Good morning. My name is Mike and I will be your conference operator today. At this time, I would like to welcome everyone to the Tennant Company's First Quarter 2017 Earnings Conference Call. This call is being recorded. There will be time for Q&A at the end of the call. [Operator Instructions] Thank you for participating in Tennant Company's First Quarter 2017 Earnings Conference Call. Beginning the today's meeting is Mr. Tom Paulson, Senior Vice President and Chief Financial Officer for Tennant Company. Mr. Paulson, you may begin.

Thanks Mike. Good morning, everyone, and welcome to Tennant Company's first quarter 2017 earnings conference call. I'm 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; and Karen Durant, Vice President and Controller; Tom Stueve, Vice President and Treasurer; and also with us today is Jim Stoffel, Vice President of Global Planning and Analysis who played an integral role in the IPC acquisition. Our agenda today is to review Tennant's performance during the 2017 first quarter and our preliminary outlook for the 2017 full-year. First, Chris will brief you on our operations and then I will cover the financials. After that, we will open up the call for your questions. We are using slides to accompany this conference call. We hope this makes it easier for you to review our results. A taped replay of this conference call along with these slides will be available on our Investor Relations website at investors.tennantco.com for approximately three months after this call. Now, 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 special non-GAAP items in the first quarter of 2017. There were no special non-GAAP items in 2016. Our 2017 first quarter earnings release includes a reconciliation of these non-GAAP measures to our GAAP results for 2017 first quarter. Our earnings release was issued this morning via Business Wire and is also posted on our Investor Relations website. 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. As you saw on today's earnings release, Tennant executed well against our strategies in the 2017 first quarter and we made further progress toward our goals. Building on our growth in 2016 fourth quarter, we are pleased to report record first quarter sales in 2017. Our results were fueled by continued growth in our Americas and EMEA regions. For 2017 first quarter, consolidated net sales grew 6.2% or 5% organically to a $191.1 million. Adjusted net earnings increased 24% to $0.31 per diluted share. Contributing to our results were organic, sales growth in the Americas of approximately 4.2% and organic sales growth in EMEA of approximately 14.3%. Tom will provide more detail on our performance by geography in a moment. In the 2017 first quarter, we took bold steps to further ignite Tennant's growth and improve profitability in keeping with our core strategies to maintain a strong new product and technology pipeline, expand Tennant's global market coverage, build our e-business capabilities and leverage the Company's cost structure to improve operating efficiency. To this end, in early April we completed the largest acquisition in Tennant's history of IPC Group. We also undertook restructuring actions to better align our global resources and expense structure with a lower growth global economic environment. The savings from the restructuring are estimated to be approximately $7 million in 2017 and a total of $10 million in 2018. Together, we expect these actions to further enhance Tennant's revenue and earnings performance. Looking at our acquisition of IPC Group, just after first quarter end, on April 6, 2017, we announced the close of our acquisition of IPC Group in an all-cash transaction for $353 million or €330 million. We anticipate that the acquisition will…

Thanks, Chris. In my comments today, I will reference as earnings per share on a fully diluted basis except for the first quarter 2017 which was calculated with the basic weighted average shares outstanding due to the as reported net loss. For the first quarter ended March 31, 2017, Tennant reported net sales of a 191.1 million, increased 6% compared to sales of a 179.9 million in the 2016 first quarter. The foreign currency exchange impact was essentially flat versus the prior year, excluding the net impact of the August 2016 Florock acquisition and the January 2016 Green Machines divestiture that increased net sales by 1.2%, organic sales increased approximately 5%. First quarter 2017 net loss was 4 million or a loss of $0.22 per share. Tennant reported adjusted net earnings of $5.4 million or $0.31 per share. The as adjusted results in the 2017 first quarter excluded two special items totaled a charge of 9.4 million after-tax or a loss of $0.53 per share. The first special item was a restructuring charge of 8 million pre-tax or $0.32 per share to better align our global resources and expense structure with the lower growth global economic environment. As Chris mentioned, the savings from the restructuring are estimated to be approximately 7 million in 2017 and a total of 10 million in 2018. The second special item was 4 million pre-tax or $0.21 per share of one-time cost related to the acquisition of the IPC Group. In the year ago quarter Tennant reported net earnings of 4.4 million or $0.25 per share. Turning now to a more detailed review of the 2017 first quarter, our sales are categorized in the three geographic regions which are the Americas, which encompasses all North America and Latin America, EMEA which covers Europe, the Middle…

[Operator Instructions] Your first question is from Joe Maxa from Dougherty & Company.

I do have a -- I mean lot of moving parts here, so I'll ask a few questions and maybe jump in the queue.

Sure.

I want to talk about gross margins first. Down on the core business and you’ve laid out some of the issues. Are those continuing with the raw material inflation and the basically the product mix? And secondly, how do you look for Q2, I mean you got a few more moving pieces with the acquisition a little bit gross margin, the stepped up inventory cost, I'm assuming it will be down under 40%, and then maybe some other thoughts?

Yes. Let me comment, that’s a bunch bundled into one question. But let me take a short at it. First, we really do anticipate that the issues were temporary in our service inefficiencies and really that’s all about more trucks being open and we like to see, we will rectify that situation and those inefficiencies will a little back way as we go forward. We do anticipate continue to see a bit of modest inflation. We think it's manageable at this point and in fact we did see some pricing benefit of 1% in the first quarter roughly and we anticipate being somewhere around that to slightly better for the balance of the year. And as far as the mix of business, I think that's a bit unusual in that while our gross margins aren't that different by geography, 14% growth in Europe along with really strong growth out of our key distributor there did put some pressure on gross margins. But if I look at it Joe across our total Tennant base, we still believe that our gross margins for all Tennant business will be between 43 and 44, so they'll remain in our targeted range. We obviously try to run and increase our gross margins year-on-year. Our gross margins were 43.5% in the prior year. We certainly hope to be modestly above that, but we're comfortable to be within our range. Our total range now is 42 to 43 for the total entity now, and that's really a function of IPC having a slower growth -- lower gross margins than Tennant, and that's not surprising. They're 80% distribution based and the distributors have to make money. So, our total gross margin will be a bit lower but our base at Tennant remains the same and we're very comfortable with that for the full year.

And that would of course excluding the one-time step up charges?

It does exclude, yes, that will be -- obviously, that's going to put a lot of pressure on gross margins. I mean it's just one of those accounting things that I won't get into here, but we really do believe that we expect the stepped up right to bleed itself out and be gone by the end of the year, so we can't say precisely when that'll be, but that's our expectation. So, we'll have a pure gross margin number next year and we'll report our gross margins excluding that step up as we go across the next three quarters to make people understand our base business is performing.

Right, and then on the European business, you've been having some nice growth last couple of quarters. The outlook on Europe for both your core business as well as IPC, how they're performing?

Yes, I mean we're thrilled. I mean we there have back-to-back quarters like that and our base Tennant business is very encouraging. I can't say that we would anticipate to repeat a 14% organic growth, and we certainly haven't built anything like that in our numbers, but we do anticipate seeing growth for the balance of the year in EMEA, and Q2 will be a tougher quarter, but our business is strong and it's pretty broad based, well that's even very encouraging. And we can also say IPC had a really nice start to the year too in Q1, so we remain confident in our ability to more consistently growing in Europe for total Tennant businesses.

What about just the order patterns now into the first part of the quarter? What do you see and maybe by geography, is it similar to Q1 or?

Yes, actually it's one of the reasons why we consider taking our guidance up from the 1% to 3% organic. We've held that firm. Our order patterns are -- they're not as strong as they were in the last quarter. Last quarter was 5% organic growth quarter. We certainly -- we're lapping a very good quarter last year and our order patterns are -- they're a little bit slower right now, but we expect those to recover. We anticipate being able to have modest growth in the quarter, we hope. But one quarter doesn't make a trend, so we remain cautious on what we saw in Q1.

When you think of the sales synergies between the two companies, where do you see your biggest opportunity? And I'm just -- and as part of that I was just wondering, if this cleaning tools and supplies is a big opportunity for you to blend you current customers?

We do, I mean if we just think about it and look at facility managers as just one example. They're important customers for us around the world to earmark the ISS's the ABM's of the world. They all buy cleaning tools and every day. And so we -- do we anticipate being able to get some benefit from that? Due to our customer base, we sure hope so and that's our expectation. But we really think the opportunities are broad based, Joe. I mean we're focusing on Europe, we do think there's opportunities in the U.S. and in the Americas and APAC, but our primary focus is going to be on Europe, and we think that product line -- our product line and their product lines can go -- be sold through respective channels, so that's one area of opportunity. We think the cross-selling of products can accelerate with what IPC is having some success doing. It's one of the premises of our -- of the acquisition that they can continue to improve their cross-selling capability, they just got to start that effort. And we also believe we can learn something from how they run a distribution channel, and we think we can help with their strategic account efforts, so the growth platform is multi-dimensional and we're nothing but more confident as we're in early days of owning the business.

And last one would be on the debt. Could you tell us what your debt level is post the debt raising acquisition and what your blended rate is?

Yes, it's $420 million right now and the blended debt rate is going to be if you include the hedge, it will be at about 4.2%. So, the actual weighted average interest is on the bond is 5.625%, we then have some money drawn on our credit facility, but the weighted average of all that’s our 4.2%.

The next question is from Chris Moore from CJS Securities.

Yes, maybe just a follow-up on the debt kind of from a leverage standpoint where are you now and where is your kind of comfort zone there?

Yes, we’re obviously comfortable at the leverage above three right now but that’s certainly not where we want to stay and we will be extremely focused on using our excess cash to pay down debt. We’re going to invest on the business, we’re going to run the business the way we have been but all of our excess cash what we can expect to pay a dividend but the balance of it will be, we’ll be paying down debt and we’ll feel better when our leverage is two or lower, so that’s where our focus will be for a period of time here and we -- I remind you that when we do generate a lot of cash on both of these businesses and we’ll take advantage of that.

Got you, all right. On the gross margin side, the total range kind of 42, 43 with IPC in there, moving into ’18 and ’19, is it possible to get back into your kind of the core business range of 43 to 44 is that too aggressive for ’18?

I’d like to think we can eat our way back in there, but for now we’re going to stick with the 42 to 43. But you know we’d like to think that’s the conservative number, we’ve certainly strongly prefer to be at the high end of that and we we’re not going to be blissful about the trying to get our gross margins back above 42 but we’re just not prepared to say when that might be.

Got you. And Chris had mentioned just basically accretive in 2018, assuming that the stepped up inventories gone by the end of ’17. Are there any more acquisition? Or any other kind of non-cash charges that would still be out there in ’18?

No, everything should really be behind us by that point, that’s certainly what we hope to be and you know we’ll provide more details and more insights as we go forward and certainly as we are able to give you information on each of the respective quarters this year that will bring more clarity to what next year looks like. So we’re certainly, we better be quite comfortable that we’re going to be accretive or we wouldn’t be saying that we are not prepared to say how accretive is at the current time.

The next question is from Bhupendra Bohra from Jefferies.

So, I just wanted to get some color behind your North America core sales number here. Nice growth actually in the quarter.

Thanks.

And you did actually say that mostly driven by the industrial business. Can you from end market perspective, just give us some color within your commercial vertical and some of the retail stuff which we are looking and like the headline news and all those things?

Sure.

Just give us some color what actually drove the strong core sales in the Americas, especially in the U.S.? Thanks.

Sure, the two big pieces of it were to that our new product success and it was really important and strategic accounts are very important. And part of that new product success is as I reminded reminder we had important industrial launches last year. The timing of those industrial launches wasn’t perfect and that was the sluggish economy last year and you’re introducing high price items into a sluggish economy. We still had a great vitality index here, but we’re starting to see some momentum on those new products now as they're fully global now, and that’s been a very important part of the growth success in Q1 was the beginning of growth on those industrial products starting to accelerate. We are seeing some better demand in the industrial side of the business and that is one of the things that gives us some confidence that maybe we just are beginning to pull out of this, we just don’t know for sure. And we had a lot of questions from folks around retail segment and I mean I know most people view it has a headwind and we're not going to say that it's an easy environment, but I'd remind people that we are not in small sites in mall driven areas. I mean we have premier set of retailers as our base business, and we have share opportunities virtually everywhere in the world with our key retailers. And we still believe that we can grow in retail. And we would say we know it's a heading, but we think given the quality of our customers and the ability, I think we can grow and we also are seeing some nice offsets on the distribution side of the business meaning where we sell into logistics location, people buying online and we do really well on those environments that those online orders are fulfilled out of them. We're taking advantage of spending more energy there.

And we did have very solid growth in the first quarter in retail. We don't report by vertical, but the growth in retail was above the total Americas and North America growth rates, so and we expect that to continue.

Okay, Yes, nice to hear that. Now, you did you say the order patterns as you exited first quarter have slowed down. Is that respected to any particular geographies like U.S. or are we talking about like overall?

It's pretty consistent, but I mean, I would say that Europe is honestly holding up a bit better than the other geographies but not notably different. And we remain comfortable based on the forecast we're getting and what we're seeing is that the order patterns will get stronger as we go through the rest of the quarter. But they're little slower than we would like, as the quarter starts out and I'd also remind you that April is the least important month by quite a bit as we go into Q2. So we're not we're just paying attention, but we still believe and we're very comfortable with our organic growth rates we've given for the full year.

Okay. Yes, I was just trying to get a sense of that 1% to 3% which you kind a maintained coming into the quarter like meeting at nice 5% organic growth here and then kind of maintaining the growth for the overall rest of 2017. It just tells me like you are being a little bit more conservative where you just want to go into like the June quarter to make and a get sense of what the organic growth?

Yes, we would like the more data points, Bhupendra. I mean once really solid quarter doesn’t make a trend. We frankly, the economy does feel like it's getting better particularly in Europe, but we're also seeing some strength in North America. We're just not ready to take our numbers up for the full year. We sure hope for whole being conservative and that's what how we like to be and we are we're still managing the business very tightly.

Okay. And lastly I just want to on the IPC, and now you guys have been you have a good track record in terms of new product introduction and the vitality index. Give some colors on like IPC, how they handle their new product growth and if you do track like with Vitality index internally or how they have benefited overtime kind of refresh cycle they have like how many months just headed on that, thanks.

I'll answer that. We love their portfolio as we mentioned it's very complementary to ours, because it's mid-sized commercial than the small commercial in some new product categories. But we quite frankly have not have the chance yet to get deeply into their R&D efforts to understand some of the details and they'll able to answer some of the questions that you're asking. But our initial review of their R&D efforts indicate that it's pretty robust and they have the nice process and they do launch a lot of new products, and they have a pipeline going forward in totality in terms of what they've showed us that looks pretty good. But I think that let us get it and we just have the kick-off meeting for the integration last week on Wednesday and Thursday and so we are just get we are just jumping into it and there is still lot to learn and hopefully next quarter we'll be able to provide a little more color around some of these opportunities.

Sure thank I'll keep that question for June quarter.

I noted it that. Thanks Bhupendra. We appreciate it.

The next question is from Marco Rodriguez from Stonegate Capital Markets.

I was wondering if you could talk a little bit more here about the strength you guys saw in Europe, the organic growth side obviously pretty healthy rate there. Were there any sort of I don't know sales events or was this maybe like some pent up demand that didn't get closed in the last -- the prior few quarters or any sort of color there will be helpful?

Yes, well first of all I think the underlying European economy is improving. And within that, our business is improving as well. But you got to remember this wasn’t an overnight sensation, we’ve been doing a lot of work in work in Europe over the last three or four years. We have pretty much a new management team, new leadership strategic restructuring, we got the market restructuring in all the key countries and I think that all hard work and effort is finally saw in the pay dividends. And we’re seeing it in the results in the last two quarters, and hopefully that continues, but as Tom said, 14.3% growth in the first quarter don’t expect that to continue end of the second quarter, but we do look forward to a continuing sustainable growth environment in our European business and IPC is just going to add to that going forward, so really excited.

Yes. I had one thing to that that EMEA have did -- prior year was ahead of 2.8% decline organically in Q1. So, we were lapping an easier quarter and it just so happens if you look at across last year, Q2 is by far the best quarter that you may have actually 8% organically last year. So, it’s a much lap, but we still think that we can grow and so, and we were confident in both of the businesses the old Tenant business and the IPC business. We really do feel that both of those businesses will respectively have organic growth in the quarter in anyway.

Okay. Perfect. That’s helpful. And then to come back and circle back around on gross margins in the quarter, the 140 basis points year-over-year decline, I know you already called out the three major items there. But then also is a little perplexed about the fact that 42% of your revenue is from the new products, so I would assume that those will be pretty high margin. Can you maybe I don’t know quantify in those particular buckets I mean where were the pluses and the minuses?

In the actual gross margins in Q1?

Right, in comparison I mean the European is -- go ahead.

Yes. If you look at the gross margins from the prior year, the prior year gross margins were particularly strong at 43% and what I would tell you is that, if you went back to 2015 gross margins in Q1 of 42 or more were more normalized. Last year, it was unusually high as we actually saw deflation in the quarter and had a really solid mix et cetera. Whereas in Q1, I'll re-comment on a couple of things, I’d say one is new product is definitely not a negative, I mean it’s the worst cases is neutral to positive, if you look at the gross margin impact, it's one of the things we do best. I mean we don’t introduce our new products that don’t have better margins on the products as it replacing. So, it is new products are generally worst case neutral in most instances, modestly additive to our margins structure. But, we really do believe that the, we were probably 50 basis points in the quarter below what we like to be in total and that really was a function of inefficiencies of the service organization that we believe are temporary and also when you see a level of growth we saw of our master distributor combine with the growth on the balance of Europe that’s going to apply a little bit at gross margin pressure. And we’re honestly fine with those gross, in the gross margins and we think our maybe 50 basis points below we’ll get that back and we’ll be within our range for the full year. So, we really view it as onetime in nature and transitional.

Got you. Helpful. And maybe if you could talk a little bit more about the potential revenue synergies. Do you guys have a strategic plan that you're rolling out any sort of initiatives that will be discussed, just thinking sort of color there to kind of help us understand that?

Well, we -- if you look at the base Tenant business, I mean there is really no change whatsoever in strategic direction, I mean we think we’ll see growth from continued rollout of new products, our pipeline is particularly strong this year that will be a meaningful benefit. We continue to improve our market coverage and optimize our market coverage and we think the restructuring actions that we just took while they reduced cost, they I think it will actually improve our go-to-market positioning particularly in the Americas. And strategic accounts continue to matter in the short-term and the long-term. And then the acquisition is going to drive some incremental revenue, I mean we’re not prepare to be precise about that at the current time, but we really do intend to again to see some incremental revenue pick up through each of our respective channels. And we’re really enthused about the opportunity to begin to see incremental growth out of both of our respective businesses due to the two businesses being together.

And last quick questions just kind of a housekeeping item post-acquisition here. Is there a significant change to your cash balance?

No, it's not, there's not. I mean we -- in fact right now our cash position is actually up a little bit but we don't see a major change; we'll continue to carry a cash balance but it won't be significant, we'll generally only carry as much cash as we need to run the business day-to-day, and any excess money will be going to pay down debt and we don't have cash trapped anywhere, it's really been one of the smart things we've done over time, that we've got a lot of flexibility, we have the ability to freely move money to pay down our debt and we'll continue to do that very aggressively.

The next question is from Rosemarie Morbelli from Gabelli & Company.

Just from following it from the last question. How much cash is needed to run the business?

We would say $25 million to $50 million roughly is, will air is close to be in at the 25 as we can be, but we really -- it's somewhere in that range. And we don't have big seasonal moves in our business either, I mean the one quarter that's generally a bit tougher is Q1 where we generally don't -- we don't generate cash. We tend to be modestly negative, but we always expect to generate a meaningful level of cash in the other quarters. So, we don't have big swings quarter-to-quarter.

And in terms of free cash flow, what is the average? What do you expect to generate now that you have IPC?

Well, I mean we haven't specifically given free cash flows, but if you were back and look at our free cash flow history, if you looked across the last five years, our free cash flow is vary between the low points of 21 million the high point of 45 million. We would expect the free cash flow on the base Tennant business would improve in the years that we're in relative to the prior year. And IPC if you look at their cash generation as a percent of their revenue, they're similar to what Tennant does. So, if you wanted to make some estimate that'd be the best way to do it, but we expect to see an improving cash flow position in our business and that will through earnings growth but also we've had more inventory in our system than we'd like to see, and we think we'll begin to work that inventory position down and that'll allow to generate further, so we think there's some leverage in our working capital there.

And if I -- can you talk about the growth rate that IPC has experienced over the last few years?

Sure, if you -- I'll first comment about Q1, I mean they certainly didn't grow at the same levels the Tennant grew, but they did see organic growth of 8% in Q1, that's -- we don't anticipate that continuing, but it was -- they got off to a really nice start and then as you look back across the last a couple of years, they've seen growth in the 2% to 4% range. And so and one of the beauties of their business is, they've been more consistent than we've been, it's one of the things that we loved in their business and that's really a function of solid business model being well managed by their management team, and we're thrilled that we retained the key people and they've done a great job of managing the business and improving margins and getting growth but very importantly consistent predictable growth on a quarterly basis.

Is that consistent growth based due to the fact that they actually have smaller less expensive machines and therefore, you don't -- a lot of more customers are willing to spend that amount versus the amount necessary for your machines?

It does help and they're not as dependant on strategic accounts as -- and that's not going to diminish us from trying to capitalize on that more, but that does help the business to be more predictable. And there's a lower price items tend to be more consistent, you don't see the economical swings up and down and also their tool business, that's a business where people are buying those products every day, it's very consumable and that business is one of the things we love, that's a great business with nice margins and we think there's upside, but it is a much more predictable consistent piece of business also.

And looking at ecommerce, what do you see the potential -- the potential size of that ecommerce let's say over the next three to five years, you can pick the date…

I'll let Chris comment on this one.

Rosemarie, what we've said is and we haven’t given any numbers, but what we’ve said is that we expect within a reasonable period of time to begin reporting e-commerce as a separate sales channel to go along with direct distribution in strategic accounts, so that should indicate to you that we anticipate it will be quite material to our results.

And reasonably three years?

Yes, in that timeframe, yes.

Okay. And then lastly if I may regarding the strength of Europe. Was there some inventory build-up in some of the channels or pending demand that we’re suddenly being filled?

No, we’ve really don’t I mean we love our distributors to carry more inventory than they do. The reality of it is they don’t carry a lot of inventory. I mean we are sort of, we don’t have that this typical channel fill kind of situations where you get onetime benefit pickups and that’s faster all over the world, so it was real demand.

[Operator Instructions] The next question is from Joe Maxa from Dougherty & Company.

I was just wondering if you could give us what you think depreciation and amortization will be in the Q2 and the following quarters?

We’ll give you an answer real quickly there. I mean there is no material change to the base Tennant business. You can see from the 8-K filing that the intangible is the amortization on that I think is about 8.5 million annual, yes. And then the incremental depreciation amortization, Jim is going to give me a number here in a second about 5 million.

For the quarter or for the year?

No for the year, so if you looked at our historical D&A what we’ve been in the $20 to $22 million range and then you add in 5 million and then also the intangible annual amortization is a big number.

Okay. In the 10 million cost you need to generate the 10 million in annual savings when does that start to kick in?

Yes, we would anticipate that we would have some modest level of savings this year. We haven’t given that precisely, but we’d like to think that maybe there is a little bit of opportunity there but we would anticipate getting somewhere close to half of the benefits next year and then we would get the full annualized benefit by 2019. So we need to start making progress but we’re going to go at a measured pace as we said many times and we certainly like to believe, that that’s a conservative number relative to not comparable industrial deals. But we’re early days, but we will begin to execute, we said we’re going to take our time, but we’re taking a 100 days to formulate our definitive plans through a very deep integration team and we will go after the 10 million of synergies. Where you talking about the 10 million on the restructure, Joe?

Well, I thought you thought there was another now. I was on the restructuring.

Okay, sorry. Yes, and that’s just the -- that’s the 10 million on the cost on the acquisition. As we’ve talked about the total synergy number that we’ve built in that actually we’ve talked about €12 million number and difference between those is the modest amount of that we have built in round some of the revenue synergies that exists.

I see, okay. And then lastly seasonality on IPC compared to Tennant's historical seasonality?

Yes, it's best to say in their business that there quarters are much more consistent. So there isn’t really a meaningful difference between each of the respective quarters. So, you could be pretty safe by just assuming that it's just equal across quarters and you are not going to be far off.

Oh, really, even in Q3 where Europe is.

Yes, I men if you wanted to adjust the quarter downward Q3 would be the one to do it, also Q1 but the differentials are, as you know our business is, it's not gigantically different but its real clear year-in and year-out one in three our meaningfully lower and your front half, back half in Tennant is pretty consistent 51:49 generally, but their business is pretty consistent quarter-to-quarter.

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

We continue to make progress against our growth aspirations. Our acquisition of IPC Group will put us over our $1 billion sales target on an annualized basis. Additionally, our combined acquisition and restructuring actions will move us closer to our 12% operating profit margin goal. Looking ahead, we believe that Tennant is competitive advantaged with attractive growth prospects and a stronger global economy. We are focused on creating value for Tennant shareholders and we are excited about the company's future. We look forward to updating you on our 2017 second quarter results in early August. Thank you for your time today and for your questions. Take care everybody.

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