Good morning. My name is Kimberly, and I will be your conference operator today. At this time, I would like to welcome everyone to the Tennant Company's Third Quarter Earnings Conference Call. This call is being recorded. There will be time for Q&A at the end of the call. (Operator Instructions). After the Q&A please stay online for closing remarks from management. Thank you for participating in Tennant Company's third quarter earnings conference call. Beginning today's meeting is Mr. Tom Paulson, Senior Vice President and Chief Financial Officer for Tennant Company. Mr. Paulson, you may begin.

Thanks, Kimberly. Good morning, everyone, and welcome to Tennant Company's third quarter 2014 earnings conference call. I am Tom Paulson, Senior Vice President and Chief Financial Officer of Tennant Company. With me on the call today are Chris Killingstad, Tennant's President and CEO; Thomas Stueve, recently promoted to Treasurer; and Karen Durant our Vice President and Controller. Our agenda today is to review Tennant's performance during the 2014's third quarter and our outlook for the year. First, Chris will brief you on our operations, and then I'll cover the financials. After that we will open up the call for your questions. 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 special or non-recurring items. For each non-GAAP measure, we'll also provide the most directly comparable GAAP measure. There were no special non-GAAP items in the first nine months of 2014, but there were special non-GAAP items in the first and fourth quarters of 2013. 2014 third quarter earnings release includes a reconciliation of these non-GAAP measures to our GAAP results for the 2013 first nine months and full year. Our earnings release was issued this morning via Business Wire and is also posted on the Investors section of our Web site at tennantco.com. At this point, I'll turn the call over to Chris.

Thank you Tom and thanks to all of you for joining us this morning. Let me begin by saying that Tennant again executed very well on our growth strategies in the third quarter. Our platform to accelerate organic sales is clearly working as we strive to attain $1 billion in revenues by 2017 with an operating profit margin of 12% or above. Taking a look at the third quarter results we posted our second highest quarterly sales in Tennant’s history driven by strong growth in the Americas and in EMEA regions. In addition Tennant set a sales record for a third quarter with sales gains in all of our major categories, equipment, parts and consumables, service and coatings. Our consolidated net sales in the quarter were $202.6 million up 7.5% compared to the prior year quarter. Our diluted earnings per share rose 12.5% to $0.63. Contributing to our performance were increased sales to strategic accounts and through distribution. And continued demand for new products such as the Compact T12 and midsize T17 rider scrubber and walk behind burnishers. The gross margin in the quarter however was below our expectations. It was constrained by supply chain challenges that we experienced with increased cost related to hiring and training additional manufacturing employees and temporary workers to support higher production levels. Including the continued ramp up to meet the growing demand for new products. These are short term growing pains. They are fixable and we are taking the necessary steps for improvement. Tom will cover results in our geographies in more detail but I’d like to share a few highlights. We saw continued strong growth in Tennant’s largest region the Americas. Sales here increased 9.8% organically in the quarter driven primarily by sales in North America. Latin America is an important region for…

Thanks Chris. In my comments today all references to earnings per share are on fully diluted basis also please note as I go through results I’ll generally not comment on year-to-date financials, results were detailed in earnings release. For the third quarter ended September 30, 2014 Tennant reported net sales of 202.6 million compared to 188.5 million in the prior year quarter. Organic sales grew approximately 7.5% with an overall neutral foreign currency exchange impact. We are encouraged by the solid level of organic sales growth in the past five quarters. As you may recall Tennant’s organic sales rose approximately 8.9% in the 2014 second quarter, 10.5% in the 2014 first quarter, 5.1% in the 2013 fourth quarter and 6.8% in the 2013 third quarter. Third quarter 2014 net earnings were 11.8 million or $0.63 per share in the year ago quarter Tennant reported net earnings of 10.6 million or $0.56 per share. Turning now to more detailed review of the 2014 third quarter. Our sales are categorized in three geographic regions which are the Americas, which encompasses all North America and Latin America, EMEA which covers Europe, the Middle East and Africa and lastly Asia-Pacific which includes China and other Asian markets Japan and Australia. In the Americas, 2014 third quarter organic sales increased approximately 9.8% excluding about 0.5% of unfavorable foreign currency impact. Record sales for third quarter in North America were fueled by strong sales of new products such as the new T12 and T17 rider scrubbers and also the new walk behind burnishers. Latin America sales growth in the 2014 third quarter was lower compared to the 2014 first half primarily due to economic headwinds in Brazil. This is an important emerging market for us and we remain confident about the long term growth prospects in…

And Kimberly this is Chris Killingstad. Before you go to the questions I just want to make a comment. I just have been told that the quality of this call has been very, very poor. I just want everybody to know we put in a new global phone system and communication system recently. And clearly it did not work as intended today. We apologize profusely and we promise that the next time and for the fourth quarter earnings that we will have it fixed. So again our apologies.

[Operator Instructions]. And your first question is from the line of Joe Maxa. Joe Maxa - Dougherty & Company: I wanted to ask a little bit more or get a little bit more color on the gross margin impact. Did you hire additional headcount to help with the production and the new products or is this primarily people you've had before that you're just training? I'm just trying to get a sense of maybe…

Yes, it's honestly Joe a new phenomenon for us as you remember. We really not only held our overall headcount relatively flat we've also have not added many permanent employees in our factory. We really managed our surges through temporary people. And due to the growth that we have seen we needed to start to adding heads. It did have some negative impact on us in the last quarter as we talked about. We thought we had it firmly under control but we did need to continue to add not only permanent heads as we convert temporaries to permanent but we also needed to continue to add temporary people to support our growth. And the place that we are making those major adds are really in our three major facilities in North America. And all those areas have been effective. So has been disrupted but I really want to focus on the fact that it's very flexible, it's under control. And we are working our way through aggressively as we speak. And it will not have any impact on our targeted numbers as we look forward and our ability to deliver growth targets and profit targets.

I would just like to add that as many of you know that finding these days qualified manufacturing talent is not as easy as it once was. And so we didn’t have as much initial success in bringing on board and getting them trained to Tennant’s very high standards. So we have had a lot of turnover on the temporary front. I think we are starting to work on out of way through that. And as Tom said by the end of the first quarter we should be back in a very stable situation which is we have had historically. Joe Maxa - Dougherty & Company: Okay, that’s helpful. Wanted to ask about the broad-based growth you're seeing in Europe. I mean could you give us a little color? Is it really related to new products? New customers? What's driving that broad-based growth?

As you said its broad-based that mean we are seeing decent growth in many of our key countries. We're seeing growth in strategic accounts. We put a new emphasis on our distribution business in Europe and that’s paying dividends. Our master distributor for Central Eastern Europe, Middle Eastern and Africa continues to grow very, very nicely. Yes new products are adding to the growth. But I think a lot of that has to do with the fact that we spent the last couple of years really restructuring our sales and marketing efforts in Europe upgrading our talent in key parts of the business. And that’s starting to pay dividends. Joe Maxa - Dougherty & Company: I see, okay. And on the new products, you talked about a new technology for ec-water. Is that something you would expect to expand your market opportunity?

Yes of course we hope to expand our opportunity with the next generation. We think it’s an exciting technology. I think it’s a significant enhancement to our existing generation of ec-water technology. And we are hoping to be able to bring more customers into the fold. As you know Joe we have only about what is it 50% reduction rates on current generation technology so there is even among our existing customer base a lot of room for growth and as we start to expand our efforts in terms of enhancing our market coverage around the world and accessing new customers we think this new technology will help us drive that effort as well. Joe Maxa - Dougherty & Company: Okay. And lastly for me, I wanted to ask your new customer acquisition strategy. Do you have any stamp that can give us any type of color on -- I don't know if you can give us like a number or a percent growth of customers that are new customers from your strategy so far?

I would say right now we’re in a very early stage so we’ve had some excited wins here and we’re still in the stage of really analyzing where the opportunities are betting that these are truly new customers and they are relevant to Tennant, they fall within the key vertical markets we’re competing for and then some of the sales and marketing resource we’re putting in place to help us go after those new customers. We’d say we are in the early stages most of the growth that you’ve seen today organically is not coming from that initiative lies ahead of us but I still believe that over the next few years it may be the biggest opportunity we have to grow. Remember we have relatively low market share around the world.

And your next question is from the line of Jason Ursaner.

Good morning. Just first on the revenue, you mentioned the new products, the introduction of the 10 new products is a nice contributor. And Chris, I apologize if you did say it in your prepared remarks and I just missed it. But is there any way to quantify the contribution you're seeing now as a percent of sales, and when you talk about the growth in the context of the 7% compound rate to get to the long-term goal, is that a net number relative to the predecessor product that it's replacing?

Yes, two comments on that I think the most -- the metric that we did talk about is if you [indiscernible] sort of first quarter of last year, our equipment revenue 2% of that came from new products that we started introducing 2012. Last quarter we were at 13%, so we continue to see momentum in our new product activities and that’s really how it works for us. Products are introduced, they grow in their second year of introduction and grow in the third year and sometimes even beyond that but we don’t see our peak growth and generally we saw in year three so a wave of a new products will continue to see this kind of increase in our new product activity as a percent of our equipment revenue. And when we talk about on the growth and our billion dollar target that come from new products, that is a net number I mean so it’s not a gross new product number it’s the net number after attrition and we have to look at new product introductions that way I mean it’s a critical part of an analysis that we’ve got to generate enough incremental revenue to justify the investment behind those new product idea. So, we diligently track the true incremental revenue that we’re driving.

Okay. And for the T12, I know you guys have pretty strong expectations for continuing layering in of demand. How are you seeing that product and maybe early stages with the T17 relative to that peak kind of three-year growth, and are they going on track or was some of the manufacturing growing pace kind of centered on the new products?

I’d say the T12 and T17 are both doing better than expectations and therefore we’re thoroughly pleased with what’s happened in the market so I would say sure could we have delivered maybe a couple more products, it’s not having a material impact on the success of those new products, they’re doing really well and we continue to expect them to ramp up and have higher growth in future years.

Okay. And just following up on the question you had previously about the prototype for the next generation ec-water, is this going to be available retrospectively as an upgrade on to the previous module that's already on equipment in the field, or is it replaceable, or is it just going to come on new equipment whenever it launches?

We will not retrofit old machines. We will -- we only have it on select scrubbers starting in the first quarter and we will roll it out over the relevant scrubber portfolio. I’m not going to commit to a timeframe for that but if you look at what we did with the first generation of ec-water probably took us 2.5 years to get there. so I assume about the same time frame here but we will not be putting the first generation ec-water model on any of the products where the second generation goes on so over the next 2.5 years we will switch second generation to first generation and as I said we expect that it will help us to grow because it is an enhanced technology that we hope will both clean better and be able to clean in more applications.

Okay. But in the interim, they wouldn't impact the attachment rate or no one hold off or anything to wait for.

Between the first generation and second generation we should see the attachment rates remained stable. Hopefully it help start to grow.

Okay. And you talked previously about the likelihood to grow operating expenses in the short-term in line with sales growth. For the quarter, obviously you mentioned some of these growing pains. Is that target still the right range, and is spending likely to continue outpacing revenue growth for a short period of time until it balances out?

Yeah. And we will provide more insights on next year at the traditional time when we get guidance which is normally during the release of our year-end numbers in late in February. But I would be fair to say that we would expect to see lower operating expenses sequentially in Q4 relative to Q3 modestly. And we would expect to see improved leverage in the fourth quarter relative to prior year if you look at our operating expenses as Q4 as a percent of our revenue compared to last year. We do believe we will begin to see some improvements. We have seen very improvement on year-to-date basis as we have been making major investments. And I would tell you that in last quarter our revenue was a little below our expectations we did not adjust our spending as we continue to invest. And so that did have some level of impact on our leverage. But we will begin to see improvement in the fourth quarter. And clearly I mean we expect to see leverage improvement in our operating expense as a percent of revenue next year. It’s a critical part of the delivery of our 12%. And we've been balancing it we think appropriately so far. But you expect to see leverage going forward.

And your next question is from the line of Daniel Rizzo. Daniel Rizzo - Sidoti & Company: Hey guys. With the new product launches, do you initially like the first year offer them at a discounted price to increase adoption rates and then raise prices in the second year? Is that kind of the strategy?

We don’t. We don’t. It’s not to say that we don’t do some things from our marketing point of view to generate excitement at the front end. So there can be some things that could potentially stimulate demand. But the reality of it is that’s just a bad practice on our business. I mean that machine might go out in the market and be there for five or seven years, you can’t afford to provide discount to drive it. It’s got to be our demand base. And we don’t discount at the front end. Daniel Rizzo - Sidoti & Company: Okay. And then you’ve indicated that Europeans sales are strong; Asia was weak in the quarter because of uncertainty. I'm just wondering why the uncertainty in Europe I mean, I know numbers would be this morning, but certainly Europe is not playing more so why there's a dichotomy between the two.

Part of its just really timing related that I mean and I mean I hear you that as you read the paper every day you will have mixed points of view about what’s going on in Europe. We would just tell you that we grew nicely in the quarter. We are growing on a year-to-date basis and Chris pointed out the multiple places that where growth is coming from. Our eyes aren’t closed but our business in business in Europe feels pretty damn solid and we expect another quarter of organic growth in Q4. And we expect to return the growth in APAC and really do view that. Even though we saw some economic uncertainties and some deferrals we believe that’s timing related and we think we will return back to growth particularly in China. We are still growing at a 20% on a year-to-date basis we expect another really good growth quarter out of China in Q4.

They don’t a strong. I mean conditions are still pretty tough in Europe. They are. Remember we are coming from a place of single-digit market share. So even in a tough environment with the new sales, marketing structure and the new products in Europe and just going to market more effectively we have the possibility of making some gains. And that’s showing up in the numbers. Daniel Rizzo - Sidoti & Company: So that would suggest that even if things do get moderately worse in Europe, that you could still grow just because you are stealing market share from your competitors?

We don’t anticipate in the short-term that Europe’s going improve from a macroeconomic perspective. But we do fully expect that we continue to grow organically.

[Operator Instructions]. And your next question is from the line of Scott Graham. Scott Graham - Jefferies & Company: Couple of questions for you guys pretty much around gross margin, so -- and it's really two questions specifically. The gross margin decline and your related confidence that the issues will be cured, let's say, two quarters or three quarters out. I'm assuming that you are implying that gross margin will be down again in the fourth quarter?

No we would actually expect in Q4 to see not only sequential improvement but we would also anticipate to see better gross margin performance than the prior year in Q4. We are not getting but we will be straight forward about the fact that we are not going to back to our stellar performance that we've had from multiple other quarters. It might be the [indiscernible] of Q1 before we exit there and we're really back completely on track but also remind folks that this has been one of our real strengths as our supply chain across the entire corporation and yes, we haven't done as well absorbing the growth and the sheer level of new product activity based on very flexible issue and we’re going to work our way through it but and we’ll start to see that improvement as we believe in Q4 and that's was built into our guidance. It’s not dramatic improvement but we will see we believe improvement in our gross margin sequentially and versus the prior year. Scott Graham - Jefferies & Company: Understood. If, however, we are going to be launching on a sort of quarter-by-quarter basis more our new products in the fourth quarter than we have in any of the previous three quarters, are you saying, Tom, that your production and your people are attuned for another ramp in new products that’s scheduled for this quarter?

Yes, I’d say couple of things there, one is the magnitude of the launches in Q4 are smaller than we’ve seen in the front part of the year and some of the things we did last year. We’re back at the next two years to see bigger more meaningful launches but we have to be careful in the Q4 of the level of new product activity because the fact that it’s not our biggest quarter, it’s our second biggest quarter of the year, and we need to be cautious as we manage our way through that. So we think we’ve got call it an easier balance in Q4 of growth and less new product activity. Scott Graham - Jefferies & Company: Okay. So, more new products in the fourth quarter versus previous quarters, the lower impacting, lower dynamics, got it.

Yes. Scott Graham - Jefferies & Company: Okay. Is there a reason why, because you guys are talking about this issue, production issue as impacting the gross margin and as to why it was holding down for that reason. Yet you had a real good sales number, and we didn’t get it looks like any operating leverage off of that. Could you tell us some of the other puts and takes on the gross margin in the quarter?

Yes, really the inefficiency this was the biggest piece and again I realize it’s a big and it’s hard to specifically quantify, but there are chemicals that reach out as you adding people and training people and having turnover and having more difficulty accessing those people. It has real effects in the way that the factories are running. So it is -- because as we look at other areas there was not any meaningful mix changes in our business, we did get pricing of 1% and we're -- on a year-to-date basis our pricing benefits is around 1% of benefit which is really in line with our expectations and we saw modest inflation but nothing to be concern about, I mean it’s not certainly not having any material impact on the margin. So we really, we do feel isolated and very flexible.

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

We are pleased with our progress to-date and confidence we have laid a strong foundation for our future. We will continue to focus on growth, building on a solid year-to-date performance in 2014. Good results in the first nine months that included organic sales growth of approximately 9%. Our strong order position going into the 2014 fourth quarter gives us confidence in our outlook for the full year. We will unveil new technologies in November that we believe will further fuel Tennant sales going forward. We are committed to our growth goals of $1 billion dollars in sales by 2017 and a 12% or above operating profit margin. We look forward to updating you on our 2014 fourth quarter results in February of 2015. Thank you for your time today and for your questions. Take care everybody.