Q4 2021 Tennant Co Earnings Call
Good morning, My name is Cheryl and I will be your conference operator today at this.
This time I would like to welcome everyone to the Tennant company's 2021 fourth quarter and full year earnings Conference call. This call is being recorded there will be time for Q&A at the end of the call. Please press star one if you would like to ask a question.
After the Q&A. Please stay on the line for closing remarks from management. If you have joined our call today via telephone and logged into the conference call presentation on your computer. Please mute the audio on your computer to avoid any potential quality issues during <unk>.
Thank you for participating in Tennant company's 2021 fourth quarter and full year earnings Conference call. Beginning today's meeting is MS. Fei Wang Senior Vice President and Chief Financial Officer for Tennant Company Midwest you may begin.
Yeah.
Good morning, everyone and welcome to Tennant company's fourth quarter and full year 2021 earnings conference call.
Senior Vice President and CFO joining.
Joining me on the call today is Dave Huml, Tennant's, President and CEO .
Today, we will update you regarding our fourth quarter and full year performance.
And our guidance for 2022.
Dave will brief you on our operations and enterprise strategy and I will cover the financials.
After our prepared remarks, we will open the call for questions. Please note a slide presentation accompanies this conference call and is available on our Investor Relations website at investors <unk> com.
<unk> Dot com.
Before we begin please be advised that our remarks this morning, and our answers to questions may contain forward looking statements regarding the company's expectations of future performance.
Such statements are subject to risks and uncertainties and our actual results may differ materially from those contained in the statements.
These risks and uncertainties are described in today's news release and the documents, we filed with the Securities and Exchange Commission.
Heard you to review those documents, particularly our safe.
Harbor statement for a description of the risks and uncertainties that may affect our results.
Additionally, on this conference call, we will discuss non-GAAP measures.
Include or exclude certain items, our 2021 fourth quarter earnings release.
Fluids, the comparable GAAP measures and a reconciliation of these non-GAAP measures to our GAAP results.
Our earnings release was issued this morning via business wire and is also posted on our Investor Relations website at investors Dot Tenneco Dot com.
I'll now turn the call over to Dave.
Thanks, Craig and thank you everyone for joining us today.
As we look back on 2021.
Global teams responded to an extremely challenging operating environment, which included unexpected and prolonged global supply disruptions and placement.
Labor constraints allowed tenants to deliver record earnings performance.
While we expect macroeconomic headwinds to persist throughout the year, our 2021 performance demonstrates our ability to execute in this environment and positions us to deliver on our full year target for 2022.
We are encouraged by current demand from tenants strong full year performance was driven by pre pandemic levels of order rates across our global markets.
In 2021, our sales grew by nine 1% on an organic basis, which excludes the effects of foreign currency exchange and divestitures.
Our comprehensive and innovative product and solution oriented offerings are resonating with customers and we expect this demand environment to continue for the foreseeable future.
While we face ongoing industry wide supply chain disruptions and deflation. Our 2021 results were in line with our revised guidance and we delivered adjusted EBITDA of $142 million and a 100 basis points improvement in adjusted EBITDA margin.
Moreover, our record open order position of strength for 2021 provided momentum into 2022.
Supported by current demand trends, our commitment to innovation and our disciplined focus on cost reductions and manufacturing efficiencies we will.
Remained confident in our ability to drive long term sustainable growth and operational efficiency to generate value for our shareholders.
We generated cash flow from operations of close to $70 million and after investing $19 billion of capital expenditures, we returned over 60% of net cash flows to our shareholders in 2021 through dividends and share repurchases.
2021, we increased our quarterly dividend by 9%, marking the fifth consecutive year that Tennant has increased its annual cash dividend.
For full year 2022, we anticipate organic net sales growth between four 5% to eight 5% and adjusted EBITDA between $145 million and $160 million, Although we expect some margin compression in 2022.
They will go into more detail later in the call.
We continue to take steps to maximize our output worldwide and to safeguard the customer experience as discussed on previous calls to minimize the impact of higher freight costs and supply disruptions. We are prioritizing local for local in region for region of manufacturing and sourcing in order to manufacture our products.
Closer to our customers.
Also our supply chain team is undertaking significant countermeasures to mitigate interruptions and expand capacity in the future.
Some of these actions include increased supplier purchase commitments and safety stock inventory.
Standard visibility of production forecasts.
Spaniards dual sourcing supply options.
And a deeper integration into our suppliers' supply chain design.
Our efforts extend beyond the short term mitigation and include the lasting improvements we continue to make as part of our enterprise growth strategy.
Much of our success in 2021 would not have been possible without the foundational improvements made in prior periods.
And the focus of this strategy creates for our organization.
As you May recall this strategy is based on three pillars.
To win where we have competitive advantage to reduce complexity and build scalable processes and to innovate for profitable growth.
The first pillar, winning where we have a competitive advantage began in 2020 with critically important foundational work.
In 2021 that would lead to the profitable sale of our coatings business as well as the expansion of our successful value capture programs in specific geographies, resulting in targeted areas of margin expansion.
Turning to the second pillar reduce complexity and build a scalable processes.
Pandemic related challenges over the last two years have compelled us to accelerate this initiative, particularly for our local for local programs.
Our localization efforts aligned to our long term strategy and help us to mitigate the current transportation challenges.
At the same time, it has led to new supplier relationships and enabled dual source opportunities that minimized production bottlenecks.
Additionally, we have multiple lines move and production capacity shift projects underway to optimize our operations.
Our engineering teams have launched new value engineering projects that yield tactical and strategic benefits ranging from cost mitigation the reduction in skus.
The implementation of our enterprise strategy is a continuous process, particularly with respect to the third pillar innovate for profitable growth.
More specifically this means leveraging innovation to unlock value for our customers and for tonnage.
A great example of tenants new inventory.
The first add on for our robotic floor scrubbers that provides multi purpose autonomous solutions specifically for retailers.
Inventory stand as an integrated solution that enables tenants for scrubbers to autonomously scan on shelf inventory and to collect data in real time to enhance inventory management and operations.
In addition to the near term opportunity and partnering with the value of customer inventory scan also represents an exciting move for Tennant company into an attractive adjacency.
We remain laser focused on winning new customers and serving our existing customers as they grow and expand.
For instance, we have recently expanded our partnership with Sunbelt rentals, the premier rental equipment company in North America.
Sunbelt rentals offers a highly diversified product mix, including general construction equipment industrial tools power generation and of course, lower scrubbers, and sweepers, which we are providing to sunbelt for more than 15 years.
Tenant has been sunbelt rentals exclusive strategic provider of floor care equipment, and we will now support their network a dedicated floor care centers, which will serve as one stop shop for their customers in need of cleaning solutions.
Sunbelt rentals as a valued strategic partner and the relationship has been mutually beneficial, particularly with respect to lead generation.
In short, we remain committed to providing our customers with high quality products and exceptional service as we execute on our enterprise strategy and we will continue to take decisive and appropriate actions to maintain our customer experience, while pursuing our growth objectives.
With that I will turn the call over to pay for a discussion of our financials.
Thank you David.
Fourth quarter net income was seven 9 million.
Up $5 2 million from the prior year SG&A was lower in Q4 2021 due in part to strong cost containment efforts as well as the absence of nonrecurring strategic investments made in the prior year.
Additionally, current year results benefited from lower interest expense due to the refinancing of debt.
For the full year, we delivered record net income of $64 $9 million compared to $33 7 million in the year ago period.
Strong sales, coupled with solid operating performance and lower interest expense contributed to the year over year increase.
Fourth quarter adjusted earnings per diluted share was <unk> 71.
Compared to <unk> 48 per diluted share in the prior year period full.
Full year 2021 adjusted earnings per diluted share was $4 39.
Compared to $2 91 in 2020, an increase of $1 48 per diluted share.
Adjusted earnings per share number excludes amortization and restructuring charges as well as the gain on sale from the coating.
And Dennis Englishman comp.
For the full year 2021, Tennant reported net sales of one 9 billion compared to $1 billion for 2020.
91% on an organic sales basis.
Foreign currency was a favorable driver in year over year. The comparison between periods were also impacted by the sale of the cogent business in the first quarter of 2021.
The increase in net sales was primarily driven by strong demand in our end markets.
In part to increased price realization.
All regions demonstrated positive organic growth on a year over year basis. Moreover growth was fairly consistent throughout the year, which is a testament to the efforts of our global team and addressing record demand and the rate of significant supply chain disruption.
As you May know tenant group that sales into three geographies. The Americas, which includes all of North America, and Latin America, EMEA, which covers Europe , the middle East and Africa, and Asia Pacific, which includes China, Japan, Australia, and other Asian markets.
For the full year 2021 sales in the Americas grew four 3% year over year or seven 4% organically growth.
Growth drivers include service parts and consumables.
Strong industrial sales in North America.
At the same time strong organic growth in Latin America was driven by industrial sales in Brazil, and the sale of IPC branded products in Mexico.
Sales in EMEA grew 19, 3% year over year, or 14, 2% organically with demand and order backlog strengthening throughout the year results reflected growth across all countries and product category.
Sales in Asia Pacific increased nine 6% year over year or five 6% on an organic basis.
Strong demand in Australia, and Korea more than offset a decline in China, which was impacted by supply chain disruptions and labor constraints.
Looking at adjusted EBITDA.
Adjusted EBITDA for the full year 2021 was $142 million or.
Or 12, 9% of scale.
<unk> to $119 4 million or 11, 9% of sales in 2020.
We are pleased in our ability to convert a nine 1% organic sales increased to 800 basis point improvement in our adjusted EBITDA margin, especially in a year, where we experienced such inflationary headwinds in material manufacturing and freight costs.
These headwinds contributed to a year over year 90 basis point decrease in adjusted gross margin to 42% in 2021.
Adjusted SG&A expenses were 29, 2% of net sales compared to 39% in the year ago period.
Year over year improvement in leverage was a result of continued cost saving action and lapping the previously mentioned strategic investments in the year ago period.
Overall, we are pleased with our full year adjusted EBITDA performance, which was the result of our ability to capture volume deliver on net price realization and manage expenses.
Turning now to our fourth quarter performance.
For the fourth quarter of 2021, Tennant reported net sales of $276 4 million up four 5% year over year on an organic basis.
While we were encouraged to see price realization ramp up and read through in the fourth quarter. The impact was somewhat muted given our existing backlog.
Currency impact from the strengthening U S dollar and the sale of the coatings business, where unfavorable drivers year over year.
In the fourth quarter sales in the Americas grew one 3% year over year or four 9% organically, despite widespread supply chain challenges and labor constraints.
Growth drivers included service parts and consumables and strong industrial sales in North America at the same time stronger organic growth in Latin America was driven by industrial sales in Brazil, and the sales of IPC branded products in Mexico.
Sales in EMEA grew three 9% year over year, or seven 4% organically with demand and order backlog continuing to strengthen.
Tenant achieved growth across all product categories and market, except for France, which was more heavily impacted by supply constraints.
Sales in Asia declined seven 5% or seven 2% on an organic basis the.
The decline was attributed in part to supply chain disruptions and labor constraints in China with new pandemic related shutdowns in the region impact of which was partially offset by strong demand in Korea and Australia.
Turning to adjusted EBITDA.
Adjusted EBITDA for the fourth quarter of 2021 was $28 4 million or 10, 3% of sales compared to $25 4 million or nine 3% of sales in 2020, we were able to achieve a 100 basis points improvement in our adjusted EBITA margin.
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Parts availability and inflationary pressures were particularly acute in the quarter as adjusted gross margin declined by 460 basis points from the prior year period to 36, 7%.
During the fourth quarter, our adjusted SG&A expenses were 28, 1% of net sales compared to 33, 9% in the year ago period.
Drivers for the quarter were consistent with those of the full year.
Turning to capital deployment in 2021, we generated operating cash flow of approximately $69 million, which reflect strong operating performance and incremental investments in working capital specifically inventory.
The cash flow generation allowed us to make good progress on our capital allocation initiatives.
Capex of approximately $90 million in 2021 was lower than guidance as capital investment activity was impacted by supply chain constraints and has shifted slightly into 2022.
As we discussed in our previous conference call, we refinanced our debt, which further extended our maturity profile and lowered our cost of debt. The interest rate savings resulted from the debt refinancing are in excess of $12 million on an annual basis.
Additionally, we reduced debt outstanding by approximately $44 million.
We ended the quarter with net leverage of one times adjusted EBITDA, which is lower than our stated goal of one and half to two and half time.
We also returned capital to our shareholders in 2021, obtaining approximately $17 $5 million in annual dividend and by repurchasing approximately 197.
All of the shares of our common stock for $15 million under our existing share repurchase authorization.
In total we ended 2021 with a cash balance of approximately $124 million and strong liquidity of approximately $403 million setting the stage for continued progress against our capital allocation priorities.
We continue to be disciplined in our capital allocation strategy, which is first to fund the operations and investment in growth.
Really manage leverage pursue strategic and accretive M&A and then to return excess free cash flow over time to shareholders through dividends and share repurchases.
Switching gears I would now like to talk about our guidance expectations for 2022.
As Dave mentioned, our guidance for the full year 2022 reflects will continues to be an uncertain operating environment with macro level headwinds that are likely to persist for much of the year.
We anticipate that supply chain constraints, such as component availability will continue to impact our ability to produce and deliver products to meet increased demand levels and we expect that we will continue to operate with record level backlog throughout 2022.
We will take necessary action like local for local and region for region manufacturing and sourcing help maximize output and to address and offset inflationary pressures.
We announced further price increases in the first quarter of 2022, and we will continue to monitor the competitive and market backdrop.
We anticipate our quarterly sales cadence will be driven more by our ability to produce than by our demand pattern.
We also expect that gross margins will improve sequentially throughout 2022 in terms of profitability. We expect increased price realization cost out initiatives and strong expense management to drive sequential adjusted EBITDA improvement throughout the year.
For 2022 tenant providing the following guidance.
Net sales of $1 <unk> 5 billion to $1, one 7 billion, reflecting organic sales growth of four and half to eight 5%.
Full year reported GAAP earnings in the range of $3 90 to $4 50 per.
<unk> per diluted share.
Adjusted EPS of $4 40 to $5 per diluted share, which excludes certain nonoperational items and amortization expense.
Adjusted EBITDA of $145 million to $160 million.
Capital expenditures of 25 million to $30 million.
And an adjusted effective tax rate of 20% to 25%, which excludes the amortization expense adjustments.
Overall, our 2022 guidance is in line with our long range financial commitments with that I will now turn the call back over to Dave.
Thank you.
To sum up I am very proud of our global tenants team's dedication and agility that delivered record earnings in 2021.
And we are prepared to build on that success as we deliver another strong year in 2022.
With that we will open the call to questions. Operator. Please go ahead.
To ask a question. Please press star one on your telephone keypad.
First question is from Chris Moore.
CJS Securities. Please go ahead your line is open.
Hey, good morning, Thanks for taking a few questions.
Hi, Chris Good morning, Chris.
Good morning.
Start with the revenue guidance four and a half.
5% organic growth can you just kind of.
Give your sense from where you're sitting today in terms of how that breaks down between volume price and this is the higher end of that more kind of price driven.
Alright.
So Chris I think when we looked at guidance and the growth that we're anticipating in 2021 2022.
There is both price and volume impact.
And I would say that.
It is.
Heavily weighted.
It is more weighted toward price than volume, but.
Bye.
By not that much of a difference.
Got you and is the is the higher end that would if you are getting closer to the eight 5% that's going to be driven by price as opposed to two to volume at that at the higher end of the.
Of the guide.
Yes, it will be both right I think it's going to be built I think youre going to see.
Volume increased on the higher end and and price contributing to that but.
At the midpoint of the range I think it's fair to say.
It's majority price, but it is.
I'm pretty close to the volume contribution.
Now, Chris Chris I would just add our pricing is being dictated to us by the inflation, we're taking up and so we're compelled to move on price.
Commensurate with what we're seeing and forecasting for inflation perspective or demand the demand for our product remains robust and we have a significant backlog available us to monetize over the coming year to the extent, we can given the supply chain constraints. So.
We've guided appropriately given what we can see today with the mix of our volume a modest volume increase as well as the pricing pricing, we've announced month to manage it as we move through the year.
Got it it's helpful.
So on the quarterly cadence.
<unk> talked about driven more by ability to produce then.
Perhaps kind of the typical tenant patterns.
From.
If that means second half has.
EBIT margin is going to increase from a revenue standpoint.
Sure.
<unk> kind of sequential quarterly.
Growth on revenue or just.
What kind of visibility you have at this stage.
And what we're planning towards we anticipate <unk> growth in revenue.
Sequentially throughout the year Q1 through Q4, we also think that we'll see margin improvement Q1 through Q4.
From a gross margin perspective, and also EBITDA margin improvement in Q1 through Q4 so.
It's straight down the P&L.
Sales gross margin and EBITDA.
Yes, Chris I would just add.
Our view, we have to plan something on a quarterly basis, but really generally speaking we think the second half will be stronger for us than the first half and so while we make it an individual quarter wrong as we went through that's our general outlook. Although we don't have any any better data points and the rest of the world is it trying to figure out with the supply chain recovery looks like.
Understood that makes sense.
Just any.
In terms of the Russian U.
Crane.
Situation at this point that any specific impact that you can see on tenant.
Yes, let me first say, it's pretty remarkable times, we're living in and I'm sure.
Bottom everyone is pretty shocking to see what has occurred despite the fact that there were telegraphing warnings of this so our hearts go out to the people of Ukraine is as they work through what this means for them and their lives in the country. While we don't have any direct assets for employees in the affected regions. We do have channel partners, who operate in those regions represent tenants.
We are reaching out to them to see to see how they're doing in <unk>.
Personally in them.
Potential how will weather this from a business standpoint, so while we don't have direct presence on other employees our manufacturing footprint in the affected regions. We do expect that this will have some ripple effects through the macro macro economy that will have to deal with.
I suspect energy costs and mail probably increase.
As a result of that and you might see some disruption further disruption and kind of freight and supply chain.
It's early days to tell.
Got it.
Last one for me just on the M&A front.
Certainly part of your capital allocation strategy just are you spending much time.
Looking at opportunities at this point.
Is there kind of how would you characterize the pipeline.
We were always exploring opportunities and how to best grow tenants and how to provide value to our shareholders and that and some element of that is M&A.
And the pipeline is something that we are working.
We will evaluate opportunities that makes sense and would be accretive to the shareholders and to the Senate.
Yes, Chris I might just add when you look at our capital allocation priorities protecting the core and funding our core business both for growth and recovery from supply chain challenges as our first priority with what's going on in the macro environment, we identified significant opportunities to reinvest back in the business aligned with our long term strategy.
And items that can help us overcome the short term challenges, whether that'd be localizing production, we're overcoming labor constraints by automating factories et cetera. So.
As Fay said, we're open minded and looking for the greatest value creation opportunities on all fronts, but from a priority allocation perspective of protecting the core is job one.
Understood.
Ill jump back in line I appreciate it guys. Thanks.
Again to ask a question. Please press star one. Your next question is from Steve <unk> of Sidoti. Please go ahead. Your line is open.
Good morning, good morning, So I appreciate the information on the call I do want to dive back into the top line guidance to think about.
Still significantly better than the 2% to 3% long term growth certainly pricing is a factor, but given the way you ended the year and given the geopolitical risks that are out there I'm just trying to.
Kind of put it all together in terms of thinking about that's still pretty good guidance.
And given the risks that are out there is that supported by are you thinking about your backlog of what youre hearing from customers. How do you get to that number and is it really supported actuality by pricing.
So Steve. Thank you for the question. So I think we ended the year with really strong organic growth, 9% organic growth FERC from a consolidated perspective and growth across all regions. So very very good and we also ended the quarter ended the year with a pretty significant backlog of three times to five times what normal.
Ranges, but that does for US is it gives us insight into what demand will look like in 2022, and we feel demand will be strong in 2022, and therefore, when we compiled our guidance.
Topline growth, there's an element of it that's demand there is an element of it pricing theyre fairly equally weighted in 2022, but we feel that the demand is strong and it really is supported by the backlog that we've seen and the conversations that we're having with our customers.
Okay.
Thanks.
Cash flow in 2022, and so just a modest increase in Capex I'm trying to think about how you're thinking about.
Working capital and how we might be looking at cash flow in 2022.
Yes, so we did make a significant investment in working capital at the end of the year, primarily in inventory as we will building.
Safety stock in and ensuring that we were positioned in order to meet the growing demand that we're seeing and so there wasn't investments.
And working capital, we suspect that that will unwind in 2022.
As we progress throughout the year and so when I look we did not give specific free cash flow guidance, but it will be higher than what we delivered here in 2021 for two reasons, one we're anticipating an increase in EBITDA.
At the midpoint of that range, it's about $15 million of increase in EBITDA and then we also anticipate kind of a return to normal from a working capital perspective, and so a decrease in inventory and other.
Other working capital items, So I think net net your points free cash flow increase in 2022.
For those reasons.
You the detail on autonomous.
Since we haven't heard a lot about larger contract wins I'm just beyond generalizations can you give us some sense of how the autonomous market has been developing over the last few months and how youre thinking about 2022.
Yes, so when we spent time talking about autonomous which we call EMR.
Over the last several calls.
The market is developing.
About how we expected it to and we were blessed to have a very large customer win early in our launch of an autonomous portfolio.
Which is fantastic.
Walmart.
Walmart is a fantastic flagship customer to earn and generating significant volume in the year, but it didn't really represent theres.
Only one Walmart in the world and it didn't really represent the way other customers are approaching adoption of new technologies, and Walmart have a strong balance sheet and against a differentiated we are investing in technology. So it was a great win right out of the gate and it helps us improve our I'll say, our deployment methodologies and gave us confidence that once we deployed that this can.
I actually work in a real world application of delivering ROI for the customer that's compelling since then what we've seen out in the marketplace from adoption perspective is high interest levels across the broad array of verticals that we can serve.
No longer question as much about the technology, but more questioning about what would it take to achieve the ROI driven by labor shortages, primarily where customers are looking for solutions, where they can.
We can't keep labor in lithium finally, but due to the Cleveland test within their within their locations and as customers get over the hump of moving towards a purchase they are tending to want to pilot.
In a few stores in a few locations with a few units to prove out the concept before they go with a wholesale deployment, which is a logical approach. This is a significant capex and customers want to want to be convinced that they're going to get the return as they move into it. So we've seen some piloting programs amongst customers across verticals. We've also seen some hybrid.
Purchase where they deploy some robotics equipment frequently by standard Tennant equipment. So maybe they put a robot in the higher volume high traffic stores larger floor footprint and then use non automated.
Emmanuel machines for the other locations. So it's more of a traditional technology adoption curves I would say what we're seeing we do expect <unk> sales to increase significantly over 2021. So we expect growth in 2022, and so we're forecasting for forecasting that accordingly, I will say this.
Our teams are very involved in the EMR discussions with customers and anyone that wants to talk about it where people are taking someone from from interest to educating them and move them into a trial period and deploy and make sure. They can realize there.
ROI on the investments and move towards a more full scale deployment, but it takes time.
Customers to prove it to themselves and that has been hampered a bit by the pandemic and our ability to operate in.
In these environments as well as our <unk> products are not immune to supply chain challenges as well and so.
We have customers in one product, we can't get it to them as quickly as we would like and so that's the latest things as well we are still very bullish on the EMR opportunity in this marketplace.
Before you have the potential exists to disrupt this industry, we are going to be the ones to disruptive and are moving more into a material position in terms of the entire portfolio of products used in <unk>.
Cleaning market.
A really interesting innovation that we launched this year in <unk>.
Look about it in the prepared remarks is our inventory scanned launch and the reason I'm. So excited about the inventory stand is it really solves a core issue for our customers in retail and the core issue that we solve for is when a broker.
<unk> mortar retailers it does not have the right product in the right place at the right price that represents a lost sale.
So retail is spend a lot of time trying to manage the on shelf inventory to make sure. It's in the right place price correctly facing the customer and available to be to be bought today. Those are manual solutions, meaning people walking in the aisles and when they see something out in place to run the global box from the storeroom and respond very manual.
So Emmanuel introduces human error and also it is not real time, there is a delay and let's face it.
Retailers are facing the same labor challenges in the rest of the rest of the economy. So demand for people to do the work. So we're solving a very real problem for our customers.
It allows our customers to leverage the <unk> investments that they would make some now when they look at an ROI and investment on robotics that can look at the return on the investments from a cleaning perspective, but now from a data capture perspective, and how much of an improvement in their off the shelf sales, where they need in order to justify this investment so it improves the ROI from.
The customer.
We're also beginning to prove the hypothesis that retailers are not going to want multiple robots running around their store floors theyre going to want to standardize on a consistent platform for robotics. So they can train their people how to use it so that they can be confident in its performance and thats.
And importantly get a service to keep it running over the long haul. So I think what youll see what the inventory scan and our significant win early when there is that customers chose tenant.
Because of our quality, yes, because of our deployment expertise and our training in the field.
New equipment, but then also our aftermarket support so that we can keep the machines running.
The retailer can enjoy their their rois thats why im excited about it from a customer perspective, I'm equally as excited about it from a tenant perspective, and I think it's it's an incremental profitable sales multimillion dollar sale, which was always always a good thing, but it really opens us up to a potentially attractive adjacency around this idea of mobile data.
Capture and so we could become the chosen platform for mobile data capture in these environments and.
And Thats really excited because that moves us from a floor cleaning into solving.
This problem for retailers and potentially solving other problems as we were able to bring real time data from the store floor over to key decision makers and up into their supply chain, helping them optimize their operations. The other reason I am excited about this from a tenant perspective is it really demonstrates our agility and innovation, we think about how close to customer.
We are understanding the real world problems coming with solutions.
All of this despite the pandemic despite the supply chain innovation is alive and well at Tennant and this is an important proof point.
All of that.
The other interesting point, I think or tenants and also for our investors is that we're not doing it alone we're partnering with World Class partners. We're focused on what we do best we're partnering for the rest to solve the problem. It gives us a front row seat to these potentially attractive adjacencies, which could become attractive for tennant more trying to pretend in the future but.
It really solidifies our position is and what the problem solver for our customers when we're able to partner with others and bring a complete solution to bear so listen.
Still very bullish on an EMR inventory scan is a really important development in our complete robotic solutions and I expect it will accelerate what was already a kind of a typical adoption curve for <unk> technology in our served markets.
Thanks Pat.
Since there are no further questions at this time I would like to turn the call over to management for closing remarks.
Thank you before we close please note that we will be posting two tenants IR website. The seconds on our series of quarterly videos that offer a deeper look into our business and growth strategy you can be notified of each new video by signing up for my E Mail alerts and investors know Tenneco Dot com.
This concludes our call stay safe and have a nice day.
This concludes today's conference call. Thank you for your participation you may now disconnect.
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