Welbilt, Inc. (NYSE:WBT) Q3 2019 Earnings Conference Call - Final Transcript

Nov 05, 2019 • 10:00 am ET


Welbilt, Inc. (NYSE:WBT) Q3 2019 Earnings Conference Call - Final Transcript


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BiIl Johnson

continued to make great progress at both of our Wave 1 North American manufacturing plants and see them on schedule with their planned activities. started to take delivery of new fabrication equipment at the plants and will install tests and go into production with this equipment over the next few months. continued to improve the layouts of our assembly lines and where we've done that we've seen efficiencies and lead times improve significantly. As we finish installing the new fabrication equipment and continue expanding line flow changes over the next one to two quarters, we expect to begin driving the cost out of these operations.

We began work on our third North American manufacturing plant in September. It signifies that we have moved into the second of four waves of our Transformation Program. We are applying learnings and people from the first two plants that should allow us to move faster with this plant. We have also accelerated KitchenCare originally scheduled in Wave 3 and the Wave 2 and have launched their planned activities. We'll report progress on both next quarter.

We remain on track to deliver the targeted savings we envisioned. The first two plants from Wave 1 and our procurement team have identified additional savings above their original plans, which gives us higher confidence of achieving our targets. As a reminder, there is an unavoidable lag from identifying and implementing our new processes and ideas. We're seeing efficient gains on those lines, reducing head count and other costs at the facilities. We're seeing those cost reductions run through inventory and finally to the income statement.

This is why we are only expecting a small benefit in 2019 from these actions and really only seeing a meaningful ramp up in the second half of 2020 reaching our previously established target of approximately $30 million of annualized run rate savings by the second half of 2020.

With that, I'll turn the call over to Josef for a summary of our segment results.

Josef Matosevic

Thank you, Bill, and good morning, everyone. I will make a few comments and our top line results within the segments. Starting on Slide 5 with the Americas, sales were relatively consistent with prior year. We continue to see growth in the general market as sales increased with the majority of our buying group customers. We have been striving to cultivate improved relationships at both the buying group level and the dealer level and see this as stronger than they have ever been. We remain fully committed to the channel.

We saw a slowdown in projects with the large chain customers beginning in the middle of the quarter, disappears to be a push out of demand with some large customers as we haven't seen projects get canceled, but we don't have visibility at this time on when they will start up again. Finally, KitchenCare aftermarket sales declined slightly in the quarter mainly from aftermarket part sales to large chains. We did see growth in KitchenCare sales to the