Good morning. My name is Karen, and I’ll be your conference operator today. At this time, I would like to welcome everyone to Tennant Company’s Second Quarter 2024 Earnings Conference Call. This call is being recorded. There will be time for Q&A at the end of the call. Thank you for participating in Tennant Company’s second quarter 2024 earnings conference call. Beginning today’s meeting is Mr. Lorenzo Bassi, Vice President, Finance and Investor Relations for Tennant Company. Mr. Bassi, you may begin.

Good morning, everyone and welcome to Tennant Company’s second quarter 2024 earnings conference call. I am Lorenzo Bassi, Vice President, Finance and Investor Relations. Joining me on the call today are Dave Huml, Tennant’s President and CEO, and Fay West, Senior Vice President and CFO. Today, we will provide an update on our 2024 second quarter performance. Dave will discuss our results and enterprise strategy, and Fay will cover our financials. After our prepared remarks, we will open the call to questions. Our earnings press release and slide presentation that accompanies this conference call are available on our Investor Relations website. 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 2024 second quarter earnings release includes the comparable GAAP measures and a reconciliation of these non-GAAP measures to our GAAP results. I’ll now turn the call over to Dave.

Thank you, Lorenzo, and hello, everyone. On the call today, I will be discussing highlights from the second quarter 2024, our outlook for the remainder of the year, and the progress on our enterprise strategy. I am pleased to report on our strong results in the quarter. Lapping a previous record high second quarter in the prior year, we achieved both organic net sales growth and increased adjusted EBITDA. Our performance was driven by generating strong order demand, as well as continued strong backlog benefit. Enabled by the execution of our enterprise strategy initiatives, we expect to drive continued order growth in the second half of 2024. For the second quarter of 2024, net sales increased 2.9% to $331 million, and adjusted EBITDA rose to $58.6 million, resulting in an adjusted EBITDA margin of 17.7%. We are pacing ahead of our year-to-date backlog reduction expectations, and we are confident in our ability to achieve the $80 million to $100 million of backlog reduction for the full year 2024, as we previously communicated. With this backlog reduction, we now believe we will exit 2024 with a normalized backlog level and market competitive lead times across the entire product portfolio globally. Second quarter order rates were very strong, up double digits compared to both the first quarter of 2024 and the second quarter of 2023. This order demand generation is a direct result of the investments we made and the execution of our enterprise growth strategy. Looking ahead to the second half of the year, we are forecasting continued strong order growth, driven by rigorous execution of targeted growth initiatives. We expect increased impact on growth from incoming orders as the backlog reduction benefit moderates in the second half. Despite known challenges and reasons for caution in the macroeconomic environment, demand for Tennant products and services remains strong. Tennant's enterprise performance during the quarter gives us momentum, and we are forecasting higher net sales in the second half of the year. Our business results varied by geography. In the Americas, order rates during the quarter were up double-digits compared to the prior year period, and we continue to reduce the backlog in our industrial machines. Our strategic investments in this region continue to deliver strong order rates, outpacing market growth, giving us reason to believe our strong leadership position is growing. In EMEA, it was a challenging quarter across the region, compounded by lapping a previous quarter with higher backlog reduction benefit. Economic activity in EMEA's manufacturing sector remains sluggish, and our sales were flat. Despite this broad-based market softness, we are seeing indicators that give us reasons for optimism in our outlook for the region. In Italy, for example, we are seeing strong order rates as we build out our distribution network with a focus on industrial, BSE, and retail vertical market customers. Overall, order rates in the region are up compared to the prior year quarter, and we expect to see continued improvement during the second half of 2024. In APAC, we faced a difficult quarter, driven primarily by stark declines in China, where we are experiencing slowing demand. Excess manufacturing capacity and government-induced overproduction in China are pressuring market prices in our mid-tier product offerings. This is affecting not just the China market, but the broader region as well, and we do not see this dynamic changing for the remainder of the year. As a result of the Q2 slowdown, we are expecting minimal growth in the APAC region for the full year 2024. We introduced the three pillars of our new enterprise strategy: growth, performance, and people. We continue to resource, invest, and execute targeted initiatives across each of these pillars. Within the growth pillar, pricing is critical to driving growth. Our pricing strategy is to maximize our market position to realize growth and capture the value we deliver to our customers. During the second quarter and throughout the first half of 2024, we saw price growth across each of our key geographies. At an enterprise level, we are targeting approximately 50 to 100 basis points of annual price growth as part of our long-term goals. New product development is another important focus. During the second quarter of 2024, we started shipping our first X4 ROVR orders to customers. The X4 ROVR is our first purpose-built autonomous floor-cleaning machine and our fourth robotic scrubber. As orders and customer interest for the X4 Rover continue to increase throughout the second quarter, we decided to increase our manufacturing capacity to support the anticipated order demand. This trend supports our belief that we have a winning product portfolio and strong value proposition in the market. Overall, our second quarter results reflect solid execution on our enterprise growth strategy, providing strong momentum for the remainder of 2024 and the years ahead. With that, I will turn the call over to Fay for a discussion of our financials.

Thank you, Dave, and good morning, everyone. In the second quarter of 2024, Tennant delivered GAAP net income of $27.9 million compared to $31.3 million in the prior year period. Net income performance in the quarter was driven by higher net sales from price realization. This was partly offset by volume declines in the EMEA and APAC regions. Overall, while our volumes remained flat, we are pleased with the net volume growth we are seeing in the Americas. Operating expenses were higher in the current year due to the ERP implementation as well as transaction and integration costs associated with our investment in Brain Corp and the acquisition of TCS. Looking beyond operating income, interest expense in the second quarter was $1.5 million lower than the prior year period, driven mostly by lower debt balances as we reduced debt during the second half of 2023. Our average interest rate, net of hedging for the second quarter of 2024, was 3.88% compared to 4.35% in the prior year quarter. Income tax expense in the quarter was $0.4 million higher than the prior year period; our effective tax rate was 24.4% in the second quarter of 2024 compared to 21.6% in the prior year. Excluding ERP implementation and other non-GAAP costs, adjusted net income in the second quarter of 2024 was $35.2 million compared to $34.7 million in the prior year period, a 1.4% increase. Adjusted EPS for the second quarter of 2024 decreased 1.6% to $1.83 per diluted share compared to the prior year period. For the second quarter of 2024, consolidated net sales totaled $331 million, a 2.9% increase compared to $321.7 million in the second quarter of 2023. Organic sales in the Americas increased 5.5% compared to the prior year period due to price realization and favorable product and channel mix across the region. Adjusted EBITDA for the second quarter of 2024 was $58.6 million, up 1.7% compared to the second quarter of 2023, with an adjusted EBITDA margin of 17.7% of sales, essentially flat compared to the second quarter of 2023. Turning now to capital deployment, net cash provided by operating activities was $18.6 million during the second quarter compared to $39.1 million in the year-ago period. The decrease in operating cash flow was primarily driven by increases in working capital due to the timing of sales during the quarter as well as investments in ERP modernization costs totaling $9 million, resulting in free cash flow of $14.4 million for the quarter. The company continues to deploy cash towards operational capital needs and to return capital to shareholders in line with its capital allocation priorities. During the second quarter, the company invested $4.2 million in capital expenditures and returned $13.3 million to shareholders through dividends and share repurchases. Tennant's liquidity remained strong with a balance of $84.6 million in cash and cash equivalents at the end of the second quarter and approximately $321.8 million of unused borrowing capacity on the company's revolving credit facility. Based on the strong order growth rate and demand for our products and services, we are now forecasting slightly higher net sales for the full year 2024. Specifically, we now expect net sales to be in the range of $1.280 billion to $1.305 billion, reflecting organic sales growth between 2.5% and 4.5%. Adjusted EPS is expected to be between $6.15 and $6.55 per diluted share. These factors contribute to our optimism for the future. With that, I will turn the call back to Dave.

Thank you, Fay. In summary, I am very proud of the global team and our ability to continue our growth trajectory, as we are lapping a record prior year. The investments we are making and innovative products we are delivering to our customers position us well to deliver on our increased full-year guidance. I wanted to thank everyone who joined us for our Investor Day at the New York Stock Exchange in May. It was well attended, and we received positive feedback from those who attended in person as well as remotely. A recording of the event, along with the presentation, is available on our investor website. With that, we will open the call to questions. Operator, please go ahead.

Your first question comes from the line of Steve Ferazani from Company Sidoti. Please go ahead.

Hey, good morning, guys. This is Daniel. I'm actually filling in for Steve today. Given the strength once again of EPS and the good strong orders, can you maybe just provide a little bit of color on why you decided to lower the high range of your EPS guidance?

Yes. I think as we look at the tax rate, interest expense, and the overall expenses, I think that's a contributing factor to our overall EPS.

Okay. Perfect. And then you touched on the geographic areas, but in general, are you seeing any recovery in any other areas within EMEA?

Thanks for the question, Daniel. We are seeing, I would call it, still sluggish demand across the region. We highlighted Italy because it's an area that we have made specific investments in, and we're starting to see green shoots of return on those investments. We have positivity in the UK as well as from our acquisition in Central and Eastern Europe, the TCS acquisition. Those will be points I would highlight as points of positivity coming through the quarter from a market demand perspective.

Perfect. And then just one more, if you don't mind. Could you just touch a little bit on the M&A pipeline that you see right now?

Yes, happy to. We've been very transparent with our strategy around M&A. We're focused on deals that defend and grow our core business that allow us to grow and capture value in the connected autonomy space and then the adjacency of other mobile equipment. We have developed a funnel of over 800 target companies aligned with that strategy, and we are actively working that funnel. The brain agreement, although technically not an acquisition, and the equity stake we took in Brain Corp are providing commercial benefits to accelerate our AMR adoption and sales in the marketplace. Our acquisition of TCS, which was in Central Eastern Europe, is on track and yielding positive benefits. We have two proof points of action within our M&A funnel early in the year. We are actively engaged and prioritizing targets. When the right deal comes along, we are prepared to move quickly. We look forward to updating you more on specifics as we move through the second half and into 2025. This is an enterprise priority and will be a strong contributor to our value creation strategies in the coming years.

Great. We really appreciate it and best of luck in the second half of the year. Thanks, Daniel.

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

Thank you. I want to thank you all for your participation today and your interest in Tennant Company and a special congratulations and thank you to the entire global Tennant team that may be listening to the call. We are proud of saying that growth is a team sport at Tennant Company. These results are a direct reflection of your efforts and contributions. This concludes our earnings call. Have a great day.

Thank you. Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect.