Welbilt, Inc.
Q1 2021 Earnings Call Transcript

Published: 9 May 2021

[Operator:]

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. At this time, I would like to turn the conference over to Rich Sheffer. You may begin, sir.

[Rich Sheffer:]

Good morning and welcome to Welbilt’s 2021 first 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 by the pending Middleby transaction. But beyond that, I won’t address it today as we continue to run our businesses independently. Before we get into our first quarter results, I want to share some details on the current market environment. Looking at the MillerPulse weekly same-store sales graph on Slide 3, you can see the recovery in the restaurant market since the historic drop that began in the second week of March 2020. QSR same-store sales have consistently been positive since early July. Most QSRs had more than 50% of their sales come through their drive-through windows prior to the crisis and now are also embracing delivery. As a result, they have been more resilient than casual dining restaurants who pre-crisis saw the majority of their sales tied to dine-in traffic. Same-store sales at casual dining restaurants began the quarter down 25% to 30% compared to the prior year and gradually saw the comparisons improved through mid-March when they lapped last year’s shutdowns. MillerPulse has now switched to presenting same-store sales comparisons to 2019 in order to show how sales are recovering relative to pre-COVID periods. As the chart shows, both QSRs and casual dining are positive through mid-April, following the latest government stimulus checks. We expect conditions to gradually improve for casual restaurant operators as temperatures are warming up enough to allow outdoor dining in colder areas and more and more people are getting vaccinated. The National Restaurant Association’s and Restaurant Performance Index rose to 100.1 in February. First time, it has reached 100 since the pandemic began and to 105.1 in March. Within the overall index, the capital expenditures component within the current situation index increased to 101.6 after being below 100 the prior 2 months. Likewise, the capital expenditures component within the expectations index remained healthy at 102.7. While the NRA is cautious to say that it doesn’t mean the industry has recovered and returned to normal growth, it is indicative of the improving conditions that were reflected in our first quarter results in the Americas.

[Marty Agard:]

Thanks, Bill and good morning everyone. I am going to start with Slide 10 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 persistent pandemic related volume headwind and more recent commodity and logistics inflationary headwinds. At 15.7% EBITDA margin, we are 190 basis points ahead of Q1 last year and 240 basis points ahead of 2019. This progress is not just the procurement or productivity elements of our transformation program, though those certainly contribute, but broadly our execution on pricing, warranty improvement, SG&A reductions and more.

[Bill Johnson:]

Before we end today’s call, I want to reiterate my continued belief that Welbilt is a stronger company that is structurally leaner and more efficient than we were at the beginning of the pandemic or when we began our transformation program in May 2019. We will continue to focus on opportunities where we can use innovation and digital leadership to help our customers succeed and grow. We will continue to leverage our culture of innovation and customer service to win the battle for brand preference. We will deliver improved margins and much improved free cash flow as this crisis abates. This concludes today’s 2021 first quarter earnings call. Thanks again for joining us this morning and have a great day.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference call. You may all disconnect.