Why Welbilt Inc (NYSE: WBT) stock is crashing

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Welbilt Inc (NYSE: WBT) stock lost over 25% on 5 Nov, (as of 2:59 PM GMT-5; Source: Google finance) after the company missed the analysts’ estimates for the third quarter of 2018. Organic Net Sales rose 3.8 percent in the third quarter. Net earnings were $26.8 million, a decrease of 12.7 percent; Adjusted Net Earnings were $35.2 million, an increase of 14.3 percent. Diluted net earnings per share were $0.19, a decrease of 13.6 percent; Adjusted Diluted Net Earnings Per Share were $0.25, an increase of 13.6 percent

WBT in the third quarter of FY 18 has reported the adjusted earnings per share of 25 cents, missing the analysts’ estimates for the adjusted earnings per share of 27 cents. The company had reported the adjusted revenue growth of 8.5 percent to $412.9 million in the third quarter of FY 18, missing the analysts’ estimates for revenue of $421.3 million. Earnings from operations were $67.7 million, a decrease of 4.2 percent; as a percent of net sales, earnings from operations were 16.4 percent, a decrease of 220 basis points Adjusted Operating EBITDA was $86.7 million, an increase of 5.9 percent; Adjusted Operating EBITDA margin was 21.0 percent, a decrease of 50 basis points and was negatively impacted by 30 basis points from the Crem Acquisition; excluding this impact, Adjusted Operating EBITDA margin decreased 20 basis points

Meanwhile, WBT has appointed William (“Bill”) C. Johnson as President and Chief Executive Officer effective November 9, 2018.

For FY 18, WBT expects net sales growth to be between 8.0 and 10.0 percent (organic +3.0 to +5.0 percent, acquisition +4.0 percent, foreign currency translation +1.0 percent). Adjusted Operating EBITDA margin is expected to be between 18.1 and 19.1 percent including a 20 basis point negative impact from the Crem acquisition. Adjusted Diluted Net Earnings Per Share to be between $0.73 and $0.81 per share; based on a forecast of 141.4 million fully diluted shares outstanding and including a $0.02 benefit from the Crem acquisition; the effective tax rate for 2018 is forecasted to be between 26 and 28 percent excluding a $2.6 million discrete charge for the Tax Cuts and Jobs Act that is added back for Adjusted Diluted Net Earnings Per Share

On the other hand, WBT has completed the amendment of its senior secured credit facility. The borrowing limit for the revolving credit facility was increased to $400 million from $275 million and the maturity date was extended to October 23, 2023. The Term Loan B facility was increased to $900 million from $815 million and the maturity date was extended to October 23, 2025. The new interest rate applicable to term B loans is LIBOR plus 250 basis points, subject to a 0 percent LIBOR floor

 

 

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