Welbilt (WBT)

Rich Sheffer Investor Relations
Bill Johnson President and Chief Executive Officer
Marty Agard Chief Financial Officer
Call transcript
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Good morning. My name is Fia and I will be the conference operator today. At this time, I would like to welcome everyone to the Welbilt, Inc. 2021 Q1 Earnings Conference Call. [Operator Instructions] At this time, I would like to turn the conference over to Rich Sheffer.

sir. begin, may You

Rich Sheffer

welcome XXXX and call quarter and webcast. to morning first Welbilt’s earnings Good

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

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

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

over to call turn to like would the I Bill. Now,

Bill Johnson

we run saying businesses am Middleby But won’t transaction. Thanks, today address I Rich I pending continue the our and excited beyond by by to morning. start as I good independently. will that, simply it

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

windows drop the X, graph prior XXXX. began MillerPulse been also their have now and weekly March QSR come that to since July. recovery drive-through are historic in positive Most the of the the can see at XX% embracing sales on since sales second the of the restaurant market week had in through more Looking sales than Slide their crisis early consistently delivery. same-store QSRs same-store you

gradually they sales casual pre-crisis result, the down when prior now have year dining comparisons has to Same-store of year’s to saw lapped to switched MillerPulse traffic. at sales a sales compared As XX% more restaurants and to relative resilient recovering through began their to comparisons casual dining sales how same-store the dine-in quarter the restaurants XX% presenting who the in been saw tied XXXX improved mid-March majority pre-COVID shutdowns. to to periods. they than show are order last

shows, chart As are dining the stimulus both checks. following QSRs and latest government positive casual mid-April, through the

vaccinated. casual getting outdoor improve in allow February. expect to are We dining more up are and Restaurant The warming Index and to and Association’s restaurant more National gradually conditions Restaurant Performance people enough in as temperatures for areas colder rose to operators XXX.X

it XXX since began time, reached XXX.X has in and March. First to the pandemic

the within Within prior component after the within index index Likewise, XXX expenditures XXX.X. the the XXX.X situation healthy the increased to remained at months. the expectations capital component overall being current X capital index, below expenditures

say of takeout start allowing second are will restrictions indicative dining most our that of Market last on quarter. restrictions it growth, have were quarter reflected still that countries the away the In improving be and eased NRA that spring. to home, returned is to in it delivery in to most and While normal expectations mean results the recovered has is compared Americas. the from through EMEA, cautious conditions but industry to doesn’t more the these first

likely with restrictions like that by improves. India. now the And that is of COVID cafés pandemic, have countries XX. and and still aggressively are Asia global on operating are vaccines phase will plans until distribution their between and China their and in vaccinated no APAC, already seen has primarily These those there Southeast impacted and France the trail May Australia restaurants In have significantly countries reopening reopen We begin announced recovery few the they population. the to UK a as split

organic was on of financial spin-off the free first up in made the order down either quarters, significantly and an in point last any first the possible month review progress operating year’s March the is declined last are in our care but quarter are with in years’ starting adjusted general team increased the in compared sales XXX-basis cash cases X%. due as we of by earnings really in down increased the our we’ve such for sales in actions program flow still use since to cost Americas first Slide smaller quarter rollouts ovens, market the the which March rollout saw had with being but end $X.XX in X.X%. excited sales non-repeating c-store we On $X.XX decreased by the Welbilt sales was net our year-over-year, to performance took net net chain diluted categories general We quarter share, multiple and hot first in see we the X.X% our year-over-year XXXX. X.X% which increased prior Sales X, a did from quarter. operating cash market, continued the increase grills, improve. by the rising large in tables We Along The XX.X%, equipment beverage in chain an the travel areas results, and EPS, quarter, remain year’s momentum margin refrigerated than sales in from Moving restaurants, first This the net year holding casual and on highest a delivered the with the month of to c-store X remained health to With to within quarter margin leisure from The increase made per XXXX. across impact transformation in markets EBITDA sales. primarily operators. pace year, of Americas X quarter. increased very in segment. recovery Adjusted Other driven presentation later with organic decreasing the was QSRs prior seasonal first education, Slide with use cabinets, quarter, the to our the segment. the picked cash. and of over COVID sales prep quarter our of usually last the about containment

busy orders We in market education season. to from for are beginning as see preparing start the their summer come they

in the American Rescue schools next for funding Act the quarters. by into the sales likelihood of the open strong in market being the two equipment provided and almost education With all will fall over We Plan the be believe person March. in learning of

Finally, first requiring KitchenCare since for began pandemic the kitchens the sales increased service. time as more aftermarket reopening and are professional

kitchens fourth implemented XX.X%, allowed larger quarter midway region XX.X%. ultimate Slide sales are the eventual from reopening had sales XX%. organic began in due with be chain decreased delivery, as were growth were opened were in the the for sales local region. percentage general the of KitchenCare quarter. in to they impacted restrictions sales and organic from the as down These in continuation down on On X, and in takeout aftermarket quarter EMEA of in sales market the Restrictions XX.X% fourth with generally line during preparing the this Declines than to they are Australia and the X, for also sequentially the increased net APAC quarter. decreased net at Looking fewer decreases the fourth through We many those fully Slide pandemic. sales countries China sales recovered again quarter. dine-out professional with Large

rest represent still seeing with the region and Southeast significant of XX% than and the being sales However, these in highly impacts from countries is APAC Asia, less Philippines our impacted. India of the COVID

and our inflation, have transformation quarter this again, X, our $X $XX which the increased run savings positively a once million progress. first period rising million We to the in inflation, we program, of impacted we savings have would rate million run our quarter. Moving results delivered a see in in progress over despite again, Slide so little new still on rate. delivered is of made approximately period Absent can the $X we

Looking on at new and most remaining agreements many which are of is has now the work qualification procurement the RFQ our new with implementing suppliers continuing and through to processes. going implemented current team product various opportunities testing responses, initiatives, presented by and

that from further increased see quarter, We positive inflation the continue savings netted the first us in kept when our procurement quarter. commodity against to in activities ramp-up which

Marty As P&L. sheet, which balance into capitalized also our also on inflationary have inventory flowing on we to will the be will discuss,

with we the see inventory obsolescence We transitional some suppliers will logistics to shift of costs. along escalation costs continue as and

example activities and procurement deliver savings. our opportunities our Engineering supplement Value can discrete Analysis continuous of initiatives will our are the close we dollar time to RFQ are to confident These complete our one We businesses. the provide the develop initiatives solution a right Value themselves how to RFQ that onsite our of for is improvement. We VAVE company into identified we have for the additional and great savings culture that transforming process process the continuing VAVE the will or original line, remain projects targeted

cost hopefully the materials of we final gradually receiving XXXX materials. which is realizing are of will ramp as of And timing volumes by With qualification completed. those lower savings into time, pre-COVID

rising from these purchase near-term, offsetting But have the Additionally, and remain are savings first expect initiated commodity, to and quarter. committed announced increase logistics and the the pressures through third generating that impact we components QX are with inflationary the for to we we in in we quarter the now have in increases price costs and QX. the seeing these

the we to plants currently make deploying to but broadly emerge seen of most in that only accelerate improvements. continue these sites, are North our X has transformation lessons our are sites manufacturing globally progress not learned program the part at as in gains American productivity of We

inconsistent these to have workforce. operations have with substantial smaller and of us been despite productivity gains dealing productivity volumes These production facilities. and gains in lower that shifts work a led some leaner against Some

of While taken more fabrication activities. continuing staff. contribute in XXXX will installed and through headcount these as We equipment, recent as related reductions some new additional the volume our they anticipate resulted We’ve fully improvements and planned rehiring we investments production integrated. have are productivity complete some delivery

where Louisiana, is to Shreveport, support additional we We One our on and have plant currently. are consolidations businesses. master plants two two had in working

the of and in other the in are this plants into consolidating months. have few expect completed next process to those one the one of We

by have plan EMEA of manufacturing this We and region initiated XXXX. consolidation to complete end the also the expect of in the

savings end of We planned that transformation the by expect to will XXXX. execution actions drive all complete the the

However, the to and manufacturing volumes will be sales timing of until delayed savings levels. realizing the return full pre-COVID

have small lowered cost and of ramping estimate, now in have program. $XX the costs, of between program million to be already down incurred related the the spend are total should to additional $XX our only $XX balance we program be of process the consulting We the there over million Since costs the the and these million. for

we new focus each. Marty, some developments have our related call. of featured controller show from Before X, benefits share sanitation enhanced a lot kitchen I on announced today’s recent turn to share will some All we our our trade other from I in rapidly shared that are product to our gross after On details position I our be call version the three to two want that for have of of some these are developments about with to a segment. we I the solution. begins virtual calls and recently be this launch offerings seeing market us, Slide growing and over product continue our to strong new initiatives. common highlighting recent last newest and want KitchenConnect, strategic Today,

a product contactless, These easy, shown by customers. are Solutions and convenient to first make their solutions food that for Merco Order restaurants the The powered Pickup self-serve is pickup Apex.

a have worldwide Apex licensing manufacture We these to distribute partnership and with cabinets.

AeroTherm the to of filter then of a periodically are feature filter for proven the product also user large-sized changing and This process. integrates the extending powered and recontamination Bluetooth-enabled thermal the pathogenic to Portable reduce AeroTherm life during of bacteria separate to units These expose interface. years. Trotec. regenerating XX.XXX% the rooms Second for scientifically and its has decontamination filter new medium benefit viruses X by WiFi is and up risk Air the process to Purifier

can see easily can conditions make By into rooms. to air areas to operators distributor quickly the it being readings. U.S. adjustments based decontaminate Welbilt these on moved additional So is facility a of portable, real-time AeroTherm quality the be in exclusive within

threat great each or either provide that among restaurant air examples products These partner turn safety. that, development we highest internal the growth customers. to or Nuovair to can Roll-In food, featured The how chillers rate and new airflow deliver the also cooling blast third our bacterial pickup, with times These limit our to Marty. provides to XX% is opportunity call is Blast for food to for supplement these from allow product the three and Welbilt enhanced during new bring chillers the new Chiller. immediately through over the a in all offerings product significant sanitation Common safer in the have Chiller. critical of a industry efforts. value-added the kitchen faster full-size These the Convotherm the Canada. cleaner is Blast exclusive be market companies Nuovair They well racks to are units I these process. blast innovative With new rolled distributor U.S. Oven will benefits improve for and chilling of Combi in removed into the

Marty Agard

This good the pleased to we elements inflationary the pricing, contribute, headwinds. Bill XX widely pandemic are headwind and adjusted results. ahead EBITDA of am of XXX execution more. more see SG&A of and basis to though our those recent reductions basis commodity being the and our program, and The improvement, to ahead broadly progress EBITDA is last margin, progress our I year Slide going procurement margin At logistics on certainly executional cover XX.X% XXXX. and but of here productivity QX warranty operating just Thanks, or everyone. with points not volume related our morning start we transformation persistent broad are is points able XXX discussion theme and

from XX decline This working X% that that in the and quarter. versus which went first partially early sales positive aftermarket effect of XX quarter effect list profit Slide as in we and mitigated increases the APAC the points had the it’s against level, the in mid EMEA price of the by pricing basis went pricing, from decline So year, quarter. volume, KitchenCare a specifically, measure and impact partial increase prior at drove netted net we quarter net benefit price into into our gross reflects the organic a the

the were this contributor We to Material the did quarter. point a at second costs, to the related into expect a partial through year. transformation programs the procurement offset XX get went end reflection net first activities, particularly of basis savings we our which list are quarter. in so still in quarter. prior ramping related costs and rising and manage costs, from quarter pressures increased the including is effect inconsistencies. the quarter to second that increase the logistics benefit the tariffs, vendor a in price the operating coming are compared Americas the quarter This These up fully continuing positive from of both chain pandemic overseas, far Inflationary but first quarter as supply commodity are constraints

quarters, our likely increasing price labor, present Other in contributor to headwinds XX believe overhead expanding recent be we margin. point warranty and through effective but were a will and program basis the our that, in transformation margins be XXXX. expenses, our expect manufacturing effort mainly these despite and We positive to increases next few

We this continue quarter. environments flex production to again to effectively lower expense our volume

we that head productivity have our on We holding back the minimize into count have plants gains are and to worked the brought to made.

our into transformation plants are and chain Looking labor ahead, will expanding in we volume headwinds program supply strategies the related tailwinds. expect across XXXX, turn

the March also this the to fees, basis the on Bill most early enable we our points SG&A actions by in SG&A basis marketing the travel towards were the professional equipment of within lower in encouraged in costs are two took XXXX. contain continue area. the urgency several and pandemic as quarter. the those in contributed contribute and an We planned mentioned. organization’s favorability in facility improvement to Many adjusted have SG&A over actions and Like aggressive to few categories us footprint, We XX spending upgrades action margin to expenses next show manufacturing quarters consolidations, impact quarter the more of executing remain favorable. emerged as all SG&A we and

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

the reconciliation track the can in release. You earnings specifics non-GAAP schedules through our

larger FX to than benefit a normal provided Finally, quarter. margin our this

Moving to free million XX, the a cash Slide cash use $XX flow was in of quarter.

pay in three of As cash in then customer we generate free a experience our remaining reminder, use quarter first inventory the and lower seasonal incentive flow stronger rebates traditionally annual quarters. We compensation, as was and seasonally flow cash build seasonally a volumes. the cash

Our is accrual of quarter, the with a and the end capital improvement payable. earnings consistent first both our receivables performance is and capital both of in and XXXX managed. at XXXX years, seasonal in capital along balance prior spending from we program significant and due well to improvements Working with cash based with have inventory quarters sheet the our and working free strong remains was and flow in first cash investment improvements. impacting both to related increases quarter Also transformation this made, traditional year’s Overall, a attributable the quarter use accounts is program. in March higher

QX in we $X down For from million million capital, $X spent last the quarter, year.

similar upgrades, is initiatives. facility IT reflected innovation expect to to for SG&A restructuring. CapEx investments, XXXX investment continue in both and planned We in to with transformation and product XXXX new investments spending The more be levels program equipment

$XX $XX range. million approximately $XX to spent million cost we of incurred total XXXX. the the down million with original and program spend charges million, $XX million of began combined to the now from the estimated million program since million reported the have transformation-related the QX, in to after in $X.X the we And May SG&A, For inception, lowered restructuring $X $XX million $XX since in we’ve have

We finish in spending expect to later the XXXX. incremental

headroom. pandemic on short-term we the restricted $XX end since with by of well million liquidity, to overall end, ended $XX cash million, in a the compliance million year decrease from QX liquidity increased expenditure our million March. of covenants, pleased $XX balance less at during and effect Cash amended for on define investments significant availability and million be cash debt revolver, quarter, at this where equivalents liquidity, were liquidity the the which we our In by are covenants our flow definitions. XXXX the credit by agreement cash in We total last into levered our of and first back on a we plus very than comes in agreement and with $XX Moving plus the with XXXX. One our comment that accounting the $XXX increased QX, our liquidity, free with will leverage performance and of as end ahead cash capital we time, while and quarter. of X.XXx we summary, the to measured remain of last decrease as quarter ratio EBITDA need at credit began

the on and finished see this quarter EBITDA slide, to at can the generated cash you the year, first year’s As improve expect quickly last we improvements to free X.Xx positive in and we flow. relative this with

compliance in expect be XXXX. headroom with We in sufficient our to covenants with

Finally, I to share on XXXX. thoughts few would like updated a

in growth be but with QX meaningful won’t regards compared or reach expect to XXXX. XXXX that pre-pandemic deliver level. XXXX, expect to Similarly, the EBITDA currently from to to XXXX, year significant show We we believe full our including expansion we we margin, XXXX back pre-pandemic to don’t in continue growth to will levels that XXXX

we pressures any fully implemented continued mitigate margin we we increases price are in and to near-term the to until benefiting implement from expect inflation. additional QX We inflationary limit expansion increases

are remain Bill As the working. a see And actions we we on basis, on project-by-project stated, materializing. can savings clearly transformation confident the

actions balance recovered. ensure pricing We the QX deliver at game are out the quarters we comments. to the for in and and program’s of That on mature my ahead, to our plan the transformation inflation, have through the managing inflation and objectives least margin a ahead in when track current program concludes is has cycle by the market come

mentioned be will to back the question-and-answer turn I session over the Bill will the his Rich for at closing a As we call, remarks. beginning With call of not conducting today. that,

Bill Johnson

more call, belief began the today’s company that were leaner beginning end efficient we we in pandemic reiterate or May the when I of we stronger continued than that is to at XXXX. my a our Welbilt transformation want Before is program structurally and

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

and to preference. will leverage the service win brand We innovation for our to of continue customer battle culture

morning deliver flow quarter improved first cash and improved margins us again earnings will a XXXX great Thanks as this concludes day. We abates. joining this for This free much crisis have call. today’s and


today’s gentlemen, for conference and Ladies call. thank you in participating

event] may You Q&A for [No disconnect. all session this