't get lumping top together. be guess, it once just $XX maybe you

that's Okay, fine.

comments get additional kind some an the your wide known kind are that was methodology that are basic using also of efficiencies kind using it outside that just today as get some going? benefit of in of of a business. or implementing Dave, -- I'm to strategy, kind principles mentioned think, you You mention to with firm you I kind kind of some of broad some XX/XX the maybe of of curious, scale very well are basis a or you out company-wide

Dave Huml

methodology, Thanks for going in educated but just forward. toolset, question, Mike. XX/XX tools is We've our one improvement your we we Yes. have business of for ourselves many it as the on analyze

using to we're say, would each in I that's most -- strategy. tool to drive appropriate our instance using we’re So us the available

Mike Shlisky

way consultant-given it? operation say not large, that own like, improvements. to a a scale it's So, Is your plan, wide company-wide just

Dave Huml

a of holistic using is The strategy framework I that's the broad enterprise and articulated are characterization. a think within that tools we're that in past the number framework. really we've fair there GPS

Mike Shlisky

also you products. a new a restaurant. of organic U.S, very your large Is always your smaller shop Okay. stuff ask are to airport, larger was in some how or in on I'm an or products? for the really square there footage real I within compact wanted opportunity and those the compact I North America like store, about penetrated small coffee Especially, market? curious, thought that restaurant end meant

Dave Huml

in question. back our space service years smaller for started Great markets channel's to lower also our reach Historically, our applications environments those within this small Yes. or customers. recognized larger to been expanding these spaces We of share both portfolio and has some our customers. and ability those

really CT into And the our was to improve the narrative, next advances market that in marketplace our product just share is important in mentioned the step so, the X I there.

Mike Shlisky

go.. -- one Perhaps Okay. yes, last

Chris Killingstad

historical become bucket I so getting are job. move restaurants, them. a new point our right This is the very way enter. products think to a these it's vertical fast price that historically, And becoming part that Dave we a Chris. convenience I we've the and was market most been also product in more I'd really no interest than where in And interest, a excited challenge, the stations is always I with complicated that high cleaning mechanized entry-level for right would is it's many price we where it's as of very And product stores, been segment customers said, away It's But say, our especially little just if, out the been to professional underrepresented. the today. to think interested market two cleaning, think priority to right a food from at now figuring at point. little order gas I we We've -- markets. creating in, mop that's have because actually getting have always presence some cases the a does have that when

down potentially road. So, a exciting it's opportunity, the

right thing it. it's foray going our to this away, off not take into first see You're but

Mike Shlisky

of is promising. very it. square Got a footage, lot so That sounds

Chris Killingstad

Right.

Mike Shlisky

cleanliness sorry, very recognize and you very cautious with on piggy was you do quarter strange – And back would workplace maybe call, just the public in a now? theory going of But that This folks the be it I time for could focused there you, that past areas in quarter market. can Is Chris. in sick my recall I us update perhaps to question forward. of was and looking there theory the that millions becoming people there a of the the kind said, reality getting things that more last Are out you from tie-in past? in hearing first folks onto for what a out clean increased businesses dying a in to today, on in than worldwide. this you're lot here? And more lot the customers with pandemic, an

Chris Killingstad

more Well, standard now, I be majority adhere least protocol. play not And a portfolio bode We priority clean to around for at world marketplace on of that part customers of the a has also cleaning, do will that, to and yet, longer cleaning seeing products. are, product bay. to that, put And our very But returned, think, place. using which the people to hold AMR. a in floor their we of focused higher not should chemicals devices well at for medium the it We're believe think that in in still will like the cleaning yet bode well protocols right remains cleaning it pandemic term high-touch theory. the robust our for sanitation, products out

customers that's And our influence starts in that this benefit. we're news good more sales So strong with up benefit starting our because not were having May. where the direction, customers because the very them. the than so the relationships see open higher mostly seeing trying will the We're standard to we showed to when clean. And But we're that first that seeing from we're and have that them of less turn. were, we to they in June, this down trend of with April in be And around we're world. is we to is yet a our intimate conversation and know,

Mike Shlisky

sounds great. Thanks much. hop queue. That's so will I it. in Got back

Operator

Your CJS next line the question Securities. comes of Chris Moore from from

You line is open.

Stefanos Crist

calling Crist in Good morning. This is Chris. Stefanos for

Chris Killingstad

morning. Stefanos. Good Hi,

Stefanos Crist

Good morning.

declines versus that severe, were June? mentioned, versus and You less June April maybe us could than declines May April, for in quantify the you possibly in

Andy Cebulla

And the consistent They XX%. said was low-XX% was the well trend Yeah. on in sales. June And just upper-XXs mentioned the April in we're our reductions as think in And reductions level. XX.X% orders in seeing remarks, in I sales. is with June Chris we're May July, as

Stefanos Crist

Got facing besides Tennant in it. uncertainties, of biggest Thank And COVID-related the the shutdowns, any you. are what second year? half the

Chris Killingstad

No. that, customers it. of many been fact have It's We closed our said down. the

are Some cautiously opening.

priority running disinfectant are remain not a this as do they cleaning at capacity. high-touch does the Standard reduced at cleaning. floor stage Some

think business. uncertain business need those this into to to manage stabilize time through very second detailed on especially bumpy pull planning for scenario closedown going in impact anticipate it's react would our And of have I the business. the uncertainty a trend to the But what triggers the the to U.S. we is have of So in prepared into And obviously done that improve. disruption, not know half. and market of a are half we we pretty second to if things manner going be a in be of out. how market, another ride could were does a a each significant course significant quickly, to lot the doing play the And broad-base is also host the elsewhere that necessary a that cases in we there or whole biggest we're

Andy Cebulla

Yeah.

I really the so to recovers about, of It's quickly recovery. really outside think, of going right the you dominant some coronavirus. at. us really at in it our pace pace we quickly Just that, just know -- how looking to open on they're and it's markets. I kind how asked build of we're invest end now with risks, customers that our to the quickly It's how capital. That's look

Chris Killingstad

say performing a I the other were we basis Right. customer was on segments case. thing, the retail, the what quarter, better in warehousing, And Manufacturing is, logistics. remains relative if looked would said, it very you essential last remains slow. at That

building is the bump first our Our service helped to That's have also has disinfecting Hospitality which really that the repeated shifted high-touch business. this in and us, contractors healthcare down cleaning. impacting that initial we not second had in an quarter. quarter

a down So us. remains healthcare as for vertical market

So we shift. haven't seen much

markets. Our that to begin some improve. life will hope activity happen some to see that I is these that, vertical we're in think to some other our of starts beginning Once trajectory

Stefanos Crist

make Thank That sense. it. Got you.

Operator

Rodriguez question of next from comes Capital Your Markets. from Stonegate Marco the line

Your line open. is

Marco Rodriguez

morning. for taking you Good Thank my question.

Andy Cebulla

Good morning.

Chris Killingstad

Good morning.

Dave Huml

Good morning.

Marco Rodriguez

talk to specifically, complexity. of on your reduction wanted the enterprise operational a strategy the I little about, bit

roadmap. where far strategy? towards as far now, lines as your did end in right Are specific product are establishing the area you terms working some was things you're for if we on I in then more talk on of couple manufacturing. you a just that exiting could maybe of or and early highlighted the You mid-cycle or that you configurations still obviously wondering some you innings? as as of standard Are

Dave Huml

to is Marco. I'll Thanks, your This question. Dave. respond

our business. we're over of in late financial activation this journey, it and we the the Where -- XXXX we the strategy of means foremost, deliver XXXX enterprise is represents very first XXXX years and the at in on to targets. really GPS expect committed XXXX. we First And to primary developed are long-range and this strategy the through year excited full the

four recent And the still company and this with execution the the really business challenges that committed the is in very in execution years, I the of developments details leadership possible what's more team our given of you midst with strategic What say the so in we by including strategy. highlighted operating some roll the is entire our We're within expect early the of to to would continue forward of and more narrative as was we're for days even we pandemic. within I to horizon strategy. the have encouraged

Chris Killingstad

to is to deal build customer's at believe which price. and just if shorter cost We've products really big out both that. more and compete really effectively from launched our on look also deliver to some And take lead a a with overtime. of standard on we perspective our just It you configurations, may that, times ability

Our hope is that force of That our of fully educated mean the have maybe they means doesn't that machines that XX% it. end Tennant the have base. fully the standard so It actually we've September sales configuration. the by that's educated customer

this the flowing starts is portfolio through. that part our product So of

work we're still work way. the in benefit the shown wouldn't really Dave I of progress So Japan, And progress. that's Tennant that's on a maybe And yet. readout seeing that mentioned, and seeing Gaomei a piece, I significant two benefits now. as integration the any in done in work don't think because definitely we've in right China any XXXX Dave businesses anticipate those until And yet in really hasn't any results of

Dave Huml

that’s think right. I

Chris Killingstad

where early of I innings. things is are that. of with in concur characterization we most these Dave's So

Marco Rodriguez

in benefits helpful. in between and of right. cuts. Can split or the Then All down Very was one-time you SG&A? SG&A $XX from primarily to recognized discuss, switching cost million you it cost what's here goods the maybe the

Andy Cebulla

a in not It details bit we million was $XX was it about but focusing in -- both. on that. talked think of We're But [ph] in both. we're this that's EBITDA I and little EBITDA, the lacking

of think that could You it way.

Marco Rodriguez

other of that million in cost And were were nature? cost $XX more any there that were the In quarter? reductions it. cuts permanent words there Got quarter other realized more are in that the than benefited

Andy Cebulla

primary No, our talked and the again and we and make about lot temporary in we're needs. ramp markets customers' ready no. we of sure keep mind do that is in will took one meet pandemic. of nature recover focusing were more up to A we're our when And trying the given actions to that they recover

to true one we of principals, our the this last held quarter when subsides. ready So about we to that pandemic we in that's want really talked really key second quarter be and

Marco Rodriguez

I'm customers then QX, Got from operating so opening or of seeing what shutdown still But on up the just if least at form understanding and whether fair? not. I'm their assume at in I capacity it. were wrong, that dynamics cleaning. from if of it with temporarily presumably obviously of their But parts aspects. of understanding or perhaps spend places like And correctly you're places more correct be lot -- the of a Is you customers early would sanitation are also, to at some reduced I'm least would your sounds shifting some cleaning capacity they floors are that it's QX. But most of a type me focused some

Chris Killingstad

That and seen customers of order were that many carry again. we improvement July. not up shutdown has surface to the been the that that at in opening is and keep the to cleaning until now. fair. due the more touch second to customers floor trend our right is And protocol at pandemic of bay cleaning least disinfecting core beginning parts been has to priority June completely we've That's Yes. think of quarter. that And high And you're a part over

things again. dramatically. the major is that down a early start to promising be as could at into we're close I disruption there to to we that's if definitive see that another the least course, But look half of improve business things going And, of signal signal. say would year, the there so And back no

go little we're if going maybe we maintain So be now. anticipating, business our we bit right it's on that's improve to the bumpy. could level June, we're July And that forward how and modeling a pretty as

Andy Cebulla

to comments Chris' for many things a is, this capital two mind of one, is I'd our expenditure. in customers add keep So

pausing them So that. they necessarily what of they're if cases shifting even they're They're In waiting open -- things buy. but maybe closed and in are but some they're until pausing they some pausing. not they're are,

an We in I'd service of PNC. particularly saw the thing quarter. is of we the talked second add about last certainly that month and comments The impact the less

as that opposed mean, customers to choosing -- thing shifting first a move maintain we first. capital doing I new into as investment. their are the to equipment they're So they're

side. recovery that's a So maybe that seeing where of than on capital quicker we're some the --

Chris Killingstad

Yeah. of a it if maybe worked recession. a your Got RodriguezX was the Then can Q Marco about And little usually - way indicator service it. bit last you revolver. very I is improvement That's Very, historically. talk the wondering in leading helpful.

You it down. took obviously

it after You terms nature it given idea just some And it thoughts you confidence repaid overall it in second the pretty But was But sounds of soon uncertainty you like choppiness, great expressed about you're down. that there business. you talk looks your year of of revolver. half took like on the still just maybe the some back on level your obviously could defensive it on expecting but the pandemic. in the the

Andy Cebulla

Yeah.

manage could opportunities So feel about that. and like cash that comfortable be pretty was we we still paying strong, And we pretty talked our and for about some and we've to quarter good in good base. pretty feel have the publicly that. us. potential talked got a about another flow inventory We've source we customers customer with They're

given and sitting facility flow our it at end always new cash cash cash we on now. banks we got in the didn't banks be, So draw fact think the the and of our to quarter the relationship still was can the a necessary the and right those if that have need have balance great positive we've with just

have quarter. the with flow the covering comfortable we we a felt were little cash just, bit; one, the two So and the saw cash that and situation we in

Marco Rodriguez

me. for question quick last And it. Got

you there the and up of the from different to in aside regions just it -- in given competitors competitive that's some the for there as volatility products whether Just product launching, that in positioning type dynamics other are acquisitions the initiatives strategic advantageous new be of there are wondering, at might that all or relates launches the looking other you're any market future? near

Andy Cebulla

be One, a spot. we're in but to bright quarter. we get be a numbers, mentioned AMR spot that to about on We We've the to continued it in continued talked We've bright offering. us. the continuing continued invest -- it expanding didn't for specific

Now, yet. not we're there

that's we'll to continue expand. about well. but as an announced anything a to and haven't talked area the small We invest And yet, that space bit hope Dave

could -- think can couple those areas of that their So are I we potential. a highlight we

Chris Killingstad

new continuing strategy innovation right said importantly, successfully now is our you're that to the But simplifying our GPS within about the right our all and this fast are all but Right out model That's Andy most term, the is now. to that allow short seeing agenda. helps recover managing the focus GPS operating we've through pandemic our of products. the but will where priority importantly markets integrity us uncertainty business improving initiatives in rolling are maintaining about. And of and start we when talked is our our get us now more off the because

Marco Rodriguez

very time. much. Thank it. Got really Understood. appreciate you I your

Chris Killingstad

Thank you.

Operator

next from line Joseph question comes Mondillo Sidoti Your Company. of and from the

unmute. is on open. are Joseph, line Your please mute, you if

line question from line from is our the Funds. comes And Gabelli of open. Brett Your Kearney next

Your open. line is

Brett Kearney

morning. Hi Thanks for guys, question. good taking my

Andy Cebulla

Good morning.

Chris Killingstad

Good morning.

Brett Kearney

into into or have every ongoing I'm dynamics as you more AMR having kind regions it's considerations customer considerations? feasible progressing conversations pandemic, wondering you the elements when with human of before continued have in terms curious is offering well factored come still other to that was that any where with business have varied to say I thinking front. of Great and if even new cleaning levels consistent around of interest the you're conversations those as again. Would customers. in occupancy hear new have has you just well those we on were autonomous the customers' nature customers today,

Chris Killingstad

manner interested pool, do cleaning in to to to And clean one expand need labor-intensive not and lot help way high so going AMR as their a spending evaluating done jobs to No, facility are to way a have thing have priorities. cleaning companies customers realizing out efficient the I'd more are that's disinfectant that out entire cleaning, done, shift they in play efficient. very time it more labor the a protocols now. that, as to can get order cleaning be say understand it that The but those changed the that same these and a and labor figure to on them, becoming high-touch COVID that as keep the more dynamics before the this they're they more get is they're all the

with we're pandemic So having we more now customers really of our because the didn't conversation that that's a have prior. of

Brett Kearney

much. so Thanks Great. Okay.

Chris Killingstad

Welcome.

Andy Cebulla

you. Thank

Operator

Your of Shlisky Instructions] from line comes question Mike [Operator from next Colliers the Securities.

Mike Shlisky

companies, guys. comments check more of up these the for hey product. from these this forward that's and of email right do market here. an players follow seem but the automated me someone's getting But out questions were that garage any days? par they they're Thanks large five I follow smaller on some big Hey a on that's as get startup-type going that AMR to scrubber, from any anything company. four any taking made. market the like besides are Is And opposed It's with of the you now? crowded or the to occasional organizations or with to I that your up want major questions also AMR

Chris Killingstad

barrier this said the and small When has a the is say but your service AMR product entrants that them inherent to the at to technology. those you the we lot successful can't infrastructures building important, our they to that. to beginning, now, our would I cost None coming be need to and and have is and of place this to companies in look for right an to commercialized change have scale entrepreneurial there at you than so equipment in other match that's that the perform are huge, cleaning many AMR in sales processes real are are a I correct players. is gain of the as in industry to AMR is think a infrastructure believe who outside help really of educate support ability in I them of more you their nobody of players they what smaller entry And the us. customers, mean important industry. the benefits is

believe lead going and a So, position significant we have we we forward. like our

Mike Shlisky

the your that counting on base year just make or counting well. slides Okay. Also, you and sure, touch the XXXX XXXX are what Are goals want want normalized as the are clear the base you or to for year some XXXX I of base is. on to growth plus I'm some the this comments XXXX? as in today's

Andy Cebulla

are Those obviously we coronavirus goals before pandemic. Yes. the set

yet, XXXX given in our we So, the would here goals base for to a guidance, about but the to got with bit not fair we is coming out. year not year say out year to XXXX think it's little aren't differently base next be that which it because, set we've probably having numbers for prior next

prior it. think it about think you years to is in it, I about And base about thinking about talked way If February. a we better as think that a

Mike Shlisky

perhaps So that's gave is or that you you fair that your XXXX in for close a perhaps, February base guidance think? do

Andy Cebulla

Yes.

fair a probably that's think I base.

got Of I like think of impact the that rates talk a and people mentioned we recovery feel. we recovery. as of of about about that We really the might from course, recovery that. what lot looks the different these pace earlier then pandemic, that'll to how know

the you impression this give to what want don't I So that's at about point. we're saying XXXX

yes think in to But base. laid guidance that fair that way is going yet. disclosed we haven't out the February about the ex-pandemic, forward, We XXXX a

Mike Shlisky

great. from Okay, And last me. one maybe one

the Just CFO. for on permanent curious search a

out Pete help on is announcement, to going the As on XX, stay or initial July tomorrow. I to recall until

to So there that know with where I you of the want stand organization. part

Chris Killingstad

Yes. CFO Well a job first a and team and interim his and haven't done terrific missed have foremost, Andy as we beat.

can think talk been kicked to has We're will be for important about others to that I have is not But that. going off. it's but that concluded it and a So I you search tell what we when you commenced know process.

Mike Shlisky

Andy here you thank as and will impress add Yes, been very well. with also yes Okay. also we’ve I

like that far for beat. Thanks So taking my it so not missed just much the seems you’ve question. so definitely

Operator

Company. Your next question comes Sidotti Joseph and Mondillo from line from the of

is line open. Your

Joseph Mondillo

you me… morning. hear Good everyone. Can Hi,

Chris Killingstad

Good morning. Hi, can you. Joe. hear Yes, we

Joseph Mondillo

statics. some getting am I Okay.

to wanted just I make sure. So

question to everything chain, first refer guys productivity market improvement we've however, – strategy, regarding want a just my engineering to you that So supply go value little you to related to your while. for that talked about plan, however

a now, year lot what You that should have of that? wondering of I timetable A lot of of that I'm with a you – road a done? from an when map we lot that ongoing understand the finishing be and is. ongoing this good expect done heavy is lifting do you'll to And just detailed be of going pretty of multi-year a a but portion plan think ahead. the just some just

Dave Huml

is question, And your we'll question. Joseph. for of strategy that's This Thanks time a the four-year the within over strategy. Dave. the period. execution Really the I'll initiatives that Yes. address pace

read factors. work to years. pace to impact couple out over time the all front case individual a expect to execute. the up We on the we'd a based lead impact. is doing and One initiatives the so four not of the had And It's harvesting

earlier changes just it making takes longer benefit. to started realized because have you contemplated get to Some we

availability each have also to have We the as balance so can execute like well to. it the got against to and bandwidth of make we would execute that resource to initiatives. We've to we that's sure

So really initiatives of range four-year business. it's a execution within journey a of broad across the

Joseph Mondillo

landscape time competitive this your us competition's Okay. provide or what thoughts especially challenging And how pretty you on seeing? an your give then could in you're update your doing

Chris Killingstad

We're not different. seeing Yes. new or anything

will can. of I think manage don't But that say and AMR as in kind think What initiatives our incursion pretty products. period aggressive I've on can in is material in new our not of trying some anybody uncertainty as any that seen said any seen period this launching it's we've of a competitors to I new that competitors well major from lead we've that by we front. we're any of some new this resort not pricing. winning terms we through continue unusual all to I customers,

is – looking that we be And at dealing may right more see. most aggressive that really normally now. with that important we're think I it's So the dynamic and than and

Joseph Mondillo

is missed new introduced capabilities point new with a a but the this can model you may we – outside introduced TX expect correct? AMR AMR model haven't being about this at when talking Okay. And have year? the of later you I were some And

Chris Killingstad

just know is a off building are space. the capabilities right. anticipate over one This Stay of – strategy for fully a portfolio and a us, long-term not in And tuned. we we this time is AMR

next you when tell not prepared stay to the we're tuned. one So is coming but

Joseph Mondillo

has that quite bit just then and the question. percentage up And first quarter last quarter a the be look The my second back at quarters R&D you three to basis even the of a with in in Okay. and bit when come follow last XXXX. on it'll little a

Just flow wondering AMR that would the with to thought especially what about make that, continue drove especially cash in the thinking you spending, cetera. the of I we out quarter. et

So what in happened just going looks the first and wondering half. about R&D and how forward that

Chris Killingstad

that environments the is had important can in think I like Well categories cautious work AMR. tell all any our this I to compromised our we need not innovation as well within way compromised have across on we you not to have do and we we've R&D. cost be improvement But initiatives any of what in certainly and

Joseph Mondillo

my Okay. day. questions. Great. Thanks taking Have good a for

Chris Killingstad

Joe. you, Thank

Operator

the over no are this I would there questions call to turn management like for at to closing Since time, remarks. further

Chris Killingstad

for All Once again, we you you stay right. and joining us today. all Again hope healthy. all you, Thank safe Christine. thank

this So earnings now and Take you disconnect. second call our care may concludes everybody. quarter

Operator

conference participating. you call. this Ladies and Thank gentlemen, today's for concludes

You may now disconnect.

Tennant (TNC) 2 Aug 202020 Q2 Earnings call transcript