Investor Presentation. February 15, 2017

Transcription

1 Investor Presentation February 15, 2017

2 Safe Harbor Statement Any statements in this presentation regarding our business that are not historical facts are forward-looking statements. These statements are based on the current expectations of the management of the company and our future results could differ materially from any 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 releases and in our SEC filings. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or other circumstances. 2

3 Agenda 1. Welbilt Introduction 2. Global Foodservice Equipment Industry 3. Strategy 4. Financials

4 Our heritage in the industry stretches back over a century, and our experience and expertise has grown tremendously over the years Berisford WELBILT Henry and Berisford Berisford The Manitowoc Manitowoc Foodservice and now, we Alexander Hirsch acquires Welbilt changes its name Company spins-off from The are Welbilt establish the 1902 Corp. in the to Enodis 1971 plc acquires Enodis Manitowoc 2008 Company Welbilt Stove Co. United States 1955 Welbilt acquires Detroit-Michigan Stove Co (parent company of Garland) to become Welbilt Corp Frymaster joins the portfolio Convotherm and Delfield join the portfolio 1966 Manitowoc Ice begins producing ice-machines 1995 MTW acquires Kolpak 2000 Merrychef and Multiplex join the Cleveland 1994 Range portfolio and Merco join the portfolio 2015 MFS launches its fitkitchen ( food inspiring technology ) initiative 1994 Lincoln joins the portfolio 4

5 Welbilt at a Glance 2016 Revenue $1.5B by Region 73% Americas 16% EMEA 11% APAC Offering: End Markets: Channels: Employees: Presence: Capabilities: Full-line of hot/cold products & systems All commercial kitchen operators distributors & dealers Approx. 5,500 globally 36 locations in 12 countries World class design, manufacturing, parts & service by End Market 1 by Channel 2 Other 2% Travel & Leisure 8% Other General Markets 7% Other Chains 4% Healthcare 8% Education 6% Retail 8% Business & Industry 10% Restaurants 58% Key Accounts 22% Dealers, Dealers, Distributors, Buying Buying Groups Groups 64% 67% 1 Estimate for WBT Americas 2 Reflects gross sales for Includes all third party product sales. 5

6 Full Line Product Offering with Leading Brands brands that command #1 or #2 market share positions System Solutions Beverage Equipment Freezers & Prep. Stations Combi- and High Speed Ovens Walk-in Refrigeration Commercial Ranges, Grills, and Induction Ice-cube machines Commercial Fryers, Hot Holding Cold products (~40-45% revenue) Hot products (35-40% revenue) Parts & Service (~15-20% revenue) 6

7 ... and a Broad Range of Supporting Services for our Channel Partners and End Customers Finance Solutions KitchenCare University StarChef Program 7

8 Long Standing Customer Relationships with large End Customers as well as US Channel Partners Large End Customers typically designated as Key Accounts Top 5 Global End Customers 2016 Customer % of FY16 Revenue # of Years¹ End Customer 1 8.1% 54 End Customer 2 3.8% 27 End Customer 3 3.2% 57 End Customer 4 2.0% 35 End Customer 5 1.8% 30 Over 40 years average relationship with our top 5 end customers and 20 years average relationship with our top 5 dealer customers US Channel Partners typically referred to as General Market 1 Source: Company estimates. Top 5 North America Dealer Customers 2016 Customer % of FY16 Revenue # of Years¹ Dealer Customer 1 7.5% 29 Dealer Customer 2 6.9% 8 Dealer Customer 3 5.7% 8 Dealer Customer 4 3.6% 28 Dealer Customer 5 3.1% 26 8

9 Stable Revenue Base from Significant Replacement Demand and Large Installed Base Predictable product replacement cycles support stable Welbilt revenue Provides recurring, higher margin revenue and aids in maintaining customers 2017 U.S. Foodservice Equipment Needs 1 Site Expansion/ Add l Dayparts 9% Renovations 23% Eco Friendly 5% New Construction 19% Replacement 44% KitchenCare KitchenCare protects, services, and maintains foodservice equipment throughout the product lifecycle Each new piece of Welbilt equipment comes with KitchenCare warranty Multiple levels of support available, depending on customer need Provides a stable source of recurring revenue 2/3 of demand expected to be driven by replacement and renovations in 2017, supporting stable revenue base ~15-20% of revenue generated by stable KitchenCare aftermarket parts and service offering 1 Foodservice Equipment and Supplies 9

10 Awards & Recognitions for Leading Product Innovations 10

11 Agenda 1. Welbilt Introduction 2. Global Foodservice Equipment Industry 3. Strategy 4. Financials

12 Positive Industry Fundamentals Population & Income Growth New Concepts & New Markets Steadily Growing Foodservice Industry Health & Safety 12

13 Increasing Global Population & Income Global Population Growth Global Population (billions) Source: U.S. Census Bureau, International Data Base, July 2015 Update The global population has tripled since the 1950s and is expected to reach over 9 billion by 2050 Global per capita income is expected to exhibit continued growth over the period Global per capita income Growth Index (1950 = 100) Eating-out culture is growing, driven by: Increasing disposable incomes Hectic lifestyles Trend Growth Line, GDP per Capita (Constant US$) Source: Global Monitoring Report, UN Statistical Yearbooks and Publications, IMF International Financial Statistics, IMF World Economic Outlook and IMF Staff Estimates. 13

14 46 Years of Restaurant-Industry 1 Sales Demonstrate Non- Cyclicality of Foodservice Industry (1.0) (2.0) (3.0) Real (inflation-adjusted) percentage growth National Restaurant Association defines restaurant industry as encompassing all meals prepared away from home including all takeout meals and beverages. Source: National Restaurant Association, 2016 Restaurant Industry Forecast 14

15 The Rise of New Dining Concepts & Untapped Markets New Dining Concept Growth Untapped Markets Room to Grow Build Your Own Format # of Chain Restaurants per 1M People 1 Revenue % USA % $4.4B China % $200M Brazil Source: 2016 Technomic Inc. Top 500 Chain Restaurant Report 1) Euromonitor, May 2016, based on full service restaurant units 15

16 Global Health & Food Safety Concerns also Drive Foodservice Equipment Demand Food safety a top priority Professional foodservice equipment facilitates proper food handling and reduces the risk of infection Environmental sustainability Reduction of unusable portions and waste Preventing premature food spoilage Food Shippers in the U.S. Face New Rules April 5, 2016 New salmonella outbreak in chicken resists antibiotics October 8, 2013 Food safety: Five things to watch out for May 23, 2016 Celebrity Chefs Hope to Press Congress on Food Waste May 25, surprising ways warmer temperatures will change our food April 5, 2016 Americans' Spending on Dining Out Just Overtook Grocery Sales April 14,

17 Foodservice Operator Cost Pressures Are Fueling Demand for Innovation Increasing Labor Cost Increasing Energy Cost Need for Waste Avoidance Targeted Innovative Product Solutions & Systems with Short Payback Increasing Real Estate Cost 17

18 Product Solutions Deliver Short Payback For Operators Solution Performance Benefit to the Operator Typical Payback Multiplex Blendin-Cup Combines core MFS technologies: ice machine, beverage dispensing, blending and automated cleaning Single piece of equipment to do multiple beverages vs. multiple pieces of equipment to do one beverage Dispense, blend and serve in the same cup serves hundreds of beverages per day Reduces waste and saves labor Drives incremental revenue & profitability An average of 70 drinks per day provides an operator payback as short as 6 months Merrychef eikon e2s Up to 15x faster than conventional cooking methods: Toasted sandwich in 50 seconds Ventless countertop oven with easy plug-n-play installation Speed of service to meet consumer demand in all segments Flexibility to cover any part of the day with high quality food Easy to use small footprint with big production Certified ventless Allows menu expansion to drive incremental revenue & profitability An average of 150 food items sold a day provides an operator payback as short as 3 months Due to versatility of Merrychef technology, further savings and quicker ROI can be obtained from removal of multiple appliances that Merrychef eikon e2s replaces Convotherm 4 Multi-use and flexible foundation of the kitchen Superior menu versatility with unwavering quality Simplifies & optimizes kitchen operations Extremely flexible Delivers the highest quality, mosteven cooking results possible The new standard for flexible, reliable self-cleaning Robust, high quality and reliability Reduced operating costs An average of 150 food items sold a day provides an operator payback as short as 4 months Due to versatility of Convotherm technology, further savings and quicker ROI can be obtained from removal of multiple appliances that Convotherm 4 replaces 18

19 kitchenconnect Will Drive Further Benefits Through Digitalization & Analytics Comprehensive In-Field Support The Heart of the Kitchen Capex -> Opex New Business Models Functions to Help Streamline... Installations and Roll Outs Demand Driven Ventilation Refrigeration Menu Management and Recipe Downloads Predictive & Preventive Maintenance Other building systems Lighting Alerts & Actions Start-ups Repairs / Smart Dispatch 19

20 fitkitchen Takes a Systems Approach and Will Drive Toward Optimization of the Entire System Kitchen 4.0 as in Industry 4.0 Back of House Systems Optimization Labor Productivity Enhancement Equipment Connectivity, Analytics and Remote Management Drive Through Optimization Inventory Management In Store Traffic Analytics Front of House Optimization Kitchen Management and Control 20

21 Positive Fundamentals and Industry-Specific Drivers Will Provide Steady Foodservice Equipment Industry Growth Global Industry Size (2016) 1 US$ Million Total Industry: $20,228 M Tracked Industry: $17,493 M Global Industry Development ( ) 2 US$ Million CAGR* 4.4% CAGR* 3.8% 3,925 2,736 16,064 16,728 17,493 18,122 18,819 19, ,894 4,810 6,112 Non-Tracked Hot Side Beverage Non-Addressed Cold Side Aftermarket *CAGR = Compound Annual Growth Rate 1 Source: Company estimates. 2 Source: Company estimates. 21

22 Agenda 1. Welbilt Introduction 2. Global Foodservice Equipment Industry 3. Strategy 4. Financials

23 Vision, Mission & Values Set the Ambition Vision We are the global leader in professional foodservice equipment and systems. Mission We create value for customers, employees and shareholders by integrating food, technology and people to build and deliver the highest quality, innovative products and systems, offer best-in-class global service, and enable healthy and safe food experiences. Values INTEGRITY PASSION TEAMWORK ENTREPRENEURSHIP ACCOUNTABILITY 23

24 Clear Strategic Objectives and Thrusts... Strategic Objectives Achieving Profitable Growth Creating Innovative Products & Solutions Driving Operational Excellence Guaranteeing Customer Satisfaction Developing Great People Strategic Thrusts Strive for # 1 or #2 market share in every segment addressed Grow organically short term, buy and build mid-term to outgrow market Right-size and simplify to improve profitability Create game-changing product & system solutions in the entire kitchen Actively address product competitiveness and lifecycle extensions Move to global platforms to enhance cost position Move assembly closer to end markets and localize products Use strategic sourcing to streamline vendor base Drive lean manufacturing principles throughout the organization Grow KitchenCare parts & service to a bigger proportion of total business Enhance process and delivery planning Develop next generation distribution Provide incentive schemes that motivate and drive performance Identify, develop and grow key talent Make Welbilt the employer of choice in our industry 24

25 ...are the Levers that will Bridge the Gap to our Margin Ambition The 1000 BPS Challenge 2015 EBITDA Margins Midteens Business Simplification Business Right Sizing Product Cost & Platforms Lean Manufacturing & Supply Chain New Products and Systems...gap closure is a multi-year journey. Parts & Service EBITDA Margin Ambition Mid- to hightwenties 25

26 2017 Priorities 1 Deliver profitable growth and operational excellence objectives 2 Drive new product and new system solutions to fuel sales growth 3 Delever the balance sheet 4 Develop acquisition pipeline 26

27 Agenda 1. Welbilt Introduction 2. Global Foodservice Equipment Industry 3. Strategy 4. Financials

28 2016 Fourth Quarter Results Operational improvements delivering solid margin growth US$ in millions 2016 Q Q4 Δ Organic net sales in constant currency 1 $387.7 $ % - FX translation impact (9.0) --- (2.5%) Organic net sales 1 $378.7 $ % Adjusted Operating EBITA margin % 16.5% +80 bps Amortization expense ($7.7) ($7.8) Net interest income (expense) ($24.7) $1.9 Other income $0.5 $19.9 Effective tax rate 30.7% (4.0%) Adjusted net earnings 1 $22.8 $75.2 (69.7%) Adjusted EPS 1 $0.16 $0.55 (70.9%) 1 Non-GAAP measures. See Appendix for GAAP presentation and reconciliations of non-gaap measures. 28

29 2016 Full Year Results Completed 1/3 of 1000 bps margin journey US$ in millions 2016 FY 2015 FY Δ Organic net sales in constant currency 1 $1,483.0 $1, % - FX translation impact (26.4) --- (1.8%) Organic net sales 1 $1,456.6 $1, % Adjusted Operating EBITA margin % 13.4% +330 bps Amortization expense ($31.2) ($31.4) Net interest income (expense) ($85.3) $14.4 Other income (expense) ($9.1) $22.1 Effective tax rate 24.1% 20.0% Adjusted net earnings 1 $87.1 $168.9 (48.4%) Adjusted EPS 1 $0.62 $1.23 (49.6%) 1 Non-GAAP measures. See Appendix for GAAP presentation and reconciliations of non-gaap measures. 29

30 Simplification and Right-Sizing Initiatives Key to Margin Improvement Focus on operational initiatives that are aimed at long-term profit growth and improved customer service and satisfaction Started implementation of an aggressive program to right-size the business and drive efficiency Simplification 80:20 product and customer line simplification and rationalization Improved manufacturing efficiency and productivity improvements KitchenCare operating improvements Right-Sizing Plant rationalizations to address 20% manufacturing overcapacity (15% of 20% addressed to far) Headcount reductions (completed) Savings expected by end of 2017: ~$100 million $12 million in 2015 $57 million in 2016 Balance in

31 2017 Full-Year Guidance Details Organic sales growth in constant currency Adjusted operating EBITDA margin Amortization expense Depreciation expense Interest expense Down 1% to up 2% Between 18.5% to 20% range (excludes separation, restructuring and asset impairment expenses) Between $30 and $33 million Between $16 and $19 million Between $85 and $90 million Effective tax rate Between 29% and 32% Adjusted diluted EPS Between $0.65 and $0.75 per share range (excludes separation, restructuring and asset impairment expenses) Capital expenditures Debt paydown Between $23 and $28 million Between $100 and $120 million 31

32 Appendix: Additional Materials 32

33 2016 Fourth Quarter Results - GAAP US$ in millions 2016 Q Q4 Δ Net sales $378.7 $391.7 (3.3%) Earnings from operations margin 14.5% 10.4% +410 bps Amortization expense ($7.7) ($7.8) Net interest income (expense) ($24.7) $1.9 Other income $0.5 $19.9 Effective tax rate 30.7% (4.0%) Net earnings $21.4 $65.1 (67.1%) Diluted EPS $0.15 $0.48 (68.8%) 33

34 2016 Full Year Results - GAAP US$ in millions 2016 FY 2015 FY Δ Net sales $1,456.6 $1,570.1 (7.2%) Earnings from operations margin 13.7% 10.2% +350 bps Amortization expense ($31.2) ($31.4) Net interest income (expense) ($85.3) $14.4 Other income (expense) ($9.1) $22.1 Effective tax rate 24.1% 20.0% Net earnings $79.5 $157.1 (49.4%) Diluted EPS $0.57 $1.15 (50.4%) 34

35 2016 Fourth Quarter Organic Net Sales in Constant Currency (US$ in millions) 2016 Q Q4 Net sales $378.7 $391.7 Less: Kysor Panel Systems sales --- (23.1) Plus: Welbilt Thailand sales Organic net sales $378.7 $369.0 Foreign currency translation Organic net sales in constant currency $387.7 $

36 2016 Full Year Organic Net Sales in Constant Currency (US$ in millions) 2016 FY 2015 FY Net sales $1,456.6 $1,570.1 Less: Kysor Panel Systems sales --- (122.1) Plus: Welbilt Thailand sales Organic net sales $1,456.6 $1,454.9 Foreign currency translation Organic net sales in constant currency $1,483.0 $1,

37 2016 Adjusted Operating EBITA by Quarter (US$ in millions) Q1 Q2 Q3 Q4 FY2016 Net earnings $18.1 $15.1 $24.9 $21.4 $79.5 Incomes taxes Other (income) expense, net (0.5) 9.1 Interest (income) on notes with MTW, net Interest expense Asset impairment expense Restructuring expense Separation expense Amortization expense Adjusted Operating EBITA $45.8 $59.3 $72.1 $65.5 $242.7 Adjusted Operating EBITA margin % 16.1% 18.8% 17.3% 16.7% 1 Adjusted Operating EBITA margin is calculated by dividing the dollar amount of Adjusted Operating EBITA by net sales. 37

38 2015 Adjusted Operating EBITA by Quarter (US$ in millions) Q1 Q2 Q3 Q4 FY2015 Net earnings $14.0 $36.9 $41.1 $65.1 $157.1 Incomes taxes (2.5) 39.3 Other (income) expense, net (0.4) (0.2) (1.6) (19.9) (22.1) Interest (income) on notes with MTW, net (4.7) (4.6) (4.2) (2.3) (15.8) Interest expense Asset impairment expense Restructuring expense 0.7 (0.2) Separation expense Amortization expense Adjusted Operating EBITA $24.2 $57.7 $63.6 $64.6 $210.1 Adjusted Operating EBITA margin 1 7.0% 14.2% 15.0% 16.5% 13.4% 1 Adjusted Operating EBITA margin is calculated by dividing the dollar amount of Adjusted Operating EBITA by net sales. 38

39 2016 Adjusted Net Earnings and Adjusted Net Earnings per Share by Quarter (US$ in millions) Q1 Q2 Q3 Q4 FY2016 Net earnings $18.1 $15.1 $24.9 $21.4 $79.5 Asset impairment expense Restructuring expense Separation expense Tax effect of adjustments (1.5) (0.7) (1.2) (1.3) (4.7) Adjusted net earnings $20.9 $16.0 $27.4 $22.8 $87.1 (US$) Q1 Q2 Q3 Q4 FY2016 Diluted earnings per share $0.13 $0.11 $0.18 $0.15 $0.57 Asset impairment expense per share Restructuring expense per share Separation expense per share Tax effect of adjustments per share (0.01) --- (0.01) (0.01) (0.04) Adjusted net earnings per share $0.15 $0.12 $0.20 $0.16 $

40 2015 Adjusted Net Earnings and Adjusted Net Earnings per Share by Quarter (US$ in millions) Q1 Q2 Q3 Q4 FY2015 Net earnings $ $41.1 $65.1 $157.1 Asset impairment expense Restructuring expense 0.7 (0.2) Separation expense Tax effect of adjustments (0.2) (0.2) (0.7) (5.9) (7.0) Adjusted net earnings $14.5 $37.0 $42.2 $75.2 $168.9 (US$) Q1 Q2 Q3 Q4 FY2015 Diluted earnings per share $0.10 $0.27 $0.30 $0.48 $1.15 Asset impairment expense per share Restructuring expense per share Separation expense per share Tax effect of adjustments per share (0.01) (0.05) (0.06) Adjusted net earnings per share $0.10 $0.27 $0.31 $0.55 $

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