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The Middleby Corporation Reports Fourth 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 fourth quarter ended January 1, 2011. Net earnings for the fourth quarter were $20,994,000 or $1.13 per share on net sales of $207,233,000 as compared to the prior year fourth quarter net earnings of $17,874,000 or $0.95 per share on net sales of $152,493,000. Net earnings for the twelve months ended January 1, 2011 were $72,867,000 or $3.97 per share on net sales of $719,121,000 as compared to net earnings of $61,156,000 or $3.29 per share on net sales of $646,629,000 in the prior year.

2010 Fourth Quarter Financial Highlights
  • The fourth 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 35.9% in the fourth quarter. Sales from acquisitions amounted to $21.2 million or 13.9% during the quarter, and largely related to the Cozzini acquisition which had a particularly strong fourth quarter due to several large orders that shipped late in the year. Excluding the impact of acquisitions, net sales increased 22.0% during the fourth quarter, including an increase of 19.2% in sales from the Commercial Foodservice Group and an increase of 40.1% in sales from the Food Processing Group. Sales growth from both segments reflects improved economic conditions from the prior year, continued growth in the international markets, and increasing business with major restaurant chain customers.
  • Gross profit increased to $83.1 million from $58.5 million and the gross margin rate increased to 40.1% from 38.3%. The gross margin rate reflects the benefit of cost reduction initiatives and increased sales volumes, offset in part by increasing material costs.
  • Operating income increased to $34.6 million from $28.3 million. Operating income included non-recurring expenses of $1.8 million associated with plant consolidation initiatives related to the acquisitions of Doyon and PerfectFry, which impacted earnings by $0.06 per share.
  • Non-cash expenses recorded during the fourth quarter included $5.4 million of depreciation and amortization in the current quarter as compared to $4.0 million in the prior year fourth quarter. The increase in depreciation and amortization included $1.8 million associated with the recent acquisition of Cozzini. Non-cash share based compensation expenses increased to $3.6 million in the 2010 fourth quarter as compared to $2.5 million in the 2009 fourth quarter.
  • Net interest expense and deferred financing costs amounted to $1.7 million in the fourth quarter as compared to $2.8 million in the prior year fourth quarter. Reduced interest expense reflects the benefit of lower interest rates and lower average debt balances.
  • Provisions for income taxes increased to $12.4 million at a 37% effective rate in comparison to $8.1 million at a 31% effective rate in the prior year quarter. The prior year fourth quarter provision included a one-time tax benefit of $1.2 million or $0.06 per share.
  • Operating cash flows amounted to $32.0 million during the fourth quarter and $98.0 million for the year. Operating cash flows for the year were utilized to complete acquisitions of $25.7 million, repurchase of $9.0 million of Middleby common stock, and fund $3.2 million in capital expenditures in fiscal 2010.
  • Total debt at the end of the 2010 fourth quarter amounted to $214.0 million as compared to $243.6 million at the end of the third quarter 2010. Debt balances continued to decline as cash flows from operating activities were utilized to repay the balance under the company’s senior revolving credit facility. That facility provides for $497.8 million of total borrowing availability and matures in December 2012.
  • Net earnings per share in the 2010 fourth quarter increased 18.9% to $1.13 per share as compared to $0.95 per share in the 2009 fourth quarter.

Mr. Bassoul commented, “In the fourth quarter, at our Commercial Foodservice Group, we realized revenue gains resulting from continuing improvement in the industry conditions and increased market penetration. We are pleased with the results realized from investments we have made both in our international selling organization and our national accounts sales team. We believe we are well positioned to capture increasing opportunities in the emerging markets as well as with our chain customers as they look to improve their kitchen operations.”

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