Welbilt: Reports 2021 Fourth Quarter Operating Results

New Port Richey / FL. (ali) Welbilt Inc., on the way to be an indirect member of Italy’s Ali Group, announced financial results for its 2021 fourth quarter.

2021 Fourth Quarter Highlights

  • Net sales were USD 423.0 million, an increase of 32.2 percent from the prior year; Organic Net Sales (a non-GAAP measure) increased 32.3 percent from the prior year
  • Earnings from operations were USD 47.3 million compared to USD 40.6 million in the prior year; as a percentage of net sales, earnings from operations were 11.2 percent compared to 12.7 percent in the prior year
  • Adjusted Operating Ebitda (a non-GAAP measure) was USD 77.0 million compared to USD 60.0 million in the prior year; Adjusted Operating Ebitda margin was 18.2 percent compared to 18.8 percent in the prior year
  • Net earnings were USD 13.8 million compared to net earnings of USD 20.2 million in the prior year; Adjusted Net Earnings (a non-GAAP measure) were USD 25.0 million compared to Adjusted Net Earnings of USD 21.7 million in the prior year
  • Diluted net earnings per share was USD 0.10 compared to diluted net earnings per share of USD 0.14 in the prior year; Adjusted Diluted Net Earnings Per Share (a non-GAAP measure) was USD 0.18 compared to Adjusted Diluted Net Earnings Per Share of USD 0.15 in the prior year
  • Net cash provided by operating activities was USD 21.9 million, compared to net cash provided by operating activities of USD 41.9 million in last year’s fourth quarter; Free Cash Flow (a non-GAAP measure) was USD 13.2 million compared to USD 37.7 million in last year’s fourth quarter

2021 Full-Year Highlights

  • Net sales were USD 1,546.9 million, an increase of 34.1 percent from the prior year; Organic Net Sales (a non-GAAP measure) increased 31.9 percent from the prior year
  • Earnings from operations were USD 181.6 million compared to USD 63.1 million in the prior year; as a percent of net sales, earnings from operations were 11.7 percent compared to 5.5 percent in the prior year
  • Adjusted Operating Ebitda (a non-GAAP measure) was USD 275.4 million compared to USD 170.9 million in the prior year; Adjusted Operating Ebitda margin was 17.8 percent compared to 14.8 percent in the prior year
  • Net earnings were USD 70.3 million compared to a net loss of USD 7.4 million in the prior year; Adjusted Net Earnings (a non-GAAP measure) were USD 98.5 million compared to Adjusted Net Earnings of USD 23.1 million in the prior year
  • Diluted net earnings per share was USD 0.49 compared to diluted net loss per share of USD 0.05 in the prior year; Adjusted Diluted Net Earnings Per Share (a non-GAAP measure) was USD 0.69 compared to Adjusted Diluted Net Earnings Per Share of USD 0.16 in the prior year
  • Net cash provided by operating activities was USD 56.1 million, compared to net cash provided by operating activities of USD 15.0 million in the prior year; Free Cash Flow (a non-GAAP measure) was USD 30.2 million, compared to a USD 5.1 million use of cash in the prior year
  • Total liquidity was USD 407.6 million on December 31, 2021 and consisted of USD 134.2 million of cash and cash equivalents and USD 273.4 million of availability on the Revolving Credit Facility

Summarizing the Company’s fourth quarter performance, Bill Johnson, Welbilt’s President and CEO, stated, «Third-party Net Sales and Organic Net Sales both grew in excess of 30 percent this quarter compared to last year’s fourth quarter, which was materially impacted by the Covid-19 pandemic. We are pleased with our Adjusted Operating Ebitda and Adjusted Operating Ebitda margin performance despite the continued inflationary impacts from our supply chain and logistics providers, and productivity headwinds in some of our plants due to parts shortages and staffing disruptions. We offset the majority of these headwinds with the beneficial impact from increased volume, positive net pricing, the supply chain and productivity improvements we achieved as part of our Business Transformation Program and through the cost containment actions we put in place earlier in the year that continued to benefit us in the fourth quarter. Industry conditions have improved with the rollout of Covid-19 vaccines and fewer restrictions in many locations, although the Delta and Omicron variants resulted in temporary restrictions in some locations. We continued to build inventory in the fourth quarter to address ongoing supply chain challenges, which helped alleviate some manufacturing disruptions and shorten lead times to support our customers. While the investment in inventory reduced Free Cash Flow in the quarter, our balance sheet ended the year in its strongest position since before the pandemic began in terms of leverage and liquidity.»

Net sales increased 32.2 percent in the fourth quarter compared to last year’s fourth quarter. Excluding the impact from foreign currency translation, Organic Net Sales increased 32.3 percent, with strong growth coming from large chain customers, general market dealers and distributors, and KitchenCare® master parts distributors and factory-authorized service dealers. Over 85 percent of the growth in the fourth quarter was from higher volume versus increased pricing. The strong growth in the fourth quarter is compared against last year’s weak fourth quarter which was impacted by the Covid-19 pandemic.

Fourth quarter Adjusted Operating Ebitda increased 28.3 percent from last year’s fourth quarter while the Adjusted Operating Ebitda margin of 18.2 percent was 60 basis points lower than last year due to higher material and manufacturing costs, and increased selling, general and administrative expenses (net of adjustments for the Transformation Program expenses and other adjustments to SG+A that are included in our Adjusted Operating Ebitda reconciliation (Net SG+A)). These were partially offset by the incremental benefit to margins from higher volume and positive net pricing. Net SG+A costs increased primarily due to increased compensation expense and commissions reflecting higher incentives, the non-recurrence of government subsidies and other measures taken in the prior year in response to the impact from the pandemic.

Liquidity and Debt

Net cash provided by operating activities in the fourth quarter was USD 21.9 million compared to USD 41.9 million in last year’s fourth quarter. Net cash used in investing activities in the fourth quarter was USD 8.7 million compared to USD 4.2 million of net cash used in investing activities in last year’s fourth quarter. Free Cash Flow (a non-GAAP measure) was USD 13.2 million in the quarter compared to USD 37.7 million in last year’s fourth quarter. The decrease in Free Cash Flow in the fourth quarter versus last year’s fourth quarter reflects a use of cash for changes in operating assets and liabilities and an increase in capital spending. Capital spending was USD 8.7 million in the fourth quarter compared to USD 4.2 million in last year’s fourth quarter.

During the quarter, total debt and finance leases (including the current portion) increased by USD 12.1 million. Our ending cash and cash equivalents was USD 134.2 million, an increase of USD 22.3 million in the quarter. Total global liquidity was USD 407.6 million as of December 31, 2021, which consisted of the USD 134.2 million of cash and cash equivalents and USD 273.4 million of availability on our Revolving Credit Facility. Total global liquidity increased by USD 10.3 million in the quarter from USD 397.3 million as of September 30, 2021.

Additional Management Commentary

«We are pleased with our fourth quarter results in light of ongoing supply chain disruptions and inflationary pressure on materials and logistics costs,» said Bill Johnson. «The drivers of our fourth quarter sales growth were very similar to those of the third quarter. In the Americas, sales to strategic QSRs and fast casual operators increased over last year with improved demand for replacement equipment and stronger rollout activity by large chains across many of our brands. General market sales and KitchenCare aftermarket sales increased in the Americas. Both EMEA and APAC also saw year-over-year growth from strategic QSRs, general market dealers and KitchenCare aftermarket customers. With positive trends for incoming orders and historically high backlogs, we expect sales growth to remain strong for the next several quarters.»

«The combination of continued aggressive discretionary cost management, improved absorption of fixed costs due to higher volumes, improved net pricing and benefits from Transformation Program, allowed us to deliver an Adjusted Operating Ebitda margin of 18.2 percent in the fourth quarter. With the tools we developed as part of our recently-completed Transformation Program, we will focus on continually improving productivity in our plants and working on other initiatives to help offset production disruptions, parts shortages and inflation from our supply chain. This continued operational improvement, along with realizing benefits from both recent and upcoming price increases, is expected to deliver improved margins in 2022,» concluded Johnson.

bakenet:eu