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 2, 2010. Net earnings for the third quarter were $20,602,000 or $1.13 per share on net sales of $177,793,000 as compared to the prior year third quarter net earnings of $15,501,000 or $0.83 per share on net sales of $153,989,000. 2010 Third Quarter Financial Highlights
- The third 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 15.5% in the third quarter. Excluding the impact of acquisitions, sales increased 11.7% during the third quarter. Excluding the impact of acquisitions, this net increase included a 10.7% sales increase at the Commercial Foodservice Group and a 19.3% sales increase at the Food Processing Group as compared to the prior year quarter.
- Gross profit increased to $70,687,000 from $62,037,000. The gross margin rate of 39.8% compared to 40.3% in the prior year quarter. The gross margin rate reflects increased steel costs and the impact of recent acquisitions with lower margins.
- Operating income increased to $32,011,000 from $28,074,000 on higher revenues. Operating income included severance costs of $841,000 associated with headcount reduction initiatives implemented in the third quarter, which impacted earnings per share by $0.03 per share.
- Non-cash expenses recorded during the third quarter included $3,849,000 million of depreciation and amortization in the current quarter as compared to $3,798,000 million in the prior year third quarter. Non-cash share based compensation expenses increased to $3,686,000 in the 2010 third quarter as compared to $2,696,000 in the 2009 third quarter.
- Net interest expense and deferred financing costs amounted to $2,177,000 in the third quarter as compared to $2,797,000 in the prior year third quarter. Reduced interest expense reflects the benefit of lower interest rates and lower average debt balances.
- Provisions for income taxes decreased to $9,353,000 million at a 31% effective rate in comparison to $9,913,000 million at a 39% effective rate in the prior year quarter. The third quarter tax provision reflects a non-recurring benefit related to a deduction of acquisition related expenses and adjustments to tax reserves.
- Total debt at the end of the 2010 third quarter amounted to $243,608,000 as compared to $ 249,008,000 at the end of the second quarter 2010. Debt continued to be reduced utilizing cash flows from operating activities. The reduction in debt during the third quarter is net of $22.1 million in funding of acquisition activities and $5.7 million utilized to repurchase shares of Middleby common stock. During the third quarter the company repurchased 104,668 shares of Middleby common stock at an average price of $54.83 per share. The company’s debt is financed under a $497,800,000 senior revolving credit facility that matures in December 2012.
- Net earnings per share in the 2010 third quarter increased 36.1% to $1.13 per share as compared to $0.83 per share in the 2009 third quarter.
Mr. Bassoul continued, “Sales at our Food Processing Group continued to remain strong resulting from increased capital budgets and the realization of deferred orders with our food processing customers. Additionally, our Food Processing Group has introduced several new products and technologies which provides for expanded revenue opportunities for this business.”Mr. Bassoul further commented, “We were pleased with the continued strong cash flow generated during the quarter. We reduced debt by over $5 million, while at the same time funding approximately $5.7 million of stock repurchases and $22.1 million in acquisition activities.” Mr. Bassoul concluded, “We are also very pleased to have completed two acquisitions during the third quarter. The acquisition of PerfectFry provides Middleby with a ventless frying solution product that allows a foodservice operator the ability to fry foods in non-traditional locations utilizing a low cost solution. This acquisition complements our TurboChef, CookTek, and Wells brands, establishing Middleby as a leader in ventless cooking solutions for the commercial foodservice industry. The acquisition of Cozzini significantly strengthens our leadership position in the food processing industry. Cozzini is a premier brand with leading market positions. The broad line of Cozzini product offerings includes grinding, slicing, emulsification, mixing and blending equipment, which complement our existing products offered under the Alkar, MP Equipment, and RapidPak brands.” Conference Call A conference call will be held at 9:00 a.m. Central time on Tuesday, November 9, 2010 and can be accessed by dialing (866) 200-6965 and providing conference code 516279# or through the investor relations section of The Middleby Corporation website at www.middleby.com. An audio replay of the call will be available approximately one half hour after its completion and can be accessed by calling (866) 206-0173 and providing code 258294#. Statements in this press release or otherwise attributable to the Company regarding the Company's business which are not historical fact are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company cautions investors that such statements are estimates of future performance and are highly dependent upon a variety of important factors that could cause actual results to differ materially from such statements. Such factors include variability in financing costs; quarterly variations in operating results; dependence on key customers; international exposure; foreign exchange and political risks affecting international sales; changing market conditions; the impact of competitive products and pricing; the timely development and market acceptance of the Company's products; the availability and cost of raw materials; and other risks detailed herein and from time-to-time in the Company's SEC filings.
The Middleby Corporation is a global leader in the foodservice equipment industry. The company develops, manufactures, markets and services a broad line of equipment used for commercial food cooking, preparation and processing. The company's leading equipment brands serving the commercial foodservice industry include Anets®, Blodgett®, Blodgett Combi®, Bloomfield®, Carter Hoffmann®, CookTek®, CTX®, Doyon®, FriFri®, Giga®, Holman®, Houno®, Jade®, Lang®, MagiKitch'n®, Middleby Marshall®, Nu-Vu®, PerfectFry®, Pitco Frialator®, Southbend®, Star®, Toastmaster® Turbochef® and Wells®. The company’s leading equipment brands serving the food processing industry include Alkar®, Cozzini®, MP Equipment®, and RapidPak®. The Middleby Corporation has been recognized by Forbes as one of the Best Small Companies in 2008, 2009 and 2010.For more information about The Middleby Corporation and the company brands, please visit www.middleby.com.
|THE MIDDLEBY CORPORATION|
|CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS|
|(Amounts in 000’s, Except Per Share Information)|
|Three Months Ended||Nine Months Ended|
|3rd Qtr, 2010||3rd Qtr, 2009||3rd Qtr, 2010||3rd Qtr, 2009|
|Cost of sales||107,106||91,952||308,304||301,989|
|Selling & distribution expenses||17,776||16,361||54,437||49,335|
|General & administrative expenses||20,900||17,602||60,972||59,702|
|Income from operations||32,011||28,074||88,175||83,110|
|Interest expense and deferred|
|financing amortization, net||2,177||2,797||6,898||8,800|
|Other expense, net||(121||)||(137||)||443||607|
|Earnings before income taxes||29,955||25,414||80,834||73,703|
|Provision for income taxes||9,353||9,913||28,961||30,421|
|Net earnings per share:|
|Weighted average number shares:|
|THE MIDDLEBY CORPORATION|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|(Amounts in 000’s)|
|Oct 2, 2010||Jan 2, 2010|
|Cash and cash equivalents||$||5,986||$||8,363|
|Accounts receivable, net||102,710||78,897|
|Prepaid expenses and other||9,139||9,914|
|Current deferred tax assets||25,229||23,339|
|Total current assets||253,293||217,026|
|Property, plant and equipment, net||44,791||47,340|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Current maturities of long-term debt||$||5,349||$||7,517|
|Total current liabilities||170,184||146,356|
|Long-term deferred tax liability||14,379||14,187|
|Other non-current liabilities||44,116||45,024|
|Total liabilities and stockholders’ equity||$||866,638||$||816,346|