Earnings Call Transcript - TNC Q2 2025

Operator, Operator

Good morning. My name is Pam, and I will be your conference operator today. At this time, I would like to welcome everyone to Tennant Company's Second Quarter 2025 Earnings Conference Call. This call is being recorded. Thank you for participating in Tennant Company's Second Quarter 2025 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.

Lorenzo Bassi, Vice President, Finance and Investor Relations

Good morning, everyone, and welcome to Tennant Company's Second Quarter 2025 Earnings Conference Call. I'm Lorenzo Bassi, Vice President, Finance and Investor Relations. Joining me on the call today are Dave Huml, President and CEO; and Fay West, Senior Vice President and CFO. Today, we will review our second quarter performance for 2025. 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 accompany 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 these 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 2025 second quarter earnings release and presentation include the comparable GAAP measures and a reconciliation of these non-GAAP measures to our GAAP results. I will now turn the call over to Dave.

David W. Huml, President and CEO

Thank you, Lorenzo, and good morning, everyone. Thank you for joining our Q2 2025 earnings call. Today, I'm excited to share our second quarter highlights, progress on our enterprise strategy and our outlook for the remainder of 2025. Our Q2 results aligned with expectations, keeping us on track to deliver full year guidance as we continue to return to normalized seasonal product and channel mix patterns. We achieved net sales of $319 million, representing an organic sales decline of 4.5%. It's important to note that we are lapping the prior year quarter that benefited from a $26 million backlog reduction, concentrated in North America and comprised of higher-margin industrial machines. As evidenced by order rates, our underlying business performance remains robust, primarily driven by demand strength in North America. Enterprise-level order rates increased by 4% compared to the prior year quarter, marking our fifth consecutive quarter of order growth. Year-to-date orders grew 8%, positioning us above the growth rate needed to deliver our full year guidance. Additionally, our book-to-bill ratio remained above 1 as order patterns returned to normalized seasonality. While demand has been generally resilient, we continue to see pockets of weakness in our international markets. Turning to our performance by region. In the Americas, orders increased by a strong 9% compared to the prior year, led by North America, where we saw double-digit order growth. This sustained momentum from Q1 reflects the impact of our strategic investments in sales and service, new product introductions like the X4 ROVR and the strength of customer preference for our industrial product portfolio. Strong order activity reinforces our confidence in sustained demand and further strengthens our leadership position across the region. Organic net sales declined 5.5%, primarily due to lapping last year's significant backlog reduction in North America and ongoing demand softness in the Mexico market. In EMEA, organic sales declined 1.4% with orders down 7.4%, reflecting varied results by country and a highly competitive environment in the region. Revenue declines were primarily isolated to Germany and the Middle East region, partly offset by strong performance in the U.K. and Iberia. Foreign exchange provided a positive 5.3% benefit as the euro strengthened against the dollar. Looking ahead, we remain confident in our strategic plans to drive performance in the second half. In APAC, organic sales declined 5%, with orders down 3.5%. In Australia, we saw volume growth driven primarily by equipment, reflecting resilient customer demand despite growing economic uncertainty. However, this strength was more than offset by ongoing demand softness in China, where elevated competitive pricing continues to weigh on performance. Challenging market dynamics in APAC are expected to persist with no growth anticipated for the full year. At the enterprise level, our 16% EBITDA margin was in line with expectations. Gross margin was impacted by product mix, reflecting a return to normal seasonality as well as ongoing cost pressures. However, pricing actions and disciplined cost management supported EBITDA performance consistent with our guidance range. Turning to a brief update on our enterprise growth strategy. Our pricing initiatives delivered results in both the Americas and EMEA, contributing a 1.8% impact at the enterprise level in Q2. This primarily reflects price increases implemented early in the year as Q2 North American tariff-related increases only began reading through in June. We anticipate price growth for the remainder of 2025 to align with our long-term target of 50 to 100 basis points annually. New products continue to be a key driver of enterprise growth with both our product line extensions and our AMR products delivering in line with our expectations. We maintain a strong opportunity pipeline for the ROVR platform. The successful early quarter launch of the X6 ROVR midsized robotic scrubber received positive market feedback, strengthening our presence in large retail and small to midsized industrial sectors. AMR sales accelerated to 6% of enterprise net sales in Q2 2025 with cumulative deployed units exceeding 10,000, highlighting AMR as a key driver of our long-term growth. In June, we announced the launch of our new outdoor sweeping machine, the Z50 Citadel Outdoor Sweeper, a market-leading solution purpose-built for industrial and municipal outdoor environments. The Z50 marks Tennant's entry into the outdoor sweeping market, expanding our total addressable market and introducing us to a new set of customers. With advanced dust and debris control, intuitive operator features and robust performance, the Z50 is designed to meet the needs of demanding outdoor applications. With this strong pipeline of innovations, we remain on track to achieve our long-term goal of driving 150 to 200 basis points of annual growth from new products. With our robust organic growth strategy reading out, we continue to actively pursue M&A opportunities that complement our long-term objectives. In line with our capital allocation priorities, we are supporting near-term business needs while returning capital to shareholders through dividends and share repurchases. Now shifting to guidance for the remainder of the year. As we enter the second half of 2025, we expect many of the same challenges to persist, including macroeconomic uncertainty and tariff-related pressures. We are closely monitoring market demand and taking proactive steps to limit potential trade war impacts on our P&L. Our pricing actions, along with procurement and supply chain initiatives are currently positioned to effectively manage tariff-driven cost inflation in the full year, contributing to our financial resilience. I remain confident in our growth strategies and in our team's agility to navigate the current environment of uncertainty. Based on our Q2 performance and current outlook, we are reaffirming our full year 2025 guidance.

Fay West, Senior Vice President and CFO

Thank you, Dave, and good morning, everyone. In the second quarter of 2025, Tennant delivered GAAP net income of $20.2 million compared to $27.9 million in the prior year period. Net income for the quarter was impacted by volume declines across all geographies, particularly in North America, where we are comparing against a prior year that benefited from a significant backlog reduction. This backlog was primarily in higher-margin industrial equipment sold through direct channels, which impacted our gross margin performance in the quarter as compared to the prior year. Beyond operating income, our effective tax rate was 26% in the second quarter of 2025 compared to 24.4% in the prior year. The rate increase resulted from a discrete tax benefit tied to share-based compensation in the prior year that did not occur in the second quarter of 2025. Income tax expense was $1.9 million lower compared to the second quarter of 2024, primarily due to lower operating performance. Additionally, interest expense was slightly lower than the prior year period. Adjusted net income, excluding non-GAAP costs such as those related to our ERP project, resulted in adjusted EPS of $1.49 per diluted share for the second quarter of 2025 compared to $1.83 per diluted share in the prior year period. Looking a little more closely at our quarterly results. For the second quarter of 2025, consolidated net sales were $318.6 million, a 3.7% decrease compared to the $331 million reported in the second quarter of 2024. Currency movements, notably the euro's appreciation against the U.S. dollar provided a favorable tailwind of 0.8%. Excluding this currency benefit, net sales contracted by 4.5%. This constant currency decline was primarily attributed to a 6.3% reduction in sales volumes across all regions, which outweighed the 1.8% positive contribution from strategic pricing initiatives implemented during the period. As a reminder, we group our net sales into the following categories: equipment, parts and consumables and service and other. In the second quarter, overall equipment net sales decreased 6.5%, primarily driven by a decline in industrial equipment sales. In contrast, both the service and parts and consumables categories experienced growth compared to the prior year, with service sales increasing 1.4% and parts and consumables growing by 1%. Shifting to regional performance. Organic sales in the Americas decreased 5.5% compared to the same period last year. The decline in net sales this period was primarily driven by lower sales of industrial equipment as we lap a significant contribution from backlog in the second quarter of 2024. This was partially offset by price realization and volume growth in Commercial Equipment. Outside the Americas, organic sales decreased 1.4% in EMEA, primarily due to volume declines in Germany and the Middle East region. These declines were partly offset by volume increases in the U.K. and Iberia and price realization. Organic sales in APAC decreased 5%, primarily due to lower volumes in China due to continued competitive pressures. This was partly offset by higher equipment sales in Australia, where demand remained resilient. Gross margin was 42.1% in the second quarter, a 100-basis point decrease compared to the prior year quarter. This decrease was primarily driven by shifts in our product and customer mix as well as ongoing inflation and lower productivity. From a product perspective, last year's gross margin performance benefited from a large concentration of higher-margin industrial products sold through direct channels. This was partly offset by price realization. S&A expense totaled $93.7 million in the second quarter of 2025; a $0.8 million increase compared to the second quarter of 2024. This increase was primarily driven by higher costs linked to our strategic investments, including ERP costs and by a bad debt charge and was partially offset by lower variable compensation expenses and discretionary spending. Excluding non-GAAP costs, adjusted S&A expense in the quarter totaled $86.9 million, a $0.6 million decrease compared to the second quarter of 2024. Adjusted S&A expense as a percent of net sales increased to 27.3% compared to 26.4% in the prior year period. This deleverage was primarily driven by a bad debt charge related to an insolvent distributor. Adjusted EBITDA for the second quarter of 2025 was $51 million compared to $58.6 million in the second quarter of 2024. Adjusted EBITDA margin for the second quarter of 2025 was 16% of net sales, down 170 basis points compared to the 17.7% recorded in the prior year period. Turning now to capital deployment. Net cash provided by operating activities was $22.5 million during the second quarter, a $3.9 million increase compared to the prior year period, primarily driven by a smaller net investment in working capital and partly offset by higher spend on our ERP project. We generated free cash flow of $18.7 million in the second quarter, including ERP spend of $16 million. Excluding these nonoperational cash flows, we converted 137.2% of net income into free cash flow during the quarter. We remain on track to achieve our 2025 goal of converting 100% of net income to free cash flow. The company continues to deploy cash flow towards operational capital needs and to return capital to shareholders in line with its capital allocation priorities. During the second quarter, the company invested $3.8 million in capital expenditures and returned $18.8 million to shareholders through share repurchases and dividends. Tennant's liquidity remains strong with a cash and cash equivalents balance of $80.1 million at the end of the second quarter and approximately $434 million of unused borrowing capacity on the company's revolving credit facility. The company continues to effectively manage debt and maintain a strong balance sheet. Our net leverage was 0.66x adjusted EBITDA, providing the company with increased flexibility and capability to fund growth through M&A and create value for our stakeholders. Moving to 2025 guidance. As Dave mentioned, discussions around global tariffs remain active and ongoing trade tensions continue to fuel economic uncertainty. As we enter the second half of 2025, we expect many of these same challenges to persist, including macroeconomic volatility and tariff-related pressures. That said, we're closely monitoring market demand and proactively taking steps to limit potential impacts on our results. As we head into the second half of the year, we have reassessed our outlook on tariff-related impacts. Based on current tariffs in place, we estimate a full year 2025 impact of approximately $20 million or around 3% of our total cost of goods sold. With the combination of strategic supply chain actions, targeted procurement efforts and market-based pricing initiatives, we remain confident in our ability to manage and offset tariff-driven cost inflation. While we continue to navigate an uncertain macroeconomic backdrop, our focus remains squarely on growing net sales in the second half of the year through sustained order growth and continued price realization. Additionally, we anticipate that cost improvements and increased productivity will drive margin expansion in the back half of the year. The collective impact of these actions, including those to address tariffs, underpin our expectations of delivering our full year 2025 results within our guidance range. For 2025, Tennant reaffirms the following guidance: net sales of $1.210 billion to $1.250 billion, reflecting organic sales decline of negative 1% to negative 4%. GAAP EPS of $3.80 per share to $4.30 per diluted share. Adjusted EPS of $5.70 per share to $6.20 per diluted share, which excludes ERP costs and amortization expense. Adjusted EBITDA in the range of $196 million to $209 million; adjusted EBITDA margin in the range of 16.2% to 16.7%. Capital expenditures of approximately $20 million and an adjusted effective tax rate of approximately 23% to 27%, which excludes an adjustment for amortization expense. With that, I will turn the call back to Dave.

David W. Huml, President and CEO

Before we conclude and open up for questions, I want to thank our global Tennant team for their outstanding execution and commitment. Your focus on delivering results, driving efficiency and serving our customers with excellence continues to set us apart. To our customers around the world, thank you for your ongoing trust in Tennant. We're proud to be your partner and are committed to earning that trust every day as we support your success. I believe our performance this quarter reflects the momentum behind our enterprise growth strategy, the strength of our operating discipline and our ability to successfully navigate dynamic market conditions. We are tracking well against our 2025 financial targets and remain focused on driving profitable growth, expanding margins and delivering strong returns. Our opportunities ahead are compelling, and we are well positioned to capitalize on them. With that, we'll open the call to questions. Operator, please go ahead.

Operator, Operator

Operator Instructions. And your first question comes from Steve Ferazani with Sidoti.

Stephen Michael Ferazani, Analyst

Appreciate the detail on the call. Dave and Fay, you mentioned the sort of growing global uncertainty around tariffs. Certainly, there's concerns around U.S. economic growth and a potential slowdown. Historically, your first half and second half have looked similar. Obviously, the guide implies a much stronger second half. Confidence level on that and how you get there given the sort of economic uncertainty?

David W. Huml, President and CEO

There's a lot of economic uncertainty, particularly regarding tariffs. In discussing tariffs with customers, they're evaluating their impact and planning their responses. There's also the challenge of unpredictability in their businesses, but overall, our customers haven't halted their ordering or projects. The opportunity pipeline remains strong despite the tariff-related uncertainty. While customers are vocal about tariffs, we haven't seen any signs of demand downturns in our business due to them. Looking ahead to the second half, I'll focus on orders, which drive our business. We had a very strong first half, and I'll go through it by region. Starting with Asia Pacific, we faced difficulties primarily due to the situation in China. The market there is challenging, characterized by increasing competition and pricing issues that have spread to other regions. Growth has been hard to achieve in China and to some extent Japan. Nonetheless, our business in Australia performed well, and we expect that to continue. The opportunity prospects look bright in Australia, and there are positive indicators in markets like Korea, Singapore, Malaysia, and Indonesia, though they face some impact from China's issues. In India, things are progressing well. We're not anticipating much improvement in APAC for the second half, but there are specific areas where we believe we can deliver growth. In EMEA, we need a strong performance in the second half. The first half was tough in the Middle East and Germany due to various external and internal factors. We're rethinking our strategy and implementing our growth approaches in those areas, which has caused some disruption. However, I believe we are on a solid path. We expect our TCS acquisition, covering Eastern Europe, to fuel growth in the second half. France showed strong Q2 results, and we hope to see continued growth there. The U.K., Ireland, Spain, and Portugal are performing well too, with strong positions in those markets. Taking a broader look at EMEA, we do see competitive pressure from price point imports from China across the region. We have our product line extensions to counter this competition and are also seeing significant interest in our AMR products. We are focusing on growth initiatives, especially in places like the U.K. and Spain, where we can apply our growth strategies effectively. In North America, we had a stellar first half, and while there are concerns, we're not detecting any signs of declining demand. The Americas as a whole saw robust growth, led by double-digit increases in North America across various channels and product categories. We have seen a rebound in commercial, especially in retail and education, and there's a strong pipeline in the industrial sector as well. We feel confident in our strategies to continue driving growth into the second half.

Stephen Michael Ferazani, Analyst

That's a great round up. In terms of the margin lift your sort of the guide kind of implies, is that pricing driven? Is it mix driven? Is it cost reduction driven? Or is it all three?

David W. Huml, President and CEO

Yes, I can answer that, Steve. So from a margin standpoint, we anticipate growth in our EBITDA margin in the second half, right, as you pointed out, in line with our guided range. And I'd say the key drivers include: one, expansion of our gross margin rate. So we anticipate driving that through pricing ramp as we expect the impact of tariff-related cost increases to unfold in the second half. We will see additional absorption because we'll see increased volume flowing through our plants in the second half. So that's going to be one of the drivers of gross margin as well. And then also some stronger impacts coming from our cost-out initiatives. Now we also have the ability and discipline in our cost management to sort of flex our S&A and R&D levels. So overall, EBITDA in the second half, that's how we anticipate growing our EBITDA margin in the second half.

Stephen Michael Ferazani, Analyst

And how much backlog conversion do you have left to lap in the second half? It's much lower, right?

David W. Huml, President and CEO

Yes, it's lower than the first half. Roughly call it, $75 million was lapped in the first half, and then we have an additional $50 million in the second half. So you're correct, lower. It's a lower comp from a backlog.

Stephen Michael Ferazani, Analyst

I didn’t expect the outdoor sweeper to be part of our plans. That was a bit of a surprise. How long did the planning take? Was this driven by customer demand? Why are we entering that market now? Has Tennant ever operated in that market before?

David W. Huml, President and CEO

Yes, that’s a great question. I have been with Tennant Company for 10 years, and if you look back at our history, we did participate in the outdoor market with a range of products. However, during a period where we focused our business strategy, we made the decision to exit those product categories because we faced challenges in competing effectively in that market, both in terms of cost and our channel strategy. Regarding our move back into outdoor sweeping, we established a growth strategy and evaluated market opportunities. When we refer to outdoor sweeping, we specifically mean industrial outdoor sweeping. While there are other outdoor cleaning segments like city cleaning and street sweeping, which we may sell some units to municipalities, our main focus is the industrial sweeping segment, which has a total addressable market of about $200 million. We found this to be an attractive space, particularly because we have prior experience in this area and some products already in adjacent markets. We also possess the aftermarket service capabilities needed to ensure our machines operate effectively in these industrial applications, which is highly valued. Given the attractive market conditions, we explored opportunities to enter and formed a strategic partnership to develop a product that aligns with our specifications and allows us to compete effectively on pricing. This approach presents a win-win situation, enabling us to grow our total addressable market while ensuring we can compete profitably. We believe this segment has long-term potential, and we can see opportunities to introduce new products in the future. Currently, our focus is on industrial outdoor sweeping, which complements our existing product line and aligns well with our go-to-market strategy, including our sales channels and aftermarket services.

Stephen Michael Ferazani, Analyst

So you're serving the same industrial customers. You don't need to expand the sales force.

David W. Huml, President and CEO

We don't need to expand the sales force to reach these customers, as we are either already serving them with other products and applications or we have sales coverage in the regions where they are located. Our sales force, particularly in North America, Latin America, and traditionally in the Middle East and Asia, is skilled at selling industrial equipment and heavy-duty aftermarket components. This aligns well with our strengths in industrial sales and service. We assessed the situation and concluded that an entirely new go-to-market strategy is unnecessary, nor do we need to develop additional aftermarket service capabilities. This is a complementary fit, and I commend the team for recognizing this opportunity. Instead of limiting ourselves based on past decisions, like exiting a product ten years ago, we conducted market research to understand customer demands. The team determined that we are fully capable of competing effectively in this space and servicing our customers well. Thus, we decided to pursue this opportunity. I emphasize that when aiming for growth, it's important to reassess market opportunities instead of merely looking back at past experiences; we are focused on the future prospects in all areas.

Operator, Operator

Your next question comes from Aaron Reed with Northcoast Research.

Aaron Bruce Reed, Analyst

I wanted to follow up on your comment that about 6% of North American sales are from AMR. Is that correct? Can you provide more details about the leasing program deployment, how it has been received, and whether it is actually boosting sales or creating new opportunities, as it's quite recent?

David W. Huml, President and CEO

Yes, I'm happy to answer that. Thank you, Aaron, for your question. To clarify, the 6% figure refers to our global enterprise sales. I’m pleased with our progress in AMR, but I feel we still have work to do in disrupting Spark. We have a strong lead and a substantial opportunity ahead to shake up this market with AMR. Specifically, I want to highlight our Equipment as a Service offering, Clean360, which we developed and launched in North America as we entered this quarter. Our team has been trained to promote it, and they are actively pitching it. We have secured a few orders for the Clean360 program, with many more in the pipeline where customers are deciding between a CapEx purchase and our Equipment as a Service option. We're encouraged by the initial results. The team is very competent in selling this offering, and it could be a strong alternative for some of our AMR customers as they consider adoption. It's just one more option in our overall strategy. Looking at our entire go-to-market approach and AMR product lineup, we are very well positioned. We have six products in our global portfolio, with the recent introduction of the X4 and X6 ROVR, which provide outstanding performance for our customers. We have plenty of reasons to be optimistic about the X4 ROVR. To provide a data point on AMR, our year-over-year sales have increased nearly 20% year-to-date through the first half, driven by both reorders and new sales of Generation 2 and Generation 3 products, including our X4 and X6 ROVR. This is a solid performance for the first half, and we see a strong opportunity pipeline as we look toward the second half of the year.

Aaron Bruce Reed, Analyst

It seemed that in the first half, the industrials were underperforming, but I understand you're seeing a strong pipeline of orders in the industrial space. I want to confirm that it was weaker initially, but you're anticipating a stronger rebound in the second half.

David W. Huml, President and CEO

Yes. So industrial is where we're lapping the backlog reduction most predominantly because the backlog was comprised of industrial and North America. So we've got to be careful when we talk about industrial strength. We're behind last year because we were buoyed by all of the backlog reduction benefit in the first two quarters. And as Lorenzo said, it was about $75 million that we're lapping in the first half. Now we're going to lap another $50 million in the second half. So on a year-over-year comparison, you're going to see industrial lapping a difficult lap and being behind. My comment was more around the order activity and the pipeline of opportunities that have not yet materialized in orders we're on the constant lookout for demand signals from the business that would indicate strength or flattening or weakening. And as we look at our CRM and look at the opportunities that have been developed, talk to our customer-facing industrial sales team, they're still bullish on the year-to-date, and they're bullish on the second half and the opportunities we have. So my comment is more about the pipeline of opportunity and the order outlook heading into the second half. We're still bullish on industrial, even though optically, we're going to show the sales being behind year-over-year. Does that make sense, Aaron?

Aaron Bruce Reed, Analyst

Yes, makes total sense. And I guess the last part is, so it sounds like your orders are picking up, things are doing well. Again, the lapping of the backlog kind of distorts what it's looking at here. But again, second half is looking good. From the time that the orders are placed to revenue being recognized, what's kind of the lead time on that just in general?

David W. Huml, President and CEO

Yes, that's a great question. It varies widely across our product lines. Our smallest product is in stock and ready to ship today, so when you place an order, it will ship within the next 48 hours. For our commercial line, lead times range from a few days to a couple of weeks, potentially extending to 3 or 4 weeks. In terms of our industrial products, the lead time is typically 8 to 10 weeks between placing an order and shipping. For the Z50 outdoor sweeper, if we don’t have the specific model in stock, the lead time can exceed a quarter, around 4 to 5 months. Overall, there is a broad range of lead times across our entire product line. If we have the right configuration in stock for some of our most popular products, we will keep those on hand to fulfill quick orders, but we maintain market-competitive lead times across our product portfolio.

Aaron Bruce Reed, Analyst

And one last question on pricing. So again, it sounds like you're able to pass on pricing that was successful. Do you expect to have any additional price increases later in the year? And then the other part too is, is there any unique or particular considerations you are having to address due to the potential semiconductor tariff that's been recently proposed, possibly hitting the AMR product category a little bit harder?

David W. Huml, President and CEO

Yes. We haven't analyzed the semiconductor tariff situation yet. However, our assessment of the potential impact of these tariffs is thorough and detailed. We evaluate all key export products and consider any indirect effects, such as when our suppliers purchase components subject to tariffs, which then affects the final product we receive. We are keeping track of both aspects and are working to quantify the expected tariff impact. Regarding pricing, the increase we implemented in North America during the second quarter was necessary to help mitigate the anticipated tariff effects. There are many variables involved in how tariffs influence costs and how they relate to pricing, but we are confident that we can use pricing strategies to offset the tariff effects on our profit and loss. That's why we feel assured in maintaining our guidance. We are open to the possibility of further price increases, both in North America and elsewhere, depending on business needs to maintain our profitability. If tariffs stabilize and become more predictable, we might not need to adjust prices. However, we are not reacting to every piece of news; there has been considerable fluctuation in tariff implementation and timelines, making predictions challenging. We remain flexible and may adjust prices if necessary to counteract tariff impacts in the latter half of the year.

Operator, Operator

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

David W. Huml, President and CEO

This concludes our earnings call. If you'd like to learn more about Tennant, we will be participating in the Sidoti Small Cap Investor Conference on September 17. Thank you for your continued interest in our company and have a great day.

Operator, Operator

This concludes today's conference call. You may now disconnect.