Tennant Company

Good morning. My name is Denise, and I will be your conference operator today. At this time, I'd like to welcome everyone to Tenet Company's 2019 Second Quarter Earnings Conference Call. This call is being recorded. There will be time for Q&A at the end of the call. Please press star 1 if you'd like to ask a question. After the Q&A, please stay on the line for closing remarks from management. If you have joined our call today via telephone and logged into the conference call presentation on your computer, Thank you, Denise.

Good morning, everyone, and welcome to Tenant Company's second quarter 2019 earnings conference call. I'm William Prey, Director of Global Financial Planning and Analysis and Investor Relations. Joining me today are Chris Killingstad, Tenant's President and CEO, Keith Woodward, Senior Vice President and CFO, Tom Stueve, Vice President and Treasurer, Andy Cibula, Vice President of Finance and Corporate Controller, and Mary Talbot, Senior Vice President and General Counsel. Today we will update you on our ongoing progress against our core strategies, our performance during the recent second quarter, and our full year guidance. Chris will first brief you on our strategies and operations, and Keith will cover the financials. After our remarks, we will open the call for questions. We are using slides to accompany this conference call. These slides, along with a replay of today's call, will be available on our Investor Relations website at investors.tenantco.com until August 31, 2019. Before we begin, please be advised that our remarks this morning and our answers to questions may contain forward-looking statements regarding the company's expectations of future performance. Such statements are subject to risk and uncertainties, and our actual results may differ materially from those contained in the statements. These risks and uncertainties are described in today's news release and the documents we file with the Securities and Exchange Commission. We encourage you to review those documents, particularly our safe harbor statement, for a description of the risks and uncertainties that may affect our results. Additionally, on this call, we will discuss non-GAAP measures that include or exclude certain items. Our 2019 second quarter earnings release includes a reconciliation of these non-GAAP measures to our GAAP results. Our earnings release was issued this morning via Business Wire and is also posted on our Investor Relations website. Now I'll turn the call over to Chris.

Thank you, William, and thanks to all of you for joining us today. For the past couple of quarters, we have begun to discuss how Tenant Company is in transition. We are moving from a period of strategic expansion designed to extend and diversify our geographic and addressable market footprint. to a more concentrated and deliberate focus on unlocking the benefits of this broader platform and driving profitable growth. This concentration on balancing reasonable growth with stronger EBITDA expansion forms the center of the strategic plan we are developing and will take us into the future. As indicated last quarter, we have already begun to implement certain initiatives from this plan. And while these efforts continue to develop and mature, They are already beginning to have a positive impact. We will have more to share with you on this plan in the coming months. But today I want to provide you with some high level insights into our approach and how it is starting to drive decision making. So you have a clear understanding of how we intend to shape the future of Tenant Company. Three growth pillars support our strategy and focus on profitable growth. The first is winning where we have competitive advantage. Within this pillar, we are deeply evaluating all aspects of our business portfolio, which includes our products, geographies, channels, and customers to truly understand the components where we have the strongest value proposition. These insights will help us Thank you. Thank you. to exit the green machine and Orbeo businesses. This is just one example of how we believe Tenant can refine our portfolio in such a way that both enhances our category leadership and our profit potential. Tenant is a much larger and more diversified organization than it was three years ago. This gives us many strengths and advantages but also significant opportunity to refine our business portfolio and optimize what it is capable of. The second strategic pillar is reducing complexity and building scalable processes across our business. Our growth has not only diversified Tenant by markets and product tier but it has also greatly expanded and in some ways made more complex. This pillar is an integral step toward increasing and improving the profitability of our products, efficiencies within our manufacturing and supply chain, and how we source material and support our overall enterprise. It means rethinking each process, looking for ways to simplify how we work across our entire business platform. and looking for ways to apply technology and automation to create new efficiencies. Our efforts in the second pillar are designed to more fully extract the benefits of this larger platform we have created. Our third strategic pillar is building on our position as an innovation leader. Tenant continues to build its reputation on innovation. and finding creative ways to bring new, compelling solutions to our customers. One example of this commitment is our autonomous floor cleaning technology. As you may recall, earlier this year we announced our relationship with Walmart for this new technology. As Keith will discuss in a moment, our early work with Walmart was, as expected, a meaningful revenue contributor in the second quarter. Autonomous cleaning technology can deliver enormous value and ROI for our customers. In particular, strategic customers with broad needs and efficiency imperatives. We are pleased with the way AMR is being received, and we are very excited by the promising role robotics will play in the future. We believe we have first mover advantage at large scale commercialization of this technology, and we intend to fully capitalize on it. We have much more work to do on all of these fronts, but our results for the second quarter begin to illustrate the potential impact of these initiatives. Like most industrial companies, we continue to operate in an environment marked by uncertain end market conditions and economic headwinds in the form of tariffs and raw material cost pressures. Furthermore, we face the opportunistic challenges that come with our own efforts to transform, efforts that we intend to further invest in this year. All this change means we have and will continue to operate the business with discipline and prudence. This approach guided our performance and outlook in the first half of this year and is informing the adjustments to our outlook we are making today. Now I'll turn the call over to Keith.