- The first quarter financial statements include the results of the recently completed acquisitions of Beech Pty. Ltd. (“Beech”), a leading manufacturer of stone hearth ovens for the commercial foodservice industry acquired on April 12, 2011 and Lincat Group PLC (“Lincat”), a leading manufacturer of ranges, ovens and counterline equipment acquired on May 27, 2011.
- Subsequent to the end of the second quarter, the company completed three additional acquisitions, “Danfotech Inc. (“Danfotech”) on July 5, 2011, Maurer-Atmos (“Maurer-Atmos”) on July 22, 2011 and Auto-Bake Pty. Ltd. (“Auto-Bake”) on August 1, 2011. The impact of these acquisitions is not reflected in the second quarter statements of earnings and balance sheets.
- Net sales increased 21.6% in the second quarter. Excluding the impact of acquisitions, sales increased 9.8% during the second quarter. This increase included an 11.3% sales increase at the Commercial Foodservice Equipment Group and a 1.8% sales decrease at the Food Processing Equipment Group as compared to the prior year quarter.
- Gross profit increased to $85.3 million from $69.4 million. The gross margin rate improved to 40.5% from 40.0%. The improvement in the gross margin rate reflects efficiency gains from the consolidation of production facilities and other integration initiatives, offset by the impact of rising material costs.
- Operating income increased to 18.6% to $35.2 million from $29.7 million on higher revenues. Operating income for the quarter included $1.3 million of non-recurring and non-cash adjustments related to the purchase accounting for the acquisitions of Beech and Lincat.
- Non-cash expenses recorded during the second quarter included $5.3 million of depreciation and amortization as compared to $3.9 million in the prior year second quarter. Non-cash share based compensation expense increased to $5.3 million in the 2011 second quarter as compared to $4.2 million in the 2010 second quarter.
- Non-operating expenses of $1.6 million included a loss of $0.5 million associated with the sale of an idle manufacturing facility that was exited in connection with a manufacturing consolidation initiative and $1.1 million of unrealized exchange losses in connection with the funding of the Lincat acquisition.
- Provisions for income taxes increased to $11.9 million at a 38% effective rate in comparison to $9.8 million at a 36% effective rate in the prior year quarter. The prior year period effective rate reflects a non-recurring benefit to tax reserves resulting from closed audit periods.
- Total debt at the end of the 2011 second quarter amounted to $309.4 million as compared to $249.0 million at the end of the second quarter 2010. The increase in debt reflects the funding of $108.0 million related to the acquisitions of Beech and Lincat during the quarter. During the second quarter of 2011, the company exercised a provision under its current credit facility to increase the amount of availability under the revolving credit line. Terms of the company’s senior credit agreement provide for $600.0 million of availability under a revolving credit line that matures in December 2012.
The Middleby Corporation Reports Second Quarter Results
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