TNC - Earnings call 4 2023 | Tennant Company

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Operator

Good morning. My name is Briana, and I will be your conference operator today. At this time, I would like to welcome everyone to Tennant Company's Fourth Quarter and Full Year 2023 Earnings Conference Call. This call is being recorded. [Operator Instructions] Thank you for participating in Tennant Company's Fourth Quarter and Full Year 2023 Earnings Conference Call. Mr. is meeting today's Beginning Lorenzo Bassi, Company. Relations Tennant and President, Finance Investor for Vice Mr. Bassi, you begin. may

Lorenzo Bassi

President, and everyone, and Conference Bassi, XXXX morning, to Full Earnings Investor Vice Lorenzo I'm Good Call. welcome Year Quarter Tennant and Relations. Finance Company's Fourth

Dave an our will are our and we call strategy, cover Relations CEO; West, conference to release full provide enterprise well performance our the this are fourth remarks, will accompanies President press quarter questions. call on Vice Tennant's open Today, CFO. as Investor update website. Fay Huml, prepared guidance and as today available and me operations President on that Dave our for our and slide An Joining earnings financials. Fay we After Senior and the will presentation call and and will XXXX. our initial you review year on

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

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

and to reconciliation the year call results. earnings now our of to turn comparable quarter these and GAAP and release Our measures full presentation Dave. XXXX over I'll the GAAP non-GAAP include a measures fourth

David Huml

Thank Lorenzo, and hello, everyone. you,

outlook pleased report growth I strategy quarter will our I from am performance underpinned our XXXX year and quarter full revenue today, the to growth XXXX, targets. call enterprise and expansion. highlights discussing long-term margin fourth by for strong be our and the On new fourth and

challenges strategy navigating on in in EBITDA year, momentum dedication net enterprise which executing and we supply our in margin. team's EBITDA highs the adjusted Our sales, record chain and carried through resulted the drove

year, reached million, the in margin our of an by business units adjusted categories, to For We organic all led North in sales billion, rose equipment $X.XXX net EBITDA growth geographic while resulting XX.X%. full saw product year-over-year and $XXX.X sales across EBITDA America.

rates growth reduced by increase organic XXXX. year full rate X% of was price combination approximately in Our volume. XX% remained a Order X% a and nearly resilient, we fueled growth and meaningfully throughout of backlog

Additionally, we we net in investments year future flow us to to as working converted This continue the shareholders capital and repurchases. return dividends through to growth making to income XXX% during share and capital. for enabled cash free focus on make improvements strategic of

Turning to Slide X.

like we close out XXXX. point made accomplishments As a strong key year, several to team I'd in the

This dedication customer also collaborated orders sales. only First, teams sales, kept supply made recovery across has efforts incredible backlog new our made satisfaction not strategic chain, maintain during the in. into profitable but the investments to and and and orders improved our stabilize flowing translate company net generated

near-term initiative. as we planet, sustainability introduced operations goals to business and is healthy by new Second, targets. our driving This to featuring science-based the people long-term integral ambitious our validated we now targets commit framework, both framework

our purchased individual than with AMR cumulative made AMR, XX% the our from launch mobile delivered illustrating core our over disciplined business, allocate and million to Fourth, program have since in invested our how customers to strategy. of have surpassed been we expand their opportunity consistent we leverage, activated customers. our in and returned continues in to capital equates machines revenue shareholders sales more this to fleet who managed investments XXXX. in XXX autonomous X,XXX capital M&A larger our to AMR XXXX, growth In or robots priorities. came debt $XXX Third, present. units the We've That previously

our are to and on building enterprise set a positioning of the growth. year margin results, strategy us permanent member These EBITDA and launch came strategy, to achieving stage for exceeded our initiatives XX% dedication of for that of prior executing every the This and record-setting enterprise our momentum remarkable financial out targeted we has team. This achievement closing ahead schedule. hard of accomplishments our into us new from a selected a the X Lastly, improvements structural success testament drove year continued business. work a global

We are proud carrying of XXXX. into momentum significant our are XXXX results, and we

enterprise Slide XXXX. at next X, more details our through years the strategy on unveil XXXX I Looking am for to pleased

industrial Rover TXXXX will Our in designed In AMR. Scrubber, fit in earlier to iterating strategy of launches. we operational by and performance value, are logistics, a M&A new renewability, is enhanced three It's Ride-on smaller the cleaning XXXX, pillars, to momentum the suites. quarter through provide in for on obstacle Tennant navigation offers growth designed right improved robots, machine robot cleaning prioritizes XX TXXXX ROI. in recent will new and pillar a product with change retail productivity greater to or medium-sized people. pillar, is spaces. In innovating AMR Also XX is now. and customer hardware the already deliver second are our customers financial next-generation our we expansive which available we and couple fewer with our and company's assists operation order specifically step is mobility the across improvement launch, Rover, light first the within resourced of result and Corp's centered offers XX driven opportunities We've software provide in product activated manufacturing size, autonomous new solutions and enterprise committed Tennant growth, compact our and framework, pillars: like you specifically aiming it to environments, In of launch floor The detection applications adoption introduced return. the commercially key and on enhance for Rover with to industries. updates. enhanced refining Brain The growth strategic these most purpose-built our The the our and Building mobile I'd rates. initiatives a that

focus a opportunity leverage strong for be we balance capital on our moving driving strategy, Our and connected select sheet, autonomy disciplined and will growing flow the Thanks paving strengthened forward. to core, our the it generation reduced growth our to be strategic allocation value have debt and acquisitions expanding to way through adjacencies. cash

This has Tennant's with in Brain robots Rover investment adoption excited to $XX Tennant next grants Corp's access upcoming Brain the XX announce launch. floor million cleaning including of on Brain exclusively technology generation are accelerate to made We a technology equipment, our the exclusive next-gen to development Tennant Corp and the agreement that available the collaboration industry. will in Corp. of be

a and Our ecosystem supported Brain with Corp Brain led by support expanded and relationship sales Corp, differentiated insights. and creates customer analytics service by Tennant

Tennant leadership to marketing shared pipeline products in This Aligned transition of Brain Tennant's management. in enhances Brain bring a robotic AMR minority single developments. bundled agreement approach Corp's from Corp to drive recurring In new and seek with the Rover, deploy objectives, between Corp simplify This Corp moving Brain solution on starting business, the us result revenue enterprise begin connected to position. customer Tennant with a and support and accelerate and new grow of share commitment empowers The Brain This services to ROI our for investment and benefiting with the autonomy equipment enhancing of robotic performance supports buying accelerating and an sold all-in-one by strategy, as core to in will forward. robotic customers resources dedicated transition ability the drive efficiencies through expanding underscores for transition framework, our value the cleaning. of investment, cleaning. will part our financial pillar experience business. With join to customers collaboration Tennant Tennant expertise Together, the West, will focusing Fay wealth to experience driving Corp autonomy to our XX our this are Brain sales, cleaning. our in autonomy M&A on our and services will our further As the technology offering strategic to Board Tennant. our dramatically we and processes customer aid and solution alignment of build in Directors in and and

cost SAP expanded We gross our disciplined margins and maintain will investments and have we The improvement established us for build margins. through have and existing cloud-based by consolidate we also actions to on will forward. Within the focused make incremental on enable encompass ERP unlocking decision-making cost-out in anticipate more to that insight a will This enable and CapEx strategic systems information gross allow our foundation pricing our best-in-class adjusted results, processes easily million, in that to we through reporting, XXXX.The be from $XX standardize enterprise order XXXX. this will excluded to When $XX with estimate will access our and entire will for to completed, that all-in inclusive $XX investment us estimated to access expected we increase project modernization ERP and approximately efficiencies. approximately to of data pillar, transformative long-term investing large are X non-GAAP the of our and modernize investment performance us is that million million OpEx solutions. S&A efficiency going allow quickly to

that we improvements us in to a a with. annualized foundation dynamics, to this investment. $XX include anticipate to customer provide Our operating be to of our approximately deliver savings business do Beginning new targeting system better increase and grow easier react million market in allow better $XX XXXX, to will as million leverage. and result scalable ERP experience will and a It are

phases. line to with The We data focused and with of a the on brings a company. phase Our is experience resources preconfigured for partnering phase, our utilizing ERP XXXX definition and us The top-tier first firm of a best risks system include state of gathering, occurred the centered practices. the helping to where will occur implementation approach, phase design will will ERP development time XXXX industry design with allocated assessment, we modernization this benchmarking XXXX, and on on scope a standard wealth in companies the in and significant three future consulting prepare change amount journey, SAP resourcing. that of thorough implementation that time management complete integrations. define entire a across in focused planning

and our can talented performance and help services and our to growth drive pillar our people will XXXX, organization work only exceptional the and products can our people on proposition. change deliver In goals who if on value be employee attracts center retains customers. met Our our

place the very employee aligning employees it compelling they and grow their careers. about We consistent am and invest choose clear, represents. a and last Tennant deliver strategy Company so future value in as capabilities, and why reaffirming X The promise have can articulating our prospects right we to proposition in will to that years and growth. In summary, to the I our opportunity about excited place people drive the future we showcased the should have

continue by to our EBITDA two, call meaningfully will discussion growth and the Fay drive basis turn margins points; our reduce With of that, we over flow to in stage conversion cash to and growth targets expanding free As to setting X% three, we one, reinvest a XXXX, the and revenue for in a I XX backlog generate continuing achieving long-term will X%; to rate. continue for to are XXX% of financials. XXX include; to business the

Fay West

per $XXX.X year. increase compared million record fourth of everyone. morning, an was prior aimed $XX.X in at incremental Full year was was $XX.X were quarter million, net gross XXXX in price full adjusted XXXX, productivity. and by of a for million margin, the income increase year of improved year quarter $XX.X million the of and XX.X% the good income the XXXX linked investments $X.XX Operating quarter higher strategic Strong current prior per from and to improvement In of expenses due increased year, the in $XXX.X EPS diluted sales year net net higher the in and fourth adjusted of and year the XX% out was year prior expenses Full GAAP by XX.X% which of for $XX.X impacted XXXX an XXXX year. of prior driven increases fostering Dave, adjusted million, Tennant the million million XX.X% to prior quarter over diluted for share fourth costs, prior million were or net of the XXXX period. on spending delivered year cost share to significant in increase the income compared both $XX higher variable income higher full which realization, from benefited income activities were $X.XX GAAP fourth Adjusted compared a net to future period. year performance, in the operating also the you, increased Operating an the performance. $XX.X net and compared to EPS growth. to period, to Thank

than year. Looking lower million expense the mostly throughout debt related meaningfully for the reduced $X.X which driven debt as beyond the to period, we noncash by tax In more year debt fourth million than offset lower interest increased favorably benefit a impacted balances year both interest the basis, was that fourth as balances. $XX operating prior net nonrecurring approximately $X overall realized expense and full the the million lower approximately items, rates of we higher On income. Interest full quarter, income a discrete quarter in year. fourth quarter income

interest compared net for full the X.XX% the in to of was rate, year average prior X.XX% hedging XXXX Our year.

more our little results. a closely at quarterly Looking

sales. backlog, of $XX the reduction XXXX, driven the to For the of constant organic totaled quarter We X.X%, primarily price currency the million increased year in consolidated third Net growth with by million, the On primarily fourth backlog. to quarter $XX.X was in realization a $XXX in XXXX. from of the sales equipment million ended increase basis, reduction of million approximately $XXX in X% quarter a end $XXX.X fourth a compared due quarter. million sales this sales net of

Equipment group period. this sales was due to slightly growth which fourth and to Australia by XXXX. or for point to XXX-basis the Organic X.X% realization XX.X% quarter million increases down in we compared Adjusted X.X%. the EMEA margin America the and in and experienced by of gross to improvement lapping into China. sales, East led $XX year in a quarter, with China, year America; We period, growth volume an reminder, and and prior markets. includes Americas America, incremental from price decrease XXXX Offsetting consumables, increased a offset adjusted into sales in consumables categories; sales, prior million North in volume prices parts sales service the to and both the As Australia $XX.X due and APAC XXXX and compared fourth quarter quarter Adjusted to both the was of following net service. as in EBITDA and includes Middle in also increase in fourth period. in in Americas, regions; other. us groups Japan increased and XX.X% the linked strong in EBITDA. the variable of contributed a to growth sales equipment of was way parts elevated to spend. Latin the in timing percent our the equipment, quick covers to X and sales SDA and the costs and compared categories service product sales In prior growth. selling Europe, North a gross performance as all development America, the sales margin quarter, in partially well Tennant to period. to Pacific for year in the net of improved Americas offset as due Organic improvement costs. were volume declines other to compared XX% XX.X% year which particularly project as declined in primarily the research prior operating Asian Africa; Australia, The and adjusted primarily position Asia higher higher increase Latin XXXX. year-over-year strategic equipment due to fourth was S&A due EMEA a X.X% of volume expenses in the X.X% Organic The was investments better future made increased higher of

results. to full on Moving year

over regions basis, XXXX, Each an of remaining For the by on driven XX% a consolidated realization were increase an an attributed $X.XXX.X impacted were This prior billion strong increase equipment In was growth $XXX.X propelled America reduction our the product favorably to categories, XXXX. EMEA The organic or XXXX, Asia from $XXX.X by the currency increases though organic This the driven million. growth recover the sales On net in on million, volume organic Pacific volume volumes led of a $XX.X XX the North meaningful increase increased months was year growth. basis. in year billion, EMEA the Net Americas or was the XX.X% it or organic XX% X.X% sales XX% price Approximately, region and and approximately million in increase basis. to of Australia sales volume. in while our the impacted sales XX.X%. in by prior in net increase on realization price weaker-than-expected X.X% year-over-year pricing, backlog. to by in was primarily pandemic. $X.XX started mix X% of were was equal sales in significant impacts an net increased Net market the by over by X.X% an by increased ended was driven XX.X% sales price sales year-over-year to to in of compared as conditions. an to achieved and China realization basis constant all

in most We compared growth also categories XX% prior year-over-year. year, notably XXXX in sales, which experienced the in nearly grew to equipment all

compared $XX.X EBITDA adjusted $XXX.X million EBITDA year to increased and of XX.X%, price growth was the more sales by strong and XX.X% multiyear XXXX to EBITDA. XXX-basis increase prior well XXXX. a of by a gross growth. as inflation due margin which created million, XXX-basis Adjusted sales expansion. XXXX, price as an operating for was point the margin full offset XXXX gross efforts from primarily the adjusted EBITDA realization, and Adjusted driven over an benefited cost leverage improvement adjusted versus year. and impact operating The increase result volume out the improvement than point to The increase margin Turning in adjusted was in increase both to year the was prior year of Full in efficiency.

We our XXXX. expense XXXX expense and The of $XXX.X to of costs to receive expect people increased growth. as in compared recovery to existing impact to million SG&A sales and XX% $XX.X SG&A pricing within initiatives Full from strategic a the attributed benefit percentage foster throughout as higher adjusted in million continue backlog recovered performance XXXX. made Adjusted develop slightly rate year strategic The in a to increased to well XXXX. increase variable actions, support XX.X% improved and was investments execute to and as to linked year to fund primarily operating compared future

now Turning compared XXXX period. operating operating $XX.X by in activities deployment. in ago $XXX.X used cash to the to was in capital year net Net million of activities cash provided million

returns our Our the priorities, operating of capital returned to further shares and strategic a million for and of company's cash million at XXX,XXX and investing and borrowing $XX.X significant repurchased providing and flow revolving in unused Tennant's strong to million. improved with end liquidity of balance to facility. of cash and growth million business, payments on the dividend in XXXX equivalents of expenditures, fund last capacity our year, our $XXX.X organic shareholders alignment with In considerably initiatives, credit remains million $XXX.X capital cash shareholders approximately repurchases. to we $XX.X core with cash $XX.X common stock financial position our strengthening through in invest capital pursue reinvested flexibility our compared in opportunistic share dividends acquisitions allocation

lower X.XXx was our adjusted of to X.X leverage than goal EBITDA, stated net Our X.Xx.

strong debt we And focused remained current sheet. interest have on rate We flow $XXX the have in million cash our generation robust XXXX. reduce directed to by cash environment, balance maintaining in given a

guidance. to Moving

of the direct delivering global in our performance emerge chain and still over success to a ever. past our growth initial ability of navigated targets crisis effectively have years while our new supply stronger will over focus strategy. on and while pandemic our long-term the years enterprise supply strong original the manage global chain phase XXXX, of expectations demonstrates X We that record XXXX, of our ahead The few a enterprise result last above than Our is both we disruptions changes schedule. Expanding are strategy a on the year achievable. the on a we made

to reduction in and As Dave line backlog, and mentioned XXXX price new go-to-market as earlier, aim bottom line our to is grow products offering strategies our customers. well discipline as of through top

with We margin. line achieve will both to expect margin XXXX, contributing demand costs, volume we adjusted X% growth. expansion will managing net a also remains to equally EBITDA in S&A sales grow resilient. X% and our price focus at on our year-over-year Overall, between gross In and and

Our XXXX. at rate reduction some but assumes same backlog experienced the we in guidance in not XXXX,

that $XXX will and end level. backlog backlog reduce $XX and we We higher-than-normal at will million in expect a year million between the XXXX

as We in are in geographies EMEA, all very rates market we our anticipate macroeconomic especially order closely, monitoring some growth global in see but softening XXXX.

will seasonality, be continue we backlog, that first of in through performance long-term historical we anticipate overall aligned continued sustainable strong that initiatives strategy. price our enterprise half to realization in with our XXXX. anticipate expect and gross to performance we'll on comparable margin work the will to more we revert we focus of half and We Further, XXXX second the as

disciplined us efficiencies. remain and focusing in in for operating will our spending, position and our investments increased growth areas prudent future that We

year sheet. approach maintaining free of basis and flow a our disciplined on a will income balance We are net to conversion full strong targeting to capital continue and cash XXX% allocating

of XX% Net range of diluted the Capital Adjusted million, EBITDA turn call for Dave. growth to $X.XX With provides organic $XXX $XXX expense. to share, back effective that, I the sales of Adjusted an of items tax excludes billion, XXXX, XX%, $X.XX in the to margin certain million. to which will expenditures amortization and For per which XX.X% sales amortization of an billion $X.XX of to range Tennant expense. to to XX.X%. following X% million to Adjusted million reflecting of EPS adjustment $XX adjusted and rate $XX the EBITDA nonoperational excludes $X.XXX guidance. in X%.

David Huml

high-performing and Thank proud I'm excited in the XXXX, not I of what you, are XXXX. our achieved about could plans results our have for more Fay. teams be

our and participate a upcoming about shows. we if X to in road events company March, are we more heading. have you learn will direction We the In wish non-deal few virtual

Xth, by The Sidoti. is and XXth hosted is CL second hosted on first March King the March on by

Freedom Senior will We on a management to XXXX, members Day Investor on excited mission leader, in growth also May York a Hall to the are driven be team at announce strategy. XX, New differentiated discuss hand Exchange. Tennant's to Stock be global by the Tennant's

We Operator, our the wish Invites distributed as will talk reach will that global to about open commitment us by as ahead. or service opportunities questions. Please be if growth compounded well are either you innovation, out that, specific superior to positive megatrends to in value. and directly to maximizing will virtually. call please shareholder we attend go soon. With person

Operator

Instructions] Your from with comes Ferazani first [Operator Steve question Sidoti.

Steve Ferazani

much was are the with slightly detail the environment, want cover it a out as backlog given on be What that And that 'XX. down that to X% guidance. growth. surprised Dave, organic couple call. the I'm in economic looked you you're to XQ. I'm optimism? Not there to appreciate challenging all surprising converting X% as gives backlog you getting start won't seeing that expected I of little little in it out questions volume, like you surprised I on a given a

David Huml

of which differential reduction. range. the for to is backlog look to the we X% the reason as in is And guidance line range, out really our our in of long-term Steve, to growth lower targets X% end X% in the X%, that with albeit at XXXX, the indicates

benefiting benefit through over just convert We're that given benefit have aperture, $XXX XXXX. the generated targeting can and profitable million $XXX in got backlog year million we to a of held That's durable. XXXX. been through we've calendar coming from periods. was period. reality We've So a we When backlog mathematical million that the $XX open to It's you multiple demonstrated revenue. reduction orders,

a that's embedded differential different perspective albeit resilient, a order From a remained us. guidance. in But presents have outlook, year. reduction business than base a certainly, basis, on year-over-year and backlog headwind for in our orders typical So the

got more kind pre-pandemic seasonality years back we've you a go If and to lived return we're what to like, we normal but through and our of normal that's manage our and in certainly looked deals, We've this return business, expecting lumpy seasonality, and to XXXX, started of significant 'XX, customers some well. future demand lumpiness orders seasonality as to placing implied overcome big the guidance in from in deals.

performance large within very customers a given some global basis impact have a quarter. on can We that

extent actions that. we into we have and we periods we new we're actually to made, so coming at actions the and We've possible. challenge down certainly, we but upcoming, the not success, XXXX and look through prior and taking, land XXXX we present a you outlook but then to when we've lapping periods. pursue become we've the big forecast does to in those predict optimistic. investments And to some as well, the for we're to that when those our a deals investments, And then When And rather you're a have QX the strategy. were challenge when out we're pivoted them, growth comparing those go X it the seen of predict rigorously. And only year happy report lap some that

overperformance of the opportunity Our enabled expectations, us to curve. that XXXX above invest ahead our in

And so terms when and in the we're reach go-to-market new entire you made of our to channel well I'll improve on but cleaning about, we've as the we're products market our XX look of to investments machine, coverage. robotic at bringing put suite as super Rover products, new across what new the our a point excited and which punctuation

our our within technicians, this lot A offer actually sales us XXXX about new of of can to business for models service value control. year. We're rather customers. and our think terms optimistic a people, you So on in compelling distribution to unique guidance the is and

our about We've control. XXXX a some we're made the now to headwinds, softening our in of and guidance, on to performance our when for the example, in that represent kind think XXXX to could within much work. and taking of So of environment EMEA, the up investments macroeconomic maybe we getting is and deliver ourselves actions set

Steve Ferazani

margin a of the how I this of it, if little say, to I I want year, That's how I off which helpful. that that was that? XQ about coming of Great. on were to When was you if -- annualize much bit lower. down was guess, guidance brought very know higher that much than comp think XQ, don't quantify the performance-based

Fay West

Yes.

I drives both that remarks. investments alluded certainly, year-over-year. those those to prepared some It's onetime not performance-based alluded And And So twofold. variable higher say also we'll would to lapping in XXXX. that and costs it's that our in be Dave I of

And were so entire our investing preparing we we growth. recovery, ourselves looking and as for in saw QX and the that our come forward through year throughout and in in strategy

come And through that well. so million we QX as in I'd in roughly that say, around was, $X QX. And saw

Steve Ferazani

Okay.

you kind SG&A in a percentage sales an So on guidance do have into what baked as that? 'XX, when range of a you is of your

Fay West

guide improvement. anticipating margin we're Well, typically S&A to But that has in which that. of What Yes. the we don't of as margin improvement, to underpins as improvement. be apparently gross kind kind well

was both through improvement in a year-over-year fairly a as was S&A comparable. that Now come quarter on basis, the 'XX as as in well of percentage on strong kind quarter pretty S&A. sales of improvement basis, meaningfully. year-over-year as pretty we gross in 'XX, margin do anticipate you XXXX saw a the But But to

Steve Ferazani

do conversion, on isn't you can a could Obviously, you're far M&A additional probably I maintenance without in 'XX. the If one give cash my position of helpful. cash of the How And not about of you you looks spending. thinking That's any levels. like that? if of again but updates any kind math development XXX% if are low in net pipeline? Okay. very another in terms off expected get CapEx That it's just in great,

David Huml

be priorities. articulated our in. please happy to. allocation capital We've I'd Fay, Yes, Yes. chime -- to We've articulated

constrained in in And commitments context doing paying accelerate we you opportunity to need priorities. to comments within look in the to out we're core powder We've certainly, and we internally sufficient into exceed my kind we've run drive commitment million million, CapEx investment to and the further find I'll so fund guidance. back growing and maybe those if deliver of range. so. our not the the the the And what demonstrated dividends. results, XXXX, that's to $XX rate to overinvest, And the can frame got further on a of $XX When implies guidance

thought As mentioned that the by step $XXX our in in environment. which debt we taking prepared took remarks, a million, appropriate in was rate we her down variable change given XXXX, Fay reduction

We guidance of shares perspective. we also position appreciated beginning buying the quarters. And free stock has through to so cash net flow, our -- We're active our a we rate. our raising cash year, the committed back we the were and response performance converting to think in have nicely from less XXX% in more in income as so like of

And well for so take we think we're positioned to we want the company. where

specifically strategic You M&A. asked about

equity And is in with the shareholders. creation although from mobile equipment is perspective, which light. agreement the agreement It's view fits want an our on think M&A in to autonomy drive to global a work. certainly are; we our the a with about kind grow capital work an And value proposition to stake announcement that to and adjacency, our exclusive basis. brand us more connect we out value We've in of autonomy per adjacencies. We filling We our customers adjacency that around with and fantastic Tennant for Brain, articulated win the se. technology our acquisition and past Brain agreement to and the that of defend brand it value first, putting the Tennant of then core We have example doing so just of fantastic third that by Brain, activated take priorities is our gaps not further propositions minority perspective expanding that and M&A an portfolio from can that that. channel product connected coverage

funnel. And so we've the activated

are We something to capital soon put But with more talking to the to work to we actual as out and we for just -- story shareholders. something and potentially benefit in and interested and Brain, of more to we'll addition are our telling just signed as the the as we anxious agreement have we announce, soon have as partners our actively selling you let know. engaged the

Operator

question Tim EF next Hutton. Your comes from with Moore

Timothy Moore

the I product. bundling with Brain on your service Corp Dave, love selling the and comments

started terrific. you more what go and you're maybe little rate? back doing bit I think a just talk I more about an you in mean that's on attachment seeing last Can that packages, inferior office get in preventative and They're maintenance couple the able of address with customers package. there. buy maintenance and field you some to competitive got years a upgrade the preventative products to

So seen bundling? the cross-selling start to two that have you accelerate on last the and year or

David Huml

Yes.

a agreement point XX be with value is the to take the software it, bundled sale and new proposition Tennant step So point them the robot insights for application single as service technician, aftermarket. change for single and salesperson embedded with the this state-of-the-art from to and of Rover cleaning and Brain. of data really navigation support go exclusive a to us We'll offer technology able our their and solution as at bundling leading with and this with analytics a a to customers in and service Tennant that includes well along service a

technician, running technicians, service can the on keep for and uptime service promise customers. and qualified the of the machine consumables deliver So and our and autonomous that parts productivity

that expect customers, the reason with we're be and bundled will that, popular it. with leading We that's offering that

We want go our to in offerings pocket, where let have to hip of it. decide going we're the they customer with variety and a

customers, accountability solution Tennant of moving and the We includes expect be new us. for software it's will equipment the and that as buying of that promise appealing for a the customers to a to approval simplicity well kind responsibility but very consolidated on as bundled that and deliver process many ease that has and territory through

really unique and and it, value preventative as proposition interesting. a robotics it's excited a customers. to is selling contract as in this So for going our This be with full-service well maintenance. sell drive of I compelling change trying is equipment We're adoption. is maintenance then very differentiated trying and sort think and step a same to do the ongoing to as about we're not What

differentiated navigation of allows a on product and that support customer a by perform it leveraging launching Gen to X equation. level ecosystem enabled excited packaging here spaces, an of well a terms and technology machine. and that the of even our midyear improved chips, Rover bundling one and tight Iterating pricing component together and from is performance these sensing bundle prop step value enhanced our wrapped robot transacting customer the and service, maneuverability our of And it's navigate as includes That's adoption, better We're think then as in to AI and software ease that to so has as just the cameras We XX that purpose-built ground-up like of launch in the application you for this sales, XXXX. change mentioned, kind a robotics. in of perspective. AMR all-in

Timothy Moore

other terrific. type Thanks to guidance about one it, expansion differentiating sales two get actually a that's have ERP spending for the you that, before actually And I'm care hands between great your I just in Great. track and veneer I of of those for think lot -- worried this guys excluding topic, a I year. for not really that.

the this I've know about past. other I asked I in The had, question

want there invest smaller and like of small model full maybe things spaces. and a Because that equipment in some and great don't lot people there of progress leasing You've medium-sized was customers medium-sized of have just could lot South Have there's on. got in be the The to going of added business? Europe if to more a but for America more that parts on a potential kind you as service. fleet, these margins. seems and of wondering high a they it I

David Huml

Yes.

today. of noted. a that that we it's value suite prop our we currently offer is compelling And geographies select for offer reasons value the the props customer, can Within that one in you

make perform to on sure we burden then but profitability our uptime, rests Now Equipment service can a the when we shifts a Service, the as that deliver go squarely shoulders. with to us to

it flow they're and require enable uptime. to of So level promptly the make any that on equipment uptime and can respond analytics service a you of so deliver sure efficiency and infrastructure data expertise challenges does internal to service delivering

the from future believe, an autonomy, back As to and the we in enabler, we and migrate fault to robotics perspective. as into key flow codes machine and data the usage offerings us a is and from ability data a connected flow equipment directly service codes

the service some look other the offer machines, profitably to and the in EAS and On and about perform Like exciting. data competitively now. profitably to connected allow And at robot, to said, nonrobotic a reliably, machines. provide it because us really think has it so XX a it Rover the abilities I as geographies when potential becomes potential it's the we has you and you upgraded equipment

an we're what it's dictate let business be interesting on geographies. take of our and to going working going are that. really, other We it whether customer would the going to in And part forward

experience of which it we which market But offering. through So and are which and little profitably, the then we building sure need deliver building want we make bit clearly a capability test to screen, on to can Tennant, markets they see really of that is which and us internally expect capabilities provide channels investing do vertical on to will our radar the do we it and direction can it tell work customers that we for make with to go make that commitments in customer and and customers of will a customers type go. have fantastic the be blocks our that interested in and sure

Timothy Moore

terrific and you quite it a and with I back It's guys road bounced stuck the two I want That's could it Dave. on whole Yes, got margin map. EBITDA seems COVID or later like years the you And well. team, a growth congratulate shutdown. and a of point Great. And you amazing ago, to just few again, expansion. on. know be expansion

that's and it my questions. good So for job,

David Huml

and I appreciate complements. your comments

As team sport. business know, winning the a you is

deliver results going gives me so this and team on commitments XXXX our is can that deliver on in these to And a Tennant global basis we effort a forward. confidence

Operator

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

David Huml

interest and you, participation today your earnings thank Have day. your you great our Company. Thank Tennant in call. for all This a and concludes

Operator

conference. today's concludes This

You may now disconnect.

Tennant (TNC) 22 Feb 242023 Q4 Earnings call transcript