The Middleby Corporation (NASDAQ: MIDD), a leading worldwide manufacturer of equipment for the commercial foodservice and food processing industries, today reported net sales and earnings for the fourth quarter and full fiscal year ended December 29, 2012. Net earnings for the fourth quarter were $37,788,000 or $2.03 per share on net sales of $291,612,000 as compared to the prior year fourth quarter net earnings of $34,559,000 or $1.87 per share on net sales of $243,760,000. Net earnings for the fiscal year ended December 29, 2012 were $120,697,000 or $6.49 per share on net sales of $1,038,174,000 as compared to net earnings of $95,473,000 or $5.15 per share on net sales of $855,907,000 in the prior year.
2012 Fourth Quarter and Full Year Financial Highlights
- Net sales increased 19.6% in the fourth quarter and 21.3% for the full fiscal year of 2012 over the comparative prior year periods. Excluding the impact of acquisitions, sales increased 8.3% during the fourth quarter and 7.2% for the full year.
- Net sales at the company’s Commercial Foodservice Equipment Group increased 5.3% in the fourth quarter and 8.7% for the full fiscal year of 2012 as compared to the comparative 2011 periods. During fiscal 2012, the company completed the acquisition of Nieco. Excluding the impact of these acquisitions, sales increased 3.9% in the fourth quarter and 5.0% for the full year.
- Net sales at the company’s Food Processing Equipment Group increased 89.0% in the fourth quarter and 89.9% for the full fiscal year of 2012 as compared to the comparative 2011 periods. During fiscal 2012, the company completed the acquisitions of Baker Thermal Solutions and Stewart Systems. Excluding the impact of the acquisitions, sales increased by 29.6% in the fourth quarter and 19.1% for the full year.
- Gross profit in the fourth quarter increased to $113.2 million from $99.7 million and the gross margin rate decreased to 38.8% from 40.9%. For the full fiscal year of 2012, gross profit increased to $403.0 million from $344.1 million and the gross margin rate decreased to 38.8% from 40.2%. The gross margin rate reflects the impact of greater sales mix of the Food Processing Equipment Group and the impact of recent acquisitions with lower gross margin rates, which are anticipated to improve as these businesses are integrated.
- Operating income increased 30.7% in the fourth quarter to $58.7 million from $44.9 million in the prior year quarter and increased 26.5% for the full fiscal year of 2012 to $188.1 million from $148.7 million in the prior year. Operating income as a percent of net sales in the 2012 fourth quarter increased to 20.1% from 18.4% in the prior year quarter and for the full fiscal year of 2012 increased to 18.1% as compared to 17.4% in the prior year.
- Non-cash expenses during the fourth quarter of 2012 amounted to $9.4 million, including $2.3 million of depreciation, $4.1 million of intangible amortization and $3.0 million of non-cash share based compensation. Non-cash expenses for the full fiscal year of 2012 amounted to $37.7 million including $8.7 million of depreciation, $17.0 million of intangible amortization and $12.0 million of non-cash stock based compensation.
- Provisions for income taxes in the fourth quarter amounted to $17.9 million at a 32.2% effective rate in comparison to $9.6 million at a 21.8% effective rate in the prior year quarter. The prior year fourth quarter provision reflected non-recurring benefits primarily related to reduced state income tax exposures. For the full fiscal year of 2012 provisions for income taxes amounted to $53.7 million at 30.8% effective rate in comparison to $45.0 million at a 32.0% effective rate in the prior year.
- Operating cash flows amounted to $34.1 million during the fourth quarter and $128.3 million for the full fiscal year of 2012. Operating cash flows for the full fiscal year of 2012 were utilized to fund 2012 acquisitions of $61.9 million, repurchase $20.7 million of Middleby common stock, and make investments of $7.7 million for capital expenditures.
- Total debt at the end of the 2012 fiscal fourth quarter amounted to $260.1 million as compared to $317.3 million at the end of the 2011 fiscal year. On December 31, 2012, subsequent to the fiscal 2012 year-end, the company completed the acquisition of Viking Range Corporation for $380 million in cash. This acquisition was funded with additional borrowings under the company’s revolving credit facility. This five-year $1.0 billion multi-currency senior revolving credit facility was entered into on August 7, 2012. The interest rate subsequent to the Viking acquisition was at LIBOR plus a margin of 1.75%, which is adjusted quarterly based upon the company’s leverage ratio.
- On February 22, 2013, the Middleby Board of Directors authorized the repurchase of up to an additional 1.0 million shares of Middleby common stock under the Company's existing share repurchase program, which was launched in 1998 with an initial authorization of 1.8 million shares. To date, the Company has repurchased in excess of 1.7 million shares under the program, approaching the previously authorized limit. Accordingly, the Board determined to increase the existing authorization in order to allow for future repurchases from time to time, as the Company deems appropriate.
Selim A. Bassoul Chairman and Chief Executive Officer commented, “Sales increased at our Commercial Foodservice Equipment Group during the quarter and for the year reflecting continued growth in emerging markets and with chain restaurant customers as they upgrade equipment and adopt new technologies to improve the efficiencies of store operations. This growth was offset in part by lower sales in Europe due to difficult market conditions.”