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TRANSCRIPT
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.
© Manitowoc Foodservice, Page 2
Agenda
1. Manitowoc Foodservice Introduction
2. Global Foodservice Equipment Industry
3. March Forth Strategy
4. Financials
© Manitowoc Foodservice, Page 3
History as an Industry Consolidator
Manitowoc is founded by Elias Gunnell,
Charles West, and Lynford Geer
Manitowoc becomes
a public company on NASDAQ
Acquires Enodis, a global
foodservice manufacturer, (required to divest Scotsman
post-acquisition)
Manitowoc stock is listed on the NYSE
Manitowoc begins producing
commercial ice-making machines
1902 1945 1971 1995 2015 2008
Manitowoc announces plan to separate into
2 distinct companies Begins manufacturing
freezers
Acquires Shannon Group, manufacturer of commercial
refrigeration equipment
Acquires SerVend International, maker
of ice & beverage dispensers
Manitowoc Foodservice
debuts as stand-alone company
NYSE: MFS
2016 1966 1993 1997
Acquires Scotsman Industries in the U.S.,
expanding foodservice to include refrigeration
technologies
Samuel & William Berisford founded a small grocery & pharmacy; store begins dealing in sugar merchant
business
S&W Berisford
incorporates as a public company
Berisford acquires Welbilt in U.S.;
enters the commercial foodservice equipment
market Berisford changes
name to Enodis
Sells off its non-core operations to
focus on core business in the
U.S. foodservice market
New range of equipment launched to meet
fast-food industry's attempt to introduce
"healthier" foods
Welbilt acquires Frymaster and 3 other companies in the Sunbeam
Group
Welbilt acquires Lincoln Foodservice Products, a manufacturer of ovens,
commercial kitchen supplies & other food-
service equipment
1851 1910 1994 1995 1999 2000 2002 2004 2008 1982
© Manitowoc Foodservice, Page 4
Manitowoc Foodservice at a Glance
Offering: Full-line of hot/cold products & systems
End Markets: All commercial kitchen operators Channels: 3000+ distributors & dealers Employees: Approx. 5,500 globally Presence: 38 locations in 12 countries Capabilities: World class design, manufacturing,
parts & service
2015 Revenue $1.5B
75% Americas
15% EMEA
10% APAC
by Region
by End Market1 by Channel2
Other 2%
Retail 8%
Business & Industry 10%
Education 6%
Healthcare 8%
Travel & Leisure 8%
Restaurants 58%
Other General Markets 4%
Key Accounts 25%
Other Chains 7%
Dealers, Distributors,
Buying Groups
64%
© Manitowoc Foodservice, Page 5
1Estimate for MFS Americas 2Reflects gross sales for 2015. Includes all third party product sales.
Full Line Product Offering with Leading Brands ...
Commercial Fryers
Beverage Equipment
12 brands that command #1 or #2 market share positions
Cold products (~50% revenue) Hot products (~35% revenue) Parts & Service (~15% revenue)
Walk-in Refrigeration
Freezers & Prep. Stations
Commercial Ranges, Grills, and Induction
Combi- and High Speed Ovens
Ice-cube machines
© Manitowoc Foodservice, Page 6
... and a Broad Range of Supporting Services for our Channel Partners and End Customers
University
Finance Solutions
StarChef Program
© Manitowoc Foodservice, Page 7
KitchenCare®
Long Standing Customer Relationships with large End Customers as well as US Channel Partners
End Customers typically directly served as “Key Accounts” Top 5 Global End Customers
US Channel Partners typically referred to as “General Market”
2015
Customer % of FY15 Revenue
# of Years¹
End Customer 1 6.0% 53 End Customer 2 4.0% 56 End Customer 3 3.8% 26 End Customer 4 2.1% 34 End Customer 5 1.4% 49
2015
Customer % of FY15 Revenue
# of Years¹
Dealer Customer 1 4.8% 7 Dealer Customer 2 4.8% 28 Dealer Customer 3 4.0% 27 Dealer Customer 4 3.2% 7 Dealer Customer 5 2.5% 56
Top 5 North America Dealer Customers
Over 40 years average relationship with our top 5 end customers and
over 20 years average relationship with our top 5 dealer customers
© Manitowoc Foodservice, Page 8
1Source: Company estimates.
Stable Revenue Base from Significant Replacement Demand and Large Installed Base
Predictable product replacement cycles support stable Manitowoc Foodservice revenue
Provides recurring, higher margin revenue and aids in maintaining customers
2016 U.S. Foodservice Equipment Needs1
More than 80% of demand driven by replacement and renovations,
limiting exposure to new construction
~15% of revenue generated by stable KitchenCare aftermarket
parts and service offering
KitchenCare
KitchenCare protects, services, and maintains foodservice equipment throughout the product lifecycle
Each new piece of Manitowoc Foodservice equipment comes with KitchenCare warranty Multiple levels of support available, depending on customer need Provides a stable source of recurring revenue
New Construction 7%
Eco Friendly 11%
Renovations 20%
Replacement 62%
© Manitowoc Foodservice, Page 9
1 Foodservice Equipment and Supplies
Agenda
1. Manitowoc Foodservice Introduction
2. Global Foodservice Equipment Industry
3. March Forth Strategy
4. Financials
© Manitowoc Foodservice, Page 11
Steadily Growing
Foodservice Industry
Positive Industry Fundamentals
Population & Income Growth
Health & Safety
New Concepts & New Markets
+
+
© Manitowoc Foodservice, Page 12
Increasing Global Population & Income
300
400
500
600
700
2000 2005 2010 2015 2020 2025 2030
Inde
x (1
950
= 10
0)
Trend Growth Line, 1950– 2000 GDP per Capita (Constant US$)
0
2
4
6
8
10
1950 1970 1990 2010 2030 2050
Glo
bal P
opul
atio
n (b
illio
ns)
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 2015-2030 period
Eating-out culture is growing, driven by: • Increasing disposable
incomes • Hectic lifestyles
Global Population Growth
Global per capita income Growth
Source: Global Monitoring Report, UN Statistical Yearbooks and Publications, IMF International Financial Statistics, IMF World Economic Outlook and IMF Staff Estimates.
© Manitowoc Foodservice, Page 13
Source: U.S. Census Bureau, International Data Base, July 2015 Update
46 Years of Restaurant-Industry1 Sales Demonstrate Non-Cyclicality of Foodservice Industry
Real (inflation-adjusted) percentage growth
(3.0)
(2.0)
(1.0)
0.0
1.0
2.0
3.0
4.0
5.0
6.0
1971 1976 1981 1986 1991 1996 2001 2006 2011 2016
© Manitowoc Foodservice, Page 14
1 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
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 People1
0 25 50 75 100
Brazil
China
USA
1) Euromonitor, May 2016, based on full service restaurant units
Revenue 2015 13%
2015 9.1% $4.4B
2015 53.6% $200M
© Manitowoc Foodservice, Page 15
Source: 2016 Technomic Inc. Top 500 Chain Restaurant Report
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
“Americans' Spending on Dining Out Just Overtook Grocery Sales” April 14, 2015
“Celebrity Chefs Hope to Press Congress on Food Waste” May 25, 2016
“Food Shippers in the U.S. Face New Rules” April 5, 2016
“Food safety: Five things to watch out for” May 23, 2016
“4 surprising ways warmer temperatures will change our food” April 5, 2016
“New salmonella outbreak in chicken resists antibiotics” October 8, 2013
© Manitowoc Foodservice, Page 16
Foodservice Operator Cost Pressures Are Fueling Demand for Innovation
Targeted Innovative
Product Solutions & Systems with Short Payback
Increasing Labor Cost
Increasing Real Estate Cost
Increasing Energy Cost
+
+ Need for Waste Avoidance
+
© Manitowoc Foodservice, Page 17
Product Solutions Deliver Short Payback For Operators
Solution Performance Benefit to the Operator Typical Payback
Multiplex Blend-in-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, most- even 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
© Manitowoc Foodservice, Page 18
kitchenconnect Will Drive Further Benefits Through Digitalization & Analytics
Comprehensive In-Field Support The Heart of the Kitchen
Functions to Help Streamline...
Demand Driven Ventilation
Other building systems Lighting
Refrigeration Menu
Management and Recipe Downloads
Installations and Roll Outs
Alerts & Actions Predictive & Preventive Maintenance
Repairs / Smart Dispatch
Start-ups
© Manitowoc Foodservice, Page 19
Capex -> Opex New Business Models
Drive Through Optimization
Inventory Management
Kitchen Management and Control
In Store Traffic Analytics
Front of House Optimization
Back of House Systems Optimization
Labor Productivity Enhancement
Equipment Connectivity, Analytics and Remote
Management
© Manitowoc Foodservice, Page 20
fitkitchen Takes a Systems Approach and Will Drive Toward Optimization of the Entire System – Kitchen 4.0 as in Industry 4.0
Positive Fundamentals and Industry Specific Drivers Will Provide Steady Foodservice Equipment Industry Growth
Global Foodservice Equipment Industry by Value (2013 – 2020E)
Source: Foodservice Equipment Market Report, Koncept Analytics, 2016 edition, April 2016
$35.0 $36.6
$47.6
$0.0
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
$50.0
2013 2014 2020E
US$ Billion
+ 4.5% CAGR
+ 4.6%
© Manitowoc Foodservice, Page 21
Agenda
1. Manitowoc Foodservice Introduction
2. Global Foodservice Equipment Industry
3. March Forth Strategy
4. Financials
© Manitowoc Foodservice, Page 22
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
© Manitowoc Foodservice, Page 23
Clear Strategic Objectives and Thrusts ...
Strategic Objectives Strategic Thrusts
Achieving Profitable Growth
• 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
Creating Innovative Products & Solutions
• 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
Driving Operational Excellence
• Move assembly closer to end markets and localize products • Use strategic sourcing to streamline vendor base • Drive lean manufacturing principles throughout the organization
Guaranteeing Customer Satisfaction
• Grow KitchenCare parts & service to a bigger proportion of total business • Enhance process and delivery planning • Develop next generation distribution
Developing Great People
• Provide incentive schemes that motivate and drive performance • Identify, develop and grow key talent • Make MFS the employer of choice in our industry
© Manitowoc Foodservice, Page 24
... are the Levers that will Bridge the Margin Gap
EBITA Margin
Ambition “Mid-
twenties”
2015 EBITA
Margins “Mid-teens”
Product Cost & Platforms
Business Simplification
Parts & Service
New Products and Systems
Business Right Sizing
Lean Manufacturing & Supply Chain
The “1000 BPS Challenge”…
...gap closure is a multi-year journey.
© Manitowoc Foodservice, Page 25
2016 Priorities
Deliver profitable growth and operational excellence objectives 1
Drive new product and new system solutions to fuel sale growth 2
Delever the balance sheet 3
© Manitowoc Foodservice, Page 26
Agenda
1. Manitowoc Foodservice Introduction
2. Global Foodservice Equipment Industry
3. March Forth Strategy
4. Financials
© Manitowoc Foodservice, Page 27
2016 First Quarter Results
2016 Q1 2015 Q1 Δ Organic sales1 $325.5 $322.1 +1.1%
Adjusted EBITA margin1 14.1% 7.0% +710 bps
Amortization expense ($7.8) ($7.8)
Net interest income (expense) ($8.6) $4.4
Other income (expense) ($2.4) $0.4
Effective tax rate 20.3% 31.7% -1140 bps
Adjusted net earnings1 $20.9 $14.5 +44.1%
Adjusted EPS1 $0.15 $0.10 +50.0%
© Manitowoc Foodservice, Page 28
Operational improvements deliver solid first quarter
1 Non-GAAP measures. See Appendix for GAAP presentation and reconciliation of non-GAAP measures.
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 (including announced closures of Cleveland & Irwindale facilities and relocation of Ice to Mexico)
Headcount reductions
Savings expected by end of 2017:
~$100 million • $12 million in 2015 • $50 million in 2016 • $38 million in 2017
© Manitowoc Foodservice, Page 29
2016 Full-Year Guidance Details
Organic sales Up 2% to 4% (adjusted to exclude KPS and include Welbilt Thailand)
Adjusted EBITA margin Between 16% and 17% (excludes separation and restructuring expenses)
Amortization expense Between $30 and $33 million
Depreciation expense Between $21 and $24 million
Interest expense Between $78 and $82 million
Effective tax rate Between 27% and 30%
Adjusted EPS Between $0.62 and $0.72 per share (excludes separation and restructuring expenses)
Capital expenditures Between $23 and $27 million
Debt paydown Between $120 and $140 million
© Manitowoc Foodservice, Page 30
2016 First Quarter Results - GAAP
2016 Q1 2015 Q1 Δ Net sales $325.5 $345.4 -5.8%
EBITA margin 12.7% 6.8% +590 bps
Amortization expense ($7.8) ($7.8)
Net interest income (expense) ($8.6) $4.4
Other income (expense) ($2.4) $0.4
Effective tax rate 20.3% 31.7% -1140 bps
Net earnings $18.1 $14.0 +29.3%
EPS $0.13 $0.10 +30.0%
© Manitowoc Foodservice, Page 32
2016 First Quarter Organic Net Sales Reconciliation
(US$ in millions) 2016 Q1 2015 Q1
Net sales – as reported $325.5 $345.4
Less: Kysor Panel System sales --- (25.5)
Plus: Welbilt Thailand sales --- 2.2
Organic net sales – as adjusted $325.5 $322.1
© Manitowoc Foodservice, Page 33
2016 First Quarter Adjusted EBITA Reconciliation
(US$ in millions) 2016 Q1 2015 Q1
Net earnings $18.1 $14.0
Incomes taxes 4.6 6.5
Other expense (income), net 2.4 (0.4)
Interest (income) on notes with MTW, net 0.1 (4.7)
Interest expense 8.5 0.3
Restructuring expense 1.3 0.7
Separation expense 3.0 ---
Amortization expense 7.8 7.8
Adjusted EBITA $45.8 $24.2
Adjusted EBITA margin1 14.1% 7.0%
© Manitowoc Foodservice, Page 34
1 Adjusted EBITA margin is calculated by dividing the dollar amount of adjusted EBITA by net sales.
2016 First Quarter Adjusted Net Earnings and Adjusted Net Earnings per Share
(US$ in millions) 2016 Q1 2015 Q1
Net earnings $18.1 $14.0
Restructuring expense (net of tax) 0.9 0.5
Separation expense (net of tax) 1.9 ---
Adjusted net earnings $20.9 $14.5
© Manitowoc Foodservice, Page 35
2016 Q1 2015 Q1
Diluted earnings per share $0.13 $0.10
Restructuring expense per share (net of tax) 0.01 ---
Separation expense per share (net of tax) 0.01 ---
Adjusted net earnings per share – Non-GAAP $0.15 $0.10