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Welbilt Reports Solid First Quarter Operating Results

Delivers sales and EPS growth over prior year; reaffirms full-year guidance
 
New Port Richey, FL. - May 7, 2018 - Welbilt, Inc. (NYSE:WBT), today announced financial results for its 2018 first quarter.Delivers sales and EPS growth over prior year; reaffirms full-year guidance
 
New Port Richey, FL. - May 7, 2018 - Welbilt, Inc. (NYSE:WBT), today announced financial results for its 2018 first quarter.
2018 First Quarter Highlights
• Net sales were $350.4 million, an increase of 6.8 percent from prior year; Organic Net Sales increased 3.7 percent
• Net earnings were $12.5 million, an increase of 150.0 percent; Adjusted Net Earnings were $21.8 million, an increase of 105.7 percent
• Diluted net earnings per share were $0.09, an increase of 125.0 percent; Adjusted Diluted Net Earnings Per Share were $0.15, an increase of 87.5 percent
• Earnings from operations were $41.6 million, an increase of 17.8 percent; as a percent of net sales, earnings from operations were 11.9 percent, an increase of 110 basis points
• Adjusted Operating EBITDA was $55.3 million, an increase of 4.3 percent; Adjusted Operating EBITDA margin was 15.8 percent, a decrease of 40 basis points

2018 Guidance
• Net sales growth: between 7.0 and 10.0 percent (organic +1.0 to +4.0 percent, acquisition +5.0 percent, foreign currency translation +1.0 percent)
• Adjusted Operating EBITDA margin: between 19.5 and 21.0 percent
• Adjusted Diluted Net Earnings Per Share: between $0.80 and $0.90 per share, based on a forecast of 141.6 million fully diluted shares outstanding and including a $0.02 benefit from the acquisition of Crem International, inclusive of integration costs
 
"We are pleased to begin 2018 with strong organic growth, driven by new rollouts with large chain customers in both the Americas and EMEA,” said Hubertus Muehlhaeuser, Welbilt’s President and CEO. "Organic Net Sales increased in the Americas segment, with stronger hot-side product sales related to the rollouts more than offsetting lower KitchenCare® aftermarket sales. In the EMEA segment, Organic Net Sales increased with higher hot-side product sales related to a rollout with a large chain customer and higher sales of Merrychef® high-speed ovens. In the APAC segment, Organic Net Sales decreased due to lower Fabristeel® project sales and a decrease in KitchenCare aftermarket sales."
 
“Operationally, Adjusted Operating EBITDA increased year-over-year again for the 11th consecutive quarter driven by the continued solid execution of our Simplification and Right-Sizing initiatives and the benefits from higher volumes. However, our Adjusted Operating EBITDA margin decreased slightly as these benefits were offset by less favorable mix primarily from lower KitchenCare aftermarket sales, and from ramp-up costs related to the new rollouts that began this quarter. We see the impacts from mix and ramp-up costs as temporary and we expect to deliver higher year-over-year Adjusted Operating EBITDA - both in absolute dollars and as a percent of sales - in 2018."
 
"We are reaffirming our 2018 annual guidance today. We expect to continue benefiting from increased sales to large chain customers and for demand from general market customers to improve as we progress through the year. We expect to see gradually increasing benefits from our recently-announced customer wins and more immediate growth benefits from the Crem International acquisition. We expect our Simplification and Right-Sizing initiatives, hedging activities and additional price increases to offset the inflationary impacts from rising material and freight costs, which would allow us to achieve another year of margin and earnings growth," concluded Muehlhaeuser.
 
Segment Discussion
Net sales in our Americas segment for the first quarter were $280.2 million, a 4.7 percent increase compared to last year's first quarter. Third-party Net Sales were $249.9 million, a 5.1 percent increase (+4.5 percent organic, +0.6 percent foreign currency translation) compared to the prior year quarter. The Organic Net Sales increase was primarily driven by higher sales of hot-side products for new rollouts for large chain customers, partially offset by lower KitchenCare aftermarket sales. First quarter adjusted operating EBITDA in the Americas segment was $47.6 million compared to $46.8 million in the first quarter of 2017. As a percentage of net sales, adjusted operating EBITDA margin was 17.0 percent in the first quarter versus 17.5 percent in the same period last year, a decrease of 50 basis points. The decrease in adjusted operating EBITDA margin was primarily driven by unfavorable product mix, costs related to starting up the new rollouts and higher compensation expense, which were partially offset by savings from our Simplification and Right-Sizing initiatives.
 
Net sales in our EMEA segment for the first quarter were $81.0 million, a 19.5 percent increase versus $67.8 million in last year's first quarter. Third-party Net Sales were $64.1 million, an 18.9 percent increase (+4.6 percent organic, +14.3 percent foreign currency translation). The Organic Net Sales increase was driven primarily by higher sales of hot-side products for a new rollout with a large chain customer and strong Merrychef high-speed oven sales, plus higher KitchenCare aftermarket sales. First quarter adjusted operating EBITDA in the EMEA segment was $14.1 million compared to $12.8 million in the first quarter of 2017. As a percentage of net sales, adjusted operating EBITDA margin was 17.4 percent in the first quarter versus 18.9 percent in the same period last year, a decrease of 150 basis points. The adjusted operating EBITDA margin decrease was primarily driven by higher compensation expense and increased overhead costs, which were partially offset by savings from our Simplification and Right-Sizing initiatives.
 
Net sales in our APAC segment for the first quarter were $43.5 million, a 4.3 percent increase from $41.7 million in last year's first quarter. Third-party Net Sales were $36.4 million, unchanged from last year's first quarter (-3.3 percent organic, +3.3 percent foreign currency translation). The Organic Net Sales decrease was driven primarily by lower Fabristeel project sales and a decrease in KitchenCare aftermarket sales, partially offset by improved sales of hot-side products. First quarter adjusted operating EBITDA in the APAC segment was $5.5 million, unchanged from last year's first quarter. As a percentage of net sales, adjusted operating EBITDA margin was 12.6 percent for the first quarter of 2018 versus 13.2 percent for the same period in the prior year. The adjusted operating EBITDA margin decrease was primarily driven by increased overhead costs.
 
Liquidity Discussion
Net cash used by operating activities in the first quarter was $153.5 million compared to $164.4 million in last year's first quarter. Net cash provided by investing activities in the first quarter was $128.1 million compared to $111.0 million in last year's first quarter. Both the current year and prior year amounts for net cash used by operating activities and net cash provided by investing activities reflect the impact of the adoption of Accounting Standards Update 2016-15, which is applicable to accounts receivable securitization programs and requires gross presentation and classification changes between the operating and investing sections on the consolidated statements of cash flows including retrospective recasting of prior period information for comparability. Free Cash Flow was a $25.4 million use of cash in the quarter, a 52.4 percent improvement from a $53.4 million use of cash in last year's first quarter. During the quarter, net borrowings on our debt agreements increased by $54.9 million compared to an increase of $80.4 million in last year's first quarter. Our ending cash balance was $153.8 million, an increase of $25.4 million in the quarter. The majority of our cash is held by our international subsidiaries.
 
Conference Call and Webcast
Welbilt will host a live conference call to discuss its 2018 first quarter earnings on Monday, May 7, 2018 at 10:00 am ET. A live webcast, supplemental presentation slides and replay of the call can be accessed on the Investor Relations page at www.welbilt.com. The webcast replay will be available for 30 days from Monday, May 7, 2018 at 1:00 pm ET. The information on our website is not a part of this release.
 
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About Welbilt, Inc.
Welbilt, Inc. provides the world’s top chefs, premier chain operators and growing independents with industry-leading equipment and solutions. Our innovative products and solutions are powered by our deep knowledge, operator insights, and culinary expertise. Our portfolio of award-winning product brands includes Cleveland, Convotherm®, Crem®, Delfield®, Frymaster®, Garland®, Kolpak®, Lincoln, Manitowoc® Ice, Merco®, Merrychef® and Multiplex®. These product brands are supported by two service brands: FitKitchen®, our fully-integrated kitchen systems brand, and KitchenCare®, our aftermarket parts and service brand. Headquartered in the Tampa Bay region of Florida and operating 17 manufacturing facilities throughout the Americas, Europe and Asia, we sell through a global network of over 3,500 distributors and dealers in over 100 countries. We have approximately 5,800 employees and generated sales of $1.45 billion in 2017. For more information, visit www.welbilt.com.

Forward-looking Statements
Certain statements in this press release constitute “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Statements contained in this press release that are not historical facts are forward-looking statements and include, for example, statements relating to our anticipated acquisition of Crem, including the timing of closing the transaction and the anticipated benefits expected to be realized by us as a result of the acquisition. Certain of these forward-looking statements can be identified by the use of words such as “anticipates,” “believes,” “intends,” “estimates,” “targets,” “expects,” “could,” “will,” “may,” “plans,” “projects,” “assumes,” “should” or other similar expressions. Such forward-looking statements involve known and unknown risks and uncertainties, and our actual results could differ materially from future results expressed or implied in these forward-looking statements. The forward-looking statement included in this release are based on our current beliefs and expectations and speak only as of the date of this release. These statements are not guarantees or indicative of future performance. Important assumptions and other important factors that could cause actual results to differ materially from those forward-looking statements include, but are not limited to, risks related to the acquisition of Crem International, including the failure to obtain applicable regulatory approvals and close the transaction in a timely manner or at all, the results of Crem International’s operations prior to the closing of the acquisition, our ability to realize the benefits of the acquisition in a manner consistent with our expectations and general integration risks, world economic factors and the ongoing economic and political uncertainty; realization of anticipated earnings enhancements, cost savings, strategic options and other synergies and the anticipated timing to realize those enhancements, savings, synergies, and options; availability of raw materials and changes in raw material prices, commodity prices and hedges in place; the ability to generate cash and manage working capital consistent with our stated goals; changes in the interest rate environment and currency fluctuations; the successful development and market acceptance of innovative new products; actions by competitors including competitive pricing; consumer and customer demand for products; laws and regulations, including changes in laws and regulations and their enforcement around the world; and those additional risks, uncertainties and factors described in more detail under the caption “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017, and in our other filings with the Securities and Exchange Commission (“SEC”). We do not intend, and, except as required by law, we undertake no obligation, to update any of our forward-looking statements after the date of this release to reflect any future events or circumstances. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

For more information, contact:
Rich Sheffer
Vice President Investor Relations, Risk Management and Treasurer Welbilt, Inc.
+1 (727) 853-3079
richard.sheffer@welbilt.com
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