- 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.
Mr. Bassoul continued, “Sales at our Food Processing Equipment Group in the third quarter declined in comparison to a robust 2010 due to slower orders in the first half. However, order rates increased in the third quarter as customers finalized their orders on projects that we have been developing throughout the year, and we realized double-digit growth in incoming orders as compared to the prior year third quarter. Due to the longer lead times in this business the favorable order rates did not benefit the third quarter but will be realized in future quarters. Prospects for the food processing business moving into 2012 are strong with a visible pipeline of new projects and demand for our equipment in emerging markets where the requirement for precooked and prepared foods is increasing and the need for advanced technologies is being recognized by food processors.”Mr. Bassoul further added, “We continue to execute on our acquisition strategy of acquiring leading brands and technologies. We were pleased to have completed the acquisitions of Danfotech, Maurer-Atmos and Auto-Bake during the third quarter. Danfotech is a leading manufacturer of meat presses and defrosting equipment for the food processing industry. Maurer-Atmos is a leading manufacturer of batch and continuous ovens for the food processing industry. Auto-Bake Pty Ltd is a leading manufacturer of automated baking systems for the food processing industry. While these acquisitions were dilutive to earnings in the third quarter, we expect significant improvement resulting from our integration initiatives. With these acquisitions Middleby adds three very strong leading brands to its Food Processing Equipment Group, significantly strengthening our global platform and expanding our product portfolio.” Conference Call A conference call will be held at 9:30 a.m. Central time on Wednesday, November 9, 2011 and can be accessed by dialing (866) 551-3680 and providing conference code 17200566# 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) 551-4520 and providing code 277578#. 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®, Beech®, Blodgett®, Blodgett Combi®, Blodgett Range®, Bloomfield®, Britannia®, Carter Hoffmann®, CookTek®, CTX®, Doyon®, frifri®, Giga®, Holman®, Houno®, IMC®, Jade®, Lang®, Lincat®, 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®, Auto-Bake®, Cozzini®, Danfotech®, Maurer-Atmos®, MP Equipment®, and RapidPak®. The Middleby Corporation has been recognized by Forbes Magazine as one of the Best Small Companies every year since 2005, most recently in October 2011.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|
|3 rd Qtr, 2011||3 rd Qtr, 2010||3 rd Qtr, 2011||3 rd Qtr, 2010|
|Cost of sales||131,402||107,106||367,662||308,304|
|Selling & distribution expenses||24,555||17,776||66,692||54,437|
|General & administrative expenses||25,577||20,900||73,995||60,972|
|Income from operations||37,186||32,011||103,798||88,175|
|Interest expense and deferred|
|financing amortization, net||2,324||2,177||6,503||6,898|
|Other (income) expense, net||(424||)||(121||)||1,022||443|
|Earnings before income taxes||35,286||29,955||96,273||80,834|
|Provision for income taxes||11,825||9,353||35,359||28,961|
|Net earnings per share:|
|Weighted average number shares:|
|THE MIDDLEBY CORPORATION|
|CONDENSED CONSOLIDATED BALANCE SHEETS|
|(Amounts in 000’s)|
|October 1, 2011||January 1, 2011|
|Cash and cash equivalents||$||13,416||$||7,656|
|Accounts receivable, net||136,670||112,049|
|Prepaid expenses and other||9,591||11,971|
|Current deferred tax assets||25,960||25,520|
|Total current assets||309,180||263,659|
|Property, plant and equipment, net||59,460||43,656|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Current maturities of long-term debt||$||6,771||$||5,097|
|Total current liabilities||190,010||183,852|
|Long-term deferred tax liability||21,505||11,858|
|Other non-current liabilities||46,123||43,629|
|Total liabilities and stockholders’ equity||$||1,030,367||$||873,172|