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 1, 2011. Net earnings for the third quarter were $23,461,000 or $1.26 per share on net sales of $218,720,000 as compared to the prior year third quarter net earnings of $20,602,000 or $1.13 per share on net sales of $177,793,000.
2011 Third Quarter Financial Highlights
- The third quarter financial statements include the results of the recently completed acquisitions of Danfotech Inc. (“Danfotech”), a manufacturer of meat presses and defrosting equipment for the food processing industry acquired on July 5, 2011, Maurer-Atmos (“Maurer”), a manufacturer of batch and continuous ovens for the food processing industry acquired on July 22, 2011 and Auto-Bake Proprietary Limited (“Auto-Bake”), a manufacturer of automated baking ovens for the food processing industry acquired on August 1, 2011. Results from these recent acquisitions reduced net earnings by $0.8 million or $0.04 per share during the quarter.
- Net sales increased 23.0% in the third quarter. Excluding the impact of acquisitions, sales increased 5.9% during the third quarter. This increase included a 10.1% sales increase at the Commercial Foodservice Equipment Group and a 25.6% sales decrease at the Food Processing Equipment Group as compared to the prior year quarter. Although revenues for the Food Processing Equipment Group declined during the quarter, the incoming order rate and backlog increased.
- Gross profit increased to $87.3 million from $70.7 million. The gross margin rate improved to 39.9% from 39.8%. The improvement in the gross margin rate reflects efficiency gains from the consolidation of production facilities and other integration initiatives, offset by lower margins at newly acquired companies and the impact of sales mix.
- Operating income increased 16.2% to $37.2 million from $32.0 million on higher revenues. Operating income reflected the dilutive effect of acquisitions completed in the third quarter as these operations were reorganized and integrated within Middleby operations.
- Non-cash expenses recorded during the third quarter included $5.3 million of depreciation and amortization as compared to $3.8 million in the prior year third quarter. Non-cash share based compensation expense increased to $5.5 million in the 2011 third quarter as compared to $3.7 million in the 2010 third quarter.
- Provisions for income taxes increased to $11.8 million at a 34% effective rate in comparison to $9.4 million at a 31% effective rate in the prior year quarter. The current year effective rate reflects favorable adjustments for increased tax deductions. The prior year period effective rate reflects a non-recurring benefit to tax reserves.
- Total debt at the end of the 2011 third quarter amounted to $303.6 million as compared to $243.6 million at the end of the third quarter 2010. The increase in debt reflects the funding of $118.6 million related to the acquisitions of Beech, Lincat, Danfotech and Auto-Bake during the first nine months of fiscal 2011. During the third quarter the company also repurchased $3.5 million of Middleby common shares of stock at an average price of $69.10 per share.
Selim A. Bassoul Chairman and Chief Executive Officer said, “At our Commercial Foodservice Equipment Group, industry conditions remained positive during the quarter and we realized continuing revenue gains resulting from growth in international business and with our chain customers. We continue to develop new business with restaurant chain customers as they look to utilize our cooking technologies to lower their operating costs and improve the efficiency of their restaurant operations.
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