Tennant Company

Good morning. My name is Sunidra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Tenant Company's 2020 First 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 one if you would 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, please mute the audio on your computer to avoid potential quality issues during the call. Thank you for participating in Tenant Company's 2020 First Quarter Earnings Conference Call. Beginning today's meeting is Mr. William Preet, Senior Director of Global Financial Planning and Analysts and Investor Relations for Tenant Company. Mr. Preet, you may begin.

Thank you, Sindra. Good morning, everyone, and welcome to Tenant Company's first quarter 2020 earnings conference call. I'm William Prate, Senior Director of Global Financial Planning and Analysis and Investor Relations. Joining me today are Chris Killingstad, Tenant's President and CEO, Dave Huml, Chief Operating Officer, and Andy Cibula, our Interim CFO. Today we will update you regarding our first quarter performance and the broader business impact of the coronavirus pandemic. Chris will brief you on our operations and Andy will cover the financials. After our remarks, we will open the call to questions. Please note a slide presentation accompanies this conference call and is available on our investor relations website at investors.tenantco.com. 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 conference call, we will discuss non-GAAP measures that include or exclude certain items. Our 2020 first quarter earnings release includes the comparable GAAP measures and a reconciliation of these non-GAAP measures to our GAAP results. Our earnings release was issued this morning via BusinessWire and is also posted on our investor relations website at investors.tenantco.com. Now, I'll turn the call over to Kristin.

Thank you, William, and thanks to all of you for joining us today. We've all witnessed a remarkable, remarkable turn of events since our last opportunity to speak with you. At the outset, I want to wish you all as you face your own challenges in this pandemic. In discussing our results, we will provide as much context as we can regarding what we are seeing and how Tenant is facing what continues to be a fluid and unpredictable situation. To date, the primary impacts on our business have been related to temporary plant shutdowns as well as slowdowns in sales to some end markets amid widespread closures of customer facilities. Regarding our plant shutdowns during the first quarter specifically, Tenant's China factories were closed for two weeks in February, and we temporarily suspended operations at our plants in Italy and the United States toward the end of March, in accordance with local directives and for cleaning purposes. As of today, although all of our plants are not yet back to full productivity, we are able to operate and are doing so subject to the latest official guidance on health and safety. As for our first quarter, it was the story of two strong months and one difficult one. We saw strong revenue performance through February, led by North America, Latin America and our EMEA regions. However, as local shutdowns began to take hold in March, we saw significant drop-offs in sales across all regions, but particularly in Italy, France, Australia and North American markets. As we manage through this pandemic, our guiding principles are first and foremost to prioritize the health and safety of our employees, customers and business partners. We take very seriously our commitment to provide the equipment, parts and service our customers need to keep their facilities clean and safe. We support a wide range of essential businesses and consider tenant to be essential in meeting their needs. Second, we will manage our costs and cash flow to maintain liquidity. And third, we are ready to make the tough decisions necessary to weather this storm while preserving our ability to ramp up quickly as markets recover. With these guiding principles in mind, we have implemented a number of measures across our global operations to minimize the financial impact of this pandemic. As announced, we have a dedicated response team in place led by our Chief Operating Officer, Dave Huml, to support our locations around the world in managing the challenges of our business as they emerge. We're fortunate to have Dave in this role to ensure we're executing on the most important initiatives in following through on our guiding principles. With respect to our supply chain, we have established cross-functional and daily communications with suppliers to review, track and prioritize high-risk components. We have also identified and activated alternative suppliers, materials and components as needed. To date, we have been able to avoid and many more. Regarding transportation, we have set up tracking, reporting and communication channels with carriers to understand their risks and to evaluate available options where necessary. At the same time, our customer service teams have done a great job working with customers to avoid missed deliveries due to closures they may be experiencing. Related to cost, We've implemented a number of actions to protect our business. Specifically, we have initiated a global merit freeze while operating within the applicable laws and regulations and have also implemented a hiring freeze for non-essential roles. We have also suspended all non-essential business travel and all non-business critical discretionary spending. Lastly, I will forego 100% of my salary through the second quarter. At the same time, our senior leaders will forego 35% of their salaries and the Board of Directors has elected to take a 50% cut in pay. We've also implemented furlough and pay reductions across our global workforce to the extent possible under local laws and regulations through the second quarter. We are monitoring developments daily and I am proud of the way our team members have responded to a situation that was unimaginable just a short time ago. Tenant is a highly resilient 150-year-old business, which is due to the amazing team we have across the globe. While the conditions we are operating in continue to unfold, it's important to recognize that we have identified all the levers available to us and we are 100% committed to doing what is necessary to emerge from this crisis in a strong position to serve the needs of our customers. At the time of our Q4 call, I expected that our focus today would be on our enterprise growth strategy of winning where we have competitive advantage, reducing complexity and building scalable processes and innovating for profitable growth. While the market landscape has changed dramatically in the past three months, the pandemic does not prevent us from following through on the strategic initiatives that we've already set in motion. In fact, those initiatives not only help us manage through this period, but can also enable us to emerge from the pandemic as a stronger company operationally. We will continue to execute on our enterprise strategy to the extent that we can. because the initiatives are within the four walls of Tenant and are focused on improving the company's operating model, which will continue to help us evolve despite this fluid environment. Lastly, I want to say a special thank you to Keith Woodward, our former Senior Vice President and Chief Financial Officer. As announced, Keith has elected to resign. Andy Cibula will continue to serve on an interim basis until a permanent CFO is named. Keith will be working with Tenant to ensure a smooth transition to the end of July. On behalf of everyone at Tenant, I want to thank Keith for his numerous contributions during his time with the company, and we wish him the best in all his future endeavors. With that, I'll turn the call over to Andy.