Welbilt (WBT)

Rich Sheffer Vice President of Investor Relations
Bill Johnson President & Chief Executive Officer
Marty Agard Chief Financial Officer
Mig Dobre Baird
Brad Vanino KeyBanc Capital Markets
David MacGregor Longbow Research
Todd Brooks CL King & Associates
Walter Liptak Seaport
Call transcript
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Good morning. My name is Samantha, and I will be your conference operator today. At this time, I would like to welcome everyone to the Welbilt, Inc. 2020 Q3 Earnings Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator you. Instructions] Thank conference. may you Sheffer, begin Rich your

Rich Sheffer

Good to and webcast. morning, welcome call quarter and earnings Welbilt's XXXX third

me Chief Financial Johnson, is Executive Joining and Officer. call and Officer; our President Chief Bill Agard, Marty the on our today

Slide this our regarding found begin on could our statements and earnings section of or our can discussion, in be release, the Harbor our presentation Investor from are of statements the historical facts statements, or that made expressed Any we refer forward-looking not our to www.welbilt.com. both website, forward-looking call implied of Before projections any Safe slides in differ Relations business our please statement today. are X and in which results future materially

important result obligation may risks Please statement, any the update and in presentation include measures. non-GAAP forward-looking important Our be including identified our reconciliations regarding and do many other and We to a whether any filings. as other non-GAAP by both of earnings affected not GAAP press factors, of in discussion results undertake measures. circumstances. Today's publicly and our events information, release to uncertainties, and revise actual or for our will our information release non-GAAP new financial use refer or future SEC

Now I'd like to over to turn the call Bill.

Bill Johnson

Rich, and good morning. Thanks,

third I environment. to want results, share our on quarter market into the details get current we Before some

their prior come more prior embracing It's crisis since year now the the to through historic weekly are began than now same-store their notable are in drop XX% Most the MillerPulse on levels. March. market sales windows X, week can Looking graph the of above that second QSRs recovery same-store at delivery. Slide and also you the the drive-through restaurant had sales sales see of that QSR

at National end the prior improvement casual quarter. the tied year, the casual improved majority not We're to rolled re-openings dine-in back traffic. in for resilient who and will the to of in indoors new EMEA. colder impede at additional regions have U.S. causing Until restaurants. dining recent difficult have to sales much also The due estimates rise now the As portions that cases, dining more compared be that being expecting Same-store XX% XXX,XXX be impacting or diners to The of near-term the pre-COVID restaurants casual COVID-XX in to down to began than result, see to the of quarter a eating Restaurant sales the their by to in is closed. they XX% COVID-XX begin the restaurants, case restaurants, some population down dining regain been will weather in restaurants same-store pre-crisis, saw see meals again it Association confidence counts of sales and additional improvement. recovery fall northern XX%

their and that We have those as closing indoor or levels. and reported a million dining restaurant of that employment dining operations below delivery-only also also rely indoor service. remains they have is to in The pre-COVID QSRs headcount model. shifting on this reduced rooms majority takeout been X.X

to and this current case, temporarily new operators aftermarket in equipment the purchases financially would KitchenCare while equipment see spending they rather sales, it. it of defer will the increase is on the new existing from replacing environment. In Given possible with demand an that the than time operators state crisis recover clarity more market, we repairing get expect on

extended hang have in next recently will in comment and new to several continued and assets recovered, on see the for income-producing equipment dining. focus they the will the our casual likely had industry due growth over to same-store over safety check. weakness repairs, food lives while builds sales equipment, and lost operators foodservice keep our the is equipment opportunity to sales that publicly the For cost down begin share concerns We've a their that they QSRs quarters several as the

we these position expect benefit to expand strong most to again. change, segment as our starts Given market this with of

other strong the markets, education Looking and market their end is of the they during at do as summer session. planned the seasonally is remodels when school upgrades majority in months not

in is stay return future. market did way As expected, project of see for that remains the the anticipated time students. we and was work as Health this for likely slow seasonally to late in completed care foreseeable August stable

once the is facilities there some at pandemic for ends. potential and the remodel long-term care Although upgrade projects

correctional and government expanded in on sanitation. spend C-stores seen have segments continue to We

We strong also smoothie for in seen the ground our our machine as especially in market, interest as C-store the a well machines. Blend offerings have focus growing beverage coffee on Fresh

have us units major a with C-store are optimistic and We beyond. new many XXXX opportunities for in will tests number this revenue chains that in drive of and

results. Moving X review to our on now to presentation financial slide our of

distribution shipments the continued high-speed point the sales decrease the operating XX%. volume of $X quarter, accounted new ovens the only attributed the possible by million over for performance Merrychef of of in was the actions in third we global better chain occurred this little in rollout C-store markets. an month had March. down general quarter decreasing monthly XX.X% program the Manitowoc made market but We Americas the quarter. quarter. distributor Despite XXX to in of a flow last we all a other delivered QSRs XX.X%. KitchenCare to care, quarter over of decreases to year. quarter's years. of for year's from year comparison, of decline was sales which market, improvement this quarter last and from late free We within rollout level We million sales. improved sales sales some by adjusted later global and compared the XX.X% to the as gradually second markets were prior decreases XXX new quarter. this was several that quarter, second the $XX.X with the million Notable end organic in existing non-repeating basis liquidity. our and did first level margin sales than first the high sequential large during destocking quarter, related XX.X% of took customer This customer. $XX improved basis sales merger which the year's quarter, the delivered sales health sales of see the quarter EBITDA total the operating to replace progress due the education next prior majority they expect with This in third cash on their the improved, consolidation In a as two we've declined and inventory largest in cost made in transformation our completion. neared X, ovens in to the containment also the of less general Year-over-year, performing On this slide points and year master decreased aftermarket was decreases, the and end eased we ramp the net in demand sales the up The from almost half in supported quarter, shipment the to net in Our third each sales machines was Ice rollouts the parts decreases These

due XX.X%. customers rollouts, decreased weak, net chain sales soft carbonated our with of sales Large X. chain market for strong small slide on with EMEA at governmental grocery the also very to Merrychef store low. in QSR sales last sales organic general sales were a with XX.X% U.K. We down Large large due a a had by were with Crem remaining chain. to Sales year. one another couple Looking a drink European impacted smaller decline for entity,

localized U.K. saw to subsidize individuals dining Program was out Eat down of unfortunately, areas Help Europe first cost were program Even the seeing they with sales and a in program eaten areas who of the APAC in to which £XX out. government the up last by through XX% of the during net quarter the in COVID ended. increased weeks, U.K. as Australia, as reopened has to impacted discount Out first XX.X% reimposing better meals that Out China sales decreased with dined China XX three the benefiting We the in supported On year-over-year X, but spikes more their from are restrictions. the unfortunately, there by also at are for meal, successful sales COVID Sales million cases was in many and the slide organic a winter, be XX.X%. project. large for

Excluding that project, India, impacted during sales the Asia, Southeast were decreased the name of few, Philippines, areas APAC, slightly. a weak later quarter. would remained and have Japan and to Other China

on make to continuing We're transformation X. slide really to program. our progress good Moving

the culture pre-COVID line until RFQ close the to our we or some we reflecting provide developing and savings suppliers. of is benefits activities RFQ of our been ramp right inventory but dollar continuous product costs lag and our identified initiatives begin now initiatives, didn't obsolescence into P&L improvement. VAVE are that the with great businesses. returns is current currently site-led agreements remain savings for review procurement has Our which and These levels. activities of for savings VAVE most responses, We also how many our company continuing shift we are see from and of value majority original early up, transforming qualification are the to engineering, processes. opportunities process that to new procurement new may embraces to remaining that to analysis solution value will procurement of while the through some the have our one is team actual in inventory, into to starting implemented our our business RFQ complete transitional and the as capitalized We're the additional suppliers the example confident We've a testing the process going own supplement time

have have progress our lessons most American globally are currently not broadly We but as transformation part seen manufacturing in these five our continued that make improvement. the of accelerate and we North gains plants only sites, with to in program of emerge are sites learned the productivity to deploying

anticipate continuing have some Some of continued headcount been some We and productivity and with dealing that gains with workforce have a XXXX new XXXX. and additional fall cost productivity related each smaller operations absorption headcount of in delivery leaner reductions this began in quarter lead gains lower We've partial higher despite fabrication volumes that to through QX led substantial reductions taken shifts and XXXX. of hurt these costs. transitional production These to equipment. in productivity

pace slower originally pace continued were we that of with enacted spending anticipated impacts COVID. has than due temporary third quarter the plants transfer and manufacturing additional of investment, manufacturing for capital the and slow China lesser of The savings our slowdown in fabrication of capital will coffee to to a the all furloughs recognizing extent Shanghai in a did of combined the plant in the quarter. in We shutdowns quarters. Crem, been during manufacturing equipment However, the plant our existing the by to complete third second quarter few one machine from

process expect fully Shanghai shutting in of margin the which of XXXX. the approximately will We the all to down the by fully program, in execution We the the program committed million savings points that million, $X planned now see drive the third the of and the in-period end transformation step-up of should complete run remain exited and savings from end rate. a $XX in the are improvement by XXX quarter, did with increasing be plant to transformation savings year. We is a actions basis delivering to

due of target realizing pause along cost of experience when the EBITDA million savings creating and volumes manufacturing related to of the XX%, terms, dollar pre-COVID all-in timing margin $XX the levels. pandemic may the with return the to delayed be full uncertainty sales However, to in

for them some in Before new and they the filtration equipment; they finally, with operators menu to and launched and tracking; what that foodservice and of utilizing service strategic and is our newest such recent combi fryers of kitchen helps cleaning are common needs X, management and metrics want On new as call we asset quality initiatives. of attracts over equipment; produce equipment assists launched kitchen how slide I cycles provides updates from ovens. their oil and all some open based I downloads to connect that management controller helps these visibility Welbilt's benefits KitchenConnect brings a I'm an Marty, pleased our version management KitchenConnect share our key in key features other environment. Because our and competitors' them platform share into the turn cloud-based platforms to facilitates announce X.X areas; solution, the with five to secure connectivity KitchenConnect product other of developments to first that stable, digital into provides and enhancements data it digital the lines. commercial KitchenConnect. we cloud on can open is measure our of

our Operators across platform. approach the leading at operating cloud-based Our capabilities retrofitting of when their existing KitchenConnect industry. its will with controller to advantage want digital for now kitchen. the is offer their edge equipment integrated puts new Welbilt's controller controllers, logic common use they connects be to products operators increasingly data We'll to the the system retrofit same what digital equipment digital management we'll and across in integrated being that choosing also integrated take kits new new to X.X our Welbilt to and of of leading only all having brands into uses demanding products a with controller new all platforms in our who brands. with

enabled years, ghost rapidly openings is combi help be FitKitchen an expected launched slide grow connects priced and the combi two and $XXX those to ago. need of of we ghost the four by with operators. oven maxx, line, XX of in born want features on Europe. oven our ovens see and hundred other today China The the competitive had cover layout launch is need kitchen kitchen our digital a is more with kitchen more far have On the in the developed launch that our standard equipment majority KitchenConnect some kitchen the combi combi are equipment of designs adopt in of market. I equipment. by operation and while in CX mid-tier for our kitchens performance, installed our to larger over ovens. an item one in to estimate team we markets ghost and so that this Americas our our and is newest European in all in and Demand example features ghost for the kitchens Welbilt can With to joined majority product XX, We equipment. X,XXX the the our digitally grow kitchens maxx performance that last being that our segment. event is have modular help but where year, to update efforts. to Convotherm controller XX, leadership virtually kitchen ghost next The These is KitchenConnect. and attend I'll ghost an yet approximately estimated live emerging maxx, was representing of slide Marty. This customers premium efficient minis, Moving many We an people is new million has our is Welbilt common another turn that, market where X.X, weeks for call several digital will the with events you than to Asian capabilities us flagship over who The and don't the

Marty Agard

slide start and our going the of Thanks, results. and morning, to I'm good XX margin EBITDA with adjusted everyone. discussion operating Bill,

positive partially net up. sales drop pricing margin As level points XXX hold year. price was quarter. including we throughout Volume, in compared impacts you netted the have the reflects costs, third January and continued impact to of increases against the quarter drove might decline in expect, basis to the this This our by prior volume our point gross year, drivers. versus tariffs, these the the mitigated profit decline headwind XX% as basis prior which XXX Material of system measure in a pricing, net at had and is

that timing-related savings our activities, procurement come we some had program's two transformation this driver. adjustments through had have we impacted from While

comparison large spread costs year. in and across this QX the themselves last to cost last per material last favorable P&L year driven benefited buys volume QX and linked included First, year's went capitalized and rollout inventory And partially a that the reductions transformation year, QX. through conversely, piece are QX in

and mention The China issue to for to transfer common and tied inventory reserve inventory obsolete also controllers new our excess controller. this of to tied North increased from we some that America being of is our replaced other by are to quarter production that older the

been for impact mainly still Other the basis have a manufacturing Lastly, had year-over-year that overhead were we last to tariffs labor, margin a point imposed months. and warranty negative expenses, impact XXX XX this quarter. within

We continue we our to quarter. declines, experienced flex effectively production to expenses again volume this

gained reduction both This We productivity continue But an addressed we've a As not and further the QX, to upcoming our volume productivity of anticipated excess reminder, and deleveraging. of we there plants the to in gains. labor in a lower productivity at a we the fixed is progress that on volume. through of end improvements March build volume, achieved cost the in thereby the helped took demand. direct on but and additional, despite reduce early as smaller more made demand could action improving implemented proportionate us the enforced degree visibility causing declines year on margin lower we impact

to consolidating continuing QX by, by our progress encouraged strategies structural labor plants for see. campus. are more upgrades equipment also program buildings reviewing quarters costs plant the transformation critically We example, several revisiting in across creatively within we related costs a our execute remain our and next the planned other exiting few given and and warehouses We're and over the

us manufacturing next additional year was on continue program. to We the actions as those plant XXX few in impact over our of contributor most Many quarter. as the in a as marketing remain margin SG&A, travel prior taking emerged March. of actions enabled from in employee-related also point aggressive categories fees an took basis all the quarters, transformation show to spending real $X down in the quarter, SG&A contain to the action pandemic's were enforced and we individual adjusted favorability and progresses in expect professional SG&A actions million, expenses, equating expenses, basis the by to each restructuring on to within footprint favorable. its quarter Like and early

you're reminder, reading statement, from that a includes As the excluded face SG&A adjusted income EBITDA. our if program the of operating investments transformation the are

can the reconciliation non-GAAP specifics track schedules. the You to

was XX. Slide the $XX cash Free in flow million to quarter. Moving positive a

both accounts well-managed our impact inventory of growth in digital This are investment decreased the volumes, levels our cash in industry sequential production receivable accounts common spending decrease controller production our payable products with the $XX Net digital quarter. a on inclusive have and moving into on impacting in see our specific program. and is we sales progress to our from levels. the the transformation both the of pursue our growth execution. Also seen program strategy our made we the in we only still negligible and collectibility we and in is better initial ramp stocking and contraction. accounts traditional born With alignment during of up capital did million by sales investment Both receivable, quarter new flow as inventory as free

investments, related in IT new QX this The to and program up restructuring. and through upgrades, million slightly $XX through in we a innovation SG&A we But bit $X line three will and product million both capital, year-to-date, at ramp in both quarter, transformation the reflected in XXXX, initiatives. and is $XX spent XXXX, XXXX For down million, with are we investment quarters. facility equipment

then cash build we One quarters. is program flow have XXXX. $XX ramp million of planned, reported and and cash customer traditionally inception compensation, our experience cash $XX last May transformation-related seasonal costs the free $XX as these stronger since rebates reminder spent $XX after a incentive charges we since to XXXX. million million investments pay three spend quarters combined continues QX, in of of have as in million that into and will the million generate is it seasonally first with million remaining inception, use the the the lower in in seasonally original of And the in in coming flow volumes. certainly on range quarter We annual down For we incurred inventory restructuring already SG&A, $X $X.X

shown cash the flow this free chart, positive As we of have remained the on beginning pandemic. since

of flow flow absent not we're it to last While a quarter. four forecast cash an fourth we providing achieve cash the free positive in nor today should are remain disruption, abrupt years, the market the levels expecting

decreased and capital at two of were Moving ended last third define with $XX $XX during We short-term quarter, liquidity, balance our is plus our end $XX total headroom. debt amended plus Cash ahead were providing revolver. significant $XXX improvement the the and on the on in cash million, to and while of the agreement which availability million we with quarter decreased covenants We equivalents investments by where of this cash with the the quarters. well liquidity, as which EBITDA in million restricted by in compliance liquidity, cash liquidity million quarter. overall our credit expenditure we

share XX, Slide I'd like updated a on Finally, few XXXX. to thoughts on

our guidance sufficiently until First, March withdrew have and reinstate we will conditions it XXXX stabilized. not in

strategic ongoing winter any Given believe process, The can cannot is have guidance in caveat during The of the quarter. fourth the thought I color year rising last recovery watch that year. installing slight gradual slightly offer COVID-XX and initiatives, better versus the to with in course, we're of do and the the the improvement We the the focused we could pace execution adjust that that of closely pandemic XXXX COVID required. realization of and from as was also hopeful the our uneven, October's resources last the we share are that to market financial declines show key we QX's make is quarter on months. even dynamics especially decline we'll, offer case overall last counts, this than will on the reversing or reopening

lags. not direct will own stated, are P&L working. level, confident linear remain our we're impacts convinced clearly make remain a in when we transformation now we quarters materializing, ahead that will benefits effects, transactional savings the our and inventory the company has are we stronger the can market see to are out to and will us confident program and time the Bill pass-through and margin point work doing path actions we mature the progression other actions those more a due As On the transformation a and be I profitable accelerate. recovered. our But are volume will both

point our of goal it. lost path That now have call nor We we'll XXX to for our concludes comments. basis sight improvement my the Operator, not questions. open


first Baird. Your the of comes Instructions] with [Operator question from line Dobre Mig

Mig Dobre

how Thank questions a commentary, I shorter-term you very of, consistent if Good if in maybe quarter? year morning in should couple that we your much. give sequentially wondering, wondering, terms kind October at can I for longer-term How I I I'm a revenue year-end. some fourth one. me I'm terms you're sort play happen context, do us one. or quarter. A the be a little of kind is channel a and everyone. of through itself, of more the you're seeing of thinking with this something the And of put dynamics -- know have thinking guess normal I'll with shorter-term distributors But guess, that trends out? about you start the in a normally appreciate seasonality, stocking different?

Bill Johnson


improvement world, on going say, well. October There's improved that. improvement at it little of a and more October October. look quarter. was continue basis. as of XXs, regarding on, of dicey better improvement a completely the September. October, August kind for September. where on, improvement the like that, month be look it more, we each little over going the happening than sales in was if what's side through was would things color the the I day And see come the at KitchenCare third quarter, see over second an quarter to to lot to December, But, third to the every monitoring we're the in at low an a in, terms of the quarter. November through and So, Europe an we July, was over right what's to a in we day-to-day third kind of maybe we When just is And quarter the looking closures gets start and now honest and try beg And and on. around And

the getting of So things aftermarket little side a better. bit is

the their seeing we with, kind think own a In levels watching us going to And haven't balance throughout the normally sheets, what of volume would you of see. to are them terms of distributors' that seen of lot come of kind the kind year-end seasonality, do buys are I quarter.

have wait So we'll just see. to and

Mig Dobre

year-end? did Bill, buys last aware that kinds year? that you difficult of to see need regard a have we do be those meaning, we But in comp of So into

Marty Agard

third the seasonal really. Mig And of percentage was was points, was declines going say bit the couple it's, on XXXX patterns. I but from quarter kind last points, seasonal seven Marty. No. of in two point a expect fourth sort down and little decline. Not similar would pattern. there I mean let's help a the quarter, is it mitigate in by little of, if of the should say year, will that we a a year-over-year it that Normally, sequential improve bit, XXXX,

seasonal normal improvement it, about call in we're improvement sequentially. this low down saying what October somewhere, down, digits October. pattern third talking then the as XXs, the question And does. that be That's would just was is, was Bill in the opposed So was the quarter low-single XX. to that the pattern

how December just So, don't we on quickly again. up know to going, depending start really where close things November,

Mig Dobre

structural in of if to -- look have level the what far the transformation. incremental, margins to from expand be forth the that to I as be that's provide to returning more while I'm this. announced as understand quite seem to heading. you do they what are And who about here, put little No, pandemic, initially. to obviously terms where capacity? way as you we there's We're you'd either to good you made is a might more a the on, are -- to things not to to or now, the you do I'm be get sort think structurally, that argument volumes, wondering volumes you That's the detail willing not. knows, of take longer-term a an that. question either industry have long you've Then, the going footprint curious, beginning But going we pre-COVID on, Because, far or you. time if know Thank did back them helpful. of than Sure. framework pre-COVID outlined at you be as the back

year? here you. be update curious to I'm what we expecting thinking could and get So else an as Thank towards your look next on we

Bill Johnson


monitor your continue we point situation, I is as valid. to the So think

We are announced the types of that into of take. the Crem looking other at can we another that we facility that facility had actions structural moved in Shanghai and closure We are and And take volumes to how these at. other other that we have actions there contemplating out And to depending structural return, China. take quickly on may we're looking costs. actions

Mig Dobre

a some this line to -- of mind for or to where be going Do decision have sort broadly? when in make you're time you it able more announce

Bill Johnson

those of next actions the be Yes. year. half of announcing first We'll types of any in

Mig Dobre

luck Good guys. you. thank Okay,


Your the Capital next comes line from KeyBanc Jeff Markets. of with question Hammond

Brad Vanino

Jeff. Hey, This is guys. good morning Brad for on

And Bill, or of the some if pipeline stages on minor development. new kind early good and the wondering is is are still around it of to that maybe I'm we rollout quoting show I kind book, So activity or planning? your positive unit in of to your in you return order beginning some see commentary anecdotal of feedback mentioned up a it's potentially the tone quarter. guess to chains that from in

Bill Johnson

are I quarter. – little It about fourth the customer, that varies bit a of $X of by kind we of We'll in million the worth – big rollouts of we million of happening. activity rollouts funnel third small on not side. but the in million It's the the called see $X quarter. the that more think to kind kind $X is It's smaller saw out building. But

of does additions look the a COVID, how just up, waiting industry more to think the to more I what house. are But of are happens be going to back the see is lot of there the and are starting because QSRs, and at them this rollouts volumes with more lockdowns, to their their recover.

Brad Vanino

maybe mentioned said closing, then I'm And back, restaurants which the that's NRA looking kind step -- a Okay. of XXX,XXX and at you mid-September. poll, are taking just

of to that just has on along equipment wondering specifics the replacing kind equipment the view wondering, the as back your to bit reset this all there or a that fundamental between equipment operator from of infrastructure little restaurant. a I'm that, comes. just So doesn't a and you will there's of capacity of gets Like a it hold and still kitchen, typically using used blend have kind how some there see And in reason around earlier then about of already refurbish higher it. the stands Appreciate at lines, given the did the completely is, make in probably challenge? come is market, going this number same significant a year mechanisms winter alluding changed it I kind the an or I'm kind that same and there? guess the restaurant conversation barriers that's

Bill Johnson


our position hasn't So on side, equipment there. all changed the at used

a those continue needs where the used used too it get to the We concerns business. of flooding reasons food network, equipment is regional used to complicated past, safety market the to equipment, any warranty lapses, with equipment very hard kinds see is a There's be. distribution It's all mainly things. all stated we've to in not the into there meaningful -- which for it's the

your we and the just to people we different to see -- all see so We of And regard it, second it this. I ways -- mean don't we see don't in all materialize. question, expect do with kinds

take in kitchen take right, depends on and design they want and their may a people and all over they'll and in some in. whole remodel over and they the new do people Some kitchen an small equipment open they and concept, and come modifications the come kitchen restaurant put

new popular will couple it's So restaurants I I to there a occur -- a do of people that, business emerge. of variants think to like And several these think take I they in years restaurant that restaurants. get It's into. out. be all of be a or closures but market. builds, there very see I going quickly new -- at different point, see the It's we as hundreds think how of interesting re-openings build-up form some thousands of there's years, more out will the a that think of lot place, to of people

Brad Vanino

Thanks appreciate I lot. a the time. Okay.


comes next Research. David from Your with of question line MacGregor the Longbow

David MacGregor

everyone. Yes. morning, Good

Bill Johnson

Hi, Dave.

David MacGregor

on making good environment, tough a progress in Bill, to seems be you control and very the guys you can the things transformation projects.

I progress there. So the guess, congratulations on

people repairing rates how observation how putting before your repair product? in right to historical kind answering clearly, gear turning of purchase on on the repair all to the of deferral rates far mean just that replacement used situation. made You sense terms sales revert likely the new replacement And to now, about below go for about that stress running you are your are I back reasons people or back which of being is are What's to much as have? room or question talked people replacement. in forced the the to side opposed

Bill Johnson

things -- Yes. it can they I don't if operating, for technicians for just or to are two, afford replace they're These I mean assets. delay in It's that. more to they there. think have there's start down these it constantly service delay than can't a they I -- it's can just And have think a income-producing it they breaking year them. maybe much reasonable but past

are a part, the hours most year maybe operating I QSRs the maybe a not but XX things, seven they're because those think operating two on QSR days longer So side for side, week heavy, day. as little on the or casual a a they're the --

Marty Agard

going drive the are get a their generational old mean there's between to this going demand. as equipment out all to we night Yes. is you and And carve new overhaul not go digital to and people in the increase to equipment. program year. here equipment day is launch, But going, functional I I'd markedly and David, going of going and that the gap -- also be a remind change

Bill Johnson

entire controller we to that right? equipment, piece that digital. So way. would of people we -- the common out controller to why change will to them the for equipment. can of get But one drive new be made a reticent hopefully, the -- our retrofitable have get reasons But and digital born -- that's get them a And we control be they knew that -- would there the

David MacGregor

around book of common Is order mean there -- out? kind what much realized Yes. of as controller? this developing an I you it rolled

Bill Johnson

So Well, we controller it. to it, right? say it's you're -- going That's is what, digital. new going you're if why be born get common it you order matter the doesn't to the standard,

David MacGregor

I But point. improvement a to that talk begins business repair, more there. to is repairs related we've Can last related been more quarters? the that. people expect related With then KitchenCare guess Okay. And were dynamics the or you channel over it reflect And talking the that is been you and in few parse seeing more deferred of inventory on we've turning me? improving the KitchenCare to replacement for would discussing, the just one some out to things help you're about about

Bill Johnson

that -- there was overhang dynamics channel visibility what but right? number into So to be and there, down there burned knew or had we off. and The dollar a clear exactly Yes. that a was coming inventory that was we very together, parts had heritage of lot the

million, to in had of something that in be So million the that, $XX burned like channel. of inventory the that $XX was million, duplicate range $XX off

there so we business KitchenCare And slowing saw get but better. service as But happen. that -- we dynamic when on. also And these closures these restaurants was the it certainly going see reopened, we --

So on. that it's dynamics are going two those -- are the

David MacGregor

me. for question Last Yes.

Just I you early a as the were behind likelihood with those line of manufacturing sight curtailments in trying what fourth for about of some can like production. next quarter the the of you say forward in point? year? limited around demand you are, but you part, this, to these talked just got balance this you've about Do the realize you curtailments the at more most feel into of quarter out and

Bill Johnson

related. shutdown way day week a substantial between up is operate been backlog March then weeks manageable can was of so a starting out needed. -- a Monday, efficiently that by these plants and We've every if something. make two it then in having shutting took without a it's really a down able efficiently or We some some number by for to time, we productivity that week at volume-related to on week that building or a more of down shutting and operate pretty and we've it more for tried people of and And

the I think probably to going that's still be case.

the shut the subsidies of that And time some out be assistance. that of down qualify order government a require there are in that's to period some for for of driven government to by us

well. a little decision-making as that So, drives of bit

I us not we a so I the at on see think shutdowns there, that second the level probably were are And rate you'll week think now, the depending of the with here, sporadically, week but quarter, right in plant. a occurring

good. now; right volumes out full are plants Some are really their quite

So, shutting be they won't obviously down.

David MacGregor

Okay, thanks very much. Keep hunting.

Bill Johnson

David. Thanks


from & Your comes Brooks King next of the question Associates. CL with line Todd

Todd Brooks

my guys. questions. morning for good Thanks Hey taking

talking opportunities you just question, customers. to units can When on unit QSR the new these off-premises, going were equipment at of they're some to speak drive-throughs? to the pipeline? well, get to same, greater, you some And about content some the when color these you in greater unit about the new are focus with new how talking that dual starting as development change First on look of you development, coming about is lesser, are new formats into

Bill Johnson


what to that their KitchenConnect come they that the us I capabilities part, the delivery-only pretty it's for they're a being wanting But do improve format, it, So, and choice it's a that top of the at right? looking to the all kitchens all store QSR. But that cost formats location, between the of different And of digital, -- depends can that common they're new is driver all being whether I look similar so have trying looking our and on wanting piece and will be assess the But the the to I their varies can or not. all by they kitchen the connected X.X they're formats. the of dine-in QSR. or with head, digital most and lower That's at programs. think whether ones my they're it, And to think the their think, off the ghost kitchen actively are a processes. development, and

Todd Brooks

customers you over bringing hurdle you're And that of if dive how involved some has customers, up just the in to this many KitchenConnect universe currently versus the with environment customers and get gotten helpful. at to are look of version That's actually kind new the KitchenConnect?

Bill Johnson

norm are I in, time. the the Yes, set and coming of resources a going and Every and number There's my continue people to off get we we it's more customers. coming this KitchenConnect. the more the more macro as of new have But staff head. -- think The it's for we're be all take add we'll actually new and people to week, that to new most into don't advantage on top And up inquiries adding -- of positioned there's do customers that area we're we're really trend. to well new people. having

Todd Brooks

cash flow side then of second And the great. Okay, just on the is free the house. question

it guess million some But I $X obsolete controller maybe was there's year-over-year. talked there. You about inventory; inventory about

You're building common inventories. controller

the are couple understand to then quarters? of Just what's out flow it's generated? inventory that just of And get in cash near-term? free some balances for outlook capital Should earmarked we debt any next towards the able the reduction over being Thanks. what -- the the

Bill Johnson


should we in So, least little as in bit the starts that continuing although build see on the a come more and bit -- then fourth we and are a over the well. inventory, quarter at to seasonal on work probably first, down a it pattern

Meanwhile, the in the did the bringing quarter. But start certainly, it is natural seasonally issued to maybe coming like you less and were out is on plants, brakes inventory your we to consolidate compressed. you've what little typically production and your first it stuff, you the back level – a we're we a – of on the of lag build you you if the to kind neutral, than the more in This like So, figure purchase maybe some controller. start fourth, a mentioning will the transitional put production take basis, and then, for eventually we just bit bit, supply can were we units plan sort that. eventually orders quarter chain down get we build a around in as the it Shanghai still quarter, backs inventory while of we building. that system put function down. be up have those a Crem industry load of then the your base we second production and into through facility, slow of We common to this that is have is so disrupted And and we're first you

way longer but substantial. We don't think plants. we're So improvements inventory all these run a out complicated to inventory continue around term, terms, should I don't I chain as we few it's that see of there. global not we things come what like supply course have – well line and with do will long, We term, a down. think their And longer have

continuous after And But some little cash of on we of improvements. get a I through generally, So this generation, it make guess. free yes, a the improvement, ramp-up commented we'll more be will I bit compression, still and got year, next some from do. on in things bit. the to that some ramping CapEx a little upgrades We've and IT into from last up year equipment kind run year this rate of of sort to

these of Some consolidations capital. some facility require actually

back get program the So we rest on of but go year we elevated debt will there'll deleveraging ago. still be Yeah, bit little talked to there. to CapEx, a paydown a about that want the

Todd Brooks

Thank you. Great.


with Your Liptak of from Seaport. line Walter next comes the question

Walter Liptak

morning, Good guys. Thanks. Hi.

Bill Johnson

Walt. Hey,

Walter Liptak

to dynamics. was you holding couple that alluded wonder, fourth up. pricing fact could seeing I fourth there come if I the might that Hey. of you pricing mentioned Have just about ask still the the been of the large build quarter? distributors the on to kind you pricing quarter. at – the not you And just in of talk you to things distributor want all some a be about in

Bill Johnson


January pricing has went So that pretty think in our I pleasantly been and held we up on pricing fortunate with well. we've that out surprised the

can think be not a haven't there. now. had is, work lot because deep probably project a We large I out of there's And discounting ton that a right of seen lot of

replacement of is what's type lot activity. of going a So on

going I we're as watching seasonality buy levels distributors I Mig's and see just either and and to see Marty But comments say that they're watching do. some we to watching from seeing are didn't would right now, they are. closely on. want inventory a what think as would I that, what's last their the large think about made the we But year, dealers still question. just

So –

Walter Liptak

on You part size Great. talked you those I an digital there's seeing you if Okay. positively you some think of wonder, the that you for of bigger I retrofit is what technology if opportunity? then idea have that? about to – using of of would Are the And controller. about a talked controller in? the customers the the getting mentioned

Bill Johnson

us a digital it, two a capabilities of about or It's retrofit everybody couple more give kind But what want is see to need Give early. we'll We've wants. capabilities. another just launched are. everybody talking the little Yeah. the so that. color on the kind all capabilities, of little quarter retrofitting what certainly, of you to a is quarters They

new more that – So opportunity I existing out equipment a we take think also they have all the in but X.X can retrofit there advantage equipment the us stuff. for to that digital, that's of that's KitchenConnect can good it's

Walter Liptak

on any guys for that quarter was us just warranty I issue. one is, last a out if that? wonder, the then refresh there is called And impact you fourth from Great. me Okay. you And regarding,

Marty Agard

other manufacturing There isn't that really overhead, EBITDA this warranty nothing bridge. particular That time. costs about what's was in special just describing me No, warranty was Walt. got there. labor We've in

since early We I -- guess XXXX, haven't the had of warranty issues for end year. – last

Walter Liptak

Okay, great.

you. Thank Okay.


do [Operator with from follow-up Mig of Dobre a question Instructions] You Baird. line have the

Mig Dobre

the stopped, Bill, into investment good invest a changed It little introduction terms thing. look new context in has give sounds which got as your pandemic. a like new is does pipeline continue the with look taking guys. good overall product you to But your how around XXXX? curious it kind hasn't like what for of you to thanks intros. and in this? product you Can see some of follow-up you've product guys us Hey, I'm it's that more

Bill Johnson

front. mean, from a the Yeah. the side actually robust. kept on pretty SG&A engineering we investment It's up I

So year. ovens, all spend, the next activity new all coming around Fresh the Blend, combi out fryers, digital the fryer XX-pound

we that business in would VAVE costs. the drive factories was the these allocated we key so the did of engineering it's this transformation, what I into to could took say we So invest in. some initiatives that those and running of continue then to downtime activity, we talent and continue when And all the weren't

innovation kept pipeline. I and able of -- we we decided So healthy elsewhere we in think to overall cut maintain spending, and to a development were spend pretty our

Mig Dobre

as then lastly, I if of salespeople And to you're customers curious shift yourself? dynamics, any the might or suppose such position in not you're other larger competitor's, investing terms of some your this a competitors Okay. be new I you product. smaller maybe Are in early that in a getting or I'm so. not, industry if do in shift to too sense there's players the from in know but know hearing any share is either from competitive don't

Bill Johnson


systems it's just little and difficult is digital the like aren't with these digital like able the think just that, to KitchenConnect The to going to Mig. revolution. do key be that. stuff up there, be I guys them connecting to very It's going for X.X to keep

that's in will I think result shift one forward. the key that going So share

Mig Dobre

Thank Okay. you.


at to questions Bill call remarks. time. like would to or further now turn no the for are I additional this back There closing over any

Bill Johnson

challenges employees management to stepping would to like focused our the really on again call, entire today's The team your I up end our stay COVID-XX strategic continuing we thank Before presented once the by for to appreciates pandemic efforts. priorities. while

to want will more a stronger company that is from Next, belief crisis I efficient. structurally Welbilt that leaner continued and my this reiterate emerge

opportunities on on to can advantages grow. innovation use where our focus customers will We our we the competitive leadership digital succeed help and and

opportunities win by culture of to as customer continue leveraging arise and innovation will We new service. business our

us will third day. this a abates. return morning, great concludes crisis and balance quarter call. have XXXX joining profitable the delevering and delivering earnings We This for this to Thanks sheet again today's growth as


conclude conference Ladies call. and today's gentlemen, does this

You lines. may disconnect your now