Welbilt, Inc.
Q2 2021 Earnings Call Transcript

Published: 3 Aug 2021

[Operator:]

Thank you for standing by. And welcome to the Welbilt, Inc. 2021 Q2 Earnings Call. I would now like to hand the conference over to your speaker today, Richard Sheffer. Please go ahead.

[Richard Sheffer:]

Good morning and welcome to Welbilt's 2021 second quarter earnings call and webcast. Joining me on the call today is Bill Johnson, our President and Chief Executive Officer; and Marty Agard, our Chief Financial Officer. Before we begin our discussion, please refer to our Safe Harbor statement on Slide 2 of the presentation slides and in our earnings release both of which can be found in the Investor Relations section of our website, www.welbilt.com. Any statements in this call regarding our business that are not historical facts are forward-looking statements and our future results could differ materially from any expressed or implied projections or forward-looking statements made today. Our actual results may be affected by many important factors including risks and uncertainties identified in our press release and in our SEC filings.

[Bill Johnson:]

Thanks, Rich and good morning. I will start by simply saying I am excited about the pending Ali Group transaction and beyond that won't address it today as we continue to run our businesses independently. Beginning on Slide 3 of our presentation, our net sales increased 92% year-over-year the second quarter with organic net sales increasing 85.8%. We had now lapped the most disruptive quarter during the pandemic. While it's exciting to be talking to you about growth, it's important to note that our sales are still behind the pre-pandemic levels of 2019. The sales growing year-over-year, we delivered an adjusted operating EBITDA margin of 18.6% which is 900 basis point increase from last year second quarter. Adjusted diluted net earnings per share was $0.22 compared to the last $0.07 in last year's second quarter. And with the increased margin and earnings per share, our second quarter free cash flow is $31.9 million making us free cash flow positive year-to-date. On Slide 4, sales in Americas increased 87.4% in the quarter than the prior year with organic net sales increasing 85.3%. Volumes are recovering in the Americas but aren’t back to pre-pandemic levels yet when we compare 2021 to 2019. Americas are also benefitting more from a strong pricing environment than either EMEA or APAC. Sales to QSRs increased year-over-year in the second quarter driven primarily by an increase in non-repeating large chain rollout sales. We saw rollouts across our ovens, grills and hot holding cabinets with multiple chain operators. The general market sales to dealers and buying groups increased in the quarter across most of our brands. Finally, KitchenCare aftermarket sales increased again this quarter as more professional kitchens are open and equipment utilization is increasing driving demand for service. Looking at EMEA on Slide 5. Sales increased 134.1% with organic net sales were up at 110.9%. In total dollars, EMEA surpassed 2019 but that was the dollars in a large part due to the significant foreign currency tailwind.

[Marty Agard:]

Thanks, Bill and good morning everyone. I'm going to start with Slide 8 and the discussion of our adjusted operating EBITDA margin results. The broad theme here is we are pleased to see our executional progress being able to widely cover the gradually fading pandemic related volume headwind and more recent commodity and logistics inflationary headwinds. At 18.6% EBITDA margin, we are 900 basis points ahead of Q2 last year and 290 basis points ahead sequentially of this year's first quarter. This progress is not just the procurement or productivity elements of our transformation program, although will certainly contribute, but broadly our execution on pricing, warranty improvement, SG&A reductions and more.

[Bill Johnson:]

This concludes today's 2021 second quarter earnings call. Thanks again for joining. Thanks, have a great day.

[Operator:]

This concludes today's conference call. Thank you for participating, you may now disconnect.