Tennant Company

Good morning. My name is Rob and I will be your conference operator today. At this time, I would like to welcome everyone to Tenant Company's 2022 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'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, please mute the audio on your computer to avoid potential quality issues during the call. Thank you for participating in Tenant Company's 2022 First Quarter Earnings Conference Call. Beginning today's meeting is Ms. Faye West, Senior Vice President and Chief Financial Officer for Tenant Company. Ms. West, you may begin.

Good morning, everyone, and welcome to Tenant Company's first quarter 2022 earnings conference call. I am Faye West, Senior Vice President and CFO. Joining me on the call is Dave Hummel, Tenant's President and CEO. Today, we will update you regarding our first quarter performance and our guidance for 2022. Dave will brief you on our operations and enterprise strategy, and I will cover the financials. After our prepared 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 risks 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 2022 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 Business Wire and is also posted on our Investor Relations website. I'll now turn the call over to Dave.

Thanks, Faye, and thank you everyone for joining us today. In line with our expectations, our first quarter results sustained strong momentum from our performance in 2021. Our comprehensive product portfolio and innovative product and solution-oriented offerings continue to resonate with customers. We have achieved pre-pandemic order levels and are encouraged that demand for our products and services remains robust. I am thankful for our employees who are managing dynamic market conditions but remain committed and focused on the needs of our customers. We delivered adjusted EBITDA of $27.9 million, and while our Q1 results were in line with our expectations, the year-over-year decrease was driven primarily by gross margin compression. Inflationary pressures related to materials and freight were offset in part by the impact of pricing actions. Parts shortages and supply chain volatility constrained our ability to ramp production, impacting volumes and creating higher levels of backlog. Macro environment risks have not moderated or corrected as quickly as we expected, and the impact this has on parts availability and inflation, and in turn, production and margin, has been reflected in our full-year outlook. We are lowering our full-year guidance for adjusted EBITDA from a range of $145 to $160 million to a range of $140 to $155 million, a decision that we did not make lightly but believed was prudent based on evolving market conditions. We continue to take steps to maximize our output worldwide and to safeguard the customer experience. Our supply chain team has expanded our dual sourcing supply options to reduce the risk of production disruptions, accelerated local for local sourcing, and engaged suppliers to address Tier 2 components to improve availability and predictability. Our engineering team has launched new value-add projects that yield tactical and strategic benefits, including the redesign of components that are currently limiting production capacity. Our operations team has designed and is executing assembly line moves and production capacity shift projects to further enhance output and building machines ahead of schedule when we are short components that can be added quickly as a last step. These measures are consistent with our long-term enterprise strategy and part of our commitment to driving continuous improvement. Our enterprise strategy also includes an unwavering commitment to profitable innovation in developing new products and features that deliver differentiated value to our customers. As we announced earlier this month, we've added lithium-ion technology to our portfolio of autonomous mobile robots, or AMR, machines, including the T38 AMR, T7 AMR, and T16 AMR. This new battery technology provides longer runtimes and hassle-free maintenance versus traditional lead-acid batteries, resulting in maximized productivity, simplified operations, and reduced costs. While we navigate the significant near-term challenges, we remain committed to providing our customers with high-quality, innovative products and exceptional service. These investments and focused actions position us exceptionally well to accelerate sales when the macro environment improves. With that, I'll turn the call over to Faye for a discussion of our financials.