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The Middleby Corporation Reports Second 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 second quarter ended July 2, 2011. Net earnings for the second quarter were $19,628,000 or $1.06 per share on net sales of $210,855,000 as compared to the prior year second quarter net earnings of $17,509,000 or $0.96 per share on net sales of $173,412,000.

2011 Second Quarter Financial Highlights
  • 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.

Selim A. Bassoul Chairman and Chief Executive Officer said, “At our Commercial Foodservice Equipment Group, industry conditions remain positive and we realized continuing revenue gains resulting from growth in international business and with our chain customers. We see promising interest in many of our new products and technologies with our customers as they continue to focus on lowering their operating costs and improving the efficiency of their restaurant operations.”

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