Good morning. My name is Sandra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Tennant Company's 2020 First Quarter Earnings Conference Call. This call is being recorded. [Operator Instructions]. Thank you for participating in Tennant Company's 2020 first quarter earnings conference call.

Beginning today's meeting is Mr. William Prate, Senior Director of Global Financial Planning and Analysis and Investor Relations for Tennant Company. Mr. Prate, you may begin..

Thank you, Sandra. Good morning, everyone, and welcome to Tennant Company's first quarter 2020 earnings conference call. I'm William Prate, Senior Director of Global Financial Planning and Analysis and Investor Relations.

Joining me today are Chris Killingstad, Tennant's President and CEO; Dave Huml, Chief Operating Officer; and Andy Cebulla, our Interim CFO. Today, we will update you regarding our first quarter performance and the broader business impact of the coronavirus pandemic. Chris will brief you on our operations, and Andy will cover the financials.

After our remarks, we will open the call to questions. Please note a slide presentation accompanies this conference call and is available on our Investor Relations website at investors.tennantco.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. We encourage you to review those documents, particularly our Safe Harbor statement for a description of the risks and uncertainties that may affect our results.

Additionally, on this conference call, we will discuss non-GAAP measures that include or exclude certain items. Our 2020 first quarter earnings release includes the comparable GAAP measures and a reconciliation of these non-GAAP measures to our GAAP results.

Our earnings release was issued this morning via Business Wire and is also posted on our Investor Relations website at investors.tenneco.com. Now I'll turn the call over to Chris..

Thank you, William, and thanks to all of you for joining us today. We've all witnessed a remarkable turn of events since our last opportunity to speak with you. At the outset, I want to wish you all the best as you face your own challenges in this pandemic.

In discussing our results, we will provide as much context as we can regarding what we are seeing and how Tennant is facing what continues to be a fluid and unpredictable situation.

To date, the primary impact on our business have been related to temporary plant shutdowns as well as slowdown in sales to some end markets amid widespread closures of customer facilities. Regarding our plant shutdowns during the first quarter, specifically, Tennant's China factories were closed for two weeks in February.

And we temporarily suspended operations at our plants in Italy and the United States toward the end of March in accordance with local directives and for cleaning purposes. As of today, although all of our plants are not yet back to full productivity, we are able to operate and are doing so subject to the latest official guidance on health and safety.

As for our first quarter, it was the story of two strong months and one difficult one. We saw strong revenue performance through February, led by North America, Latin America and our EMEA regions.

However, as local shutdowns began to take hold in March, we saw significant drop-offs in sales across all regions, but particularly in Italy, France, Australia and North American markets.

As we manage through this pandemic, our guiding principles are, first and foremost, to prioritize the health and safety of our employees, customers and business partners. We take very seriously our commitment to provide the equipment, parts and service our customers need to keep their facilities clean and safe.

We support a wide range of essential businesses and consider Tennant to be essential in meeting their needs. Second, we will manage our costs and cash flow to maintain liquidity. And third, we are ready to make the tough decisions necessary to weather this storm, while preserving our ability to ramp up quickly as markets recover.

With these guiding principles in mind, we have implemented a number of measures across our global operations to minimize the financial impact of this pandemic.

As announced, we have a dedicated response team in place, led by our Chief Operating Officer, Dave Huml, to support our locations around the world and managing the challenges of our business as they emerge.

We're fortunate to have Dave in this role to ensure we're executing on the most important initiatives in following through on our guiding principles. With respect to our supply chain, we have established cross-functional and daily communications with suppliers to review, track and prioritize high-risk components.

We have also identified and activated alternative suppliers, materials and components as needed. To date, we have been able to avoid major supply disruptions. Regarding transportation, we have set up tracking, reporting and communication channels with carriers to understand their risks and to evaluate available options where necessary.

At the same time, our customer service teams have done a great job working with customers to avoid missed deliveries due to closures they may be experiencing. Related to costs. We've implemented a number of actions to protect our business.

Specifically, we have initiated a global merit freeze while operating within the applicable laws and regulations and have also implemented a hiring freeze for non-essential roles. We have also suspended all non-essential business travel and all non-business-critical discretionary spending.

Lastly, I will forgo 100% of my salary through the second quarter. At the same time, our senior leaders will forgo 35% of their salaries, and the Board of Directors has elected to take a 50% cut in pay.

We've also implemented furlough and pay reductions across our global workforce to the extent possible under local laws and regulations through the second quarter. We are monitoring developments daily, and I am proud of the way our team members have responded to a situation that was unimaginable just a short time ago.

Tennant is a highly resilient 150-year-old business, which is due to the amazing team we have across the globe.

While the conditions we are operating in continue to unfold, it's important to recognize that we have identified all the levers available to us, and we are 100% committed to doing what is necessary to emerge from this crisis in a strong position to serve the needs of our customers.

At the time of our Q4 call, I expected that our focus today would be on our enterprise growth strategy of winning where we have competitive advantage, reducing complexity and building scalable processes and innovating for profitable growth.

While the market landscape has changed dramatically in the past three months, the pandemic does not prevent us from following through on the strategic initiatives that we've already set in motion.

In fact, those initiatives not only help us manage through this period but can also enable us to emerge from the pandemic as a stronger company operationally.

We will continue to execute on our enterprise strategy to the extent that we can because the initiatives are within the 4 walls of Tennant and are focused on improving the company's operating model, which will continue to help us evolve despite this fluid environment.

Lastly, I want to say a special thank you to Keith Woodward, our former Senior Vice President and Chief Financial Officer. As announced, Keith has elected to resign. Andy Cebulla will continue to serve on an interim basis until a permanent CFO is named. Keith will be working with Tennant to ensure a smooth transition through the end of July.

On behalf of everyone at Tennant, I want to thank Keith for his numerous contributions during his time with the company, and we wish him the best in all his future endeavors. With that, I'll turn the call over to Andy..

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 Asia markets.

Sales in the Americas improved 1.1% or 1.9% organically, resulting in Tennant's 10th consecutive quarter of organic growth in the region, driven by strength in both North America and Latin America.

Our North American results reflect continued demand for Tennant's autonomous cleaning machines as well as pricing actions related to our enterprise strategy. Sales in Latin America were primarily driven by strength in Mexico.

As noted, some of the company's manufacturing plants in North America were closed briefly towards the end of March for cleaning in the interest of employee safety.

Sales in the Europe, Middle East and Africa region were down 7.8% or 4.9% organically due to the broad economic impact of the pandemic, with the largest declines recorded in Italy and France. The company's regional manufacturing plants were closed for 1 to 2 weeks in March, depending on location and in accordance with local government directives.

Also, shutdowns of customer facilities were widespread in March, which had a negative impact on our sales for the quarter. Sales in the Asia Pacific region decreased 25.8% or 22.9% organically, primarily as a result of significant decreases in sales in China due to the pandemic.

Sales in Australia also declined due to the pandemic, along with the negative impact from the timing of strategic account orders. Tennant manufacturing plants in the region were closed for approximately two weeks in February, in line with local government requirements. Now on to margins.

Adjusted gross margins during the first quarters of 2020 and 2019 were 42.0% and 41.2%, respectively.

The year-over-year increase primarily reflects actions related to Tennant's new enterprise strategy, including pricing and cost-out initiatives as well as favorable freight costing, which more than offset the negative effect of labor and material inflation. Turning to expenses.

During the first quarter, our adjusted S&A expenses were 32.3% of net sales compared with 32.5% in the year ago period, mainly as a result of cost containment efforts and adjustments to management incentives, given the impact the current pandemic is likely to have on our financial performance compared to our original guidance.

As Chris discussed, careful S&A management is a key component of our response to the pandemic. Regarding the impact of FX during the first quarter, due to significant strengthening of the U.S.

dollar, especially relative to the Brazilian real and Mexican peso compared to the same period of last year, we recognized a large currency transaction loss of approximately $4 million. Adjusted EBITDA in the first quarter of 2020 was $26.1 million or 10.4% of sales compared with $29.5 million or 11.2% of sales in the first quarter of 2019.

The decline resulted from lower sales in the quarter as well as the foreign currency loss that I just mentioned. As for our tax rate. In the first quarter, the company had an adjusted effective tax rate of 20.5% compared to 21.5% in the year ago period.

The difference was mainly due to the projected mix in full year taxable earnings by country and an increase in discrete favorable tax items compared to the prior year.

In the first quarter of 2020, as mentioned, our adjusted EPS, which excludes certain non-operational items and amortization expense, was $0.57 compared with $0.72 in the first quarter of 2019. Turning now to cash flow, capital allocation and balance sheet items.

In the first quarter of 2020, Tennant generated $8.7 million in cash flow from operations, primarily from business performance. We paid $12.4 million in capital expenditures and $4 million in dividends in the quarter.

As Chris mentioned, we are managing our capital spending closely to ensure we are focusing on the critical projects that support our safety and growth initiatives. As a precaution, the company has drawn an additional $125 million from its $200 million revolver and has approximately $30 million of remaining undrawn funds.

As of March 31, 2020, the company had $192 million in cash and cash equivalents, which includes the additional $125 million draw that I just mentioned. Lastly, as previously announced, the company has withdrawn the full year guidance it provided on February 20 due to the uncertain nature of the pandemic.

While we don't have visibility to the rest of the second quarter, we saw April organic sales declines of approximately 30% as a result of continued slowdowns in sales to some end markets amid widespread disruptions to our customers.

While the company does not have adequate visibility regarding the impact on its businesses and financial results for the remainder of fiscal 2020, we will do whatever is necessary to maintain sufficient liquidity and to preserve our ability to ramp up quickly as markets recover. We will now open the call to questions. Operator, please go ahead..

[Operator Instructions] And your first question comes from Christopher Moore..

Hey good morning guys. Hope you're doing well. Good morning. Maybe just start with the last comment in terms of the 30% organic decline that you saw in April.

Was that across kind of all the geographic regions? Was it focused in any place specifically?.

It was pretty widespread, Chris. We saw declines really in all regions, all areas of the business. I think EMEA was probably a little bit worse in some of the other regions, but they're all pretty consistently down..

Yes. I'd also say, just in terms of customer segments, what we're seeing is that there's relative strength in areas like health care, retail, anything associated with grocery and e-commerce and transportation, while sectors like hospitality, education and all public venues are, have fallen off quite dramatically..

Yes. Makes sense. Makes sense.

So I'm trying to determine if fiscal year '20, wherever that may come in from a revenue standpoint, is that kind of the new base that we should be thinking about for fiscal '21, maybe could you just talk about the puts and takes as to why that would be the new base or why it might make sense to think that the, that 2% to 3% organic growth target potentially could be a little stronger than that in '21 just from a kind of big picture standpoint?.

Yes. I think it's a good question. I think, honestly, it's just a little too early to really project that at this point. We don't know, we don't have visibility for the year and really to think about 2020 and how that might look. It's just a little too early to project that.

We don't know right now, as people are talking about the recovery, is it a Vs? Is it a U? Is it a L? And we need to wait to see how the things develop. But certainly, we're still focusing on our strategy and can move forward with a lot of initiatives in that respect..

Yes. And I think it's important to remember, we said that the new enterprise strategy, a lot of what we're working on, we've already rolled out and will have an impact. Many of the initiatives within the four walls of Tennant, there's two really key objectives that we're trying to accomplish.

One is overall business simplification and improvement in our operating model. And I would say that everything that's within our control is proceeding according to plan. So the key variable is really revenue recovery. So our sense is that when revenue starts to come back, our EBITDA improvement goals should follow.

So I think that the general premise of what we're trying to accomplish here hasn't changed, but it is revenue recovery dependent. And as we all know, we don't have visibility to when that's going to happen..

Yes. I think it's a good point. Long term, I think we have the same goals that we laid out before. It's just difficult to project 2021 at the moment..

Got it. That's helpful. Last one for me.

Just, I'm just wondering if there's any areas that Tennant might possibly emerge from the pandemic kind of in an improved competitive position? Is there, obviously, from an operational standpoint, you continue to focus on the improvement there from kind of bigger thoughts in terms of what you're seeing in the marketplace, any reason to think that you may even be better competitively positioned in certain areas than you are currently?.

Well, it's a possibility, but we'll just going to have to wait and see how things play out. Right now, what we know is, we've said like in health care, we're, it's doing okay, not great. We know some parts of health care are struggling as well. They cancel all elective surgeries and all of that, and that has had an impact.

But I think right now, most facilities are focusing intensely on sanitization and disinfecting, misting, spraying.

They're not focusing on the floors as much, but I have a feeling that when the dust settles and everybody goes back and looks at what's going to be required from their cleaning protocols, those cleaning protocols could become much more robust and take on a higher priority for facilities.

And what we know is that the COVID virus exists in the soil as well as on floors. So they are going to have to be cleaned as part of an overall cleanliness regimen in a facility. And the other thing we know is that if it's on the floor, it gets on the shoes, and the shoes tracking across the entire facility.

So I think there is a likelihood that there will be a higher standard of clean that gets established coming out of this. And if that is the case, I think that we have a big role to play in that. But I think it's too early to tell. But it's definitely possible. We're monitoring this.

Also, in terms of our innovation agenda, we're looking at what other things can we do to supplement what we already do to be an even more important player in the cleaning market in the future..

And your next question comes from Michael Shlisky with Dougherty & Company..

So I know you were in the process last quarter of trying to work on developing some new models of autonomous scrubbers.

Does what's going on now with the pandemic, make that process more difficult? Has anything been kind of pushed out on the calendar there? Or perhaps even more broadly for your R&D in general, have you been able to kind of keep your pipeline of innovation going throughout all this?.

Well, we actually think that our autonomous cleaning machines, there's a real opportunity there going forward that you can put these machines into a facility. They run autonomously. Nobody has to be in the room with them. You can deploy labor to other very critical cleaning tasks. So we continue to see a great level of interest in our AMR program.

And one of the things that we have absolutely protected in our R&D budget is the AMR product and technology road map, that has not been compromised at all. It was all on full speed..

Great. Perfect. Then I also wanted to ask about the impact you've seen so far on the whole good sales versus the parts and the service sales.

Could you maybe contrast any differences in the first quarter? And what the differences might look like here in the second, between the two? Could one might grow faster than the other one here?.

Yes. We won't provide any specifics on those two. But generally, they followed a similar trend. And I think what we'd say is perhaps in the short-term or even the medium term, service might be a greater opportunity. Chris mentioned there's some perhaps other cleaning protocols in the short term our customers may have to focus on.

So cleaning might be a, or sorry, service might be an opportunity in the short or medium term. If these capital purchases are delayed, again, we don't see any trends of that necessarily, but it could be something we'd see in the future. But generally speaking, what we're seeing now is a similar slowdown to both.

We have still been able to get our service techs out in the field, and it's equally as important for our customers to make sure their machines, especially in critical areas, are being serviced. So it's been a similar trend for both and maybe some opportunities, particularly in the service area going forward..

Yes. I'll add to that, that if you look back to the 2008, 2009 period, as people put off purchasing new machines, and therefore, had to service their existing machines, we did see that service parts and consumables was actually a more robust part of our portfolio for a period of time.

We're not far enough into this to know if that dynamic is going to play out this time around, but there's a high likelihood it will. .

Okay. Great. And then thirdly, I wanted to ask about your inventories and working capital.

I'm curious, Andy, if you've got any feel for what kind of inventory days can you bring this to, try and harvest some of your cash that's being used in working capital? And are there any targets or goals you've got at least for the next couple of quarters here?.

Yes. We certainly recognized at the end of 2019 that working capital is higher than we like and recognize that. And it was one of our big goals for 2020. Admittedly, this pandemic has thrown some of our fairly aggressive goals, maybe delayed them a little bit. We had to focus on kind of navigating through the pandemic.

But certainly, there's still an opportunity for working capital reduction. I won't share any specific targets. But it's front and center for us, and it's something we are focusing on. And it's not just inventory.

It's also thinking about our receivables and how we can collect those maybe more rapidly or differently with our customers, maybe working on our payment terms with customers. And then in payables as well, other things we can do with our suppliers in those terms as far as our payment terms go. And then you mentioned inventory.

There are lots of opportunities for us. That's the good news, I'd say, in the inventory front. And it is something we're definitely working on. I'd say it's an opportunity for Tennant from a cash flow perspective for certain, but I won't provide any specifics on targets or goals..

That's great. I have an important follow-up, Andy.

Have you had any issues with any customers with collecting amounts due over the last month or so?.

No. No, we haven't. Actually, we are talking to customers very regularly, as you can imagine, and talking to our teams both in the U.S. and overseas about their collection efforts. We haven't seen anything widespread.

There are pockets of customers that are asking for maybe extended payment terms, but we haven't seen anything of any magnitude at this point reflecting on our receivables. We feel real good about our cash position. It's fairly much higher than we normally carry because of the draw, and we continue to see good cash flow, Matt, from operations..

Okay. I'll leave it there. Thanks very much everybody. .

Thanks so much. .

And your next question comes from Marco Rodriguez with Stonegate Capital..

Good morning. And thanks for taking the question. .

Good morning. .

I had to jump on the call a little bit late, so I apologize if you already went over this. But I was wondering if you can maybe talk a little bit about the disruption or lack thereof that social distancing, lack of traveling might have on your particular sales cycle.

I understand that some of your customers' operations are shut down, you obviously can't deliver anything when they're shut.

But just kind of trying to understand the sales cycle and how some of these aspects the governments are trying to do to kind of limit the spread might be impacting that cycle?.

Well, I don't know when you jumped on the call, but we did say that if you look at our customer segments, there were -- the ones that are performing better are retail, anything having to do with grocery e-commerce is doing okay. Health care is doing okay. Transportation is as well.

And then the ones where -- I think that are struggling more, not surprisingly, education, hospitality and all public venues, right? The business is pretty much dried up there.

So our sense is, we take a look at, when could our demand curve start to move in a positive direction? It's really when more of our customer segments start to open up and return to more normalized operations. What we're doing is, one of the things we've done is being very, very proactive.

We are staying in constant touch with our customers, let them know that we have the capability to serve them, both in terms of the products, the sales support, service in parts of consumables. So that, so we're telling them, as soon as you're ready, you let us know. We're here, we're ready and fully engaged to get back on track with you..

Maybe just to build on that, too. One thing I'd say is, we know our customers well. And remote selling is certainly something you can do when you know your customer well. And I think that's an advantage Tennant has right now. I mentioned before that we are still able to service our customers in critical areas, and that hasn't been an issue.

But I think this distancing, social distancing hasn't had a major impact on our ability to sell our product. I think it's kind of what Chris has pointed..

Yes. We basically, we view ourselves as providing yourself an essential service in this environment. And we can sell to anybody who is open for business. And so as more people open for business, our sales growth should reflect that..

And then I heard the comment on the April sales being down 30%, pretty broad-based. I was, and obviously, you see the numbers in Asia.

I was wondering if maybe you can kind of talk a little bit, if you haven't already, about the cadence of sales in Asia Pac? And then kind of how those sales may have come back or didn't in terms of when the lockdown's kind of got lifted there?.

Yes. The issue there, so one thing we were monitoring to see is exactly around your question. And we had the earlier shutdown in February because it obviously impacted China a bit earlier. But the issue we experienced wasn't, we're not necessarily seeing a robust recovery in that region because the end customers are still impacted.

And so there's that end customer. We need to see end customer demand increase before we're seeing any real increases there at all. So I mentioned the April activity is down, and that includes China and APAC.

And it's, so we haven't really seen any kind of recovery to any extent yet that maybe some of us would have expected, given the earlier impacts from the pandemic?.

Yes. I mean there's two parts of our business in China. One is the consumer, local consumer-driven part and the other part is the export-driven part. We're starting to see consumer spending come back, albeit slowly. So that part of our business will probably recover more quickly. But the export business side is still very, very slow.

And then if you look at our customer portfolio, we have more customers in that part of the market..

Got it. That's helpful. And last quick question for me. I know that obviously, the situation right now is very difficult in terms of visibility and nobody's crystal ball is any better than anyone else's.

But I was wondering if you could perhaps talk a little bit more in general or in specifics, if you can, sort of, what sort of scenario analysis you guys have gone through? What might be your base case? What are you kind of looking at, a U shape, a V shape, an L shape? Are you factoring in a second wave? Just any sort of color that you can provide as far as what sort of base case you're thinking about and how you're trying to potentially run the operations around that base case scenario?.

Yes. It's a good question. And as you can imagine, I think all of us wish we could say more than, we just don't have visibility. We're running multiple scenarios. And we've taken action. We feel actions to date that Chris mentioned that we think is appropriate, given a variety of scenarios.

And we also have ability to take more action if things deteriorate beyond what we're seeing. But really, we can't realistically predict what kind of recovery it's going to be. I mentioned earlier, this kind of V shape or U Shape or L shape, we don't have good visibility to that at this point in time, and that's why we're not really providing guidance.

But rest assured, we are running a number of scenarios. We're planning from a worst-case perspective to make sure we're prepared. And liquidity, as Chris mentioned, is very important to us. And we think we're well positioned there. We think our strategy and our position with our customers, it will help us get through this pandemic.

But as far as specific specifics go, we can't provide any guidance on any specifics of cases we're tracking at this point..

Yes. But we have identified all the initiatives that we would need to execute under the various scenarios that we're working on, and we can pull those triggers very quickly, whether it's on the most negative side or if things come in a little more positively than we are currently predicting..

[Operator Instructions]. And your next question comes from Brett Kearney with Gabelli Funds..

Two quick pieces I want to touch on.

Any parts of the, probably not so much Tennant portfolio, but I mean IPC's offering, some of the smaller cleaning tools and maybe mobile cleaning carts that the business is seeing more kind of an acute demand pick up in the current environment, albeit it probably small for the overall company? And then secondly, I guess going back to something you mentioned, Chris, I was curious what you are hearing if you're seeing kind of increased customer interest or how those conversations are going, particularly for some grocery and large warehouse e-commerce operators for your autonomous cleaning solution, how well that fits into the needs of those customers with the current dynamics?.

Yes. So I mean it's not so much that we're having the conversations with the customers, and they're coming back and telling us, oh, we're going to implement more robust cleaning protocols.

I just think that we're anticipating because of what everyone is going through that, that is a possibility that more robust cleaning protocols will be put in place and prioritized. And that we need to be ready to provide it. I also think there's going to be a greater need for the sanitization, disinfection.

And we're looking at ways that we can add that to the services that we already provide. And so this is really just us stepping back and saying, in this environment, when the dust settles, what could it look like, and how can we play? So it's uncertain at this time. I think that it's a possibility it can go to that direction.

And if it does, we will be very, very prepared to enter and deploy. Now, and you talked about IPC, which is interesting because one of the things that happens in environments like this when everybody is struggling, they either, they postpone purchase a new equipment or maybe they downgrade to a cheaper piece of equipment.

And as you know, the IPC value proposition is more of a bid tier player at a lower price point. So we could see that, that part of the portfolio does better. The other thing we're noticing is that people are recognizing that using mops and buckets, which a lot of people still do right now in the cleaning of smaller spaces is not very sanitary at all.

And so they're saying, we got to stop that, and we got to go to technology. And IPC portfolio has a number of products that are very effective at planning small spaces. And so we think that's an opportunity that we're monitoring very quickly. I mean we're monitoring now.

And hopefully, at some point in time, we can say whether or not that has actually accelerated and helped our business..

Okay, great. Thank you so much. And I hope you guys and all teams stay safe and healthy. .

And your next question comes from Joe Mondillo with Sidoti & Company..

Hi, everyone. Good morning. Hope you're all doing well. .

Good morning Joe. Thank you. .

So I apologize, I missed a little bit at the front -- beginning of the call. I apologize if I'm asking anything in repeat. You mentioned that -- January and February, you mentioned the growth rates versus what you saw in March.

Where was most of that growth coming from in January and February?.

So it was really -- it's all regions, all areas did have growth. Most of it came from Americas and EMEA. Primarily, you think North America and Latin America had good growth, but EMEA did as well. So all we're moving well..

Okay. And you -- just a question on the autonomous part of the business, and I think you were just talking about this. But I'm curious, number one, a couple of questions. First off, you just introduced the products in Europe.

I'm wondering, before the big hit with Covid, how that business, the autonomous business in Europe has trended when you compare it to the early stages when you introduced the products in Americas?.

Yes. I'd say that we're still in the very early stages in Europe. And there's lots of interest, but I think that the COVID crisis has maybe delayed adoption, but the interest remains. And I think when things stabilize, we're going to start to see progress.

But what we know is that the AMR solution, given what everybody is experiencing is in some ways, spot on. I mean, because it allows you to put a machine in a facility, not have it -- no labor associated with it. You can take that labor and apply it to the more critical sanitization and disinfecting protocols that they have already established.

So there's a real benefit from that. The other thing I would say, just if you look at the U.S. right now, I mean, all the orders that we had in place for AMR, we expect it to be delivered in 2020. We have not lost a single one. Everybody is moving forward with it.

And as I also said, and I don't know if you heard this part, but one we're protecting within our R&D budget is our AMR product and technology road map. So we're going full speed ahead because we do believe that through this and definitely only come out of it with AMR functionality and benefit to customers, is going to be big..

And then in regard to your overall sort of restructuring of the company that you've been focusing on for the last, I don't know, 18 months, 12 months.

Can you give us an idea of how does the COVID endemic changed that? Does it accelerate things? Does it allow, the downturn, does it allow you to accelerate certain things that you've wanted to do? And regarding permanent savings, regarding this whole plan, is there anything more that you can, I know you are thinking about potentially talking a lot more about quantifying savings related to this plant.

Obviously, COVID affects a lot of the parts of the business, so I'm not sure if it's easy to do that at this point.

But is there any information that you can give regarding that whole part of the growth plan?.

Yes. I mean I think what we said that we continue to implement aggressively against the enterprise strategy. We've done things like we've either modified or we have removed 50% of our distributor portfolio around the world.

We reorganized our strategic account portfolio to only those businesses that are truly strategic account, get the pricing at discounts that is associated with that designation. We continue to work on business simplification and operating model improvement.

And we said that all those initiatives are within the four walls of Tennant and are proceeding according to plan. So I'd say that right now, nothing has changed in terms of the majority of the initiatives within our enterprise strategy, but it is revenue-reliant, and so the key variable is revenue recovery.

And so we're comfortable that once revenue starts coming back or EBITDA improvement goals should follow. And so we're sticking to the long-term goals and objectives that we've established and communicated..

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

All right. Thank you. So I want to thank you again for joining us today and taking a moment. And I want to take a moment to thank our team for the amazing work that they have done during this unprecedented time. We hope everyone remains safe. And with that, this concludes our first quarter earnings call. Have a great day, everyone. Thank you..

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