TENNANT CO — Call Transcript 2026

Good afternoon, everyone. Welcome back to Sidoti's Virtual Investor Conference. I know we had a little bit of technical difficulty. Hopefully, you all joined with us for the presentation because I think it's going to be an interesting one this afternoon. We're pleased to be welcomed by Tennant Company, the ticker is TNC. We probably will have a few minutes after the presentation for questions. As a reminder, you can press that Q&A button at the bottom of your screen and type them in, and we'll get to as many as we can. Having said that, I'm pleased to be joined this afternoon by Patrick Schottler, Senior Vice President, Robotics, and Lorenzo Bassi, Vice President, Finance and Investor Relations. With that, let me turn it over to you, gentlemen. Thanks, Steve, and good afternoon, everyone. Appreciate the opportunity to present. As part of our technical challenge, it looks like my camera's not going to cooperate today, so I'll be off-camera. But thanks again for making the time. We appreciate the opportunity to be here and share an overview of Tennant Company. We'll spend a few minutes, probably 15 minutes or so, walking through a few key elements of our strategy with a particular focus on robotics, and that driving our growth, and then open it up for Q&A between Lorenzo and myself. We can go to the next slide. At our core, Tennant Company is a global leader in commercial cleaning solutions. We offer a differentiated investment profile built on four core elements. We're a market-leading business with a durable competitive moat. We have exposure to structural growth driven by macro trends in automation, labor, and sustainability. We have a clear path to accelerated growth through robotics, and we have a strong balance sheet giving us the financial firepower to realize our growth potential, both organically and through acquisition. Our business is highly diversified, and that serves as a critical source of resilience for us. We serve our customers across a broad range of end markets, from retail to logistics, manufacturing, transportation. Essentially anywhere that there is a commercial facility to clean, you can find Tennant Company with a presence. We operate across a truly global footprint with sales and manufacturing presence spanning North America, Europe, Asia-Pacific, and Latin America, allowing us to participate in both developed and emerging growth dynamics. We go to market through an omni-channel model. We sell directly to end users, including large national and international accounts. We have a global network of distribution partners to access diversified vertical markets. We have field service as an important aftermarket selling channel. Increasingly, we transact with customers through e-commerce channels. That breadth of coverage across verticals, geographies, channels, that allows us to scale with customers globally while maintaining strong and localized support. We pair that reach with a full solution portfolio that includes equipment, parts, consumables, and service, enabling us to engage with our customers across the entire ownership life cycle. Importantly, roughly 40% of our revenue comes from the aftermarket, generated from a consistent and profitable stream of revenue from parts, consumables, and service. That recurring aftermarket revenue stream is reinforced by our global service network of more than 1,000 technicians, which is a meaningful competitive advantage for Tennant Company. It enables us to support large distributed customer footprints and maintain high levels of uptime and performance across our cleaning fleets. This combination, our installed base, our service capability, and our engagement across the product life cycle, creates strong customer loyalty and a sustainable competitive differentiation for Tennant Company that is really difficult to replicate. The market that we compete in is growing, and it's driven by expansion in global facilities footprint, and a structural shift towards cleaning automation. Tennant drives that cleaning automation across our core business. We're leveraging our core strengths to accelerate the adoption of robotic cleaning as the most impactful form of automation cleaning. We have a strong starting point in robotics with more than 11,000 cleaning robots deployed globally, and we're building on that foundation to scale robotics revenue and achieve our objectives of $250 million in robotic revenue by 2028. Overall, supporting this strong financial position, we generate consistent cash flow. We're operating with low leverage between one and two turns, and we have the financial firepower to invest in both organic growth and acquisitions. You can go to the next slide. Innovation is how we translate these global macro market trends into revenue growth. Our innovation agenda is tightly aligned to solving our customers' most important challenges, which is anchored in these durable macro trends. The most important of these macro trends is labor. Labor represents the large majority of our customers' cleaning costs. Labor is increasingly scarce, increasingly expensive, and very difficult to retain. That dynamic is creating real challenges for our customers, and it's directly impacting their operating economics and their outcomes. Our response to this is automation. We are systematically applying automation across the cleaning continuum, from mechanizing manual cleaning to converting to robotic cleaning to deliver step changes in productivity. There is still a significant portion of the global market that is still cleaning their floors and their facilities manually with a mop and bucket, particularly in developing regions. Converting that base to mechanized cleaning is a meaningful and durable growth driver for Tennant Company. The next level of automation in robotics represents that next step in that progression, and it delivers an order of magnitude improvement in labor productivity while enabling our customers to clean more spaces and with greater consistency. Other macro trends include electrification, and that's a trend that is accelerating in our industry space. Customers are transitioning their equipment fleets from internal combustion-powered to battery-powered platforms in an attempt to reduce their total cost of ownership and meet their emissions goals. Tennant is well-positioned here with a broad electrified portfolio, and we are continuing to invest in an expanding set of lithium-ion battery-powered platforms. Sustainability continues to influence our customers' purchasing decisions as well. They're prioritizing solutions that reduce water, reduce their energy usage. Our robotics platforms, our lithium-ion battery-powered machines, our ec-H2O Technology are all examples of innovations that are directly addressing our customers' sustainability needs. These global macro trends are durable and they're accelerating, and our innovation agenda is directly aligned to capturing the growth that stems from them. You can go to the next slide. Robotics specifically, robotics is the single largest driver of our organic growth agenda moving forward. It directly addresses our customers' largest challenge of labor while fundamentally improving cleaning outcomes. For customers, robotic cleaning enables lower total labor cost, the reallocation of that labor to more complex tasks, and more consistent, higher quality cleaning outcomes. For Tennant, robotics represents an exceptional opportunity to accelerate our growth and enhance our competitive advantage. Average cleaning robot selling prices vary, but they average roughly 3x what our traditional equipment provides in terms of average sales price. The result of that is an expanding addressable market for Tennant Company and expanding and accelerating revenue growth. It increases our customer stickiness, allowing us to further differentiate through AI-enabled software technology, data, and life cycle management. We have a strong foundation in the robotic space. We've been in this space for over eight years. We have more than 11,000 robots deployed globally. That makes us one of the largest mobile robot fleet operators in the world. We've proven ROI at scale with some of the world's largest and most demanding customers. What we're seeing now is a distinct increase in the pace of robotic cleaning adoption. We believe we are at an inflection point. Labor constraints are intensifying, technology costs are declining, robotic cleaning capabilities have reached a level where customers are now deploying robots at scale. That shift is accelerating demand and attracting a new class of competition. In response, we launched the TNC Robotics venture, designed to operate with the speed and focus of a startup while leveraging Tennant's global scale, global brand, and global infrastructure. This positions us to scale robotics revenue from that $85 million that we were last year to our objective of $250 million in 2028, which requires us to deliver an annual growth in the area of 50% each year. Our strategy to accelerate robotic cleaning is based on three priorities, they're informed by our eight years of experience in this space already. Our first priority is accelerating product innovation. We're rapidly expanding our product and technology portfolio across more applications, providing greater levels of autonomy and covering an expanded range of price and value points. We've demonstrated this with recent launches of the X2 ROVR SCRUB, the X16 Industrial Robotic Sweeper, and the launch of the Clean 2.0 autonomous navigation technology with SelfPath AI. Our second priority is building a differentiated go-to-market capability purpose-built for robotics. Our experience has taught us that selling robotics is fundamentally different than selling traditional equipment. We're investing in the specialized capability required to sell, deploy, and scale robotic solutions globally while repositioning the Tennant brand as a leader in automation and robotics. Our third priority is that we're building a comprehensive automation ecosystem. Success in robotics is not just about selling a piece of equipment. It's about ensuring customers achieve their Return on investment . We combine our global service network, our customer success capabilities, and the growing universe of data we get from our robots to actively manage deployment, utilization, and customer outcomes over time. That ability to drive adoption and sustain performance at scale is a meaningful and sustainable competitive advantage. A key enabler across all three of these priorities for robotics is our partnership with Brain Corp. We've partnered with Brain since 2018. We've continued to deepen that relationship. We invested in their company in 2024. We secured exclusivity to their floor care technology through 2029, we've aligned our two companies around our agenda for accelerated product and technology development. The partnership empowers Tennant to leverage our strengths in owning the customer relationship and provide an exceptional life cycle experience for our customers, while Brain can leverage their leadership in AI-powered autonomy. Early results from the TNC Robotics strategic pivot are encouraging. We've launched new products. We've advanced our technology platform. We've strengthened our automation ecosystem, and we're seeing an acceleration in the business. We communicated at the end of Q1 that our robotics business was up 85% year-over-year in Q1. We're still early, still very early in this pivot, but the trajectory that we're on is strong, and it is aligned to our ambition. Lorenzo, I'll turn it over to you to walk us through our financial outlook and capital allocation strategy. Thanks, Pat. What you just heard is a real growth story. The natural question now is how do we fund it and how do we know it pays off? I think the answer is that we're scaling robotics from a position of financial strength, and the speed that Pat described is possible precisely because it sits on top of a profitable, disciplined core business. Let me spend a few minutes on the financial model underneath all of this, how we grow, how we expand margins, and how we put our balance sheet to work. What you see on this slide is our long-term financial model, and it is a framework that we really hold ourselves accountable for. Start with the targets on the left. Over the long term, we're targeting organic net sales growth of 3%-5%, adjusted EBITDA margin expansion of 50 basis points-100 basis points a year, and free cash flow conversion of 100%. I'm talking about net income to free cash flow conversion of 100%. In addition to that, our organic strategy, we're also targeting roughly $150 million of net sales added through M&A. More to come on that. These targets are not aspirational. They are built on three concrete sets of levers. The first is organic growth. We drive it through pricing excellence, making sure we capture the full value we deliver to our customers, through product innovation, where we're investing in the segments with the highest growth potential, including robotics portfolio, as Pat just walked you through, and through new channels and markets with regional strategies tailored to where we are the strongest. The second lever is margin expansion. This comes from a rigorous cost-out program targeting investments in operating efficiencies and disciplined expense control. We expect it to show in two places, roughly 30 basis points from gross margin expansion and roughly 45 basis points from leveraging on our S&A structure, which is largely fixed and headcount-based. Underpinning all of this is a strong financial position, healthy balance sheet, and strong cash flow that fund our journey with disciplined capital allocation driving value creation. That balance sheet is exactly where we want to go next. This next slide really outlines our capital allocation strategy, and it starts from a simple premise. A strong balance sheet gives us both the foundation and the flexibility to invest for growth. Let me take you through our priorities roughly in orders. First, we invest in the business itself. Sustaining, maintaining our business is a priority, then kind of investing in our profit-generating assets. That means new product innovation, ongoing optimization of our manufacturing footprint with capital expenditure of about, on a given year, $20 million-$25 million. This is how we keep the core competitive and the innovation pipeline full. That investment is backed by a strong balance sheet. We generate a healthy free cash flow, as I mentioned, targeting that conversion that I just mentioned, the 100% conversion from net income to free cash flow. We run a net leverage ratio of 1x-2x adjusted EBITDA. That discipline gives us, we think, real capacity to pursue acquisitions when the right opportunity present themselves. Now, on acquisitions specifically, the approach is very focused. We look to leverage our core competencies into adjacencies that are attractive to us, Pat is going to show you exactly where we see those opportunities in just a moment. Finally, we return capital to our shareholders. We are proud of a dividend track record that span more than 50 consecutive years of increase, and we complement that with opportunistic share repurchases. You saw what we did in Q1, where we took advantage of what we thought was a one-time price dislocation of our share price, and we purchased, we bought back about $60 million of shares. Now, if you put it all together, you have a company with the financial strength to fund our ambitious growth agenda and reward shareholders along the way. Since the next step is where we put that M&A capacity to work, let me hand it back to Pat to walk through our strategic priorities and where we see the most attractive opportunities to grow. Pat? Yeah, as Lorenzo mentioned, M&A is a key component of our growth and capital allocation strategy. We built a focused, disciplined approach to M&A, supported by dedicated resourcing inside Tennant Company, responsible for developing and converting the M&A pipeline. Our strategy is centered in three areas. First, strengthening our core cleaning business within our current $9 billion addressable market. This includes both product and channel expansion, as demonstrated by the recent distributor acquisitions that we made in Europe that have expanded our go-to-market reach and increased our share. Second, accelerating growth in robotics and connected autonomy. We view M&A in the robotics context as a way to move faster in robotics, whether through expanding our product portfolio, controlling targeted elements of the technology stack, or strengthening our automation ecosystem. Finally, the third pillar of our strategy is selectively expanding into adjacent mobile equipment markets where our capabilities, particularly in direct sales, direct service, and our growing automation ecosystem, can be leveraged to create value beyond cleaning. Across all three pillars, we apply a disciplined framework. We evaluate each opportunity against a disciplined set of strategic, financial, and operational criteria. Ensuring that we deploy capital to the opportunities where Tennant can create the most value and with the highest degrees of confidence. We're managing an active pipeline and view M&A as a meaningful lever of value creation for our shareholders. With that, we'll open it up for Q&A. Thanks so much, Lorenzo. Thanks, Pat. Pat, I just want to make sure you're not a robot too, right? Because we can't see you. No, but I spend a lot of time with robots. Fair enough. We actually have a few questions already, but I'll remind everyone we have about nine or 10 minutes remaining. If you have a question, press the Q&A button and type in your question. One topic you didn't get into too much, Lorenzo, it's come up in the queue, so I will ask it. Let me read this to you. Now that ERP stabilization is largely behind you and the focus has shifted to optimization, what are the important milestones you need to reach to sort of reach the margin recovery that's built into your guidance? No, that's a great question. As we mentioned, as we released our Q1 results. We exited Q1 with, let's say, what our core workflows are, order management, production scheduling, and fulfillment, largely operating reliably, number one, and at scale across our North America business. When we say stabilization, we think stabilization is really done. The system is stable. The operational performance improves sequentially. The next step, as you mentioned, it's optimization phase, and really in terms of milestones, we're looking at fixing functionalities to drive throughput labor productivity, and system-enabled performance. For us, it's really about getting back to all those KPIs in terms of productivity, in terms of efficiencies that we were targeting already when we launched in Q4, but that clearly we had some functionalities issues that didn't allow us to get there. This is really how we see this. It's getting by the end of the quarter and leading into the second half of the year, not only stable as we are, but also optimized in terms of that throughput. The KPIs are largely, the milestones are largely around throughput and productivity of our labor as we get the product to our customer. Okay, perfect. Thank you. Pat, turning to robotics, I'm going to combine my own question with a question we have around channels, but I guess what I'm sure you get this question a lot, I'm getting it a ton. You got to $85 million in robotics revenue over the span of about six years. You started taking orders 2019. You hit $85 million last year. You're targeting virtually tripling over three years, so a 40%+ CAGR. What gives you that? You talked about hitting an inflection point. What gives you the confidence on such a robust goal or target, $250 million by 2028? Yeah. Great question. A couple of things from our perspective. One, the strategy that we are deploying gives me confidence. Last year, as we built our strategy, we reflected on our eight years of commercial experience, we've learned a lot. We've learned a lot about what it takes to get customers to buy in, and then from a pilot to scale, from pilot scale to full scale. Our experience informed the strategy that we built. We think we've got a compelling strategy, and that's based in, one, a rapid expansion of our product and technology portfolio. You've heard us communicate our intention to launch 10 new robotics products in the next two years. We're off to a fast start this year already with X2, X16, and Clean 2.0. We need to keep that pace of innovation and product development so that we cover more applications, deliver more autonomy across more price points. That's a really essential element to getting to $250 million. Building out a go-to-market capability. Adding dedicated automation, selling capacity and capability, deployment capacity and capability, and customer success resources to help our customers scale, a key element of it. Creating this automation customer support ecosystem so that we can demonstrate the ROI to customers and get them to move from pilot to total scale. It's our strategy, and that's what we can control and what we're focused on. I'll also add that I do believe we are at this inflection point, that the conversations with our customers have shifted markedly over the past year, where customers historically may have been expressing curiosity and dabbling at pilot scale. They're now asking us how do they get to large adoption, large scale. Some of the most challenging verticals and channels have really pivoted and changed their posture towards robotics. Those are some of the reasons why we have conviction in our $250 million objective. Can you talk a little bit about, because this is the specific question we got in terms about expanding the channels and how part of the strategy that plays and where the channels are most important. For sure. Historically, our business in robotics has been built around our direct business and really large strategic accounts in retail and a few of our industrial verticals. That's been great business for us, but for us to grow at this kind of pace, we need to add to our channel selection and really leverage Tennant's legacy multi-channel go-to-market. Distribution is an obvious opportunity for us. We use distribution as a very efficient and effective way to get to a diverse set of market verticals that include education, healthcare, office space, hospitality, and we have historically done not that much robotics business through distribution. We're intentionally focused on unlocking distribution as a key channel to access additional markets, and that means we're building a product portfolio better suited to distribution. That's a big part of our play there. We're building programs specifically for distribution as a way to unlock their capability to sell and deploy, leveraging our tools and our experience and our skill set. Distribution's a big part of it. I'll say, for us to grow at this magnitude, we have to unlock distribution. We have to accelerate the wins with the big strategic account of customers that we deal directly with, the large retailers, the large industrial players, the large logistics companies, manufacturers. In addition to that, Tennant's legacy is centered a lot around selling up and down the street business to industrial customers. Single site industrial manufacturing locations, smaller scale regional logistics providers. We need to unlock that as well, and that's been a smaller component of this business. Building our industrial product portfolio, enabling our global sales force to effectively sell robots and really unlock this direct industrial channel that we've built historically, has been a small part of the mix historically. It needs to be a bigger part of the mix moving forward. We think those are the channel plays that'll get us to this level of growth. You recently announced a three-year extension with the exclusive agreement with Brain. Can you talk a little bit about how that affects the competitive landscape? Certainly, I'm sure you get this question a lot, we do, in terms of cheaper foreign competition entering the market. Yep. Yeah. First, in terms of how our relationship with Brain has shifted the market landscape, when we went exclusive with them on floor care technology in 2024, prior to that they were working with our largest international competitors. We believe that our relationship with them moving to exclusive was a significant event in the industry and has allowed us to build our advantage against legacy competitors over the past few years. Our latest moves to extend exclusivity and continue to evolve the partnership put us in an even stronger position with Brain Corp and accelerating product and technology with them. With respect to the new entrant competitors, the landscape that we see is that they are robot first, software first. They're not from the cleaning industry. They're new to the industry. What we see them doing, certainly are attacking the market at different price points. We're answering that with a different product portfolio. It's less about how they're pricing and more about the product portfolio that they're bringing. They're attacking at smaller formats, lower value solutions, we're answering that with a more comprehensive product portfolio like what you see with the X2 ROVR SCRUB. Smaller format, lower price point. Got it. Go ahead. The last thing I would mention is they are attacking with, I would say, feature-rich technology. What we've seen is that it's relatively delicate technology. It's complex, it's difficult to use, we are taking a different approach. We know that our customers need easy to use, durable technology, that's our approach. I could see that. That's really always been the biggest difficulty in getting adoption, right? Is making it easier to use, I would imagine. Right. Got it. We're just about out of time. I do want to get in one last question about the balance sheet. We have someone asking about, you did do the sizable share repurchase in Q1 as the stock was lower. How are you thinking about the remainder of the year? Because obviously cash flow in the balance sheet has been a very strong part of your story in terms of balancing returning capital to shareholders versus M&A opportunities. Yeah. As you mentioned, right, the Q1 buyback was obviously, was opportunistic, was a high conviction decision, in response to an event-driven dislocation in the share price. We deployed $60 million to repurchase shares, the average price $63 per share. We believe that price really did not reflect the underlying value of the franchise. Right now, going forward, which is your question, we're not going to say we're done, right? Repurchases will continue to be opportunistic. We have ample remaining authorization. We will deploy capital when we see an attractive risk-adjusted return. We have our framework to do that. Of course, we'll also continue to invest in the business as mentioned, right, pay our dividend in line with our capital allocation framework. Got it. We are just about out of time. Pat, Lorenzo, any closing comments before I wrap this up? No, just thank you everybody. I really appreciate your interest in Tennant Company. Have a great rest of the conference. Thank you, Steve, as always, for facilitating for the great conference. Always great to. Thanks, everyone. Take care Always great to get caught up again on Tennant Company, the ticker's TNC. You can reach out directly to Lorenzo at Tennant Company if you have any follow-up questions, or you can direct your questions to Steve Ferazani at Sidoti. I certainly can pass it along to the team at Tennant. Thanks, everyone, for joining us, and appreciate you sticking around for the remainder of the conference through tomorrow. Thanks, everyone. Thanks. Thank you

Speaker 3: Good afternoon, everyone. Welcome back to Sidoti's Virtual Investor Conference. I know we had a little bit of technical difficulty. Hopefully, you all joined with us for the presentation because I think it's going to be an interesting one this afternoon. We're pleased to be welcomed by Tennant Company, the ticker is TNC. We probably will have a few minutes after the presentation for questions. As a reminder, you can press that Q&A button at the bottom of your screen and type them in, and we'll get to as many as we can. Having said that, I'm pleased to be joined this afternoon by Patrick Schottler, Senior Vice President, Robotics, and Lorenzo Bassi, Vice President, Finance and Investor Relations. With that, let me turn it over to you, gentlemen. Good afternoon, everyone. good afternoon everyone Welcome back to Sidoti's Virtual Investor Conference. welcome back to sidoti's virtual investor conference I know we had a little bit of technical difficulty. i know we had a little bit of technical difficulty Hopefully, you all joined with us for the presentation because I think it's going to be an interesting one this afternoon. hopefully you all joined with us for the presentation because i think it's going to be an interesting one this afternoon We're pleased to be welcomed by Tennant Company, the ticker is TNC. we're pleased to be welcomed by tennant company the ticker is tnc We probably will have a few minutes after the presentation for questions. we probably will have a few minutes after the presentation for questions As a reminder, you can press that Q&A button at the bottom of your screen and type them in, and we'll get to as many as we can. as a reminder you can press that q&a button at the bottom of your screen and type them in and we'll get to as many as we can Having said that, I'm pleased to be joined this afternoon by Patrick Schottler, Senior Vice President, Robotics, and Lorenzo Bassi, Vice President, Finance and Investor Relations. having said that i'm pleased to be joined this afternoon by patrick schottler senior vice president robotics and lorenzo bassi vice president finance and investor relations With that, let me turn it over to you, gentlemen. with that let me turn it over to you gentlemen

Speaker 2: Thanks, Steve, and good afternoon, everyone. Appreciate the opportunity to present. As part of our technical challenge, it looks like my camera's not going to cooperate today, so I'll be off-camera. But thanks again for making the time. We appreciate the opportunity to be here and share an overview of Tennant Company. We'll spend a few minutes, probably 15 minutes or so, walking through a few key elements of our strategy with a particular focus on robotics, and that driving our growth, and then open it up for Q&A between Lorenzo and myself. We can go to the next slide. At our core, Tennant Company is a global leader in commercial cleaning solutions. We offer a differentiated investment profile built on four core elements. We're a market-leading business with a durable competitive moat. We have exposure to structural growth driven by macro trends in automation, labor, and sustainability. Thanks, Steve, and good afternoon, everyone. thanks steve and good afternoon everyone Appreciate the opportunity to present. appreciate the opportunity to present As part of our technical challenge, it looks like my camera's not going to cooperate today, so I'll be off-camera. as part of our technical challenge it looks like my camera's not going to cooperate today so i'll be off-camera But thanks again for making the time. but thanks again for making the time We appreciate the opportunity to be here and share an overview of Tennant Company. we appreciate the opportunity to be here and share an overview of tennant company We'll spend a few minutes, probably 15 minutes or so, walking through a few key elements of our strategy with a particular focus on robotics, and that driving our growth, and then open it up for Q&A between Lorenzo and myself. we'll spend a few minutes probably 15 minutes or so walking through a few key elements of our strategy with a particular focus on robotics and that driving our growth and then open it up for q&a between lorenzo and myself We can go to the next slide. we can go to the next slide At our core, Tennant Company is a global leader in commercial cleaning solutions. at our core tennant company is a global leader in commercial cleaning solutions We offer a differentiated investment profile built on four core elements. we offer a differentiated investment profile built on four core elements We're a market-leading business with a durable competitive moat. we're a market-leading business with a durable competitive moat We have exposure to structural growth driven by macro trends in automation, labor, and sustainability. we have exposure to structural growth driven by macro trends in automation labor and sustainability We have a clear path to accelerated growth through robotics, and we have a strong balance sheet giving us the financial firepower to realize our growth potential, both organically and through acquisition. Our business is highly diversified, and that serves as a critical source of resilience for us. We serve our customers across a broad range of end markets, from retail to logistics, manufacturing, transportation. Essentially anywhere that there is a commercial facility to clean, you can find Tennant Company with a presence. We operate across a truly global footprint with sales and manufacturing presence spanning North America, Europe, Asia-Pacific, and Latin America, allowing us to participate in both developed and emerging growth dynamics. We go to market through an omni-channel model. We sell directly to end users, including large national and international accounts. We have a global network of distribution partners to access diversified vertical markets. We have a clear path to accelerated growth through robotics, and we have a strong balance sheet giving us the financial firepower to realize our growth potential, both organically and through acquisition. we have a clear path to accelerated growth through robotics and we have a strong balance sheet giving us the financial firepower to realize our growth potential both organically and through acquisition Our business is highly diversified, and that serves as a critical source of resilience for us. our business is highly diversified and that serves as a critical source of resilience for us We serve our customers across a broad range of end markets, from retail to logistics, manufacturing, transportation. we serve our customers across a broad range of end markets from retail to logistics manufacturing transportation Essentially anywhere that there is a commercial facility to clean, you can find Tennant Company with a presence. essentially anywhere that there is a commercial facility to clean you can find tennant company with a presence We operate across a truly global footprint with sales and manufacturing presence spanning North America, Europe, Asia-Pacific, and Latin America, allowing us to participate in both developed and emerging growth dynamics. we operate across a truly global footprint with sales and manufacturing presence spanning north america europe asia-pacific and latin america allowing us to participate in both developed and emerging growth dynamics We go to market through an omni-channel model. we go to market through an omni-channel model We sell directly to end users, including large national and international accounts. we sell directly to end users including large national and international accounts We have a global network of distribution partners to access diversified vertical markets. we have a global network of distribution partners to access diversified vertical markets We have field service as an important aftermarket selling channel. Increasingly, we transact with customers through e-commerce channels. That breadth of coverage across verticals, geographies, channels, that allows us to scale with customers globally while maintaining strong and localized support. We pair that reach with a full solution portfolio that includes equipment, parts, consumables, and service, enabling us to engage with our customers across the entire ownership life cycle. Importantly, roughly 40% of our revenue comes from the aftermarket, generated from a consistent and profitable stream of revenue from parts, consumables, and service. That recurring aftermarket revenue stream is reinforced by our global service network of more than 1,000 technicians, which is a meaningful competitive advantage for Tennant Company. It enables us to support large distributed customer footprints and maintain high levels of uptime and performance across our cleaning fleets. We have field service as an important aftermarket selling channel. we have field service as an important aftermarket selling channel Increasingly, we transact with customers through e-commerce channels. increasingly we transact with customers through e-commerce channels That breadth of coverage across verticals, geographies, channels, that allows us to scale with customers globally while maintaining strong and localized support. that breadth of coverage across verticals geographies channels that allows us to scale with customers globally while maintaining strong and localized support We pair that reach with a full solution portfolio that includes equipment, parts, consumables, and service, enabling us to engage with our customers across the entire ownership life cycle. we pair that reach with a full solution portfolio that includes equipment parts consumables and service enabling us to engage with our customers across the entire ownership life cycle Importantly, roughly 40% of our revenue comes from the aftermarket, generated from a consistent and profitable stream of revenue from parts, consumables, and service. importantly roughly 40% of our revenue comes from the aftermarket generated from a consistent and profitable stream of revenue from parts consumables and service That recurring aftermarket revenue stream is reinforced by our global service network of more than 1,000 technicians, which is a meaningful competitive advantage for Tennant Company. that recurring aftermarket revenue stream is reinforced by our global service network of more than 1,000 technicians which is a meaningful competitive advantage for tennant company It enables us to support large distributed customer footprints and maintain high levels of uptime and performance across our cleaning fleets. it enables us to support large distributed customer footprints and maintain high levels of uptime and performance across our cleaning fleets This combination, our installed base, our service capability, and our engagement across the product life cycle, creates strong customer loyalty and a sustainable competitive differentiation for Tennant Company that is really difficult to replicate. The market that we compete in is growing, and it's driven by expansion in global facilities footprint, and a structural shift towards cleaning automation. Tennant drives that cleaning automation across our core business. We're leveraging our core strengths to accelerate the adoption of robotic cleaning as the most impactful form of automation cleaning. We have a strong starting point in robotics with more than 11,000 cleaning robots deployed globally, and we're building on that foundation to scale robotics revenue and achieve our objectives of $250 million in robotic revenue by 2028. Overall, supporting this strong financial position, we generate consistent cash flow. This combination, our installed base, our service capability, and our engagement across the product life cycle, creates strong customer loyalty and a sustainable competitive differentiation for Tennant Company that is really difficult to replicate. this combination our installed base our service capability and our engagement across the product life cycle creates strong customer loyalty and a sustainable competitive differentiation for tennant company that is really difficult to replicate The market that we compete in is growing, and it's driven by expansion in global facilities footprint, and a structural shift towards cleaning automation. the market that we compete in is growing and it's driven by expansion in global facilities footprint and a structural shift towards cleaning automation Tennant drives that cleaning automation across our core business. tennant drives that cleaning automation across our core business We're leveraging our core strengths to accelerate the adoption of robotic cleaning as the most impactful form of automation cleaning. we're leveraging our core strengths to accelerate the adoption of robotic cleaning as the most impactful form of automation cleaning We have a strong starting point in robotics with more than 11,000 cleaning robots deployed globally, and we're building on that foundation to scale robotics revenue and achieve our objectives of $250 million in robotic revenue by 2028. we have a strong starting point in robotics with more than 11,000 cleaning robots deployed globally and we're building on that foundation to scale robotics revenue and achieve our objectives of $250 million in robotic revenue by 2028 Overall, supporting this strong financial position, we generate consistent cash flow. overall supporting this strong financial position we generate consistent cash flow We're operating with low leverage between one and two turns, and we have the financial firepower to invest in both organic growth and acquisitions. You can go to the next slide. Innovation is how we translate these global macro market trends into revenue growth. Our innovation agenda is tightly aligned to solving our customers' most important challenges, which is anchored in these durable macro trends. The most important of these macro trends is labor. Labor represents the large majority of our customers' cleaning costs. Labor is increasingly scarce, increasingly expensive, and very difficult to retain. That dynamic is creating real challenges for our customers, and it's directly impacting their operating economics and their outcomes. Our response to this is automation. We are systematically applying automation across the cleaning continuum, from mechanizing manual cleaning to converting to robotic cleaning to deliver step changes in productivity. We're operating with low leverage between one and two turns, and we have the financial firepower to invest in both organic growth and acquisitions. we're operating with low leverage between one and two turns and we have the financial firepower to invest in both organic growth and acquisitions You can go to the next slide. you can go to the next slide Innovation is how we translate these global macro market trends into revenue growth. innovation is how we translate these global macro market trends into revenue growth Our innovation agenda is tightly aligned to solving our customers' most important challenges, which is anchored in these durable macro trends. our innovation agenda is tightly aligned to solving our customers' most important challenges which is anchored in these durable macro trends The most important of these macro trends is labor. the most important of these macro trends is labor Labor represents the large majority of our customers' cleaning costs. labor represents the large majority of our customers' cleaning costs Labor is increasingly scarce, increasingly expensive, and very difficult to retain. labor is increasingly scarce increasingly expensive and very difficult to retain That dynamic is creating real challenges for our customers, and it's directly impacting their operating economics and their outcomes. that dynamic is creating real challenges for our customers and it's directly impacting their operating economics and their outcomes Our response to this is automation. our response to this is automation We are systematically applying automation across the cleaning continuum, from mechanizing manual cleaning to converting to robotic cleaning to deliver step changes in productivity. we are systematically applying automation across the cleaning continuum from mechanizing manual cleaning to converting to robotic cleaning to deliver step changes in productivity There is still a significant portion of the global market that is still cleaning their floors and their facilities manually with a mop and bucket, particularly in developing regions. Converting that base to mechanized cleaning is a meaningful and durable growth driver for Tennant Company. The next level of automation in robotics represents that next step in that progression, and it delivers an order of magnitude improvement in labor productivity while enabling our customers to clean more spaces and with greater consistency. Other macro trends include electrification, and that's a trend that is accelerating in our industry space. Customers are transitioning their equipment fleets from internal combustion-powered to battery-powered platforms in an attempt to reduce their total cost of ownership and meet their emissions goals. Tennant is well-positioned here with a broad electrified portfolio, and we are continuing to invest in an expanding set of lithium-ion battery-powered platforms. There is still a significant portion of the global market that is still cleaning their floors and their facilities manually with a mop and bucket, particularly in developing regions. there is still a significant portion of the global market that is still cleaning their floors and their facilities manually with a mop and bucket particularly in developing regions Converting that base to mechanized cleaning is a meaningful and durable growth driver for Tennant Company. converting that base to mechanized cleaning is a meaningful and durable growth driver for tennant company The next level of automation in robotics represents that next step in that progression, and it delivers an order of magnitude improvement in labor productivity while enabling our customers to clean more spaces and with greater consistency. the next level of automation in robotics represents that next step in that progression and it delivers an order of magnitude improvement in labor productivity while enabling our customers to clean more spaces and with greater consistency Other macro trends include electrification, and that's a trend that is accelerating in our industry space. other macro trends include electrification and that's a trend that is accelerating in our industry space Customers are transitioning their equipment fleets from internal combustion-powered to battery-powered platforms in an attempt to reduce their total cost of ownership and meet their emissions goals. customers are transitioning their equipment fleets from internal combustion-powered to battery-powered platforms in an attempt to reduce their total cost of ownership and meet their emissions goals Tennant is well-positioned here with a broad electrified portfolio, and we are continuing to invest in an expanding set of lithium-ion battery-powered platforms. tennant is well-positioned here with a broad electrified portfolio and we are continuing to invest in an expanding set of lithium-ion battery-powered platforms Sustainability continues to influence our customers' purchasing decisions as well. They're prioritizing solutions that reduce water, reduce their energy usage. Our robotics platforms, our lithium-ion battery-powered machines, our ec-H2O Technology are all examples of innovations that are directly addressing our customers' sustainability needs. These global macro trends are durable and they're accelerating, and our innovation agenda is directly aligned to capturing the growth that stems from them. You can go to the next slide. Robotics specifically, robotics is the single largest driver of our organic growth agenda moving forward. It directly addresses our customers' largest challenge of labor while fundamentally improving cleaning outcomes. For customers, robotic cleaning enables lower total labor cost, the reallocation of that labor to more complex tasks, and more consistent, higher quality cleaning outcomes. For Tennant, robotics represents an exceptional opportunity to accelerate our growth and enhance our competitive advantage. Sustainability continues to influence our customers' purchasing decisions as well. sustainability continues to influence our customers' purchasing decisions as well They're prioritizing solutions that reduce water, reduce their energy usage. they're prioritizing solutions that reduce water reduce their energy usage Our robotics platforms, our lithium-ion battery-powered machines, our ec-H2O Technology are all examples of innovations that are directly addressing our customers' sustainability needs. our robotics platforms our lithium-ion battery-powered machines our ec-h2o technology are all examples of innovations that are directly addressing our customers' sustainability needs These global macro trends are durable and they're accelerating, and our innovation agenda is directly aligned to capturing the growth that stems from them. these global macro trends are durable and they're accelerating and our innovation agenda is directly aligned to capturing the growth that stems from them You can go to the next slide. you can go to the next slide Robotics specifically, robotics is the single largest driver of our organic growth agenda moving forward. robotics specifically robotics is the single largest driver of our organic growth agenda moving forward It directly addresses our customers' largest challenge of labor while fundamentally improving cleaning outcomes. it directly addresses our customers' largest challenge of labor while fundamentally improving cleaning outcomes For customers, robotic cleaning enables lower total labor cost, the reallocation of that labor to more complex tasks, and more consistent, higher quality cleaning outcomes. for customers robotic cleaning enables lower total labor cost the reallocation of that labor to more complex tasks and more consistent higher quality cleaning outcomes For Tennant, robotics represents an exceptional opportunity to accelerate our growth and enhance our competitive advantage. for tennant robotics represents an exceptional opportunity to accelerate our growth and enhance our competitive advantage Average cleaning robot selling prices vary, but they average roughly 3x what our traditional equipment provides in terms of average sales price. The result of that is an expanding addressable market for Tennant Company and expanding and accelerating revenue growth. It increases our customer stickiness, allowing us to further differentiate through AI-enabled software technology, data, and life cycle management. We have a strong foundation in the robotic space. We've been in this space for over eight years. We have more than 11,000 robots deployed globally. That makes us one of the largest mobile robot fleet operators in the world. We've proven ROI at scale with some of the world's largest and most demanding customers. What we're seeing now is a distinct increase in the pace of robotic cleaning adoption. We believe we are at an inflection point. Average cleaning robot selling prices vary, but they average roughly 3x what our traditional equipment provides in terms of average sales price. average cleaning robot selling prices vary but they average roughly 3x what our traditional equipment provides in terms of average sales price The result of that is an expanding addressable market for Tennant Company and expanding and accelerating revenue growth. the result of that is an expanding addressable market for tennant company and expanding and accelerating revenue growth It increases our customer stickiness, allowing us to further differentiate through AI-enabled software technology, data, and life cycle management. it increases our customer stickiness allowing us to further differentiate through ai-enabled software technology data and life cycle management We have a strong foundation in the robotic space. we have a strong foundation in the robotic space We've been in this space for over eight years. we've been in this space for over eight years We have more than 11,000 robots deployed globally. we have more than 11,000 robots deployed globally That makes us one of the largest mobile robot fleet operators in the world. that makes us one of the largest mobile robot fleet operators in the world We've proven ROI at scale with some of the world's largest and most demanding customers. we've proven roi at scale with some of the world's largest and most demanding customers What we're seeing now is a distinct increase in the pace of robotic cleaning adoption. what we're seeing now is a distinct increase in the pace of robotic cleaning adoption We believe we are at an inflection point. we believe we are at an inflection point Labor constraints are intensifying, technology costs are declining, robotic cleaning capabilities have reached a level where customers are now deploying robots at scale. That shift is accelerating demand and attracting a new class of competition. In response, we launched the TNC Robotics venture, designed to operate with the speed and focus of a startup while leveraging Tennant's global scale, global brand, and global infrastructure. This positions us to scale robotics revenue from that $85 million that we were last year to our objective of $250 million in 2028, which requires us to deliver an annual growth in the area of 50% each year. Our strategy to accelerate robotic cleaning is based on three priorities, they're informed by our eight years of experience in this space already. Our first priority is accelerating product innovation. Labor constraints are intensifying, technology costs are declining, robotic cleaning capabilities have reached a level where customers are now deploying robots at scale. labor constraints are intensifying technology costs are declining robotic cleaning capabilities have reached a level where customers are now deploying robots at scale That shift is accelerating demand and attracting a new class of competition. that shift is accelerating demand and attracting a new class of competition In response, we launched the TNC Robotics venture, designed to operate with the speed and focus of a startup while leveraging Tennant's global scale, global brand, and global infrastructure. in response we launched the tnc robotics venture designed to operate with the speed and focus of a startup while leveraging tennant's global scale global brand and global infrastructure This positions us to scale robotics revenue from that $85 million that we were last year to our objective of $250 million in 2028, which requires us to deliver an annual growth in the area of 50% each year. this positions us to scale robotics revenue from that $85 million that we were last year to our objective of $250 million in 2028 which requires us to deliver an annual growth in the area of 50% each year Our strategy to accelerate robotic cleaning is based on three priorities, they're informed by our eight years of experience in this space already. our strategy to accelerate robotic cleaning is based on three priorities they're informed by our eight years of experience in this space already Our first priority is accelerating product innovation. our first priority is accelerating product innovation We're rapidly expanding our product and technology portfolio across more applications, providing greater levels of autonomy and covering an expanded range of price and value points. We've demonstrated this with recent launches of the X2 ROVR SCRUB, the X16 Industrial Robotic Sweeper, and the launch of the Clean 2.0 autonomous navigation technology with SelfPath AI. Our second priority is building a differentiated go-to-market capability purpose-built for robotics. Our experience has taught us that selling robotics is fundamentally different than selling traditional equipment. We're investing in the specialized capability required to sell, deploy, and scale robotic solutions globally while repositioning the Tennant brand as a leader in automation and robotics. Our third priority is that we're building a comprehensive automation ecosystem. Success in robotics is not just about selling a piece of equipment. It's about ensuring customers achieve their Return on investment . We're rapidly expanding our product and technology portfolio across more applications, providing greater levels of autonomy and covering an expanded range of price and value points. we're rapidly expanding our product and technology portfolio across more applications providing greater levels of autonomy and covering an expanded range of price and value points We've demonstrated this with recent launches of the X2 ROVR SCRUB, the X16 Industrial Robotic Sweeper, and the launch of the Clean 2.0 autonomous navigation technology with SelfPath AI. we've demonstrated this with recent launches of the x2 rovr scrub the x16 industrial robotic sweeper and the launch of the clean 2.0 autonomous navigation technology with selfpath ai Our second priority is building a differentiated go-to-market capability purpose-built for robotics. our second priority is building a differentiated go-to-market capability purpose-built for robotics Our experience has taught us that selling robotics is fundamentally different than selling traditional equipment. our experience has taught us that selling robotics is fundamentally different than selling traditional equipment We're investing in the specialized capability required to sell, deploy, and scale robotic solutions globally while repositioning the Tennant brand as a leader in automation and robotics. we're investing in the specialized capability required to sell deploy and scale robotic solutions globally while repositioning the tennant brand as a leader in automation and robotics Our third priority is that we're building a comprehensive automation ecosystem. our third priority is that we're building a comprehensive automation ecosystem Success in robotics is not just about selling a piece of equipment. success in robotics is not just about selling a piece of equipment It's about ensuring customers achieve their Return on investment . it's about ensuring customers achieve their return on investment We combine our global service network, our customer success capabilities, and the growing universe of data we get from our robots to actively manage deployment, utilization, and customer outcomes over time. That ability to drive adoption and sustain performance at scale is a meaningful and sustainable competitive advantage. A key enabler across all three of these priorities for robotics is our partnership with Brain Corp. We've partnered with Brain since 2018. We've continued to deepen that relationship. We invested in their company in 2024. We secured exclusivity to their floor care technology through 2029, we've aligned our two companies around our agenda for accelerated product and technology development. The partnership empowers Tennant to leverage our strengths in owning the customer relationship and provide an exceptional life cycle experience for our customers, while Brain can leverage their leadership in AI-powered autonomy. We combine our global service network, our customer success capabilities, and the growing universe of data we get from our robots to actively manage deployment, utilization, and customer outcomes over time. we combine our global service network our customer success capabilities and the growing universe of data we get from our robots to actively manage deployment utilization and customer outcomes over time That ability to drive adoption and sustain performance at scale is a meaningful and sustainable competitive advantage. that ability to drive adoption and sustain performance at scale is a meaningful and sustainable competitive advantage A key enabler across all three of these priorities for robotics is our partnership with Brain Corp. a key enabler across all three of these priorities for robotics is our partnership with brain corp We've partnered with Brain since 2018. we've partnered with brain since 2018 We've continued to deepen that relationship. we've continued to deepen that relationship We invested in their company in 2024. we invested in their company in 2024 We secured exclusivity to their floor care technology through 2029, we've aligned our two companies around our agenda for accelerated product and technology development. we secured exclusivity to their floor care technology through 2029 we've aligned our two companies around our agenda for accelerated product and technology development The partnership empowers Tennant to leverage our strengths in owning the customer relationship and provide an exceptional life cycle experience for our customers, while Brain can leverage their leadership in AI-powered autonomy. the partnership empowers tennant to leverage our strengths in owning the customer relationship and provide an exceptional life cycle experience for our customers while brain can leverage their leadership in ai-powered autonomy Early results from the TNC Robotics strategic pivot are encouraging. We've launched new products. We've advanced our technology platform. We've strengthened our automation ecosystem, and we're seeing an acceleration in the business. We communicated at the end of Q1 that our robotics business was up 85% year-over-year in Q1. We're still early, still very early in this pivot, but the trajectory that we're on is strong, and it is aligned to our ambition. Lorenzo, I'll turn it over to you to walk us through our financial outlook and capital allocation strategy. Early results from the TNC Robotics strategic pivot are encouraging. early results from the tnc robotics strategic pivot are encouraging We've launched new products. we've launched new products We've advanced our technology platform. we've advanced our technology platform We've strengthened our automation ecosystem, and we're seeing an acceleration in the business. we've strengthened our automation ecosystem and we're seeing an acceleration in the business We communicated at the end of Q1 that our robotics business was up 85% year-over-year in Q1. we communicated at the end of q1 that our robotics business was up 85% year-over-year in q1 We're still early, still very early in this pivot, but the trajectory that we're on is strong, and it is aligned to our ambition. we're still early still very early in this pivot but the trajectory that we're on is strong and it is aligned to our ambition Lorenzo, I'll turn it over to you to walk us through our financial outlook and capital allocation strategy. lorenzo i'll turn it over to you to walk us through our financial outlook and capital allocation strategy

Speaker 1: Thanks, Pat. What you just heard is a real growth story. The natural question now is how do we fund it and how do we know it pays off? I think the answer is that we're scaling robotics from a position of financial strength, and the speed that Pat described is possible precisely because it sits on top of a profitable, disciplined core business. Let me spend a few minutes on the financial model underneath all of this, how we grow, how we expand margins, and how we put our balance sheet to work. What you see on this slide is our long-term financial model, and it is a framework that we really hold ourselves accountable for. Start with the targets on the left. Thanks, Pat. thanks pat What you just heard is a real growth story. what you just heard is a real growth story The natural question now is how do we fund it and how do we know it pays off? the natural question now is how do we fund it and how do we know it pays off I think the answer is that we're scaling robotics from a position of financial strength, and the speed that Pat described is possible precisely because it sits on top of a profitable, disciplined core business. i think the answer is that we're scaling robotics from a position of financial strength and the speed that pat described is possible precisely because it sits on top of a profitable disciplined core business Let me spend a few minutes on the financial model underneath all of this, how we grow, how we expand margins, and how we put our balance sheet to work. let me spend a few minutes on the financial model underneath all of this how we grow how we expand margins and how we put our balance sheet to work What you see on this slide is our long-term financial model, and it is a framework that we really hold ourselves accountable for. what you see on this slide is our long-term financial model and it is a framework that we really hold ourselves accountable for Start with the targets on the left. start with the targets on the left Over the long term, we're targeting organic net sales growth of 3%-5%, adjusted EBITDA margin expansion of 50 basis points-100 basis points a year, and free cash flow conversion of 100%. I'm talking about net income to free cash flow conversion of 100%. In addition to that, our organic strategy, we're also targeting roughly $150 million of net sales added through M&A. More to come on that. These targets are not aspirational. They are built on three concrete sets of levers. The first is organic growth. We drive it through pricing excellence, making sure we capture the full value we deliver to our customers, through product innovation, where we're investing in the segments with the highest growth potential, including robotics portfolio, as Pat just walked you through, and through new channels and markets with regional strategies tailored to where we are the strongest. Over the long term, we're targeting organic net sales growth of 3%-5%, adjusted EBITDA margin expansion of 50 basis points - 100 basis points a year, and free cash flow conversion of 100%. over the long term we're targeting organic net sales growth of 3%-5% adjusted ebitda margin expansion of 50 basis points - 100 basis points a year and free cash flow conversion of 100% I'm talking about net income to free cash flow conversion of 100%. i'm talking about net income to free cash flow conversion of 100% In addition to that, our organic strategy, we're also targeting roughly $150 million of net sales added through M&A. in addition to that our organic strategy we're also targeting roughly $150 million of net sales added through m&a More to come on that. more to come on that These targets are not aspirational. these targets are not aspirational They are built on three concrete sets of levers. they are built on three concrete sets of levers The first is organic growth. the first is organic growth We drive it through pricing excellence, making sure we capture the full value we deliver to our customers, through product innovation, where we're investing in the segments with the highest growth potential, including robotics portfolio, as Pat just walked you through, and through new channels and markets with regional strategies tailored to where we are the strongest. we drive it through pricing excellence making sure we capture the full value we deliver to our customers through product innovation where we're investing in the segments with the highest growth potential including robotics portfolio as pat just walked you through and through new channels and markets with regional strategies tailored to where we are the strongest The second lever is margin expansion. This comes from a rigorous cost-out program targeting investments in operating efficiencies and disciplined expense control. We expect it to show in two places, roughly 30 basis points from gross margin expansion and roughly 45 basis points from leveraging on our S&A structure, which is largely fixed and headcount-based. Underpinning all of this is a strong financial position, healthy balance sheet, and strong cash flow that fund our journey with disciplined capital allocation driving value creation. That balance sheet is exactly where we want to go next. This next slide really outlines our capital allocation strategy, and it starts from a simple premise. A strong balance sheet gives us both the foundation and the flexibility to invest for growth. Let me take you through our priorities roughly in orders. First, we invest in the business itself. The second lever is margin expansion. the second lever is margin expansion This comes from a rigorous cost-out program targeting investments in operating efficiencies and disciplined expense control. this comes from a rigorous cost-out program targeting investments in operating efficiencies and disciplined expense control We expect it to show in two places, roughly 30 basis points from gross margin expansion and roughly 45 basis points from leveraging on our S&A structure, which is largely fixed and headcount-based. we expect it to show in two places roughly 30 basis points from gross margin expansion and roughly 45 basis points from leveraging on our s&a structure which is largely fixed and headcount-based Underpinning all of this is a strong financial position, healthy balance sheet, and strong cash flow that fund our journey with disciplined capital allocation driving value creation. underpinning all of this is a strong financial position healthy balance sheet and strong cash flow that fund our journey with disciplined capital allocation driving value creation That balance sheet is exactly where we want to go next. that balance sheet is exactly where we want to go next This next slide really outlines our capital allocation strategy, and it starts from a simple premise. this next slide really outlines our capital allocation strategy and it starts from a simple premise A strong balance sheet gives us both the foundation and the flexibility to invest for growth. a strong balance sheet gives us both the foundation and the flexibility to invest for growth Let me take you through our priorities roughly in orders. let me take you through our priorities roughly in orders First, we invest in the business itself. first we invest in the business itself Sustaining, maintaining our business is a priority, then kind of investing in our profit-generating assets. That means new product innovation, ongoing optimization of our manufacturing footprint with capital expenditure of about, on a given year, $20 million-$25 million. This is how we keep the core competitive and the innovation pipeline full. That investment is backed by a strong balance sheet. We generate a healthy free cash flow, as I mentioned, targeting that conversion that I just mentioned, the 100% conversion from net income to free cash flow. We run a net leverage ratio of 1x-2x adjusted EBITDA. That discipline gives us, we think, real capacity to pursue acquisitions when the right opportunity present themselves. Now, on acquisitions specifically, the approach is very focused. Sustaining, maintaining our business is a priority, then kind of investing in our profit-generating assets. sustaining maintaining our business is a priority then kind of investing in our profit-generating assets That means new product innovation, ongoing optimization of our manufacturing footprint with capital expenditure of about, on a given year, $20 million - $25 million. that means new product innovation ongoing optimization of our manufacturing footprint with capital expenditure of about on a given year $20 million - $25 million This is how we keep the core competitive and the innovation pipeline full. this is how we keep the core competitive and the innovation pipeline full That investment is backed by a strong balance sheet. that investment is backed by a strong balance sheet We generate a healthy free cash flow, as I mentioned, targeting that conversion that I just mentioned, the 100% conversion from net income to free cash flow. we generate a healthy free cash flow as i mentioned targeting that conversion that i just mentioned the 100% conversion from net income to free cash flow We run a net leverage ratio of 1x-2x adjusted EBITDA. we run a net leverage ratio of 1x-2x adjusted ebitda That discipline gives us, we think, real capacity to pursue acquisitions when the right opportunity present themselves. that discipline gives us we think real capacity to pursue acquisitions when the right opportunity present themselves Now, on acquisitions specifically, the approach is very focused. now on acquisitions specifically the approach is very focused We look to leverage our core competencies into adjacencies that are attractive to us, Pat is going to show you exactly where we see those opportunities in just a moment. Finally, we return capital to our shareholders. We are proud of a dividend track record that span more than 50 consecutive years of increase, and we complement that with opportunistic share repurchases. You saw what we did in Q1, where we took advantage of what we thought was a one-time price dislocation of our share price, and we purchased, we bought back about $60 million of shares. Now, if you put it all together, you have a company with the financial strength to fund our ambitious growth agenda and reward shareholders along the way. We look to leverage our core competencies into adjacencies that are attractive to us, Pat is going to show you exactly where we see those opportunities in just a moment. we look to leverage our core competencies into adjacencies that are attractive to us pat is going to show you exactly where we see those opportunities in just a moment Finally, we return capital to our shareholders. finally we return capital to our shareholders We are proud of a dividend track record that span more than 50 consecutive years of increase, and we complement that with opportunistic share repurchases. we are proud of a dividend track record that span more than 50 consecutive years of increase and we complement that with opportunistic share repurchases You saw what we did in Q1, where we took advantage of what we thought was a one-time price dislocation of our share price, and we purchased, we bought back about $60 million of shares. you saw what we did in q1 where we took advantage of what we thought was a one-time price dislocation of our share price and we purchased we bought back about $60 million of shares Now, if you put it all together, you have a company with the financial strength to fund our ambitious growth agenda and reward shareholders along the way. now if you put it all together you have a company with the financial strength to fund our ambitious growth agenda and reward shareholders along the way Since the next step is where we put that M&A capacity to work, let me hand it back to Pat to walk through our strategic priorities and where we see the most attractive opportunities to grow. Pat? Since the next step is where we put that M&A capacity to work, let me hand it back to Pat to walk through our strategic priorities and where we see the most attractive opportunities to grow. since the next step is where we put that m&a capacity to work let me hand it back to pat to walk through our strategic priorities and where we see the most attractive opportunities to grow Pat? pat

Speaker 2: Yeah, as Lorenzo mentioned, M&A is a key component of our growth and capital allocation strategy. We built a focused, disciplined approach to M&A, supported by dedicated resourcing inside Tennant Company, responsible for developing and converting the M&A pipeline. Our strategy is centered in three areas. First, strengthening our core cleaning business within our current $9 billion addressable market. This includes both product and channel expansion, as demonstrated by the recent distributor acquisitions that we made in Europe that have expanded our go-to-market reach and increased our share. Second, accelerating growth in robotics and connected autonomy. We view M&A in the robotics context as a way to move faster in robotics, whether through expanding our product portfolio, controlling targeted elements of the technology stack, or strengthening our automation ecosystem. Yeah, as Lorenzo mentioned, M&A is a key component of our growth and capital allocation strategy. yeah as lorenzo mentioned m&a is a key component of our growth and capital allocation strategy We built a focused, disciplined approach to M&A, supported by dedicated resourcing inside Tennant Company, responsible for developing and converting the M&A pipeline. we built a focused disciplined approach to m&a supported by dedicated resourcing inside tennant company responsible for developing and converting the m&a pipeline Our strategy is centered in three areas. our strategy is centered in three areas First, strengthening our core cleaning business within our current $9 billion addressable market. first strengthening our core cleaning business within our current $9 billion addressable market This includes both product and channel expansion, as demonstrated by the recent distributor acquisitions that we made in Europe that have expanded our go-to-market reach and increased our share. this includes both product and channel expansion as demonstrated by the recent distributor acquisitions that we made in europe that have expanded our go-to-market reach and increased our share Second, accelerating growth in robotics and connected autonomy. second accelerating growth in robotics and connected autonomy We view M&A in the robotics context as a way to move faster in robotics, whether through expanding our product portfolio, controlling targeted elements of the technology stack, or strengthening our automation ecosystem. we view m&a in the robotics context as a way to move faster in robotics whether through expanding our product portfolio controlling targeted elements of the technology stack or strengthening our automation ecosystem Finally, the third pillar of our strategy is selectively expanding into adjacent mobile equipment markets where our capabilities, particularly in direct sales, direct service, and our growing automation ecosystem, can be leveraged to create value beyond cleaning. Across all three pillars, we apply a disciplined framework. We evaluate each opportunity against a disciplined set of strategic, financial, and operational criteria. Ensuring that we deploy capital to the opportunities where Tennant can create the most value and with the highest degrees of confidence. We're managing an active pipeline and view M&A as a meaningful lever of value creation for our shareholders. With that, we'll open it up for Q&A. Finally, the third pillar of our strategy is selectively expanding into adjacent mobile equipment markets where our capabilities, particularly in direct sales, direct service, and our growing automation ecosystem, can be leveraged to create value beyond cleaning. finally the third pillar of our strategy is selectively expanding into adjacent mobile equipment markets where our capabilities particularly in direct sales direct service and our growing automation ecosystem can be leveraged to create value beyond cleaning Across all three pillars, we apply a disciplined framework. across all three pillars we apply a disciplined framework We evaluate each opportunity against a disciplined set of strategic, financial, and operational criteria. we evaluate each opportunity against a disciplined set of strategic financial and operational criteria Ensuring that we deploy capital to the opportunities where Tennant can create the most value and with the highest degrees of confidence. ensuring that we deploy capital to the opportunities where tennant can create the most value and with the highest degrees of confidence We're managing an active pipeline and view M&A as a meaningful lever of value creation for our shareholders. we're managing an active pipeline and view m&a as a meaningful lever of value creation for our shareholders With that, we'll open it up for Q&A. with that we'll open it up for q&a

Speaker 3: Thanks so much, Lorenzo. Thanks, Pat. Pat, I just want to make sure you're not a robot too, right? Because we can't see you. Thanks so much, Lorenzo. thanks so much lorenzo Thanks, Pat. thanks pat Pat, I just want to make sure you're not a robot too, right? pat i just want to make sure you're not a robot too right Because we can't see you. because we can't see you

Speaker 2: No, but I spend a lot of time with robots. No, but I spend a lot of time with robots. no but i spend a lot of time with robots

Speaker 3: Fair enough. We actually have a few questions already, but I'll remind everyone we have about nine or 10 minutes remaining. If you have a question, press the Q&A button and type in your question. One topic you didn't get into too much, Lorenzo, it's come up in the queue, so I will ask it. Let me read this to you. Now that ERP stabilization is largely behind you and the focus has shifted to optimization, what are the important milestones you need to reach to sort of reach the margin recovery that's built into your guidance? Fair enough. fair enough We actually have a few questions already, but I'll remind everyone we have about nine or 10 minutes remaining. we actually have a few questions already but i'll remind everyone we have about nine or 10 minutes remaining If you have a question, press the Q&A button and type in your question. if you have a question press the q&a button and type in your question One topic you didn't get into too much, Lorenzo, it's come up in the queue, so I will ask it. one topic you didn't get into too much lorenzo it's come up in the queue so i will ask it Let me read this to you. let me read this to you Now that ERP stabilization is largely behind you and the focus has shifted to optimization, what are the important milestones you need to reach to sort of reach the margin recovery that's built into your guidance? now that erp stabilization is largely behind you and the focus has shifted to optimization what are the important milestones you need to reach to sort of reach the margin recovery that's built into your guidance

Speaker 1: No, that's a great question. As we mentioned, as we released our Q1 results. We exited Q1 with, let's say, what our core workflows are, order management, production scheduling, and fulfillment, largely operating reliably, number one, and at scale across our North America business. When we say stabilization, we think stabilization is really done. The system is stable. The operational performance improves sequentially. The next step, as you mentioned, it's optimization phase, and really in terms of milestones, we're looking at fixing functionalities to drive throughput labor productivity, and system-enabled performance. For us, it's really about getting back to all those KPIs in terms of productivity, in terms of efficiencies that we were targeting already when we launched in Q4, but that clearly we had some functionalities issues that didn't allow us to get there. This is really how we see this. No, that's a great question. no that's a great question As we mentioned, as we released our Q1 results. as we mentioned as we released our q1 results We exited Q1 with, let's say, what our core workflows are, order management, production scheduling, and fulfillment, largely operating reliably, number one, and at scale across our North America business. we exited q1 with let's say what our core workflows are order management production scheduling and fulfillment largely operating reliably number one and at scale across our north america business When we say stabilization, we think stabilization is really done. when we say stabilization we think stabilization is really done The system is stable. the system is stable The operational performance improves sequentially. the operational performance improves sequentially The next step, as you mentioned, it's optimization phase, and really in terms of milestones, we're looking at fixing functionalities to drive throughput labor productivity, and system-enabled performance. the next step as you mentioned it's optimization phase and really in terms of milestones we're looking at fixing functionalities to drive throughput labor productivity and system-enabled performance For us, it's really about getting back to all those KPIs in terms of productivity, in terms of efficiencies that we were targeting already when we launched in Q4, but that clearly we had some functionalities issues that didn't allow us to get there. for us it's really about getting back to all those kpis in terms of productivity in terms of efficiencies that we were targeting already when we launched in q4 but that clearly we had some functionalities issues that didn't allow us to get there This is really how we see this. this is really how we see this It's getting by the end of the quarter and leading into the second half of the year, not only stable as we are, but also optimized in terms of that throughput. The KPIs are largely, the milestones are largely around throughput and productivity of our labor as we get the product to our customer. It's getting by the end of the quarter and leading into the second half of the year, not only stable as we are, but also optimized in terms of that throughput. it's getting by the end of the quarter and leading into the second half of the year not only stable as we are but also optimized in terms of that throughput The KPIs are largely, the milestones are largely around throughput and productivity of our labor as we get the product to our customer. the kpis are largely the milestones are largely around throughput and productivity of our labor as we get the product to our customer

Speaker 3: Okay, perfect. Thank you. Pat, turning to robotics, I'm going to combine my own question with a question we have around channels, but I guess what I'm sure you get this question a lot, I'm getting it a ton. You got to $85 million in robotics revenue over the span of about six years. You started taking orders 2019. You hit $85 million last year. You're targeting virtually tripling over three years, so a 40%+ CAGR. What gives you that? You talked about hitting an inflection point. What gives you the confidence on such a robust goal or target, $250 million by 2028? Okay, perfect. okay perfect Thank you. thank you Pat, turning to robotics, I'm going to combine my own question with a question we have around channels, but I guess what I'm sure you get this question a lot, I'm getting it a ton. pat turning to robotics i'm going to combine my own question with a question we have around channels but i guess what i'm sure you get this question a lot i'm getting it a ton You got to $85 million in robotics revenue over the span of about six years. you got to $85 million in robotics revenue over the span of about six years You started taking orders 2019. you started taking orders 2019 You hit $85 million last year. you hit $85 million last year You're targeting virtually tripling over three years, so a 40%+ CAGR. you're targeting virtually tripling over three years so a 40%+ cagr What gives you that? what gives you that You talked about hitting an inflection point. you talked about hitting an inflection point What gives you the confidence on such a robust goal or target, $250 million by 2028? what gives you the confidence on such a robust goal or target $250 million by 2028

Speaker 2: Yeah. Great question. A couple of things from our perspective. One, the strategy that we are deploying gives me confidence. Last year, as we built our strategy, we reflected on our eight years of commercial experience, we've learned a lot. We've learned a lot about what it takes to get customers to buy in, and then from a pilot to scale, from pilot scale to full scale. Our experience informed the strategy that we built. We think we've got a compelling strategy, and that's based in, one, a rapid expansion of our product and technology portfolio. You've heard us communicate our intention to launch 10 new robotics products in the next two years. We're off to a fast start this year already with X2, X16, and Clean 2.0. Yeah. yeah Great question. great question A couple of things from our perspective. a couple of things from our perspective One, the strategy that we are deploying gives me confidence. one the strategy that we are deploying gives me confidence Last year, as we built our strategy, we reflected on our eight years of commercial experience, we've learned a lot. last year as we built our strategy we reflected on our eight years of commercial experience we've learned a lot We've learned a lot about what it takes to get customers to buy in, and then from a pilot to scale, from pilot scale to full scale. we've learned a lot about what it takes to get customers to buy in and then from a pilot to scale from pilot scale to full scale Our experience informed the strategy that we built. our experience informed the strategy that we built We think we've got a compelling strategy, and that's based in, one, a rapid expansion of our product and technology portfolio. we think we've got a compelling strategy and that's based in one a rapid expansion of our product and technology portfolio You've heard us communicate our intention to launch 10 new robotics products in the next two years. you've heard us communicate our intention to launch 10 new robotics products in the next two years We're off to a fast start this year already with X2, X16, and Clean 2.0. we're off to a fast start this year already with x2 x16 and clean 2.0 We need to keep that pace of innovation and product development so that we cover more applications, deliver more autonomy across more price points. That's a really essential element to getting to $250 million. Building out a go-to-market capability. Adding dedicated automation, selling capacity and capability, deployment capacity and capability, and customer success resources to help our customers scale, a key element of it. Creating this automation customer support ecosystem so that we can demonstrate the ROI to customers and get them to move from pilot to total scale. It's our strategy, and that's what we can control and what we're focused on. I'll also add that I do believe we are at this inflection point, that the conversations with our customers have shifted markedly over the past year, where customers historically may have been expressing curiosity and dabbling at pilot scale. We need to keep that pace of innovation and product development so that we cover more applications, deliver more autonomy across more price points. we need to keep that pace of innovation and product development so that we cover more applications deliver more autonomy across more price points That's a really essential element to getting to $250 million. that's a really essential element to getting to $250 million Building out a go-to-market capability. building out a go-to-market capability Adding dedicated automation, selling capacity and capability, deployment capacity and capability, and customer success resources to help our customers scale, a key element of it. adding dedicated automation selling capacity and capability deployment capacity and capability and customer success resources to help our customers scale a key element of it Creating this automation customer support ecosystem so that we can demonstrate the ROI to customers and get them to move from pilot to total scale. creating this automation customer support ecosystem so that we can demonstrate the roi to customers and get them to move from pilot to total scale It's our strategy, and that's what we can control and what we're focused on. it's our strategy and that's what we can control and what we're focused on I'll also add that I do believe we are at this inflection point, that the conversations with our customers have shifted markedly over the past year, where customers historically may have been expressing curiosity and dabbling at pilot scale. i'll also add that i do believe we are at this inflection point that the conversations with our customers have shifted markedly over the past year where customers historically may have been expressing curiosity and dabbling at pilot scale They're now asking us how do they get to large adoption, large scale. Some of the most challenging verticals and channels have really pivoted and changed their posture towards robotics. Those are some of the reasons why we have conviction in our $250 million objective. They're now asking us how do they get to large adoption, large scale. they're now asking us how do they get to large adoption large scale Some of the most challenging verticals and channels have really pivoted and changed their posture towards robotics. some of the most challenging verticals and channels have really pivoted and changed their posture towards robotics Those are some of the reasons why we have conviction in our $250 million objective. those are some of the reasons why we have conviction in our $250 million objective

Speaker 3: Can you talk a little bit about, because this is the specific question we got in terms about expanding the channels and how part of the strategy that plays and where the channels are most important. Can you talk a little bit about, because this is the specific question we got in terms about expanding the channels and how part of the strategy that plays and where the channels are most important. can you talk a little bit about because this is the specific question we got in terms about expanding the channels and how part of the strategy that plays and where the channels are most important

Speaker 2: For sure. Historically, our business in robotics has been built around our direct business and really large strategic accounts in retail and a few of our industrial verticals. That's been great business for us, but for us to grow at this kind of pace, we need to add to our channel selection and really leverage Tennant's legacy multi-channel go-to-market. Distribution is an obvious opportunity for us. We use distribution as a very efficient and effective way to get to a diverse set of market verticals that include education, healthcare, office space, hospitality, and we have historically done not that much robotics business through distribution. We're intentionally focused on unlocking distribution as a key channel to access additional markets, and that means we're building a product portfolio better suited to distribution. That's a big part of our play there. For sure. for sure Historically, our business in robotics has been built around our direct business and really large strategic accounts in retail and a few of our industrial verticals. historically our business in robotics has been built around our direct business and really large strategic accounts in retail and a few of our industrial verticals That's been great business for us, but for us to grow at this kind of pace, we need to add to our channel selection and really leverage Tennant's legacy multi-channel go-to-market. that's been great business for us but for us to grow at this kind of pace we need to add to our channel selection and really leverage tennant's legacy multi-channel go-to-market Distribution is an obvious opportunity for us. distribution is an obvious opportunity for us We use distribution as a very efficient and effective way to get to a diverse set of market verticals that include education, healthcare, office space, hospitality, and we have historically done not that much robotics business through distribution. we use distribution as a very efficient and effective way to get to a diverse set of market verticals that include education healthcare office space hospitality and we have historically done not that much robotics business through distribution We're intentionally focused on unlocking distribution as a key channel to access additional markets, and that means we're building a product portfolio better suited to distribution. we're intentionally focused on unlocking distribution as a key channel to access additional markets and that means we're building a product portfolio better suited to distribution That's a big part of our play there. that's a big part of our play there We're building programs specifically for distribution as a way to unlock their capability to sell and deploy, leveraging our tools and our experience and our skill set. Distribution's a big part of it. I'll say, for us to grow at this magnitude, we have to unlock distribution. We have to accelerate the wins with the big strategic account of customers that we deal directly with, the large retailers, the large industrial players, the large logistics companies, manufacturers. In addition to that, Tennant's legacy is centered a lot around selling up and down the street business to industrial customers. Single site industrial manufacturing locations, smaller scale regional logistics providers. We need to unlock that as well, and that's been a smaller component of this business. We're building programs specifically for distribution as a way to unlock their capability to sell and deploy, leveraging our tools and our experience and our skill set. we're building programs specifically for distribution as a way to unlock their capability to sell and deploy leveraging our tools and our experience and our skill set Distribution's a big part of it. distribution's a big part of it I'll say, for us to grow at this magnitude, we have to unlock distribution. i'll say for us to grow at this magnitude we have to unlock distribution We have to accelerate the wins with the big strategic account of customers that we deal directly with, the large retailers, the large industrial players, the large logistics companies, manufacturers. we have to accelerate the wins with the big strategic account of customers that we deal directly with the large retailers the large industrial players the large logistics companies manufacturers In addition to that, Tennant's legacy is centered a lot around selling up and down the street business to industrial customers. in addition to that tennant's legacy is centered a lot around selling up and down the street business to industrial customers Single site industrial manufacturing locations, smaller scale regional logistics providers. single site industrial manufacturing locations smaller scale regional logistics providers We need to unlock that as well, and that's been a smaller component of this business. we need to unlock that as well and that's been a smaller component of this business Building our industrial product portfolio, enabling our global sales force to effectively sell robots and really unlock this direct industrial channel that we've built historically, has been a small part of the mix historically. It needs to be a bigger part of the mix moving forward. We think those are the channel plays that'll get us to this level of growth. Building our industrial product portfolio, enabling our global sales force to effectively sell robots and really unlock this direct industrial channel that we've built historically, has been a small part of the mix historically. building our industrial product portfolio enabling our global sales force to effectively sell robots and really unlock this direct industrial channel that we've built historically has been a small part of the mix historically It needs to be a bigger part of the mix moving forward. it needs to be a bigger part of the mix moving forward We think those are the channel plays that'll get us to this level of growth. we think those are the channel plays that'll get us to this level of growth

Speaker 3: You recently announced a three-year extension with the exclusive agreement with Brain. Can you talk a little bit about how that affects the competitive landscape? Certainly, I'm sure you get this question a lot, we do, in terms of cheaper foreign competition entering the market. You recently announced a three-year extension with the exclusive agreement with Brain. you recently announced a three-year extension with the exclusive agreement with brain Can you talk a little bit about how that affects the competitive landscape? can you talk a little bit about how that affects the competitive landscape Certainly, I'm sure you get this question a lot, we do, in terms of cheaper foreign competition entering the market. certainly i'm sure you get this question a lot we do in terms of cheaper foreign competition entering the market

Speaker 2: Yep. Yeah. First, in terms of how our relationship with Brain has shifted the market landscape, when we went exclusive with them on floor care technology in 2024, prior to that they were working with our largest international competitors. We believe that our relationship with them moving to exclusive was a significant event in the industry and has allowed us to build our advantage against legacy competitors over the past few years. Our latest moves to extend exclusivity and continue to evolve the partnership put us in an even stronger position with Brain Corp and accelerating product and technology with them. With respect to the new entrant competitors, the landscape that we see is that they are robot first, software first. They're not from the cleaning industry. They're new to the industry. What we see them doing, certainly are attacking the market at different price points. Yep. yep Yeah. yeah First, in terms of how our relationship with Brain has shifted the market landscape, when we went exclusive with them on floor care technology in 2024, prior to that they were working with our largest international competitors. first in terms of how our relationship with brain has shifted the market landscape when we went exclusive with them on floor care technology in 2024 prior to that they were working with our largest international competitors We believe that our relationship with them moving to exclusive was a significant event in the industry and has allowed us to build our advantage against legacy competitors over the past few years. we believe that our relationship with them moving to exclusive was a significant event in the industry and has allowed us to build our advantage against legacy competitors over the past few years Our latest moves to extend exclusivity and continue to evolve the partnership put us in an even stronger position with Brain Corp and accelerating product and technology with them. our latest moves to extend exclusivity and continue to evolve the partnership put us in an even stronger position with brain corp and accelerating product and technology with them With respect to the new entrant competitors, the landscape that we see is that they are robot first, software first. with respect to the new entrant competitors the landscape that we see is that they are robot first software first They're not from the cleaning industry. they're not from the cleaning industry They're new to the industry. they're new to the industry What we see them doing, certainly are attacking the market at different price points. what we see them doing certainly are attacking the market at different price points We're answering that with a different product portfolio. It's less about how they're pricing and more about the product portfolio that they're bringing. They're attacking at smaller formats, lower value solutions, we're answering that with a more comprehensive product portfolio like what you see with the X2 ROVR SCRUB. Smaller format, lower price point. We're answering that with a different product portfolio. we're answering that with a different product portfolio It's less about how they're pricing and more about the product portfolio that they're bringing. it's less about how they're pricing and more about the product portfolio that they're bringing They're attacking at smaller formats, lower value solutions, we're answering that with a more comprehensive product portfolio like what you see with the X2 ROVR SCRUB. they're attacking at smaller formats lower value solutions we're answering that with a more comprehensive product portfolio like what you see with the x2 rovr scrub Smaller format, lower price point. smaller format lower price point

Speaker 3: Got it. Go ahead. Got it. got it Go ahead. go ahead

Speaker 2: The last thing I would mention is they are attacking with, I would say, feature-rich technology. What we've seen is that it's relatively delicate technology. It's complex, it's difficult to use, we are taking a different approach. We know that our customers need easy to use, durable technology, that's our approach. The last thing I would mention is they are attacking with, I would say, feature-rich technology. the last thing i would mention is they are attacking with i would say feature-rich technology What we've seen is that it's relatively delicate technology. what we've seen is that it's relatively delicate technology It's complex, it's difficult to use, we are taking a different approach. it's complex it's difficult to use we are taking a different approach We know that our customers need easy to use, durable technology, that's our approach. we know that our customers need easy to use durable technology that's our approach

Speaker 3: I could see that. That's really always been the biggest difficulty in getting adoption, right? Is making it easier to use, I would imagine. I could see that. i could see that That's really always been the biggest difficulty in getting adoption, right? that's really always been the biggest difficulty in getting adoption right Is making it easier to use, I would imagine. is making it easier to use i would imagine

Speaker 2: Right. Right. right

Speaker 3: Got it. We're just about out of time. I do want to get in one last question about the balance sheet. We have someone asking about, you did do the sizable share repurchase in Q1 as the stock was lower. How are you thinking about the remainder of the year? Because obviously cash flow in the balance sheet has been a very strong part of your story in terms of balancing returning capital to shareholders versus M&A opportunities. Got it. got it We're just about out of time. we're just about out of time I do want to get in one last question about the balance sheet. i do want to get in one last question about the balance sheet We have someone asking about, you did do the sizable share repurchase in Q1 as the stock was lower. we have someone asking about you did do the sizable share repurchase in q1 as the stock was lower How are you thinking about the remainder of the year? how are you thinking about the remainder of the year Because obviously cash flow in the balance sheet has been a very strong part of your story in terms of balancing returning capital to shareholders versus M&A opportunities. because obviously cash flow in the balance sheet has been a very strong part of your story in terms of balancing returning capital to shareholders versus m&a opportunities

Speaker 1: Yeah. As you mentioned, right, the Q1 buyback was obviously, was opportunistic, was a high conviction decision, in response to an event-driven dislocation in the share price. We deployed $60 million to repurchase shares, the average price $63 per share. We believe that price really did not reflect the underlying value of the franchise. Right now, going forward, which is your question, we're not going to say we're done, right? Repurchases will continue to be opportunistic. We have ample remaining authorization. We will deploy capital when we see an attractive risk-adjusted return. We have our framework to do that. Of course, we'll also continue to invest in the business as mentioned, right, pay our dividend in line with our capital allocation framework. Yeah. yeah As you mentioned, right, the Q1 buyback was obviously, was opportunistic, was a high conviction decision, in response to an event-driven dislocation in the share price. as you mentioned right the q1 buyback was obviously was opportunistic was a high conviction decision in response to an event-driven dislocation in the share price We deployed $60 million to repurchase shares, the average price $63 per share. we deployed $60 million to repurchase shares the average price $63 per share We believe that price really did not reflect the underlying value of the franchise. we believe that price really did not reflect the underlying value of the franchise Right now, going forward, which is your question, we're not going to say we're done, right? right now going forward which is your question we're not going to say we're done right Repurchases will continue to be opportunistic. repurchases will continue to be opportunistic We have ample remaining authorization. we have ample remaining authorization We will deploy capital when we see an attractive risk-adjusted return. we will deploy capital when we see an attractive risk-adjusted return We have our framework to do that. we have our framework to do that Of course, we'll also continue to invest in the business as mentioned, right, pay our dividend in line with our capital allocation framework. of course we'll also continue to invest in the business as mentioned right pay our dividend in line with our capital allocation framework

Speaker 3: Got it. We are just about out of time. Pat, Lorenzo, any closing comments before I wrap this up? Got it. got it We are just about out of time. we are just about out of time Pat, Lorenzo, any closing comments before I wrap this up? pat lorenzo any closing comments before i wrap this up

Speaker 1: No, just thank you everybody. I really appreciate your interest in Tennant Company. Have a great rest of the conference. Thank you, Steve, as always, for facilitating for the great conference. No, just thank you everybody. no just thank you everybody I really appreciate your interest in Tennant Company. i really appreciate your interest in tennant company Have a great rest of the conference. have a great rest of the conference Thank you, Steve, as always, for facilitating for the great conference. thank you steve as always for facilitating for the great conference

Speaker 3: Always great to. Always great to. always great to

Speaker 2: Thanks, everyone. Take care Thanks, everyone. thanks everyone Take care take care

Speaker 3: Always great to get caught up again on Tennant Company, the ticker's TNC. You can reach out directly to Lorenzo at Tennant Company if you have any follow-up questions, or you can direct your questions to Steve Ferazani at Sidoti. I certainly can pass it along to the team at Tennant. Thanks, everyone, for joining us, and appreciate you sticking around for the remainder of the conference through tomorrow. Thanks, everyone. Always great to get caught up again on Tennant Company, the ticker's TNC. always great to get caught up again on tennant company the ticker's tnc You can reach out directly to Lorenzo at Tennant Company if you have any follow-up questions, or you can direct your questions to Steve Ferazani at Sidoti. you can reach out directly to lorenzo at tennant company if you have any follow-up questions or you can direct your questions to steve ferazani at sidoti I certainly can pass it along to the team at Tennant. i certainly can pass it along to the team at tennant Thanks, everyone, for joining us, and appreciate you sticking around for the remainder of the conference through tomorrow. thanks everyone for joining us and appreciate you sticking around for the remainder of the conference through tomorrow Thanks, everyone. thanks everyone

Speaker 1: Thanks. Thank you Thanks. thanks Thank you thank you