The Middleby Corporation Reports Third Quarter Results
The Middleby Corporation (NASDAQ: MIDD), a leading worldwide manufacturer of restaurant and foodservice cooking equipment, today reported net sales and earnings for the third quarter ended October 2, 2010. Net earnings for the third quarter were $20,602,000 or $1.13 per share on net sales of $177,793,000 as compared to the prior year third quarter net earnings of $15,501,000 or $0.83 per share on net sales of $153,989,000.
2010 Third Quarter Financial Highlights
- The third quarter financial statements include the results of the recently completed acquisitions of PerfectFry, a leader in ventless frying systems for the commercial foodservice industry acquired on July 13, 2010 and Cozzini, a leading manufacturer of equipment for the food processing industry acquired on September 21, 2010.
- Net sales increased 15.5% in the third quarter. Excluding the impact of acquisitions, sales increased 11.7% during the third quarter. Excluding the impact of acquisitions, this net increase included a 10.7% sales increase at the Commercial Foodservice Group and a 19.3% sales increase at the Food Processing Group as compared to the prior year quarter.
- Gross profit increased to $70,687,000 from $62,037,000. The gross margin rate of 39.8% compared to 40.3% in the prior year quarter. The gross margin rate reflects increased steel costs and the impact of recent acquisitions with lower margins.
- Operating income increased to $32,011,000 from $28,074,000 on higher revenues. Operating income included severance costs of $841,000 associated with headcount reduction initiatives implemented in the third quarter, which impacted earnings per share by $0.03 per share.
- Non-cash expenses recorded during the third quarter included $3,849,000 million of depreciation and amortization in the current quarter as compared to $3,798,000 million in the prior year third quarter. Non-cash share based compensation expenses increased to $3,686,000 in the 2010 third quarter as compared to $2,696,000 in the 2009 third quarter.
- Net interest expense and deferred financing costs amounted to $2,177,000 in the third quarter as compared to $2,797,000 in the prior year third quarter. Reduced interest expense reflects the benefit of lower interest rates and lower average debt balances.
- Provisions for income taxes decreased to $9,353,000 million at a 31% effective rate in comparison to $9,913,000 million at a 39% effective rate in the prior year quarter. The third quarter tax provision reflects a non-recurring benefit related to a deduction of acquisition related expenses and adjustments to tax reserves.
- Total debt at the end of the 2010 third quarter amounted to $243,608,000 as compared to $ 249,008,000 at the end of the second quarter 2010. Debt continued to be reduced utilizing cash flows from operating activities. The reduction in debt during the third quarter is net of $22.1 million in funding of acquisition activities and $5.7 million utilized to repurchase shares of Middleby common stock. During the third quarter the company repurchased 104,668 shares of Middleby common stock at an average price of $54.83 per share. The company’s debt is financed under a $497,800,000 senior revolving credit facility that matures in December 2012.
- Net earnings per share in the 2010 third quarter increased 36.1% to $1.13 per share as compared to $0.83 per share in the 2009 third quarter.
Selim A. Bassoul Chairman and Chief Executive Officer said, “The third quarter results reflected strong revenue growth at both the commercial foodservice and food processing segments of our business. At our commercial foodservice business, we have realized revenue gains resulting from modest improvement in the industry conditions and increased market penetration. Increased market penetration is attributable to success of recent product introductions and investments we have made in our sales organization. The recent expansion of our international selling organization has positioned us well in the emerging markets. We are also now beginning to realize results from the implementation of our national accounts team focused on servicing our major chain account customers.”
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